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
