INVESTMENT MANAGEMENT TRUST AGREEMENT
This
Agreement is made as of ___________, 2008 by and between CS China Acquisition
Corp. (the “Company”) and Continental Stock Transfer & Trust Company
(“Trustee”).
WHEREAS,
the Company’s registration statement on Form S-1, No. 333-147294 (“Registration
Statement”), for its initial public offering of securities (“IPO”) has been
declared effective as of the date hereof (“Effective Date”) by the Securities
and Exchange Commission (capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Registration Statement); and
WHEREAS,
EarlyBirdCapital, Inc. (“EBC”) is acting as the representative of the
underwriters in the IPO; and
WHEREAS,
as described in the Registration Statement, and in accordance with the Company’s
Memorandum and Articles of Association, $24,000,000 of the gross proceeds of
the
IPO and sale of the Insider Warrants (as defined in the Registration Statement)
($27,600,000 if the underwriters over-allotment option is exercised in full)
will be delivered to the Trustee to be deposited and held in a trust account
for
the benefit of the Company and the holders of the Company’s ordinary shares, par
value $.0001 per share, issued in the IPO as hereinafter provided (the amount
to
be delivered to the Trustee will be referred to herein as the “Property”; the
shareholders for whose benefit the Trustee shall hold the Property will be
referred to as the “Public Shareholders,” and the Public Shareholders and the
Company will be referred to together as the “Beneficiaries”); and
WHEREAS,
the Company and the Trustee desire to enter into this Agreement to set forth
the
terms and conditions pursuant to which the Trustee shall hold the
Property;
IT
IS
AGREED:
1. Agreements
and Covenants of Trustee.
The
Trustee hereby agrees and covenants to:
(a) Hold
the
Property in trust for the Beneficiaries in accordance with the terms of this
Agreement in a segregated trust account (“Trust Account”) established by the
Trustee;
(b) Manage,
supervise and administer the Trust Account subject to the terms and conditions
set forth herein;
(c) In
a
timely manner, upon the instruction of the Company, to invest and reinvest
the
Property in United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act of 1940 having a maturity of 180 days
or
less, and/or in any open ended investment company registered under the
Investment Company Act of 1940 that holds itself out as a money market fund
selected by the Company meeting the conditions of paragraphs (c)(2), (c)(3)
and
(c)(4) of Rule 2a-7 promulgated under the Investment Company Act of 1940, as
determined by the Company;
1
(d) Collect
and receive, when due, all principal and income arising from the Property,
which
shall become part of the “Property,” as such term is used herein;
(e) Notify
the Company of all communications received by it with respect to any Property
requiring action by the Company;
(f) Supply
any necessary information or documents as may be requested by the Company in
connection with the Company’s preparation of its tax returns;
(g) Participate
in any plan or proceeding for protecting or enforcing any right or interest
arising from the Property if, as and when instructed by the Company to do
so;
(h) Render
to
the Company and EBC monthly written statements of the activities of and amounts
in the Trust Account reflecting all receipts and disbursements of the Trust
Account; and
(i) Commence
liquidation of the Trust Account only after and promptly after receipt of,
and
only in accordance with, the terms of a letter (“Termination Letter”), in a form
substantially similar to that attached hereto as either Exhibit A or Exhibit
B
hereto, signed on behalf of the Company by its President or Chairman of the
Board and Secretary or Assistant Secretary and affirmed by counsel for the
Company or, if applicable, by the Company's liquidator, and complete
the liquidation of the Trust Account and distribute the Property in the Trust
Account only as directed in the Termination Letter and the other documents
referred to therein; provided, however, that in the event that a Termination
Letter has not been received by the Trustee by the 18-month anniversary of
the
closing (“Closing”) of the IPO (“First Date”), or the 30-month anniversary of
the Closing (“Last Date”) in the event that a definitive agreement for a
Business Combination has been executed on or prior to the First Date but the
Business Combination has not been consummated by the First Date, the Trust
Account shall be liquidated in accordance with the procedures set forth in
the
Termination Letter attached as Exhibit B hereto and distributed to the
shareholders of record on the Last Date. The provisions of this Section 1(i)
may
not be modified, amended or deleted under any circumstances.
2. Limited
Distributions of Income from Trust Account.
(a) Upon
written request from the Company, which may be given from time to time in a
form
substantially similar to that attached hereto as Exhibit C, the Trustee shall
distribute to the Company the amount requested by the Company to cover any
income tax obligation owed by the Company;
2
(b) Upon
written request from the Company, which may be given from time to time in a
form
substantially similar to that attached hereto as Exhibit D, the Trustee shall
distribute to the Company the amount requested by the Company to cover expenses
related to investigating and selecting a target business and other working
capital requirements; provided, however, that the aggregate amount of all such
distributions shall not exceed $1,050,000 and the Company will not be allowed
to
withdraw interest income earned on the trust account unless there is sufficient
funds available to pay the Company’s tax obligations on such interest income or
otherwise then due at that time; and
(c) The
limited distributions referred to in Sections 2(a) and 2(b) above shall be
made
only from income collected on the Property. Except as provided in Section 2(a)
and 2(b) above, no other distributions from the Trust Account shall be permitted
except in accordance with Section 1(i) hereof.
(d) In
all
cases, the Company shall provide EBC with a copy of any Termination Letters
and/or any other correspondence that it issues to the Trustee with respect
to
any proposed withdrawal from the Trust Account promptly after such
issuance.
3. Agreements
and Covenants of the Company. The Company hereby agrees and covenants
to:
(a) Give
all
instructions to the Trustee hereunder in writing, signed by the Company’s
Chairman of the Board or President. In addition, except with respect to its
duties under paragraphs 1(i), 2(a) and 2(b) above, the Trustee shall be entitled
to rely on, and shall be protected in relying on, any verbal or telephonic
advice or instruction which it in good faith believes to be given by any one
of
the persons authorized above to give written instructions, provided that the
Company shall promptly confirm such instructions in writing;
(b) Hold
the
Trustee harmless and indemnify the Trustee from and against, any and all
expenses, including reasonable counsel fees and disbursements, or loss suffered
by the Trustee in connection with any action, suit or other proceeding brought
against the Trustee involving any claim, or in connection with any claim or
demand which in any way arises out of or relates to this Agreement, the services
of the Trustee hereunder, or the Property or any income earned from investment
of the Property, except for expenses and losses resulting from the Trustee's
gross negligence or willful misconduct. Promptly after the receipt by the
Trustee of notice of demand or claim or the commencement of any action, suit
or
proceeding, pursuant to which the Trustee intends to seek indemnification under
this paragraph, it shall notify the Company in writing of such claim
(hereinafter referred to as the “Indemnified Claim”). The Trustee shall have the
right to conduct and manage the defense against such Indemnified Claim,
provided, that the Trustee shall obtain the consent of the Company with respect
to the selection of counsel, which consent shall not be unreasonably withheld.
The Trustee may not agree to settle any Indemnified Claim without the prior
written consent of the Company, which consent shall not be unreasonably
withheld. The Company may participate in such action with its own counsel;
3
(c) Pay
the
Trustee an initial acceptance fee of $1,000 and an annual fee of $3,000 (it
being expressly understood that the Property shall not be used to pay such
fee).
The Company shall pay the Trustee the initial acceptance fee and first annual
fee at the consummation of the IPO and thereafter on the anniversary of the
Effective Date. The Trustee shall refund to the Company the fee (on a pro rata
basis) with respect to any period after the liquidation of the Trust Fund.
The
Company shall not be responsible for any other fees or charges of the Trustee
except as may be provided in paragraph 3(b) hereof (it being expressly
understood that the Property shall not be used to make any payments to the
Trustee under such paragraph);
(d) In
connection with any vote of the Company’s shareholders regarding a Business
Combination, provide to the Trustee an affidavit or certificate of a firm
regularly engaged in the business of soliciting proxies and/or tabulating
shareholder votes (which firm may be the Trustee) verifying the vote of the
Company’s shareholders regarding such Business Combination; and
(e) In
connection with the Trustee acting as Paying/Disbursing Agent pursuant to
Exhibit B, the Company will not give the Trustee disbursement instructions
which
would be prohibited under this Agreement.
4. Limitations
of Liability.
The
Trustee shall have no responsibility or liability to:
(a) Take
any
action with respect to the Property, other than as directed in paragraphs 1
and
2 hereof and the Trustee shall have no liability to any party except for
liability arising out of its own gross negligence or willful
misconduct;
(b) Institute
any proceeding for the collection of any principal and income arising from,
or
institute, appear in or defend any proceeding of any kind with respect to,
any
of the Property unless and until it shall have received instructions from the
Company given as provided herein to do so and the Company shall have advanced
or
guaranteed to it funds sufficient to pay any expenses incident
thereto;
(c) Change
the investment of any Property, other than in compliance with paragraph
1(c);
(d) Refund
any depreciation in principal of any Property;
4
(e) Assume
that the authority of any person designated by the Company to give instructions
hereunder shall not be continuing unless provided otherwise in such designation,
or unless the Company shall have delivered a written revocation of such
authority to the Trustee;
(f) The
other
parties hereto or to anyone else for any action taken or omitted by it, or
any
action suffered by it to be taken or omitted, in good faith and in the exercise
of its own best judgment, except for its gross negligence or willful misconduct.
The Trustee may rely conclusively and shall be protected in acting upon any
order, notice, demand, certificate, opinion or advice of counsel (including
counsel chosen by the Trustee), statement, instrument, report or other paper
or
document (not only as to its due execution and the validity and effectiveness
of
its provisions, but also as to the truth and acceptability of any information
therein contained) which is believed by the Trustee, in good faith, to be
genuine and to be signed or presented by the proper person or persons. The
Trustee shall not be bound by any notice or demand, or any waiver, modification,
termination or rescission of this Agreement or any of the terms hereof, unless
evidenced by a written instrument delivered to the Trustee signed by the proper
party or parties and, if the duties or rights of the Trustee are affected,
unless it shall give its prior written consent thereto;
(g) Verify
the correctness of the information set forth in the Registration Statement
or to
confirm or assure that any acquisition made by the Company or any other action
taken by it is as contemplated by the Registration Statement; and
(h) File
local, state and/or Federal tax returns or information returns with any taxing
authority on behalf of the Trust Account and payee statements with the Company
documenting the taxes, if any, payable by the Company or the Trust Account,
relating to the income earned on the Property.
(i) Pay
any
taxes on behalf of the Trust Account (it being expressly understood that the
Property shall not be used to pay any such taxes and that such taxes, if any,
shall be paid by the Company from funds not held in the Trust
Account).
5. Termination.
This
Agreement shall terminate as follows:
(a) If
the
Trustee gives written notice to the Company that it desires to resign under
this
Agreement, the Company shall use its reasonable efforts to locate a successor
trustee. At such time that the Company notifies the Trustee that a successor
trustee has been appointed by the Company and has agreed to become subject
to
the terms of this Agreement, the Trustee shall transfer the management of the
Trust Account to the successor trustee, including but not limited to the
transfer of copies of the reports and statements relating to the Trust Account,
whereupon this Agreement shall terminate; provided, however, that, in the event
that the Company does not locate a successor trustee within ninety days of
receipt of the resignation notice from the Trustee, the Trustee may submit
an
application to have the Property deposited with any court in the State of New
York or with the United States District Court for the Southern District of
New
York and upon such deposit, the Trustee shall be immune from any liability
whatsoever; or
5
(b) At
such
time that the Trustee has completed the liquidation of the Trust Account in
accordance with the provisions of paragraph 1(i) hereof, and distributed the
Property in accordance with the provisions of the Termination Letter, this
Agreement shall terminate except with respect to Paragraph 3(b).
5. Miscellaneous.
(a) The
Company and the Trustee each acknowledge that the Trustee will follow the
security procedures set forth below with respect to funds transferred from
the
Trust Account. Upon receipt of written instructions, the Trustee will confirm
such instructions with an Authorized Individual at an Authorized Telephone
Number listed on the attached Exhibit E. The Company and the Trustee will each
restrict access to confidential information relating to such security procedures
to authorized persons. Each party must notify the other party immediately if
it
has reason to believe unauthorized persons may have obtained access to such
information, or of any change in its authorized personnel. In executing funds
transfers, the Trustee will rely upon account numbers or other identifying
numbers of a beneficiary, beneficiary's bank or intermediary bank, rather than
names. The Trustee shall not be liable for any loss, liability or expense
resulting from any error in an account number or other identifying number,
provided it has accurately transmitted the numbers provided.
(b) This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of
another jurisdiction. It may be executed in several original or facsimile
counterparts, each one of which shall constitute an original, and together
shall
constitute but one instrument.
(c) This
Agreement contains the entire agreement and understanding of the parties hereto
with respect to the subject matter hereof. Except for Section 1(i) (which may
not be amended under any circumstances), this Agreement or any provision hereof
may only be changed, amended or modified by a writing signed by each of the
parties hereto; provided, however, that no such change, amendment or
modification may be made without the prior written consent of EBC. As to any
claim, cross-claim or counterclaim in any way relating to this Agreement, each
party waives the right to trial by jury.
(d) The
parties hereto consent to the jurisdiction and venue of any state or federal
court located in the City of New York, Borough of Manhattan, for purposes of
resolving any disputes hereunder.
6
(e) Any
notice, consent or request to be given in connection with any of the terms
or
provisions of this Agreement shall be in writing and shall be sent by express
mail or similar private courier service, by certified mail (return receipt
requested), by hand delivery or by facsimile transmission:
if
to the
Trustee, to:
Continental
Stock Transfer
&
Trust Company
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx X. Xxxxxx
Fax
No.:
(000) 000-0000
if
to the
Company, to:
0000
X.X.
Xxxxxx Xxxxxx, Xxxxx 000
Xxxxx,
Xxxxxxx 00000
Attn:
Xxxxx Xxx, Chairman
Fax
No.:
(___) ___-____
in
either
case with a copy to:
EarlyBirdCapital,
Inc.
000
Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxx X. Xxxxxxxx, Chairman
Fax
No.:
(000) 000-0000
(f) This
Agreement may not be assigned by the Trustee without the prior consent of the
Company.
(g) Each
of
the Trustee and the Company hereby represents that it has the full right and
power and has been duly authorized to enter into this Agreement and to perform
its respective obligations as contemplated hereunder. The Trustee acknowledges
and agrees that it shall not make any claims or proceed against the Trust
Account, including by way of set-off, and shall not be entitled to any funds
in
the Trust Account under any circumstance. In the event that the Trustee has
a
claim against the Company under this Agreement, the Trustee will pursue such
claim solely against the Company and not against the Property held in the Trust
Account.
(h) Each
of
the Company and the Trustee hereby acknowledge that EBC is a third party
beneficiary of this Agreement.
7
IN
WITNESS WHEREOF, the parties have duly executed this Investment Management
Trust
Agreement as of the date first written above.
|
CONTINENTAL
STOCK TRANSFER & TRUST
COMPANY,
as Trustee
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||
| |
|
|
| By: | ||
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Name:
Title:
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||
| |
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|
| By: | ||
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Name:
Title:
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8
SCHEDULE
A
|
Fee
Item
|
Time
and method of payment
|
Amount
|
|||||
|
Initial
acceptance fee
|
Initial
closing of IPO by wire transfer
|
$
|
1,000
|
||||
|
Annual
fee
|
First
year, initial closing of IPO by wire transfer; thereafter on the
anniversary of the effective date of the IPO by wire transfer or
check
|
$
|
3,000
|
||||
|
Transaction
processing fee for disbursements to Company under Section
2
|
Deduction
by Trustee from accumulated income following disbursement made to
Company
under Section 2
|
$
|
250
|
||||
9
EXHIBIT
A
[Letterhead
of Company]
[Insert
date]
Continental
Stock Transfer
&
Trust Company
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx Xxxxxx
Re: Trust
Account No. - Termination Letter
Gentlemen:
Pursuant
to paragraph 1(i) of the Investment Management Trust Agreement between CS China
Acquisition Corp. (“Company”) and Continental Stock Transfer & Trust Company
(“Trustee”), dated as of _________, 2008 (“Trust Agreement”), this is to advise
you that the Company has entered into an agreement (“Business Agreement”) with
__________________ (“Target Business”) to consummate a business combination with
Target Business (“Business Combination”) on or about [insert
date].
The
Company shall notify you at least 48 hours in advance of the actual date of
the
consummation of the Business Combination (“Consummation Date”).
In
accordance with the terms of the Trust Agreement, we hereby authorize you to
commence liquidation of the Trust Account to the effect that, on the
Consummation Date, all of funds held in the Trust Account will be immediately
available for transfer to the account or accounts that the Company shall direct
on the Consummation Date.
On
the
Consummation Date (i) counsel for the Company shall deliver to you written
notification that the Business Combination has been consummated and (ii) the
Company shall deliver to you (a) [an affidavit] [a certificate] of
__________________, which verifies the vote of the Company’s stockholders in
connection with the Business Combination and (b) written instructions with
respect to the transfer of the funds held in the Trust Account (“Instruction
Letter”). You are hereby directed and authorized to transfer the funds held in
the Trust Account immediately upon your receipt of the counsel's letter and
the
Instruction Letter, in accordance with the terms of the Instruction Letter.
In
the event that certain deposits held in the Trust Account may not be liquidated
by the Consummation Date without penalty, you will notify the Company of the
same and the Company shall direct you as to whether such funds should remain
in
the Trust Account and distributed after the Consummation Date to the Company.
Upon the distribution of all the funds in the Trust Account pursuant to the
terms hereof, the Trust Agreement shall be terminated.
10
In
the
event that the Business Combination is not consummated on the Consummation
Date
described in the notice thereof and we have not notified you on or before the
original Consummation Date of a new Consummation Date, then upon receipt by
the
Trustee of written instructions from the Company, the funds held in the Trust
Account shall be reinvested as provided in the Trust Agreement on the business
day immediately following the Consummation Date as set forth in the
notice.
|
Very
truly yours,
|
||
| |
|
|
| By: | ||
|
Xxxxx
Xxx, Chairman of the Board
|
||
| By: | ||
|
Xxxxx
Xxxxxxxxx, Secretary
|
||
cc:
EarlyBirdCapital, Inc.
11
EXHIBIT
B
[Letterhead
of Company]
[Insert
date]
Continental
Stock Transfer
&
Trust Company
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Re: Trust
Account No. - Termination Letter
Gentlemen:
Pursuant
to paragraph 1(i) of the Investment Management Trust Agreement between CS China
Acquisition Corp. (“Company”) and Continental Stock Transfer & Trust Company
(“Trustee”), dated as of ________, 2008 (“Trust Agreement”), this
is
to advise you that the Company has been unable to effect a Business Combination
with a Target Company within the time frame specified in the Company’s
Memorandum and Articles of Association, as described in the Company’s prospectus
relating to its IPO.
In
accordance with the terms of the Trust Agree-ment, we/I hereby authorize you,
to
commence liquidation of the Trust Account as promptly as practicable to
shareholders of record on the Last Date (as defined in the Trust Agreement).
You
will notify the Company in writing as to when all of the funds in the Trust
Account will be available for immediate transfer (“Transfer Date”) in accordance
with the terms of the Trust Agreement and the Memorandum and Articles of
Association of the Company. You shall commence distribution of such funds
directly to the Company’s shareholders (other than with respect to the initial
shares, as defined in the Company’s Prospectus, dated ________, 2008) in
accordance with the terms of the Trust Agreement and the Memorandum and Articles
of Association of the Company and you shall oversee [, with my supervision,]
the
distribution of the funds. Upon the distribution of all the funds in the Trust
Account, your obligations under the Trust Agreement shall be
terminated.
|
Very
truly yours,
|
||
| |
|
|
| By: | ||
|
Xxxxx
Xxx, Chairman of the Board [/ Liquidator
name]
|
||
| By: | ||
|
Xxxxx
Xxxxxxxxx, Secretary
|
||
cc:
EarlyBirdCapital, Inc.
12
EXHIBIT
C
[Letterhead
of Company]
[Insert
date]
Continental
Stock Transfer
&
Trust Company
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx Xxxxxx
Re: Trust
Account No.
Gentlemen:
Pursuant
to paragraph 2(a) of the Investment Management Trust Agreement between CS China
Acquisition Corp. (“Company”) and Continental Stock Transfer & Trust Company
(“Trustee”), dated as of ___________, 2008 (“Trust Agreement”), the
Company hereby requests that you deliver to the Company $_______ of the income
earned on the Property as of the date hereof. The Company needs such funds
to
pay for the tax obligations as set forth on the attached tax return or tax
statement. In accordance with the terms of the Trust Agreement, you are hereby
directed and authorized to transfer (via wire transfer) such funds promptly
upon
your receipt of this letter to the Company’s operating account at:
[WIRE
INSTRUCTION INFORMATION]
cc:
EarlyBirdCapital, Inc.
13
EXHIBIT
D
[Letterhead
of Company]
[Insert
date]
Continental
Stock Transfer
&
Trust Company
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx Xxxxxx
Re: Trust
Account No.
Gentlemen:
Pursuant
to paragraph 2(b) of the Investment Management Trust Agreement between CS China
Acquisition Corp. (“Company”) and Continental Stock Transfer & Trust Company
(“Trustee”), dated as of __________, 2008 (“Trust Agreement”), the
Company hereby requests that you deliver to the Company $_______ of the income
earned on the Property as of the date hereof, which does not exceed, in the
aggregate with all such prior disbursements pursuant to paragraph 2(b), if
any,
the maximum amount set forth in paragraph 2(b). The Company needs such funds
to
cover its expenses relating to investigating and selecting a target business
and
other working capital requirements. In accordance with the terms of the Trust
Agreement, you are hereby directed and authorized to transfer (via wire
transfer) such funds promptly upon your receipt of this letter to the Company’s
operating account at:
[WIRE
INSTRUCTION INFORMATION]
|
Very
truly yours,
|
||
|
CS
CHINA ACQUISITION CORP.
|
||
| |
|
|
| By: | ||
|
Xxxxx
Xxx, Chairman of the Board
|
||
| By: | ||
|
Xxxxx
Xxxxxxxxx, Secretary
|
||
cc:
EarlyBirdCapital, Inc.
14
EXHIBIT
E
|
AUTHORIZED
INDIVIDUAL(S)
|
AUTHORIZED
|
|
|
FOR
TELEPHONE CALL BACK
|
TELEPHONE
NUMBER(S)
|
|
|
Company:
|
||
|
CS
China Acquisition Corp.
|
||
|
0000
X.X. Xxxxxx Xxxxxx, Xxxxx 000
|
||
|
Xxxxx,
Xxxxxxx 00000
|
||
|
Attn:
Xxxxx Xxx, Chairman
|
(000)
000-0000
|
|
|
Trustee:
|
||
|
Continental
Stock Transfer
|
||
|
&
Trust Company
|
||
|
00
Xxxxxxx Xxxxx
|
||
|
Xxx
Xxxx, Xxx Xxxx 00000
|
||
|
Attn:
Xxxxxx X. Xxxxxx, Chairman
|
(000)
000-0000
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15
