Document:

exhibit10_1.htm

Exhibit 10.1

 

 

 

 

 

 

 

 

 

CHARTER COMMUNICATIONS, INC.

 

 

SUPPLEMENTAL DEFERRED COMPENSATION PLAN

 

 

(Amended and Restated as of September 1, 2011)

 

 

 

 

 

 

 

 

 

 

 

  

  

  

 

 

CHARTER COMMUNICATIONS, INC.

SUPPLEMENTAL DEFERRED COMPENSATION PLAN

 

TABLE OF CONTENTS

 

	
ARTICLE I ESTABLISHMENT AND PURPOSE

	1

 

	
  

	
1.1

	
Purpose

	
1

	
  

	
1.2

	
Type of Plan

	
1

	
  

	
1.3

	
Plan History and Effective Date of Restatement

	
1

 

	
ARTICLE II DEFINITIONS

	1

 

	
ARTICLE III PARTICIPATION

	4

 

	
  

	
3.1

	
Eligible Employee

	
4

	
  

	
3.2

	
Participating Employer

	
4

 

	
ARTICLE IV RETIREMENT SAVINGS BENEFITS

	4

 

	
  

	
4.1

	
Salary Reduction Contributions

	
4

	
  

	
4.2

	
Salary Reduction Accounts

	
5

	
  

	
4.3

	
Hypothetical Investments

	
5

	
  

	
4.4

	
Salary Reduction Contributions and Salary Reduction Accounts – Deemed Investment

	
6

	
  

	
4.5

	
Valuation

	
6

	
  

	
4.6

	
Vesting

	
6

 

	
ARTICLE V PAYMENT OF BENEFITS

	6

 

	
  

	
5.1

	
General Payment Provisions

	
6

	
  

	
5.2

	
Time of Payment for Salary Reduction Accounts

	
7

	
  

	
5.3

	
Death Benefits

	
8

	
  

	
5.4

	
Actual Date of Payment

	
8

 

	
ARTICLE VI SOURCES OF PAYMENTS

	9

 

	
ARTICLE VII PLAN ADMINISTRATOR

	9

 

	
  

	
7.1

	
Plan Administrator

	
9

	
  

	
7.2

	
Standard of Conduct

	
9

 

	
ARTICLE VIII NONALIENATION OF BENEFITS

	9

 

	
ARTICLE IX AMENDMENT AND TERMINATION

	  10

 

	
ARTICLE X GENERAL PROVISIONS

	  10

 

	
  

	
10.1

	
Plan Not a Contract of Employment

	
  10

	
  

	
10.2

	
Successors

	
  10

 

  

- i -

  

 

	
  

	
10.3

	
Official Actions

	
  10

	
  

	
10.4

	
Liability

	
  11

	
  

	
10.5

	
Governing Law

	
  11

	
  

	
10.6

	
Construction

	
  11

	
  

	
10.7

	Severability	
  11

	
  

	
10.8

	
Withholding

	
  11

  

- ii -

  

 

 

CHARTER COMMUNICATIONS, INC.

SUPPLEMENTAL DEFERRED COMPENSATION PLAN

 

 

ARTICLE I

ESTABLISHMENT AND PURPOSE

 

1.1 Purpose. The Charter Communications, Inc. Supplemental Deferred Compensation Plan (the “Plan”) is intended to provide benefits to employees whose participation in the Charter Communications, Inc. 401(k) Plan (the “401(k) Plan”) is limited because of certain discrimination rules imposed by the Code on qualified plans that limit the participation of certain highly compensated employees.

 

1.2 Type of Plan.  For federal income tax purposes, the Plan is intended to be a nonqualified, unfunded deferred compensation plan.  For purposes of the Employee Retirement Income Security Act of 1974 (“ERISA”) the Plan is intended to be a plan described in Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA providing benefits to a select group of management or highly compensated employees.

 

1.3 Plan History and Effective Date of Restatement. 

 

The Plan, which was originally effective December 1, 1996, was amended as of January 1, 2000, amended and restated as of January 1, 2002, and amended and restated as of January 1, 2005 to comply with the requirements of Section 409A of the Code.  The Plan was further amended to freeze participation and deferrals of compensation effective January 1, 2008.  The Sponsor now desires to amend and completely restate the Plan to again permit deferrals of compensation and to make such other changes as the Sponsor finds necessary or desirable.

 

This 2011 Restatement is generally effective September 1, 2011 the (“Effective Date”), except as otherwise explicitly provided in this document.

 

 

 

ARTICLE II

DEFINITIONS

 

Unless otherwise expressly defined by the terms or the context of the Plan, the terms used in the Plan shall have the same meanings as those terms in the 401(k) Plan.

 

“Aggregate Salary Reduction Accounts” shall mean all of a Participant’s Grandfathered Salary Reduction Accounts and Salary Reduction Accounts.

 

“Base Pay” shall mean any compensation payable by an Employer to an Eligible Employee as base salary pursuant to the Employer’s normal payroll practices before reduction for amounts deferred under the Employer’s qualified retirement plans or Code Section 125 plans.  Base Pay payable after the end of a Plan Year for services performed during the final payroll period of the preceding Plan year shall be treated as Base Pay for services in the subsequent Plan Year.

 

 

  

  

  

 

“Benefit Amount” shall mean the amount payable to a Participant pursuant to the Plan, which is the total amount credited to the Aggregate Salary Reduction Accounts of the Participant as of the date of the determination.

 

“Board” shall mean the Board of Directors of the Sponsor.

 

“Bonus Pay” shall mean amounts payable to an Eligible Employee under the annual cash incentive plan of the Employer, prior to reduction for amounts deferred under the Employer’s qualified retirement plans or Code Section 125 plans.  Bonus Compensation does not include other types of remuneration, such as long-term incentive pay or restricted stock awards.

 

“Change in Control” shall mean one of the following events which causes an Employer to cease to be a member of the controlled group of corporations that includes the Sponsor:

 

(i)           The acquisition by one person, or more than one person acting as a group, of ownership of stock of the Employer that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Employer;

 

(ii)           The acquisition by one person, or more than one person acting as a group, of ownership of stock of the Employer, that together with stock of the Employer acquired during the twelve-month period ending on the date of the most recent acquisition by such person or group, constitutes 30% or more of the total voting power of the stock of the Employer; or

 

(iii)           A majority of the members of the Employer’s board of directors is replaced during any twelve-month period by directors whose appointment or election is not endorsed by a majority of the members of the Employer’s board of directors before the date of the appointment or election.

 

Persons will not be considered to be acting as a group solely because they purchase or own stock of the same corporation at the same time, or as a result of the same public offering.  However, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Employer.

 

This definition of Change in Control shall be interpreted in accordance with, and in a manner that will bring the definition into compliance with, the regulations under Section 409A of the Code.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended and all valid regulations thereunder.  Reference to a section of the Code shall include that section and any comparable section or sections of any future legislation that amends, supplements or superseded said section.

 

“Covered Compensation” shall mean, as applicable, Base Pay or Bonus Pay.

 

“Designated Pay-Out Schedule” shall have the meaning specified in Section 5.1.

 

“Employer” shall mean the Sponsor and any other business entity affiliated with the Sponsor whose employees are eligible to participate in the 401(k) Plan with the consent of the Sponsor.

 

 

  

- 2 -

  

 

“Grandfathered Salary Reduction Accounts ” shall mean the Salary Reduction Accounts established for a Participant under the Plan with respect to amounts deferred under the Plan prior to January 1, 2005.

 

“Investment Direction” shall mean a Participant’s direction to the recordkeeper of the Plan, in the form and manner prescribed by the Plan Administrator, in accordance with either written directions or directions made through the recordkeeper’s telephone or internet system directing which Investment Funds will be credited with his or her deferred compensation and any earnings thereon.

 

“Investment Funds” shall mean the hypothetical investment funds, as determined from time to time by the Sponsor or the Plan Administrator.

 

“Participant” shall mean an Eligible Employee, as described in Section 3.1 below, including a former employee, who has elected to participate in this Plan and who continues to have rights to benefits under this Plan, or whose beneficiaries may be eligible to receive benefits under this Plan.

 

“Plan Administrator” shall have the meaning specified in Section 7.1.

 

“Plan Year” shall mean the calendar year.

 

“Salary Reduction Contribution” shall have the meaning specified in Section 4.1.

 

“Salary Reduction Accounts” shall mean the accounts established pursuant to Section 4.2 with respect to the amounts a Participant defers under the Plan on or after January 1, 2005.

 

“Specified Employee” shall mean a specified employee as defined in Treas. Reg. §1.409A-1(i) (generally, officers earning more than $130,000 per year, as indexed for inflation for years after 2002 ($160,000 for 2011), who are among the fifty (50) highest paid employees).

 

“Sponsor” shall mean Charter Communications, Inc.

 

“Termination of Employment” means separation from service with the Sponsor and its affiliates (generally 50% common control with the Sponsor), as defined in IRS regulations under Section 409A of the Code (generally, a decrease in the performance of services to no more than 20% of the average for the preceding 36-month period, and disregarding leave of absences up to six months where there is a reasonable expectation the employee will return).

 

“Valuation Date” shall have the meaning specified in Section 4.2.

 

 

  

- 3 -

  

 

 

ARTICLE III

PARTICIPATION

 

3.1 Eligible Employee. Any employee who is selected by the Plan Administrator to participate in the Plan shall be an Eligible Employee on and after such time.  An individual who has become an Eligible Employee shall cease to be an Eligible Employee effective as of any date designated by the Plan Administrator.  However, an Eligible Employee who makes an irrevocable election to participate for a Plan Year shall remain an Eligible Employee for the remainder of that Plan Year regardless of whether such individual is subsequently classified as ineligible.

 

3.2 Participating Employer. An Employer shall adopt the Plan by consenting to the election to participate of an Eligible Employee who is an employee of such entity.  Any such business entity that adopts this Plan agrees to the terms and conditions of this Plan as amended from time to time by the Sponsor and to the rules and procedures established by the Plan Administrator appointed by the Sponsor.

 

 

ARTICLE IV

RETIREMENT SAVINGS BENEFITS

 

4.1 Salary Reduction Contributions. Each Eligible Employee for a Plan Year may elect to have his or her Covered Compensation deferred through payroll withholding of an amount (expressed in whole percentages of Base Pay and/or Bonus Pay) up to 25% of Base Pay and/or Bonus Pay in accordance with this Section (referred to as a “Salary Reduction Contribution”).  An Eligible Employee may make separate deferral elections with respect to Base Pay and Bonus Pay.  The Plan Administrator, in its discretion, may prescribe all appropriate election rules and procedures.  An election under this selection shall be in writing or an electronic submission on a form delivered to the Eligible Employee by the Plan Administrator.

 

(a)           Deferrals of Base Pay.  An Eligible Employee may elect to defer his or her Base Pay by filing an election form with the Plan Administrator by the close of the calendar year preceding the year in which the Eligible Employee performs the services giving rise to the Base Pay to be deferred.  Such election shall be irrevocable as of December 31 of the calendar year preceding the calendar year to which such election applies.  An Eligible Employee must make a new election to defer Base Pay for each subsequent calendar year.  An Eligible Employee who fails to file an election form with the Plan Administrator by the close of each calendar year election period will be deemed to have elected to defer 0% of Base Pay for the subsequent calendar year.

 

(b)           Deferrals of Bonus Pay.  An Eligible Employee may elect to defer his or her Bonus Pay by filing an election form with the Plan Administrator in accordance with the rules described under Section 4.1(a) with respect to Base Pay.

 

(c)           First Year of Eligibility.  In the case of an employee who first becomes eligible to participate in the Plan, the election must be submitted within thirty days following the date of such initial eligibility.  For purposes of determining an employee’s first date of eligibility, all other plans maintained by the Employer shall be aggregated with the Plan to the extent required by Code Section 409A.  The election, once made, shall be irrevocable for the Plan Year.

 

For 2011, in accordance with Treas. Reg. §1.409A-2(a)(7)(ii), all Eligible Employees shall be treated as newly eligible to participate in the Plan and may submit elections pursuant to defer 

 

 

  

- 4 -

  

 

Covered Compensation earned on or after the effective date of this 2011 Restatement pursuant to procedures established by the Plan Administrator.

 

4.2 Salary Reduction Accounts. A separate memorandum account (the “Salary Reduction Account”) shall be established and maintained for each Participant with respect to deferred compensation payable pursuant to the Plan from each respective entity that is an Employer of such Participant.  The Plan Administrator shall record the dollar amount of the Salary Reduction Contribution of each Participant for each Plan Year to the Participant’s Salary Reduction Account established with respect to the Employer entity from whom such compensation was earned.  Within each Participant’s Salary Reduction Account, separate subaccounts shall be maintained to the extent necessary for the administration of the Plan.

 

The Salary Reduction Account shall be deemed invested as set forth in this Article.  The amount credited to the Aggregate Salary Reduction Accounts of a Participant shall be adjusted no less frequently than annually by the Plan Administrator to reflect earnings, losses, distributions, investment transfers and any other transactions attributable to the investment of the amounts credited to the Accounts of each Participant.  The Plan Administrator shall establish such accounting and recordkeeping rules and procedures as are reasonable in the circumstances (such as the nature of the investments) as it in its discretion shall determine; provided that such rules and procedures shall be applied uniformly to Participants in similar circumstances.  A date as of which the accounts of Participants are so adjusted is referred to in this Plan as a “Valuation Date.”

 

The amount credited to the Aggregate Salary Reduction Accounts of a Participant from time to time as of the most recent Valuation Date shall constitute the Benefit Amount of the Participant at such time.

 

4.3 Hypothetical Investments. Amounts credited to a Participant’s Aggregate Salary Reduction Accounts shall be deemed to be invested according to the Participant’s Investment Direction in one or more of the deemed Investment Funds selected by the Sponsor or the Plan Administrator.  For any period, the deemed return on each of these Investment Funds shall be the same as the return for such period on each similarly named fund selected by the Sponsor in its sole discretion.  The Sponsor may add to, decrease or change the Investment Funds offered under the Plan, at any time and for any reason.  Participants and Beneficiaries shall not have the right to continue any deemed investment in any particular Investment Fund and the Sponsor shall be under no obligation to invest amounts corresponding to any deemed investment in any particular Investment Fund chosen by Participants.  Any such deemed investment of any Salary Reduction Account or Grandfathered Salary Reduction Account shall be made solely for the purpose of determining the value of such account under the Plan.

 

 

  

- 5 -

  

 

4.4 Salary Reduction Contributions and Salary Reduction Accounts – Deemed Investment. The Plan Administrator in its sole discretion may establish such rules and investment direction procedures as are appropriate to administer all investment options.  Such rules and procedures may include limitations and restrictions on the time and manner of directing investment and reinvestment of amounts credited to individual Salary Reduction Accounts or Grandfathered Salary Reduction Accounts as appropriate to facilitate the administration of the Plan.  Salary Reduction Contributions shall be credited to the Investment Funds in accordance with a Participant’s Investment Direction.  A Participant shall direct that his or her Salary Reduction Contributions be allocated to deemed investments in any or all of the Investment Funds according to the procedures established by the Plan Administrator.

 

A Participant may elect to transfer amounts credited to his or her Aggregate Salary Deferral Accounts among the Investment Funds, at such time and in such manner as may be specified by the Plan Administrator from time to time.

 

4.5 Valuation. For purposes of the hypothetical investments hereunder, the Salary Reduction Contributions shall be considered to be invested on the date the recordkeeper of the Plan records such amounts.  As of each Valuation Date, the recordkeeper of the Plan shall determine the value of each Participant’s Aggregate Salary Reduction Accounts.

 

For purposes of distribution pursuant to Article V, the balance of each Participant’s Aggregate Salary Reduction Accounts shall be valued as of the Valuation Date immediately preceding the date that the Plan Administrator commences the processing of the distribution of the balance of such account, or the particular installment thereof.  Each Participant or his or her respective Beneficiary assumes the risk in connection with any decrease in value of his or her Aggregate Salary Reduction Accounts deemed invested in the Investment Funds.

 

4.6 Vesting. The amount credited from time to time to the Aggregate Salary Reduction Accounts of a Participant shall be fully vested and nonforfeitable.

 

 

ARTICLE V

PAYMENT OF BENEFITS

 

5.1 General Payment Provisions. A Participant’s Benefit Amount will be paid in the following manner:

 

(a)           Time and Form of Payment for Grandfathered Salary Reduction Accounts.  The Plan as in effect on October 3, 2004, without regard to any amendment thereafter, is referred to herein as the Prior Plan.  Payment of a Participant’s Grandfathered Salary Reduction Accounts as of December 31, 2004, as adjusted for earnings or losses in accordance with Sections 4.2 through 4.5 from time to time, shall be governed by the Prior Plan.

 

(b)           Election of Time and Form of Payment for Salary Reduction Accounts.  At the time of his or her deferral election, each Participant may elect to have the payment of the applicable Salary Reduction Account deferred with a Designated Pay-Out Schedule.  A “Designated Pay-Out Schedule” shall mean one of the following, as selected by the Participant:

 

(i)           a single lump-sum, payable upon January 1 of a specified year (which must be at least two years from the year in which the Covered Compensation would be payable without regard to this Plan);

 

 

  

- 6 -

  

 

(ii)           annual installments over a period of five, ten or fifteen years, beginning on January 1 of a specified year (which must be at least two years from the year in which the Covered Compensation would be payable without regard to this Plan);

 

(iii)           a single lump sum, payable upon Termination of Employment; or

 

(iv)           annual installments over a period of five, ten or fifteen years, payable upon Termination of Employment.

 

A Designated Pay-Out Schedule under (i) or (ii) above shall be referred to as an “In-Service Account.”

 

If no election as to a Designated Pay-Out Schedule is made, the Participant’s Salary Reduction Accounts will be payable in a single lump sum upon Termination of Employment.

 

Where payment in installments is elected, the amount of each installment payment shall be determined under the declining balance accounting method.  For example, a ten year installment payout would be paid as follows:  1/10th of the Salary Reduction Accounts in the first year; 1/9th of the remaining amount credited to the Salary Reduction Accounts in the second year; 1/8th of the remaining amount credited to the Salary Reduction Accounts in the third year; and so on, with the balance of the remaining amount credited to the Salary Reduction Accounts in the tenth year.

 

A Participant may elect to change the Designated Pay-Out Schedule for his Salary Reduction Account(s) subject to the requirements of Section 5.2(b).

 

(c)           Satisfaction of Amounts Due.  Payment to a Participant of his or her Benefit Amount shall constitute payment in full of the entire benefit or amount due the Participant under the Plan.

 

5.2 Time of Payment for Salary Reduction Accounts.

 

(a)           General Rule.  If a Participant’s Salary Reduction Account is an In-Service Account, such Salary Reduction Account shall be payable upon the earlier of his or her Termination of Employment or January 1 of the applicable year.  Otherwise, a Participant’s Salary Reductions Account shall be payable upon the Termination of Employment of the Participant.

 

All such payments will be in the form specified for such Salary Reduction Account by the Participant’s Designated Pay-Out Schedule.

 

(b)           Deferral of Payment Date.  A Participant may elect to change the time and/or form of payment of his Salary Reduction Account, if such election is filed in accordance with procedures established by the Plan Administrator, and:

 

(i)           such election shall not take effect until at least 12 months after the date on which the election is filed,

 

(ii)          the first payment with respect to which such election is made shall be deferred for a period of not less than 5 years from the date such payment would otherwise have been made, and

 

 

  

- 7 -

  

 

(iii)           any election related to a payment that was otherwise to be made at a specified time may not be made less than 12 months prior to the date of the first scheduled payment.

 

(c)           Certain Payments Upon Change in Control. Notwithstanding anything herein to the contrary, a Participant’s Salary Reduction Account(s) established prior to January 1, 2011 shall be payable upon a Change in Control of the Participant’s Employer in a single lump sum.

 

(d)           Six Month Delay for Specified Employees.  Notwithstanding Section 5.1(a), payment of a Participant’s Salary Reduction Account(s) by reason of Termination of Employment shall not be made or commence prior to the date which is 6 months after the date of a Participant’s Termination of Employment (for any reason other than death) in the case of a Participant who is determined to be a Specified Employee on the date of his or her Termination of Employment.  Any payments (with earnings or losses calculated in accordance with the provisions governing deemed investment of the Salary Reduction Account) shall be payable in a lump sum to the Participant as of the day after the last day of such 6-month period, and all other payments following such 6-month period shall be payable in accordance with the terms of the Plan and the Participant’s election.

 

5.3 Death Benefits.

 

Each Participant entitled to a Benefit Amount under the Plan shall be entitled to a death benefit equal to the entire Benefit Amount of the Participant.  Such benefit shall be payable to the Beneficiary of the Participant in a single lump sum as soon as administratively feasible after the death of the Participant.

 

Each Participant may designate a Beneficiary or Beneficiaries (contingently, consecutively or successively) of a death benefit and, from time to time, may change his or her designated Beneficiary.  A Beneficiary may be a trust.  A beneficiary designation shall be made in writing in a form prescribed by the Plan Administrator and delivered to the Plan Administrator while the Participant is alive.  If there is no designated Beneficiary surviving at the death of a Participant, payment of any death benefit of the Participant shall be made to the persons and in the proportions which any death benefit would be payable under the 401(k) Plan.

 

5.4 Actual Date of Payment. An amount payable on a date specified in Sections 5.2 or 5.3 shall be paid as soon as administratively feasible after such date; but no later than the later of (a) the end of the calendar year in which the specified date occurs; or (b) the 15th day of the third calendar month following such specified date, provided the Participant (or Beneficiary) is not permitted to designate the taxable year of the payment.  The payment date may be postponed further if calculation of the amount of the payment is not administratively practicable due to events beyond the control of the Participant (or Beneficiary), and the payment is made in the first calendar year in which the calculation of the amount of the payment is administratively practicable.

 

The amount due the Participant shall be the balance (or, in the case of installment payments, the applicable portion thereof) credited to the Salary Reduction Account of the Participant on the actual date of payment.

 

 

  

- 8 -

  

 

 

 

ARTICLE VI

SOURCES OF PAYMENTS

 

Benefits attributable to a Salary Reduction Account or Grandfathered Salary Reduction Account established with respect to an entity that it is an Employer under the Plan shall be paid by such entity out of its general assets or out of a trust established to assist the Employer in meeting its obligation sunder this Plan.  Any such trust shall conform in substance to the terms of the model trust described in Revenue Procedure 92-64, 1992-2 C.B. 422, with respect to the claim of Participants to assets of the Employer and such trust.  In no event shall any Participant be entitled to receive payment of an amount from the general assets of an Employer that the Participant received from such trust.  Except as specifically provided below, obligations to pay benefits due Participants under the Plan shall be the primary obligation of each respective entity that is an Employer.  A Participant shall not have any rights with respect to payment of benefits from any entity under the Plan other than the unsecured right to receive payments from such entity.  The Benefit Amount defines the amount payable by each respective entity that is an Employer to a Participant under the Plan.

 

An Employer shall not be obligated to set aside, earmark or escrow any funds or other assets to satisfy its obligation under this Supplemental Deferred Compensation Plan.  Any benefit payable in accordance with the terms of the Plan shall not be represented by a note or any evidence of indebtedness other than the promises contained in the Plan.

 

 

ARTICLE VII

PLAN ADMINISTRATOR

 

7.1 Plan Administrator. The Plan shall be administered by a person or committee appointed by the Sponsor as Plan Administrator.  The Plan Administrator may adopt such rules as it may deem necessary, desirable and appropriate to administer the Plan.  The decisions of the Plan Administrator, including but not limited to interpretations and determinations of amounts due under the Plan, shall be final and binding on all parties.

 

7.2 Standard of Conduct. The Plan Administrator shall perform its duties as the Plan Administrator and in its sole discretion shall determine what is appropriate in light of the reason and purpose for which the Plan is established and maintained.  The interpretation of all provisions of the Plan and the determination of whether a Participant or Beneficiary is entitled to any benefit pursuant to the terms of the Plan, shall be exercised by the Plan Administrator.

 

 

ARTICLE VIII

NONALIENATION OF BENEFITS

 

Except as may be required by the federal income tax withholding provisions of the Code or by the laws of any State, the interests of Participants and their Beneficiaries under the Plan are not subject to the claims of their creditors and may not be voluntarily or involuntarily sold, transferred, alienated, assigned, pledged, anticipated, or encumbered.  Any attempt by a Participant or his or her Beneficiary to sell, transfer, alienate, assign, pledge, anticipate, encumber, charge or otherwise dispose of any right to benefits payable hereunder shall be void.  The Employer may cancel and refuse to pay any portion of a benefit which is sold, transferred, alienated, assigned, pledged, anticipated or encumbered.  Notwithstanding the above, the Plan Administrator may distribute all or a portion of a Participant’s Salary 

 

 

  

- 9 -

  

 

Reduction Accounts to the extent necessary to comply with a domestic relations order (as defined in Section 414(p)(1)(B) of the Code).

 

 

ARTICLE IX

AMENDMENT AND TERMINATION

 

(a)           General.  Notwithstanding any other provision of the Plan, the Board may at any time, and from time to time, amend, in whole or in part, any or all of the provisions of the Plan, or suspend or terminate it entirely, retroactively or otherwise; provided, however, that any such amendment, suspension or termination may not, without the Participant’s consent, adversely affect the amount credited to his or her Salary Reduction Account for any calendar year ended prior to the effective date of such amendment, suspension or termination.

 

(b)           Salary Reduction Accounts.  With respect to Salary Reduction Accounts, the Sponsor may terminate the Plan, and distribute all vested accrued benefits, subject to the restrictions set forth in Treas. Reg. §1.409A-3(j)(4).  A termination of the Plan must comply with the provisions of Section 409A of the Code and the regulations and guidance promulgated thereunder, including, but not limited to, restrictions on the timing of final distributions and the adoption of future deferred compensation arrangements.

 

 

 

ARTICLE X

GENERAL PROVISIONS

 

10.1 Plan Not a Contract of Employment. Neither this Plan nor any elections hereunder shall create any obligation on the Sponsor or any Employer to establish or continue any other programs, plans or policies of any kind.  Neither this Plan nor any election made pursuant to this Plan shall give any Participant or other employee any right with respect to continuance of employment by the Sponsor or any Employer, nor shall there be a limitation in any way on the right of the Sponsor or any Employer by which an employee is employed to terminate his or her employment at any time.

 

10.2 Successors. The provisions of the Plan shall be binding upon the Employer and its successors and assigns and upon every Participant and his or her heirs, beneficiaries, estates and legal representatives.  In the event any business entity that was an Employer under the terms of this Plan should cease to qualify as such, because of a sale, merger, liquidation or any other transaction, such entity shall arrange for its obligations under the Plan to be assumed by one of its owners that is a member of the controlled group of business entities, as defined in Section 414(b) and (c) of the Code, that includes such entity.  On and after written notification of such assumption, an Employee shall have no further claim against such a former Employer.

 

10.3 Official Actions. Any action required to be taken by the Board pursuant to the Plan may be performed by any person or persons, including a committee, to which the Board delegates the authority to take actions of that kind.  Whenever under the terms of the Plan an entity or corporation is permitted or required to take some action, such action may be taken by an officer of the corporation who has been duly authorized by the Board or comparable governing body of such corporation or other entity to take actions of that kind.

 

 

  

- 10 -

  

 

This Plan and the obligations of the Employer hereunder shall be subject to all applicable federal and state laws, rules and regulations and to such approvals by any governmental or regulatory agency as may from time to time be required.  The Board may make such changes in this Plan as may be necessary or desirable, in the opinion of the Board, to comply with the laws, rules and regulations of any governmental or regulatory authority, or to be eligible for tax benefits under the Code, or any other laws or regulations of any federal, state, local or foreign government.

 

10.4 Liability. No member of the Board of the Sponsor, no employee of the Sponsor and no person nor member of the committee, if any, serving as Plan Administrator shall be liable for any act or action hereunder, whether of omission or commission, by any other member or employee or by any agent to whom duties in connection with the administration of the Plan have been delegated, or except in circumstances involving his or her bad faith, gross negligence or fraud, for anything done with legal counsel, who may be counsel for the Sponsor or other counsel, with respect to its obligations or duties hereunder, or with respect to any action or proceeding or any question of law, and shall not be liable with respect to any action taken or omitted by it in good faith pursuant to the advice of such counsel.

 

10.5 Governing Law. The terms and provisions of this Plan shall be construed according to the principles, and in the priority, as follows: first, in accordance with the meaning under, and which will bring the Plan into conformity with, section 409A of the Internal Revenue Code of 1986; and secondly, in accordance with the laws of the State of Missouri.  The Plan shall be deemed to contain the provisions necessary to comply with such laws.

 

10.6 Construction. Wherever any words are used herein in the singular form they shall be construed as though they were also used in the plural form in all cases where they would so apply.  The titles to sections of the Plan are intended solely as a convenience and shall not be used as an aid in construction of any provisions thereof.

 

10.7 Severability. In case any provision of the Plan shall be held illegal or invalid for any reason, such illegality or invalidity shall not affect the remaining provisions of the Plan, and the Plan shall be construed and enforced as if such illegal and invalid provisions had never been set forth.

 

10.8 Withholding. The Employer shall withhold from amounts due under the Plan the amount necessary to enable the Employer to remit to the appropriate government entity or entities on behalf of the Participant as may be required by the federal income tax withholding provisions of the Code, by an applicable state’s income tax, or by an applicable city, county or municipality’s earnings or income tax, or by an applicable city, county or municipality’s earnings or income tax act.  The Employer shall withhold from the payroll of, or collect from, a Participant the amount necessary to remit on behalf of the Participant any FICA taxes which may be required with respect to amounts accrued by a Participant hereunder, as determined by the Employer.

 

IN WITNESS WHEREOF, Charter Communications, Inc. has executed the foregoing instrument on this _____ day of _____________, 2011.

 

              CHARTER COMMUNICATIONS, INC.

 

              By: ___________________________________                                                                          

 

              Title:__________________________________

 

                                                                           

- 11 -ex10-a.htm

Exhibit 10.a

 

AGREEMENT AND PLAN OF MERGER

by and among

HXT Holdings, Inc.

HXT Acquisition Corp.

and

China Metal Holding, Inc.

Dated as of September 2, 2011

  

  

  

MERGER AGREEMENT

Merger Agreement (the “Agreement”) dated as of September 2, 2011 by and among HXT Holdings, Inc., a corporation formed under the laws of the State of Delaware (“HXTH”), HXT Acquisition Corp., a corporation newly formed under the laws of the State of Delaware and a wholly owned subsidiary of HXTH (the “Merger Sub”), and China Metal Holding, Inc., a corporation formed under the laws of the State of Delaware (“China Metal”).”   HXTH, the Merger Sub, and China Metal are referred to herein individually as a “Party” and collectively as the “Parties.”

PREAMBLE

WHEREAS, HXTH and China Metal have determined that a business combination between them is advisable and in the best interests of their respective companies and stockholders and presents an opportunity for their respective companies to achieve long-term strategic and financial benefits;

WHEREAS, HXTH has proposed to acquire China Metal pursuant to a merger transaction whereby, pursuant to the terms and subject to the conditions of this Agreement, China Metal shall become a wholly owned subsidiary of HXTH through the merger of China Metal with and into the Merger Sub (the “Merger”); and

WHEREAS, in the Merger, all issued and outstanding shares of capital stock of China Metal shall be cancelled and converted into the right to receive 9,200,000 shares of the common stock of HXTH (the “Merger Shares”);

NOW, THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties contained herein, the Parties, intending to be legally bound, hereby agree as follows:

CERTAIN DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth below:

“Applicable Law” means any domestic or foreign law, statute, regulation, rule, policy, guideline or ordinance applicable to the businesses of the Parties, the Merger and/or the Parties.

“DGCL” means Delaware General Corporation Law.

“Knowledge” means, in the case of HXTH or China Metal, a particular fact or other matter of which its Chief Executive Officer or the Chief Financial Officer is actually aware or which a prudent individual serving in such capacity could be expected to discover or otherwise become aware of in the course of conducting a reasonable review or investigation of the corporation and its business and affairs.

“Lien” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, claim, encumbrance, royalty interest, any other adverse claim of any kind in respect of such property or asset, or any other restrictions or limitations of any nature whatsoever.

“Material Adverse Effect” with respect to any entity or group of entities means any event, change or effect that has or would have a materially adverse effect on the financial condition, business or results of operations of such entity or group of entities, taken as a whole.

  

1

  

“Person” means any individual, corporation, partnership, trust or unincorporated organization or a government or any agency or political subdivision thereof.

“Surviving Entity” shall mean China Metal as the surviving entity in the Merger as provided in Section 1.04.

“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means:

(i) any income, alternative or add-on minimum tax, gross receipts tax, sales tax, use tax, ad valorem tax, transfer tax, franchise tax, profits tax, license tax, withholding tax, payroll tax, employment tax, excise tax, severance tax, stamp tax, occupation tax, property tax, environmental or windfall profit tax, custom, duty or other tax, impost, levy, governmental fee or other like assessment or charge of any kind whatsoever together with any interest or any penalty, addition to tax or additional amount imposed with respect thereto by any governmental or Tax authority responsible for the imposition of any such tax (domestic or foreign), and

(ii) any liability for the payment of any amounts of the type described in clause (i) above as a result of being a member of an affiliated, consolidated, combined or unitary group for any Taxable period, and

(iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) above as a result of any express or implied obligation to indemnify any other person.

“Tax Return” means any return, declaration, form, claim for refund or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

ARTICLE I

THE TRANSACTIONS

SECTION 1.01                    THE MERGER.

Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the  DGCL, at the Effective Time (as hereinafter defined), all China Metal Shares (as hereinafter defined) shall be cancelled and converted into the right to receive the Merger Shares.  In connection therewith, the following terms shall apply:

(a)           Exchange Agent.   Robert Brantl, Esq., counsel for HXTH, shall act as the exchange agent (the “Exchange Agent”) for the purpose of exchanging China Metal Shares for the Merger Shares.   At or prior to the Closing, HXTH shall deliver to the Exchange Agent the Merger Shares.

(b)           Conversion of Securities.

(i)           Conversion of China Metal Securities.  At the Effective Time, by virtue of the Merger and without any action on the part of HXTH, China Metal or the Merger Sub, or the holders of any of their respective securities:

(A)           Each of the issued and outstanding shares of common stock of China Metal (the “China Metal Shares”) immediately prior to the Effective Time shall be converted into and represent the right to receive, and shall be exchangeable for, one thousand (1,000) Merger Shares.

  

2

  

(B)           All China Metal Shares shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such shares shall cease to have any rights with respect thereto, except the right to receive the Merger Shares to be issued pursuant to this Section 1.01(b)(i)(A) upon the surrender of such certificate in accordance with Section 1.07, without interest.  No fractional shares may be issued; but each fractional share that would result from the Merger will be rounded to the nearest number of whole shares.

(ii)           Conversion of Merger Sub Stock.  At the Effective Time, by virtue of the Merger and without any action on the part of China Metal, HXTH, the Merger Sub, or the holders of any of their respective securities, each share of capital stock of Merger Sub outstanding immediately prior to the Effective Time shall be converted into one share of the common stock of the Surviving Entity and the shares of common stock of the Surviving Entity so issued in such conversion shall constitute the only outstanding shares of capital stock of the Surviving Entity and the Surviving Entity shall be a wholly owned subsidiary of HXTH.

(c)           Exemption from Registration.  The Parties intend that the issuance of the Merger Shares  shall be exempt from the registration requirements of the Securities Act pursuant to Section 4(2) of the Securities Act and the rules and regulations promulgated thereunder.

SECTION 1.02                     CLOSING.

The closing of the Share Purchase and the Merger (the “Closing”) will take place at the offices of Robert Brantl, Esq., counsel for China Metal, within one (1) business day following the satisfaction or waiver of the conditions precedent set forth in Article V or at such other date as HXTH and China Metal shall agree (the “Closing Date”), but in any event no later than September 30, 2011 unless extended by a written agreement of HXTH and China Metal.

SECTION 1.03                     MERGER; EFFECTIVE TIME.

At the Effective Time and subject to and upon the terms and conditions of this Agreement, Merger Sub shall, and HXTH shall cause Merger Sub to, merge with and into China Metal in accordance with the provisions of the DGCL, the separate corporate existence of Merger Sub shall cease and China Metal shall continue as the Surviving Entity.  The Effective Time shall occur upon the filing with the Secretary of State of the State of Delaware of a Certificate of Merger, executed in accordance with the applicable provisions of the DGCL (the “Effective Time”).  The date on which the Effective Time occurs is referred to as the “Effective Date.”  The Parties will cause the Certificate of Merger to be filed as soon as practicable after the Closing.

SECTION 1.04                     EFFECT OF THE MERGER.

The Merger shall have the effect set forth in Title 8, Section 259 of the DGCL.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of China Metal and Merger Sub shall vest in the Surviving Entity, and all debts, liabilities and duties of China Metal and Merger Sub shall become the debts, liabilities and duties of the Surviving Entity.

SECTION 1.05                     CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.

Pursuant to the Merger:

  

3

  

(a)           The Certificate of Incorporation and Bylaws of China Metal as in effect immediately prior to the Effective Time shall be the Certificate of Incorporation and Bylaws of the Surviving Entity immediately following the Merger.

(b)           The directors and officers of the China Metal immediately prior to the Merger shall be the directors and officers of the Surviving Entity subsequent to the Merger.

 

SECTION 1.06                     RESTRICTIONS ON RESALE

 

The Merger Shares issued will not be registered under the Securities Act, or the securities laws of any state, and cannot be transferred, hypothecated, sold or otherwise disposed of until:  (i) a registration statement with respect to such securities is declared effective under the Securities Act, or (ii) HXTH receives an opinion of counsel, reasonably satisfactory to HXTH, that an exemption from the registration requirements of the Securities Act is available.

The certificates representing the Merger Shares shall contain a legend substantially as follows:

“THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER SUCH ACT, OR HXT HOLDINGS, INC. RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER REASONABLY SATISFACTORY TO COUNSEL FOR HXT HOLDINGS, INC.  THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS AVAILABLE.”

SECTION 1.07                     EXCHANGE OF CERTIFICATES.

(a)           EXCHANGE OF CERTIFICATES.  After the Effective Time, the shareholders of China Metal (“China Metal Shareholders”) shall be required to surrender all their China Metal Shares to the Exchange Agent, and the China Metal Shareholders shall be entitled upon such surrender to receive in exchange therefor certificates representing the proportionate number of Merger Shares into which the China Metal Shares theretofore represented by the stock transfer forms so surrendered shall have been exchanged pursuant to this Agreement.  Until so surrendered, each outstanding certificate which, prior to the Effective Time, represented China Metal Shares shall be deemed for all corporate purposes, subject to the further provisions of this Article I, to evidence the ownership of the number of whole Merger Shares for which such China Metal Shares have been so exchanged.  No dividend payable to holders of Merger Shares of record as of any date subsequent to the Effective Time shall be paid to the owner of any certificate which, prior to the Effective Time, represented China Metal Shares, until such certificate or certificates representing all the relevant China Metal Shares, together with a stock transfer form, are surrendered as provided in this Article I or pursuant to letters of transmittal or other instructions with respect to lost certificates provided by the Exchange Agent.

(b)           FULL SATISFACTION OF RIGHTS.  All Merger Shares for which the China Metal Shares shall have been exchanged pursuant to this Article I shall be deemed to have been issued in full satisfaction of all rights pertaining to the China Metal Shares.

(c)           EXCHANGE OF CERTIFICATES.  All certificates representing China Metal Shares converted into the right to receive Merger Shares pursuant to this Article I shall be furnished to HXTH subsequent to delivery thereof to the Exchange Agent pursuant to this Agreement.

  

4

  

(d)           CLOSING OF TRANSFER BOOKS.  On the Effective Date, the stock transfer book of China Metal shall be deemed to be closed and no transfer of China Metal Shares shall thereafter be recorded thereon.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF HXTH

HXTH and , where applicable, the Merger Sub hereby jointly and severally represent and warrant to China Metal and to the China Metal Shareholders, as of the date of this Agreement, as of the Closing Date and as of the Effective Time, as follows:

SECTION 2.01                     ORGANIZATION, STANDING AND POWER.

HXTH is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has corporate power and authority to conduct its business as presently conducted by it and to enter into and perform this Agreement and to carry out the transactions contemplated by this Agreement.  Merger Sub is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has corporate power and authority to enter into and perform this Agreement and to carry out the transactions contemplated by this Agreement.

SECTION 2.02                     SUBSIDIARIES

HXTH owns all of the outstanding capital stock of the Merger Sub and of Heng Xing Technology Group Development Limited, a British Virgin Islands corporation (“Operating Sub”).  Other than its ownership of the Merger Sub and the Operating Sub, HXTH does not have an ownership interest in any Person.   Merger Sub is a recently formed corporation and prior to the date hereof and through the Effective Date, Merger Sub shall not conduct any operating business, become a party to any agreements, or incur any liabilities or obligations. Operating Sub is party to a Transfer Agreement pursuant to which HXTH will transfer ownership of Operating Sub to a third party immediately after the Closing (the “Transfer Agreement”).

SECTION 2.03                     CAPITALIZATION.

(a)           There are 61,000,000 shares of capital stock of HXTH authorized, consisting of 60,000,000 shares of common stock, $0.001 par value per share (the “HXTH Common Shares”), and 1,000,000 shares of preferred stock, $0.001 per share (“HXTH Preferred Shares”).  As of the date of this Agreement, there are 666,241 HXTH Common Shares issued and outstanding and no HXTH Preferred Shares are issued and outstanding.

(b)           All outstanding HXTH Common Shares are validly issued, fully paid, non-assessable, not subject to pre-emptive rights and have been issued in compliance with all state and federal securities laws or other Applicable Law.  The Merger Shares will, when issued pursuant to this Agreement, be duly and validly authorized and issued, fully paid and non-assessable.

SECTION 2.04                     AUTHORITY FOR AGREEMENT.

The execution, delivery, and performance of this Agreement by each of HXTH and Merger Sub has been duly authorized by all necessary corporate and shareholder action, and this Agreement, upon its execution by the Parties, will constitute the valid and binding obligation of each of HXTH and the  Merger Sub, enforceable against each of them in accordance with and subject to its terms, except as enforceability may be affected by bankruptcy, insolvency or other laws of general application affecting the enforcement of creditors' rights.  The execution and consummation of the transactions contemplated by this Agreement and compliance with its provisions by HXTH and Merger Sub will not violate any provision of Applicable Law and will not conflict with or result in any breach of any of the terms, conditions, or provisions of, or constitute a default under, HXTH's Articles of Incorporation, Merger Sub’s Certificate of Incorporation, or either of their Bylaws, in each case as amended, or, in any material respect, any indenture, lease, loan agreement or other agreement or instrument to which HXTH is a party or by which it or any of its properties is bound, or any decree, judgment, order, statute, rule or regulation applicable to HXTH or Merger Sub.

  

5

  

SECTION 2.05                     FINANCIAL CONDITION

The Annual Report on Form 10-K filed by HXTH for the year ended September 30, 2010 and the Quarterly Report on Form 10-Q filed by HXTH for the period ended June 30, 2011 (the “SEC Filings”) are true, correct and complete in all material respects, are not misleading and do not omit to state any material fact which is necessary to make the statements contained in such public filings not misleading in any material respect.  The financial statements included in the SEC Filings (the “Financial Statements”) were prepared in accordance with generally accepted accounting principles and fairly reflect the financial condition of HXTH as of the dates stated and the results of its operations for the periods presented.

SECTION 2.06                     ABSENCE OF CERTAIN CHANGES OR EVENTS.

Since June 30, 2011, except as contemplated by this Agreement:

(a)           there has not been any Material Adverse Change in the business, operations, properties, assets, or condition of HXTH;

(b)           HXTH has not (i) amended its Articles of Incorporation;  (ii) declared or made, or agreed to declare or make, any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any outstanding capital stock; (iii) made any material change in its method of management, operation, or accounting; (iv) entered into any material transaction other than the Transfer Agreement; or (v) made any accrual or arrangement for payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee;

(c)           HXTH has not (i) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (ii) paid any material obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the most recent HXTH balance sheet, and current liabilities incurred since that date in the ordinary course of business; (iii) sold or transferred, or agreed to sell or transfer, any material assets, properties, or rights, or canceled, or agreed to cancel, any material debts or claims, except pursuant to the Transfer Agreement; or (iv) made or permitted any material amendment or termination of any contract, agreement, or license to which it is a party.

SECTION 2.07                     GOVERNMENTAL AND THIRD PARTY CONSENTS

No consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other federal, state, county, local or other foreign governmental authority, instrumentality, agency or commission or any third party, including a party to any agreement with HXTH, the Operating Sub or Merger Sub, is required by or with respect to HXTH, the Operating Sub or Merger Sub in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under (i) applicable securities laws, or (ii) the DGCL.

  

6

  

SECTION 2.08                     LITIGATION

There is no action, suit, investigation, audit or proceeding pending against, or to the Knowledge of HXTH, threatened against or affecting, HXTH or the Merger Sub or the Operating Sub or any of their respective assets or properties before any court or arbitrator or any governmental body, agency or official.

SECTION 2.09                     COMPLIANCE WITH APPLICABLE LAWS.

To the Knowledge of HXTH, the business of each of HXTH, the Operating Sub and the Merger Sub has not been, and is not being, conducted in violation of any Applicable Law.

SECTION 2.10                     TAX RETURNS AND PAYMENT

HXTH has duly and timely filed all material Tax Returns required to be filed by it and has duly and timely paid all Taxes shown thereon to be due.  Except as disclosed in Financial Statements filed by HXTH with the SEC, there is no material claim for Taxes that is a Lien against the property of HXTH other than Liens for Taxes not yet due and payable, none of which is material.  HXTH has not received written notification of any audit of any Tax Return of HXTH being conducted or pending by a Tax authority where an adverse determination could have a Material Adverse Effect on HXTH, no extension or waiver of the statute of limitations on the assessment of any Taxes has been granted by HXTH which is currently in effect, and HXTH is not a party to any agreement, contract or arrangement with any Tax authority or otherwise, which may result in the payment of any material amount in excess of the amount reflected on the above referenced HXTH Financial Statements.

SECTION 2.11                     SECURITY LISTING

HXTH is a fully compliant reporting company under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and all HXTH public filings required under the Exchange Act have been made.  The common stock of HXTH is listed for quotation on the OTC Bulletin Board.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF CHINA METAL

China Metal hereby represents and warrants to HXTH and to Merger Sub, as of the date of this Agreement and as of the Effective Time (except as otherwise indicated), as follows:

SECTION 3.01                     ORGANIZATION, STANDING AND POWER.

China Metal is a privately held corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, and has full corporate power and authority to conduct its business as presently conducted by it and to enter into and perform this Agreement and to carry out the transactions contemplated by this Agreement.  China Metal is duly qualified to do business as a foreign corporation in each state in which the nature of the business conducted by it or the character or location of the properties and assets owned or leased by it make such qualification necessary.

  

7

  

SECTION 3.02                     CAPITALIZATION.

There are 9,200 issued and outstanding shares of common stock of China Metal with $.00001 par value (the “China Metal Common Shares”).  No China Metal Common Shares have been reserved for issuance to any Person, and there are no outstanding rights, warrants, options or agreements for the purchase of China Metal Common Shares.   No Person is entitled to any rights with respect to the conversion, exchange or delivery of the China Metal Common Shares.  The China Metal Common Shares have been issued in compliance with Applicable Law.

SECTION 3.03                     AUTHORITY FOR AGREEMENT.

The execution, delivery and performance of this Agreement by China Metal has been duly authorized by all necessary corporate action, and this Agreement constitutes the valid and binding obligation of China Metal, enforceable against China Metal in accordance with its terms, except as enforceability may be affected by bankruptcy, insolvency or other laws of general application affecting the enforcement of creditors' rights.  The execution and consummation of the transactions contemplated by this Agreement and compliance with its provisions by China Metal will not violate any provision of Applicable Law and will not conflict with or result in any breach of any of the terms, conditions, or provisions of, or constitute a default under, China Metal’s Certificate of Incorporation or Bylaws, in each case as amended, or, to the Knowledge of China Metal, in any material respect, any indenture, lease, loan agreement or other agreement instrument to which China Metal is a party or by which it or any of its  properties are bound, or any decree, judgment, order, statute, rule or regulation applicable to China Metal.

SECTION 3.04                     GOVERNMENTAL OR THIRD PARTY CONSENT

No consent, waiver, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other federal, state, county, local or other foreign governmental authority, instrumentality, agency or commission or any third party, including a party to any agreement with China Metal, is required by or with respect to China Metal in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for such consents, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under (i) applicable securities laws, or (ii) the DGCL.

SECTION 3.05                     LITIGATION

There is no action, suit, investigation, audit or proceeding pending against or, to the Knowledge of China Metal, threatened, against or affecting China Metal or any of its material assets or properties before any court or arbitrator or any governmental body, agency or official.

SECTION 3.06                     COMPLIANCE WITH APPLICABLE LAWS.

To the Knowledge of China Metal, the business of China Metal (including the business of its subsidiary, Changzhou Huayue Electronic Co. Ltd. (“Huayue”)), has not been, and is not being, conducted in violation of any Applicable Law, except for possible violations which individually or in the aggregate have not had and are not reasonably likely to have a Material Adverse Effect on China Metal.

SECTION 3.07                     TAX RETURNS AND PAYMENT

China Metal and Huayue have duly and timely filed all material Tax Returns required to be filed by it and has duly and timely paid all Taxes shown thereon to be due, except as reflected in China Metal Financial Statements heretofore delivered to HXTH and except for Taxes being contested in good faith.  Subject to the foregoing, to the Knowledge of China Metal, except as disclosed in the China Metal Financial Statements, there is no material claim for Taxes that is a Lien against the property of China Metal other than Liens for Taxes not yet due and payable, none of which is material.  China Metal has not received written notification of any audit of any Tax Return of China Metal being conducted or pending by a Tax authority where an adverse determination could have a Material Adverse Effect on China Metal, no extension or waiver of the statute of limitations on the assessment of any Taxes has been granted by China Metal which is currently in effect, and China Metal is not a party to any agreement, contract or arrangement with any Tax authority or otherwise, which may result in the payment of any material amount in excess of the amount reflected on the China Metal Financial Statements.

  

8

  

SECTION 3.08                     FINANCIAL CONDITION

The financial statements of China Metal for the years ended May 31, 2011 and 2010 previously delivered to HXTX (the “China Metal Financial Statements”) were prepared in accordance with generally accepted accounting principles and fairly reflect the financial condition of HXTH as of the dates stated and the results of its operations for the periods presented.

SECTION 3.09                     ABSENCE OF CERTAIN CHANGES OR EVENTS.

Since May 31, 2011, except as contemplated by this Agreement:

(a)           there has not been any Material Adverse Change in the business, operations, properties, assets, or condition of China Metal (including Huayue);

(b)           neither China Metal nor Huayue has (i) amended its Articles of Incorporation;  (ii) declared or made, or agreed to declare or make, any payment of dividends or distributions of any assets of any kind whatsoever to stockholders or purchased or redeemed, or agreed to purchase or redeem, any outstanding capital stock; (iii) made any material change in its method of management, operation, or accounting; (iv) entered into any material transaction; or (v) made any accrual or arrangement for payment of bonuses or special compensation of any kind or any severance or termination pay to any present or former officer or employee;

(c)           neither China Metal nor Huayue has (i) borrowed or agreed to borrow any funds or incurred, or become subject to, any material obligation or liability (absolute or contingent) except liabilities incurred in the ordinary course of business; (ii) paid any material obligation or liability (absolute or contingent) other than current liabilities reflected in or shown on the May 31, 2011 China Metal balance sheet, and current liabilities incurred since that date in the ordinary course of business; (iii) sold or transferred, or agreed to sell or transfer, any material assets, properties, or rights, or canceled, or agreed to cancel, any material debts or claims; or (iv) made or permitted any material amendment or termination of any contract, agreement, or license to which it is a party.

ARTICLE IV

CONDITIONS PRECEDENT

SECTION 4.01                     CONDITIONS PRECEDENT TO THE PARTIES' OBLIGATIONS.

The obligations of the Parties as provided herein shall be subject to each of the following conditions precedent, unless waived in writing by both HXTH and China Metal:

(a)           Consents, Approvals.  The Parties shall have obtained all necessary consents and approvals of their respective boards of directors, and all consents, approvals and authorizations required under their respective charter documents, and all material consents, including any material consents and waivers by the Parties’ respective lenders and other third-parties, if necessary, to the consummation of the transactions contemplated by this Agreement.

  

9

  

(b)           Shareholder Approval.  This Agreement and the transactions contemplated hereby shall have been approved by the shareholders of China Metal in accordance with the applicable provisions of the DGCL and its bylaws.

(c)           Absence of Certain Litigation.  No action or proceeding shall be threatened or pending before any governmental entity or authority which, in the reasonable opinion of counsel for the Parties, is likely to result in a restraint, prohibition or the obtaining of damages or other relief in connection with this Agreement or the consummation of the transactions contemplated hereby.

(d)           Transfer Agreement.  HXTH shall have entered into the Transfer Agreement pursuant to which the Operating Sub shall be assigned to Li Yuan Qing in exchange for the undertaking by Li Yuan Qing to indemnify HXTH and its affiliates against liabilities of the Operating Sub.

SECTION 4.02                    CONDITIONS PRECEDENT TO THE OBLIGATIONS OF HXTH

The obligations of HXTH on the Closing Date as provided herein shall be subject to the satisfaction, on or prior to the Closing Date, of the following conditions precedent, unless waived in writing by HXTH:

(a)           Representations and Warranties.  The representations and warranties by China Metal in Article III herein shall be true and accurate in all material respects on and as of the Closing Date with the same force and effect as though such representations and warranties had been made at and as of the Closing Date.

(b)           Due Diligence.  HXTH shall have completed to its own satisfaction due diligence in relation to China Metal.

SECTION 4.03                    CONDITIONS PRECEDENT TO THE OBLIGATIONS OF CHINA METAL

The obligations of China Metal on the Closing Date as provided herein shall be subject to the satisfaction, on or prior to the Closing Date, of the following conditions precedent, unless waived in writing by China Metal:

(a)           Representations And Warranties.  The representations and warranties by HXTH and Merger Sub in Article II herein shall be true and accurate in all material respects on and as of the Closing Date with the same force and effect as though such representations and warranties had been made at and as of the Closing Date.

(b)           Due Diligence.  China Metal shall have completed to its own satisfaction due diligence in relation to HXTH;

(c)           HXTH Board of Directors.  At the Effective Time of the Merger or in accordance with applicable law, all of the officers and members of the board of directors of HXTH shall tender their resignations as officers and directors of HXTH, after filling the vacancies created on the HXTH board of directors with persons designated by the Board of Directors of China Metal, all subject to the passage of ten days from the date on which HXTH shall have filed with the SEC and mailed to its shareholders of record an information statement containing the information required by SEC Rule 14f-1, which shall be provided by China Metal.

  

10

  

ARTICLE V

MISCELLANEOUS

SECTION 5.01                     EXPENSES.

Except as contemplated by this Agreement, all costs and expenses incurred in connection with this Agreement and the consummation of the transactions contemplated by this Agreement shall be paid by the Party incurring such expenses.

SECTION 5.02                     APPLICABLE LAW

This Agreement shall be governed by the laws of the State of  Delaware, without giving effect to the principles of conflicts of laws thereof, as applied to agreements entered into and to be performed in such state.

SECTION 5.03                     NOTICES.

All notices and other communications under this Agreement shall be in writing and shall be deemed to have been duly given or made as follows:

(a)           If sent by reputable overnight air courier (such as Federal Express), 2 business days after being sent;

(b)           If sent by facsimile transmission, with a copy mailed on the same day in the manner provided in clause (a) above, when transmitted and receipt is confirmed by the fax machine; or

(c)           If otherwise actually personally delivered, when delivered.

All notices and other communications under this Agreement shall be sent or delivered as follows:

If to China Metal, to:

Huakang Zhou

18 Quail Run

Warren, NJ  07059

Facsimile:   973-966-8870

If to HXTH, to:

Li Yuan Qing

Shenzhen Hengtaifeng Technology Co., Ltd.

No. 5 Floor 6, Block A, Skyworth Bldg.

Hi-Tech Industrial Park, Nanshan District

Shenzhen, P.R. China 518057

Facsimile:

  with a copy to (which shall not constitute notice):

Robert Brantl, Esq.

52 Mulligan Lane

Irvington, NY 10533

Facsimile:   914-693-1807

Each Party may change its address by written notice in accordance with this Section.

  

11

  

SECTION 5.04                     COUNTERPARTS.

This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which shall be considered one and the same agreement.

SECTION 5.05                     NO THIRD PARTY BENEFICIARIES.

Except as expressly provided by this Agreement, nothing herein is intended to confer upon any person or entity not a Party to this Agreement any rights or remedies under or by reason of this Agreement.

IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the date first above written.

HXT HOLDINGS, INC.

	
By:

	
/s/ Li Yuan Qing

	
Name:

	
Li Yuan Qing

	
Title:

	
Chief Executive Officer

HXT ACQUISITION CORP.

	
By:

	
/s/ Li Yuan Qing

	
Name:

	
Li Yuan Qing

	
Title:

	
Chief Executive Officer

CHINA METAL HOLDING, INC.

	
By:

	
/s/ Huakang Zhou

	
Name:

	
Huakang Zhou

	
Title:

	
President

 

 

12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00194-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00194-of-00352.parquet"}]]