China MediaExpress Holdings, Inc. (fka CCME)

[v80alue]

Details for Starr agreement is not in 10k. it is here

http://www.sec.gov/Archives/edgar/data/1236615/000134100410000246/exhibit_e.htm

I made mistake yesterday to think Starr would gain full control of CCME. Instead if founding members can not pay penalty, Starr will liquidate CCME at 7x earning. so the whole agreement is hinged on an auditted financial report to SEC. Cheng as well as Lin brothers can't ignore that. Of course Cheng can hide but Lin brothers can't.

10k does lay out the result in plain English about what will happen for Starr's victory in arbitration. quoted below

If CME Does Not Meet Performance Targets Specified in its Financing Documents, it Could be Required to Pay Significant Cash Penalties and/or a Change of Control May Take Place

Pursuant to the terms of an investor rights agreement, the Company is required to pay certain performance adjustment amounts to Starr in the event the Company’s audited consolidated net profits (“ANCP”) for 2009, 2010 or 2011 are less than US$42,000,000, US$55,000,000 and US$70,000,000, respectively (each, a “Profits Target”). The Performance Adjustment Amount payable in any of 2009, 2010 or 2011 will be a fraction of US$343,462,957 proportionate to the amount by which the Company’s ANCP in such year falls short of the then applicable Profits Target. The Performance Adjustment Amounts will be payable in cash or stock, but only to the extent such stock, together with the shares of Common Stock acquired or acquirable as a result of Starr’s ownership of the Purchased Shares, the Purchased Warrants and the Transferred Shares, will not exceed 19.9% of the total number of shares of Common Stock issued and outstanding as of the date of the Purchase Agreement.

In addition, as long as Starr owns at least 3% of the issued and outstanding shares of CME’s common stock, on a fully diluted, as-if-converted basis, it will also have the right (the “Put Right”) to require the founding stockholders of HKMDF to purchase all the securities held by it if any of the following occurs: (1) the Company’s ACNP for 2012 is less than its ACNP for 2011; (2) the Company fails to achieve 50% of any Profits Target for any of 2009, 2010 or 2011; or (3) the Company or certain of such founding stockholder materially breaches certain provisions of the investment documents.

In the event such founding stockholders do not comply with their obligation to purchase Starr’s shares under the foregoing provisions, Starr will have the right to require the founding stockholders to sell up to all of the Company’s capital stock directly or indirectly held by them to a third party pursuant to a managed sale process. In the event such sales take place or of any of the foregoing penalties are imposed, there could be a material adverse effect on our business, results of operation and financial condition.