RE: Engagement Agreement
January
5, 2010
P.O. Box
309GT Xxxxxx House
South
Church Street
Xxxxxx
Town, Grand Cayman
Cayman
Islands
RE: Engagement
Agreement
Dear
Xxxx:
We are
pleased to submit this letter (the “Agreement”), which confirms the
understanding between Asia
Special Situation Acquisition Corp. (the “Company”or “ASSAC”), and XXXX
Capital Partners, LLC, (“XXXX”), pursuant to which the Company has retained XXXX
to act as its financial advisor in connection with a series of transactions,
including the acquisition and financing of one or more offshore specialty
insurance companies and the consolidation of the net assets of a series of
investment funds with one or more of such insurance companies (the
“Transactions”).
Scope
of Services
In
connection with this engagement, XXXX shall perform the following services as
and when requested:
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(a)
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review
the Transactions in light of ASSAC’s existing strategic
alternatives;
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(b)
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advise
ASSAC in regard to explaining the transaction to the
market;
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(c)
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advise ASSAC
in connection with its proxy
process;
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(d)
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assist
with accounting and legal advisors and other representatives of ASSAC
to facilitate an orderly closing of the
Transactions;
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(e)
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participate
in meetings of the board of directors and management of ASSAC;
and
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(f)
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provide
such other financial advisory services appropriate to this role as ASSAC
and XXXX may mutually agree.
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00
XXXXXXXXX XXXXX, XXXXXXX XXXXX, XX
00000 800.678.9147 xxx.xxxx.xxx
The
Company understands that XXXX will not be responsible for rendering legal,
accounting or tax advice and agrees to retain its own legal counsel and
accountants concerning any necessary legal, accounting and tax
matters. The Company further understands that Xxxx will
not solicit the purchase or sale of securities of the Company, make a market in
its securities, or produce any research relating to the Company during the
pendency of the Transactions, and will not solict proxies relating to any
meeting of the stockholders of the Company relating to the
Transactions.
Retention
The
Company hereby retains XXXX as the Company’s financial advisor in connection
with the Transactions, subject to Section 4 hereof, for a three-month period
(the “Engagement Period”) commencing on the date hereof, provided that if the
Transactions are still proceeding at such time, the Engagement Period shall be
extended until they are terminated or completed.
Compensation
for Services
As
compensation for the services to be provided to the Company by XXXX, the Company
shall pay to XXXX certain fees and reimburse XXXX for expenses as noted
below:
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(a)
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Advisory
Fee and Expenses
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(i)
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The
Company agrees to pay XXXX an advisory fee (the “Transaction Advisory
Fee”) equal to one percent (1%) of the total value of the Transactions,
where total value includes all of the stock issued or cash consideration
paid by ASSAC in the Transactions;
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(ii)
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In
addition, the Company agrees to pay XXXX $213,421.79 for expenses incurred
by XXXX in advising the Company on prior transactions, plus expenses incurred by Xxxx relating to the
Transactions (collectively, the
“Expenses”).
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(b)
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At the discretion of the Company, the Transaction
Advisory Fee and the Expenses will be paid to XXXX on closing of the
Transactions in cash or by the issuance to XXXX of a number of
ordinary shares of the Company determined by dividing the sum of
the Transaction Advisory Fee and the
Expenses by $7.50, issuable at the
closing of the Transactions. Any such ordinary shares (i) shall be registered
under the Securities Act for resale prior to
June 30, 2010 and (ii) shall be subject to resale restrictions as follows:
(x) XXXX may not resell any such shares until July 31, 2010; (y) from
August 1, 2010 until December 30, 2010, XXXX may resell, each calendar
month during such period, one-sixth of the total number of shares
initially issued to XXXX; and (z) commencing December 31, 2010, XXXX may
resell any remaining shares free of
restriction.
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(c)
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Immediately prior to the closing of the
Transactions, taking into account the anticipated success of the
Transactions, the extent of XXXX’x efforts in connection with successfully
closing the Transactions, and such other factors as the parties deem
relevant, the Company and XXXX will negotiate in good faith a transaction
bonus payable to XXXX (to be in cash or stock at the valuation above)
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Rights
to Future Financing
The
Company hereby agrees that, during the term of this engagement and for 12 months
thereafter, XXXX shall be entitled to serve as
a the sole placement agent or sole lead
bookrunner (with any other bookrunners or managers and their compensation
subject to XXXX’x approval) in connection with any private or public sale of equity, debt or convertible debt financing the Company may pursue
(other than lines of credit for working capital). If XXXX is the sole placement agent or underwriter, it
shall be entitled to receive an underwriting commission or agent fee, as
the case may be, equal to six percent (6%) of the gross amount of such
financing(s), plus two percent (2%) of the gross amount of such financing(s) for
XXXX’x expenses. If XXXX is not the
sole placement agent or managing underwriter and book runner,it shall be
entitled to receive a minimum of fifty percent (50%) of the fees and expenses of
all placement agents or bookrunners and managing underwriters, as the case may
be.
5. Covenants
of the Company
The
Company agrees as follows:
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(a)
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This
Agreement is duly authorized and validly executed and delivered by the
Company, and constitutes a legal, valid and binding agreement of the
Company.
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(b)
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The
Company agrees to furnish XXXX with all information concerning its
business, prospects, operations, and financial plans as reasonably
required by XXXX. The Company acknowledges that XXXX may rely
upon the completeness and accuracy of information and data furnished to it
by the Company without an independent verification of such information and
data.
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(c)
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The
Company agrees that XXXX may rely upon, and shall be a third party
beneficiary of, the representations and warranties, covenants, and
indemnities set forth in any purchase, merger or similar agreements
entered into in connection with the Transactions. The Company
further agrees that it will use reasonable commercial efforts to enable
XXXX to rely on any opinions of counsel or of other opinions or reports of
experts delivered in connection with the Transactions. As
between ASSAC and XXXX, the parties agree that XXXX is a third party
beneficiary of such documents.
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6. Confidentiality
XXXX
agrees that it will not disclose to any person, other than to any agents,
attorneys, accountants, employees, officers, and directors of XXXX who need to
know such information in connection with XXXX’x engagement hereunder and who are
similarly bound to confidentiality, any confidential and non-public information
relating to the Company or the targets that XXXX receives from the Company or
its agents, attorneys or accountants in connection with the services rendered
hereunder. Except as may otherwise be provided herein, any advice
offered by XXXX hereunder shall not be disclosed publicly in any manner without
XXXX’x prior written approval and shall be treated by the Company and XXXX as
confidential. In addition, XXXX’x advice is not intended for, and
should not be relied upon by, other third parties. The Company also
agrees that any reference to XXXX in any news release or other communication to
any party outside the Company is subject to XXXX’x prior written approval, which
approval shall not be unreasonably withheld or delayed. If XXXX
resigns or is terminated prior to any release or communication, no reference
shall be made therein to XXXX without its prior written
permission. Notwithstanding the foregoing sentences set forth in this
Section 6, (i) XXXX consents to a reference to XXXX and the terms of this
engagement in any filing required to be made by the Company with the U.S.
Securities and Exchange Commission or any state securities commission in
connection with the Transactions and (ii) both parties acknowledge that the
obligations set forth herein shall not apply where disclosure is required by any
federal or state law, rule or regulation or any decision or order of any court
or regulatory authority; provided that in such case the disclosing party shall
provide adequate notice of any such required disclosures to the other party in
order to allow the other party to seek a protective or other appropriate
order. This Section 6 shall survive the termination or expiration of
this Agreement.
7. Trust
Fund
Notwithstanding
anything to the contrary express or implied contained in this Agreement, neither
XXXX nor any of its affiliates shall have any lien, security interest, claim
against or any other right to (a) any of the maximum $115.0 million principal
amount of the proceeds held in that certain trust administered and maintained by
Continental Stock Transfer & Trust Company, as trustee (and any successor
trust or substitute arrangement) for the benefit of the public shareholders of
ASSAC (the “Trust”), or (b) any interest earned on such maximum $115.0 million
principal amount of proceeds held in the Trust. Each of XXXX and its
affiliates, do hereby expressly waive and relinquish any claim or other rights
to the Trust, its corpus or any interest earned thereon.
8. Term
of Engagement
The
Company’s obligation to pay fees and expenses to the extent required pursuant to
Section 3 shall survive this Agreement.
9. Notices
Notice
given pursuant to any of the provisions of this Agreement shall be in writing
and shall be mailed or delivered to the Company at Asia Special Situation
Acquisition Corp., P.O. Box 309GT Xxxxxx House, South Church Street, Xxxxxx
Town, Grand Cayman, Cayman Islands, Attention: Xxxx Xxxxx; and to
XXXX at 00 Xxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, XX 00000, Attention: Xxx
Xxxx.
10. Advertisements
The
Company agrees that XXXX and its representatives shall have the right to place
advertisements in financial and other newspapers and journals and to otherwise
refer to this engagement in presentations, on its website and in other similar
contexts, at its own expense and after public announcement by the Company of the
Transactions.
11. Entire
Agreement; Construction
This
Agreement incorporates the entire understanding of the parties with respect to
the Transactions and supersedes all previous agreements with respect to the
Transactions and shall be governed by, and construed in accordance with, the
laws of the State of California as applied to contracts made and performed in
such State, without regard to principles of conflicts of laws.
12. Arbitration
Any
controversy arising out of or relating to this Agreement or the alleged breach
thereof shall be settled by submission of the matter to arbitration in Los
Angeles, California, such arbitration to be in accordance with the rules, then
in effect, of the Financial Industry Regulatory Authority, Inc.
(FINRA).
13. Severability
Any
determination that any provision of this Agreement may be, or is, unenforceable
shall not affect the enforceability of the remainder of this
Agreement.
14. Counterparts
This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same instrument.
15. Third-Party
Beneficiaries
This
Agreement has been and is made solely for the benefit of the Company, XXXX and
the other Indemnified Persons referred to in Section 16 below and their
respective successors and assigns, and no other person shall acquire or have any
rights under or by virtue of this Agreement.
16. Indemnification
The
Company agrees to indemnify XXXX to the extent forth in Exhibit I attached
hereto. The indemnification provisions set forth in Exhibit I shall
remain operative and in full force and effect regardless of termination or
expiration of this Agreement, or the consummation of any
Transactions.
17. Succession
This
Agreement shall be binding upon and inure to the benefit of the Company, XXXX,
the Indemnified Persons and their respective successors, assigns, heirs and
personal representatives.
Remainder
of page left blank intentionally.
If the
foregoing terms correctly set forth our understanding, please confirm this by
signing and returning to XXXX the duplicate copy of this
letter. Thereupon this letter, as signed in counterpart, shall
constitute our Agreement on the subject matter herein.
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XXXX
CAPITAL PARTNERS, LLC
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By:
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Xxxxxxxx
X Xxxx
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Managing
Director
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Confirmed
and Agreed to this 5th
day of January, 2010
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By:
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Xxxx X. Xxxxx,
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President
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EXHIBIT
I
Indemnification
Provisions
The
Company agrees to indemnify and hold harmless XXXX and its affiliates (as
defined in Rule 405 under the Securities Act of 1933, as amended) and their
respective directors, officers, employees, agents and controlling persons (XXXX
and each such person being an “Indemnified Party”) from and against all losses,
claims, damages and liabilities (or actions, including shareholder actions, in
respect thereof), joint or several, to which such Indemnified Party may become
subject under any applicable federal or state law, or otherwise, which are
related to or result from the performance by XXXX of the services contemplated
by or the engagement of XXXX pursuant to this Agreement and will promptly
reimburse any Indemnified Party for all reasonable expenses (including
reasonable counsel fees and expenses) as they are incurred in connection with
the investigation of, preparation for or defense arising from any threatened or
pending claim in which indemnification may be sought by such Indemnified Party
hereunder, whether or not such Indemnified Party is a party. The
Company will not be liable to any Indemnified Party under the foregoing
indemnification and reimbursement provisions, (i) for any settlement by an
Indemnified Party effected without its prior written consent (not to be
unreasonably withheld); or (ii) to the extent that any loss, claim, damage or
liability is found in a judgment by a court or arbitrator of competent
jurisdiction to have resulted from an Indemnified Party’s willful misconduct,
bad faith or gross negligence. The Company also agrees that no
Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company or its security holders or
creditors related to or arising out of the engagement of XXXX pursuant to, or
the performance by XXXX of the services contemplated by, this Agreement except
to the extent that any loss, claim, damage or liability is found in a judgment
by a court of competent jurisdiction to have resulted from Indemnified Party’s
willful misconduct, bad faith or gross negligence.
Promptly
after receipt by an Indemnified Party of notice of any intention or threat to
commence an action, suit or proceeding or notice of the commencement of any
action, suit or proceeding, such Indemnified Party will, if a claim in respect
thereof is to be made against the Company pursuant hereto, promptly notify the
Company in writing of the same. In case any such action is brought
against any Indemnified Party and such Indemnified Party notifies the Company of
the commencement thereof, the Company may elect to assume the defense thereof,
with counsel reasonably satisfactory to such Indemnified Party, and an
Indemnified Party may employ counsel to participate in the defense of any such
action, provided that the employment of such counsel shall be at the Indemnified
Party’s own expense, unless (i) the employment of such counsel has been
authorized in writing by the Company, (ii) the Indemnified Party has reasonably
concluded (based upon advice of counsel to the Indemnified Party) that there may
be legal defenses available to it that are different from or in addition to
those available to the Company, or that a conflict or potential conflict exists
between the Indemnified Party and the Company that makes it impossible or
inadvisable for counsel to the Company to conduct the defense of both the
Company and the Indemnified Party (in which case the Company will not have the
right to direct the defense of such action on behalf of the Indemnified Party),
or (iii) the Company has not in fact employed counsel reasonably satisfactory to
the Indemnified Party to assume the defense of such action within a reasonable
time after receiving notice of the action, suit or proceeding, in each of which
cases the reasonable fees, disbursements and other charges of such counsel will
be at the expense of the Company; provided, further, that in no event shall the
Company be required to pay fees and expenses for more than one firm of attorneys
representing Indemnified Parties. Any failure or delay by an
Indemnified Party to give the notice referred to in this paragraph shall not
affect such Indemnified Party’s right to be indemnified hereunder, except to the
extent that such failure or delay causes actual harm to the Company, or
prejudices its ability to defend such action, suit or proceeding on behalf of
such Indemnified Party.
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XXXXXXXXX XXXXX, XXXXXXX XXXXX, XX
00000 800.678.9147 xxx.xxxx.xxx
If the
indemnification provided for in this Agreement is for any reason held
unenforceable by an Indemnified Party (other than for willful misconduct, bad
faith or gross negligence of an Indemnified
Party), the Company agrees to contribute to the losses, claims, damages and
liabilities for which such indemnification is held unenforceable (i) in such
proportion as is appropriate to reflect the relative benefits to the Company, on
the one hand, and XXXX on the other hand, of the Transactions as contemplated
whether or not the Transactions are consummated or, (ii) if (but only if) the
allocation provided for in clause (i) is for any reason unenforceable, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) but also the relative fault of the Company, on the one hand and
XXXX, on the other hand, as well as any other relevant equitable
considerations. The Company agrees that for the purposes of this
paragraph the relative benefits to the Company and XXXX of the Transactions as
contemplated shall be deemed to be in the same proportion that the total value
received/paid or contemplated to be received/paid by the Company or its
shareholders, as the case may be, as a result of or in connection with the
Transactions bear to the fees paid or to be paid to XXXX under this
Agreement. Notwithstanding the foregoing, the Company expressly
agrees that XXXX shall not be required to contribute any amount in excess of the
amount by which fees paid XXXX hereunder (excluding reimbursable expenses),
exceeds the amount of any damages which XXXX has otherwise been required to
pay.
The
Company agrees that without XXXX’x prior written consent, which shall not be
unreasonably withheld, it will not settle, compromise or consent to the entry of
any judgment in any pending or threatened claim, action or proceeding in respect
of which indemnification could be sought under the indemnification provisions of
this Agreement (in which XXXX or any other Indemnified Party is an actual or
potential party to such claim, action or proceeding), unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action or
proceeding.
In the
event that an Indemnified Party is requested or required to appear as a witness
in any action brought by or on behalf of or against the Company relating to the
Transactions in which such Indemnified Party is not named as a defendant, the
Company agrees to promptly reimburse XXXX on a monthly basis for all expenses
incurred by it in connection with such Indemnified Party’s appearing and
preparing to appear as such a witness, including, without limitation, the
reasonable fees and disbursements of its legal counsel.
If
multiple claims are brought with respect to at least one of which
indemnification is permitted under applicable law and provided for under this
Agreement, the Company agrees that any judgment or arbitration award shall be
conclusively deemed to be based on claims as to which indemnification is
permitted and provided for, except to the extent the judgment or arbitration
award expressly states that it, or any portion thereof, is based solely on a
claim as to which indemnification is not available.
