EXHIBIT 10.1
INVESTMENT MANAGEMENT TRUST AGREEMENT
This Agreement is made as of ___________, 2006 by and between
ChinaGrowth South Acquisition Corporation (the "Company") and American Stock
Transfer & Trust Company ("Trustee").
WHEREAS, the Company's Registration Statement on Form F-1, No. 333-
________ ("Registration Statement"), for its initial public offering of
securities ("IPO") has been declared effective as of the date hereof by the
Securities and Exchange Commission ("Effective Date"); and
WHEREAS, Xxxxxx Xxxxxx & Co. Inc. ("Xxxxxx Xxxxxx") is acting as the
representative of the underwriters in the IPO; and
WHEREAS, as described in the Company's Registration Statement, and in
accordance with the Company's Articles and Memorandum of Association,
$34,200,000 of the net proceeds of the IPO and sale of founding director
warrants including $720,000 in deferred underwriter's discounts and commissions
($39,330,000 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
issued in the IPO and in the event the units are registered in Colorado,
pursuant to Section 11-51-302(6) of the Colorado Revised Statutes, a copy of
which statute is attached hereto and made a part hereof. 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, including the terms of Section 11-51-302(6) of
the Colorado Statute, in a segregated trust account ("Trust Account")
established by the Trustee at a branch of JPMorgan Chase NY Bank selected 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 any "Government Security" within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940 with a maturity of 180
days or less, or in money market funds meeting certain conditions under Rule
2a-7 promulgated under the Investment Company Act of 1940, as amended;
(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 and Xxxxxx Xxxxxx 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 the tax returns
for the Trust Account;
(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 and/or Xxxxxx Xxxxxx to do so;
(h) Render to the Company and to Xxxxxx Xxxxxx, and to such other
person as the Company may instruct, monthly written statements of the activities
of and amounts in the Trust Account reflecting all receipts and disbursements of
the Trust Account;
(i) Upon written instructions from the Company, deliver to the
Company, on a quarterly basis, from the Property in the Trust Account, an amount
equal to the taxes payable by the Company, if any, relating to interest earned
on the Property; and
(j) Commence liquidation of the Trust Account 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, signed on behalf of the Company by its Chief Executive Officer or
Chairman of the Board and affirmed by its entire Board of Directors, 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 [DATE/18 MONTHS] (or the date that is the six
month anniversary of such date, in the event that a letter of intent, agreement
in principle or definitive agreement has been executed prior to such date in
connection with a Business Combination (as defined in the Termination Letter
attached hereto as Exhibit A) that has not been consummated by [DATE/24
MONTHS]), the Trust Account shall be liquidated in accordance with the
procedures set forth in the Termination Letter attached as Exhibit B to the
shareholders of record on the record date; PROVIDED, FURTHER, that the record
date shall be within ten (10) days of [DATE/18 MONTHS] (or the date that is the
six month anniversary of such date, in the event that a letter of intent,
agreement in principle or definitive agreement has been executed prior to such
date in connection with a Business Combination that has not been consummated by
[DATE/24 MONTHS]), or as soon thereafter as is practicable.
2. 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 Chief Executive Officer or Chairman of the Board. In addition,
except with respect to its duties under paragraph 1(j) 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 Company shall have the right to conduct and manage the defense
against such Indemnified Claim, provided, that the Company shall obtain the
consent of the Trustee with respect to the selection of counsel, which consent
shall not be unreasonably withheld. The Trustee may participate in such action
with its own counsel at its own expense;
(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 year's 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 2(b) hereof (it
being expressly understood that the Property shall not be used to make any
payments to the Trustee under such paragraph);
(d) Provide to the Trustee any letter of intent, agreement in
principle or definitive agreement that is executed prior to [DATE/18 MONTHS] in
connection with a Business Combination; and
(e) 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 tabulating shareholder votes (which firm may be the Trustee) verifying the
vote of the Company's shareholders regarding such Business Combination.
3. 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 paragraph 1 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;
(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) Subject to the requirements of Section 1(i) of the Trust
Agreement, pay any taxes on behalf of the Trust Account to any governmental
entity or taxing authority.
4. 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 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 that arises due to any actions or omissions to act by any
party after such deposit; or
(b) At such time that the Trustee has completed the liquidation of the
Trust Account in accordance with the provisions of paragraph 1(j) hereof, and
distributed the Property in accordance with the provisions of the Termination
Letter, this Agreement shall terminate except with respect to Paragraph 2(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 C. 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
conflict of laws. It may be executed in several 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. 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
Xxxxxx Xxxxxx. 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 for purposes of resolving
any disputes hereunder.
(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:
American Stock Transfer
& Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx, Vice President
Fax No.: 000-000-0000
if to the Company, to:
ChinaGrowth South Acquisition Corporation
0000 Xxxxxxxx Xxxx, Xxxxxxxx
Xxxxxxxx Chemical Industry Park
Shanghai, China 201417
Attn: Xxxxxxx Xxxxx, Chief Executive Officer
Fax No.: (00) 0000-0000
in either case with a copy to:
Ellenoff Xxxxxxxx & Schole LLP
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx, Esq.
Fax No.: (000) 000-0000
and
Xxxxxx Xxxxxx & Co. Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx
Fax No.: (000) 000-0000
and
DLA Xxxxx Xxxxxxx Xxxx Xxxx US LLP
1251 Avenue of the Americas
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxx Xxxxxx, Esq.
Fax No.: (000) 000-0000
(f) This Agreement may not be assigned by the Trustee without the
prior written consent of the Company and Xxxxxx Xxxxxx.
(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 WITNESS WHEREOF, the parties have duly executed this Investment Management
Trust Agreement as of the date first written above.
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Trustee
By:
--------------------------------------------
Name:
Title:
CHINAGROWTH SOUTH ACQUISITION CORPORATION
By:
--------------------------------------------
Name:
Title:
EXHIBIT A
[LETTERHEAD OF COMPANY]
[INSERT DATE]
American Stock Transfer
& Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Re: TRUST ACCOUNT NO. [ ] TERMINATION LETTER
Gentlemen:
Pursuant to paragraph 1(j) of the Investment Management Trust
Agreement between ChinaGrowth South Acquisition Corporation ("Company") and
American Stock Transfer & Trust Company ("Trustee"), dated as of ________, 200_
("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 paragraph ___ of the Amended and Restated Articles
and Memorandum of Association of the Company, the Business Combination has been
approved by the shareholders of the Company and by the Public Shareholders
holding a majority of the IPO Shares, and Public Shareholders holding less than
20% of the IPO Shares have voted against the Business Combination and given
notice of exercise of their conversion rights described in paragraph __ of the
Amended and Restated Articles and Memorandum of Association of the Company.
Pursuant to Section 2(e) of the Trust Agreement, we are providing you with [an
affidavit][a certificate] of _________, which verifies the vote of the Company's
shareholders in connection with the Business Combination. 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 (a) the Business Combination has been consummated
and (b) the provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado
Statute have been met, and (ii) the Company shall deliver to you 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.
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 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,
CHINAGROWTH SOUTH
ACQUISITION CORPORATION
By:
-------------------------------------
Name:
Title:
AFFIRMED:
Global Vestor Capital Partners LLC
-------------------------------------
Name:
Title:
-------------------------------------
Name:
Title:
Chum Capital Group Limited
-------------------------------------
Name:
Title:
Guorun Group Limited
-------------------------------------
Name:
Title:
Venture Link Assets Limited
-------------------------------------
Name:
Title:
EXHIBIT B
[LETTERHEAD OF COMPANY]
[INSERT DATE]
American Stock Transfer
& Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Re: TRUST ACCOUNT NO. [ ] TERMINATION LETTER
Gentlemen:
Pursuant to paragraph 1(j) of the Investment Management Trust
Agreement between ChinaGrowth South Acquisition Corporation ("Company") and
American Stock Transfer & Trust Company dated as of May __, 2006 ("Trust
Agreement"), this is to advise you that the Board of Directors of the Company
has voted to dissolve and liquidate the Company. Attached hereto is a copy of
the minutes of the meeting of the Board of Directors of the Company relating
thereto, certified by the Secretary of the Company as true and correct and in
full force and effect.
In accordance with the terms of the Trust Agreement, we hereby (a)
certify to you that the provisions of Section 11-51-302(6) and Rule 51-3.4 of
the Colorado Statute have been met and (b) authorize you, to commence
liquidation of the Trust Account. In connection with this liquidation, you are
hereby authorized to establish a record date for the purposes of determining the
shareholders of record entitled to receive their per share portion of the Trust
Account. The record date shall be within ten (10) days of the liquidation date,
or as soon thereafter as is practicable. 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 Articles and Memorandum of Association of the Company. You shall
commence distribution of such funds in accordance with the terms of the Trust
Agreement and the Articles and Memorandum of Association of the Company and you
shall oversee the distribution of the funds. Upon the payment of all the funds
in the Trust Account, the Trust Agreement shall be terminated.
Very truly yours,
CHINAGROWTH SOUTH
ACQUISITION CORPORATION
By:
-----------------------------------
Name:
Title:
AFFIRMED:
Global Vestor Capital Partners LLC
--------------------------------------------
Name:
Title:
--------------------------------------------
Name:
Title:
Chum Capital Group Limited
--------------------------------------------
Name:
Title:
Guorun Group Limited
--------------------------------------------
Name:
Title:
Venture Link Assets Limited
--------------------------------------------
Name:
Title:
EXHIBIT C
AUTHORIZED INDIVIDUAL(S) AUTHORIZED
FOR TELEPHONE CALL BACK TELEPHONE NUMBER(S)
----------------------------------------- --------------------
COMPANY:
ChinaGrowth South Acquisition Corporation
0000 Xxxxxxxx Xxxx, Xxxxxxxx
Xxxxxxxx Chemical Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxx 000000 00-0000-0000
Attn: Xxxxxxx Xxxxx, Chief Executive
Officer
TRUSTEE:
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx, Vice President (000) 000-0000
