DEFM14A 1 y78076dmdefm14a.htm DEFINITIVE PROXY STATEMENT defm14a
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
SCHEDULE 14A
(Rule 14a-101)
 
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
 
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. 5)
 
Payment of Filing Fee (Check the appropriate box):
 
Filed by the Registrant þ
 
Filed by a Party other than the Registrant o
 
Check the appropriate box:
 
o  Preliminary Proxy Statement
o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ  Definitive Proxy Statement
o  Definitive Additional Materials
o  Soliciting Material Pursuant to §240.14a-12
 
TM ENTERTAINMENT AND MEDIA, INC.
(Name of Registrant as Specified in its Charter)
 
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
 
o   No fee required.
 
o   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
  (1)   Title of each class of securities to which transaction applies:
 
  (2)   Aggregate number of securities to which transaction applies:
 
  (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
 
  (4)   Proposed maximum aggregate value of transaction:
 
  (5)   Total fee paid:
 
þ   Fee paid previously with preliminary materials: $17,220
 
o   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
  (1)   Amount Previously Paid:
 
 
  (2)   Form, Schedule or Registration Statement No.:
 
 
  (3)   Filing Party:
 
 
  (4)   Date Filed:
 
 


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TM ENTERTAINMENT AND MEDIA, INC.
307 EAST 87TH STREET
NEW YORK, NEW YORK 10128
October 2, 2009
 
TO THE STOCKHOLDERS OF
 
TM ENTERTAINMENT AND MEDIA, INC.
 
You are cordially invited to attend the special meeting (the “Special Meeting”) of stockholders of TM Entertainment and Media, Inc., a Delaware corporation (“TM”), to be held at 10:00 a.m., local time, on October 15, 2009. At the Special Meeting, you will be asked to consider, among other things, proposals relating to the purchase of all of the issued and outstanding capital stock of Hong Kong Mandefu Holding Limited (“CME”) resulting in CME becoming a direct wholly-owned subsidiary of TM.
 
The Proxy Statement following this letter is dated October 2, 2009 and is first being mailed to TM stockholders on or about October 5, 2009.
 
CME operates the largest digital television advertising network on inter-city express buses in China. CME commenced operations in the advertising industry in November 2003 as one of the first participants in advertising on inter-city express buses in China. All of the issued and outstanding capital stock of CME is owned by Zheng Cheng, Thousand Space Holdings Limited and Bright Elite Management Limited (collectively, the “Sellers”).
 
The Special Meeting will be held at 10:00 a.m. local time, on October 15, 2009, at the offices of Morrison Cohen LLP located at 909 Third Avenue, New York, New York 10022. At this important meeting, you will be asked to consider and vote upon the following proposals:
 
• to amend TM’s Amended and Restated Certificate of Incorporation to remove the prohibition on the consummation of a Business Combination if holders of an aggregate of 30% or more in interest of the shares of our common stock issued in our initial public offering (“IPO Shares”) exercise their conversion rights (the “Initial Charter Amendment Proposal No. 1”);
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to remove the requirement that only holders of the IPO Shares who vote against the Transaction (as defined below) may convert their IPO Shares into cash (the “Initial Charter Amendment Proposal No. 2”); (FOR THE AVOIDANCE OF DOUBT, CONSISTENT WITH TM’S IPO PROSPECTUS, THE 2,250,000 SHARES ISSUED TO THE FOUNDERS OF TM SHALL NOT BE PERMITTED TO CONVERT OR OTHERWISE PARTICIPATE IN THE LIQUIDATION OF THE TRUST ACCOUNT SHOULD TM LIQUIDATE.)
 
  •  to approve the purchase by TM of CME pursuant to a Share Exchange Agreement (the “Share Exchange Agreement”) dated as of May 1, 2009 among TM, CME, the Sellers, Fujian Zong Heng Express Information Technology Co., Ltd., Fujian Fenzhong Media Co., Ltd., Ou Wen Lin and Qingping Lin (referred to as the “Transaction”) and the transactions contemplated thereby (the “Transaction Proposal”);
 
  •  to approve the issuance of shares (the “Share Issuance Proposal”) of TM common stock, par value $0.001 (“TM Common Stock”) pursuant to the Share Exchange Agreement to the Sellers (whereby the number of shares of TM Common Stock that will be issued to the Sellers is 20.915 million with the possibility for the Sellers to earn up to an additional 15.0 million shares subject to the achievement of certain net income targets);
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to change TM’s corporate name to “China MediaExpress Holdings, Inc.,” delete certain provisions that relate to us as a blank check company and create perpetual existence (the “Charter Amendment Proposal”);
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to increase the number of shares authorized for issuance (the “Authorized Share Increase Proposal”);
 
  •  to elect six persons to TM’s board of directors to serve for the respective term of office of the class to which the nominee is elected and until their successors are duly elected and qualified (the “Election of Directors Proposal”); and
 
  •  to approve any adjournment or postponement of the Special Meeting to a later date or time or dates or times if necessary for the purpose of soliciting additional proxies (the “Adjournment Proposal”).


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Please be aware that if the Transaction is completed, each holder of IPO Shares who votes such shares either “FOR” or “AGAINST” the Transaction may, at the time of such vote, elect to convert those IPO Shares to cash following the procedures described in this document.
 
Pursuant to TM’s Amended and Restated Certificate of Incorporation, TM is required to obtain stockholder approval of the Transaction. Pursuant to certain rules of the NYSE Amex, TM is required to obtain stockholder approval of the issuance of TM Common Stock in connection with the Transaction. In addition, TM and CME have agreed that they will work together to, subject to stockholder approval, use their commercially reasonable efforts to cause the name of TM to be changed to “China MediaExpress Holdings, Inc.” (or such other name as TM and the Sellers mutually agree upon) immediately after the consummation of the Transaction.
 
The Transaction Proposal is conditioned upon the approval of the Initial Charter Amendment Proposal No. 2 and, in the event the Initial Charter Amendment Proposal No. 2 does not receive the necessary vote to approve that proposal, then the Transaction Proposal will not be presented for approval. Each of the Share Issuance Proposal, the Charter Amendment Proposal and the Authorized Share Increase Proposal are conditioned upon the approval of the Transaction Proposal and, in the event the Transaction Proposal does not receive the necessary vote to approve that proposal, then none of those proposals will be presented for approval. If the Transaction Proposal is approved but the Share Issuance Proposal or the Charter Amendment Proposal are not approved, TM could be deemed to have failed to perform certain covenants under the Share Exchange Agreement, allowing the Sellers to terminate the Share Exchange Agreement or seek indemnification thereunder.
 
The Election of Directors Proposal and the Adjournment Proposal are not conditioned upon the approval of any of the other proposals, but if the Transaction Proposal is not approved, none of the proposals will be presented for approval.
 
In connection with the vote required for the Transaction, our pre-IPO stockholders (our “Initial Stockholders”), directors and officers have previously agreed to vote all of the 2,250,000 shares of TM Common Stock which are beneficially owned by them, representing approximately 18.0% of the shares of TM Common Stock outstanding as of the record date, in accordance with the vote of the majority of shares of TM Common Stock voted by the public shareholders other than our Initial Stockholders (our “public stockholders”). This voting arrangement does not apply to any other shares our Initial Stockholders may purchase in the future. Accordingly, they may vote these shares on a proposed business combination any way they chose. Currently, our Initial Stockholders do not own any shares of TM Common Stock which are not subject to this voting arrangement. In addition, TM’s officers, directors, initial stockholders or their affiliates who may purchase IPO Shares, would be entitled to convert such shares in accordance with the procedures described in this Proxy Statement. In no event will our Initial Stockholders be entitled to convert the 2,250,000 shares they acquired before the IPO. Currently, no such persons own such IPO Shares and should they acquire such IPO Shares, they do not intend to exercise conversion rights with respect thereto. The ability of TM’s officers, directors, initial stockholders and their affiliates to convert any IPO Shares they purchase to help secure approval of the Transaction may facilitate the purchase of more shares for this purpose.
 
In addition, if the Initial Charter Amendment Proposal No. 2 is approved and the Transaction is consummated, each public stockholder who votes either for or against the Transaction will have the right to contemporaneously elect to have his or her shares of TM Common Stock converted into cash regardless of whether he or she votes for or against the Transaction. If the Initial Charter Amendment Proposal No. 2 is not approved by the affirmative vote of the holders of a majority of the outstanding shares of our common stock on the record date, the Transaction Proposal will not be presented to the stockholders for a vote and the Transaction will not be consummated. The per share conversion price will be calculated as of two business days prior to the consummation of the Transaction, and will equal the amount in the trust account (the “Trust Account”) into which were placed the proceeds of our initial public offering (the “IPO”), divided by the number of shares sold in our IPO (10,255,000). As of August 31, 2009, $81,075,868 (equating to approximately $7.91 per share), net of taxes payable, was in the Trust Account.
 
TM will proceed with the Transaction only if (1) the Initial Charter Amendment Proposal No. 2 is approved, and (2) a majority of the shares of common stock present at the meeting and voted by the public stockholders are voted in favor of the Transaction. The Initial Stockholders have previously agreed not to demand conversion of any shares of TM Common Stock owned by them.
 
If a stockholder vote on this Transaction is held and the Transaction is not approved, TM will not try to consummate a business combination with a different target. If TM does not consummate a business combination


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by October 17, 2009, its corporate existence will cease by operation of law and it will promptly distribute only to its public stockholders (including its existing stockholders to the extent they have purchased shares in its IPO or in the aftermarket) the amount in the Trust Account (including any accrued interest then remaining in the Trust Account) plus any remaining net assets. If a liquidation were to occur, based on the amount in the Trust Account as of August 31, 2009, $81,075,868, net of estimated taxes payable), the initial per share liquidation price would be approximately $7.91. Because the Trust Account will continue to earn interest and incur taxes on such interest until the date of liquidation, and because the Trust Account may be subject to the claims of creditors, the actual liquidation price may be more or less than approximately $7.91 per share.
 
TM shares of common stock, warrants and units are quoted on the NYSE Amex under the symbols “TMI”, “TMI.WS” and “TMI.U,” respectively. On September 25, 2009, the closing price of TM Common Stock, warrants and units was $7.90, $0.20 and $7.80, respectively.
 
After careful consideration, TM’s board of directors unanimously recommends that you vote or give instruction to vote “FOR” the approval of each of the following proposals: (i) the Initial Charter Amendment No. 1, (ii) the Initial Charter Amendment No. 2, Proposal, (iii) the Transaction Proposal, (iv) the Share Issuance Proposal, (v) the Charter Amendment Proposal, (vi) the Authorized Share Increase Proposal, (vii) the Election of Directors Proposal, and (viii) the Adjournment Proposal.
 
The accompanying Proxy Statement provides detailed information concerning the foregoing proposals and certain additional information, including, without limitation, the information set forth under the section entitled “Risk Factors”, all of which you are urged to read carefully. It is important that your TM Common Stock be represented at the Special Meeting, regardless of the number of shares you hold. Therefore, please sign, date and return your proxy card as soon as possible, whether or not you plan to attend the Special Meeting. This will not prevent you from voting your shares in person if you subsequently choose to attend the Special Meeting.
 
Certain financial and other information from TM’s annual report on Form 10-K for the fiscal year ended December 31, 2008 and from TM’s quarterly report on Form 10-Q for the six months ended June 30, 2009 is included in the accompanying Proxy Statement.
 
I look forward to seeing you at the Special Meeting.
 
Sincerely,
 
/s/  Theodore S. Green
Theodore S. Green
Chairman of the Board, Co-Chief Executive Officer
and Interim Chief Financial Officer
 
YOUR VOTE IS IMPORTANT, WHETHER OR NOT YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE PROMPTLY VOTE YOUR SHARES AND SUBMIT YOUR PROXY BY TELEPHONE OR BY INTERNET, OR BY COMPLETING, SIGNING, DATING AND RETURNING YOUR PROXY FORM IN THE ENCLOSED ENVELOPE. IF YOU RETURN A PROXY WITH YOUR SIGNATURE BUT WITHOUT AN INDICATION OF HOW YOU WISH TO VOTE, YOUR PROXY WILL BE VOTED “FOR” EACH OF THE PROPOSALS.
 
SEE “RISK FACTORS” FOR A DISCUSSION OF VARIOUS FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH THE PROPOSED ACQUISITION SINCE, UPON THE CONSUMMATION OF THE TRANSACTION, THE OPERATIONS AND ASSETS OF CME WILL ESSENTIALLY CONSTITUTE ALL OF THE OPERATIONS AND ASSETS OF TM.
 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTION, PASSED UPON THE MERITS OR FAIRNESS OF THE TRANSACTION OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
 
This Proxy Statement is dated October 2, 2009 and is first being mailed to TM stockholders on or about October 5, 2009.


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TM ENTERTAINMENT AND MEDIA, INC.
307 EAST 87TH STREET
NEW YORK, NEW YORK 10128
 
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER 15, 2009
 
TO THE STOCKHOLDERS OF
 
TM ENTERTAINMENT AND MEDIA, INC.:
 
NOTICE IS HEREBY GIVEN that the special meeting (the “Special Meeting”) of stockholders of TM Entertainment and Media, Inc., a Delaware corporation (“TM”), will be held at 10:00 a.m., local time, on October 15, 2009, at the offices of Morrison Cohen LLP located at 909 Third Avenue, New York, New York 10022 for the purpose of considering and voting upon the following proposals:
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to remove the prohibition on the consummation of a Business Combination if holders of an aggregate of 30% or more in interest of the shares of our common stock issued in our initial public offering (“IPO Shares”) exercise their conversion rights (the “Initial Charter Amendment Proposal No. 1”);
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to remove the requirement that only holders of the IPO Shares who vote against the Transaction (as defined below) may convert their IPO Shares into cash (the “Initial Charter Amendment Proposal No. 2”); (FOR THE AVOIDANCE OF DOUBT, CONSISTENT WITH TM’S IPO PROSPECTUS, THE 2,250,000 SHARES ISSUED TO THE FOUNDERS OF TM SHALL NOT BE PERMITTED TO CONVERT OR OTHERWISE PARTICIPATE IN THE LIQUIDATION OF THE TRUST ACCOUNT SHOULD TM LIQUIDATE.)
 
  •  to approve the purchase by TM of all of the issued and outstanding capital stock of Hong Kong Mandefu Holding Limited (“CME”) pursuant to a Share Exchange Agreement (the “Share Exchange Agreement”) dated as of May 1, 2009 among TM, CME, Zheng Cheng, Thousand Space Holdings Limited and Bright Elite Management Limited (collectively, the “Sellers”), Fujian Zong Heng Express Information Technology Co., Ltd., Fujian Fenzhong Media Co., Ltd., Ou Wen Lin and Qingping Lin, referred to as the “Transaction” and the transactions contemplated thereby (the “Transaction Proposal”), resulting in CME becoming a direct wholly-owned subsidiary of TM;
 
  •  to approve the issuance of shares (the “Share Issuance Proposal”) of TM common stock, par value $0.001 per share (“TM Common Stock”), pursuant to the Share Exchange Agreement to the Sellers (whereby the number of shares of TM Common Stock that will be issued to the Sellers is 20.915 million with the possibility for the Sellers to earn up to an additional 15.0 million shares subject to the achievement of certain net income targets;
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to change TM’s corporate name to “China MediaExpress Holdings, Inc.,” delete certain provisions that relate to us as a blank check company and create perpetual existence (the “Charter Amendment Proposal”);
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to increase the number of shares authorized for issuance (the “Authorized Share Increase Proposal”);
 
  •  to elect six persons to CME’s board of directors to serve for the respective term of office of the class to which the nominee is elected and until their successors are duly elected and qualified (the “Election of Directors Proposal”); and
 
  •  to approve any adjournment or postponement of the Special Meeting to a later date or time or dates or times if necessary for the purpose of soliciting additional proxies (the “Adjournment Proposal”).
 
Please be aware that if the Transaction is completed, each holder of IPO Shares who votes such shares either “FOR” or “AGAINST” the Transaction may, at the time of such vote, elect to convert those IPO Shares to cash following the procedures described in this document.


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Our board of directors has fixed the close of business on September 21, 2009 as the record date (the “Record Date”) for determining TM stockholders entitled to receive notice of and vote at the Special Meeting and any adjournment or postponement thereof. Only holders of record of TM Common Stock on that date are entitled to have their votes counted at the Special Meeting or any adjournment or postponement.
 
Your vote is important.  Please submit your proxy card as soon as possible to make sure that your shares are represented at the Special Meeting.
 
If you are a stockholder of record, you may also cast your vote in person at the Special Meeting. If your shares are held of record by a broker, bank or nominee, you may provide the record holder of your shares with instructions on how to vote your shares, or you may also cast your vote in person at the Special Meeting by obtaining a proxy from your broker, bank or nominee.
 
On the Record Date, there were 12,505,000 outstanding shares of TM Common Stock, of which 10,255,000 were issued to the public in TM’s initial public offering (the “IPO”; such shares, the “IPO Shares”) and 2,250,000 were issued prior to its IPO to its Initial Stockholders, each of which is entitled to one vote per share at the Special Meeting. The holders of the shares issued prior to TM’s IPO are beneficially held by its directors and executive officers, each of whom has agreed to vote all of his shares with respect to the Transaction Proposal only in accordance with the majority of the votes cast by the holders of the IPO Shares. If holders of a majority of the IPO Shares voting in person or by proxy at the Special Meeting vote against, or abstain with respect to, the Transaction Proposal, such proposal shall not be approved.
 
Your vote is important, whether or not you plan to attend the special meeting, please promptly vote your shares and submit your proxy by completing, signing, dating and returning your proxy form in the enclosed envelope. You may also vote by telephone or the internet, as described on the proxy card. If you are a stockholder of record, you may also cast your vote in person at the special meeting. If your shares are held in an account at a brokerage firm or bank, you must instruct your broker or bank how to vote your shares, or you may cast your vote in person at the special meeting by obtaining a proxy from your brokerage firm or bank. If you return a proxy with your signature but without an indication of how you wish to vote, your proxy will be voted “for” each of the proposals.
 
Any proxy may be revoked at any time prior to its exercise by delivery of a later dated proxy, by notifying Theodore S. Green, our Co-Chief Executive Officer, in writing before the Special Meeting, or by voting in person at the Special Meeting. By authorizing your proxy promptly, you can help us avoid the expense of further proxy solicitations.
 
Your attention is directed to the Proxy Statement accompanying this notice (including the annexes thereto) for a more complete statement regarding the matters proposed to be acted on at the Special Meeting. We encourage you to read this Proxy Statement carefully. If you have any questions or need assistance voting your shares, please contact either TM and its representatives at (212) 289-6942 or our proxy solicitor MacKenzie Partners, Inc., by telephone at (800) 322-2885 or by email at proxy@mackenziepartners.com.
 
BY ORDER OF THE BOARD OF DIRECTORS,
 
/s/  Theodore S. Green
Theodore S. Green
Chairman of the Board, Co-Chief Executive Officer
and Interim Chief Financial Officer
 
Dated: October 2, 2009


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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
 
This Proxy Statement includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”), as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include, but are not limited to statements regarding our expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about our:
 
  •  Ability to complete the Transaction;
 
  •  Success in retaining or recruiting, or changes required in, our management or directors following the Transaction;
 
  •  Potential inability to obtain additional financing to complete a business combination;
 
  •  Change in control if we acquire CME for stock;
 
  •  Public securities’ limited liquidity and trading;
 
  •  The delisting of our securities from the NYSE Amex or an inability to have our securities listed on the NYSE Amex following the Transaction;
 
  •  Our goals and strategies;
 
  •  Our future prospects and market acceptance of our advertising network;
 
  •  Our future business development, financial condition and results of operations;
 
  •  Projected changes in revenues, costs, expense items, profits, earnings, and other estimated financial information;
 
  •  Our ability to manage the growth of our existing advertising network on inter-city express buses and expansion to prospective advertising network on high speed railways;
 
  •  Trends and competition in the out-of-home advertising media market in China;
 
  •  Changes in general economic and business conditions in China; and
 
  •  Chinese laws, regulations and policies, including those applicable to the advertising industry.
 
The forward-looking statements contained or incorporated by reference in this Proxy Statement are based on our current expectation and beliefs concerning future developments and their potential effects on us and speak only as of the date of such statement. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in this Proxy Statement, including in the section entitled “RISK FACTORS”, and our other SEC Filings. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
 
References in this report as to “we,” “us” or “our Company” refer to TM Entertainment and Media, Inc. References in this report to “CME” refer to Hong Kong Mandefu Holding Limited. References to “public stockholders” refer to holders of shares of common stock sold as part of the units in our IPO, including any of our stockholders existing prior to our IPO to the extent that they purchased or acquired such shares.


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SUMMARY OF THE PROXY STATEMENT
 
References in this report as to “we,” “us” or “our Company” refer to TM Entertainment and Media, Inc., a Delaware corporation (“TM”). References to “Public Stockholders” refer to holders of shares of common stock sold as part of the units in our initial public offering (the “IPO”), including any of our stockholders existing prior to our IPO to the extent that they purchased or acquired such shares.
 
This Proxy Statement relates to a proposed purchase of all of the issued and outstanding capital stock of Hong Kong Mandefu Holding Limited (“CME”) pursuant to a Share Exchange Agreement (the “Share Exchange Agreement”) dated as of May 1, 2009 and amended as of September 30, 2009, among TM, CME, Zheng Cheng, Thousand Space Holdings Limited and Bright Elite Management Limited (collectively, the “Sellers”), Fujian Zong Heng Express Information Technology Co., Ltd. (“Fujian Express”), Fujian Fenzhong Media Co., Ltd. (“Fujian Fenzhong”), Ou Wen Lin and Qingping Lin (collectively, Fujian Express, Fujian Fenzhong, Ou Wen Lin, Qingping Lin and the Sellers are referred to herein as the “CME Parties”) resulting in CME becoming a direct wholly-owned subsidiary of TM, referred to herein as (the “Transaction.”)
 
This summary highlights selected information from this Proxy Statement and does not contain all of the information that is important to you. To better understand the proposals being considered at the Special Meeting, you should carefully read this entire Proxy Statement and the other documents to which it refers you, including the Share Exchange Agreement attached as Annex A to this Proxy Statement, and the other agreements, instruments and documents attached as annexes to this Proxy Statement.
 
The Parties
 
TM
 
TM is a Delaware blank check company incorporated on May 1, 2007 in order to serve as a vehicle for the acquisition of an operating business in the entertainment, media, digital and communications industries. See section entitled “INFORMATION ABOUT TM ENTERTAINMENT AND MEDIA, INC.” As discussed in this Proxy Statement, on May 4, 2009, we announced that we had entered into a definitive agreement to, among other things, purchase from the Sellers all of the issued and outstanding capital stock of CME.
 
The mailing address of TM’s principal executive office is 307 East 87th Street, New York, New York 10128, and its telephone number is (212) 289-6942.
 
The Sellers
 
The Sellers own collectively all of the issued and outstanding capital stock of CME.
 
CME
 
CME, through contractual arrangements with Fujian Fenzhong, an entity majority owned by CME’S majority shareholder, operates the largest television advertising network on inter-city express buses in China. All references in this Proxy Statement to “CME’s advertising network”, “CME’s customers”, CME’s operations in general and similar connotations, refer to Fujian Fenzhong, an entity which is controlled by CME through contractual agreements and which operates the advertising network. While CME has no direct equity ownership in Fujian Fenzhong, through the contractual agreements CME receives the economic benefits of Fujian Fenzhong’s operations. See the sections entitled “RISK FACTORS — Risks Related to CME’s Corporate Structure” and “CME’S CORPORATE STRUCTURE — Contractual Arrangements”. CME generates revenues by selling advertising on its network of television displays installed on inter-city express buses in China. See section entitled “INFORMATION ABOUT HONG KONG MANDEFU HOLDING LIMITED (“CME”) — Business Summary.”
 
As of June 30, 2009, the number of inter-city express buses within CME’s network exceeded 16,000 and covered inter-city express bus services originating in eleven regions, including the four municipalities of Beijing, Shanghai, Tianjin and Chongqing and seven economically prosperous provinces, namely Guangdong, Jiangsu, Fujian, Sichuan, Hubei, Anhui and Hebei.


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CME has entered into long-term framework agreements with 40 bus operator partners for terms ranging from five to eight years. Pursuant to these agreements, CME pays the bus operators concession fees for the right to install its displays and automated control systems inside their buses and display entertainment content and advertisements. CME’s entertainment content is provided by third parties and advertisements are provided by its clients.
 
In October 2007, CME entered into a five-year cooperation agreement with an entity affiliated with the Ministry of Transport of the People’s Republic of China to be the sole strategic alliance partner in the establishment of a nationwide in-vehicle television system that displays copyrighted programs on buses traveling on highways in China. The cooperation agreement also gave CME exclusive rights to display advertisements on the system. CME believes its status as the sole strategic alliance partner designated by an entity affiliated with the Ministry of Transport and the exclusive rights to display advertisements on the system has facilitated its historical expansion and is expected to continue to provide them with a competitive advantage in the future.
 
During the year ended December 31, 2008, more than 400 advertisers had purchased advertising time on CME’s network either through advertising agents or directly from CME. Some of these clients have purchased advertising time from CME for more than three years, including Hitachi, China Telecom, Toyota, Siemens and China Pacific Life Insurance. CME has attracted several well-known international and national brands to its advertising network, including Coca Cola, Pepsi, Wahaha, Siemens, Hitachi, China Telecom, China Mobile, China Post, Toyota, Bank of China, and China Pacific Life Insurance. While CME is unable to determine the exact dollar amount paid by these individual advertisers who purchase advertising through a third party agency, CME is able to determine, based on the number of ads run for these advertisers, that these advertisers comprise a significant portion the advertising on CME’s network. For the years ended December 31, 2006, 2007 and 2008, CME generated total net revenues of $4.0 million, $25.8 million and $63.0 million, respectively. During the same periods, CME had net income of $0.9 million, $7.0 million and $26.4 million, respectively.
 
The Transaction
 
The Share Exchange Agreement
 
  •  Pursuant to the Share Exchange Agreement, TM will purchase from the Sellers 100% of the outstanding equity of CME and TM will issue at closing 20.915 million newly issued shares of common stock of TM (the “TM Common Stock”), and pay $10.0 million in three year, no interest promissory notes. See sections entitled “THE TRANSACTION PROPOSAL” and “THE SHARE EXCHANGE AGREEMENT”. Following the consummation of the Transaction, TM will own 100% of the issued and outstanding capital stock of CME.
 
  •  In addition, the Sellers may earn up to an additional 15.0 million shares of TM subject to the achievement of the following net income targets for 2009, 2010 and 2011:
 
                         
Year
 
Net Income (RMB)
 
Net Income (US$)(1)
 
Shares
 
2009
    287.0 million       $42.0 million       1.0 million  
2010
    570.0 million       $83.5 million       7.0 million  
2011(2)
    889.0 million       $130.2 million       7.0 million  
 
 
(1) Based on current exchange rate of 6.83 RMB/US$.
 
(2) If TM’s adjusted net income for 2009, 2010 or 2011 does not equal or exceed the targeted net income threshold for such fiscal year, the earn-out shares in respect of such fiscal year will not be issued to the Sellers; provided, however, that if TM’s adjusted net income in the fiscal year immediately succeeding such non-achieving fiscal year exceeds the sum of (i) the targeted net income threshold for such immediately succeeding fiscal year (which, for the fiscal year ending December 31, 2012, the targeted net income threshold shall be RMB1,155,700,000 ($169.2 million)) and (ii) the shortfall amount for the non-achieving fiscal year, then the earn-out shares in respect of such non-achieving fiscal year will be issued to the Sellers.
 
CME’s net income in the fiscal year ended December 31, 2008 was US$26.4 million.


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  •  Sellers will also be entitled to receive up to $20.9 million of the cash proceeds from the exercise of TM’s publicly held warrants to the extent a sufficient number of these warrants are exercised. These warrants are held publicly and it is unknown if or when any of these warrants will be exercised. Warrants to purchase approximately 3.8 million shares of TM Common Stock would need to be exercised in order to generate sufficient proceeds to pay the full $20.9 million to the Sellers. We are required to pay the applicable proceeds from the exercise of these warrants to the Sellers within 15 days after the end of the first full fiscal quarter ending after the closing of the Transaction and each fiscal quarter ending thereafter, until the full amount is paid to the Sellers. TM may redeem these warrants at a price of $0.01 per warrant at any time while the warrants are exercisable, if, and only if, the last sales price of TM’s Common Stock equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending 3 business days before TM sends a notice of redemption. While we may have the right to redeem the warrants prior to the payment of the proceeds from their exercise to the Sellers, it is expected that holders of warrants will exercise such warrants before the conditions to our right to redeem are met. The $20.9 million of additional consideration payable to the existing shareholders of CME when and if TM’s publicly-traded warrants are exercised was part of the negotiation of the transaction consideration between TM and CME. We believe that such additional consideration was a material factor to the existing CME shareholders, and that the existing CME shareholders evaluated the likelihood that they would receive such proceeds in deciding whether or not to enter into the Share Exchange Agreement with TM.
 
  •  Based on the closing price of TM Common Stock as of September 25, 2009, the total value of the of the consideration to be received by the Sellers (assuming all of the ‘‘earn-out” shares are earned) is approximately $320.5 million.
 
  •  In addition, TM paid $150,000 to CME’s certified public accountants as partial payment of such accountants’ fees for the account of CME on May 4, 2009.
 
In addition, as part of an amendment to the Share Exchange Agreement, our Initial Stockholders agreed to transfer 750,000 shares of TM Common Stock owned by them to the Sellers upon the closing of the transaction contemplated by the Share Exchange Agreement and to sign lock-ups of up to 2 years with respect to 2,100,000 warrants owned by them.
 
A copy of the Share Exchange Agreement is attached as Annex A to this Proxy Statement. We encourage you to read it in its entirety.
 
Post-Closing Ownership of TM Common Stock
 
Immediately prior to consumation of the Transaction, the officers and directors of TM will beneficially own 18.0% of the TM Common Stock outstanding at the time. The following tables set forth the projected ownership of TM’s Common Stock immediately following Transaction, based on various scenarios, after giving effect to the sale of 750,000 shares owned by our Initial Stockholders to the Sellers and assuming that (i) the Sellers achieve the maximum equity earn-out from 2009 to 2012, (ii) the holders of 100% of the outstanding TM Common Stock issued in our IPO vote for or against the Transaction and demand such stock be converted into cash (“Maximum Conversions”), (iii) that all outstanding warrants are exercised, and (iv) that Pali exercises its option to purchase 700 units and the exercise of the warrants issuable pursuant to such option, for a total of 1,400,000 shares of TM Common Stock (the “Pali Option”).
 
The following table sets forth the projected ownership of TM’s Common Stock immediately following the Transaction, excluding any warrants held by TM stockholders and the Pali Option.
 


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    Excluding Earn-Out     Including Earn-Out  
          Assuming
          Assuming
 
    Assuming No
    Maximum
    Assuming No
    Maximum
 
 
  Conversions     Conversions     Conversions     Conversions  
 
Current TM officers and directors
    4.5 %     6.4 %     3.1 %     3.9 %
Current TM stockholders (including current TM officers and directors)
    35.1 %     6.4 %     24.2 %     3.9 %
Sellers
    64.6 %     93.1 %     75.6 %     95.8 %
 
The following table sets forth the projected ownership of TM’s Common Stock immediately following the Transaction, assuming the currently outstanding warrants of TM are exercised and the Pali Option is exercised in full.
 
                                 
    Excluding Earn-Out     Including Earn-Out  
          Assuming
          Assuming
 
    Assuming No
    Maximum
    Assuming No
    Maximum
 
    Conversions     Conversions     Conversions     Conversions  
 
Current TM officers and directors
    7.6 %     9.7 %     5.8 %     6.9 %
Current TM stockholders (including current TM officers and directors)
    51.0 %     37.4 %     38.7 %     26.6 %
Sellers
    45.8 %     58.5 %     58.9 %     70.5 %
 
Representations, Warranties and Covenants
 
In the Share Exchange Agreement, each of TM and the CME Parties make customary representations and warranties (subject to certain exceptions), including agreements by TM and CME relating to the conduct of their respective business between the time the Share Exchange Agreement was signed and the consummation of the Transaction, as well as agree not to solicit alternative transactions to the Transaction.
 
See the sections entitled “THE SHARE EXCHANGE AGREEMENT — Representations and Warranties” and “THE SHARE EXCHANGE AGREEMENT — Covenants”.
 
Conditions to Closing
 
Consummation of the Transaction is conditioned on the TM Common Stockholders, voting as a group, approving the transactions.
 
The obligations of the CME Parties to consummate the transactions contemplated by Share Exchange Agreement, in addition to the conditions described above, are conditioned upon, among other things, that (i) there shall have been no material adverse effect with respect to TM since December 31, 2008, and (ii) TM shall have a sufficient amount of cash to pay $3.8 million of its fees and expenses incurred in connection with the proposed Transaction.
 
The obligations of TM to consummate the transactions contemplated by the Share Exchange Agreement are conditioned upon there having been no material adverse effect with respect to CME since December 31, 2008;
 
See the section entitled “THE SHARE EXCHANGE AGREEMENT — Conditions to Closing”.
 
Indemnification
 
The Sellers have agreed, on a pro rata basis and not jointly, to indemnify TM from any damages arising from breaches of any basic representation or warranty relating to capital structure and title to shares, proper corporate organization and similar corporate matters and authorization, execution, delivery and enforceability of the Share Exchange Agreement and other transaction documents and breaches of any covenants, agreements or obligations in the Share Exchange Agreement to be performed or complied with by CME, Fujian Express or Fujian Fenzhong.

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See the section entitled “THE SHARE EXCHANGE AGREEMENT — Indemnification”.
 
Termination
 
The Share Exchange Agreement contains certain termination rights for both TM and the Sellers under specified circumstances, including the Sellers’ right to terminate if the Transaction has not been consummated forty-five (45) days after TM receive final approval from and clearance by the SEC to mail the Proxy Statement to TM’s stockholders. See the section entitled “THE SHARE EXCHANGE AGREEMENT — Termination”.
 
Board of Directors
 
The parties have agreed that upon the closing of the Share Exchange Agreement, and for a period ending not sooner than March 31, 2012 (or March 31, 2013 if the shares subject to the earn-out provision have not been issued prior to such date), the TM board of directors will consist of seven persons, of which the Sellers will initially designate five directors and TM will initially designate two directors. Of the five directors designated by the Sellers, at least three will be “independent directors” as such term is defined by Section 803 of the AMEX Company Guide, provided that the Company may amend, modify or terminate the requirement that the Sellers designate five directors and how many of those five must be independent directors with the consent of a majority of the independent directors then serving on the TM board.
 
See the section entitled “THE SHARE EXCHANGE AGREEMENT — Additional Agreements and Covenants”.
 
Lock-up Agreements
 
At the closing of the Transaction, the Sellers will enter into lock-up agreements with TM, providing, among other things, that they not sell or otherwise transfer any of the shares of TM Common Stock received in the business combination, subject to certain exceptions, for a period of 12 months from the closing date of the business combination or, with respect to the earn-out shares, from the date of issuance of such shares, for those shares beneficially owned by Mr. Cheng; and six months from the closing date of the business combination or, with respect to the earn-out shares, from the date of issuance of such shares, for those shares beneficially owned by Thousand Space Holdings Limited and Bright Elite Management Limited.
 
See the section entitled “CERTAIN AGREEMENTS RELATING TO THE TRANSACTION — Lock-Up Agreements”. Copies of the forms of Lock-up Agreements are attached as Annex B to this Proxy Statement. We encourage you to read them in their entirety.
 
Registration Rights Agreements
 
Upon consummation of the Transaction, TM and the Sellers will enter into a Registration Rights Agreement pursuant to which TM will grant to the Sellers certain “demand” and “piggyback” registration rights with respect to the shares of TM Common Stock received by the Sellers as consideration in the Transaction.
 
See the section entitled “CERTAIN AGREEMENTS RELATING TO THE TRANSACTION — Registration Rights Agreement”. A copy of the form of the Registration Rights Agreement is attached as Annex C to this Proxy Statement. We encourage you to read it in its entirety.
 
Voting Agreement
 
At the consummation of the Transaction, Theodore S. Green and Malcolm Bird will enter into a Voting Agreement with the Sellers. The Voting Agreement provides, among other things, that, until March 31, 2012 (or March 31, 2013 if the shares subject to the earn-out provision have not been issued prior to such date) at any meeting called or action taken for the purpose of electing directors to the TM board of directors, each Seller agrees to vote for two directors nominated by Mr. Green and Mr. Bird on behalf of the TM stockholders. See the section entitled “CERTAIN AGREEMENTS RELATING TO THE TRANSACTION —


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Voting Agreement”. A copy of the form of the Voting Agreement is attached as Exhibit D to this Proxy Statement. We encourage you to read it in its entirety.
 
Employment Agreement
 
Mr. Cheng has entered into a 5 year employment agreement with Fujian Fenzhong effective as of December 1, 2008, which will continue in effect following the consummation of the business combination. See the section entitled “CERTAIN AGREEMENTS RELATING TO THE TRANSACTION — Employment Agreement”.
 
Satisfaction of Requirement that the Transaction has a Fair Market Value Equal to at least 80.0% of TM’s Net Assets
 
It is a requirement of TM’s Amended and Restated Certificate of Incorporation that the initial business acquired by TM has a fair market value equal to at least 80.0% of TM’s net assets at the time of acquisition. Based solely on its evaluation of the consideration to be paid in the Transaction, TM’s board of directors determined that this requirement was met and exceeded. See the sections entitled “THE TRANSACTION PROPOSAL — Recommendation of the Board of Directors and Reasons for the Transaction” and “— Satisfaction of Requirement that the Transaction has a Fair Market Value Equal to at least 80.0% of TM’s Net Assets”.
 
Issuance of TM Common Stock
 
Pursuant to the Share Exchange Agreement, TM will purchase from the Sellers 100% of the outstanding equity of CME and TM will issue at closing 20.915 million newly issued shares of TM Common Stock and pay $10.0 million in three year, no interest promissory notes. In addition, the Sellers may also earn up to an additional 15.0 million newly issued shares of TM Common Stock subject to the achievement of certain net income targets for 2009, 2010 and 2011.
 
Certain NYSE Amex rules require that we obtain the approval of our stockholders in connection with any transaction in which (i) the present or potential issuance of TM Common Stock could result in an increase in the shares of TM Common Stock outstanding of 20.0% or more or (ii) the issuance of such securities will result in a change of control of TM. As a result, we have decided to seek the approval of our stockholders for the issuance of TM Common Stock in connection with the Transaction and the listing of such issued TM Common Stock on the NYSE Amex. See the section entitled “THE SHARE ISSUANCE PROPOSAL”.
 
The Initial Charter Amendment Proposals
 
The initial amendments of TM’s Amended and restated Certificate of Incorporation are being proposed in order to (i) remove the prohibition on the consummation of a Business Combination if holders of an aggregate of 30% or more in interest of the shares of our common stock issued in our initial public offering (“IPO Shares”) exercise their conversion rights, and (ii) remove the requirement that only holders of the IPO Shares who vote against the Transaction (as defined below) may convert their IPO Shares into cash. (FOR THE AVOIDANCE OF DOUBT, CONSISTENT WITH TM’S IPO PROSPECTUS, THE 2,250,000 SHARES ISSUED TO THE FOUNDERS OF TM SHALL NOT BE PERMITTED TO CONVERT OR OTHERWISE PARTICIPATE IN THE LIQUIDATION OF THE TRUST ACCOUNT SHOULD TM LIQUIDATE.) See section entitled “THE INITIAL CHARTER AMENDMENT PROPOSALS”.
 
Since our initial public offering prospectus did not disclose the amendments contemplated by the Initial Charter Amendment Proposals, holders of IPO Shares at the time of the Transaction who purchased such shares in the IPO may have securities law claims against us for recission. See section entitled “THE INITIAL CHARTER AMENDMENT PROPOSALS — Recission Rights”.
 
The purpose of the Initial Charter Amendment Proposals is to increase the likelihood that the Transaction is approved and all allow all shareholders who either vote for or against the Transaction to convert their IPO Shares. By eliminating the requirement that no more than 30% of the IPO Shares seek conversion in order to consummate the Transaction and by allowing shareholders to vote for or against the Transaction to convert, we


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are eliminating the ability of holders of 30% of TM’s IPO Shares to “veto” the Transaction notwithstanding its approval by a majority, effectively reducing the threshold vote needed to approve the transaction from 70% to 50% of the votes cast and reducing the incentive for shareholders to vote against the Transaction.
 
We have conditioned the Transaction Proposal on the adoption of the Initial Charter Amendment Proposal No. 2 in order to assure that stockholders whose primary goal is to receive the Trust value for their shares, whether through conversion or liquidation, receive such value even if they choose to vote in favor of the Transaction Proposal. By doing so we have precluded the possibility that a stockholder who intends to convert and who votes in favor of the Transaction Proposal would not receive the Trust value if the Transaction Proposal is approved but the Initial Charter Amendment Proposal No. 2 is not. As presented, such a stockholder can provide a proxy to vote in favor of the Transaction Proposal knowing that under all circumstances he will be guaranteed to receive the Trust value. We believe that had we not made the presentation of the Transaction Proposal conditioned on the adoption of Initial Charter Amendment Proposal No. 2, in order to preserve these rights for stockholders, we would have had to give such stockholders the opportunity to vote on the Transaction Proposal on a conditional basis, voting in favor only if Initial Charter Amendment Proposal No. 2 was adopted, and voting against if it was not.
 
The Charter Amendment and Authorized Share Increase Proposal
 
The amendment of TM’s Amended and Restated Certificate of Incorporation is being proposed in order to change TM’s corporate name to “China MediaExpress Holdings, Inc.,” increase the number of shares authorized for issuance, delete certain provisions that relate to us as a blank check company and create perpetual existence. The increase in the number of shares authorized for issuance is necessary to have sufficient shares available to issue in the Transaction, including the potential earn-out shares. The additional authorized shares may also be used in securing stockholder approval of the Transaction, including through a “permitted financing.” See the section entitled “THE SPECIAL MEETING — Actions That May be Taken to Secure Approval of TM’s Stockholders”. See the sections entitled “THE CHARTER AMENDMENT PROPOSAL” and “THE AUTHORIZED SHARE INCREASE PROPOSAL”.
 
The form of the certificate of amendment of TM’s Amended and Restated Certificate of Incorporation to change TM’s corporate name, increase the number of shares authorized for issuance, delete certain provisions that relate to us as a blank check company and create perpetual existence is attached as Annex E to this Proxy Statement. We encourage you to read it in its entirety.
 
TM’s Board of Directors and Management
 
TM’s board of directors currently consists of five directors, divided into three classes. Each year, one class is elected to serve for a term of three years. However, since we did not hold an annual meeting in 2008, we are asking stockholders to elect the first class of directors to serve for a term of two years and to elect the second class of directors to serve for a term of three years. Messrs. Jonathan F. Miller and Malcolm Bird currently serve in classes one and two, respectively. Theodore S. Green currently serves as a class three director whose term does not expire until our annual meeting to be held in 2010. However, Mr. Green has agreed to stand for re-election a year early and, if elected, will be elected for a new three-year term in the second class of directors.
 
The parties have agreed that upon the closing of the Share Exchange Agreement, and for a period ending not sooner than March 31, 2012 (or March 31, 2013 if the shares subject to the earn-out provision have not been issued prior to such date), the TM board of directors will consist of seven persons, of which the Sellers will initially designate five directors and TM will initially designate two directors. Of the five directors designated by the Sellers, at least three will be “independent directors” as such term is defined by Section 803 of the AMEX Company Guide, provided that the Company may amend, modify or terminate the requirement that the Sellers designate five directors and how many of those five must be independent directors with the consent of a majority of the independent directors then serving on the TM board.
 
The board of directors shall establish and maintain an Audit Committee which shall consist of three Independent Directors, of which one shall be designated as the Chairman of the Audit Committee, who shall


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be an expert in the field of media finance, and whom shall be designated as part of the class of directors whose term expires three years after he or she is elected.
 
We expect that, subject to election at the Special Meeting by our stockholders, Theodore S. Green and Malcolm Bird, current directors of TM, will continue serving as members of TM’s board of directors immediately following the consummation of the Transaction. In addition, upon consummation of the Transaction, subject to election at the Special Meeting by all stockholders, Zheng Cheng, Jacky Lam, George Zhou and Marco Kung, will fill the vacancies created by the expansion of TM’s board of directors to six members.
 
In connection with the consummation of the Transaction, we expect that Theodore S. Green and Malcolm Bird will resign as officers of TM, and that we will appoint Zheng Cheng as Chief Executive Officer of TM.
 
For more information, please see the sections entitled “MANAGEMENT — Directors, Management and Key Employees Following the Transaction”.
 
Adjournment
 
In the event there are not sufficient votes at the time of the Special Meeting to approve the Transaction Proposal, the Share Issuance Proposal, the Election of Directors Proposal and the Charter Amendment Proposal, the chairperson of the Special Meeting may adjourn the Special Meeting to a later date or time or dates or times, if necessary, to permit further solicitation of proxies. Approval of the adoption of the Adjournment Proposal requires the affirmative vote of holders of a majority of the shares of TM Common Stock present, in person or by proxy, at the Special Meeting. See the section entitled “THE ADJOURNMENT PROPOSAL” starting on page 102.
 
The Special Meeting
 
Date, Time and Place
 
The Special Meeting will be held at 10:00 a.m., local time, on October 15, 2009, at the offices of Morrison Cohen LLP located at 909 Third Avenue, New York, New York 10022.
 
Voting Power; Record Date
 
You will be entitled to vote or direct the vote of your TM Common Stock at the Special Meeting if you owned TM Common Stock at the close of business on September 21, 2009, the record date for the Special Meeting. You will have one vote for each share of TM Common Stock you own at that time. Warrants to purchase TM Common Stock do not have voting rights.
 
Quorum
 
The presence, in person or by proxy, of a majority of all the outstanding shares of TM Common Stock constitutes a quorum at the Special Meeting.
 
Required Vote
 
Pursuant to TM’s Amended and Restated Certificate of Incorporation, TM is required to obtain stockholder approval of the Transaction. Approval of the Transaction Proposal requires the affirmative vote of a majority of the shares of TM Common Stock that were issued in our IPO and voted on the matter in person or by proxy entitled to vote at the Special Meeting. Approval of the Share Issuance Proposal and the Adjournment Proposal requires the affirmative vote of a majority of the shares of TM Common Stock voted on the matter either in person or by proxy and entitled to vote at the Special Meeting, and the Initial Charter Amendment Proposals (No. 1 and No. 2), the Charter Amendment Proposal and the Authorized Share Increase Proposal will require the affirmative vote of holders of a majority of the outstanding TM Common Stock. To be elected under the Election of Directors Proposal, a nominee must receive a plurality of the votes cast on the matter either in person or by proxy and entitled to vote at the Special Meeting.


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At the close of business on September 21, 2009, there were 12,505,000 shares of TM Common Stock outstanding and entitled to vote, which includes 2,250,000 shares beneficially owned by TM’s Initial Stockholders, officers and directors and 10,255,000 shares that were issued in our IPO. Each share of TM Common Stock entitles its holder to cast one vote per proposal.
 
In connection with the vote required for the Transaction, our Initial Stockholders, directors and officers have previously agreed to vote all of the 2,250,000 shares of TM Common Stock, representing approximately 18.0% of the shares of TM Common Stock outstanding as of the record date (excluding any warrants held by such persons), which are beneficially owned by them in accordance with the vote of the majority of shares of TM Common Stock held by our public stockholders, other than such shares held by our Initial Shareholders.
 
On March 31, 2009, TM announced that it reached an agreement with Opportunity Partners L.P., a fund in the Bulldog Investors (“Bulldog”) group of private investment funds in connection with Bulldog’s then ongoing consent solicitation and proposed proxy solicitation. In connection with the settlement, Bulldog agreed (i) to cease its efforts to effectuate an early windup of TM, (ii) not to oppose the board of directors at the next meeting of stockholders or otherwise seek to exercise control over the management of TM, (iii) to withdraw its demand to force TM to hold an annual meeting of stockholders, and (iv) to enter into a forward contract with TM or a third party whereby Bulldog would not vote its shares against a proposed business combination. As part of the settlement, TM agreed to name Gerald Hellerman to its Board of Directors, who is independent of both Bulldog and TM. In addition, TM reimbursed Bulldog for certain expenses it incurred in connection with its consent solicitation and proposed proxy solicitation. As of the date of this proxy, Bulldog owns 2,500,078 shares of TM Common Stock, representing an 20.0% ownership interest. A total of approximately $19.8 million would be paid to Bulldog to purchase its shares following the consummation of the Transaction, assuming all of Bulldog’s shares are acquired for the Trust value per share of $7.91. We believe the fact that Bulldog agreed to enter into a forward contract with TM enhances the likelihood that TM will receive stockholder approval for each of the proposals being voted upon at the Special Meeting. To date, no such forward contract has been entered into. It is expected that a forward contract with Bulldog will be entered into prior to the mailing of the proxy statement, although the parties may enter into such contract any time prior to the Special Meeting. The terms of such contract have not been agreed upon, but it is expected that TM would agree to purchase Bulldog’s shares of TM Common Stock following the consummation of the Transaction at a fixed price equal to the per share Trust Account liquidation value, which based on the amount in the Trust Account as of August 31, 2009, equals to approximately $7.91.
 
Our IPO prospectus did not disclose that funds in the trust account might be used to purchase common stock from holders thereof who have indicated their intention to vote against the acquisition and convert their shares into cash. Consequently, such use of the funds in the trust account might be grounds for a holder of our public stock who purchased such shares in our IPO, to seek rescission of the purchase of the units the holder acquired in the IPO. A successful claimant for damages under federal or state law could be awarded an amount to compensate for the decrease in value of the shares caused by the alleged violation, together with interest, while retaining the shares.
 
Actions that May be Taken to Secure Approval of TM’s Stockholders
 
If, following the date of this proxy statement, TM determines that the Transaction Proposal may not receive sufficient votes at the Special Meeting for the acquisition to be consummated, TM, CME and the Initial Stockholders and/or their affiliates may enter into negotiations for one or more transactions with existing stockholders who have indicated, or are believed to have indicated, an intention to vote against the Transaction Proposal to sell their shares to one or more parties who would vote in favor of, the Transaction Proposal. See section entitled “THE SPECIAL MEETING — Actions That May be Taken to Secure Approval of TM’s Stockholders”. There can be no certainty that any such transactions would in fact be sought to be negotiated or, if negotiations are commenced, would be consummated. If any such transactions are consummated, TM, TM’s executive officers and directors, the Initial Stockholders and any other applicable parties will promptly disclose such transactions by means of a supplement to this Proxy Statement and/or the filing of a Current Report on Form 8-K with the SEC and any other required filings.


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TM believes that eliminating the requirement that holders of no more than 30.0% of the IPO Shares vote against the Transaction and extending the right to elect conversion to those holders of IPO Shares who vote for the Transaction, will increase the likelihood that the Transaction will be approved. Under the terms of Initial Charter Amendment Proposal No. 2, if the Transaction is approved and completed, stockholders holding IPO Shares who vote those shares either for or against the Transaction will have the opportunity to either (1) continue to hold their IPO Shares, or (2) elect at the time they vote to convert their IPO Shares into cash upon the closing of the Transaction. The Transaction Proposal is conditioned upon the approval of the Initial Charter Amendment Proposal No. 2 and, in the event the Initial Charter Amendment Proposal No. 2 does not receive the necessary vote to approve that proposal, then the Transaction Proposal will not be presented for approval.
 
See the section entitled “THE SPECIAL MEETING — Conversion Rights”.
 
The Share Exchange Agreement expressly allows TM to raise $50,000,000 in debt or equity to purchase shares of TM Common Stock issued in our IPO. We may use the proceeds of this financing in a variety of ways to secure the required vote to approve the Transaction, including through entering into agreements with our current public shareholders to purchase their shares if the Transaction is approved. Assuming such shares are acquired for the Trust value per share of $7.91 and that we raise and utilize a total of $50 million to purchase shares, we could potentially purchase up to approximately 6,321,113 shares, which represents more than 50% of our outstanding public shares. In addition to such “permitted financing”, we have an agreement with one of our existing public stockholders to enter into a contract to purchase 2,500,078 shares from such stockholder if the Transaction is approved. Together with the shares which could potentially be purchased in the “permitted financing”, these represent approximately 86% percent of our publicly outstanding shares, which would ensure that the Transaction is approved. These actions to obtain stockholder approval of the Transaction could significantly reduce the amount of funds available to the combined company following the transaction, materially increase such company’s debt and impact its relative ownership following the Transaction. Purchase of shares currently owned by TM stockholders will increase the Seller’s ownership of TM following the Transaction, as well as increase the relative percentage ownership of current TM stockholders who do not convert their shares. TM, CME or affiliates may purchase TM’s common stock to help secure approval of the Initial Charter Amendment Proposals.
 
See the section entitled “THE SPECIAL MEETING — Actions That May be Taken to Secure Approval of TM’s Stockholders”.
 
In the event that any purchases of TM’s shares of common stock are made by TM, CME or affiliates of either of them after the mailing of this proxy statement to stockholders but prior to the Special Meeting, TM will file a Current Report on Form 8-K relating to such purchases within four business days of such purchases or otherwise prior to the Special Meting. TM’s stockholders may not have sufficient time to consider the impact of such purchases before submitting their proxy, or if they have submitted a proxy, to revoke such proxy prior to the Special Meeting.
 
CME intends to purchase such number of TM’s publicly traded warrants as it determines in its sole discretion following the closing of the Transaction.
 
Proxies; Board Solicitation
 
Your proxy is being solicited by TM’s board of directors on each proposal being presented to stockholders at the Special Meeting. TM’s board of directors has hired Mackenzie Partners Inc., a proxy solicitation firm, to assist it in soliciting proxies. Proxies may be solicited in person or by mail, telephone or other electronic means. If you grant a proxy, you may still vote your shares of TM Common Stock in person, if you revoke your proxy before the Special Meeting.
 
The costs of preparing, assembling, printing, mailing and distributing the Notice of Annual Meeting of Shareholders, the Proxy Statement, the Proxies and the annual report will be borne by us. We have engaged MacKenzie Partners, Inc. (“Mackenzie”) as an independent proxy solicitor to assist in the distribution of proxy materials and the solicitation of votes for approximately $25,000 and reasonable out-of-pocket expenses. We expect that approximately 20 employees of MacKenzie will solicit proxies from our public’s stockholders. In addition, we have retained Pali Capital, Inc. (“Pali”), the representative of the underwriters of our IPO, as financial advisor, and in such role Pali will assist us in soliciting proxies. Pali will receive no consideration for this role, but will be


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reimbursed by us for reasonable out-of-pocket expenses. We expect that up to 20 employees of Pali will assist in soliciting proxies. In connection with our IPO we sold to Pali an option to purchase up to 700,000 units (consisting of one share of Common Stock and one warrant to purchase one share of Common Stock) for $10.00 per unit. In addition, $3,281,600 of the underwriting commissions and discounts payable to the underwriters in our IPO (including Pali) were deferred and placed in our trust account and will not be paid to the underwriters if we do not complete a business combination by October 17, 2009. Pali has agreed to waive its deferred underwriting fee in exchange for such number of shares of TM’s Common Stock owned by our Initial Stockholders to be agreed upon. We also will reimburse brokers who are holders of record of Common Stock for their reasonable out-of-pocket expenses in forwarding proxies and accompanying materials to the beneficial holders of such Common Stock. In addition to the use of the mails, Proxies may be solicited without extra compensation by our directors, officers and employees by telephone, telecopy, telegraph, email or personal interview.
 
Significant Stockholdings
 
The holdings of TM’s directors, officers and significant stockholders are detailed in the section entitled “BENEFICIAL OWNERSHIP OF TM SECURITIES”.
 
Certain U.S. Federal Income Tax Consequences
 
Neither TM nor its stockholders will recognize any gain or loss for U.S. federal income tax purposes, as a result of the Transaction. A stockholder of TM that exercises its IPO conversion rights generally will recognize gain or loss for U.S. federal income tax purposes on the conversion equal to the difference between (1) the amount of cash received by such stockholder pursuant to the conversion and (2) such stockholder’s tax basis in its stock in TM.
 
See the section entitled “THE TRANSACTION PROPOSAL — Certain U.S. Federal Income Tax Consequences of the Transaction”.


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QUESTIONS AND ANSWERS ABOUT THE TRANSACTION
AND THE SPECIAL MEETING
 
These Questions and Answers are only summaries of the matters they discuss. Please read this entire Proxy Statement.
 
I. Q: Why am I receiving this Proxy Statement?
 
A: TM has agreed to purchase 100% of the issued and outstanding capital stock of CME under the terms of the Share Exchange Agreement dated as of May 1, 2009 as amended as of September 30, 2009, among TM, CME and the Sellers, which are described in this Proxy Statement. A copy of the Share Exchange Agreement is attached to this Proxy Statement as Annex A. We encourage you to read it in its entirety. In this Proxy Statement we refer to the purchase by TM of the issued and outstanding capital stock of CME and the related transactions contemplated by the Share Exchange Agreement as the “Transaction.” Pursuant to TM’s Amended and Restated Certificate of Incorporation, TM is required to obtain stockholder approval of the Transaction.
 
In addition to voting on the Transaction Proposal, the stockholders of TM will be asked to vote on: (i) the Initial Charter Amendment Proposal No. 1, (ii) the Initial Charter Amendment Proposal No. 2, (iii) the Share Issuance Proposal, (iv) the Charter Amendment Proposal, (v) the Authorized Share Increase Proposal, (vi) the Election of Directors Proposal, and (vii) the Adjournment Proposal.
 
Pursuant to certain rules of the NYSE Amex, TM is required to obtain stockholder approval of the issuance of TM Common Stock in connection with the Transaction. In addition, TM and CME have agreed that they will work together to, subject to stockholder approval, use their commercially reasonable efforts to cause the name of TM to be changed to “China MediaExpress Holdings, Inc.” (or such other name as TM and the Sellers mutually agree upon) immediately after the consummation of the Transaction.
 
TM will hold a special meeting (the “Special Meeting”) of its stockholders at 10:00 a.m., local time, on October 15, 2009 to obtain these approvals. This Proxy Statement contains important information about the Special Meeting, the proposed Transaction and the other proposals to be presented to the TM stockholders. You should read it carefully.
 
Your vote is important. We encourage you to vote as soon as possible after carefully reviewing this Proxy Statement.
 
II. Q: Why are we allowed to make the amendments contemplated by the Initial Charter Amendment Proposals?
 
A: As part of the Initial Charter Amendment Proposals (No. 1 and No. 2) we are removing (i) the prohibition on the consummation of a Business Combination if holders of an aggregate of 30% or more in interest of IPO Shares exercise their conversion rights and (ii) the requirement that only holders of IPO Shares who vote against the Transaction may convert their IPO Shares into cash. While our Amended and Restated Certificate of Incorporation states that each of these relevant provisions cannot be amended prior to the consummation of a business combination, we have obtained the opinion of Delaware counsel, included in this proxy statement as Annex G, that the Initial Charter Amendment Proposals, if duly adopted by our board of directors and duly approved by the holders of a majority of our outstanding capital stock, all in accordance with the applicable provisions of the Delaware General Corporations Law, or DGCL, would be valid and effective when filed in accordance with the DGCL. See the section entitled “THE INITIAL CHARTER AMENMENT PROPOSALS — Rescission Rights.”
 
III. Q: Why is TM proposing the Transaction?
 
A: TM was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase and/or other similar transaction with one or more businesses in the entertainment, media, digital and communications industries and to seek out opportunities both


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domestically and internationally to take advantage of our management team’s experience in these markets. CME operates the largest digital television advertising network on inter-city express buses in China.
 
TM believes that CME is well positioned for growth and that ownership of CME will provide TM stockholders with an opportunity to participate in a business with a history of earnings and with growth potential. However, CME has a limited operating history, derives a significant portion of its revenues from a limited number of advertising clients, depends on one equipment supplier and relies on contractual arrangements with a third party to conduct its advertising business in China. The Transaction is intended to be a “business combination” under TM’s Amended and Restated Certificate of Incorporation, which TM must submit to its stockholders for approval prior to completion.
 
IV. Q: What is being voted on?
 
A: You are being asked to vote upon the following proposals:
 
• to approve the Initial Charter Amendment Proposal No. 1;
 
• to approve the Initial Charter Amendment Proposal No. 2;
 
• to approve the purchase by TM of CME pursuant to the Share Exchange Agreement and the transactions contemplated thereby (the “Transaction Proposal”);
 
• to approve the Share Issuance Proposal;
 
• to approve the Charter Amendment Proposal;
 
• to approve the Authorized Share Increase Proposal;
 
• to approve the Election of Directors Proposal; and
 
• to approve the Adjournment Proposal.
 
V. Q: What is the relation between the Proposals?
 
A: The Transaction Proposal is conditioned upon the approval of the Initial Charter Amendment Proposal No. 2 and, in the event the Initial Charter Amendment Proposal No. 2 does not receive the necessary vote to approve that proposal, then the Transaction Proposal will not be presented for approval. Each of the Share Issuance Proposal, the Charter Amendment Proposal and the Authorized Share Increase Proposal are conditioned upon the approval of the Transaction Proposal and, in the event the Transaction Proposal does not receive the necessary vote to approve that proposal, then none of those proposals will be presented for approval. If the Transaction Proposal is approved but any of the Share Issuance Proposal, or the Charter Amendment Proposal are not approved, TM would not be able to perform its obligations under Share Exchange Agreement, allowing the Sellers to terminate the Share Exchange Agreement.
 
Adoption of the Election of Directors Proposal and the Adjournment Proposal are not conditioned upon the adoption of any of the other proposals, but if the Transaction Proposal is not approved the Election of Directors Proposal will not be presented for approval.
 
VI. Q: Who can vote at the Special Meeting?
 
A: Holders of TM Common Stock at the close of business on September 21, 2009, the record date for the Special Meeting, may vote in person or by proxy on the proposals at the Special Meeting. On the record date, 12,505,000 shares of TM Common Stock were outstanding and entitled to vote at the Special Meeting. As of the record date, our Initial Stockholders, officers and directors beneficially owned approximately 18.0% of the outstanding shares of TM Common Stock (excluding any warrants held by such persons).


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VII. Q: Why is TM proposing to initially amend its Amended and Restated Certificate of Incorporation?
 
A: TM is proposing to initially amend its Amended and Restated Certificate of Incorporation prior to the vote on the Transaction Proposal to: (i) remove the prohibition on the consummation of a Business Combination if holders of an aggregate of 30% or more in interest of the shares of our common stock issued in our initial public offering (“IPO Shares”) exercise their conversion rights, and (ii) remove the requirement that only holders of the IPO Shares who vote against the Transaction may convert their IPO Shares into cash. (FOR THE AVOIDANCE OF DOUBT, CONSISTENT WITH TM’S IPO PROSPECTUS, THE 2,250,000 SHARES ISSUED TO THE FOUNDERS OF TM SHALL NOT BE PERMITTED TO CONVERT OR OTHERWISE PARTICIPATE IN THE LIQUIDATION OF THE TRUST ACCOUNT SHOULD TM LIQUIDATE.) This will increase the likelihood that the Transaction will be approved and will allow all holders of IPO Shares to convert such shares into cash if the Transaction is consummated regardless of whether they vote for or against the Transaction Proposal. These amendments would effectively reduce the threshold vote required to approve the Transaction from 70% to 50% of the votes cast, and would reduce the incentive for stockholders who wish to receive the Trust value for their shares to vote against the Transaction.
 
VIII. Q: What vote is required in order to approve the Initial Charter Amendment Proposal?
 
A: The approval of the Initial Charter Amendment Proposal will require the affirmative vote of the holders of a majority of the outstanding shares of TM Common Stock.
 
IX. Q: Since our initial public offering prospectus did not disclose what is being proposed at the meeting, what are my legal rights?
 
A: You should be aware that neither our Amended and Restated Certificate of Incorporation nor our initial public offering prospectus contemplated the possibility of (i) removing the prohibition on the consummation of a Business Combination if holders of an aggregate of 30% or more in interest of the shares of our common stock issued in our initial public offering (“IPO Shares”) exercise their conversion rights, or (ii) removing the requirement that only holders of the IPO Shares who vote against the Transaction may convert their IPO Shares into cash. This will allow all holders of IPO Shares to convert such shares into cash if the Transaction is consummated regardless of whether they vote for or against the Transaction Proposal. Accordingly, each holder of IPO Shares at the time of the Transaction who purchased such shares in the initial public offering may have securities law claims against us for rescission (under which a successful claimant has the right to receive the total amount paid for his or her securities pursuant to an allegedly deficient prospectus, plus interest and less any income earned on the securities, in exchange for surrender of the securities) or damages (compensation for loss on an investment caused by alleged material misrepresentations or omissions in the sale of a security). Such claims may entitle stockholders asserting them to up to $8.00 per share, based on the initial offering price of the initial public offering units comprised of stock and warrants, less any amount received from sale of the original warrants purchased with them, plus interest from the date of our initial public offering (which, in the case of holders of IPO Shares, may be more than the pro rata share of the trust account to which they are entitled on conversion or liquidation). See the section entitled “THE INITIAL CHARTER AMENDMENT PROPOSALS — Rescission Rights.”
 
X. Q: What vote is required in order to approve the Transaction Proposal?
 
A: Under TM’s Amended and Restated Certificate of Incorporation, the approval of the Transaction will require the affirmative vote of holders of a majority of the shares of TM Common Stock that were issued in the IPO and voted on the matter either in person or by proxy and entitled to vote at the Special Meeting. Warrants to purchase TM Common Stock do not have voting rights, and TM is not asking the warrant holders to vote on the Transaction Proposal or the other proposals. If the Transaction Proposal is not approved, none of the other proposals will be presented for approval.


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XI. Q: How do the TM insiders intend to vote their shares?
 
A: In connection with the vote required for any business combination, all of our Initial Stockholders, including all of our officers and directors, have agreed to vote their respective initial shares in accordance with the majority of the shares of common stock voted by the Public Stockholders. If the majority of Public Stockholders voting at the meeting, regardless of percent, vote to approve the business combination, our Initial Stockholders will vote all shares owned by them prior to our IPO in favor of the business combination. Similarly, if the majority of Public Stockholders voting at the meeting, regardless of percent, vote against the business combination, our Initial Stockholders will vote all shares owned by them prior to our IPO against the business combination. This voting arrangement does not apply to any other shares our Initial Stockholders may purchase in the future. Accordingly, they may vote these shares on a proposed business combination any way they chose. Currently, our Initial Stockholders do not own any shares of TM Common Stock which are not subject to this voting arrangement. TM will proceed with the business combination only if a majority of the shares of common stock voted by the Public Stockholders are voted in favor of the business combination.
 
XII. Q: What will I receive in the proposed Transaction?
 
A: TM stockholders will continue to hold the shares of TM Common Stock that they owned prior to the Transaction.
 
XIII. Q: Do TM stockholders have conversion rights?
 
A: Yes. Assuming the Initial Charter Amendment Proposal is approved, with respect to a business combination which is approved and consummated, any public stockholder who voted either for or against the business combination may, at the time of voting, demand that TM convert his, hers, or its shares. If the Initial Charter Amendment Proposal No. 2 is not approved, TM will not complete the Transaction and will liquidate. The per share conversion price will equal the amount in the Trust Account, calculated as of two business days prior to the consummation of the proposed business combination, divided by the number of shares of TM Common Stock held by public stockholders at the consummation of the Transaction. The per share conversion price will be calculated as of two business days prior to the consummation of the Transaction, and will equal the amount in the Trust Account divided by the number of shares of TM Common Stock issued in our IPO (10,255,000). Based on the amount in the Trust Account as of August 31, 2009 ($81,075,868, net of taxes payable), the per share conversion price would be approximately $7.91. However, the Trust Account will continue to earn interest and incur taxes on such interest until the consummation of the Transaction. In addition, our placing of funds in the Trust Account may not protect those funds from third party claims against us or other liabilities of TM. We cannot assure you that the per-share distribution from the Trust Account, if we liquidate, will not be less than $7.91. While we have sought and will continue to seek to have all vendors and service providers (which would include any third parties we engaged to assist us in any way in connection with our search for a target business) and prospective target businesses execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, there is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they will not seek recourse against the Trust Account or that a court would not conclude that such agreements are not legally enforceable. Accordingly, the funds held in the Trust Account could be subject to claims that take priority over the claims of our public stockholders, and the actual per share conversion price may be less than approximately $7.91. Furthermore, two of our Initial Stockholders have personally agreed, pursuant to agreements with us and our underwriter, that, if we liquidate prior to the consummation of a business combination, they will be personally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for products sold to us in excess of the proceeds of our IPO not held in the Trust Account, but only


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if, and to the extent, the claims reduce the amounts in the Trust Account. However, our Initial Stockholders will not have any personal liability as to any claimed amounts owed to a third party who executed a valid and enforceable waiver.
 
Our Initial Stockholders, directors and officers will not have any conversion rights attributable to their shares of TM Common Stock acquired before the IPO in the event that the Transaction is or is not approved by a majority of our Public Stockholders.
 
XIV. Q: If I have conversion rights, how do I exercise them?
 
A: If you wish to exercise your conversion rights, you must vote either for or against the Transaction Proposal and contemporaneously demand that TM convert your shares of TM Common Stock into cash. Abstensions or broker non-votes will not allow you to exercise your conversion rights. You may exercise your conversion rights either by checking the appropriate box on the proxy card or by submitting your request in writing to Continental Stock Transfer & Trust Company (“Continental”) at 17 Battery Place, 8th Floor, New York, NY 10004, Attn: Mark Zimkind. In addition, TM stockholders who hold their stock in street name must ensure their bank or broker complies with the requirements identified below. If, prior to the Special Meeting, you (i) initially vote for the Transaction Proposal but then wish to vote against it and exercise your conversion rights or (ii) initially vote against the Transaction Proposal and wish to exercise your conversion rights but do not check the box on the proxy card providing for the exercise of your conversion rights or do not send a written request to Continental to exercise your conversion rights, you may request that Continental send to you another proxy card on which you may indicate your intended vote and exercise your conversion rights by checking the box provided for such purpose on the proxy card. You may make such request by contacting Mark Zimkind of Continental by telephone at (212) 845-3287 or by email at mzimkind@continentalstock.com. Any corrected or changed proxy card or written demand of conversion rights must be received by Continental prior to the Special Meeting. You may also change a prior vote by attending the Special Meeting where you will be able to revoke your proxy and vote in person. If, notwithstanding your negative vote and exercise of your conversion rights, the Transaction is consummated, then you will be entitled to have your shares converted. If you exercise your conversion rights, then you will be exchanging your shares of TM Common Stock issued in the IPO for cash and will no longer own these shares. You will be entitled to receive cash for these shares only if you continue to hold these shares through the consummation of the Transaction and your stock certificate for the shares you wish to convert are tendered for conversion. Exercise of your conversion rights does not result in either the conversion or a loss of your warrants. Any warrants that you own will continue to be outstanding and exercisable following a conversion of your shares of TM Common Stock and the consummation of the Transaction. If the Transaction is not consummated, and TM is forced to liquidate, our warrants will expire with no value. See the section entitled “THE SPECIAL MEETING — Conversion Rights”.
 
XV. Q: What additional conversion procedures are required if my shares are held in “street name”?
 
A: If your shares are held in “street name,” your bank or broker must, by 5:00 P.M., New York City time, on October 14, 2009, the business day prior to the special meeting, electronically transfer your shares to the DTC account of Continental, in its capacity as our stock transfer agent, and provide Continental with the necessary stock powers, written instructions to the effect that you want to convert your shares and a written certificate addressed to Continental stating that you were the owner of such shares as of the record date, you have owned such shares since the record date and you will continue to own such shares through the consummation of the Transaction. If you demand conversion of your shares, and later decide that you do not want to convert such shares, your bank or broker must make arrangements with Continental, at the telephone number stated above, to cancel the conversion. To be effective, withdrawals


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of shares previously submitted for conversion must be completed prior to the commencement of the annual meeting.
 
Continental can assist with this process. Continental can be reached by phone at (212) 845-3287, by email at mzimkind@continentalstock.com, and by mail at 17 Battery Place, 8th Floor, New York, NY 10004, Attn: Mark Zimkind. We urge stockholders who hold shares in street name and who may wish to exercise their conversion rights to promptly contact the account executive at the organization holding their account to accomplish these additional procedures. If such stockholders fail to act promptly, they may be unable to timely satisfy the conversion requirements.
 
XVI. Q: Do I need to send in my stock certificates now?
 
A: TM stockholders who hold stock certificates themselves rather than in street name should submit their stock certificates by 5.00 p.m., New York City time, on October 14, 2009, the business day prior to the special meeting to Continental Stock Transfer & Trust Company at 17 Battery Place, 8th Floor, New York, NY 10004, Attn: Mark Zimkind. In the event the proposed transaction is not approved, Continental Stock Transfer & Trust Company will retain any stock certificates submitted to it and you will receive payment therefor following the liquidation of TM. In addition you may bring your stock certificates to the special meeting if you plan to attend in person. There is no cost to tender your shares. TM stockholders who hold shares in street name should have their bank or broker contact Continental with respect to the procedure to complete the conversion of such shares.
 
XVII. Q: What if I object to the proposed Transaction? Do I have appraisal rights?
 
A: Under the General Corporation Law of the State of Delaware, TM stockholders do not have appraisal rights in connection with the Transaction or any of the other proposals to be presented at the Special Meeting. However, if you hold TM Common Stock issued in our IPO (and you are not an initial stockholder), you may exercise your conversion rights. See the section entitled “THE SPECIAL MEETING — Conversion Rights”.
 
XVIII. Q: What happens to the funds deposited in the Trust Account after consummation of the Transaction?
 
A: Upon consummation of the Transaction, TM stockholders electing to exercise their conversion rights will receive their pro rata portion of the Trust Account. The balance of the funds in the Trust Account will be utilized to fund transaction expenses. Any remaining funds will be available for operations and the conduct of our business subsequent to the consummation of the Transaction.
 
XIX. Q: What happens if the Transaction is not consummated?
 
A: The deadline under our Amended and Restated Certificate of Incorporation to consummate a business combination is October 17, 2009. If a stockholder vote on this Transaction is held and the Transaction is not approved, we will not continue to try to consummate a business combination with a different target due to the limited time remaining to consummate a business combination and the cost involved in doing so. If we do not consummate a business combination by October 17, 2009, our corporate existence will cease by operation of law and we will promptly distribute only to our public stockholders (including our existing stockholders to the extent they have purchased shares in our IPO or in the aftermarket) the amount in the Trust Account (including any accrued interest then remaining in the Trust Account) plus any remaining net assets. Furthermore, two of our Initial Stockholders have personally agreed, pursuant to agreements with us and our underwriter, that, if we liquidate prior to the consummation of a business combination, they will be personally liable to pay debts and obligations to target businesses or vendors or other entities that are owed money by us for services rendered or contracted for products sold to us in excess of the proceeds of our IPO not held in the Trust


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Account, but only if, and to the extent, the claims reduce the amounts in the Trust Account. However, our Initial Stockholders will not have any personal liability as to any claimed amounts owed to a third party who executed a valid and enforceable waiver.
 
Our Initial Stockholders, directors and officers have agreed to waive their respective rights to participate in any liquidation distribution occurring upon our failure to consummate a business combination, but only with respect to those shares of TM Common Stock beneficially owned and acquired by them prior to our IPO. They will participate in any liquidation distribution with respect to any shares of TM Common Stock acquired in connection with or following our IPO. There will be no distribution from the Trust Account with respect to the warrants, and all rights with respect to the warrants will effectively terminate upon our liquidation.
 
If a liquidation were to occur, based on the amount in the Trust Account as of August 31, 2009 (approximately $81,075,868 which is net of estimated taxes payable), the initial per share liquidation price would be approximately $7.91. However, the Trust Account will continue to earn interest and incur taxes on such interest until the date of liquidation. In addition, our placing of funds in the Trust Account may not protect those funds from third party claims against us or other liabilities of TM. While we have sought and will continue to seek to have all vendors and service providers (which would include any third parties we engaged to assist us in any way in connection with our search for a target business) and prospective target businesses execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, there is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they will not seek recourse against the Trust Account or that a court would not conclude that such agreements are not legally enforceable. Accordingly, the funds held in the Trust Account could be subject to claims that take priority over the claims of our public stockholders, and the actual per share liquidation price may be less than approximately $7.91. See the section entitled “RISK FACTORS — Risks Relating to the Proposed Transaction” for risks associated with the dissolution of TM.
 
XX. Q: When is the Transaction expected to be completed?
 
A: If the Transaction is approved, it is anticipated that the Transaction will be consummated promptly following the Special Meeting and the satisfaction of all conditions to completion of the Transaction. For a description of the conditions to completion of the Transaction, see the section entitled “THE SHARE EXCHANGE AGREEMENT — Conditions to Closing”.
 
XXI. Q: What vote is required in order to approve the Share Issuance Proposal?
 
A: The approval of the Share Issuance Proposal will require the affirmative vote of the holders of a majority of the shares of TM Common Stock voted on the matter either in person or by proxy and entitled to vote at the Special Meeting.
 
XXII. Q: What vote is required in order to approve the Charter Amendment Proposal?
 
A: The approval of the Charter Amendment Proposal will require the affirmative vote of the holders of a majority of the outstanding shares of TM Common Stock.
 
XXIII. Q: What vote is required in order to approve the Authorized Share Increase Proposal?
 
A: The approval of the Authorized Share Increase Proposal will require the affirmative vote of the holders of a majority of the outstanding shares of TM Common Stock.
 
XXIV. Q: What vote is required to elect Theodore S. Green, Malcolm Bird, Zheng Cheng, Jacky Lam, George Zhou and Marco Kung to TM’s board of directors under the Election of Directors Proposal?
 
A: To be elected, a nominee must receive a plurality of the votes cast on the matter either in person or by proxy and entitled to vote at the Special Meeting.


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XXV. Q: What vote is required to approve the Adjournment Proposal, if needed?
 
A: Approval of the Adjournment Proposal will require the affirmative vote of holders of a majority of the shares of TM Common Stock represented in person or by proxy and entitled to vote at the Special Meeting.
 
XXVI. Q: Why is TM proposing to amend its Amended and Restated Certificate of Incorporation?
 
A: TM is proposing to amend its Amended and Restated Certificate of Incorporation at the time of the Transaction to change TM’s corporate name to “China MediaExpress Holdings, Inc.” We believe that changing our name to “China MediaExpress Holdings, Inc.” will better reflect our operating business upon completion of the Transaction. In addition, TM and CME have agreed that they will work together to, subject to stockholder approval, use their commercially reasonable efforts to cause the name of TM to be changed to “China MediaExpress Holdings, Inc.” (or such other name as TM and the Sellers mutually agree upon) immediately after the consummation of the Transaction. The amendment of TM’s Amended and Restated Certificate of Incorporation would effectuate such name change. In addition, this amendment would increase the number of shares authorized for issuance, delete existing provisions that relate to us as a blank check company and create perpetual corporate existence.
 
XXVII. Q: Does TM’s board of directors recommend voting in favor of the Initial Charter Amendment Proposals, Transaction Proposal, the Share Issuance Proposal, the Charter Amendment Proposal, the Authorized Share Increase Proposal, the Election of Directors Proposal and the Adjournment Proposal?
 
A: Yes. After careful consideration of the terms and conditions of the Initial Charter Amendment Proposals, the Transaction Proposal, the Share Issuance Proposal, the Charter Amendment Proposal, the Authorized Share Increase Proposal the Election of Directors Proposal, and the Adjournment Proposal, TM’s board of directors has unanimously (i) approved and declared advisable the Share Exchange Agreement and the Transaction, (ii) approved and authorized the issuance of TM Common Stock in connection with the Transaction, (iii) approved the various amendments to TM’s Amended and Restated Certificate of Incorporation, (iv) recommended that each of the nominees for election to TM’s board of directors be elected to serve for the respective term of office of the class to which the nominee is elected and until their successors are duly elected and qualified, and (v) approved adjournment or postponement of the Special Meeting to a later date or time or dates or times if necessary for the purpose of soliciting additional proxies.
 
After careful consideration, TM’s board of directors recommends that TM stockholders vote or give instruction to vote FOR each of the Transaction Proposal, the Share Issuance Proposal, the Charter Amendment Proposal, the Election of Directors Proposal, and the Adjournment Proposal. However, you should note that the members of TM’s board of directors have interests in the Transaction that are different from, or in addition to, your interests as a stockholder. For a description of such interests, please see the section entitled “THE TRANSACTION PROPOSAL — Interests of TM’s Management in the Transaction”.
 
XXVIII. Q: Who will manage TM after consummation of the Transaction?
 
A: We expect that, subject to election at the Special Meeting by our stockholders, Theodore S. Green and Malcolm Bird, current directors of TM, will continue serving as members of TM’s board of directors immediately following the consummation of the Transaction. In addition, immediately following the consummation of the Transaction, we expect to increase the size of TM’s board of directors to six members, and appoint as directors Zheng Cheng, Jacky Lam, George Zhou and Marco Kung. For a description of these management agreements, see the sections entitled “MANAGEMENT FOLLOWING THE TRANSACTION”.


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XXIX. Q: What do I need to do now?
 
A: TM urges you to read carefully and consider the information contained in this Proxy Statement, including the annexes, and to consider how the Transaction will affect you as a stockholder of TM. You should then vote as soon as possible in accordance with the instructions provided in this Proxy Statement and on the enclosed proxy card.
 
XXX. Q: How do I vote?
 
A: If you are a holder of record of TM Common Stock, you may vote by submitting a proxy for the Special Meeting or in person at the Special Meeting. You may submit your proxy by completing, signing, dating and returning the enclosed proxy card in the accompanying pre-addressed postage paid envelope. If you hold your shares of TM Common Stock in “street name,” which means your shares are held of record by a broker, bank or nominee, you must provide the record holder of your shares with instructions on how to vote your shares.
 
XXXI. Q: If I am not going to attend the Special Meeting in person, should I return my proxy card instead?
 
A: Yes. After carefully reading and considering the information in this Proxy Statement, please fill out and sign your proxy card. Then return it in the return envelope as soon as possible, so that your shares of TM Common Stock may be represented at the Special Meeting. A properly executed proxy will be counted for the purpose of determining the existence of a quorum.
 
XXXII. Q: Can I change my vote after I have mailed my signed proxy card?
 
A: Yes. Send a later-dated, signed proxy card to Mackenzie, TM’s proxy solicitor, at 105 Madison Avenue New York, NY 10016, prior to the date of the Special Meeting or attend the Special Meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to Mackenzie before the Special Meeting. You can reach Mackenzie at proxy@mackenziepartners.com.
 
XXXIII. Q: If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
 
A: No. Your broker, bank or nominee cannot vote your shares of TM Common Stock unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. You should instruct your broker, bank or nominee to vote your shares of TM Common Stock, following the procedures provided by your broker, bank or nominee.
 
XXXIV. Q: What will happen if I abstain from voting or fail to instruct my broker, bank or nominee to vote?
 
A: Under the General Corporation Law of the State of Delaware, an abstention, or the failure to instruct your broker, bank or nominee how to vote (also known as a broker non-vote), is not considered a vote cast at the Special Meeting with respect to the Transaction Proposal and therefore, will have no effect on the vote relating to the Transaction Proposal. An abstention or broker non-vote will not enable you to exercise your conversion rights. A broker non-vote will have the same effect as a vote against the Initial Charter Amendment Proposals, the Charter Amendment Proposal and the Authorized Share Increase Proposal, but will have no effect on the Share Issuance Proposal and the Adjournment Proposal. Stockholders may only vote for or withhold votes for the nominees for election pursuant to the Election of Directors Proposal. Votes that are withheld and broker non-votes, if any, will be counted for purposes of determining the presence or absence of a quorum, but will have no effect on the election of directors.
 
XXXV. Q: What should I do if I receive more than one set of voting materials?
 
A: You may receive more than one set of voting materials, including multiple copies of this Proxy Statement and multiple proxy cards or voting instruction cards. For example, if you hold your


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shares of TM Common Stock in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares of TM Common Stock. If you are a holder of record and your shares of TM Common Stock are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast a vote with respect to all of your shares of TM Common Stock.
 
XXXVI. Q: Who can help answer my questions?
 
A: If you have questions about the Transaction or this Proxy Statement, or if you need additional copies of this Proxy Statement or the enclosed proxy card, you may contact Mackenzie, our proxy solicitor by telephone at (800) 322-2885 or by email at proxy@mackenziepartners.com You may also obtain additional information about TM from documents filed with the Securities and Exchange Commission (the “SEC”) by following the instructions in the section entitled “WHERE YOU CAN FIND MORE INFORMATION”.


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RISK FACTORS
 
You should carefully consider the following risk factors, together with all of the other information included in this Proxy Statement, before you decide whether to vote or direct your vote to be cast to approve the Transaction and related proposals. The following risk factors consist of risks relating to the proposed Transaction, risks relating to doing business in China, risks relating to CME, risks relating to CME’s corporate structure and risks relating to TM. In addition, references in these “Risk Factors” to “CME’s advertising network”, “CME’s customers”, CME’s operations in general and similar connotations, refer to Fujian Fenzhong, an entity which is controlled by CME through contractual agreements and which operates the advertising network. While CME has no direct equity ownership in Fujian Fenzhong, through the contractual agreements CME receives the economic benefits of Fujian Fenzhongs’s operations. See the sections entitled “RISK FACTORS — Risks Related to CME’s Corporate Structure” and “CME’S CORPORATE STRUCTURE — Contractual Arrangements”.
 
Risks Relating to the Proposed Transaction
 
Various stockholder approvals are required to complete the Transaction, and we cannot assure you that it will be consummated; TM, CME, our initial stockholders and their respective affiliates may enter into transactions to secure the required stockholder approvals, which could reduce the amount of funds available to CME following the Transaction.
 
We will proceed with the Transaction only if (1) the Initial Charter Amendment Proposal No. 2 is approved, and (2) a majority of the shares of TM Common Stock voted by the public stockholders are voted in favor of the Transaction. The Share Exchange Agreement contains a number of other conditions to closing, some or all of which may not be satisfied. Many of these conditions are beyond our control and include, among other things, the continued accuracy of the representations and warranties in the Share Exchange Agreement.
 
We cannot be certain that we will obtain the necessary stockholder approval or that we and the Sellers will satisfy other closing conditions.
 
In order to ensure that that the Transaction Proposal is approved TM, CME, TM’s initial stockholders and their respective affiliates or other third parties may enter into transactions to purchase shares of common stock of TM from stockholders who have indicated their intention to vote against the acquisition and seek conversion of their shares. Such transactions could reduce the amount of funds available to CME following the Transaction. While TM will publicly disclose any such transactions, TM’s stockholders may not have sufficient time to consider the impact of such purchases before submitting their proxy, or if they have submitted a proxy, to revoke such proxy prior to the Special Meeting.
 
If we consummate the Transaction, we will be issuing additional shares of TM Common Stock. This would reduce the percentage of the equity interest held by our current stockholders in our company, and will cause a change in control of TM and could adversely affect the market price of the TM Common Stock and discourage certain business combinations in which our stockholders could be offered a premium for their shares.
 
Pursuant to the Share Exchange Agreement, TM will purchase from the Sellers 100% of the outstanding equity of CME and TM will issue at closing 20.915 million newly issued shares of TM Common Stock, and pay $10.0 million in three year, no interest promissory notes. In addition, the Sellers may also earn up to an additional 15.0 million newly issued shares of TM Common Stock subject to the achievement of certain net income targets for 2009, 2010 and 2011.
 
As a consequence of such issuance, our current stockholders will experience immediate dilution of their percentage ownership interest in TM, with the Sellers owning approximately 64.6% of the outstanding shares of TM Common Stock immediately after the consummation of the Transaction assuming no conversions and 93.1% assuming a maximum of 100% conversions. The presence of the foregoing additional number of shares of TM Common Stock eligible for trading in the public market, or the perception that such additional shares may become eligible for trading, may have an adverse effect on the market price of the TM Common Stock.


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In addition, if and when the Sellers hold a controlling interest in TM, such control could discourage certain business combinations that could offer our stockholders a premium for their shares.
 
In addition, at the consummation of the Transaction, TM and the Sellers will enter into a Registration Rights Agreement pursuant to which TM will grant to the Sellers certain piggyback and demand registration rights with respect to the shares of TM Common Stock issued to the Sellers as consideration paid pursuant to the Share Exchange Agreement, the exercise of which may have an adverse effect on the market price of the TM Common Stock, and the existence of which may make it more difficult to effect certain business combinations. See the section entitled “RISK FACTORS — Risks Relating to TM”.
 
If we consummate the Transaction, our outstanding warrants may be exercised, which would increase the number of shares of TM Common Stock eligible for future resale in the public market and result in dilution of our stockholders’ percentage ownership interest in TM. This might have an adverse effect on the market price of the TM Common Stock.
 
Outstanding warrants to purchase an aggregate of 12,355,000 (including warrants to purchase 10,255,000 shares issued in our IPO and warrants to purchase 2,100,000 shares issued to our Initial Stockholders) shares of TM Common Stock issued in conjunction with our IPO will become exercisable if we consummate the Transaction. We expect that these warrants will be exercised only if the $5.50 per share exercise price is below the then market price of the TM Common Stock.
 
In addition, in connection with our IPO, TM sold to Pali Capital, Inc. (“Pali”), for $100, an option to purchase up to a total of 700,000 units, consisting of one share of TM Common Stock and one warrant, for $10.00 per unit, exercisable commencing on the later of the consummation of our initial business combination and one year after the date of the final prospectus for our IPO and expiring October 17, 2012. The warrants underlying the units have terms that are identical to those issued in our IPO. The purchase option also contains a cashless exercise feature that allows the holder or holders of the purchase option to receive units on a net exercise basis. In addition, the purchase option provides for registration rights that permit the holder or holders of the purchase option to demand that a registration statement be filed with respect to all or any part of the securities underlying the purchase option within five years of the completion of the Offering. Further, the holder or holders of the purchase option are entitled to piggyback registration rights in the event TM undertakes a subsequent registered offering within seven years of the completion of our IPO. Warrants issued and outstanding as a result of the exercise of the purchase option will be subject to TM’s right of redemption. Therefore, an aggregate of approximately 13,755,000 million shares of TM Common Stock may be issued in the future upon exercise of currently outstanding warrants and options.
 
To the extent that any of the foregoing warrants and/or options are exercised, additional shares of TM Common Stock will be issued, which will result in dilution of our stockholders’ percentage ownership interest in TM and increase the number of shares of TM Common Stock eligible for resale in the public market. Sales of a substantial number of shares of TM Common Stock issued on exercise of the warrants in the public market could adversely affect the market price of the TM Common Stock.
 
The pro forma financial statements are not necessarily indicative of the financial position or results of operations of TM (Post-Transaction).
 
The pro forma financial statements contained in this Proxy Statement are not an indicator of CME’s financial condition or results of operations following the Transaction. The pro forma financial statements have been derived from the historical financial statements of CME and TM and many adjustments and assumptions have been made regarding CME after giving effect to the Transaction. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with complete accuracy. As a result, the actual financial condition and results of operations of TM (after the consummation of the Transaction; “TM Post-Transaction”) following the Transaction may not be consistent with, or evident from, these pro forma financial statements or past results.


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Our working capital will be reduced if TM stockholders exercise their right to convert their shares into cash. This would reduce our cash reserve after the Transaction.
 
Assuming the Initial Charter Amendment Proposal is approved, pursuant to our certificate of incorporation, all holders of shares issued in our IPO may vote either for or against the Transaction and elect that we convert their shares into a pro rata share of the Trust Account calculated as of two business days prior to the consummation of the merger. To the extent the merger is consummated and holders of a significant number of shares issued in our IPO have properly elected to convert their shares, there will be a corresponding reduction in the amount of funds available to the combined company following the merger. Additionally, if holders properly elect to convert their shares, there may be a corresponding reduction in the value of each share of common stock of the combined company. Any payment upon exercise of conversion rights will reduce our cash after the merger. As a company in the early stage of its growth and development, the combined company will require significant capital to grow and eventually become profitable and may require additional sources of capital to the extent that funds disbursed to our stockholders upon the exercise of their conversion rights result in working capital shortfalls.
 
An active market for our common stock may not develop.
 
Our common stock is currently listed on the NYSE Amex. If the Transaction is approved we cannot assure you a regular trading market of our shares will develop or that any market will be sustained. Accordingly, we cannot assure you of the likelihood that an active trading market for our shares will develop or be maintained, the liquidity of any trading market, your ability to sell your shares when desired, or at all, or the prices that you may obtain for your shares.
 
The value of our common stock and warrants may be adversely affected by market volatility.
 
Even if an active trading market develops, the market price of our shares and warrants may be highly volatile and could be subject to wide fluctuations. In addition, the trading volume in our shares and warrants may fluctuate and cause significant price variations to occur. If the market prices of our shares and warrants decline significantly, you may be unable to resell your shares and warrants at or above your purchase price, if at all. We cannot assure you that the market price of our shares and warrants will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of our shares and warrants or result in fluctuations in the price or trading volume of our shares and warrants include:
 
  •  actual or anticipated fluctuations in quarterly and annual results;
 
  •  limited operating history;
 
  •  market conditions in the industry;
 
  •  shortfalls in TM’s operating results from levels forecasted by securities analysts;
 
  •  the failure of securities analysts to cover our shares after the Transaction;
 
  •  announcements concerning TM or its competitors;
 
  •  low average trading volume levels of TM Common Stock following the Transaction; and
 
  •  the general state of the securities markets.
 
  •  departures of CME key personnel;
 
  •  adverse market reaction to any indebtedness we may incur or securities we may issue in the future;
 
  •  actions by stockholders;
 
  •  speculation in the press or investment community;
 
  •  changes or proposed changes in laws or regulations or differing interpretations thereof affecting our business or enforcement of these laws and regulations, or announcements relating to these matters;


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  •  fluctuations for reasons unrelated to our business or our results of operations; and
 
  •  general market and economic conditions.
 
Risks Relating to Doing Business In China
 
General
 
The economies of individual foreign countries may differ significantly from the U.S. economy in such respects as growth of gross national product, rate of inflation, currency depreciation, capital reinvestment, resource self sufficiency and balance of payments position. With respect to some foreign countries there is the possibility of nationalization, expropriation or confiscatory taxation, political changes, governmental regulation, economic or social instability, or diplomatic developments (including war) which could adversely affect investments in those countries.
 
Laws and regulations of foreign countries may impose restrictions that would not exist in the United States. Some foreign countries have laws and regulations that currently limit or preclude direct foreign investment. Even where permitted, direct investments may require significant government approvals and may require financing and structuring alternatives that differ significantly from those customarily used in the United States. In addition, in certain countries such laws and regulations have been subject to frequent and unforeseen change, potentially exposing an investment to restrictions, taxes, and other obligations that were not anticipated at the time the initial investment was made.
 
Investments in international companies may be subject to significant currency exchange risks. Any fluctuations in foreign currency exchange rates between the U.S. Dollar and the respective foreign currencies may significantly affect the value of international companies and the returns ultimately achieved. We may enter into financial arrangements designed to hedge such currency exchange risks. Such hedging arrangements are themselves subject to various risks different from those of the related investment. For example, unanticipated changes in interest rates, securities prices or currency exchange rates may result in a poorer overall performance than if the hedging arrangement had not been entered into. Moreover, there can be no assurance that instruments suitable for hedging currency will be available, or that such instruments will be attractively priced, at the time we wish to use them.
 
Adverse changes in economic and political policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could adversely affect CME’s business.
 
CME conducts substantially all of its business operations in China. Accordingly, CME’s business, results of operations, financial condition and prospects are subject to a significant degree to economic, political and legal conditions in China or in countries in the same geographic region. China’s economy differs from the economies of developed countries in many respects, including with respect to government regulation and control of foreign exchange, the level of development and growth rate, and the allocation of resources.
 
While the PRC economy has experienced significant growth in the past 20 years, growth has been uneven across different regions and economic sectors. The PRC government has implemented certain measures to encourage economic development and guide the allocation of resources. While some of these measures benefit the PRC economy generally, they may also negatively affect CME. For example, CME’s business, financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations applicable to CME.
 
The PRC economy has been transitioning from a planned economy to a more market-oriented economy. Although the PRC government has implemented measures since the late 1970s emphasizing market-oriented reforms, the reduction of state ownership of productive assets and improved corporate governance, the PRC government still owns a substantial portion of productive assets in China and continues to play a significant role in regulating industrial development. In addition, the PRC government exercises significant control over China’s economic growth by controlling the allocation of resources and payment of foreign currency-denominated obligations, setting monetary policy and giving preferential treatment to particular industries or companies.


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Since late 2003, the PRC government has implemented a number of measures, such as raising bank reserves against deposit rates and placing additional limitations on the ability of commercial banks to make loans and raise interest rates, in an attempt to slow down specific segments of China’s economy that the government believed to be overheating. In 2008, however, in response to the world economic crisis, the PRC government cut internal rates and announced a stimulus plan in an attempt to help sustain growth. These actions, as well as future actions and policies of the PRC government, could materially affect CME’s liquidity and access to capital, as well as its ability to operate its business.
 
Uncertainties with respect to the PRC legal system could adversely affect CME.
 
CME conducts its business primarily through operations in China. CME’s operations in China are governed by PRC laws and regulations. CME’s operating companies are generally subject to laws and regulations applicable to foreign investments in China and, in particular, laws and regulations applicable to wholly foreign-owned enterprises. The PRC legal system is principally based on statutes. Prior court decisions may be cited for reference but typically have limited precedential value.
 
Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to foreign investments in China. However, China has not developed a fully integrated legal system, and recently enacted laws and regulations may not sufficiently cover all aspects of economic activities in China. In particular, because these laws and regulations are relatively new, and because of the limited volume of published decisions (and the nonbinding nature of such decisions), the interpretation and enforcement of these laws and regulations raise uncertainties. In addition, the PRC legal system is based in part on government policies and internal rules (some of which are not published on a timely basis or at all) that may have retroactive effect. As a result, CME may not be aware of its violation of these policies and rules until after a violation occurs. In addition, any litigation in China may be protracted and result in substantial costs and diversion of resources and management attention.
 
CME may have difficulty establishing adequate management, legal and financial controls in the PRC.
 
Most PRC companies historically have been less focused on establishing Western style management and financial reporting concepts and practices, as well as modern banking, computer and other internal control systems, than companies in the U.S. and certain other Western countries. CME believes that, with the hiring of its new CFO, it will be able to maintain sufficient internal control systems to comply with Section 404 of the Sarbanes-Oxley Act. However, CME may have difficulty in hiring and retaining a sufficient number of qualified internal control employees to work in the PRC. As a result of these factors, CME may experience difficulty in establishing management, legal and financial controls, collecting financial data, preparing financial statements, books of account and corporate records, and instituting business practices that meet Western standards. CME’s inability to maintain sufficient internal controls to meet the requirements of Section 404 of the Sarbanes-Oxley Act could impair our ability to timely meet our ongoing Exchange Act reporting obligations, may result in the failure to identify and assess the risks of their business and internal control system which may cause misstatements in its financial reporting and may result in a qualified opinion on its audit of internal control.
 
PRC regulation of loans to and direct investment by offshore holding companies in PRC entities may delay or prevent CME from making loans or additional capital contributions to its PRC operating companies, which could materially and adversely affect its liquidity and ability to fund and expand its business.
 
As an offshore holding company of its PRC operating companies, CME may make loans or additional capital contributions to its PRC operating companies. Any loans to CME’s PRC operating companies are subject to PRC regulations. For example, loans by CME to its operating companies in China, which are foreign-invested enterprises, to finance their activities may not exceed statutory limits and must be registered with the PRC State Administration of Foreign Exchange, or SAFE.
 
CME may also decide to finance its operating companies, in which it has equity ownership, by making capital contributions to such entities. The PRC Ministry of Commerce (or its local counterpart) must approve these capital contributions. CME cannot assure you that it will be able to obtain these government approvals


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on a timely basis, if at all, with respect to any such capital contributions. If CME fails to receive such approvals, its ability to use the proceeds of such transactions and to capitalize its PRC operations may be negatively affected, which could adversely affect CME’s liquidity and ability to fund and expand its business.
 
Governmental control of foreign exchange markets in the PRC may affect the value of an investment in certain securities of TM (Post-Transaction).
 
The PRC government imposes controls on the convertibility of the RMB into foreign currencies and, in certain cases, the remittance of currency out of China. CME receives substantially all of its revenues in RMB. CME’s income is primarily derived from dividend payments from its PRC operating companies. Shortages in the availability of foreign currency may restrict the ability of CME’s PRC operating companies to remit sufficient foreign currency to pay dividends or make other payments, or otherwise satisfy their foreign currency denominated obligations.
 
Under existing PRC foreign exchange regulations, payments of current account items, including profit distributions, interest payments and expenditures from trade-related transactions, can be made in foreign currencies without prior approval from SAFE by complying with certain procedural requirements. However, approval from appropriate government authorities is required where RMB is to be converted into foreign currency and remitted out of China to pay capital expenses, such as the repayment of loans denominated in foreign currencies. The PRC government may also at its discretion restrict future access to foreign currencies for current account transactions. If the Chinese foreign exchange control system prevents CME from obtaining sufficient foreign currency to satisfy its currency demands, CME may not be able to pay dividends in foreign currencies to shareholders.
 
Fluctuation in the value of the RMB may have a material adverse effect on the value of an investment in certain securities of TM (Post-Transaction).
 
The value of the RMB against the U.S. dollar and other currencies may fluctuate and is affected by, among other things, changes in political and economic conditions. On July 21, 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar. Under the new policy, the RMB has been permitted to fluctuate within a narrow and managed band against a basket of foreign currencies. This change in policy has resulted in an approximately 17% appreciation of the RMB against the U.S. dollar between July 21, 2005 and June 30, 2009. While the international reaction to the RMB revaluation has generally been positive, there remains significant international pressure on the PRC government to adopt an even more flexible currency policy, which could result in a further and more significant appreciation of the RMB against the U.S. dollar.
 
Substantially all of CME’s revenues and costs are denominated in the RMB, and a significant portion of CME’s financial assets is also denominated in the RMB. Further, CME relies principally on dividends and other distributions paid to it by its operating companies and affiliated entities in China. Any significant revaluation of the RMB could materially and adversely affect CME’s cash flows, revenues, earnings and financial position, and the value of, and any dividends payable with respect to, the shares of TM (Post-Transaction) in U.S. dollars. Any fluctuations of the exchange rate between the RMB and the U.S. dollar could also result in foreign currency translation losses for financial reporting purposes.
 
Any health epidemics and other outbreaks, or war, acts of terrorism or other man-made or natural disasters could severely disrupt CME’s business operations.
 
CME’s business could be materially and adversely affected by the outbreak of avian influenza, severe acute respiratory syndrome, or SARS, swine influenza (H1N1) or another epidemic. In 2006 and 2007, there were reports of occurrences of avian influenza in various parts of China, including a few confirmed human cases and deaths. In 2009, there were reported cases of swine influenza (H1N1) in certain parts of China. Any prolonged recurrence of avian influenza, SARS, swine influenza (H1N1) or other adverse public health developments in China could require the temporary closure of CME’s offices or otherwise severely disrupt CME’s business operations and adversely affect its results of operations.


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CME’s operations are also vulnerable to interruption and damage from natural and other types of disasters, including snowstorms, earthquakes, fire, floods, environmental accidents, power loss, communications failures and similar events. In January and February 2008, large portions of Southern and Central China were hit with a series of snowstorms, which caused extensive damage and transportation disruption. On May 12, 2008, a severe earthquake measuring approximately 8.0 on the Richter scale occurred in Sichuan province of China, resulting in numerous casualties and severe property damage. The Panzhihua earthquake struck southern Sichuan province on August 30, 2008 resulting in deaths and damage to property and infrastructure. If any disaster were to occur in the future, CME’s ability to operate its business could be seriously impaired.
 
 
CME may fail to execute its expansion strategies and manage its growth effectively, which could materially adversely affect its financial condition and results of operations.
 
CME has experienced significant growth since it commenced its advertising services business in November 2003. To meet the demand of advertisers for broader network coverage, CME must continue to expand the coverage of its network by increasing the number of inter-city express buses within its network and expanding into new provinces and regions not currently included in its network. CME intends to increase the number of inter-city express buses within its network and to enter into new provinces and regions in the future. CME also plans to increase the number of airport shuttle buses and tour buses included in its network. In addition, CME plans to expand its network to other transportation vehicles, such as shuttle buses servicing the commute between supermarkets and residential communities in China and expand its business into other media platforms such as stationary adverting media at bus terminals. However, there can be no assurance that it will be able to execute its expansion strategies.
 
CME’s continued success is dependent on its ability to execute its expansion strategies and manage its growth effectively and efficiently in the future. The marketing strategies of advertisers and advertising agencies may differ from region to region to cater to the taste of the target audiences in a particular region. As a result, CME’s clients’ specifications may become more complex and difficult to satisfy and CME may be required to devote more time, effort and resources to satisfy client preferences, which could substantially increase its costs. In addition, as CME continues its expansion efforts, it will incur substantial costs and expend substantial resources. CME may not be able to manage its current or future operations effectively or compete effectively in the new markets it enters. If it is not able to manage its growth successfully, CME’s business and prospects will be materially adversely affected.
 
The continued growth of CME’s business has resulted in, and will continue to result in, substantial demand on its management, operational and other resources. In particular, the management of its growth will require, among other things:
 
  •  increased sales and sales support activities;
 
  •  expanded and improved administrative and operational systems;
 
  •  enhanced information technology systems;
 
  •  stringent cost controls and sufficient working capital;
 
  •  strengthening of financial and management controls;
 
  •  a reliable supply of digital television displays and other equipment; and
 
  •  hiring and training of new personnel.
 
CME’s limited operating history may not serve as an adequate basis to judge its future prospects and results of operations.
 
CME commenced its operations in the advertising industry in November 2003. Its limited operating history may not provide an adequate basis for you to evaluate its business, financial performance and


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prospects. Since the market in which CME operates is rapidly evolving, it has only limited insight into the emerging trends that may affect its business. In addition, it is difficult to evaluate the viability of its business and address the risks frequently encountered by early stage companies using new forms of advertising media. If CME is unsuccessful in addressing any risk or uncertainty associated with its network, its business, financial condition and results of operations may be materially adversely affected.
 
If CME’s clients or the passengers do not accept, or lose interest in, in-vehicle digital television advertising, its business will deteriorate.
 
The market for in-vehicle television advertising networks in China is relatively new and its potential is uncertain. CME’s success depends on the public acceptance of this method of delivering advertising content. If the target audiences are not receptive to its advertising network, CME’s clients may not continue to utilize this medium as a component of their advertising strategies. The attractiveness of CME’s advertising network to the target audiences is primarily affected by the appeal of its entertainment programs. As a result, CME’s ability to continue to obtain a sufficient range of programs attractive to the target audiences and to switch or rotate the programs more frequently on its advertising network is critical to maintain the appeal of its advertising network. Currently, CME manually updates the entertainment programs on a fifteen-day interval and advertisements on a thirty-day interval. CME expects to upgrade its existing equipment and control systems to automatically update its entertainment programs upon arrival of the express buses carrying its network at the bus terminals. CME believes this upgrade will allow for more frequent updating of the content to increase the attractiveness of its advertising network and enable it to reduce the costs of manual updating. However, there can be no assurance that CME will be successful in these efforts. If CME fails in these efforts, its network may lose its appeal and it may not be able to draw the attention of the bus passengers. In addition, the attention of the target audiences may be districted by the increasing popularity and use of personal handheld entertainment devices, such as portable media players and handheld video game devices. If CME fails to maintain or increase the attractiveness of its network, its business, financial condition and results of operations may be materially adversely affected.
 
Although CME has adopted various methods to enhance the effectiveness of its advertising network, passengers may find some elements of in-vehicle digital television advertising disruptive or intrusive. For example, passengers are not able to turn off entertainment programs and advertisement content during transit because the switches of CME’s equipment and systems are connected to the electric doors of the buses, which cannot be opened while the buses are traveling on expressways. In addition, CME’s systems are programmed to play the entertainment programs and advertisements at or above a fixed minimum volume. Because passengers are effectively confined to their seat during their journey, they may react negatively to having to see and hear CME’s content. While there have been no significant complaints received to date and there are currently no regulations or laws restricting the broadcasting of CME’s programs in the vehicles, if a substantial number of passengers complain about CME’s services, bus operators may become less willing or unwilling to carry CME’s network on their buses and advertising agencies and advertisers may become less willing or unwilling to use CME’s network to deliver their advertisements. As a result, its business, financial condition and results of operations would be materially adversely affected.
 
CME may not be able to renew its existing long-term framework agreements with inter-city express bus operators or enter into new long-term framework agreements with additional inter-city express bus operators
 
CME has entered into long-term framework agreements (including the supplementary agreements, if any) with 40 inter-city express bus operators in China to install its equipment and control systems and display entertainment programs and advertisements for a term ranging from five to eight years. These agreements will begin to expire December 31, 2011. As a result, CME’s future growth is dependent upon its ability to continue to enter into long-term framework agreements with existing and new inter-city express bus operators. If it is unable to renew its existing long-term framework agreements upon expiration, it may lose advertising network coverage over municipalities and provinces highly desirable for its clients and consequently, it may lose its competitive advantage in the industry. Moreover, in order to replace the network coverage represented by the


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loss of such long-term arrangements, CME may have to enter into short-term contracts with other inter-city express bus operators on less favorable terms, which could adversely affect the attractiveness of its advertising network for its clients and increase its costs. Further, if it is unable to enter into long-term framework agreements with additional inter-city express bus operators on commercially reasonable terms, CME may not be able to expand its network as planned which would reduce its ability to grow its revenues and maximize average advertising fees.
 
CME has not experienced any difficulties or disputes with respect to the performance of its long-term agreements with inter-city express bus operators. However, if any inter-city express bus operator ceases to engage CME to exclusively provide entertainment programs and advertisements on its buses, chooses not to renew its long-term framework agreement with CME upon expiration or terminates its long-term framework agreement with CME before it expires or otherwise fails to perform its obligations to CME, there can be no assurance that CME will be able to seek adequate recourse and its business, financial condition and results of operations could be materially adversely affected.
 
CME does not have direct contractual relationships with third-party owners of certain inter-city express buses carrying its network and its purchase of digital television displays originally installed on these buses may be subject to claims by third parties.
 
Less than 10% of the inter-city express buses carrying CME’s network are not owned by the inter-city express bus operators participating in its network with which it has entered into long-term framework agreements. Instead, these inter-city express buses are owned by third parties and commissioned by the inter-city express bus operators participating in its network to provide transportation services. CME is not a party to the contracts between these third-party bus owners and the inter-city express bus operators participating in its network. CME does not have direct contractual relationships with third-party owners of certain inter-city express buses carrying its network. Therefore, it does not have control over such third-party bus owners. Although the inner-city express bus operators are responsible for maintaining the number of buses provided by the third-party owners, in the event that any third-party bus operator fails to provide transportation services or unilaterally terminates its contracts with the inter-city express bus operators participating in its network for any reason, CME would not be able to fulfill its obligations to display advertisements for its clients on those buses. If this occurs, CME’s business, financial condition and results of operations could be materially adversely affected.
 
In addition, CME has purchased digital television displays originally installed on the buses owned by third-parties from some of the bus operators participating in its network. However, the bus operators that sold the digital television displays to CME may not have ownership over such displays. CME has been advised by its PRC counsel, that it has legally acquired ownership over such digital television displays in accordance with PRC law because it has acquired such displays in good faith as a bona fide third-party purchaser (that is, it was not aware of the fact that the bus operators did not have ownership over the digital television displays at the time of the purchase), it paid reasonable considerations for such displays, and it has received delivery of such displays. In addition, CME entered into supplementary agreements with such bus operators in the summer of 2008, whereby the bus operators guaranteed their full title to the displays they transferred to CME, and if any third party asserts ownership to the displays which causes any loss to CME, the bus operators shall be responsible for the settlement of such dispute and compensate CME in full for the amount of the loss suffered by CME. All digital television displays purchase agreements entered into after August 2008 contain similar guarantees by bus operators. Nonetheless, there can be no assurance that the original owners of the digital television displays will not assert claims against the bus operators and include CME as a defendant in the claims. If any plaintiff prevails, CME may be jointly and severally liable with the bus operators for monetary compensation of residual value of the digital television displays or for an injunction to return the digital television displays to the original owner, and there can be no assurance that the bus operators will compensate CME in full the amount of the loss suffered by CME as provided in the supplementary agreements. Either case will cause CME to incur cash outlays to pay for monetary compensation or to fund the replacement of digital television displays.


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A business disruption of any bus operator participating in CME’s network or a downturn in the inter-city express bus transportation industry in general could adversely affect its business.
 
CME’s business depends heavily on the continued operation of the inter-city express bus transportation services. Prior to January 1, 2006, CME relied on no more than ten bus operators to carry its network. For the year ended December 31, 2007, although the number of bus operators participating in its network increased to more than 30, CME relied heavily on the top ten bus operators to carry its network. For the years ended December 31, 2007 and December 31, 2008, the amount of concession fees paid to the top ten bus operators participating in its network accounted for 62.3% and 61.0%, respectively of total concession fees paid to all bus operators participating in its network. Currently, more than one-fifth of inter-city express buses carrying its network are operated by three bus operators participating in its network. If any major bus operator participating in CME’s network experiences a business disruption, insolvency or bankruptcy, it might suspend or stop its transportation services partially or completely. If this occurs, the number of inter-city express buses carrying CME’s network could decrease significantly, which could materially adversely affect the scope of its market share.
 
Furthermore, inter-city bus travel in China is largely driven by economic growth. Therefore, inter-city express bus transportation services are susceptible to downturns in the economy. In the event of an economic downturn, the number of passengers, including business, leisure and other travelers, may decrease, which would result in a smaller target audience and in turn impact the effectiveness of its advertising network for advertisers and advertising agencies. Moreover, further increases in crude oil prices could result in increases in bus fares payable by the passengers, particularly if government subsidies are insufficient to cover resulting increases in fuel costs incurred by bus operators, which may adversely affect the demand for travel on inter-city express buses. Further, the introduction and the expanded reach of high speed railway networks as the government continues to increase expenditure on high speed railway construction in China are likely to impose competition for inter-city express bus operators in the future. If an increased number of inter-city travelers choose to travel on high speed railways, or alternative transportation options, such as automobiles or airplanes, instead of on inter-city express buses in the future, the size of the target audience reachable by its advertising network may not grow or may even decrease and the attractiveness of its advertising network for advertisers may suffer.
 
If CME is unable to continue to obtain a wide range of free entertainment programs from its content suppliers or from other content suppliers on substantially the same terms in the future, its business could be materially adversely affected.
 
On September 1, 2006, CME entered into a cooperation agreement with Fujian SouthEastern Television Channel for a term of nine years starting from September 1, 2006 to August 31, 2015. In addition, on August 25, 2008, CME entered into a cooperation agreement with Hunan Satellite Television for a term of two years starting from September 1, 2008 to August 31, 2010. As a result, CME obtains a wide range of free entertainment programs from Fujian SouthEastern Television Channel and Hunan Satellite Television each month. However, there can be no assurance that CME will be able to continue to obtain free content from these content suppliers or at all. CME is obligated to perform certain obligations under these agreements. For example, CME is obligated to display the logo of Fujian SouthEastern Television Channel while showing its content on its network. In the event of a breach of such obligations, Fujian SouthEastern Television Channel could terminate its agreement with CME. The payment of penalty charges in the event of an early termination may not be sufficient to compensate CME for the loss of its ability to obtain free entertainment content each month. Moreover, if CME fails to renew its agreements with its content suppliers on substantially the same terms upon expiration, CME may have to pay for content provided by third-party suppliers which would increase CME’s costs and adversely affect its profitability. If CME is unable to locate alternative content suppliers to provide comparable content on commercially reasonable terms in the event of an early termination or upon expiration, the attractiveness of its advertising network could be reduced and its business could be materially adversely affected.


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CME relies on third-party advertising agencies to source advertisers. CME’s failure to retain key third-party agencies or attract additional agencies on favorable terms could materially adversely affect its revenue growth.
 
CME currently generates a majority of its revenues by selling advertising time slots to advertising agencies that purchase advertising time slots from it and in turn resell such time directly to advertisers. Consequently, the success of its business is significantly reliant on such third-party advertising agencies to source advertisers. CME typically enters into advertising contracts with its advertising agency clients with terms ranging from several months to one year. If it fails to renew these advertising contracts for any reason with any of its key advertising agency clients, its revenues may be materially adversely affected.
 
CME has also entered into long-term framework agreements with some of its advertising agency clients for three year terms that commenced January 1, 2008 to December 31, 2010. These long-term framework agreements specify the permissible range of annual increase in the average selling prices, which is between a minimum of 20% and a maximum of 50%. However, CME has entered into such long-term framework agreements with a small portion of its clients. If it is unable to increase its average selling prices with a sufficient number of its clients each year, it may not be able to grow its revenues or maximize its average advertising fees as planned. In addition, the advertising industry is highly competitive and fragmented. If it is unable to closely monitor the changing trends in the advertising agency industry or fail to retain any of its key third-party advertising agency clients, its business, financial condition and results of operations could be materially adversely affected.
 
CME derives a substantial portion of its revenues from a limited number of advertising clients.
 
CME derives a majority of its revenues from a limited number of advertising clients. For the year ended December 31, 2008, revenues generated from its top ten clients and the single largest client accounted for 64.3% and 7.6%, respectively, of its total revenues. CME generated all its revenues in the year ended December 31, 2005 directly from advertisers. It started generating revenues from advertising agency clients who purchase advertising time slots from it and resell such time to their end clients in the year ended December 31, 2006 and the top two clients in that year were advertising agency clients. For the years ended December 31, 2007 and 2008, all of the top ten clients were advertising agency clients. The change of mix of advertising agency clients in relation to direct advertising clients in its client base significantly increased its reliance on advertising agency clients for the generation of its revenues. The loss of sales from any of its clients, in particular, its advertising agency clients, could have a material adverse effect on its business. Moreover, CME typically enters into one-year contracts with its advertising agency clients. CME’s revenues may decline if it is unable to renew the one-year contracts with its advertising agency clients.
 
CME relies on one equipment supplier, Hangzhou Yusong Electronic Technology Co., Ltd., or Hangzhou Yusong, to deliver its digital television displays and related equipment and automated control systems.
 
CME purchases its digital television displays and related equipment and control systems exclusively from Hangzhou Yusong, an independent third party. Because it relies exclusively on Hangzhou Yusong for the supply of its equipment and control systems, any interruption or delay in Hangzhou Yusong’s production could materially adversely affect CME’s ability to install its equipment and control systems on additional inter-city express buses to expand its network as planned, and CME may not be able to find an alternative equipment supplier in a timely or cost-effective manner, if at all. In addition, although Hangzhou Yusong has been its equipment supplier since 2003, CME does not have any exclusive contractual arrangements with Hangzhou Yusong. As a result, Hangzhou Yusong may produce equipment and control systems for CME’s competitors in the future, and may refuse to renew its agreement with CME or may enter into agreements with it on less favorable terms, which may substantially increase CME’s costs and materially adversely affect CME’s operations.
 
Moreover, on August 1, 2008, Zheng Cheng, Fujian Fenzhong and Hangzhou Yusong entered into a patent licensing agreement pursuant to which Hangzhou Yusong obtained a license to manufacture its equipment and control systems based on CME’s patented technology. According to the patent licensing


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agreement, Hangzhou Yusong is subject to confidentiality obligations to keep the production procedures or other information necessary for the production of CME’s patented automated control systems in strict confidence. However, there can be no assurance that Hangzhou Yusong will abide by its confidentiality obligations. In the event that Hangzhou Yusong breaches its confidentiality obligations and discloses production procedures or other information necessary for the production of CME’s patented automated control systems to any third party, including CME’s competitors, CME’s business may be materially adversely affected. In addition, although CME obtained patent protection for its automated control systems, in the event of any third-party infringement of its patent, the costs and other resources necessary to prosecute any claim may be large and could have a material adverse effect on CME’s business.
 
Further, certain key components of CME’s equipment and control systems, such as hard disk drives and integrated circuit chips are imported from overseas. Although the importation of such equipment and systems is the responsibility of Hangzhou Yusong, any delay resulting from custom inspections or otherwise of these imported key components could in turn result in the delay of Hangzhou Yusong’s production and supply of CME’s equipment and control systems to it, which could adversely affect its business.
 
CME may reach saturation in terms of advertising time slots available for sale and, conversely, it may experience difficulties in selling advertising time slots, either of which could adversely affect its revenues and profitability over time.
 
CME sells the advertising time slots on its network placed on inter-city express buses. CME sells its advertising time slots by the number of minutes or seconds in a particular municipality or province for a period of a few months to one year. Although inter-city express buses carrying its network frequently travel across municipalities and provinces in China, CME sells its advertising time slots based on the municipality or province from which the buses depart. Therefore, CME’s advertising time slots available for sale are limited by the municipalities and provinces included in its network. CME’s existing network comprises all four municipalities, namely, Beijing, Shanghai, Tianjin and Chongqing, and seven economically prosperous provinces, namely, Guangdong, Jiangsu, Fujian, Sichuan, Hubei, Anhui and Hebei. CME expects to enter into new provinces and regions in the future. If CME is unable to enter into new provinces according to its plans, it would not be able to increase the number of advertising time slots available for sale on its network. In addition, advertisers usually target audiences located in economically prosperous regions to promote their products and services. In provinces and municipalities where demand for advertising time slots by advertisers is particularity strong, such as Shanghai, Beijing, Jiangsu and Guangdong, CME may run out of advertising time slots for sale to its clients. On the other hand, it may not be able to sell all advertising time slots on inter-city express buses traveling in economically less prosperous provinces or regions as it continues to expand its geographic coverage in the future, which could adversely affect its ability to generate higher levels of revenues and profitability over time.
 
A downturn in the businesses of advertisers, advertising agencies or the advertising industry in general, could materially adversely affect CME’s business.
 
CME generates all of its revenues from advertisers who purchase advertising time slots directly from it or through advertising agencies. If there is a downturn in the business of the advertisers, they may decrease their overall advertising spending on new out-of-home advertising networks, including CME. Moreover, the businesses of some advertisers may be subject to seasonal or unpredictable fluctuations, making it difficult for them to determine the amount of advertising spending to be used on CME’s advertising network, if at all. In the event of a downturn in the businesses of the advertisers, the advertisers may decrease or cease purchases of advertising time slots from CME. Similarly, CME’s business from advertising agencies could be materially adversely affected if the advertisers who purchase advertising time slots through the advertising agencies decrease their advertising spending. All of CME’s historical revenues have been generated from advertising services. CME does not currently have any plans to diversify revenue sources beyond the provision of selling advertising time slots. As a result, if there were any business disruption or a downturn in the advertising industry in general for any reason, CME may be unable to diversify its revenue sources and its ability to generate revenues and its results of operations could be materially adversely affected.


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CME operates in the advertising industry, which is particularly sensitive to changes in economic conditions and advertising trends.
 
CME operates in the advertising industry where demand for advertising time and the resulting advertising spending are particularly sensitive to changes in general economic conditions with advertising spending typically decreasing during periods of economic downturn. The amount of advertising spending on CME’s network may decrease for a number of reasons, including:
 
  •  a general decline in economic conditions;
 
  •  a decline in economic conditions in the particular geographical regions in which CME conducts business;
 
  •  a decision to shift advertising spending to other advertising media; and
 
  •  a decline in advertising spending in general.
 
A decrease in demand for advertising media in general, and for CME’s advertising services in particular, would materially adversely affect its business, financial condition and results of operations.
 
If CME fails to attract advertising clients to its network, it will be unable to maintain or increase its advertising prices, which would negatively affect its ability to grow revenues.
 
The actual prices CME can charge its advertising clients who purchase advertising time slots on its network, either directly or through advertising agencies, depend on the coverage and quality of its networks and the demand by advertisers for advertising time. CME’s advertising clients choose to advertise on its advertising network in part based on the extent of its coverage and the desirability of the cities where it operates. If CME fails to maintain or expand its geographic coverage, or solidify its brand name and reputation as a quality provider of advertising services, advertisers may be unwilling to purchase time on its network or pay the advertising fees it requires to remain profitable. A decrease in demand for its services could cause it to lower the prices it charges for advertising time on its network and could negatively affect its ability to increase its prices in the future, either of which would materially adversely affect its business, financial condition, prospects and results of operations.
 
If CME fails to compete successfully with existing and new competitors, its business and results of operations may be adversely affected.
 
CME competes directly with existing smaller advertising network operators who place their network on inter-city buses that travel primarily between villages or on highways in China. In addition, CME competes with other alternative advertising media, such as the Internet, street furniture and frame, as well as traditional advertising media, such as television, newspapers, magazines and radio for overall advertising spending by its clients. CME also competes for overall advertising spending by its clients with new out-of-home advertising network operators including Focus Media, a multi-platform digital media company with its primary platform in office buildings or other building structure; VisionChina Media, Towona and Bus Online, digital television advertising network operators with their primary platforms on public mass transportation systems inside cities; and AirMedia, a digital television advertising network operator with its primary platform on airplanes and airports.
 
In the future, CME may also face competition from new entrants into the out-of-home advertising network sector. In addition, since December 2005, the establishment of wholly foreign-owned advertising companies has been permitted and a large number of wholly foreign-owned advertising companies have been established since then. CME believes China’s ongoing deregulation of its advertising market will expose it to greater competition with existing or new advertising companies in China, including PRC subsidiaries of larger or better established multi-national companies that may have more experience in the advertising industry and significantly greater financial resources.


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If CME loses its status as the sole strategic alliance partner designated by TTAVC, it may be unable to maintain or expand its advertising network.
 
In October 2007, CME entered into a five-year cooperation agreement with Transport Television and Audio-Video Center, or TTAVC, an entity affiliated with the Ministry of Transport of the People’s Republic of China to be the sole strategic alliance partner in the establishment of a nationwide in-vehicle television system that displays copyrighted programs on buses traveling on highways in China. The cooperation agreement also gave CME exclusive rights to display advertisements on the system. In November 2007, TTAVC issued a notice to municipalities, provinces and transportation enterprises in China regarding facilitating the implementation of the system contemplated under the cooperation agreement. Its ability to maintain its status as the sole strategic alliance partner designated by TTAVC is important to its future growth. If CME is unable to maintain such status because TTAVC refuses to renew the agreement upon expiration or for any other reason, CME may be unable to expand its network as planned. Moreover, CME would lose its exclusive rights and other advertising network operators may establish in-vehicle television systems on buses traveling on highways in China to compete with it. If this occurs, it may lose its market share to these competitors. Further, CME’s clients may decide to place their advertisements on such competing networks or otherwise decrease their advertising spending on its network, which would materially adversely affect its financial condition and results of operations.
 
If CME is unable to adapt to changing trends and technologies in the advertising industry, it will not be able to compete effectively.
 
Trends and technologies in the advertising industry are continuously evolving. The ability to quickly identify new advertising trends and to develop new technology to meet the demand of advertisers and target audiences is essential to the continued success in the advertising industry. To enable more frequent updating of the content displayed on its network, CME plans to upgrade its existing equipment and control systems to automatically update its programs upon arrival of the buses at bus terminals. However, there can be no assurance that it will be able to successfully upgrade its existing equipment as planned. If it is unsuccessful in these efforts, CME may incur substantial research and development costs without the ability to recoup such expenses with future revenues derived from such efforts and it may not be able to grow its business as planned.
 
In addition, if advertisers find other advertising networks to be more attractive, it may be required to expand into new advertising networks to adapt to new trends in the advertising industry, which may require substantial capital expenditure to develop or acquire new technologies. It may not have sufficient financial or technological resources necessary to fund or otherwise implement needed technological innovations. If CME fails to respond to the changing advertising trends, it may be unable to increase or maintain its market share and revenues, which may materially adversely affect its business prospects.
 
CME may be unable to obtain sufficient funds for future development on commercially reasonable terms, which could materially adversely affect its liquidity and financial condition.
 
CME may need additional capital for future developments. If current sources are insufficient to satisfy cash requirements, it may seek to sell additional equity or debt securities or obtain a credit facility. This could result in additional dilution to shareholders and increased debt service obligations. The incurrence of indebtedness could also result in operating and financing covenants that could restrict operations and liquidity.
 
In addition, its ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties, including:
 
  •  investors’ perception of, and demand for, securities of new out-of-home advertising media companies;
 
  •  economic conditions in the United States and other capital markets in which CME may seek to raise funds;
 
  •  its future financial condition, results of operations and cash flows;


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  •  PRC government regulation of foreign investment in advertising services companies and restrictions on out-of-home advertising media companies in China;
 
  •  economic, political and other conditions in China; and
 
There can be no assurance that financing will be available in amounts or on terms acceptable to CME in a timely manner, if at all. Any failure to raise additional funds on favorable terms could have a material adverse effect on its liquidity and financial condition.
 
The loss of key employees, including any member of senior management, or a failure to recruit qualified personnel as needed could weaken CME’s strategic, technological and operational expertise, and lower the quality of its services.
 
CME’s future success depends upon the continued services of its senior executives and other key employees. In particular, it relies on the expertise and experience of its chief executive officer, Zheng Cheng and its chief financial officer, Jacky Lam Wai Kei. It relies on their industry expertise, their experience in its business operations, and their working relationships with CME’s employees, its clients, the inter-city express bus operators, and relevant government authorities. Its success also depends on its ability to attract and retain qualified personnel for strategic planning, programming and enhanced services. The competition for qualified personnel in new out-of-home advertising industry may increase in the future, making it difficult for it to attract and retain qualified personnel. CME’s operations could suffer with the loss of any member of the senior management team or any key employee. If one or more of its senior executives were unable or unwilling to continue in their present positions, CME might be unable to find suitable replacements for them. In addition, although CME has entered into non-competition agreements with its senior executives and key employees, there can be no assurance that they will abide by their non-competition obligations. If any of them work for its competitors in the future, it may suffer from losses of clients, content suppliers, equipment suppliers, key professionals and staff members, which could materially adversely affect its operations and revenues.
 
CME may be subject to the risk of labor disputes.
 
CME is subject to laws and regulations in relation to labor protection in China, including representation of employees by a labor union. Currently, the employees of Fujian Fenzhong are represented by a labor union. The labor union typically represents the majority of employees and assists with collective bargaining of compensation and benefits and other legal matters with the employers on behalf of employees, monitors compliance with labor laws and internal labor procedures and mediates labor disputes in the case of conflicts and lawsuits against the employer. The labor union can also enter into a collective bargaining agreement with the employer in writing and all employment contracts separately entered into with each employee can be no less favorable than the terms contained in such collective bargaining agreement. In addition, employers are required to make contributions to the union fund at a rate of 2% of salaries paid to the employees. For the year ended December 31, 2006, CME’s contribution to the union fund amounted to $12,000, which increased by 93.0% to $23,000 for the year ended December 31, 2007, which further increased by 5% to $27,000 for the year ended December 31, 2008. Such contributions are subject to increase as it recruits new employees or increase the salaries of its existing employees. Moreover, it has not experienced strikes or labor protests in the past; however, there is no assurance that such events will not occur in the future if it is unable to maintain a satisfactory relationship with its employees or the labor union. If this occurs, it could experience a disruption to its operations which would materially adversely affect its financial condition and results of operations.
 
CME may be subject to intellectual property infringement claims, which may force it to incur substantial legal expenses and could potentially result in judgments against it, which may materially disrupt its business.
 
CME cannot be certain that its advertising content, entertainment content or other aspects of its business do not or will not infringe upon patents, copyrights or other intellectual property rights held by third parties. Although it is not aware of any such claims, it may become subject to legal proceedings and claims from time to time relating to the intellectual property of others in the ordinary course of its business. If it is found to


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have violated the intellectual property rights of others, it may be enjoined from using such intellectual property, and it may incur licensing fees or be forced to develop alternatives. Successful infringement or licensing claims against it may also result in substantial monetary liabilities, which may materially adversely affect its business.
 
CME’s failure to protect its intellectual property rights could have a negative impact on its business.
 
CME believes its brand, trade name, patented automated control systems and other intellectual property rights are critical to its success. The success of its business depends in part upon its continuing ability to use its brand, trade names, trademarks and patented automated control systems to increase brand awareness and to further develop its brand and expand its advertising network. In particular, CME’s patented automated control system is a key component of its competitive advantage and its growth strategy. The unauthorized use of its patented automated control systems or other infringements on its intellectual property rights could diminish the value of its brand and its market acceptance, competitive advantages or goodwill.
 
CME does not have any business liability, disruption, property or litigation insurance in China.
 
The insurance industry in China is still at an early stage of development. Insurance companies in China offer limited business insurance products. CME has determined that the cost of such insurance and the difficulties associated with acquiring such insurance on commercially reasonable terms make it impractical for it to have such insurance. As a result, except for the mandatory vehicle insurance, CME does not have any business liability, disruption, litigation or other property insurance coverage for its operations in China. Any business disruption, loss of properties or litigation it experiences might result in substantial costs incurred and diversion of resources which may materially adversely affect its business, financial condition and results of operations.
 
Failure to comply with PRC laws and regulations relating to advertisement content restrictions governing the advertising industry in China may result in severe penalties and civil liabilities.
 
Advertisers, advertising operators, and advertising distributors are required by PRC advertising laws and regulations to ensure that the content of the advertisements they prepare or distribute is fair, accurate and in full compliance with applicable laws, rules and regulations. In providing advertising services, advertising agencies and advertising distributors must review the supporting documents provided by advertisers and verify that the content of the advertisements complies with applicable PRC laws, rules and regulations. Prior to distributing advertisements that are subject to government censorship and approval, such as advertisements for patented products or processes, pharmaceutical products, medical procedures, alcohol, tobacco, and cosmetics, advertising distributors are obligated to verify that such governmental review has been performed and approval has been obtained. Violation of these regulations may result in penalties, including fines, confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish corrections of the advertisement containing restricted or prohibited content. In circumstances involving serious violations, the State Administration of Industry and Commerce, or SAIC, or its local branches may revoke violators’ licenses or permits for their advertising business operations.
 
CME is an advertising operator that places advertisements provided by its clients on inter-city express buses. As a result, it is obligated under PRC laws and regulations to ensure that the content of the advertisements displayed on its advertising network is in full compliance with applicable laws and regulations. CME endeavors to take all required measures, including independent verification of whether the advertisers have performed requisite reviews and obtained necessary approvals prior to distribution of relevant advertisements. However, if it fails to comply with applicable laws and regulations for any reason, CME may face severe penalties.
 
Moreover, civil claims may be filed against CME for fraud, defamation, subversion, negligence, copyright or trademark infringements or other violations due to the nature and content of the information displayed on its network. If viewers find the content displayed on its advertising network to be offensive, bus companies


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that display its content on their buses and bus terminals may seek to hold CME responsible for any claims by their passengers or they may terminate their relationships with CME.
 
If the PRC government determines that CME was obligated to register as an out-of-home advertising network operator, it may be subject to administrative sanctions, including discontinuation of its business for failure to complete such registration.
 
The SAIC promulgated the Out-of-Home Advertising Registration Administrative Regulations, or the Out-of-Home Advertising Regulations, on December 8, 1995 as amended on December 3, 1998 and May 22, 2006. Under the Out-of-Home Advertising Regulations, out-of-home advertisements in China must be registered with the local branch of the SAIC before dissemination. The advertising distributors are required to submit a registration application form and other supporting documents for registration. After review and examination, if an application complies with applicable requirements, the local branch of the SAIC will issue an Out-of-Home Advertising Registration Certificate for such advertisement. A change of registration with local SAICs must be made in the event of a change in the distributor, the location of dissemination, the periods, the content, the format, or the specifications of the advertisements.
 
According to the Out-of-Home Advertising Regulations, advertisements posted or placed on public transportation vehicles, such as inter-city express buses, are considered out-of-home advertisements and must be registered as advertising distributors. However, it is unclear whether the advertisements displayed on CME’s network would be considered out-of-home advertisements. Further, although the PRC Advertising Law defines an “advertising distributor” as a legal person or other economic entity that distributes advertisements for advertisers or an advertising operator entrusted by advertisers, the Out-of-Home Advertising Regulations do not define “advertising distributor.” Therefore, CME is unable to determine whether it is considered as an advertising distributor for purposes of the Out-of-Home Advertising Regulations and therefore is obligated to obtain the registration certificate.
 
To ensure that CME’s business complies with the Out-of-Home Advertising Regulations, CME made inquiries with the local SAICs in the cities in which it has operations regarding whether it is required to obtain Out-of-Home Advertising Registration Certificates or to proceed with other procedures, such as filing, in these cities. With the exception of the local SAIC in Jiangsu province and Xiamen city of Fujian province, all the local SAICs with whom CME consulted do not expressly require CME to register with them. The officials at different levels within the local SAIC in Jiangsu and Xiamen city expressed different views on whether the advertisements shown on CME’s digital television displays should be regarded as out-of-home advertisements. CME recently again inquired with the local SAIC of Xiamen whether it is required to be registered and was verbally told that the advertisements displayed on CME’s digital television displays do not need to be registered with Xiamen SAIC and that CME does not need to obtain the Out-of-Home Advertising Registration Certificate according to Out-of-Home Advertising Regulations, but is only required to file the content of advertisement with the Xiamen SAIC. However, the filing procedures are unclear and it is also unclear whether penalties will be imposed if CME fails to make such filings. In addition, CME tried to re-apply for Out-of-Home Advertising Registration with the local SAICs in Jiangsu, but the officials rejected such applications saying that CME does not need to register under current applicable regulations. In light of such circumstances, there can be no assurance that CME will be able to complete the registration procedure in compliance with the new out-of-home advertisement provisions in Jiangsu, or at all. If CME is required to complete the registration procedure with the local SAIC in Jiangsu but fails to do so, the relevant authorities in Jiangsu may require CME to forfeit its advertising income sourced in Jiangsu or subject it to fines. CME may also be required to discontinue its operations in Jiangsu, which would result in a breach of contracts with its clients and its business, financial condition and results of operations would be materially adversely affected.


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Future acquisitions may have an adverse effect on CME’s ability to manage its business.
 
CME may acquire businesses, technologies, services or products which are complementary to its core advertising network business. Future acquisitions may expose it to potential risks, including risks associated with:
 
  •  the integration of new operations, services and personnel;
 
  •  unforeseen or hidden liabilities;
 
  •  the diversion of resources and management attention from its existing business and technology;
 
  •  its potential inability to generate sufficient revenue to offset new costs;
 
  •  the expenses of acquisitions; or
 
  •  the potential loss of or harm to relationships with its employees and clients resulting from its integration of new businesses.
 
Any of the potential risks listed above could have a material and adverse effect on its ability to manage its business, its revenues and net income.
 
See also Risk Factor
 
“CME may be unable to obtain sufficient funds for future development on commercially reasonable terms, which could materially adversely affect its liquidity and financial condition”.
 
CME may be required to obtain an approval from the PRC State Administration of Radio, Film and Television, or SARFT, under the Notice on Strengthening the Administration of Audio and Visual Media on Vehicles, Buildings and Other Public Arena, or December 2007 Notice.
 
On December 6, 2007, SARFT promulgated the December 2007 Notice pursuant to which the broadcasting of audio and visual programs, including news, drama series, sports, technology, entertainment and other programs, through radio and television networks, the Internet and other information systems affixed to vehicles and buildings and in airports, bus and railway stations, shopping malls, banks, hospitals and other out-of-home public media is subject to approval by the SARFT. The December 2007 Notice requires the local branches of SARFT to investigate and record any organization or company engaging in the activities described in the December 2007 Notice without any permissions, send written notices to such organizations or companies demanding their compliance with the December 2007 Notice, and report the results of such investigations to SARFT by January 15, 2008. To date, CME has not received any notice from the SARFT, or any of its local branches in the municipalities and provinces included in its network, demanding its compliance with the December 2007 Notice. CME made inquiries with SARFT regarding whether it is required to obtain an approval and the procedures of obtaining such an approval. Due to the lack to clear implementing rules and regulations for the December 2007 Notice, CME is unable to obtain a written confirmation from SARFT as to whether it is required to obtain an approval under the December 2007 Notice and the procedures thereof. To ensure that its business complies with the December 2007 Notice, CME submitted an application for approval with the local SARFT in Fujian in July 2008 and expects to receive an approval by the end of 2009. In the event that the SARFT, or any of its local branches in the municipalities and provinces included in CME’s network, requires it to obtain an approval, there is no assurance that it will be able to obtain such approval. If it is unable to obtain such approval, it may be required to discontinue its operations, which will decrease the attractiveness of its advertising network may cause its clients to reduce or cease the purchase of advertising time slots from it, and could materially adversely affect its business, financial condition and results of operations.
 
CME faces risks relating to health epidemics and natural disasters, which could materially adversely affect its financial condition and results of operations.
 
The effect of a health epidemic or outbreak could materially adversely affect CME’s business. Any prolonged recurrence of avian flu, severe acute respiratory syndrome, or SARS, or another epidemic or


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outbreak in China may result in restrictions on long-distance travel, including highway transportation on inter-city express buses, and have a material adverse effect on demand for transportation on inter-city express buses in China. In addition, the government authorities may require the closure of CME’s offices or other businesses to temporarily cease their operations, including transportation services provided by inter-city express bus operators critical to CME’s continued operations. For example, during SARS outbreak in 2003 and 2004, many businesses closed their offices and many businesses were temporarily forced to cease operations under the order of the government authorities. From 2005 to present, there have also been reports on the occurrence of avian flu in various parts of China, including a few confirmed human cases and deaths. The recurrence of any health epidemic in China could result in similar government measures to contain dissemination of diseases, which would have a material adverse effect on the Chinese economy in general and result in an impact on CME’s business if the inter-city express buses were required to temporarily cease operations. Further, a significant disruption to long-distance bus services resulting from major construction or renovation projects, terrorist attacks, natural disasters, weather conditions or other factors beyond CME’s control could render its advertising media inoperative or materially limit the effectiveness of CME’s advertising network. If any of these occurs, CME would not be able to display advertisements for its clients, which would result in a breach of contracts with its clients and have a material adverse effect on its business.
 
Risks Relating to CME’s Corporate Structure
 
If the PRC government determines that the agreements that establish the structure of CME’s business operations in China do not comply with applicable PRC laws and regulations, CME could be subject to severe penalties, including an order to cease its business operations.
 
The PRC government requires any foreign entities that invest in the advertising services industry to have at least two years of direct operations in the advertising industry outside China. CME has not directly operated any advertising business outside China and therefore, CME currently does not qualify under PRC regulations to directly provide advertising services. TM is a Delaware corporation and a foreign legal person under Chinese laws. Therefore, as a potential subsidiary, Fujian Express is currently ineligible to apply for the required licenses to provide advertising services in China. CME’s advertising business is currently provided through its contractual arrangements with Fujian Fenzhong, its consolidated entity in China. Fujian Fenzhong is currently owned by Zheng Cheng and Chunlan Bian. Fujian Fenzhong holds the requisite licenses to provide advertising services in China. Fujian Fenzhong directly operates its advertising network and sells advertising time slots to its clients. CME has been and expects to continue to be dependent on Fujian Fenzhong to operate its advertising business. CME does not have any equity interest in Fujian Fenzhong but receives the economic benefits of it through various contractual arrangements.
 
CME has been advised by its PRC counsel that each of the contracts under the structure of its business operations in China through contractual arrangements with Fujian Fenzhong and its shareholders complies, and immediately after the completion of this Transaction, will comply with all applicable PRC laws and regulations and does not violate, breach, contravene or otherwise conflict with any applicable PRC laws, rules or regulations. However, there exist substantial uncertainties regarding the application, interpretation and enforcement of relevant current and future PRC laws and regulations and their potential effect on its corporate structure and contractual arrangements. The interpretation of these laws and regulations are subject to the discretion of competent PRC authorities. There can be no assurance that the PRC regulatory authorities will not take a view different from the opinions of CME’s PRC counsel and determine that its corporate structure and contractual arrangements violate PRC laws, rules and regulations. In the event that the PRC regulatory authorities determine in their discretion that its corporate structure and contractual arrangements violate applicable PRC laws, rules and regulations, including restrictions on foreign investment in the advertising industry in the future, CME may be subject to severe penalties, including an order to cease its business operations.


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If CME or any of its current or future subsidiaries are found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, PRC regulatory authorities would have broad discretion in dealing with such violations, including:
 
  •  revoking the business and operating licenses of such subsidiary and consolidated entity;
 
  •  discontinuing or restricting the conduct of any related-party transactions between such subsidiary and consolidated entity;
 
  •  imposing fines, confiscating the income of Fujian Fenzhong or CME’s income, or imposing other requirements with which CME or any subsidiary or consolidated entity may not be able to comply;
 
  •  shutting down CME’s advertising network; or
 
  •  requiring CME or any subsidiary or consolidated entity to restructure the relevant ownership structure or operations.
 
The imposition of any of these penalties would result in a material adverse effect on CME’s ability to conduct its business.
 
CME relies on contractual arrangements with Fujian Fenzhong, its consolidated entity in China, and its shareholders, which may not be as effective in providing CME with operational control or enabling CME to derive economic benefits as through ownership of controlling equity interest.
 
CME has in the past relied, and will continue in the future to rely, on contractual arrangements with Fujian Fenzhong, its consolidated entity in China, and its shareholders to operate its advertising business. These contractual arrangements may not be as effective as ownership of controlling equity interest would be in providing CME with control over, or enabling CME to derive economic benefits from operations of, Fujian Fenzhong. If CME had direct ownership of Fujian Fenzhong, it would be able to exercise its rights as a shareholder to (i) effect changes in the board of directors of Fujian Fenzhong, which in turn could effect changes, subject to any applicable fiduciary obligations, at the management level, and (ii) derive economic benefits from operations of Fujian Fenzhong by causing Fujian Fenzhong to declare and pay dividends. However, under the current contractual arrangements, as a legal matter, if Fujian Fenzhong and any of its shareholder fails to perform its, his or her respective obligations under these contractual arrangements, CME may have to incur substantial costs and resources to enforce such arrangements, and rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which it cannot assure you will be effective. For example, if shareholders of Fujian Fenzhong were to refuse to transfer their equity interests in Fujian Fenzhong to CME or its designated persons when it exercises the purchase option pursuant to these contractual arrangements, CME may have to take legal actions to compel them to fulfill their contractual obligations.
 
CME expects to continue to depend upon its contractual arrangements among Fujian Express, Fujian Fenzhong and its shareholders to operate its advertising business in China due to the PRC regulatory restrictions on foreign investments in its industry. If (i) the applicable PRC authorities invalidate these contractual arrangements for violation of PRC laws, rules and regulations, (ii) Fujian Fenzhong or its shareholders terminate these contractual arrangements or (iii) Fujian Fenzhong or its shareholders fail to perform their obligations under these contractual arrangements, CME would not be able to continue its business operations in China or to derive economic benefits from the operations of Fujian Fenzhong. Further, if Fujian Express (on behalf of CME) fails to renew these contractual arrangements upon their expiration, CME would not be able to continue its business operations unless the then current PRC law allows CME or its direct subsidiary to directly operate advertising businesses in China. In addition, if Fujian Fenzhong or all or part of its assets become subject to liens or rights of third-party creditors, CME may be unable to continue some or all of its business activities, which could severely disrupt its business and cause grave damaging effects on its financial condition and results of operations. If Fujian Fenzhong undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights to some or all of these assets, thereby hindering CME’s ability to operate its business or derive economic benefits from Fujian Fenzhong, which could materially adversely affect its business and its ability to generate revenues.


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All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through either arbitration or litigation in the PRC. Therefore, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal environment in the PRC may not be as well developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit CME’s ability to enforce these contractual arrangements. In the event CME is unable to enforce these contractual arrangements, it may not be able to exercise effective control over its operating entities, and its ability to conduct its business or derive economic benefits from operations of Fujian Fenzhong may be negatively affected.
 
In addition, the equity interest in Fujian Fenzhong are pledged to secure the obligations of Fujian Fenzhong and the loans of Fujian Fenzhong’s shareholders according to the contractual arrangements. Pursuant to the PRC Property Law effective on October 1, 2007, the pledge of equity interest could take effect only after being registered with the competent local SAIC. Fujian Express and Fujian Fenzhong’s shareholders have received the Notice on Pledge of Equity Interest Registration issued by the Fuzhou Administration of Industry and Commerce dated June 15, 2009, announcing the respective equity interest pledged by Zheng Cheng and Chunlan Bian became effective as of such date.
 
The beneficial owners of Fujian Fenzhong may have potential conflicts of interest with CME.
 
The beneficial owners of Fujian Fenzhong are also the founders of CME and own a substantial portion of its common shares. Conflicts of interests between their dual roles as beneficial owners of both Fujian Fenzhong and CME may arise. There can be no assurance that when conflicts of interest arise, any or all of these individuals will act in the best interests of CME or that any conflict of interest will be resolved in its favor. In addition, these individuals may breach or cause Fujian Fenzhong to breach or refuse to renew the existing contractual arrangements that allow CME to effectively control Fujian Fenzhong and receive economic benefits from it. If CME cannot resolve any conflicts of interest or disputes between CME and the beneficial owners of Fujian Fenzhong, CME would have to rely on legal proceedings, the outcome of which is uncertain and which could be disruptive to CME’s business.
 
Fujian Express’ contractual arrangements with Fujian Fenzhong may be subject to scrutiny by the PRC tax authorities and may result in a finding that it owes additional taxes or is ineligible for tax exemption, or both, which could substantially increase its taxes owed and thereby reduce its net income.
 
Under applicable PRC laws, rules and regulations, arrangements and transactions among related parties may be subject to audits or challenges by the PRC tax authorities. Neither CME nor its PRC counsel are able to determine whether any of these transactions will be regarded by the PRC tax authorities as arm’s length transactions because, based on its knowledge, the PRC tax authorities have not issued a ruling or interpretation in respect of the type of transaction structure similar to that of CME. The relevant tax authorities may determine that CME’s contractual relationships with Fujian Fenzhong were not entered into on an arm’s length basis. If any of the transactions between Fujian Express and Fujian Fenzhong, including the contractual relationships with Fujian Fenzhong, are determined not to have been entered into on an arm’s length basis, or are found to result in an impermissible reduction in taxes under PRC law, the PRC tax authorities may adjust the profits and losses of Fujian Fenzhong and assess more taxes on it. In addition, the PRC tax authorities may impose late payment surcharges and other penalties to Fujian Fenzhong for underpaid taxes. CME’s net income may be materially adversely affected if Fujian Fenzhong’s tax liabilities increase or if it is found to be subject to late payment surcharges or other penalties.
 
CME relies principally on dividends and other distributions on equity paid by its wholly-owned operating subsidiary to fund any cash and financing requirements it may have, and any limitation on the ability of its operating subsidiary to pay dividends to it could have a material adverse effect on its ability to conduct its business.
 
CME is a holding company, and it relies principally on dividends and other distributions on equity paid by Fujian Express, its PRC operating subsidiary, for its cash requirements, including the funds necessary to service any debt it may incur. If Fujian Express incurs debt on its own behalf in the future, the instruments


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governing the debt may restrict their ability to pay dividends or make other distributions to it. In addition, the PRC tax authorities may require CME to adjust its taxable income under the contractual arrangements Fujian Express currently has in place with Fujian Fenzhong in a manner that would materially adversely affect Fujian Express’s ability to pay dividends and other distributions to CME. Furthermore, relevant PRC laws, rules and regulations permit payments of dividends by Fujian Express only out of its retained earnings, if any, determined in accordance with PRC accounting standards and regulations. Under PRC laws, rules and regulations, the statutory general reserve fund requires annual appropriations of 10% of after-tax income to be set aside prior to payment of dividends until the cumulative fund reaches 50% of the registered capital. As a result of these PRC laws, rules and regulations, Fujian Express is restricted in its ability to transfer a portion of its net assets to CME whether in the form of dividends, loans or advances. As of December 31, 2008, its contribution to the reserve funds pursuant to PRC laws and regulations totaled $4,314,000. Any limitation on the ability of its subsidiary or consolidated entity to pay dividends to it could materially adversely limit its ability to grow, make investments or acquisitions that could be beneficial to its businesses, pay dividends or otherwise fund and conduct its business.
 
Adverse changes in the political and economic policies of the PRC government could have a material adverse effect on the overall economic growth of China, which could reduce the demand for CME’s services and have a material adverse effect on its business.
 
Substantially all of CME’s assets are located in China and substantially all of its revenues are derived from its operations in China. Accordingly, economic, political and legal developments of China will substantially affect its business, financial condition, results of operations and prospects. The Chinese economy differs from the economies of most developed countries in many respects, including:
 
  •  the amount of government involvement;
 
  •  the level of development;
 
  •  the growth rate;
 
  •  the control of foreign exchange; and
 
  •  the allocation of resources.
 
While the Chinese economy has experienced significant growth in the past 30 years, growth has been uneven both geographically and among various sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide the allocation of resources. Some of these measures may benefit the overall Chinese economy, but may also have a negative effect on CME. CME cannot predict the future direction of political or economic reforms or the effects such measures may have on CME’s business, financial position or results of operations. Any adverse change in the political or economic conditions in China, including any decrease in the government expenditure on highway transportation infrastructure construction, could have a material adverse effect on CME’s business, lead to reduction in demand for its services and materially adversely affect its business.
 
The Chinese economy has been transitioning from a planned economy to a more market-oriented economy. Although the PRC government has in recent years implemented measures emphasizing the utilization of market forces for economic reforms, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in China is still owned by the PRC government. The continued control of these assets and other aspects of the national economy by the PRC government could materially adversely affect CME’s business. The PRC government also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Since late 2003, the PRC government implemented a number of measures, such as raising bank reserves against deposit rates to place additional limitations on the ability of commercial banks to make loans and raise interest rates, in order to control the growth rate of specific segments of China’s economy which it believed to be overheating. China has experienced a period of relatively high inflation since August 2007 and the PRC government has introduced


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and implemented a number of measures in an effort to control inflation. The PRC government may continue these and other measures to control inflation and manage economic growth. These measures may cause decreased economic activity in the PRC, including a slow-down or decline in advertising spending, which in turn could adversely affect its financial condition and results of operations. These measures, as well as future actions and policies of the PRC government, could also materially affect CME’s liquidity and access to capital and CME’s ability to operate its business. Substantially all of CME’s assets are located in China and substantially all of its revenues are derived from its operations in China. Accordingly, CME’s business, financial condition, results of operations and prospects are subject, to a significant extent, to economic, political and legal developments in China.
 
Uncertainties with respect to the PRC legal system could limit the legal protections available to TM (Post-Transaction) and CME or result in substantial costs and the diversion of resources and management attention.
 
The PRC legal system is based on written statutes. Prior court decisions may be cited for reference but have limited precedential value. Since 1979, PRC legislation and regulations have significantly enhanced the protections afforded to various forms of foreign investments in China. However, since the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform. Enforcement of these laws, regulations and rules involve uncertainties, which may limit the legal protections available to CME. For example, CME may have to resort to administrative and court proceedings to enforce the legal protection that it enjoys either by law or contract. However, since PRC administrative authorities and courts have significant discretion in interpreting and implementing statutory and contractual terms, it may be more difficult than in more developed legal systems to evaluate the outcome of administrative and court proceedings and the level of legal protection CME enjoys. These uncertainties may impede CME’s ability to enforce the contracts it has entered into with its business partners, clients and suppliers. In addition, such uncertainties, including the inability to enforce its contracts, could materially adversely affect its business and operations. Furthermore, intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries. Accordingly, CME cannot predict the effect of future developments in the PRC legal system, including the promulgation of new laws, changes to existing laws or the interpretation or enforcement thereof, or the preemption of national laws by local regulations. These uncertainties could limit the legal protections available to TM and other foreign investors, including you. In addition, any litigation in China may be protracted and result in substantial costs and the diversion of resources and management attention.
 
TM (Post-Transaction) may experience difficulties effecting service of process, enforcing foreign judgments or bringing original actions in China based on United States or other foreign laws, against CME or its management as approved by this Proxy Statement.
 
CME conducts substantially all of its operations in China and substantially all of its assets are located in China. In addition, all of its senior executive officers reside within China and Hong Kong. As a result, it may not be possible to effect service of process within the United States or elsewhere outside China upon CME or its senior executive officers, including with respect to matters arising under U.S. federal securities laws or applicable state securities laws. Moreover, the PRC does not have treaties with the United States or many other countries providing for the reciprocal recognition and enforcement of legal judgments.
 
Restrictions on currency exchange may limit our ability to receive and use our revenues and may affect the value of your investment.
 
According to the existing PRC foreign exchange regulations, RMB is freely convertible only to the extent of current account items, such as trade-related receipts and payments and dividends. Capital account items, such as direct equity investments, loans and repatriation of investment, require the prior approval from or registration with the SAFE or its local branch for conversion of RMB into a foreign currency, such as U.S. dollars, and remittance of the foreign currency outside the PRC


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Under the current corporate structure of CME, income is primarily derived from dividend payments, a substantial part of which is derived from the legally distributable profits of subsidiary and consolidated entity. All revenues and expenses are denominated in RMB. CME’s PRC subsidiary must remit sufficient foreign currency to pay dividends or make other payments to it. Although the payments of current account items, including profit distributions, can be made in foreign currencies without prior approval by complying with certain procedural requirements, PRC government may restrict access to foreign currencies for current account transactions in the future, which would limit its ability to pay dividends in foreign currencies to its shareholders.
 
If CME needs to convert RMB into foreign currency and remit it out of China to pay capital expenses, such as the repayment of loans denominated in foreign currencies, CME must obtain approval from SAFE or its local branch. These limitations could affect its ability to obtain foreign exchange through debt or equity financing, and could affect its business and financial condition.
 
If any of CME’s PRC significant subsidiaries or consolidated entity becomes the subject of a bankruptcy or liquidation proceeding, CME may lose the ability to use and enjoy those assets, which could reduce the size of its advertising network and materially adversely affect its business, ability to generate revenues and the market price of its products.
 
To comply with PRC laws, rules and regulations relating to foreign ownership restrictions in the advertising industry, CME currently conducts its operations in China through contractual arrangements among Fujian Express, Fujian Fenzhong and its shareholders. As part of these arrangements, Fujian Fenzhong holds substantially all the assets that are important to the operation of the business. If Fujian Fenzhong becomes bankrupt and all or part of its assets become subject to liens or rights of third-party creditors, its may be unable to continue some or all of its business activities, which could materially adversely affect CME’s business, financial condition and results of operations. If Fujian Fenzhong undergoes a voluntary or involuntary liquidation proceeding, its shareholders or unrelated third-party creditors may claim rights to some or all of its assets, thereby hindering CME’s ability to operate its business, which could materially adversely affect its business, its ability to generate revenues.
 
Under the EIT Law, we and CME each may be classified as a “resident enterprise” of the PRC. Such classification could result in unfavorable tax consequences to us, CME and our non-PRC shareholders.
 
On March 16, 2007, the National People’s Congress approved and promulgated a new tax law, the PRC Enterprise Income Tax Law, or “EIT Law,” which took effect on January 1, 2008. Under the EIT Law, an enterprise established outside of China with “de facto management bodies” within China is considered a “resident enterprise,” meaning that it can be treated in a manner similar to a Chinese enterprise for enterprise income tax purposes, although the dividends paid to one resident enterprise from another may qualify as “tax-exempt income”. The implementing rules of the EIT Law define de facto management as “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of the enterprise. The EIT Law and its implementing rules are relatively new and ambiguous in terms of some definitions, requirements and detailed procedures; therefore, it is unclear how the PRC tax authorities will determine tax residency based on the facts of each case.
 
If the PRC tax authorities determine, after the consummation of the Transaction, that we and/or CME is a “resident enterprise” for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we and/or CME may be subject to enterprise income tax at a rate of 25% on our and/or CME’s worldwide taxable income, as the case may be, as well as PRC enterprise income tax reporting obligations. Second, although under the EIT Law and its implementing rules, dividends we and/or CME receive from Fujian Express may qualify as “tax-exempt income,” assuming we and CME are each treated as a “resident enterprise” under the EIT Law, there is no guarantee that such dividends will not be subject to PRC withholding tax, which generally will be imposed at a rate of 10% (or, if the Double Tax Avoidance Arrangement between Hong Kong and Mainland China applies, 5%). Finally, the new “resident enterprise” classification could result in a situation in which a 10% PRC tax is imposed on dividends we pay to our non-PRC security holders and gains derived by our non-PRC security holders from transferring our securities, if


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such income is considered PRC-sourced income by the relevant PRC authorities. If any such PRC taxes apply, a non-PRC security holder may be entitled to a reduced rate of PRC taxes under an applicable income tax treaty and/or foreign tax credit against such security holder’s domestic income tax liability (subject to applicable conditions and limitations). TM stockholders should consult with their own tax advisors regarding the applicability of any such taxes, the effects of any applicable income tax treaties, and any available foreign credits.
 
CME may need to obtain the approval from the China Securities Regulatory Commission, or the CSRC, in connection with this Transaction under a recently adopted PRC regulation. CME cannot currently predict whether it will be able to obtain such approval.
 
On August 8, 2006, six PRC regulatory agencies, including the CSRC, MOC, the State Owned Assets Supervision and Administration Commission, or SASAC, the State Administration for Taxation, or SAT, SAIC, and SAFE, jointly promulgated a rule entitled Provisions Regarding Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A rule, which was amended and took effect on June 22, 2009, to regulate foreign investment in PRC domestic enterprises. The M&A rule provides that the MOC must be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise and any of the following situations exist: (i) the transaction involves an important industry in China; (ii) the transaction may affect national “economic security”; or (iii) the PRC domestic enterprise has a well-known trademark or historical Chinese trade name in China. The M&A rule also contains a provision purporting, among other things, to require offshore special purpose vehicles, or SPVs, formed for the purpose of overseas listing of equity interests in PRC companies and entities directly or indirectly controlled by PRC companies or PRC individuals, to obtain the approval of the CSRC prior to the listing and trading of their securities on overseas stock exchanges. On September 21, 2006, the CSRC published guidelines to this provision of the M&A rule.
 
To date, the application of the M&A rule is unclear. CME’s PRC counsel has advised CME that:
 
  •  the CSRC approval required under the M&A rule applies to SPVs that, for purposes of achieving overseas listing, acquire the equity interests in PRC companies through share exchanges; and
 
  •  based on their understanding of the current PRC laws, rules and regulations and the M&A rule, unless there are new PRC laws and regulations or clear requirements from the CSRC in any form that require the prior approval of the CSRC for the listing and trading of any overseas SPVs securities on an overseas stock exchange, the M&A rule does not require that CME obtains prior CSRC approval for the listing and trading on the NYSE Amex because CME completed its reorganization whereby Fujian Express was established as a wholly foreign owned enterprise and the restructuring between Fujian Express and Fujian Fenzhong was carried out prior to September 8, 2006, the effective date of the M&A rule.
 
However, the interpretation and application of the M&A rule remain unclear, and the PRC government authorities have the sole discretion to determine whether the Transaction is subject to the approval of the CSRC. If the CSRC or another PRC regulatory agency subsequently determines that CSRC approval is required for the Transaction, CME cannot predict how long it would take to obtain the approval. In addition, CME may need to apply for a remedial approval from the CSRC and may be subject to certain administrative or other sanctions from these regulatory agencies.
 
Further, new rules and regulations or relevant interpretations may be issued from time to time that may require CME to obtain retroactive approval from the CSRC in connection with the business combination. If this were to occur, CME’s failure to obtain or delay in obtaining the CSRC approval for the business combination would subject CME to sanctions imposed by the CSRC and other PRC regulatory agencies. These sanctions could include fines and penalties on CME’s operations in China, restrictions or limitations on CME’s ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect CME’s business, results of operations and financial condition.


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If the CSRC or another PRC regulatory agency subsequently determines that CSRC approval is required for the business combination, CME may need to apply for a remedial approval from the CSRC and may be subject to certain administrative punishments or other sanctions from these regulatory agencies. New rules and regulations or relevant interpretations may require that CME retroactively obtain approval from the CSRC in connection with the business combination. If this were to occur, CME’s failure to obtain or delay in obtaining the CSRC approval for the Transaction would subject CME to sanctions imposed by the CSRC and other PRC regulatory agencies. These sanctions could include fines and penalties on CME’s operations in China, restrictions or limitations on CME’s ability to pay dividends outside of China, and other forms of sanctions that may materially and adversely affect CME’s business, results of operations and financial condition.
 
CME cannot predict when the CSRC may promulgate additional rules or other guidance, if at all. If implementing rules or guidance are issued prior to the completion of this Transaction and consequently it concludes it is required to obtain CSRC approval, this Transaction will be delayed until CME obtains the CSRC approval, which may take several months or longer. Furthermore, any delay in the issuance of such implementing rules or guidance may create additional uncertainties with respect to this Transaction. Moreover, implementing rules or guidance, to the extent issued, may fail to resolve current ambiguities under the M&A rules. Uncertainties and/or negative publicity regarding the M&A rules could have a material adverse effect on TM’s trading price.
 
The new regulations also established additional procedures and requirements expected to make merger and acquisition activities in China by foreign investors more time-consuming and complex, including requirements in some instances that the MOC be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. These rules may also require the approval from the MOC where overseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. Complying with the requirements of the new regulations to complete such transactions could be time-consuming, and any required approval processes, including MOC approval, may delay or inhibit CME’s ability to complete such transactions, which could affect CME’s ability to expand its business.
 
PRC regulations relating to the offshore investment by PRC residents and employee stock options held by PRC residents may limit CME’s operations and subject it to liabilities.
 
Pursuant to SAFE’s Notice on Relevant Issues Concerning Foreign Exchange Administration for PRC Residents to Engage in Financing and Inbound Investment via Overseas Special Purpose Vehicles, or Circular No. 75, issued on October 21, 2005 (i) a PRC resident, including a PRC resident natural person or a PRC company, shall register with the local branch of SAFE before it establishes or controls an overseas SPV for the purpose of overseas equity financing (including convertible debt financing); (ii) when a PRC resident contributes the assets of or its equity interests in a domestic enterprise to an SPV, or engages in overseas financing after contributing assets or equity interests to an SPV, such PRC resident shall register his or her interest in the SPV and the change thereof with the local SAFE branch; and (iii) when the SPV undergoes a material event outside China, such as a change in share capital, or merger or acquisition, the PRC resident shall, within 30 days of the occurrence of such event, register such change with the local branch of SAFE. Under the Circular No. 75, if the subsidiary of a SPV purchases or controls the assets of domestic companies through contractual arrangements in China, this practice constitutes “Inbound Investment” and shall be registered with SAFE. PRC residents who are shareholders of SPVs established before November 1, 2005 were required to register with the local SAFE branch before March 31, 2006. Failure to comply with the various SAFE registration requirements described above could result in liability under PRC laws for evasion of applicable foreign exchange restrictions.
 
Mr. Zheng Cheng, CME’s CEO and a PRC resident, established CME on April 25, 2001. CME owns a 100% interest and directly controls its PRC subsidiary, Fujian Express. On November 2, 2003 and December 1, 2003, Fujian Express, Fujian Fenzhong and its shareholders, Zheng Cheng and Chunlan Bian, entered into two agreements, respectively, and on April 17, 2009, Fujian Express, Fujian Fenzhong and its shareholders, Zheng Cheng and Chunlan Bian, entered into a series of contractual documents, under which Zheng Cheng and Chunlan Bian granted Fujian Express all their voting rights as shareholders of Fujian Fenzhong, and Fujian


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Fenzhong agreed to distribute all its economic benefits, after deduction of taxes and expenses, to Fujian Express. According to the Circular No. 75. CME may be deemed to be an SPV and these arrangements may constitute “Inbound Investment.” To ensure the compliance with the Circular No. 75, Zheng Cheng and the other CME related parties filed the registration as required in the circular No. 75 with the Fujian SAFE on September 9, 2008. However, after the consummation of this transaction, Zheng Cheng and the other CME related parties will be required to register the change of CME’s shareholding structure with the Fujian SAFE. If such registration for change is not completed in a timely manner, or at all, Fujian Express, as the PRC subsidiary of the SPV, may be prohibited from distributing its profits and the proceeds from any reduction in capital, share transfer or liquidation, to CME, and CME may also be prohibited from injecting additional capital into Fujian Express.
 
In addition, on December 25, 2006, the People’s Bank of China promulgated the “Measures for the Administration of Individual Foreign Exchange,” and on January 5, 2007, SAFE promulgated the implementation rules on those measures. These regulations became effective on February 1, 2007. Pursuant to these regulations, PRC citizens who are granted shares or share options by an overseas listed company according to its employee share option or share option plan are required, through a qualified PRC agent which may be the PRC subsidiary of such overseas listed company, to register with the SAFE and complete certain other procedures related to the share option or share option plan. Foreign exchange income received from the sale of shares or dividends distributed by the overseas listed company must be remitted into a foreign currency account of such PRC citizen or be exchanged into RMB. Its PRC citizen employees who have been granted share options, or PRC option grantees, will be subject to these regulations. If CME or its PRC option grantees fail to comply with these regulations, it or its PRC option grantees may be subject to fines and legal sanctions.
 
There can be no assurance that all of CME’s shareholders or options grantees who are PRC residents will appropriately make or obtain any applicable registrations or approvals required by these SAFE regulations. The failure or inability of CME’s PRC resident shareholders or option grantees to comply with the registration procedures set forth therein may subject it to fines and legal sanctions, restrict its cross-border investment activities, or limit its PRC subsidiary’s ability to distribute dividends or obtain foreign-exchange-dominated loans to itself.
 
Risks Relating to TM
 
If we are forced to dissolve and liquidate, payments from the Trust Account to our public stockholders may be delayed.
 
If we do not consummate the Transaction by October 17, 2009, we anticipate notifying the trustee of the Trust Account to begin liquidating such assets promptly after such date and anticipate it will take no more than 10 business days to effectuate such distribution.
 
We currently expect that the costs associated with the implementation and completion of the plan of dissolution and liquidation will be no more than approximately $15,000. We will pay the costs of liquidation from our remaining assets outside of the trust fund. If such funds are insufficient, Theodore S. Green and Malcolm Bird have agreed to advance us the funds necessary to complete such dissolution and/or liquidation and have agreed not to seek repayment of such expenses; however, there is no guarantee that the assets of Messrs. Green and Bird will be sufficient to satisfy our dissolution and/or liquidation expenses.
 
If we are forced to liquidate before a business combination and distribute the Trust Account, our public stockholders will receive less than $8.00 per share and our warrants will expire worthless.
 
If we are unable to complete the Transaction and are forced to liquidate our assets, the per-share liquidation distribution will be less than $8.00 because of the expenses of our IPO, our general and administrative expenses and the costs of seeking a business combination. Furthermore, there will be no distribution with respect to our outstanding warrants which will expire worthless if we liquidate before the completion of a business combination.


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Exercise of conversion rights must be effected pursuant to a specific process which may take time to complete and may result in the expenditure of funds by stockholders seeking conversion.
 
A stockholder requesting conversion of his, her or its common stock into cash may do so at any time after the mailing to our stockholders of the Proxy Statement and prior to the vote taken with respect to a proposed business combination. A stockholder would have from the time we send out our Proxy Statement through the vote on the business combination to tender (either electronically or through the delivery of physical stock certificates) his, her or its shares of common stock if he, she or it wishes to seek to exercise his, her or its conversion rights, a period which is expected to be not less than 10 nor more than 60 days. There is a nominal cost associated with the above-referenced tendering process and the act of certificating the shares or delivering them through the DWAC system. The transfer agent will typically charge the tendering broker $35 and it would be the broker’s decision whether or not to pass this cost on to the converting holder. There may be additional mailing and other nominal charges depending on the particular process used to tender common stock. Although we believe the time period, costs and other potential burdens associated with the tendering process are not onerous for an average investor, this process may result in additional burdens for our stockholders, including mis-delivery or any other defect in the tendering process.
 
If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders will be less than approximately $7.91 per share.
 
Our placing of funds in trust may not protect those funds from third party claims against us. Although we have sought to have all vendors and service providers we engage and prospective target businesses we negotiate with, execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of our public stockholders, there is no guarantee that, even if such entities have executed such agreements with us, they will not seek recourse against the Trust Account. Nor is there any guarantee that a court would uphold the validity of such agreements. Accordingly, the proceeds held in trust could be subject to claims which could take priority over those of our public stockholders. If we liquidate before the completion of a business combination and distribute the proceeds held in trust to our public stockholders, our management stockholders have agreed that they will be personally liable to ensure that the proceeds in the Trust Account are not reduced by the claims of target businesses or vendors or other entities that are owed money by us for services rendered or contracted for or products sold to us. Based on representations made to us by our management stockholders, we currently believe that they are capable of funding a shortfall in our Trust Account to satisfy their foreseeable indemnification obligations. However, we have not asked them to reserve for such an eventuality. Although we have a fiduciary obligation to pursue our management stockholders to enforce their indemnification obligations, and intend to pursue such actions as and when we deem appropriate, there can be no assurance they will be able to satisfy those obligations, if required to do so or that the proceeds in the Trust Account will not be reduced by such claims. Furthermore, our management stockholders will not have any personal liability as to any claimed amounts owed to a third party who executed a valid and enforceable waiver (including a prospective target business).
 
Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the Trust Account, we cannot assure our stockholders we will be able to return to our public stockholders at least $7.91 per share.
 
If any funds held in our trust account are used to purchase TM Common Stock from holders who would have otherwise voted against the transaction, our shareholders who purchased shares in our IPO may be entitled to rescission rights.
 
Our IPO prospectus did not disclose that funds in the trust account might be used to purchase common stock from holders thereof who have indicated their intention to vote against the acquisition and convert their shares into cash. Consequently, such use of the funds in the trust account might be grounds for a holder of our public stock who purchased such shares in our IPO, to seek rescission of the purchase of the units the holder acquired in the IPO. A successful claimant for damages under federal or state law could be awarded an


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amount to compensate for the decrease in value of the shares caused by the alleged violation, together with interest, while retaining the shares.
 
Our stockholders may be held liable for claims by third parties against us to the extent of distributions received by them.
 
Our amended and restated certificate of incorporation provides that we will continue in existence only until 24 months from the date of our IPO. If we have not completed a business combination by such date and amended this provision in connection thereto, pursuant to the Delaware General Corporation Law, our corporate existence will cease except for the purposes of winding up our affairs and liquidating. Under Sections 280 through 282 of the Delaware General Corporation Law, our stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to make liquidating distributions to our stockholders as soon as reasonably possible after the expiration of the twenty four month period and, therefore, we do not intend to comply with those procedures. Because we will not be complying with those procedures, we are required, pursuant to Section 281 of the Delaware General Corporation Law, to adopt a plan that will provide for our payment, based on facts known to us at such time, of (i) all existing claims, (ii) all pending claims and (iii) all claims that may be potentially brought against us within the subsequent 10 years. Accordingly, we would be required to provide for any creditors known to us at that time or those that we believe could be potentially brought against us within the subsequent 10 years prior to distributing the funds held in the trust to stockholders. We cannot assure our public stockholders that we will properly assess all claims that may be potentially brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more) and any liability of our stockholders may extend well beyond the third anniversary of the date of distribution. Accordingly, we cannot assure our public stockholders that third parties will not seek to recover from our stockholders amounts owed to them by us.
 
If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the Trust Account to our public stockholders promptly after October 17, 2009, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached their fiduciary duties to our creditors or may have acted in bad faith, thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the Trust Account prior to addressing the claims of creditors. We cannot assure our public stockholders that claims will not be brought against us for these reasons.
 
An effective registration statement may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise his, her or its warrants and causing such warrants to be practically worthless.
 
No warrant held by public stockholders will be exercisable and we will not be obligated to issue shares of common stock unless at the time such holder seeks to exercise such warrant, a registration statement relating to the common stock issuable upon exercise of the warrant is effective and current and the common stock has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant agreement, we have agreed to use our best efforts to


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meet these conditions and to maintain a current prospectus relating to the common stock issuable upon exercise of the warrants until the expiration of the warrants. However, we cannot assure our stockholders that we will be able to do so, and if we do not maintain a current prospectus related to the common stock issuable upon exercise of the warrants, holders will be unable to exercise their warrants and we will not be required to settle any such warrant exercise. In no event will we be required to net cash settle any warrant exercise. If the prospectus relating to the common stock issuable upon the exercise of the warrants is not current, the warrants held by public stockholders may have no value, the market for such warrants may be limited and such warrants may expire worthless. As a result, a purchaser of a unit may pay the full unit purchase price solely for the shares underlying the unit. Notwithstanding the foregoing, the insider warrants may be exercisable for unregistered shares of common stock even if no registration relating to the common stock issuable upon exercise of the warrants is effective and current.
 
We have not obtained an opinion from an unaffiliated third party as to the fair market value of the target acquisition or that the price we are paying for the business is fair to our stockholders.
 
We have not obtained an opinion from an unaffiliated third party that either the target acquisition we select has a fair market value in excess of 80.0% of our net assets held in the Trust Account (net of taxes and amounts disbursed for working capital purposes and excluding the amount held in the Trust Account representing a portion of the underwriters’ discount) or that the price we are paying is fair to our stockholders unless (i) our board is not able to independently determine that a target acquisition has a sufficient market value or (ii) there is a conflict of interest with respect to the transaction. As no opinion will be obtained, our stockholders will be relying on the judgment of our board of directors.
 
All of our officers and directors own shares of our common stock issued prior to our IPO and warrants issued at our IPO. These shares will not participate in liquidation distributions and, therefore, our officers and directors may have a conflict of interest in determining whether a particular target business is appropriate for a business combination.
 
All of our officers and directors own shares of our common stock that were issued prior to our IPO. Such individuals have waived their right to receive distributions with respect to their initial shares upon our liquidation if we are unable to consummate the Transaction. Accordingly, the shares acquired prior to our IPO, as well as the insider warrants, and any warrants purchased by our officers or directors in our IPO or in the aftermarket will be worthless if we do not consummate the Transaction. The personal and financial interests of our directors and officers may influence their motivation in selecting CME and completing the Transaction. Consequently, our directors’ and officers’ discretion in identifying and selecting CME may result in a conflict of interest when determining whether the terms, conditions and timing of the Transaction are appropriate and in our stockholders’ best interest.
 
The NYSE Amex may delist our securities from quotation on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.
 
Our securities are listed on the NYSE Amex, a national securities exchange. We cannot assure our stockholders that our securities will continue to be listed on the NYSE Amex in the future prior to a business combination. In February 2009, TM received a notice from NYSE Amex indicating that it is below certain of the exchange’s continued listing standards due to its failure to hold an annual meeting of stockholders in 2008. TM submitted a plan of compliance with NYSE Amex and the exchange accepted the plan and granted TM an extension until August 11, 2009 to regain compliance with continued listing standards. TM has requested that the NYSE Amex grant an additional extension until October 17, 2009. Additionally, in connection with our business combination, the NYSE Amex will require us to file a new initial listing application and meet its initial listing requirements as opposed to its more lenient continued listing requirements. We cannot assure our stockholders that we will be able to meet these initial listing requirements at that time.


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If the NYSE Amex delists our securities from trading on its exchange, we could face significant material adverse consequences, including:
 
  •  a limited availability of market quotations for our securities;
 
  •  a determination that our common stock is a “penny stock” which will require brokers trading in our common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our common stock;
 
  •  a limited amount of news and analyst coverage for our company; and
 
  •  a decreased ability to issue additional securities or obtain additional financing in the future.
 
Our Initial Stockholders, including our officers and directors, control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.
 
Our Initial Stockholders (including all of our officers and directors) collectively own approximately 18.0% of our issued and outstanding shares of common stock. However, if a significant number of stockholders vote, or indicate an intention to vote, against the Transaction, our officers, directors and stockholders and their affiliates could make such purchases in the open market or in private transactions in order to influence the vote. Our board of directors is divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. It is unlikely that there will be an annual meeting of our stockholders to elect new directors prior to the consummation of the Transaction, in which case all of the current directors will continue in office until at least the consummation of the business combination. If there is an annual meeting, as a consequence of our “staggered” board of directors, only a minority of the board of directors will be considered for election and our Initial Stockholders, because of their ownership position, will have considerable influence regarding the outcome. Accordingly, our Initial Stockholders will continue to exert control at least until the consummation of a business combination.
 
If we effect the Transaction, we will be subject to a variety of additional risks that may negatively impact our operations.
 
We will be subject to any special considerations or risks associated with companies operating in China, including any of the following:
 
  •  tax issues, such as tax law changes and variations in tax laws;
 
  •  currency fluctuations; our revenues, costs and assets would be denominated in RMBs and fluctuations in the exchange rate between RMBs and US$ could adversely affect our results and financial condition in US$ terms;
 
  •  cultural and language differences; our board of directors would be comprised of individuals with different language skills and cultural backgrounds, which could make it harder for the board to make decisions; and
 
  •  employment regulations; our employees would be represented by a labor union and we would be required to make contributions to the union fund.
 
We cannot assure our stockholders that we would be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.
 
If we effect the Transaction, the laws applicable to CME will likely govern all of our material agreements and we may not be able to enforce our legal rights.
 
If we effect the Transaction, the laws of China will govern almost all of the material agreements relating to its operations. We cannot assure our stockholders that CME will be able to enforce any of its material agreements or that remedies will be available in China. The system of laws and the enforcement of existing laws in China may not be as certain in implementation and interpretation as in the United States.


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The inability to enforce or obtain a remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we acquire CME, it is likely that substantially all of our assets would be located outside of the United States and some of our officers and directors will reside outside of the United States. As a result, it may not be possible for investors in the United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties against our directors and officers under Federal securities laws.
 
Risks Related to the Initial Charter Amendment Proposals
 
Holders of IPO Shares at the time of the Transaction who purchased their units in the initial public offering and have not redeemed their shares for cash may have rights to rescind their purchases and assert a claim for damages therefor against us and our directors and officers.
 
The initial public offering prospectus disclosed that we would not seek to amend any of the provisions of Article Seventh of our amended and restated certificate of incorporation. Neither our Amended and Restated Certificate of Incorporation nor our initial public offering prospectus contemplated the possibility of (i) removing the prohibition on the consummation of a Business Combination if holders of an aggregate of 30% or more in interest of the IPO Shares exercise their conversion rights, or (ii) removing the requirement that only holders of the IPO Shares who vote against the Transaction may convert their IPO Shares into cash. Our initial public offering prospectus stated that these specific provisions in our Amended and Restated Certificate of Incorporation may not be amended prior to the consummation of an initial business combination. Our initial public offering prospectus further stated that while the validity under Delaware law of a provision restricting the ability to amend the charter has not been settled, we would not take any actions to waive or amend any of those provisions. Consequently, each holder of IPO Shares at the time of the Transaction who purchased his IPO Shares in the initial public offering and who has not converted his shares into cash may have securities law claims against us for rescission (under which a successful claimant has the right to receive the total amount paid for his or her securities pursuant to an allegedly deficient prospectus, plus interest and less any income earned on the securities, in exchange for surrender of the securities) or damages (compensation for loss on an investment caused by alleged material misrepresentations or omissions in the sale of a security). Such claims may entitle stockholders asserting them to up to $8.00 per share, based on the initial offering price of the initial public offering units comprised of stock and warrants, less any amount received from sale of the original warrants purchased with them, plus interest from the date of our initial public offering (which, in the case of holders of Public Shares, may be more than the pro rata share of the trust account to which they are entitled on conversion or liquidation). See the section entitled “THE INITIAL CHARTER AMENDMENT PROPOSALS — Rescission Rights.”
 
Our working capital will be reduced if our stockholders exercise their right to convert their shares into cash, and our reduced working capital may adversely affect our business strategy and future operations, and you may hold shares in a smaller company than anticipated.
 
If the Initial Charter Amendment Proposal is approved by the holders of a majority of our outstanding shares there will be no express limit in our Amended and Restated Certificate of Incorporation on the number of stockholders who may vote with respect to the Transaction and elect to convert their shares. The removal of the prohibition against closing an acquisition if more than 30% of the shareholders exercise their conversation rights, could result in substantial conversions, which would leave us with less working capital available to pursue CME’s growth strategy, and the remaining shareholders may own shares in a significantly smaller company. We are not required to deliver any minimum working capital amount at the closing of the Transaction.
 
In the event that a significant number of our IPO shares are converted, our stock may become less liquid following the Transaction.
 
If a significant number of our IPO Shares are converted, we may be left with a significantly smaller number of shareholders. As a result, trading in our stock following the Transaction may be limited and your ability to sell your shares in the market could be adversely affected.


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SELECTED HISTORICAL FINANCIAL INFORMATION
 
Summary Historical Financial Information of TM
 
The summary historical financial information of TM set forth below is derived from the audited and unaudited financial statements of TM included in this Proxy Statement. TM’s summary historical balance sheet data as of December 31, 2008 and 2007, and historical summary statement of operations data for the year ended December 31, 2008 and the period from May 1, 2007 (inception) to December 31, 2007 have been derived from TM’s audited financial statements. The summary historical statement of operations data for the six months ended June 30, 2009 and 2008, and for the period May 1, 2007 (inception) to June 30, 2009 and the balance sheet data as of June 30, 2009 have been derived from TM’s unaudited financial statements and, in the opinion of management, include all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of TM’s financial position and results of operations as of the dates and for the periods indicated.
 
This information should be read in conjunction with the section entitled “TM’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and the notes thereto included elsewhere in this Proxy Statement.
 
                                         
                      May 1, 2007
    May 1, 2007
 
                Year Ended
    (Inception) to
    (Inception) to
 
    Six Months Ended June 30     December 31,
    December 31,
    June 30,
 
    2009     2008     2008     2007     2009  
    (In thousands, except share and per share data)  
 
Statement of Operations Data:
                                       
Revenues
  $     $     $     $     $  
Formation and operating expenses
    (1,026 )     (1,521 )     (1,994 )     (295 )     (3,315 )
Interest expense
    (3 )                 (3 )     (6 )
Interest income
    148       806       1,619       488       2,255  
(Loss) income before taxes
    (881 )     (715 )     (375 )     190       (1,066 )
Income taxes
                             
Net (loss) income
    (881 )     (715 )     (375 )     190       (1,066 )
Less: interest income attributable to common stock subject to possible conversion (net of taxes of $0, $0, $5, $0 and $0)
    (5 )           (42 )           (47 )
Basic (loss) income per share
  $ (0.07 )   $ (0.06 )   $ (0.03 )   $ 0.04          
Diluted (loss) income per share
  $ (0.07 )   $ (0.06 )   $ (0.03 )   $ 0.03          
Basic weighted average shares outstanding
    12,505,000       12,505,000       12,505,000       5,389,286          
Diluted weighted average shares outstanding
    12,505,000       12,505,000       12,505,000       6,306,169          
 
                         
    June 30,
    December 31,
    December 31,
 
    2009     2008     2007  
    (In thousands)  
 
Balance Sheet Data:
                       
Cash
  $ 13     $ 175     $ 465  
Cash held in Trust — restricted
    81,135       81,119       80,979  
Total assets
    81,185       81,385       81,644  
Total liabilities
    4,378       3,696       3,581  
Common stock, subject to conversion
    24,286       24,286       24,286  
Interest income attributable to common stock, subject to possible conversion (net of taxes of $0, $5, and $0 respectively)
    47       42        
Total stockholders equity
    52,475       53,361       53,778  
Total liabilities and stockholders’ equity
    81,185       81,385       81,644  


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Summary Historical Consolidated Financial Information of CME
 
The summary historical consolidated financial information of CME set forth below is derived from the audited and unaudited consolidated financial statements of CME included in this proxy statement. CME’s summary historical consolidated balance sheet data as of June 30, 2009 and December 31, 2008 and 2007, and historical summary consolidated statement of operations data for the six months ended June 30, 2009 and 2008, the years ended December 31, 2008 and 2007 have been derived from CME’s unaudited and audited consolidated financial statements. The summary historical consolidated statement of operations data for the six months ended June 30, 2009 and 2008 has been derived from CME’s unaudited consolidated financial statements and, in the opinion of management, include all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of CME’s financial position and results of operations as of the dates and for the periods indicated.
 
This information should be read in conjunction with the section entitled “CME’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” of CME and the consolidated financial statements and the notes thereto included elsewhere in this proxy statement.
 
                                 
    Six Months Ended
    Year Ended
    Year Ended
 
    June 30,     December 31,
    December 31,
 
    2009     2008     2008     2007  
    (In thousands, except per share data)  
 
Consolidated Statement of Operations Data:
                               
Sales, net of business tax and related surcharges
  $ 37,861     $ 30,450     $ 62,999     $ 25,837  
Cost of sales
    (14,362 )     (11,900 )     (25,065 )     (13,164 )
Gross profit
    23,499       18,550       37,934       12,673  
Operating expenses
    (1,879 )     (1,438 )     (2,813 )     (1,657 )
Income from operations
    21,620       17,112       35,121       11,016  
Income before income taxes
    21,663       17,151       35,221       11,040  
Income taxes
    (5,927 )     (4,316 )     (8,854 )     (4,073 )
Net income
    15,736       12,835       26,367       6,967  
Foreign currency translation adjustment
    (47 )     438       1,012       352  
Comprehensive income
    15,689       13,273       27,379       7,319  
Basic and diluted earnings per share
  $ 1,573.60     $ 1,283.50     $ 2,636.70     $ 696.70  
Basic and diluted weighted average shares outstanding
    10,000       10,000       10,000       10,000  
 
                         
    June 30,
    December 31,  
    2009     2008     2007  
    (In thousands)  
 
Consolidated Balance Sheet Data:
                       
Cash and cash equivalents
  $ 29,437     $ 29,997     $ 6,364  
Total assets
    48,775       49,116       18,707  
Total liabilities
    15,660       14,120       11,090  
Stockholders equity
    33,115       34,996       7,617  
Total liabilities and stockholders’ equity
    48,775       49,116       18,707  


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Summary Unaudited Pro Forma Condensed Combined Financial Information
 
The summary unaudited pro forma condensed combined financial information set forth below is derived from, and should be read in conjunction with, the unaudited pro forma condensed consolidated financial statements included elsewhere in this proxy statement. The following unaudited pro forma condensed combined statement of operations data presents the combined company’s results of operations for the year ended December 31, 2008 and the six months ended June 30, 2009 assuming the merger occurred on January 1, 2008. The following unaudited pro forma condensed combined balance sheet data presents the combined company’s financial position assuming that the merger occurred on June 30, 2009. The unaudited pro forma condensed combined financial information does not purport to represent what the combined company’s results of operations or financial condition would actually have been had the merger in fact occurred as of such dates or to project the combined company’s results of operations for any future period or as of any future date.
 
This information should be read together with CME’s and TM’s audited and unaudited financial statements and related notes, provided in the sections entitled “Unaudited Pro Forma Condensed Combined Financial Information,” “CME’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” of CME, “TM’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” of TM and other financial information included elsewhere in this proxy statement.
 
The unaudited pro forma condensed financial information has been prepared using two different levels of approval of the Transaction by the TM stockholders, as follows:
 
  •  Assuming No Exercise of Conversion Rights: This presentation assumes that no TM stockholders properly exercise their conversion rights; and
 
  •  Assuming Maximum Exercise of Conversion Rights: This presentation assumes that 100% of the TM stockholders properly exercise their conversion rights. Additionally, this presentation includes $3.8 million of additional capital through long-term debt that TM is required to secure prior to or contemporaneously with the closing of the Transaction, which is reflected in the pro forma balance sheet and pro forma statement of operations. Since the terms of such long-term debt are not currently known, the pro forma statement of operations data reflects interest expense at 10% per annum, a rate indicative of the current borrowing costs of the combined company based on terms provided by potential financing sources.


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Pro Forma Statement of Operations Data:
 
                                 
    Six Months Ended June 30, 2009     Year Ended December 31, 2008  
          Assuming
          Assuming
 
    Assuming No
    Maximum
    Assuming No
    Maximum
 
    Exercise of
    Exercise of
    Exercise of
    Exercise of
 
    Conversion
    Conversion
    Conversion
    Conversion
 
    Rights     Rights     Rights     Rights  
    (In thousands, except share and per share data)  
 
Sales, net of business tax and related surcharges
  $ 37,861     $ 37,861     $ 62,999     $ 62,999  
Cost of sales
    (14,362 )     (14,362 )     (25,065 )     (25,065 )
Gross profit
    23,499       23,499       37,934       37,934  
Operating expenses
    (2,905 )     (2,905 )     (4,807 )     (4,807 )
Income from operations
    20,594       20,594       33,127       33,127  
Interest expenses
    (370 )     (560 )     (751 )     (1,131 )
Interest income
    191       43       1,719       100  
Income before income taxes
    20,415       20,077       34,095       32,096  
Income taxes
    (5,927 )     (5,927 )     (8,854 )     (8,854 )
Net income
    14,488       14,150       25,241       23,242  
Basic earnings per share
  $ 0.43     $ 0.61     $ 0.75     $ 1.00  
Diluted earnings per share
  $ 0.39     $ 0.53     $ 0.69     $ 0.88  
Basic weighted average shares outstanding
    33,520,000       23,265,000       33,520,000       23,265,000  
Diluted weighted average shares outstanding
    36,927,995       26,672,995       36,517,393       26,262,393  
 
Pro Forma Balance Sheet Data:
 
                 
    June 30, 2009  
          Assuming
 
    Assuming No
    Maximum
 
    Exercise of
    Exercise
 
    Conversion
    of Conversion
 
    Rights     Rights  
    (In thousands)  
 
Cash and cash equivalents
  $ 106,785     $ 29,450  
Total assets
    126,160       48,825  
Long term debt
    7,513       11,313  
Total liabilities
    23,173       26,973  
Stockholders equity
    102,987       21,852  
Total liabilities and stockholders’ equity
    126,160       48,825  
 
See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” for further information.


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Comparative Summary Historical and Unaudited Pro Forma Financial Data
 
The following tables set forth the financial data of TM and CME on a stand-alone basis for the historical periods of the six months ended June 30, 2009 and the unaudited pro forma combined financial data and per share ownership information of TM and CME after giving effect to the Transaction, assuming (1) that no TM stockholders properly exercise their conversion rights and (2) that 100% of TM stockholders properly exercise their conversion rights. You should read this information in conjunction with the selected summary historical financial information included elsewhere in this proxy statement, and the historical financial statements of TM and CME and related notes included elsewhere in this proxy statement. The unaudited pro forma combined per share information is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial information and related notes included elsewhere in this proxy statement.
 
The unaudited pro forma combined earnings per share information below does not purport to represent the earnings per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of TM and CME would have been had the companies been combined during the periods presented.
 
                                 
    Six Months Ended June 30, 2009  
    Historical     Pro Forma Combined  
                      Assuming
 
                Assuming No
    Maximum
 
                Exercise of
    Exercise of
 
                Conversion
    Conversion
 
    TM     CME     Rights     Rights  
    (In thousands, except share and per share data)  
 
Sales, net of business tax and related surcharges
  $     $ 37,861     $ 37,861     $ 37,861  
Income from operations
    (1,026 )     21,620       20,594       20,594  
Interest expense
    (3 )           (370 )     (560 )
Interest income
    148       43       191       43  
(Loss) income before income taxes
    (881 )     21,663       20,415       20,077  
Net (loss) income
    (881 )     15,736       14,488       14,150  
Basic (loss) earnings per share
  $ (0.07 )   $ 1,573.60     $ 0.43     $ 0.61  
Diluted (loss) earnings per share
  $ (0.07 )   $ 1,573.60     $ 0.39     $ 0.53  
Basic weighted average shares outstanding
    12,505,000       10,000       33,520,000       23,265,000  
Diluted weighted average shares outstanding
    12,505,000       10,000       36,927,995       26,672,995  


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PRICE RANGE OF SECURITIES AND DIVIDENDS
 
Our equity securities trade on the NYSE Amex. Each of our units consists of one share of common stock and one warrant and trades on the NYSE Amex under the symbol “TMI.U.” On November 14, 2007, the common stock and warrants included in the units began to trade separately. Those units not separated will continue to trade on the NYSE Amex under the symbol “TMI.U,” and each of the common stock and warrants trade on the NYSE Amex under the symbols “TMI” and “TMI.WS,” respectively.
 
Each warrant entitles the holder to purchase one share of our common stock at a price of $5.50. Each warrant will become exercisable only on our completion of a business combination and will expire on October 17, 2011, or earlier upon redemption.
 
The following table sets forth, for each quarter of the fiscal year ended December 31, 2008 and for a portion of the fourth quarter of the fiscal year ended December 31, 2007, the high and low sales price of TM Common Stock, units, and warrants as reported on the NYSE Amex. Prior to October 17, 2007, there was no established trading market for our securities.
 
                                                 
          TMI
    TMI/WS
 
    TMI/U Units     Common Stock     Warrants  
    High     Low     High     Low     High     Low  
 
Year Ended December 31, 2009
                                               
First Quarter
  $ 7.55     $ 7.36     $ 7.63     $ 7.32     $ 0.07     $ 0.03  
Second Quarter
    7.78       7.60       7.80       7.63       0.20       0.04  
Third Quarter through September 25, 2009
    8.00       7.80       7.91       7.73       0.28       0.10  
Year Ended December 31, 2008:
                                               
First Quarter
  $ 7.89     $ 7.47     $ 7.33     $ 7.10     $ 0.68     $ 0.38  
Second Quarter
    7.80       7.41       7.40       7.13       0.50       0.35  
Third Quarter
    7.75       7.00       7.52       7.20       0.51       0.20  
Fourth Quarter
    7.45       6.81       7.31       6.87       0.29       0.01  
Year Ended December 31, 2007:
                                               
Fourth Quarter(1)
  $ 8.04     $ 7.81     $ 7.34     $ 7.20     $ 0.74     $ 0.65  
 
 
(1) Our units began trading on October 17, 2007. The common stock and warrants did not begin separate trading until November 14, 2007.
 
Holders of Common Equity
 
On September 21, 2009, there were 15 holders of record of our units, 25 holders of record of our warrants and 41 holders of record of TM Common Stock. Such numbers do not include beneficial owners holding shares, warrants or units through nominee names.
 
Dividends
 
We have not paid any cash dividends on our common stock to date and do not intend to pay cash dividends prior to the completion of a business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our then board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future.
 
Securities Authorized for Issuance Under Equity Compensation Plans
 
Not applicable.
 
CME
 
CME’s securities are not publicly traded.


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THE SPECIAL MEETING
 
TM is furnishing this Proxy Statement to its stockholders as part of the solicitation of proxies by TM’s board of directors for use at the Special Meeting in connection with the proposed Transaction. This Proxy Statement provides you with the information you need to know to be able to vote or instruct your vote to be cast at the Special Meeting.
 
Date, Time and Place
 
The Special Meeting will be held at 10:00 a.m., local time, on October 15, 2009, at the offices of Morrison Cohen LLP located at 909 Third Avenue, New York, New York 10022.
 
Purpose of the Special Meeting
 
At the Special Meeting, holders of TM Common Stock will be asked to vote upon the following proposals:
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to remove the prohibition on the consummation of a Business Combination if holders of an aggregate of 30% or more in interest of the shares of our common stock issued in our initial public offering (“IPO Shares”) exercise their conversion rights (the “Initial Charter Amendment Proposal No. 1”),
 
  •  to amend TM’s Amended and Restated certificate of Incorporation to remove the requirement that only holders of the IPO Shares who vote against the Transaction (as defined below) may convert their IPO Shares into cash (the “Initial Charter Amendment Proposal No. 2”, and together with the Initial Charter Amendment Proposal, the “Initial Charter Amendment Proposals”); (FOR THE AVOIDANCE OF DOUBT, CONSISTENT WITH TM’S IPO PROSPECTUS, THE 2,250,000 SHARES ISSUED TO THE FOUNDERS OF TM SHALL NOT BE PERMITTED TO CONVERT OR OTHERWISE PARTICIPATE IN THE LIQUIDATION OF THE TRUST ACCOUNT SHOULD TM LIQUIDATE.)
 
  •  to approve the purchase by TM of CME pursuant to the Share Exchange Agreement and the transactions contemplated thereby;
 
  •  to approve the issuance of shares of TM Common Stock pursuant to the Share Exchange Agreement to the Sellers (whereby the number of shares of TM Common Stock that will be issued to the Sellers is 20.915 million and up to an additional 15.0 million shares if certain net income targets are met;
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to change TM’s corporate name to “China MediaExpress Holdings, Inc.,” increase the number of shares authorized for issuance, delete certain provisions that relate to us as a blank check company and create perpetual existence; and
 
  •  to amend TM’s Amended and Restated Certificate of Incorporation to increase the number of shares authorized for issuance (the “Authorized Share Increase Proposal”);
 
  •  to elect six persons to TM’s board of directors to serve for the respective term of office of the class to which the nominee is elected and until their successors are duly elected and qualified; and
 
  •  to approve any adjournment or postponement of the Special Meeting to a later date or time or dates or times if necessary for the purpose of soliciting additional proxies (the “Adjournment Proposal”).
 
Please be aware that if the Transaction is completed, each holder of IPO Shares who votes such shares either “FOR” or “AGAINST” the Transaction may, at the time of such vote, elect to convert those IPO Shares to cash following the procedures described in this document.
 
Pursuant to TM’s Amended and Restated Certificate of Incorporation, TM is required to obtain stockholder approval of the proposed Transaction. Pursuant to certain rules of the NYSE Amex, TM is required to obtain stockholder approval of the issuance of TM Common Stock in connection with the Transaction. In addition, TM and CME have agreed that they will work together to, subject to stockholder approval, use their commercially reasonable efforts to cause the name of TM to be changed to “China


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MediaExpress Holdings, Inc.” (or such other name as TM and the Sellers mutually agree upon) immediately after the consummation of the Transaction.
 
Recommendation of TM’s Board of Directors
 
After careful consideration of the terms and conditions of the Initial Charter Amendment Proposals, the Transaction Proposal, the Share Issuance Proposal, the Charter Amendment Proposal, the Authorized Share Increase Proposal, the Election of Directors Proposal, and the Adjournment Proposal, TM’s board of directors has unanimously (i) approved and declared advisable the Share Exchange Agreement and the Transaction, (ii) approved and authorized the issuance of TM Common Stock in connection with the Transaction, (iii) approved the various amendments to TM’s Amended and Restated Certificate of Incorporation, (iv) recommended that each of the nominees for election to TM’s board of directors be elected to serve for the respective term of office of the class to which the nominee is elected and until their successors are duly elected and qualified, and (v) approved adjournment or postponement of the Special Meeting to a later date or time or dates or times if necessary for the purpose of soliciting additional proxies.
 
Our board of directors has also determined that the fair market value of the Transaction is at least 80.0% of TM’s net assets at the time of acquisition, which is necessary to satisfy the provisions of TM’s Amended and Restated Certificate of Incorporation enabling it to consummate the Transaction.
 
Record Date; Who is Entitled to Vote
 
We have fixed the close of business on September 21, 2009 as the record date for determining TM stockholders entitled to notice of and to attend and vote at the Special Meeting. As of the close of business on September 21, 2009, there were 12,505,000 shares of TM Common Stock outstanding and entitled to vote, which includes 2,250,000 shares beneficially owned by TM’s Initial Stockholders, officers and directors and 10,255,000 shares that were issued in our IPO. Each share of TM Common Stock is entitled to one vote per share at the Special Meeting. TM’s warrants do not have voting rights.
 
Quorum
 
The presence, in person or by proxy, of a majority of all the outstanding shares of TM Common Stock constitutes a quorum at the Special Meeting.
 
Required Vote
 
Pursuant to TM’s Amended and Restated Certificate of Incorporation, TM is required to obtain stockholder approval of the Transaction. Approval of the Transaction Proposal requires the affirmative vote of a majority of the shares of TM Common Stock that were issued in our IPO and voted on this matter either in person or by proxy and entitled to vote at the Special Meeting.
 
Approval of the Share Issuance Proposal and the Adjournment Proposal require the affirmative vote of a majority of the shares of TM Common Stock present either in person or by proxy and entitled to vote at the Special Meeting, and the Initial Charter Amendment Proposals, the Charter Amendment Proposal and the Authorized Share Increase Proposal will require the affirmative vote of holders of a majority of the outstanding TM Common Stock. To be elected under the Election of Directors Proposal, a nominee must receive a plurality of the votes cast either in person or by proxy and entitled to vote at the Special Meeting.
 
In connection with the vote required for the Transaction, our Initial Stockholders, directors and officers have agreed to vote all of the initial shares of TM Common Stock which are beneficially owned by them, or in which they have disclaimed beneficial ownership, in accordance with the vote of the majority of our public stockholders other than the Initial Stockholders. As of the record date, our Initial Stockholders, directors and officers beneficially owned 2,250,000 shares of TM Common Stock (excluding any warrants held by such persons), representing approximately 18.0% of the outstanding shares of TM Common Stock. TM’s Initial Stockholders, directors and officers will cast the 2,250,000 shares of TM Common Stock owned by them in the same manner as such majority votes on such proposal.


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On March 31, 2009, TM announced that it reached an agreement with Opportunity Partners L.P., a fund in the Bulldog Investors (“Bulldog”) group of private investment funds in connection with Bulldog’s then ongoing consent solicitation and proposed proxy solicitation. In connection with the settlement, Bulldog agreed (i) to cease its efforts to effectuate an early windup of TM, (ii) not to oppose the board of directors at the next meeting of stockholders or otherwise seek to exercise control over the management of TM, (iii) to withdraw its demand to force TM to hold an annual meeting of stockholders, and (iv) to enter into a forward contract with TM or a third party whereby Bulldog would not vote its shares against a proposed business combination. As part of the settlement, TM agreed to name Gerald Hellerman to its Board of Directors, who is independent of both Bulldog and TM. In addition, TM reimbursed Bulldog for certain expenses it incurred in connection with its consent solicitation and proposed proxy solicitation. As of the date of this proxy, Bulldog owns 2,500,078 shares of TM Common Stock, representing an 20.0% ownership interest. A total of approximately $19.8 million would be paid to Bulldog to purchase its shares following the consummation of the Transaction, assuming all of Bulldog’s shares are acquired for the Trust value per share of $7.91. We believe the fact that Bulldog agreed to enter into a forward contract with TM enhances the likelihood that TM will receive stockholder approval for each of the proposals being voted upon at the Special Meeting. To date, no such forward contract has been entered into. It is expected that a forward contract with Bulldog will be entered into prior to the mailing of the proxy statement, although the parties may enter into such contract any time prior to the Special Meeting. The terms of such contract have not been agreed upon, but it is expected that TM would agree to purchase Bulldog’s shares of TM Common Stock following the consummation of the Transaction at a fixed price equal to the per share Trust Account liquidation value, which based on the amount in the Trust Account as of August 31, 2009, equals to approximately $7.91.
 
TM believes that eliminating the requirement that holders of no more than 30.0% of the IPO Shares vote against the Transaction and extending the right to elect conversion to those holders of IPO Shares who vote for the Transaction, will increase the likelihood that the Transaction will be approved. Under the terms of Initial Charter Amendment Proposals, if the Transaction is approved and completed, stockholders holding IPO Shares who vote those shares either for or against the Transaction will have the opportunity to either (1) continue to hold their IPO Shares, or (2) elect, at the time of such vote, to convert their IPO Shares into cash upon the closing of the Transaction. The Transaction Proposal is conditioned upon the approval of the Initial Charter Amendment Proposal No. 2 and, in the event the Initial Charter Amendment Proposal No. 2 does not receive the necessary vote to approve that proposal, then the Transaction Proposal will not be presented for approval.
 
Actions That May be Taken to Secure Approval of TM’s Stockholders.
 
In order to ensure that the Transaction Proposal is approved, TM, CME, the Initial Stockholders and their respective affiliates or other third parties may enter into transactions to purchase shares of common stock of TM from stockholders who have indicated their intention to vote against the acquisition and seek conversion of their shares. Transactions of such nature would only be entered into and effected at a time when the purchasers of such securities or any of their affiliates are not aware of any material nonpublic information regarding TM, CME or the acquisition. Such purchases could result in all or substantially all of TM’s trust fund being expended to pay for such purchases post transaction, which would result in CME not receiving any working capital from the trust account. No transactions have been entered into, but may include:
 
  •  Purchases by TM, CME or their respective affiliates of shares of common stock of TM;
 
  •  Agreements with third parties to purchase shares of common stock of TM that may then be exchanged into a new security or loan issued by the combined company in conjunction with the acquisition;
 
  •  Agreements with third parties to purchase shares of common stock of TM that may then be resold to the combined company subsequent to the acquisition using funds that were previously in the trust account.
 
  •  Agreements with third parties pursuant to which TM, CME or their respective affiliates would borrow funds to make purchases of shares of common stock of TM. The combined company would repay such borrowings using funds that were previously in the trust account; and


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  •  The granting of securities to third party purchasers of shares of common stock of TM as an inducement for such third parties to purchase such securities.
 
The Share Exchange Agreement expressly allows TM to raise $50,000,000 in debt or equity to purchase shares of TM Common Stock issued in our IPO. We may use the proceeds of this financing in a variety of ways to secure the required vote to approve the Transaction, including through entering into agreements with our current public shareholders to purchase their shares if the Transaction is approved. Assuming such shares are acquired for the Trust value per share of $7.91 and that we raise and utilize a total of $50 million to purchase shares, we could potentially purchase up to approximately 6,321,113 shares, which represents more than 50% of our outstanding public shares. In addition to such “permitted financing”, we have an agreement with one of our existing public stockholders to enter into a contract to purchase 2,500,078 shares from such stockholder if the Transaction is approved. Together with the shares which could potentially be purchased in the “permitted financing”, these represent approximately 86% percent of our publicly outstanding shares, which would ensure that the Transaction is approved. These actions to obtain stockholder approval of the Transaction could significantly reduce the amount of funds available to the combined company following the transaction, materially increase such company’s debt and impact its relative ownership following the Transaction. Purchase of shares currently owned by TM stockholders will increase the Seller’s ownership of TM following the Transaction, as well as increase the relative percentage ownership of current TM stockholders who do not convert their shares. TM, CME or affiliates may purchase TM’s common stock to help secure approval of the Initial Charter Amendment Proposals.
 
In the event that it appeared that the acquisition would not be consummated at the meeting of TM’s stockholders, such meeting could be adjourned (assuming that such adjournment was not past October 17, 2009, the date on which TM’s corporate existence terminates unless it consummates a business combination) to enter into arrangements similar to the foregoing.
 
In the event that any purchases of TM’s shares of common stock are made by TM, CME or affiliates of either of them after the mailing of this proxy statement to stockholders but prior to the Special Meeting, TM will file a Current Report on Form 8-K relating to such purchases within four business days of such purchases or otherwise prior to the Special Meting. TM’s stockholders may not have sufficient time to consider the impact of such purchases before submitting their proxy, or if they have submitted a proxy, to revoke such proxy prior to the Special Meeting. In the event that members of the management team of TM purchase TM shares of common stock, such purchasers will also be required to make beneficial ownership filings with the Securities and Exchange Commission. Members of TM management have an obligation to disclose changes in their beneficial ownership of TM securities within two business days of any such changes.
 
CME intends to purchase such number of TM’s publicly traded warrants as it determines in its sole discretion following the closing of the Transaction.
 
TM will file a Current Report on Form 8-K with respect to any arrangements entered into by TM, CME or their respective affiliates which is intended to increase the likelihood that the arrangement and related proposals are approved by TM’s stockholders. Any TM shares purchased by TM prior to the Special Meeting will not be considered outstanding for purposes of the Special Meeting and will therefore not be permitted to vote at the meeting. In the event that public shares are purchased by TM, such shares would no longer be deemed to be outstanding for purposes of determining the vote required for the approval of any of the proposals presented at the Special Meeting. Therefore, this would reduce (i) the number of public shares outstanding and entitled to vote on each matter, and (ii) the number of shares required to be voted in favor of each proposal. Conversely, if TM agrees to purchase such shares under a forward sale arrangement or TM’s directors and officers purchased such shares, those shares would still be considered to be outstanding and could be voted in favor of such proposals, reducing the number of shares required to be voted in favor of such proposals by a number of shares equal to those purchased. Neither TM nor its officers or directors purchasing shares would affect the number of shares that could be converted by TM with the acquisition still being permitted to be consummated.
 
Our IPO prospectus did not disclose that funds in the trust account might be used to purchase common stock from holders thereof who have indicated their intention to vote against the acquisition and convert their shares into cash. Consequently, such use of the funds in the trust account might be grounds for a holder of our public stock who purchased such shares in our IPO, to seek rescission of the purchase of the units the holder


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acquired in the IPO. A successful claimant for damages under federal or state law could be awarded an amount to compensate for the decrease in value of the shares caused by the alleged violation, together with interest, while retaining the shares.
 
As of the record date for the Special Meeting, TM’s Initial Stockholders, either directly or beneficially, owned and were entitled to vote 2,250,000 shares, or approximately 18% of TM’s outstanding common stock. With respect to the Transaction Proposal, TM’s Initial Stockholders have agreed to vote their respective shares of common stock owned by them prior to our IPO in accordance with the majority of the votes cast by the Public Stockholders with respect to the Transaction Proposal and related proposals. This voting arrangement shall not apply to any shares included in units purchased in our IPO or purchased following our IPO in the open market by any of our Initial Stockholders, officers and directors. Accordingly, they may vote these shares on a proposed business combination any way they choose.
 
Voting Your Shares
 
Each share of TM Common Stock that you own in your name entitles you to one vote per proposal. Your proxy card shows the number of shares of TM Common Stock you own. There are three ways to vote your shares of TM Common Stock at the Special Meeting:
 
  •  You can vote by signing and returning the enclosed proxy card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares of TM Common Stock as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares of TM Common Stock, your shares of TM Common Stock will be voted as recommended by our board “FOR” the adoption of the Transaction Proposal, the Share Issuance Proposal, the Charter Amendment Proposal, the Authorized Share Increase Proposal, the election of the nominees to TM’s board of directors, and, if required, the Adjournment Proposal. Votes received after a matter has been voted upon at the Special Meeting will not be counted.
 
  •  You can submit a proxy to vote your shares by following the telephone or Internet voting instructions included with your proxy and, if you do, you should not return the proxy card. If you vote this way, however, you will not be able to exercise conversion rights.
 
  •  You can attend the Special Meeting and vote in person. We will give you a ballot when you arrive. However, if your shares of TM Common Stock are held in the name of your broker, bank or another nominee, you must get a proxy from the broker, bank or other nominee. That is the only way we can be sure that the broker, bank or nominee has not already voted your shares of TM Common Stock.
 
Revoking Your Proxy
 
If you give a proxy, you may revoke it at any time before it is exercised by doing any one of the following:
 
  •  you may send another proxy card with a later date;
 
  •  you may notify Mackenzie Partners, Inc. (“Mackenzie”), our proxy solicitor, in writing before the Special Meeting that you have revoked your proxy; or
 
  •  you may attend the Special Meeting, revoke your proxy, and vote in person, as indicated above.
 
If your shares of TM Common Stock are held in “street name,” consult your broker for instructions on how to revoke your proxy or change your vote.
 
Conversion Rights
 
Assuming the Initial Charter Amendment Proposal No. 2 is approved, any holder of shares of TM Common Stock that were issued in our IPO (other than an initial stockholder) who votes either for or against the Transaction Proposal may, at the time of such vote, demand that TM convert his or her shares of TM Common Stock into a pro rata portion of the Trust Account. If the Initial Charter Amendment is not approved, TM will not complete the Transaction and will liquidate. The per share conversion price will be calculated as of two business days prior to


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the consummation of the Transaction, and will equal the amount in the Trust Account divided by the number of shares of TM Common Stock issued in our IPO (10,255,000). Based on the amount in the Trust Account as of August 31, 2009 ($81,075,868, net of taxes payable), the per share conversion price would be approximately $7.91. However, the Trust Account will continue to earn interest and incur taxes on such interest until the consummation of the Transaction. In addition, our placing of funds in the Trust Account may not protect those funds from third party claims against us or other liabilities of TM. While we have sought and will continue to seek to have all vendors and service providers (which would include any third parties we engaged to assist us in any way in connection with our search for a target business) and prospective target businesses execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the Trust Account, there is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they will not seek recourse against the Trust Account or that a court would not conclude that such agreements are not legally enforceable. Accordingly, the funds held in the Trust Account could be subject to claims that take priority over the claims of our public stockholders, and the actual per share conversion price may be less than approximately $7.91. You will only be entitled to receive cash for these shares if you continue to hold them through the consummation of the Transaction and then tender your stock certificate(s) to TM. If you exercise your conversion rights, you will be exchanging your shares of TM Common Stock for cash and will no longer own these shares. Do not send your stock certificate(s) with your proxy. If the Transaction is consummated, converting stockholders will be sent instructions on how to tender their shares of TM Common Stock and when they should expect to receive the conversion amount. Stockholders will not be requested to tender their share of TM Common Stock before the Transaction is consummated.
 
In order to exercise your conversion rights, you must vote either for or against the Transaction Proposal. Abstentions and broker non-votes do not satisfy this requirement. If you vote for or against the Transaction Proposal, you may exercise your conversion rights either by checking the box on the proxy card or by submitting your request in writing to Mackenzie at the address listed on page 193. If you (i) initially vote for the Transaction Proposal but then wish to vote against or (ii) initially vote for or against the Transaction Proposal and wish to exercise your conversion rights but do not check the box on the proxy card providing for the exercise of your conversion rights or do not send a written request to Mackenzie to exercise your conversion rights, you may request that Mackenzie send to you another proxy card on which you may indicate your intended vote and exercise your conversion rights by checking the box provided for such purpose on the proxy card. You may make such request by contacting TM at the phone number or address listed above. Any corrected or changed proxy card or written demand of conversion rights must be received by TM prior to the Special Meeting to be effective. You may also change a prior vote by attending the Special Meeting where you will be able to revoke your proxy and vote in person.
 
It is anticipated that the funds to be distributed to eligible stockholders who elect conversion will be distributed promptly after completion of the Transaction. Public stockholders who so convert their TM Common Stock will retain the warrants that they received as part of the units issued in our IPO and continue to have the right to exercise them.
 
Questions About Voting
 
If you have any questions about how to vote or direct a vote in respect of your TM Common Stock, you may call Mackenzie our proxy solicitor, at (800) 322-2885. You may also want to consult your financial and other advisors about the vote.
 
No Additional Matters May Be Presented at the Special Meeting
 
The Special Meeting has been called only to consider the adoption of the Transaction Proposal, Share Issuance Proposal, Charter Amendment Proposal, the Authorized Share Increase Proposal, the Election of Directors Proposal, and the Adjournment Proposal. Under our bylaws, other than procedural matters incidental to the conduct of the meeting, no other matters may be considered at the Special Meeting if they are not included in the notice of the meeting.


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Abstentions and Broker Non-Votes
 
If your broker, bank or nominee holds your shares of TM Common Stock in its name and you do not give the broker, bank or nominee specific voting instructions, certain NYSE Amex rules would prohibit your broker, bank or nominee from voting your shares of TM Common Stock on the Initial Charter Amendment Proposals, Transaction Proposal, the Share Issuance Proposal, the Charter Amendment Proposal and the Authorized Share Increase Proposal. Failure to provide specific voting instructions to your broker, bank or nominee with respect to such non-routine matters is known as a “broker non-vote.”
 
Abstaining from voting or not voting (including broker non-votes), either in person or by proxy or voting instruction, will not have an effect on the vote relating to the Transaction Proposal, since our Amended and Restated Certificate of Incorporation provides that only votes cast at the Special Meeting will count toward the vote on the Transaction Proposal. An abstention and broker non-votes will not have an effect on the votes relating to the Shares Issuance Proposal, but will have the effect of a vote against the Initial Charter Amendment Proposals, the Charter Amendment Proposal and the Authorized Share Increase Proposal. Stockholders may only vote for or withhold votes for the nominees for election pursuant to the Election of Directors Proposal. Votes that are withheld and broker non-votes, if any, will be counted for purposes of determining the presence or absence of a quorum, but will have no effect on the election of directors.
 
A broker non-vote will not entitle you to exercise your conversion rights. To exercise your conversion rights, you must affirmatively vote for or against the Transaction and elect to convert your shares of TM Common Stock by checking the appropriate box, or direct your broker, bank or nominee to check the appropriate box, on the proxy card and ensure that the proxy card is delivered prior to the Special Meeting.
 
Proxy Solicitation Costs
 
The costs of preparing, assembling, printing, mailing and distributing the Notice of Annual Meeting of Shareholders, the Proxy Statement, the Proxies and the annual report will be borne by us. We have engaged MacKenzie Partners, Inc. (“Mackenzie”) as an independent proxy solicitor to assist in the distribution of proxy materials and the solicitation of votes for approximately $25,000 and reasonable out-of-pocket expenses. We expect that approximately 20 employees of MacKenzie will solicit proxies from our public’s stockholders. In addition, we have retained Pali Capital, Inc. (“Pali”), the representative of the underwriters of our IPO, as financial advisor, and in such role Pali will assist us in soliciting proxies. Pali will receive no consideration for this role, but will be reimbursed by us for reasonable out-of-pocket expenses. We expect that up to 20 employees of Pali will assist in soliciting proxies. In connection with our IPO we sold to Pali an option to purchase up to 700,000 units (consisting of one share of Common Stock and one warrant to purchase one share of Common Stock) for $10.00 per unit. In addition, $3,281,600 of the underwriting commissions and discounts payable to the underwriters in our IPO (including Pali) were deferred and placed in our trust account and will not be paid to the underwriters if we do not complete a business combination by October 17, 2009. Pali has agreed to waive its deferred underwriting fee in exchange for such number of shares of TM’s Common Stock owned by our Initial Stockholders to be agreed upon. We also will reimburse brokers who are holders of record of Common Stock for their reasonable out-of-pocket expenses in forwarding proxies and accompanying materials to the beneficial holders of such Common Stock. In addition to the use of the mails, Proxies may be solicited without extra compensation by our directors, officers and employees by telephone, telecopy, telegraph, email or personal interview.
 
Stock Ownership
 
Information concerning the holdings of certain TM stockholders is set forth below under the section entitled “BENEFICIAL OWNERSHIP OF TM SECURITIES”.
 
THE TRANSACTION PROPOSAL
 
The discussion in this Proxy Statement of the Transaction and the principal terms of the Share Exchange Agreement, among TM, CME and the Sellers is subject to, and is qualified in its entirety by reference to, the full text of the Share Exchange Agreement. A copy of the Share Exchange Agreement is attached as Annex A to this Proxy Statement. We encourage you to read it in its entirety.


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General Description of the Transaction
 
Pursuant to the Share Exchange Agreement, TM will purchase from the Sellers 100% of the outstanding equity of CME and TM will issue at closing 20.915 million newly issued shares of TM Common Stock, and pay $10.0 million in three year, no interest promissory notes. Following the consummation of the Transaction, TM will directly own 100% of the issued and outstanding capital stock of CME. In addition, the Sellers may earn up to an additional 15.0 million shares of TM subject to the achievement of the following net income targets for 2009, 2010 and 2011:
 
                         
Year
 
Net Income (RMB)
 
Net Income (US$)(1)
 
Shares
 
2009
    287.0 million       $42.0 million       1.0 million  
2010
    570.0 million       $83.5 million       7.0 million  
2011(2)
    889.0 million       $130.2 million       7.0 million  
 
 
(1) Based on current exchange rate of 6.83 RMB/US$.
 
(2) If TM’s adjusted net income for 2009, 2010 or 2011 does not equal or exceed the targeted net income threshold for such fiscal year, the earn-out shares in respect of such fiscal year will not be issued to the Sellers; provided, however, that if TM’s adjusted net income in the fiscal year immediately succeeding such non-achieving fiscal year exceeds the sum of (i) the targeted net income threshold for such immediately succeeding fiscal year (which, for the fiscal year ending December 31, 2012, the targeted net income threshold shall be RMB1,155,700,000 ($169.2 million)) and (ii) the shortfall amount for the non-achieving fiscal year, then the earn-out shares in respect of such non-achieving fiscal year will be issued to the Sellers.
 
CME’s net income in the fiscal year ended December 31, 2008 was US$26.4 million.
 
The Sellers will also be entitled to receive up to $20.9 million of the cash proceeds from the exercise of TM’s publicly held warrants to the extent a sufficient number of these warrants are exercised. These warrants are held publicly and it is unknown if or when any of these warrants will be exercised. Warrants to purchase approximately 3.8 million shares of TM Common Stock would need to be exercised in order to generate sufficient proceeds to pay the full $20.9 million to the Sellers. We are required to pay the applicable proceeds from the exercise of these warrants to the Sellers within 15 days after the end of the first full fiscal quarter ending after the closing of the Transaction and each fiscal quarter ending thereafter, until the full amount is paid to the Sellers. TM may redeem these warrants at a price of $0.01 per warrant at any time while the warrants are exercisable, if, and only if, the last sales price of TM’s Common Stock equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending 3 business days before TM sends a notice of redemption.
 
Based on the closing price of TM Common Stock as of September 25, 2009, the total value of the of the consideration to be received by the Sellers (assuming all of the “earn-out” shares are earned) is approximately $320.5 million.
 
In addition, TM paid $150,000 to CME’s certified public accountants as partial payment of such accountants’ fees for the account of CME on May 4, 2009.
 
In addition, as part of an amendment to the Share Exchange Agreement, our Initial Stockholders agreed to transfer 750,000 shares of TM Common Stock owned by them to the Sellers upon the closing of the transaction contemplated by the Share Exchange Agreement and to sign lock-ups of up to 2 years with respect to 2,100,000 warrants owned by them.
 
Background of the Transaction
 
The terms of the Share Exchange Agreement are the result of arms-length negotiations between representatives of TM and CME. The following is a brief discussion of TM’s search for its business combination and the background of the negotiations related to the Share Exchange Agreement between TM and CME.


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TM was incorporated in Delaware on May 1, 2007 as a blank check company formed with the purpose of effecting a merger, capital stock exchange, asset acquisition or other similar business combination with a domestic or foreign operating business in the entertainment, media, digital or communications industries and whose net assets are at least 80.0% of the value of our net assets, including the funds held in the trust account that holds TM’s IPO proceeds (excluding the deferred underwriting discounts and commissions from our IPO).
 
TM completed its IPO on October 17, 2007, raising net proceeds of $78,978,000 including net proceeds from the sale of units on the partial exercise of the underwriter’s overallotment option, of which $78,878,000 was deposited into the trust account. In addition, all of the proceeds from the private sale of warrants ($2,100,000) were deposited into the trust account, for a total of $80,978,800 held in trust (or approximately $7.90 per share sold in the offering). In accordance with TM’s certificate of incorporation, these funds will be released upon either its consummation of a business combination or its liquidation. TM must liquidate unless it has consummated a business combination by October 17, 2009. As of August 31, 2009, approximately $81,075,868 (net of taxes payable) was held on deposit in the trust account.
 
During the period immediately subsequent to the IPO on October 17, 2007 through November 2008, our officers and directors and other representatives were involved in identifying and evaluating prospective businesses regarding a potential business combination for TM. After the consummation of our IPO, we convened our management and representatives of Pali, our investment banker, to discuss and begin implementing our overall plan for identifying, evaluating and, where appropriate, pursuing potential acquisition opportunities. Given our commitment to source, review and negotiate a transaction within the prescribed timeframe, we agreed to immediately identify and begin the process of making contact with various prospective sources of deal flow, including business contacts and relationships we have established to encourage them to contact us with ideas or specific acquisition opportunities that they might have for us to consider and explore.
 
TM was able to source opportunities both proactively and reactively, and given the mandate to find a suitable business combination partner, did not limit itself to any one transaction structure (e.g., cash vs. stock issued to potential seller, straight merger, corporate spin-out or management buy-out). Proactive sourcing involved TM management, and in certain cases, Pali, among other things:
 
  •  Initiating conversations with third-party companies which they believed could make attractive combination partners;
 
  •  attending conferences or industry events to meet prospective business combination partners;
 
  •  contacting professional service providers (lawyers, accountants, consultants and bankers);
 
  •  utilizing their own network of business associates and former colleagues for leads;
 
  •  working with third-party intermediaries, including other investment bankers; and
 
  •  inquiring of business owners, including private equity firms, of their interest in selling their business.
 
Reactive sourcing involved fielding inquiries or responding to solicitations by either (i) companies looking for capital or investment alternatives or (ii) investment bankers or other similar professionals who represented a company engaged in a sale or fund-raising process. TM considered numerous companies in the entertainment, media, digital and communications industries.
 
In considering potential targets for a business combination, TM’s management considered the following factors as being material to their decision:
 
  •  financial condition and results of operations;
 
  •  cash flow potential;
 
  •  growth potential;
 
  •  experience and skill of management and availability of additional personnel;
 
  •  capital requirements;


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  •  competitive position;
 
  •  regulatory or technical barriers to entry;
 
  •  stage of development of the products, processes or services;
 
  •  degree of current or potential market acceptance of the products, processes or services;
 
  •  contributions TM could make to the potential target’s business;
 
  •  relative valuation to comparable companies;
 
  •  regulatory environment of the industry; and
 
  •  costs associated with effecting the business combination.
 
The evaluation relating to the merits of a particular business combination were based, to the extent relevant, on the above factors. In evaluating certain prospective business targets, TM’s management conducted a due diligence review which encompassed, among other things, business, financial and industry analysis, meetings with management, and, where applicable, inspection of facilities as well as review of financial and other information which were available.
 
As a result of these efforts, TM initiated contact, either directly or through a third-party intermediary, with over 100 potential targets. TM signed non-disclosure agreements relating to approximately 15 of these potential business combination opportunities. TM also had discussions with numerous target companies with which a non-disclosure agreement was not signed. With respect to several business combination opportunities, discussions among TM’s management and the targets included financial disclosures, site visits, reviews of potential transaction structures, preliminary estimates of transaction values, discussions of management objectives, business plans and projections and the engagement of third party service providers. Discussions, including introductory meetings attended by some combination of Messrs. Green and Bird and other designated individuals on behalf of TM occurred with potential targets on a regular basis during the period from October 2007 through November 2008. Our board of directors’ initial review and analysis determined that a transaction with many of the potential target companies would not be successful based on purchase price, valuation, industry, conditions and market concerns.
 
Based on their experience in investigating investment opportunities, TM’s management assessed the competition for quality companies that could be a potential target for a business combination and determined that a company that TM’s management identified as a suitable potential business combination partner would typically have several alternatives to a potential business combination with TM, including remaining independent or selling itself to another third party, as well as obtaining capital either privately or publicly. Additionally, in many cases, TM’s management had to spend time educating a prospective business combination partner about “blank check” companies and explaining, from TM management’s perspective, the benefits of a combination with TM over other alternatives that it may have been considering. The reasons varied for why TM did not reach agreement with many of the potential business combination partners it encountered. With respect to certain targets, the TM management team did not feel sufficiently comfortable with the target company’s forecasted financial performance or the likelihood that management could reach such forecasted performance. With respect to others, an agreement could not be reached on financial terms, the target’s operating performance declined during the course of negotiations or TM simply decided that it was not in the best interests of its shareholders to pursue a particular transaction. Of all the transactions that TM reviewed, TM believes the transaction with CME provides the most attractive option for its business combination.
 
A general timeline for meaningful business combination search activities for TM is as follows:
 
In December 2007, TM was introduced to a mobile entertainment company (“Target A”). From December 2007 though February 2008, TM and its representatives conducted extensive financial, business and legal due diligence on Target A, including numerous meetings with Target A’s management and representatives. In February 2008, TM executed a non-binding letter of intent with Target A. Additional due diligence as well as the negotiation of a purchase agreement with Target A continued throughout May 2008. In May 2008, discussions with Target A were terminated due to an unexpected deterioration in Target A’s financial results.


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In January 2008, Pali introduced TM to a telecommunications service provider (“Target B”) that was interested in raising capital and was considering a transaction with a blank check company. From January through March 2008, TM and its representatives conducted preliminary due diligence on Target B and the industry in which Target B operated. In March 2008, TM submitted a letter of intent to Target B that outlined the terms of a merger between TM and Target B. Subsequently, TM and Target B engaged in several discussions regarding the terms of the letter of intent. However, Target B ultimately decided to pursue another transaction.
 
In late May 2008, TM was contacted by the financial advisor of an entertainment distribution company (“Target C”) regarding a potential transaction. From late May 2008 through November 2008, TM and its representatives conducted extensive financial and business due diligence on Target C, including meetings with Target C’s management and representatives and a visit to Target C’s facilities. In October 2008, TM submitted a non-binding letter of intent for a merger of TM and Target C. Through the remainder of October and November, TM and it representatives held numerous discussions with Target C and its representatives regarding the letter of intent and potential transaction structures. TM ended discussions with Target C in late November 2008 as a transaction structure could not be agreed upon between the parties.
 
In August 2008, TM was contacted regarding the auction of a pay-TV operator (“Target D”). From late August 2008 through November 2008, TM and its representatives conducted financial and business due diligence on Target D, including a meeting with and numerous conference calls with Target D’s management and a review of documents provided to TM via a virtual data room. In early November 2008, TM submitted an offer for the acquisition of Target D. In late November 2008, TM was notified that it was not selected as the winning bidder in the auction of Target D.
 
On November 24, 2008, Pali was contacted by a finder regarding a potential transaction opportunity for TM with a Chinese media company. Upon signing a non-disclosure agreement on December 2, 2008, TM was provided with information on CME, including a draft of a Registration Statement on Form F-1 that had been prepared (but never filed) in connection with a contemplated IPO in the United States of CME. As a result of general market conditions in the United States in the fall of 2008 and since then, CME’s management determined not to file the Form F-1 and to pursue the proposed transaction with TM in lieu of conducting an initial public offering. Immediately following, TM and its representatives began conducting preliminary due diligence on CME, other public Chinese advertising companies, and the Chinese adverting industry in general as well as on other blank check companies that had entered into a business combination with a target based in China. TM was informed that CME was planning to conduct a traditional IPO but due to the turmoil in the global equity and credit markets during the fall of 2008 that it had abandoned such plans for the time being. Since TM had already raised in excess of $80 million in its IPO in October 2007, we believed that CME might be receptive to entering into a transaction with us.
 
On December 8, 2008, Messrs. Green and Bird and representatives of Pali held a conference call with representatives of CME to discuss CME’s historical and projected financial results, business plan and strategy.
 
On December 10, 2008, TM management received a preliminary financial model from Pali regarding the acquisition of CME. The financial model outlined a potential transaction based on the following information that could serve as the basis to structure the financial terms of a transaction: (i) unsubstantiated financial results of CME that had been provided to Pali by the finder (which subsequently proved to be substantially understated), and (ii) valuation metrics based on CME’s most comparable publicly traded company, VisionChina Media, an operator of a television advertising network on intra-city buses and subways in China, and Focus Media and AirMedia. The valuation metrics presented were price to earnings multiples.


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The comparison of multiples presented were as follows:
 
                         
    Price/Earnings  
    2008E     2009E     2010E  
 
VisionChina Media
    8.3 x     6.5 x     5.3 x
AirMedia
    11.7 x     8.7 x     7.1 x
Focus Media
    5.1 x     4.7 x     3.7 x
TM/CME
    8.2 x     4.5 x     2.5 x
 
Based on the findings from the preliminary due diligence and the financial model, Messrs. Green and Bird decided to begin the preparation of a preliminary non-binding letter of intent to send to CME.
 
On December 11, 2008, TM provided CME with a preliminary non-binding letter of intent outlining the terms of a transaction between the two companies. As part of the letter of intent, TM’s management contemplated a deal structure in which TM would issue shares of its common stock and pay cash to CME shareholders. The proposed structure included an earn-out component which assured TM’s management that there would be a strong alignment of interests between CME’s management and TM’s stockholders following the closing of the transaction.
 
From December 18 through December 19, 2008, Messrs. Green and Bird and a representative of Pali visited CME at its headquarters in Fuzhou, China to discuss the terms of a transaction and to perform due diligence. TM and CME engaged in extensive negotiations over the aggregate value to be paid to CME’s stockholders based on TM’s valuation of CME. In addition, TM verbally engaged Pali as its financial advisor with respect to a transaction involving CME.
 
Between December 20, 2008 and January 12, 2009, representatives of TM and CME engaged in numerous discussions relating to the terms in the non-binding letter of intent for a transaction between CME and TM. In addition, another representative of Pali conducted on site due diligence of CME within that time frame.
 
On January 8, 2009, CME and TM signed a non-binding letter of intent setting forth the principal terms of the proposed acquisition of CME by TM, which included the following principle terms to be included in customary definitive agreements to be negotiated by the parties:
 
  •  Consideration — $316.9 million of total consideration comprised of $176.0 million of initial consideration at closing of the transaction (19.5 million shares of TM Common Stock valued at $8.00 per share, and $20.0 million in cash) and additional consideration of up to $140.9 million upon achieving certain benchmarks and the exercise of TM public warrants (15.0 million shares of TM Common Stock valued at $8.00 per share, and $20.9 million of the cash proceeds from the exercise of TM’s publicly held warrants);
 
  •  Pre-Shareholder Vote Financing — TM is permitted to raise up to $50 million of financing prior to TM’s shareholder vote to finance or partially finance the purchase of up to $50 million of TM Common Stock to the extent necessary to receive shareholder approval;
 
  •  Lock-up — CME’s existing stockholders will agree to customary restrictions upon the sale, pledge or other transfer of shares of common stock that they receive;
 
  •  Senior Management — CME will agree to add a Chief Financial Officer conversant with US GAAP and public company accounting standards that is mutually acceptable to both TM and the CME;
 
  •  Board of Directors — The board of directors following the acquisition to initially consist of members designated by CME, with additional customary representation for TM as well as independent members as required by law and stock exchange rules;
 
  •  Exclusivity — The later of February 28, 2009 and 15 days following TM’s receipt of CME’s audited financial statements for the calendar years 2006, 2007 and 2008.


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The transaction was structured to be valued at a discount to what TM believed to be the most comparable publicly traded company (VisionChina Media) to CME. The actual negotiation process involved a series of discussions regarding a number of factors, including the number of shares CME’s existing shareholders would receive upon the closing of the transaction, the number of shares they would receive through the achievement of various earn-out payments related to specified net income targets, the amount of cash they were to receive at closing and the amount of cash they could receive through the future exercise of TM’s warrants. The earn-out net income targets were solely based on CME’s financial projections that were provided to us.
 
From January 13 through mid-April 2009, TM continued its due diligence review of CME’s business. The due diligence consisted of a detailed review of information provided to TM by CME on its business as well as a further due diligence review of the Chinese advertising industry in general and the competitive landscape with respect to CME in particular.
 
On January 23, 2009, Morrison Cohen LLP (“Morrison Cohen”), TM’s counsel, provided a draft of a Share Exchange Agreement to CME.
 
From January 2009 through April 2009, TM’s board of directors was continuously updated on the status of the transaction and was provided with information on CME and the Chinese advertising industry.
 
On February 4, 2009, TM engaged Global Law Office (“GLO”) to act as its Chinese legal counsel. From January 2009 through April 2009, GLO along with Morrison Cohen conducted extensive legal due diligence on CME.
 
On February 11, 2009, GLO provided to TM a preliminary legal due diligence summary on CME.
 
On February 27, 2009, TM received a draft of CME’s audited financial statements for the calendar years 2006, 2007 and 2008 prepared by AJ. Robbins, PC (“AJ Robbins”).
 
On March 6, 2009, TM received comments to the Share Exchange Agreement from CME’s legal counsel, Loeb & Loeb LLP (“Loeb”).
 
On March 9, 2009, GLO provided to TM a list of legal issues surrounding the transaction with CME, including the lack of SARFT approval, the structure following consummation of the transaction and minor trademark issues.
 
On March 13, 2009, Morrison Cohen and Loeb held a conference call to highlight the material issues relating to the Share Exchange Agreement including the timing of the payment related to the $20.9 million of the cash proceeds from the exercise of TM’s publicly held warrants, the definition of the Permitted Financing, conduct prior to closing, indemnification, and representations and warranties.
 
On March 16, 2009, TM, Pali and Morrison Cohen held a conference call with CME and Loeb to discuss the material issues relating to the Share Exchange Agreement that were highlighted on the March 13, 2009 conference call.
 
Between March 16, 2009 and April 23, 2009, representatives of TM and CME, and their respective legal counsel, continued to negotiate the terms of the Share Exchange Agreement and related documents. Such negotiations were primarily conducted telephonically. While numerous items were negotiated, particular attention was given to the definition and terms of TM’s Permitted Financing (as defined in the Share Exchange Agreement) and the minimum amount of working capital that TM would be required to deliver in the transaction. During these negotiations, CME came to understand that a portion of TM’s Trust could be used to purchase TM’s publicly traded shares in order to secure approval of the Transaction and that additional financing might be required to complete the Transaction. As a result, CME sought to ensure that a minimum amount of cash (in addition to the consideration payable to the Sellers) for working capital purposes was delivered by TM at closing. After a series of negotiations, it was ultimately agreed that TM could secure up to $50.0 million in financing (secured or unsecured debt, which may be convertible into TM Common Stock, or preferred stock) with a term of at least 3 years. Additionally, TM agreed to deliver at least $10.0 million of working capital (after fees and expenses) at the closing of the transaction, but CME subsequently agreed to forego this requirement.


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On March 30, 2009, TM formalized its previously agreed upon engagement of Pali as its financial advisor through the execution of a written agreement.
 
On April 13, 2009, TM and Pali held a conference call with AJ Robbins to discuss the audited financials, CME’s record keeping and internal controls, as well as the on site work performed for the audit. Additionally, AJ Robbins confirmed the draft received in March was substantially similar to the final version to be received upon payment of the audit fee by CME.
 
On April 23, 2009, at a meeting of TM’s board of directors, TM management reviewed the principal terms of the proposed transaction with CME and the status of the negotiations regarding the Share Exchange Agreement and related documentation. The meeting included a verbal presentation from Pali, which included a summary of the proposed transaction consideration and structure, an overview of the business and financials of CME, and a discussion of the advertising market in China and the implied valuation of the transaction.
 
The historical financials and projections provided by the management of CME were as follows:
 
                                                 
    2006     2007     2008     2009E     2010E     2011E  
    (In millions)  
 
Net Sales
  $ 4.0     $ 25.8     $ 63.0     $ 104.2     $ 196.6     $ 305.5  
Gross Profit
  $ 2.5     $ 12.7     $ 37.9     $ 71.5     $ 140.9     $ 219.5  
EBITDA
  $ 2.0     $ 12.6     $ 38.0     $ 65.5     $ 128.5     $ 197.8  
Pre-Tax Income
  $ 1.6     $ 11.0     $ 35.2     $ 60.2     $ 119.4     $ 186.1  
Net Income
  $ 0.9     $ 7.0     $ 26.4     $ 42.1     $ 83.6     $ 130.3  
 
The projections provided by the management of CME were based on their current business plan and without regard to capital structure and the proposed Transaction.
 
The discussion on the implied valuation focused on a comparison of the price to earnings multiples, enterprise value to revenue multiples and enterprise value to EBITDA (earnings before interest, taxes, depreciation and amortization) multiples of the publicly-traded companies comparable to CME (VisionChina Media, AirMedia, Baidu, Sohu and Sina) compared to the multiples embedded in TM’s transaction with CME. Heavy emphasis was placed on the price to earnings multiples of CME’s most comparable publicly traded company, VisionChina Media, an operator of a television advertising network on intra-city buses and subways in China and a publicly listed company on NASDAQ, as compared to the price to earnings multiples in TM’s transaction with CME. The comparison of multiples analyzed were as follows:
 
                                                                                 
                                                          Debt/
 
    Enterprise Value/Revenue     Enterprise Value/EBITDA     Price/Earnings     2008
 
    2008     2009E     2010E     2008     2009E     2010E     2008     2009E     2010E     EBITDA  
 
VisionChina Media
    2.2 x     1.6 x     1.3 x     5.0 x     3.5 x     2.8 x     8.4 x     7.7 x     6.2 x     0.0 x
AirMedia
    1.5 x     1.1 x     0.9 x     5.3 x     6.3 x     3.2 x     11.7 x     15.1 x     8.8 x     0.0 x
Baidu
    14.2 x     11.4 x     8.4 x     31.2 x     25.4 x     18.8 x     42.8 x     36.5 x     27.5 x     0.0 x
Sohu
    3.4 x     2.9 x     2.5 x     8.1 x     6.8 x     5.9 x     11.5 x     10.8 x     9.8 x     1.2 x
Sina
    2.6 x     2.5 x     1.7 x     11.3 x     8.1 x     5.7 x     15.6 x     18.0 x     14.0 x     0.0 x
TM/CME
    2.8 x     1.7 x     0.9 x     4.6 x     2.7 x     1.5 x     9.8 x     6.3 x     3.9 x     0.0 x
 
The analysis resulted in a conclusion by Pali that due to lower implied multiples in most cases, TM’s transaction with CME compared favorably to its publicly-traded comparables. Following a full discussion, the TM board unanimously approved the Share Exchange Agreement and the transactions contemplated.
 
Pali had been one of the underwriters of TM’s initial public offering. Pali regularly provides investment banking services and mergers and acquisitions advisory services and TM management believed that the Pali investment professionals would provide sound advice to TM and its board of directors relating to a proposed transaction with CME, especially in connection with structuring the transaction and helping to analyze the financial terms to be negotiated. In addition, Pali’s investment professionals had advised numerous special purpose acquisition companies and were thus familiar with the various requirements pertaining to them. Pali was not engaged to issue an opinion to the Board of Directors regarding the fairness of the Transaction or


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whether the Transaction would satisfy the requirement that the Transaction have a fair market value equal to at least 80% of TM’s net assets. Pali has agreed to waive its deferred underwriting fee in exchange for such number of shares of this Common Stock owned by our initial Stockholders to be agreed upon. Upon the closing of the Transaction, pursuant to the engagement agreement Pali is to be paid a fee of approximately $2.0 million, the exact amount to be determined based on the total expenses incurred in the Transaction by TM. TM has also agreed to reimburse Pali for its reasonable out-of-pocket expenses and to indemnify Pali and certain related persons against liabilities arising out of Pali’s services under the engagement agreement.
 
Between April 23, 2009 and May 1, 2009, representatives of TM and CME continued to finalize the Share Exchange Agreement and related documentation.
 
On May 1, 2009, AJ Robbins delivered the final audit of CME to TM.
 
On the evening of May 1, 2009, the Share Exchange Agreement was executed by the parties thereto and on the morning of May 4, 2009, TM issued a press release announcing the transaction.
 
TM maintained regular contact with CME after execution of the original Share Exchange Agreement. From June 2009 through September 2009, and as permitted under the original Share Exchange Agreement, TM and CME sought to secure a Permitted Financing (as defined in the original Share Exchange Agreement) and conducted numerous meetings, in-person and telephonically, with approximately 30 potential debt and equity investors. The discussions with investors all varied in terms of level of interest. TM and CME ultimately received term sheets from several investors. None of the term sheets received were acceptable to both TM and CME. Therefore, in order to consummate the transaction and preserve value for all TM shareholders interested in the transaction, in late September, TM and CME agreed to discuss amending the original Share Exchange Agreement so as to reduce or defer the cash portion payable to the parties and to reduce the need to seek alternative sources of financing.
 
On September 23, 2009, the terms of such changes were verbally agreed upon by both TM and CME. The changes included issuing 1.415 million additional shares of TM Common Stock and $10.0 million in notes payable to CME shareholders, in lieu of the $20.0 million cash consideration. Additionally, it was agreed that the $10.0 working capital requirement would be removed and that TM would limit its transaction expense.
 
Between September 23, 2009 and September 30, 2009, representatives of TM and CME continued to negotiate an amendment to the Share Exchange Agreement.
 
On September 30, 2009, at a meeting of TM’s board of directors, TM management and Morrison Cohen reviewed the changes to the transaction and the Share Exchange Agreement. The TM board unanimously approved the amended transaction and changes to the Share Exchange Agreement.
 
On September 30, 2009, the amendment to Share Exchange Agreement was executed by the parties thereto and on the morning of October 1, 2009, TM issued a press release announcing the amended transaction. A copy of such amendment is included in Annex A attached to this Proxy Statement.
 
In addition, during this time TM’s management began considering ways to increase the likelihood that the Transaction would be approved, including by way of amendments to TM’s Amended and Restated Certificate of Incorporation. It was determined that the amendments proposed by the Initial Charter Amendment Proposals would meet these goals by reducing the threshold vote required for approval of the Transaction and by reducing the incentive for holders of IPO Shares to vote against the Transaction. As a result, TM negotiated with CME to allow such amendments and to eliminate the contractual requirement in the Share Exchange Agreement that no more than 30% of the IPO Shares elect to convert in order to consummate the Transaction.
 
Recommendation of the Board of Directors and Reasons for the Transaction
 
After careful consideration, TM’s board of directors, by unanimous vote at a meeting on April 23, 2009 and on September 30, 2009, approved and declared advisable the Share Exchange Agreement and the Transaction. Accordingly, our board of directors recommends that TM’s stockholders vote “FOR” the Transaction Proposal.


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TM’s board of directors considered a wide variety of factors in connection with its evaluation of the Transaction. Pali’s valuation analysis was one of the factors the board of directors considered, in addition to TM’s own due diligence and review of CME’s business operations and results. In light of the complexity of those factors, TM’s board of directors did not consider it practicable to, nor did it attempt to, quantify or otherwise assign relative weights to the specific factors it considered in reaching its decision. In addition, individual members of TM’s board of directors may have given different weight to different factors. In reaching its determination, TM’s board of directors considered the following factors, among others:
 
  •  information with respect to the financial condition, results of operation and business of CME, on both a historical and prospective basis; 2006 — 2008 net revenue and net income CAGR of 269% and 404%, respectively, with a projected 2008 — 2011 net income CAGR of 158%;
 
  •  CME’s lower price to earnings multiples relative to its public comparables, given its future prospects and those of the industry;
 
  •  CME’s management team’s quality and strength, and proven track record of success; CME’s existing management team has grown the business to achieve 2008 net revenue and net income of $63.0 and $26.4 million, respectively, and 35,000 installed TV displays on over 16,000 buses in a short period of time;
 
  •  the earn-out and lock-up features of the transaction, which provide substantial incentives to the management and stockholders of CME to realize future value for all stockholders after the closing of the Transaction; CME’s existing shareholders have agreed to receive a substantial portion of the consideration based on achieving certain net income targets that imply significant growth in earnings and indicate their commitment and confidence towards CME’s future growth prospects; the lock-up agreements that CME’s existing shareholders have agreed to enter into and the consideration based on the exercise of the publicly held warrants will align their interests with those of TM’s stockholders;
 
  •  the terms and conditions of the Share Exchange Agreement and related transaction documents;
 
  •  the Chinese and global advertising market, both current and projected; advertising spending in China reached $15.4 billion in 2007 and is expected grow to $25.0 billion in 2011, a 12.8% CAGR; and
 
  •  the results of TM’s business, financial, accounting, legal and other due diligence review of CME.
 
Our board of directors also considered potentially negative factors in its deliberations concerning the Transaction and the Share Exchange Agreement, including:
 
  •  the competitive nature of the Chinese advertising industry in general; although the Chinese advertising industry is generally competitive, it is also highly fragmented and growing quite rapidly; however, CME is the only company with an advertising network of its size and scope on inter-city express buses in China;
 
  •  the possibility that the benefits anticipated from the Transaction might not be achieved or might not occur as rapidly or to the extent currently anticipated; it is possible that the financial and strategic benefits of having CME publicly traded on a U.S. exchange, and that the ability of TM’s management to leverage its business relationships to secure additional programming for CME could fall short of our expectations;
 
  •  the risk that CME is unable to increase the number of buses in its network as projected;
 
  •  the pro forma effect of the issuance of 15,000,000 shares of TM common stock pursuant to the Share Exchange Agreement on TM’s earnings per share, which would reduce TM’s earnings per share on a pro forma adjusted basis; and
 
  •  the limits on indemnification in the Share Exchange Agreement, which restrict the remedies available to TM in the event of a breach by CME and cap the damages recoverable by TM at $25.0 million.
 
In addition, TM’s board of directors relied on a number of standards generally accepted by the financial community in making its decision to enter into the Share Exchange Agreement with CME. In particular, TM’s


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board of directors placed heavy emphasis on the price to earnings multiples of publicly-traded companies that it deemed to be comparable to CME and compared those multiples to the earnings multiple embedded in TM’s transaction with CME. In addition, TM’s board of directors evaluated enterprise value to revenue multiples, enterprise value to EBITDA (earnings before interest, taxes, depreciation and amortization) multiples and the capital structures of the publicly-traded companies comparable to CME and compared the multiples and capital structures to those in TM’s transaction with CME.
 
Despite not being disclosed in TM’s IPO prospectus, TM’s board of directors, also considered various transactions either TM or its affiliates might enter into in order to secure the required stockholder approval of the Transaction, including the purchase of TM’s publicly traded shares with funds from the Trust, the entering into various debt or equity financing arrangements to fund such purchases and the impact of such transactions on the amounts available for the Transaction, the debt of the combined company and its relative equity ownership following such transactions.
 
This discussion of the information and factors that our board of directors considered is not intended to be exhaustive but, we believe, includes many of the material factors considered by our board of directors. Each member of our board of directors made his judgment based on the total mix of information available to our board of directors of the overall effect of the Transaction on our stockholders compared to other alternatives. The judgments of individual directors may have been influenced to a greater or lesser degree by their individual views with respect to different factors.
 
Based on the factors outlined above, our board of directors approved and declared it advisable that TM enter into the Transaction.
 
Interests of TM’s Management in the Transaction
 
When you consider the recommendation of TM’s board of directors that you vote in favor of the Transaction, you should keep in mind that TM’s officers and directors have interests in the Transaction that are different from, or in addition to, yours. These interests include the following:
 
  •  If the Transaction is not consummated and TM is required to liquidate, the shares of TM Common Stock owned and acquired by TM’s directors and officers prior to our IPO will be worthless because they will not be entitled to receive any of the assets held in the Trust Account with respect to these shares. In addition, if the Transaction is not consummated, and TM is forced to liquidate, warrants held by TM’s directors and officers will expire with no value. On April 23, 2009, the date TM’s board of directors approved the Transaction and the Share Exchange Agreement, our directors and officers owned a total of 2,250,000 shares of TM Common Stock acquired prior to our IPO having a total market value of approximately $17.2 million based on the share price of $7.64 of the TM Common Stock on the last trading day prior to that date. In addition, on April 23, 2009, our directors and officers held warrants exercisable for an aggregate of 2,100,000 shares of TM Common Stock (for which they paid $2,100,000) having a total market value of approximately $0.2 million based on our warrant price of $0.11 per warrant on the last trading day prior to that date.
 
  •  Each of Messrs. Green and Bird has agreed, that, if we liquidate prior to the consummation of a business combination, they will be personally liable to ensure that the proceeds of the Trust Account are not reduced by the claims of vendors for services rendered or products sold to us as well as claims of prospective target businesses for fees and expenses of third parties that we have agreed in writing to pay in the event we do not complete a business combination. If the Transaction is consummated, TM’s officers and directors will not have to perform such obligations. If the Transaction is not consummated, however, TM’s officers and directors could potentially be liable for any claims against the Trust Account by such vendors or prospective target businesses who did not sign waivers. If the Transaction is not consummated, CME and the Sellers will be responsible for their own expenses incurred in connection with the proposed Transaction. Pursuant to the Share Exchange Agreement, CME and the Sellers have waived any claim they may have against the Trust Account.


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  •  All rights specified in TM’s Amended and Restated Certificate of Incorporation relating to the right of directors and officers to be indemnified by TM, and of TM’s directors and officers to be exculpated from monetary liability with respect to prior acts or omissions, will continue after the Transaction. If the Transaction is not consummated and TM liquidates, it will not be able to perform its obligations under those provisions. If the Transaction is ultimately completed, the combined company’s ability to perform such obligations will probably be substantially enhanced.
 
Satisfaction of Requirement that the Transaction has a Fair Market Value Equal to at least 80.0% of TM’s Net Assets
 
It is a requirement that any business acquired by TM have a fair market value equal to at least 80.0% of TM’s net assets at the time of acquisition. Based solely on its evaluation of the consideration to be paid in the Transaction, TM’s board of directors determined that this requirement was met and exceeded. TM’s board of directors did not consider the implied valuation of CME based on Pali’s presentation on April 23, 2009 in making its determination that the 80% requirement was met. TM’s board of directors did not seek or obtain an opinion of an outside valuation advisor as to whether the 80.0% test has been met, however, in light of the financial background and experience of members of TM’s management and board of directors, TM’s board of directors believes it is qualified to determine whether the Transaction meets this requirement. Mr. Green (in his roles at Anchor Bay Entertainment, Greenlight Consulting and Sony Wonder), Mr. Bird (in his roles at AOL, Hanana-Barbera and USA Broadcasting), Mr. Hyde (in his numerous roles as a senior executive, consultant and advisor) and Mr. Miller (in his roles as a senior executive, investor and advisor), all have had significant financial experience. If the Transaction is not consummated and TM is required to liquidate, the shares of TM Common Stock owned and acquired by TM’s directors and officers prior to our IPO will be worthless because they will not be entitled to receive any of the assets held in the Trust Account with respect to these shares. In addition, if the Transaction is not consummated, and TM is forced to liquidate, warrants held by TM’s directors and officers will expire with no value. These factors created a conflict of interest for TM’s directors and officers in negotiating the Transaction on behalf of TM, which resulted in the value of the consideration being paid by TM exceeding 80% of TM’s net assets.
 
In determining that the Transaction had a fair market value equal to at least 80.0% of TM’s net assets, TM’s board of directors first determined that as of March 31, 2009, TM had approximately $77.4 million in net assets (total assets minus total liabilities). The fair value of the Transaction was determined through arms-length negotiations between the Sellers and TM (Messrs. Green and Bird) and resulted in a minimum purchase price equal to approximately $176.0 million, assuming a value of $8.00 of the TM Common Stock being issued. This amount exceeds 80.0% of TM’s net assets at the time our board of directors approved the Share Exchange Agreement and the Transaction. Therefore, the 80.0% test was satisfied.
 
Certain U.S. Federal Income Tax Consequences of the Transaction
 
The following discussion is a summary of the material U.S. federal income tax consequences of the Transaction to TM and to current holders of TM Common Stock, as well as the material U.S. federal income tax consequences to the holders of TM Common Stock who choose to exercise their IPO conversion rights. This discussion addresses only those TM stockholders who are “U.S. Holders” (as defined below) that hold each of their shares of TM Common Stock as a “capital asset” as defined in the Internal Revenue Code of 1986, as amended (the “Code”).. This summary is for the general information of TM stockholders only and does not purport to be a complete analysis of all potential tax effects of the Transaction or the exercise of the IPO conversion rights, nor does it constitute tax advice to any particular TM stockholder. For example, this summary does not consider the effect of any applicable state, local or non-U.S. tax laws, or of any non-income tax laws. This discussion does not address all of the U.S. federal income tax consequences that may be relevant to a particular TM stockholder in light of their individual circumstances or to TM stockholders that are subject to special treatment under U.S. federal income tax laws, including, without limitation:
 
  •  financial institutions, regulated investment companies, real estate investment trusts and insurance companies;


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  •  tax-exempt organizations;
 
  •  stockholders who are not U.S. Holders;
 
  •  partnerships, limited liability companies that are not treated as corporations for U.S. federal income tax purposes, subchapter S corporations and other pass-through entities and investors in such entities;
 
  •  dealers, brokers and traders in securities or foreign currencies;
 
  •  stockholders who acquired their shares of TM Common Stock pursuant to the exercise of employee stock options, in connection with employee stock incentive plans or otherwise as compensation;
 
  •  stockholders who hold TM Common Stock as part of a hedge, appreciated financial position, straddle, constructive sale or conversion transaction or other integrated transaction;
 
  •  certain expatriates or former long-term residents of the United States;
 
  •  stockholders who have elected mark-to-market accounting;
 
  •  persons liable for the alternative minimum tax; or
 
  •  U.S. Holders whose “functional currency” is not the U.S. dollar.
 
For purposes of this discussion, “U.S. Holder” refers to a beneficial owner that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation) for U.S. federal income tax purposes, created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source, (iv) a trust if (1) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (2) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.
 
If an entity treated as a partnership for U.S. federal income tax purposes holds TM Common Stock, the U.S. federal income tax treatment of a person holding equity interests in such entity generally will depend upon the status of that person and the activities of that entity. Such entities, and persons holding equity interests in such entities, should consult their tax advisors regarding the U.S. federal income tax consequences of the Transaction and the exercise of the IPO conversion rights.
 
The following discussion is based on the Code, the applicable Treasury Regulations, administrative rulings and interpretations and court decisions, each as in effect as of the date of this Proxy Statement and all of which are subject to change, possibly with retroactive effect. Any such change could materially alter the tax consequences described herein. This discussion does not purport to be a comprehensive analysis or description of all potential U.S. federal income tax consequences of the Transaction and the exercise of the IPO conversion rights. It is not binding on the IRS, and there can be no assurance that the IRS (or a court, in the event of an IRS challenge) will agree with the conclusions stated herein. TM has not obtained a ruling from the IRS or an opinion of counsel as to any U.S. federal income tax consequence described herein. There can be no assurance that the IRS will not take a different position, or that such position will not be sustained if challenged.
 
STOCKHOLDERS ARE URGED TO CONSULT THEIR TAX ADVISORS AS TO THE SPECIFIC TAX CONSEQUENCES TO THEM OF THE PROPOSED TRANSACTION AND THE EXERCISE OF THEIR IPO CONVERSION RIGHTS IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, INCLUDING THE APPLICABILITY AND EFFECT OF U.S. FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX LAWS.
 
U.S. Federal Income Tax Consequences of the Transaction to TM and Current U.S. Holders of TM Common Stock.
 
Neither TM nor current U.S. Holders of TM Common Stock will recognize gain or loss for U.S. federal income tax purposes as a result of the Transaction.


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U.S. Federal Income Tax Consequences to U.S. Holders of TM Common Stock Who Exercise IPO Conversion Rights.
 
Gain or Loss
 
A U.S. Holder of TM Common Stock that exercises IPO conversion rights and effects a termination of the stockholder’s interest in TM will generally be required to recognize gain or loss upon the disposition of that stockholder’s shares of TM Common Stock. Such gain or loss will be measured by the difference between the amount of cash received and the tax basis of that stockholder’s shares of TM Common Stock. A U.S. Holder’s gain or loss generally should be computed on a “per share” basis, so that gain or loss should be calculated separately for blocks of stock acquired at different dates or for different prices. The amounts received by a U.S. Holder of TM Common Stock pursuant to the conversion generally should be allocated proportionately to each share of stock owned by such stockholder. The gain or loss recognized by such stockholder in connection with the conversion will generally be a capital gain or loss and will be a long-term capital gain or loss if the holding period for the shares of TM Common Stock disposed of is treated as being more than one year. It is possible, however, that our IPO conversion rights with respect to TM Common Stock may prevent a U.S. Holder from satisfying the holding period requirements for long-term capital gain or loss. Long-term capital gain of non-corporate taxpayers may be subject to more favorable tax rates than ordinary income or short-term capital gain. The deductibility of capital losses is subject to various limitations. U.S. Holders are urged to consult their own tax advisors regarding the availability of long-term capital gain or loss treatment.
 
Backup Withholding
 
Unless a TM stockholder complies with certain reporting and/or Form W-9 certification procedures or is an exempt recipient under applicable provisions of the Code and Treasury Regulations, such stockholder may be subject to backup withholding tax with respect to payments received pursuant to the exercise of IPO conversion rights. The backup withholding tax is currently imposed at a rate of 28%. If backup withholding applies, the amount withheld is not an additional tax, but generally should be allowed as a credit against the stockholder’s U.S. federal income tax liability and may entitle the stockholder to a refund, provided that certain required information is timely furnished to the IRS. Stockholders are urged to consult with their own tax advisors regarding the application of backup withholding and the availability of and procedure for obtaining an exemption from backup withholding in their particular circumstances.
 
Anticipated Accounting Treatment
 
The Transaction will be accounted for as a reverse acquisition in which CME is the accounting acquirer, equivalent to a recapitalization. The net monetary assets of TM will be recorded as of the closing date of the Transaction at their respective historical costs, which is considered to be the equivalent of fair value. No goodwill or intangible assets will be recorded as a result of the Transaction.
 
The determination of CME as the accounting acquirer has been made based on consideration of all quantitative and qualitative factors of the Transaction, including significant consideration given to the fact that upon consummation of the Transaction: (i) CME will control the management of TM, (ii) CME will control the board of directors of TM and (iii) CME shareholders will be the largest group of shareholders of TM.
 
Post-Closing Ownership of TM Common Stock
 
Immediately following the consummation of the Transaction, and assuming that no TM stockholder exercises its conversion rights and assuming that none of TM’s warrants or options are exercised, the Sellers will own approximately 64.6% of the outstanding TM Common Stock and the current TM stockholders will own approximately 35.1% of the outstanding TM Common Stock. If the Sellers achieve the maximum equity earn-out from 2009 to 2012, then the Sellers would own approximately 75.6% of the TM Common Stock outstanding at that time.


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Assuming the holders of 100% of the outstanding TM Common Stock issued in our IPO vote either for or against the Transaction and exercise their conversion rights, and assuming that none of TM’s warrants or options are exercised, the Sellers will own approximately 93.1% of the outstanding TM Common Stock and the current TM stockholders will own approximately 6.4% of the outstanding TM Common Stock immediately following the consummation of the Transaction. If the Sellers achieve the maximum equity earn-out from 2009 to 2012, then the Sellers would own approximately 95.8% of the TM Common Stock outstanding at that time.
 
Headquarters; Stock Symbols; Name
 
After completion of the Transaction:
 
  •  the corporate headquarters and principal executive offices of TM will be located at 22/F, Wuyi Center, 33 East Street, Fuzhou, Fujian, People’s Republic of China;
 
  •  TM’s corporate name will be changed to “China MediaExpress Holdings, Inc.”; and
 
  •  the TM Common Stock and the warrants and units of TM that are outstanding prior to the Transaction are currently listed on the NYSE Amex under the symbols “TMI,” “TMI.WS” and “TMI.U”. However, as a result of the change of TM’s corporate name to “China MediaExpress Holdings, Inc.” such symbols will change.
 
THE SHARE EXCHANGE AGREEMENT
 
The discussion in this Proxy Statement of the business combination and the principal terms of the Share Exchange Agreement described below are qualified in their entirety by reference to the copy of the Share Exchange Agreement attached as Annex A hereto and incorporated herein by reference. The following description summarizes the material provisions of the Share Exchange Agreement, which agreement we urge you to read carefully because it is the principal legal document that governs the business combination.
 
The representations and warranties described below and included in the Share Exchange Agreement were made by TM and the CME Parties as of specific dates. The assertions embodied in these representations and warranties may be subject to important qualifications and limitations agreed to by TM and the CME Parties in connection with negotiating the Share Exchange Agreement. The representations and warranties may also be subject to a contractual standard of materiality that may be different from what may be viewed as material to stockholders, or may have been used for the purpose of allocating risk among TM and the CME Parties, rather than establishing matters as facts. The Share Exchange Agreement is described in this Proxy Statement and included as Annex A only to provide you with information regarding its terms and conditions at the time it was entered into by the parties. Accordingly, you should read the representations and warranties in the Share Exchange Agreement not in isolation but rather in conjunction with the other information contained in this document.
 
Basic Deal Terms
 
TM will acquire each share of capital stock of CME issued and outstanding prior to the business combination in exchange for $10,000,000 in three year, no interest promissory notes and an aggregate of 20,915,000 shares of TM Common Stock. In addition, TM paid $150,000 to CME on May 4, 2009 and has agreed to issue the Sellers up to an additional 15,000,000 shares of TM Common Stock pursuant to an earn-out provision in the Share Exchange Agreement based on the adjusted net income of the combined company during the fiscal years ending December 31, 2009, 2010, 2011 and potentially 2012. Furthermore, the Sellers are entitled to receive up to $20,888,888 of the cash proceeds received from the exercise of TM’s publicly held warrants to the extent a sufficient number of these warrants are exercised. These warrants are held publicly and it is unknown if or when any of these warrants will be exercised. Warrants to purchase approximately 3.8 million shares of TM Common Stock would need to be exercised in order to generate sufficient proceeds to pay the full $20.9 million to the Sellers. We are required to pay the applicable proceeds from the exercise of these warrants to the Sellers within 15 days after the end of the first full fiscal quarter


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ending after the closing of the Transaction and each fiscal quarter ending thereafter, until the full amount is paid to the Sellers. TM may redeem these warrants at a price of $0.01 per warrant at any time while the warrants are exercisable, if, and only if, the last sales price of TM’s Common Stock equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending 3 business days before TM sends a notice of redemption.
 
The earn-out will be based on the adjusted net income of TM during the fiscal years ending December 31, 2009, 2010, 2011 and potentially 2012. The term “adjusted net income” means the “Net Income Attributable to the Parent” as calculated and disclosed pursuant to Statement of Accounting Standards, or SFAS, No. 160, as set forth on the audited consolidated financial statements of TM comprising a part of the Forms 10-K filed with the SEC for the fiscal years ending December 31, 2009, 2010, 2011 or potentially 2012, adjusted to:
 
  •  add back to the “Net Income Attributable to the Parent” any charges for (a) “acquisition-related costs” as defined in and charged to expense pursuant to SFAS No. 141(R) and any other fees, expenses or payments to any third party related to the business combination, (b) the amortization of intangibles, (c) the impairment of goodwill, (d) compensation expense arising from the earn-out shares, each of (a) — (d) as it relates to any acquisitions completed in, or pending at the end of, the applicable period (including the business combination), by TM or the CME entities;
 
  •  add back to the “Net Income Attributable to the Parent” any out of pocket (i.e., third party) expenses incurred to design, implement and annually assess disclosure controls and procedures and internal controls over financial reporting by TM or the CME entities as a consequence of TM’s compliance with the Sarbanes-Oxley Act;
 
  •  add back to the “Net Income Attributable to the Parent” any charges for taxes payable by any of TM or the CME entities that are directly attributable to the business combination and that apply to the applicable period; and
 
  •  deduct from the “Net Income Attributable to Parent” the financial statement tax benefit of the amount in the above bullets, computed by multiplying the amount of the adjustment in the above bullets by the statutory tax rate applicable to TM or the CME entity that incurred the expense.
 
provided, however, that if TM is no longer required or eligible to file a Form 10-K, then the “Net Income Attributable to Parent” as calculated and disclosed pursuant to SFAS No. 160 for any particular fiscal year shall be as set forth on the audited consolidated financial statements of TM for such fiscal year.
 
The 15,000,000 shares of TM Common Stock subject to the earn-out provision will be issued to the Sellers as follows:
 
  •  1,000,000 shares will be issued to the Sellers if TM’s adjusted net income during the fiscal year ending December 31, 2009 equals or exceeds RMB 287,000,000 ($42.0 million)1;
 
  •  7,000,000 shares will be issued to the Sellers if TM’s adjusted net income during the fiscal year ending December 31, 2010 equals or exceeds RMB 570,000,000 ($83.5 million)1; and
 
  •  7,000,000 shares will be issued to the Sellers if TM’s adjusted net income during the fiscal year ending December 31, 2011 equals or exceeds RMB 889,000,000 ($130.2 million)1.
 
If TM’s adjusted net income for 2009, 2010 and 2011 does not equal or exceed the targeted net income threshold for such fiscal year, the earn-out shares in respect of such fiscal year will not be issued to the Sellers; provided, however, that if TM’s adjusted net income in the fiscal year immediately succeeding such non-achieving fiscal year exceeds the sum of (i) the targeted net income threshold for such immediately succeeding fiscal year (which, for the fiscal year ending December 31, 2012, the targeted net income threshold shall be RMB1,155,700,000) ($169.2 million) and (ii) the shortfall amount for the non-achieving fiscal year, then the earn-out shares in respect of such non-achieving fiscal year will be issued to the Sellers.
 
 
1 Based on current exchange rate of 6.83 RMB/US$.


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Upon the consummation of the business combination, TM will own 100% of the issued and outstanding shares of capital stock of CME. Two of CME’s subsidiaries are also parties to the Share Exchange Agreement: (i) Fujian Zong Heng Express Information Technology Co., Ltd., a limited liability company established in the PRC and a wholly-owned subsidiary of CME, and (ii) Fujian Fenzhong Media Co., Ltd., a limited liability company operating in the media business established in the PRC and controlled by Fujian Express by contractual agreements and arrangements. We refer to CME and these subsidiaries as the “CME entities.”
 
In addition, TM paid $150,000 to CME’s certified public accountants as partial payment of such accountants’ fees for the account of CME on May 4, 2009.
 
In addition, as part of an amendment to the Share Exchange Agreement, our Initial Stockholders agreed to transfer 750,000 shares of TM Common Stock owned by them to the Sellers upon the closing of the transaction contemplated by the Share Exchange Agreement and to sign lock-ups of up to 2 years with respect to 2,100,000 warrants owned by them.
 
Representations and Warranties
 
In the Share Exchange Agreement, the CME Parties make certain representations and warranties (subject to certain exceptions) relating to, among other things:
 
  •  capital structure and title to shares;
 
  •  proper corporate organization and similar corporate matters;
 
  •  authorization, execution, delivery and enforceability of the Share Exchange Agreement and other transaction documents;
 
  •  absence of conflicts with the organizational documents, material contracts and material permits of the CME entities;
 
  •  required consents and approvals;
 
  •  financial information, projections and absence of undisclosed liabilities;
 
  •  absence of certain changes or events;
 
  •  absence of litigation;
 
  •  licenses and permits;
 
  •  title to properties and assets;
 
  •  ownership of intellectual property;
 
  •  taxes;
 
  •  employment matters;
 
  •  transactions with affiliates and employees;
 
  •  insurance coverage;
 
  •  material contracts;
 
  •  compliance with laws, including local PRC laws and those relating to foreign corrupt practices and money laundering;
 
  •  brokers and finders;
 
  •  matters related to the Office of Foreign Assets Control of the U.S. Treasury Department;
 
  •  environmental matters; and
 
  •  customers and suppliers.


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In the Share Exchange Agreement, TM makes certain representations and warranties (subject to certain exceptions) relating to, among other things:
 
  •  capital structure;
 
  •  proper corporate organization and similar corporate matters;
 
  •  authorization, execution, delivery and enforceability of the Share Exchange Agreement and other transaction documents;
 
  •  absence of conflicts with the organizational documents, material contracts and material permits of TM;
 
  •  required consents and approvals;
 
  •  SEC filings;
 
  •  internal accounting controls;
 
  •  solvency;
 
  •  absence of certain changes or events;
 
  •  absence of undisclosed liabilities;
 
  •  absence of litigation;
 
  •  compliance with laws, including the Sarbanes-Oxley Act of 2002 and foreign corrupt practices and money laundering;
 
  •  registration rights;
 
  •  brokers and finders;
 
  •  minute books;
 
  •  votes required by TM’s board of directors and stockholders;
 
  •  quotation of securities on the NYSE Amex;
 
  •  information with respect to the trust account;
 
  •  transactions with affiliates and employees;
 
  •  material contracts; and
 
  •  taxes.
 
Conduct of Business Pending Closing
 
TM and the CME Parties agreed to use commercially reasonable efforts to carry on their respective businesses in the ordinary course in substantially the same manner as previously conducted, to pay all debts and taxes when due, to pay or perform other obligations when due, to use all reasonable efforts consistent with past practice and policies to preserve intact their respective business organizations, to use commercially reasonable efforts consistent with past practice to keep available the services of present officers, directors and employees, and to use commercially reasonable efforts consistent with past practice to preserve relationships with customers, suppliers, distributors, licensors, licensees and others having business dealings with them.
 
The CME Parties agreed not to, without the prior written consent of TM (not to be unreasonably delayed or withheld) and subject to certain exceptions:
 
  •  amend their respective organizational documents or structure agreements, which are those agreements which enable CME to effectively control and consolidate the financial results of Fujian Fenzhong with the financial statements of CME;
 
  •  declare or pay dividends or alter their capital structure;


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  •  enter into, violate, amend or otherwise modify any material contract, other than in the ordinary course of business consistent with past practice;
 
  •  issue, deliver or sell or authorize or propose the issuance, delivery or sale of, or purchase or propose the purchase of, any shares of their capital stock or securities convertible into their capital stock;
 
  •  transfer or license intellectual property other than the license of non-exclusive rights to intellectual property in the ordinary course of business consistent with past practice;
 
  •  sell, lease, license or otherwise dispose of or encumber properties or assets that are material, individually or in the aggregate, to its business, other than in the ordinary course of business consistent with past practice;
 
  •  issue or sell any debt securities or guarantee any debt securities of others in excess of $100,000, in the aggregate, except in the ordinary course of business;
 
  •  pay, discharge or satisfy any claims, liabilities or obligations in excess of $100,000, in any one case, or $250,000, in the aggregate, other than in the ordinary course of business and with respect to certain liabilities reflected or reserved against in the CME financial statements;
 
  •  acquire any business or assets which are material, individually or in the aggregate, to their business, taken as a whole, or acquire any equity securities of any entity, in each case, except to the extent that the financial statements of or relating to such acquired assets or business would be required under applicable U.S. federal securities laws to be publicly disclosed on a Report on Form 8-K or in this Proxy Statement;
 
  •  except as required to comply with applicable law and except for pre-existing agreements, (a) take any action with respect to any employment, severance, retirement, retention, incentive or similar agreement for the benefit of any current or former director, executive officer or any collective bargaining agreement, (b) increase in any material respect the compensation or fringe benefits of, or pay any bonus to, any director or executive officer, (c) materially amend or accelerate the payment, right to payment or vesting of any compensation or benefits, (d) pay any material benefit not provided for as of the date of the Share Exchange Agreement under any benefit plan, or (e) grant any awards under any compensation plan or benefit plan, or remove the existing restrictions in any such plans;
 
  •  enter into any binding discussions, negotiations or arrangements with any broker, investment banker, agent or finder relating to the Share Exchange Agreement or the transactions contemplated thereby, other than with Piper Jaffray; and
 
  •  agree in writing or otherwise to take any of the actions described above.
 
TM agreed not to, without the prior written consent of CME (not to be unreasonably delayed or withheld) and subject to certain exceptions:
 
  •  amend its organizational documents;
 
  •  change any method of accounting or accounting principles or practices, except as required by U.S. GAAP or applicable law;
 
  •  fail to timely file or furnish any SEC reports;
 
  •  declare or pay any dividends, make any distributions or alter its capital structure;
 
  •  sell, lease, license or otherwise dispose of or encumber any of its properties or assets;
 
  •  enter into, violate, amend or otherwise modify any material contract other than contracts that involve the payment or receipt by TM of less than $100,000, individually, or in the aggregate, that, TM reasonably determines are necessary for the completion of the transactions
 
  •  issue, deliver or sell or authorize or propose the issuance, delivery or sale of, or purchase or propose the purchase of, any shares of its capital stock or securities convertible into its capital stock;
 
  •  issue or sell any debt securities or guarantee any debt securities of others;
 
  •  pay, discharge or satisfy any claims, liabilities or obligations in excess of $100,000, other than in the ordinary course of business and with respect to any liabilities reflected or reserved against in the TM financial statements;


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  •  make any capital expenditures, additions or improvements;
 
  •  make any acquisitions;
 
  •  make or change any material tax election, adopt or change any accounting method in respect of taxes, file any tax return or any amendment to a tax return, enter into any closing agreement, settle any claim or assessment in respect of taxes, or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of taxes;
 
  •  initiate, compromise or settle any material litigation or arbitration proceedings; and
 
  •  agree in writing or otherwise to take any of the actions described above.
 
Covenants
 
The Share Exchange Agreement also contains additional covenants of the parties, including covenants providing for:
 
  •  the parties to use commercially reasonable efforts to obtain all necessary approvals from stockholders that are required for the consummation of the transactions contemplated by the Share Exchange Agreement;
 
  •  the protection of confidential information of the parties subject to certain exceptions as required by law, regulation or legal or administrative process, and, subject to the confidentiality requirements, the provision of reasonable access to information;
 
  •  the parties to supplement or amend their respective disclosure schedules with respect to any matter that resulted in or could reasonably be expected to result in a material adverse effect on such party;
 
  •  the parties to cooperate in the preparation of any press release or public announcement related to the Share Exchange Agreement or related transactions;
 
  •  the parties to cooperate and use their commercially reasonable best efforts to secure the permitted financing, which means (i) the incurrence or issuance by TM or the combined company of up to $50,000,000 of secured or unsecured indebtedness (which may be convertible into shares of TM Common Stock) or preferred stock, the net proceeds of which may be utilized to purchase up to $50,000,000 of public held shares of TM Common Stock; (ii) the exchange of shares of TM Common Stock for any senior ranking security that shall remain outstanding following the closing of the business combination; or (iii) forward contracts with existing TM stockholders to be settled contemporaneously with the closing of the business combination using TM’s cash, including cash proceeds from another permitted financing or cash from the trust account (such cooperation to include involving Piper Jaffray as an additional financial advisor in the event such becomes necessary to ensure the completion of the permitted financing);
 
  •  the CME entities to deliver to TM no later than May 6, 2009 the audited consolidated financial statements of CME for the fiscal years ended December 31, 2006, 2007 and 2008;
 
  •  the CME entities to deliver to TM within 30 days after the end of each fiscal quarter the unaudited consolidated balance sheets and the related consolidated statements of income and statements of cash flows of CME for the period then ended;
 
  •  the CME entities to deliver to TM within 15 days after the end of each calendar month any financial information regarding the CME entities prepared by its management in the ordinary course of business consistent with past practice;
 
  •  the CME entities to maintain insurance policies providing insurance coverage for their businesses and for the assets and properties of the CME entities;
 
  •  the CME entities and Sellers to waive all right, title, interest or claim of any kind against the trust account that they may have in the future as a result of, or arising out of, any negotiations, contracts or agreements with TM, and to not seek recourse against the trust account;


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  •  the CME Parties to cause CME to continue to consolidate the financial results of Fujian Fenzhong with the financial statements of CME;
 
  •  TM to prepare, file and mail this Proxy Statement and to hold a stockholder meeting to approve the transactions contemplated by the Share Exchange Agreement and to agree to provide CME with any correspondence received from or to be sent to the SEC and allow CME the opportunity to review and comment on any responses thereto;
 
  •  the CME Parties to provide any information reasonably required or appropriate for inclusion in this Proxy Statement, and any such information so provided shall not contain, at the time this Proxy Statement is filed with the SEC or becomes effective under the Securities Act, any untrue statement of material fact nor omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading;
 
  •  TM, the CME entities and the Sellers to use commercially reasonable efforts to fulfill the closing conditions in the Share Exchange Agreement, including engaging in a road show at mutually agreed to times and places to seek the approval of the transactions;
 
  •  TM and the CME entities to timely file all tax returns and other documents required to be filed with applicable governmental authorities, and to pay all taxes due on such returns;
 
  •  TM and the CME entities to provide prompt written notice to the other party of any event or development that occurs that is of a nature that, individually or in the aggregate, would have or reasonably be expected to have a material adverse effect on the disclosing party, or would require any amendment or supplement to this Proxy Statement; and
 
  •  TM to ensure that the shares of common stock of TM to be issued to the Sellers will be duly authorized, validly issued, fully paid and nonassessable and enforceable in accordance with their terms in compliance with applicable securities laws.
 
Exclusivity; No Other Negotiations
 
Pursuant to the Share Exchange Agreement, none of the CME entities and the Sellers may take, directly or indirectly, any action to initiate, assist, solicit, negotiate, or encourage any offer, inquiry or proposal from any person other than TM:
 
  •  relating to an acquisition proposal, which means the acquisition of any capital stock or other voting securities of CME entities or any assets of CME entities other than sales of assets in the ordinary course of business;
 
  •  to reach any agreement or understanding for, or otherwise attempt to consummate, any acquisition proposal with any of the CME entities and/or any CME shareholder;
 
  •  to participate in discussions or negotiations with or to furnish or cause to be furnished any information with respect to any of the CME entities or afford access to the assets and properties or books and records of CME entities who any of the CME entities knows or has reason to believe is in the process of considering any acquisition proposal relating to any of the CME entities;
 
  •  to facilitate any effort or attempt by any person to do or seek any of the foregoing; or
 
  •  to take any other action that is inconsistent with the transactions contemplated by the Share Exchange Agreement.
 
The foregoing restrictions on the CME entities and Sellers described above will remain binding and in full force and effect unless and until the Share Exchange Agreement and the transactions contemplated thereby are terminated by the CME Parties by reason of the closing of the transactions not having occurred within forty-five (45) days after TM receives final approval from and clearance by the SEC enabling TM to mail this Proxy Statement to TM’s stockholders.


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Pursuant to the Share Exchange Agreement, TM may not take directly or indirectly, any action to initiate, assist, solicit, negotiate, or encourage any offer, inquiry or proposal from any person relating to the acquisition by TM of that person or any affiliate of that person, or take any other action that is inconsistent with the Share Exchange Agreement.
 
Additional Agreements and Covenants
 
Board Composition
 
The parties have agreed that upon the closing of the Share Exchange Agreement, and for a period ending not sooner than March 31, 2012 (or March 31, 2013 if the shares subject to the earn-out provision have not been issued prior to such date), the TM board of directors will consist of seven persons, of which the Sellers will initially designate five directors and TM will initially designate two directors. Of the five directors designated by the Sellers, at least three will be “independent directors” as such term is defined by Section 803 of the AMEX Company Guide, provided that the Company may amend, modify or terminate the requirement that the Sellers designate five directors and how many of those five must be independent directors with the consent of a majority of the independent directors then serving on the TM board.
 
At the closing of the Transaction, the Sellers, Theodore S. Green and Malcolm Bird and TM will enter into a voting agreement. The voting agreement provides, among other things, that, until March 31, 2012 (or March 31, 2013 if the shares subject to the earn-out provision have not been issued prior to such date) at any meeting of stockholders called or action taken for the purpose of electing directors to the TM (Post-Transaction) board of directors, the Sellers will agree to vote for two directors nominated by Mr. Green and Mr. Bird on behalf of the TM stockholders. The initial designated directors for the TM stockholders are Mr. Green and Mr. Bird. See the section entitled “THE ELECTION OF DIRECTORS PROPOSAL”.
 
The TM board of directors shall, within 60 days following the closing of the Share Exchange Agreement, establish an audit committee consisting of not less than three independent directors.
 
Director and Officer Insurance
 
As soon as practicable, TM will file an application with a reputable insurance company seeking a tail liability insurance policy that will be paid for by the combined company upon the closing and covering those persons who are currently covered by TM’s directors’ and officers’ liability insurance policy. The Sellers have agreed to use commercially reasonable efforts to cause the combined company to purchase (to the extent available in the market) such policy with coverage in amount and scope at least as favorable to such persons as TM’s existing coverage (or as much as available for a price of up to $200,000), which policy shall continue for at least six years following the closing.
 
Estimates, Projections and Forecasts
 
Pursuant to the Share Exchange Agreement, except as otherwise expressly set forth therein, TM has acknowledged that none of the CME entities or Sellers made any representations or warranties whatsoever with respect to any estimates, projections or other forecasts and plans (including the reasonableness of the assumptions underlying such estimates, projections or forecasts) regarding the CME entities or Sellers, their business or any other matters. Except as otherwise expressly set forth in the Share Exchange Agreement, TM agreed to take responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans (including the reasonableness of the assumptions underlying such estimates, projections and forecasts), and that TM has no claim against the CME entities or Sellers with respect to the foregoing.
 
Conditions to Closing
 
General Conditions
 
Consummation of the Share Exchange Agreement and the related transactions is conditioned on the TM Common Stockholders, voting as a group, approving the transactions.


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In addition, the consummation of the transactions contemplated by the Share Exchange Agreement is conditioned upon certain closing conditions, including:
 
  •  the delivery by each party to the other party of a certificate to the effect that the representations and warranties of the delivering party are true and correct in all material respects (except that those representations and warranties which are qualified by materiality, material adverse effect or words of similar import shall be true and correct in all respects) as of the closing, and all covenants contained in the Share Exchange Agreement have been materially complied with by the delivering party;
 
  •  no action, suit or proceeding shall have been instituted before any court or governmental or regulatory body or instituted or threatened by any governmental authorities to restrain, modify or prevent the carrying out of the transactions contemplated by the Share Exchange Agreement; and
 
  •  no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal or regulatory restraint provision limiting or restricting the party’s conduct or operations shall be in effect, nor shall any proceeding brought by an administrative agency or commission or other governmental authority, domestic or foreign, seeking the foregoing shall be pending.
 
CME’s Conditions to Closing
 
The obligations of the CME Parties to consummate the transactions contemplated by the Share Exchange Agreement, in addition to the conditions described above, are conditioned upon each of the following, among other things:
 
  •  there shall have been no material adverse effect with respect to TM since December 31, 2008;
 
  •  the receipt of necessary consents and approvals by third parties and the completion of necessary proceedings;
 
  •  the resignation of those officers and directors who are not continuing as officers and directors of TM, free of any claims for employment compensation in any form and including a full release of any claims for past or future employment compensation;
 
  •  CME shall have received a legal opinion, which is customary for transactions of this nature, from counsel to TM;
 
  •  TM shall have made appropriate arrangements with the trustee of the trust account to have the trust account disbursed immediately upon the closing;
 
  •  TM shall have filed this Proxy Statement with the SEC and mailed it to TM’s stockholders and filed all reports and other documents required to be filed by TM under the U.S. federal securities laws through the closing date of the Share Exchange Agreement;
 
  •  TM’s Common Stock and Warrants shall continue to be approved for listing on the NYSE Amex;
 
  •  TM shall have a sufficient amount of cash to pay $3.8 million of its fees and expenses incurred in connection with the proposed Transaction; and
 
  •  no formal or informal SEC investigation or proceeding shall have been initiated by the SEC against any of the TM parties or any of their officers or directors.
 
TM’s Conditions to Closing
 
The obligations of TM to consummate the transactions contemplated by the Share Exchange Agreement, in addition to the conditions described above in the second paragraph of this section, are conditioned upon each of the following, among other things:
 
  •  there shall have been no material adverse effect with respect to CME since December 31, 2008;


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  •  CME shall have furnished TM with the audited consolidated financial statements of the CME for the fiscal years ended December 31, 2006, 2007 and 2008, along with the quarterly and monthly financial statements required to have been delivered pursuant to the Share Exchange Agreement;
 
  •  TM shall have received a legal opinion, which is customary for transactions of this nature, from counsel to CME;
 
  •  CME shall have appointed a chief financial officer that is mutually acceptable for CME and TM, acting reasonably;
 
  •  all fees and expenses incurred by TM in connection with the Share Exchange Agreement and the transactions contemplated thereby up to $3.8 million, in amounts consistent with the estimates provided by TM to CME prior to the effective date of the Share Exchange Agreement, shall have been paid;
 
  •  TM shall have received investor representation letters executed by the Sellers; and
 
  •  no formal or informal SEC investigation or proceeding shall have been initiated by the SEC against any of the CME Parties or any of their officers or directors.
 
If permitted under the applicable law, either TM or the CME Parties may waive any inaccuracies in the representations and warranties made to such party contained in the Share Exchange Agreement and waive compliance with any agreements or conditions for the benefit of itself or such party contained in the Share Exchange Agreement. We cannot assure you that all of the conditions will be satisfied or waived. In the event either party waives a material condition which results in a change in the terms of the transaction rendering prior disclosure materially misleading, the board of directors of TM intends to supplement this proxy statement and re-solicit proxies.
 
TM is in discussions with a number of prospective investors related to the permitted financing. However, no firm agreement has been reached with any investor at this point in time.
 
CME has appointed a chief financial officer acceptable to TM, Mr. Jacky Wai Kei Lam.
 
The legal opinions to be delivered by the respective parties relate to customary transactional matters such as the legal existence of such parties, the due authorization of the proposed transaction, the enforceability of the respective parties’ obligations and non-contravention of existing agreements. The opinions are expected to be delivered at the closing of the Share Exchange Agreement transaction.
 
In February 2009 TM received a notice from NYSE Amex indicating that it is below certain of the exchange’s continued listing standards due to its failure to hold an annual meeting of stockholders in 2008. TM submitted a plan of compliance with NYSE Amex and the exchange accepted the plan and granted TM an extension until August 11, 2009 to regain compliance with continued listing standards. TM has requested that the NYSE Amex grant an additional extension until October 17, 2009.
 
Indemnification
 
Indemnification by the CME Shareholders
 
The Sellers have agreed, on a pro rata basis and not jointly, to indemnify TM from any damages arising from: (a) any breach of any basic representation or warranty made by the CME entities, which mean those representations and warranties relating to capital structure and title to shares, proper corporate organization and similar corporate matters and authorization, execution, delivery and enforceability of the Share Exchange Agreement and other transaction documents; (b) any breach by any CME entity of its covenants, agreements or obligations in the Share Exchange Agreement to be performed or complied with by such CME entity; (c) any breach of any basic representation and warranty made by any CME shareholder; and (d) any breach by any CME shareholder of its covenants, agreements or obligations in the Share Exchange Agreement to be performed or complied with by such CME shareholder. Notwithstanding the foregoing, however, the representations, warranties, covenants, agreements and obligations that relate specifically and solely to a particular CME shareholder are the obligations of that particular CME shareholder only.


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The amount of damages suffered by TM may be paid in cash or, at the option of the Sellers, may be recovered by the repurchase by TM of a specified number of TM shares owned by the Sellers. If the Sellers opt to deliver shares instead of cash, the number of shares to be returned by the Sellers shall be equal to the aggregate amount of the damages agreed to be paid by the Sellers, divided by $8.00. Further, the repurchase price payable by TM will be equal to the amount of the damages suffered by TM.
 
Indemnification by TM
 
TM agreed to indemnify each of the CME Parties from any damages arising from: (a) any breach of any basic representation or warranty made by TM, which mean those representations and warranties relating to capital structure, proper corporate organization and similar corporate matters, authorization, execution, delivery and enforceability of the Share Exchange Agreement and other transaction documents, SEC filings and information with respect to the trust account; or (b) any breach by TM of its covenants, agreements or obligations in the Share Exchange Agreement to be performed or complied with by TM.
 
The amount of damages suffered by the CME Parties shall be paid in cash or, at the option of TM, newly issued TM shares. The number of TM shares to be issued to the CME Parties shall be equal to the aggregate amount of the damages agreed to be paid by TM, divided by $8.00.
 
Limitations on Indemnity
 
TM will not be entitled to indemnification in respect of breaches of any basic representations or warranties made by the CME entities and the Sellers unless the aggregate amount of damages to TM exceeds $1,000,000, and then only to the extent such damages exceed $1,000,000; provided that, with limited exceptions, the aggregate amount of damages payable by the Sellers to TM shall not exceed $25,000,000.
 
The CME Parties will not be entitled to indemnification unless the aggregate amount of damages to the CME Parties exceeds $1,000,000, and then only to the extent such damages exceed $1,000,000; provided that, with limited exceptions, the aggregate amount of damages payable by TM to the CME Parties shall not exceed $25,000,000.
 
Termination
 
The Share Exchange Agreement may be terminated or abandoned at any time prior to the closing by:
 
  •  mutual written consent of the parties;
 
  •  the CME Parties, if the closing has not occurred within forty-five (45) days after TM receives final approval from and clearance by the SEC enabling TM to mail this Proxy Statement to TM’s stockholders;
 
  •  any CME party, if TM has breached any representation, warranty, covenant or agreement contained in the Share Exchange Agreement which has prevented the satisfaction of the conditions to the obligations of the CME Parties under the Share Exchange Agreement and the violation or breach has not been waived by the CME Parties or cured by TM within ten business days after written notice from the CME Parties;
 
  •  TM, if the CME Parties have breached any representation, warranty, covenant or agreement contained in the Share Exchange Agreement which has prevented the satisfaction of the conditions to the obligations of TM under the Share Exchange Agreement and such violation or breach has not been waived by TM or cured by the CME Parties within ten business days after written notice from TM;
 
  •  TM, if CME’s net income for the fiscal year ending December 31, 2008, as derived from the audited financial statements of CME, is less than $15,000,000;
 
  •  any CME party, if the TM board of directors fails to recommend or withdraws its approval or recommendation of the Share Exchange Agreement and the transactions contemplated under the Share Exchange Agreement; or


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  •  either TM or the CME Parties, if, at any meetings of the stockholders of TM (including any adjournments thereof), the Share Exchange Agreement and the transactions and payments contemplated thereby are not approved, or if holders of 30.0% or more of TM’s publicly held common stock exercise their right to convert their common stock into cash from the trust account (in light of the Initial Charter Amendment Proposal, we are currently seeking a waiver from the CME Parties of this condition).
 
In addition, even if the Transaction Proposal is approved, in the event that either of the Share Issuance Proposal on the Charter Amendment Proposal are not approved, TM would not be able to perform its obligations under the Share Exchange Agreement, allowing the Sellers to terminate the Share Exchange Agreement.
 
Effect of Termination
 
In the event of termination and abandonment by either TM or the CME Parties, all further obligations of the parties shall terminate, no party shall have any right against the other party, and each party shall bear its own costs and expenses.
 
Amendment, Extension and Waiver
 
The Share Exchange Agreement may be amended by the parties thereto at any time by execution of an instrument in writing signed on behalf of each of the parties. At any time prior to the closing, either TM or CME may, to the extent allowed by applicable law, extend the time for the performance of the obligations under the Share Exchange Agreement, waive any inaccuracies in representations and warranties made to the other party and waive compliance with any of the agreements or conditions for the benefit of the other party. Any such extension or waiver must be in writing signed by both parties.
 
Regulatory and Other Approvals
 
Except for approvals required by the General Corporate Law of the State of Delaware and compliance with applicable securities laws and rules and regulations of the SEC, no federal, state or foreign regulatory requirements remain to be complied with or other material approvals to obtain or filings to make in order to consummate the business combination.
 
CERTAIN AGREEMENTS RELATING TO THE TRANSACTION
 
Lock-Up Agreements
 
At the closing of the Transaction, the Sellers will enter into lock-up agreements with TM, providing, among other things, that they not sell or otherwise transfer any of the shares of TM Common Stock received in the Transaction, subject to certain exceptions, for a period of:
 
  •  twelve months from the closing date of the Transaction or, with respect to the earn-out shares, from the date of issuance of such shares, for those shares beneficially owned by Mr. Cheng; and
 
  •  six months from the closing date of the Transaction or, with respect to the earn-out shares, from the date of issuance of such shares, for those shares beneficially owned by Thousand Space Holdings Limited and Bright Elite Management Limited.
 
Notwithstanding the foregoing, nothing in the lock-up agreements will restrict transfers of the shares by the Sellers in a secondary underwritten public offering, or, with respect to the shares beneficially owned by Thousand Space Holdings Limited and Bright Elite Management Limited, to an institutional investor.
 
The forms of Lock-up Agreements are attached Annex B hereto. We encourage you to read the forms of Lock-up Agreements in their entirety.


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Voting Agreement
 
Upon consummation of the Transaction, the initial TM board of directors will consist of seven directors, of which the Sellers will designate five directors to TM’s board and Mr. Green and Mr. Bird, on behalf of the TM stockholders, will designate two directors. The initial designated directors for the TM stockholders are expected to be Mr. Green and Mr. Bird.
 
At the closing of the Transaction, the Sellers, Mr. Green and Mr. Bird, as representatives of TM, and TM will enter into a voting agreement. The voting agreement provides, among other things, that, until March 31, 2012 (or March 31, 2013 if the shares subject to the earn-out provision have not been issued prior to such date) at any meeting called or action taken for the purpose of electing directors to the TM board of directors, each CME shareholder agrees to vote for two directors nominated by Mr. Green and Mr. Bird on behalf of the TM stockholders.
 
During the term of the voting agreement, Mr. Green and Mr. Bird, on behalf of TM, shall have the right to request the resignation or removal of the directors they have nominated. In such event, each CME shareholder agrees to vote all of its shares in a manner that would cause the removal of such director, whether at any annual or special meeting called, or, in connection with any other action (including the execution of written consents) taken for the purpose of removing such director. In the event of the resignation, death, removal or disqualification of any TM director, Mr. Green and Mr. Bird, on behalf of TM, shall promptly nominate a new director and, after written notice of the nomination has been given to the Sellers, they will each vote all their shares to elect such nominee to the TM board of directors.
 
The form of Voting Agreement is attached as Annex C hereto. We encourage you to read the form of Voting Agreement in its entirety.
 
Registration Rights Agreement
 
At the closing of the Transaction, TM and the Sellers will enter into a registration rights agreement pursuant to which the Sellers will be entitled to registration rights for their shares of TM Common Stock received in connection with the business combination. Pursuant to the registration rights agreement, at any time and from time to time following the one (1) year anniversary of the closing of the business combination, the Sellers are entitled to make up to two (2) demands on TM that TM register the shares of TM Common Stock held by the Sellers. In addition, the Sellers have “piggyback” registration rights on registration statements filed subsequent to the one (1) year anniversary of the closing of the business combination. TM will bear the expenses incurred in connection with the filing of any such registration statements.
 
The form of Registration Rights agreement is attached as Annex D hereto. We encourage you to read the form of Registration Rights Agreement in its entirety.
 
Employment Agreement
 
Mr. Cheng has entered into a 5 year employment agreement with Fujian Fenzhong as of December 1, 2008, which will continue in effect following the consummation of the business combination. Under his employment agreement, Mr. Cheng serves as the General Manager of Fujian Fenzhong and is entitled to a monthly pre-tax salary of 15,000RMB. Mr. Cheng is subject to a non-competition restriction during the term of his employment and for 24 months after his employment agreement is terminated.
 
Required Vote
 
The approval of the Transaction Proposal will require the affirmative vote of the holders of a majority of the shares of TM Common Stock that were issued in the IPO and voted on the matter either in person or by proxy and entitled to vote at the Special Meeting.
 
If the Initial Charter Amendment Proposal No. 2 is not approved, the Transaction Proposal will not be presented at the Special Meeting.


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Recommendation
 
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE TRANSACTION PROPOSAL.
 
THE INITIAL CHARTER AMENDMENT PROPOSALS
 
Background
 
We are proposing to initially amend our Amended and Restated Certificate of Incorporation to revise paragraph A and paragraph B of Article SEVENTH of our Amended and Restated Certificate of Incorporation. Paragraph A and paragraph B of Article SEVENTH of our Amended and Restated Certificate of Incorporation currently state as follows:
 
“A. Prior to the consummation of any Business Combination, the Corporation shall submit such Business Combination to its stockholders for approval regardless of whether the Business Combination is of a type which normally would require such stockholder approval under the GCL. In the event a majority of the IPO Shares (as defined below) present and entitled to vote at the meeting to approve the Business Combination are voted for the approval of such Business Combination, the Corporation shall be authorized to consummate the Business Combination; provided that the Corporation shall not consummate any Business Combination if holders of an aggregate of 30% or more in interest of the IPO Shares exercise their conversion rights described in paragraph B below.
 
B. In the event a Business Combination is approved in accordance with the above paragraph (A) and is consummated by the Corporation, any stockholder of the Corporation holding shares of Common Stock issued in the IPO (“IPO Shares”) who voted against the Business Combination may, contemporaneous with such vote, demand the Corporation convert his IPO Shares into cash. If so demanded, the Corporation shall, promptly after consummation of the Business Combination, convert such shares into cash at a per share conversion price equal to the quotient determined by dividing (i) the amount in the Trust Account (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 Account” shall mean the trust account established by the Corporation at the consummation of its IPO and into which a certain amount of the net proceeds of the IPO is deposited.”
 
In order to increase the likelihood that the Transaction is approved, we are proposing an amendment to Article SEVENTH of our Amended and Restated Certificate of Incorporation that would remove the prohibition on the consummation of a business combination if holders of more than 30% of our IPO Shares elect to exercise their conversion rights (the “Initial Charter Amendment No. 1”). Currently, our Amended and Restated Certificate of Incorporation states that we are not authorized to consummate a business combination if holders of more than 30% of our IPO Shares exercise their conversion rights. By eliminating the ability of holders of 30% of the IPO Shares to “veto” the Transaction, this amendment would effectively reduce the threshold vote required to ensure approval of the Transaction from 70% to 50% of the votes cast.
 
In addition, in order to allow all holders of IPO Shares who do not wish to remain invested in us to recoup a significant portion of their initial investment by exercising their conversion rights, we are proposing an amendment to Article SEVENTH of our Amended and Restated Certificate of Incorporation to allow any holder of our IPO Shares who votes affirmatively or negatively with respect to the Transaction Proposal simultaneously to elect to convert their shares into their pro rata portion of the trust account (the “Initial Charter Amendment No. 2”, and together with the Initial Charter Amendment Proposal No. 1, the “Initial Charter Amendment Proposals,”). (FOR THE AVOIDANCE OF DOUBT, CONSISTENT WITH TM’S IPO PROSPECTUS, THE 2,250,000 SHARES ISSUED TO THE FOUNDERS OF TM SHALL NOT BE PERMITTED TO CONVERT OR OTHERWISE PARTICIPATE IN THE LIQUIDATION OF THE TRUST ACCOUNT SHOULD TM LIQUIDATE.) Currently, our Amended and Restated Certificate of Incorporation only allows for holders who vote against our initial business combination to convert their IPO Shares. This amendment would reduce the incentive for stockholders who wish to receive the Trust value for


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their shares to vote against the Transaction, therefore increasing the likelihood that the Transaction is approved.
 
The Initial Charter Amendment Proposal No. 1 and the Initial Charter Amendment Proposal No. 2 (the “Initial Charter Amendment Proposals”) are being presented as separate proposals, and will be voted upon separately, at the Special Meeting. If Initial Charter Amendment Proposal No. 1 is not approved and Initial Charter Amendment Proposal No. 2 is approved, the Board of Directors will delete the non-approved proposal from any certificate of amendment that may be filed with the Secretary of State of the State of Delaware.
 
If a significant number of our IPO Shares are converted, TM likely would be left with a significantly smaller number of shareholders. As a result, trading in TM’s Common Stock following the Transaction may be limited and TM’s stockholders’ ability to sell their shares in the market could be adversely affected.
 
We will file an initial Certificate of Amendment to our Amended and Restated Certificate of Incorporation, a copy of which is included as Annex F to this proxy statement, with the Secretary of State of the State of Delaware to amend and restate the second sentence of paragraph A of Article SEVENTH to read in its entirety as follows:
 
“In the event a majority of the IPO Shares (as defined below) present and entitled to vote at the meeting to approve the Business Combination are voted for the approval of such Business Combination, the Corporation shall be authorized to consummate the Business Combination.”
 
The initial Certificate of Amendment to our Amended and Restated Certificate of Incorporation will also amend and restate the first sentence of paragraph B of Article SEVENTH to read in its entirety as follows:
 
“In the event a Business Combination is approved in accordance with the above paragraph (A) and is consummated by the Corporation, any stockholder of the Corporation holding shares of Common Stock issued in the IPO (“IPO Shares”) who voted his, her or its IPO Shares affirmatively or negatively with respect to the Business Combination may, contemporaneously with such vote, demand the Corporation convert his, her or its IPO Shares into cash.”
 
The provisions of Article SEVENTH that are proposed to be deleted relate directly to our operation as a blank check company. Article SEVENTH, paragraph A, requires that the business combination be submitted to our stockholders for approval and be authorized by the vote of a majority of the IPO Shares cast at a meeting of stockholders called to approve the business combination, provided that the business combination shall not be consummated if the holders of 30% or more of the IPO Shares exercise their conversion rights. Article SEVENTH, paragraph B, specifies the procedures for exercising conversion rights.
 
We believe that these provisions were included to protect our stockholders from having to sustain their investments for an unreasonably long period if we failed to find a suitable business combination in the timeframe contemplated by our Amended and Restated Certificate of Incorporation. Given the expenditure of time, effort and money on the proposed acquisition of CME, we also believe that circumstances warrant providing those stockholders who find the Transaction to be an attractive investment an opportunity to have the transaction consummated. Stockholders who do not find the Transaction to be an attractive investment opportunity may exercise their conversion rights, in connection with their vote on the Transaction Proposal. If the Initial Charter Amendment Proposals are approved, we will pay converting stockholders as soon as practicable following the consummation of the Transaction. If these proposals are not approved, we will likely be forced to liquidate all of our assets in trust.
 
Prohibition on amending Article SEVENTH
 
Our Amended and Restated Certificate of Incorporation purports to prohibit amendment to Article SEVENTH prior to consummation of an initial business combination. Our initial offering prospectus stated that we had been advised that such provision limiting our ability to amend our Amended and Restated certificate of incorporation may not be enforceable under Delaware law. We believe that the Transaction is an extremely attractive opportunity in the current market environment and, therefore, our stockholders should be given the opportunity to consider the Transaction. In considering the Initial Charter Amendment Proposals, our


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board of directors came to the conclusion that the potential benefits of the proposed acquisition outweighed the possibility of any liability described below as a result of the initial charter proposals being approved. Moreover, we are still offering holders of IPO Shares the right to vote their IPO Shares against the Transaction Proposal and demand that such shares be redeemed for a pro rata portion of the trust account. Accordingly, we believe that the proposed amendments to our Amended and Restated Certificate of Incorporation is consistent with the spirit in which we offered our securities to the public.
 
We have received an opinion from special Delaware counsel, Potter Anderson & Corroon LLP, concerning the enforceability of the restriction on amending Article SEVENTH. Potter Anderson & Corroon LLP concluded in its opinion, based upon the analysis set forth therein and its examination of Delaware law, and subject to the assumptions, qualifications, limitations and exceptions set forth in its opinion, that the proposed amendments to Articles SEVENTH of our Amended and Restated Certificate of Incorporation, “if duly adopted by the Board of Directors of the Company (by vote of the majority of the directors present at a meeting at which a quorum is present or, alternatively, by unanimous written consent) and duly approved by the holders of a majority of the outstanding stock of the Company entitled to vote thereon, all in accordance with Section 242(b) of the General Corporation Law, would be valid and effective when filed with the Secretary of State in accordance with Sections 103 and 242 of the General Corporation Law.” A copy of Potter Anderson & Corroon’s opinion is included as Annex G to this proxy statement, and stockholders are urged to review it in its entirety.
 
Rescission Rights
 
Our initial public offering prospectus disclosed that we would not seek to amend any of the provisions of Articles SEVENTH of our Amended and Restated Certificate of Incorporation. Consequently, each holder of IPO Shares at the time of the Transaction who purchased his IPO Shares in the initial public offering and who has not converted his shares into cash may have securities law claims against us for rescission (under which a successful claimant has the right to receive the total amount paid for his or her securities pursuant to an allegedly deficient prospectus, plus interest and less any income earned on the securities, in exchange for surrender of the securities) or damages (compensation for loss on an investment caused by alleged material misrepresentations or omissions in the sale of a security).
 
Such claims may entitle stockholders asserting them to up to $8.00 per share, based on the initial offering price of the initial public offering units comprised of stock and warrants, less any amount received from sale of the original warrants purchased with them, plus interest from the date of our initial public offering (which, in the case of holders of IPO Shares, may be more than the pro rata share of the trust account to which they are entitled on conversion or liquidation).
 
In general, a person who purchased shares pursuant to a defective prospectus or other representation must make a claim for rescission within the applicable statute of limitations period, which, for claims made under Section 12 of the Securities Act and some state statutes, is one year from the time the claimant discovered or reasonably should have discovered the facts giving rise to the claim, but not more than three years from the occurrence of the event giving rise to the claim. A successful claimant for damages under federal or state law could be awarded an amount to compensate for the decrease in value of his or her shares caused by the alleged violation (including, possibly, punitive damages), together with interest, while retaining the shares. Claims under the anti-fraud provisions of the federal securities laws must generally be brought within two years of discovery, but not more than five years after occurrence. Rescission and damages claims would not necessarily be finally adjudicated by the time the Acquisition may be completed, and such claims would not be extinguished by consummation of the transactions.
 
Even if you do not pursue such claims, others, who may include all holders of IPO Shares, may. Neither TM nor CME can predict whether our stockholders will bring such claims, how many might bring them or the extent to which they might be successful.


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Required Vote
 
The approval of each of the Initial Charter Amendment Proposals will require the affirmative vote of the holders of a majority of the outstanding shares of our common stock on the record date.
 
If the Initial Charter Amendment Proposal No. 2 is not approved by the affirmative vote of the holders of a majority of the outstanding shares of our common stock on the record date, the Transaction Proposal will not be presented to the stockholders for a vote and the Transaction will not be consummated.
 
Recommendation
 
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE INITIAL CHARTER AMENDMENT PROPOSAL NO. 1 AND THE INITIAL CHARTER AMENDMENT PROPOSAL NO. 2.
 
THE SHARE ISSUANCE PROPOSAL
 
Background
 
Pursuant to the Share Exchange Agreement, TM will purchase from the Sellers 100% of the outstanding equity of CME and TM will issue at closing 20.915 million newly issued shares of TM Common Stock and pay to the Sellers $10.0 million in three year, no interest promissory notes. In addition, the Sellers may earn up to an additional 15.0 million newly issued shares of TM Common Stock subject to the achievement of the certain net income targets.
 
Certain NYSE Amex rules require that we obtain the approval of our stockholders in connection with any transaction in which (i) the present or potential issuance of TM Common Stock could result in an increase in the shares of TM Common Stock outstanding of 20.0% or more or (ii) the issuance of such securities will result in a change of control of TM.
 
As of the record date, there were 12,505,000 shares of TM Common Stock outstanding. An additional 20.915 million shares of TM Common Stock will be issued upon consummation of the Transaction and up to an additional 15.0 million shares of TM Common Stock might be issued after the Transaction so long as certain net income targets are met. In addition, up to an additional 13,755,000 of TM Common Stock may be issued pursuant to currently outstanding warrants and an option by Pali to purchase 700,000 Units, each unit consisting of 1 share and a warrant to purchase 1 share.
 
Because the number of shares of TM Common Stock that could be issued to the Sellers in connection with the Transaction could result in an increase of 20.0% or more in the outstanding shares of TM Common Stock, or a change of control of TM as defined by the rules of the NYSE Amex, we are seeking shareholder approval of the issuance of shares of TM Common Stock in connection with the Transaction to comply with the rules of the NYSE Amex, and the listing of such shares of TM Common Stock on the NYSE Amex.
 
Required Vote
 
The approval of the Share Issuance Proposal will require the affirmative vote of the holders of a majority of the shares of TM Common Stock voted on the matter either in person or by proxy and entitled to vote at the Special Meeting.
 
If the Transaction Proposal is not approved, this proposal will not be presented at the Special Meeting.
 
Recommendation
 
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE SHARE ISSUANCE PROPOSAL.


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THE CHARTER AMENDMENT PROPOSAL
 
Background
 
We are seeking your approval to authorize TM’s board of directors, in its discretion, to amend its Amended and Restated Certificate of Incorporation to change TM’s corporate name to “China MediaExpress Holdings, Inc.,” delete certain provisions that relate to us as a blank check company and create perpetual existence.
 
If the Transaction Proposal is not approved, this proposal will not be presented at the Special Meeting. In addition, if the Transaction is approved at the Special Meeting, but is not subsequently consummated, TM’s board of directors will not effect this amendment of TM’s Amended and Restated Certificate of Incorporation.
 
This summary is qualified by reference to the complete text of the proposed amendment to the Amended and Restated Certificate of Incorporation, a copy of which is attached to this Proxy Statement as Annex E. All stockholders are encouraged to read the proposed charter in its entirety for a more complete description of its terms.
 
         
   
Current Charter
 
Proposed Charter
 
Name
  Our current charter provides that our name is “TM Entertainment and Media, Inc.”   The proposed charter provides that our name is “China MediaExpress Holdings, Inc.”
Number of Authorized Shares
  Our current charter authorizes 40,000,000 shares of common stock for issuance.   The proposed charter authorizes 70,000,000 shares of common stock for issuance.
Duration of Existence
  Our current charter provides that TM’s existence shall terminate on October 17, 2009.   The proposed charter is silent as to TM’s existence, and under the DGCL, unless specified otherwise, a corporation has perpetual existence.
Provisions Specific to a Blank Check Company
  Under our current charter, Section 7 sets forth various provisions related to our operations as a blank check company prior to the consummation of a business combination.   The proposed charter does not include these blank check company provisions because, upon consummation of the Transaction, we will operate CME and cease to be a blank check company.
Voting Rights
  Under our current charter, TM Common Stock is entitled to one vote per share. Our current charter does not provide for cumulative voting rights.   The proposed charter provides that each holder of common stock is entitled to one vote per share, except that shares of common stock have no vote with respect to any amendments to the charter that relate solely to the terms of a series of preferred stock if the holders of the series are entitled to vote separately or with the holders of one or more other series. The proposed charter does not provide for cumulative voting rights.


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Current Charter
 
Proposed Charter
 
Conversion Rights
  In the event that a majority of the shares issued in our IPO approve a business combination, any TM stockholder holding shares of common stock issued at our IPO who votes against the business combination, may at the same time demand that we convert the stockholder’s shares from our IPO to cash.   The proposed charter does not provide for conversion rights.
Special Stockholders Meetings
  Our current charter is silent as to special stockholders meetings. Under the DGCL, special meetings of the stockholders may be called by the board or by any such person as may be authorized by a corporation’s charter or bylaws. Our bylaws currently provide that a special stockholders meeting may only be called by a majority of the board, our chief executive officer or chairman, and by our secretary at the request in writing of stockholders holding a majority of the voting power of the outstanding TM Common Stock.   Under the proposed charter, special meetings of the stockholders may be called only by a majority of the board.
Action by Consent of the Stockholders
  Under the DGCL, unless a company’s charter provides otherwise, stockholders may execute an action by written consent in lieu of any annual or special meeting.   The proposed charter prohibits stockholders from taking any action by written consent in lieu of a meeting, and stockholders must take any actions at a duly called annual or special meeting of the stockholders and the power of the stockholders to consent in writing without a meeting is specifically denied. However, the preceding prohibition does not apply at any time when TM Common Stock is not registered under Section 12 of the Exchange Act.
 
Required Vote
 
The approval of the Charter Amendment Proposal will require the affirmative vote of the holders of a majority of the outstanding shares of TM Common Stock. Stockholders will not be required to exchange outstanding stock certificates for new stock certificates if the Charter Amendment Proposal is adopted. If the Charter Amendment Proposal is not approved, and if the Sellers choose not to waive the failure of TM to change its name, the Sellers would not be obligated to consummate the Transaction.
 
If the Transaction Proposal is not approved, this proposal will not be presented at the Special Meeting.

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Recommendation
 
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE CHARTER AMENDMENT PROPOSAL.
 
THE AUTHORIZED SHARE INCREASE PROPOSAL
 
Background
 
We are seeking your approval to authorize TM’s board of directors, in its discretion, to amend its Amended and Restated Certificate of Incorporation to increase the number of shares authorized for issuance from 40,000,000 shares of common stock to 70,000,000 shares of common stock.
 
The increase in the number of shares authorized for issuance is necessary to have sufficient shares available to issue in the Transaction, including the potential earn-out shares. The additional authorized shares may also be used in securing stockholder approval of the Transaction, including through a “permitted financing.” See the section entitled “THE SPECIAL MEETING — Actions That May be Taken to Secure Approval of TM’s Stockholders”. Assuming the Transaction is consummated, there would be 33,520,000 shares of common stock issued and outstanding, 15,000,000 shares of common stock reserved for issuance to satisfy the potential earn out issuances, 12,355,000 shares of common stock reserved for issuance pursuant to currently outstanding warrants and 1,400,000 shares of common stock reserved for issuance pursuant to a 700,000 unit purchase option we issued to our underwriter, each unit consisting of 1 share of common stock and a warrant to purchase 1 share of common stock. This would leave 7,725,000 shares authorized and not reserved for issuance, representing approximately 11.0% of the total number of shares on a fully-diluted basis. We do not currently have any plans for such shares, although some or all may be used in the future to secure stockholder approval of the Transaction and for employee equity incentive purposes. In addition, having a large number of authorized and unissued shares may have anti-takeover effects as such shares could be used to fend off potential takeovers.
 
If the Transaction Proposal is not approved, this proposal will not be presented at the Special Meeting. In addition, if the Transaction is approved at the Special Meeting, but is not subsequently consummated, TM’s board of directors will not effect the amendment of TM’s Amended and Restated Certificate of Incorporation to increase the number of shares authorized for issuance.
 
Required Vote
 
Approval of the Authorized Share Increase Proposal will require the affirmative vote of holders of a majority of the outstanding shares of TM Common Stock.
 
Recommendation
 
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE “FOR” THE AUTHORIZED SHARE INCREASE PROPOSAL.


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THE ELECTION OF DIRECTORS PROPOSAL
 
Background
 
The board of directors currently consists of five directors, divided into three classes. Each year, one class is elected to serve for a term of three years. However, since we did not hold an annual meeting in 2008, we are asking stockholders to elect the first class of directors to serve for a term of two years and to elect the second class of directors to serve for a term of three years. Messrs. Jonathan F. Miller and Malcolm Bird currently serve in classes one and two, respectively. Theodore S. Green currently serves as a class three director whose term does not expire until our annual meeting to be held in 2010. However, Mr. Green has agreed to stand for re-election a year early and, if elected, will be elected for a new three-year term in the second class of directors. Messrs. Zheng Cheng, Jacky Lam, George Zhou and Marco Kung do not currently serve on the board of directors. Unless otherwise directed, the persons named in the Proxy intend to cast all Proxies received FOR the election of Messrs. Zheng Cheng, Jacky Wai Kei Lam, and George Zhou as the first class of directors, to serve on the board of directors until the 2011 annual meeting of stockholders, Messrs. Green and Bird as the second class of directors, to serve on the board of directors until the 2012 annual meeting, and Mr. Marco Kung as a third class director to serve on the board of directors until the 2010 annual meeting of stockholders (collectively, the “Nominees”). Each Nominee has advised the Company of his willingness to serve as a director of the Company. In case any Nominee should become unavailable for election to the board of directors for any reason, the persons named in the Proxies will have discretionary authority to vote the Proxies for one or more alternative nominees who will be designated by the board of directors, subject to prior recommendation by the Nominating Committee.
 
The names of the nominees, their ages, their respective class designation and term of office are set forth below:
 
</
                 
            Year in Which
Name
 
Age
 
Class
 
Term Expires