Rule 10b5-1 Stock Purchase Plan
This
Rule 10b5-1 Stock Purchase Plan (this “Purchase Plan”), is entered into on
___________, 2008 by and among Daewoo Securities Co., Ltd. (the “Broker”), Korea
Milestone Acquisition Corporation, a Cayman Islands company (the “Company”),
Dawin Technology, Inc. (“Dawin”) and Sang-Xxxx Xxx (“Xxx”, and collectively with
Dawin, the “Purchaser”).
WHEREAS,
Purchaser desires to establish a plan that qualifies for the affirmative defense
and safe harbor provided by Rule 10b5-1 (“Rule 10b5-1”) under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) to purchase
warrants to purchase ordinary shares (the “Warrants”), of the Company, as
described in the Company’s Registration Statement on Form F-1 relating to the
initial public offering of the Company (the “IPO”).
WHEREAS,
Purchaser desires to engage Broker as its exclusive agent to purchase Warrants
on its behalf in accordance with this Purchase Plan;
WHEREAS,
Purchaser has established or, prior to effecting transactions under this
Purchase Plan will establish, an account (the “Account”) with Broker by
executing an account agreement and all other necessary ancillary documents
with
Broker; and
NOW,
THEREFORE,
Broker,
the Company and Purchaser hereby agree as follows:
1. Engagement
of Broker
During
the term of this Purchase Plan, Broker shall act as Purchaser’s exclusive agent
to purchase Warrants pursuant to this Purchase Plan. Subject to the terms and
conditions set forth herein, Broker hereby accepts such appointment and
engagement.
2. Trading
Instructions
(a) Broker
is authorized to begin purchasing up to 5,000,000 Warrants as agent for
Purchaser as set forth herein pursuant to this Purchase Plan on the earlier
of
(i) ten (10) months from the effective date of the prospectus related to the
IPO
and (ii) the Company’s filing of a Form 6-K containing the proxy statement
relating to the Company’s initial business combination (the “Commencement
Date”). Broker shall cease purchasing Warrants sixty (60) calendar days after
the Commencement Date or on the Termination Date (as defined below), whichever
is earlier. The period beginning on the Commencement Date and ending on the
Termination Date is referred to herein as the “Plan Period”.
(b) In
accordance with Broker’s customary procedures, Broker will deposit Warrants
purchased hereunder into the Account against payment to Broker of the purchase
price therefor and commissions and other fees in respect thereof.
(c) Broker
will notify Purchaser of all transactions executed under this Purchase Plan
pursuant to customary trade confirmations, which shall be provided within 24
hours of each transaction to Purchaser, SoftForum Building, 8th Floor, 000-0
Xxxxxxxxx, Xxxxxxx, Xxxxx, Xxxxx, 135-170, Attn: Sang-Xxxx Xxx, by facsimile
at
(82) (0) 0000-0000 and confirmed by telephone at (82) (0) 000-0000, with a
copy
to Xxxxxxx X. Xxxx, Esq., Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
(d) (i) On
each day on which the NASDAQ Stock Market (the “Exchange”) is open for trading
(each, a “Business Day”), Broker shall use commercially reasonable efforts to
purchase, as agent and for the account of Purchaser, up to 5,000,000
Warrants at a price of US$2.30 per Warrant.
(ii) Purchaser shall
pay
to Broker a commission of US$0.03 per Warrant so purchased.
(e) Broker
will make, keep and produce promptly upon request a daily time-sequenced
schedule of all Warrant purchases made under this Purchase Plan, on a
transaction-by-transaction basis, including (i) size, time of execution and
price of purchase; and (ii) the exchange, quotation system, or other
facility through which the Warrant purchase occurred, which obligations are
set
forth under the heading “Daily Time-Sequenced Schedule Obligations” on
Appendix
A
hereto.
(f) Purchaser
agrees that this Purchase Plan constitutes an irrevocable “good till cancel”
limit order to purchase Warrants at US$2.30 per Warrant pursuant to the terms
of
this Purchase Plan.
(g) The
Account shall be a non-hypothecated, delivery versus payment account, such
that
the Warrants and payment for such Warrants are due and exchanged
simultaneously.
3. Funding
of Account
(a)
Purchaser agrees to fund the Account with at least eleven million five hundred
U.S. dollars (US$11,500,000) by depositing a cash amount of twelve billion
Korean won (KRW12,000,000,000) and cash-equivalent securities and certificates
of deposit equal to seven billion Korean won (KRW7,000,000,000) as set forth
in
Appendix
B
(the
“Full Commitment”) no later than the Effective Date of the Company’s
Registration Statement on Form F-1 in connection with the IPO (the “Effective
Date”). Pursuant to Article 44-3 of the Korean Securities and Exchange Act,
funds in the Account shall be deposited by Broker with the Korean Securities
Finance Corporation (the “KSFC”) clearly identified by Broker as property of
Purchaser, pursuant to a trust arrangement under the Korean Trust Act for the
purpose of ensuring, among other things, that funds in the Account are protected
from creditor claims of either the Broker or the KSFC.
(b) On
the date that is two weeks prior to the Commencement Date (the “Conversion
Date”), a sufficient portion of the funds in the Account shall be converted to
U.S. dollars so that the Account is funded with fully collected U.S. dollars
in
the amount of US$11,500,000.
(c) At
such time after (i) funds in the Account are converted into US$11,500,000,
and
(ii) the Commencement Date, any amounts (in U.S. dollars or Korean won) in
excess of US$11,500,000 may be withdrawn from the Account and returned to
Purchaser or its affiliates by Broker.
(d) Broker
shall provide to Underwriter an account statement for the Account, (i) no later
than the Effective Date that evidences the Full Commitment is in the Account
and
available for Warrant purchases as of that date and (ii) the next business
day
following the Conversion Date that evidences the Full U.S. Dollar Commitment
(as
defined below) in the Account and (iii) no later than twenty-four hours prior
to
the Commencement Date that evidences the Full U.S. Dollar Commitment in the
Account. Other than withdrawals by Broker for the sole purpose of payment for
Warrant purchases and as provided in this Section 3, no funds may be withdrawn
from the Account prior to the Termination Date.
(e) Purchaser
irrevocably covenants to ensure that the Account shall have no less
than:
(i)
the
Full Commitment, namely, US$11,500,000 (or its equivalent in Korean won or
combination of U.S. dollars, Korean won and Certificates of Deposit) on the
Effective Date;
(ii)
US$11,500,000 (in U.S. dollars) commencing on the date that is two weeks prior
to the Commencement Date and continuing through the Commencement Date (the
“Full
U.S. Dollar Commitment”); and
(iii)
on
any day within the term of the Purchase Plan, the product (in U.S. dollars)
of
US$2.30 times (5,000,000 Warrants less the number of Warrants purchased
hereunder prior to that date) (such product, the “Remaining U.S. Dollar
Commitment”).
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Broker
shall monitor the foreign currency exchange rate and value the account on a
daily basis, and in the event the balance in the Account is less than the Full
Commitment (the difference between the Remaining U.S. Dollar Commitment and
the
balance in the Account being referred to as a “Shortfall”), due to foreign
currency exchange rate fluctuations or otherwise, Broker
shall immediately notify Purchaser of such Shortfall by close of business on
the
day the Shortfall occurs. In the event of such Shortfall, Purchaser agrees
and
irrevocably covenants that it will immediately deposit to the Account, by close
of business on the day that the Shortfall occurs, with respect to Shortfalls
in
(i) above, in U.S. dollars or its equivalent in Korean won, equal to the
Shortfall in the Account, and with respect to Shortfalls in (ii) or (iii) above,
U.S. dollar funds equal to the Shortfall in the Account, all with the purpose
and intent of assuring that the Account is fully funded on the Effective Date,
and from the Conversion Date to and through the Commencement Date to the
Termination Date in U.S. dollars, and each purchase of Warrants by Broker
pursuant to the Purchase Plan will be fully funded by the Remaining U.S. Dollar
Commitment and each such purchase properly consummated concurrent with each
such
purchase.
(f) In
addition, each of Xxx and Xxxxx does hereby personally guarantee for the benefit
of Broker, Underwriter and the Company that the Account shall have no less
than
the Full Commitment until the date the Account is converted to the Full U.S.
Dollar Commitment, which date shall be no later than two weeks prior to the
Commencement Date. In the event any Korean won or Certificates of Deposit in
the
Account cannot be converted to U.S. dollars, due to fluctuations in the foreign
exchange rate or otherwise, Purchaser shall, immediately on such date, provide
to the Broker an amount in cash in U.S. dollars sufficient to ensure the
Remaining U.S. Dollar Commitment is in the Account.
4. Broker’s
Discretion to Deviate from Trading Instructions
(a) Subject
to the Warrant Purchase Guidelines and other terms and conditions set forth
in
this Purchase Plan, Broker shall have full discretion with respect to the
execution of all purchases, and Purchaser acknowledges and agrees that Purchaser
does not have, and shall not attempt to exercise, any influence over how, when
or whether to effect such purchases of Warrants pursuant to this Purchase Plan.
(b) Notwithstanding
any provision herein to the contrary, including the provisions of Section
2(d)(i), in the event that, on any Business Day, in the opinion of Broker’s
counsel, effecting purchases hereunder would result in a violation of applicable
law or a breach of any contract to which Broker or its affiliates are a party
or
by which it or its affiliates are bound or such purchases would result in a
violation of applicable law by Purchaser (collectively, “Restrictions”), Broker
may refrain from purchasing Warrants or purchase fewer than the otherwise
applicable number of Warrants to be purchased set forth in the Warrant Purchase
Guidelines, as determined by Broker, in its discretion with regard to such
Restrictions, provided,
however,
that as
soon as such Restrictions are no longer in effect, Broker shall resume effecting
purchases hereunder. In this connection, Broker may receive a notice from the
Company indicating that Regulation M precludes purchases for a period of time
and Broker shall suspend purchasing once it has received such a notice until
such time as it receives an additional notice from the Company to the effect
that such Restrictions under Regulation M have terminated.
5. Termination
Date
This
Purchase Plan shall terminate upon the Termination Date. “Termination Date”
means the earliest of:
(a)
the date on which Purchaser purchases 5,000,000 Warrants pursuant to this
Purchase Plan; or
(b)
the date that Broker receives notice that Purchaser has filed a petition for
bankruptcy or reorganization, or a petition for bankruptcy has been filed
against Purchaser and has not been dismissed within sixty (60) calendar
days of its filing.
If
Broker
determines that any event specified in Paragraphs (a) or (b) of this
Section 5 has occurred, Broker shall promptly notify Purchaser that this
Purchase Plan has terminated pursuant to the terms of this Section 5 and
the date of such termination.
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6. Representations,
Warranties and Covenants
(a) From
the date hereof until the Termination Date, each of the Company and Purchaser
agrees not to discuss with Broker the Company’s and/or a potential target
company’s (a “Target”) business, operations or prospects or any other
information likely to be related to the value of the Warrants or likely to
influence a decision to buy Warrants. Notwithstanding the preceding sentence,
with the approval of counsel to Broker, Purchaser and the Company may
communicate with Broker personnel who are not responsible for, and have no
ability to influence, the execution of this Purchase Plan. Notwithstanding
the
first sentence in this paragraph, the Company and Purchaser shall jointly
provide Broker with written notification of (i) the Commencement Date, and
(ii) the mailing of a proxy or other solicitation materials to shareholders
of the Target with respect to a vote on the business combination or any fact
that would make purchases under this Purchase Plan unlawful pursuant to
Regulation M or otherwise, as soon as such fact is known to the Company or
Purchaser.
(b)
Each of Xxx and Dawin represents and warrants to Broker that it has duly
authorized this Purchase Plan and the transactions contemplated hereby.
(c)
Each of Xxx and Xxxxx agrees that it will not, and the Company agrees with
Broker that neither it nor any “affiliated purchaser” as defined in
Rule 10b-18 will, make any purchases of blocks as described in the proviso
in Rule 10b-18(b)(4) during the four full calendar weeks immediately
preceding the Commencement Date.
(d)
Each of Xxx and Dawin represents and warrants to Broker that it is not aware
of
any material, nonpublic information concerning the Company or its securities
(“Material, Nonpublic Information”) and is entering into this Purchase Plan in
good faith and not as part of a plan or scheme to evade the prohibitions of
Rule 10b5-1.
(e) Broker
represents and warrants to the Company and each of Xxx and Xxxxx that it has
implemented reasonable policies and procedures, taking into consideration the
nature of Broker’s business, to ensure that individuals making investment
decisions will not violate the laws prohibiting trading on the basis of
Material, Nonpublic Information. These policies and procedures include those
that restrict any purchase or sale, or the causing of any purchase or sale,
of
any security as to which Broker has Material, Nonpublic Information, as well
as
those that prevent such individuals from becoming aware of or being in
possession of Material, Nonpublic Information.
(f) From
the date hereof until the Termination Date, each of Xxx and Dawin agrees not
to
enter into any hedging transaction with respect to any Warrants.
(g) Each
of the Company, Xxx and Xxxxx agrees that, during the period from the
Commencement Date to the date falling that number of days following the
Termination Date equal to the “restricted period” applicable to the Company, it
will not engage in any “distribution” with respect to which the Warrants are a
“covered security” (as such terms are defined in Regulation M) or any other
activity that would prohibit the purchase of Warrants by Broker.
(h) Each
of the Company, Xxx and Dawin represents and warrants that as of the time of
execution of this Purchase Plan, it has not entered into any similar plan or
agreement with respect to Warrants or any security or interest convertible
into
or exchangeable for Warrants. Each of the Company, Xxx and Xxxxx agrees that
without the prior written consent of Broker, it shall not, during the Plan
Period, directly or indirectly (including, without limitation, by means of
a
cash-settled or other derivative instrument) purchase, offer to purchase, place
any bid or limit order that would effect a purchase of, any Warrants (or an
equivalent interest, including a unit of beneficial interest in a trust or
limited partnership or a depository share), or any security convertible into
or
exchangeable for Warrants.
(i) Each
of the Company, Xxx and Dawin agrees to inform Broker (i) of any purchases
made during the Plan Period by an “affiliated purchaser” as defined in
Rule 10b-18 promptly upon becoming aware of such purchases and (ii) if
any “affiliated purchaser” intends to make any such purchases, promptly upon
being informed of such intention.
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(j) Broker
is aware of potential consequences in the event of a Shortfall in the Account
or
the failure to settle Warrant purchase requests from the Company’s Warrant
holders, and covenants to take any steps necessary to correct a Shortfall in
the
Account and to ensure settlement of Warrant purchase requests.
(k) Each
of Broker, Xxx and Xxxxx represents and warrants that it is aware that all
the
funds in the Account are held in the name of Dawin.
(l) Each
of Xxx and Xxxxx represents and warrants that Dawin has the requisite authority
to deliver the cash amounts and Certificates of Deposit to the Account for
use
as set forth in this Purchase Plan.
(m) Each
of Xxx and Xxxxx covenants that it shall make no claim to recover any amount
in
the Account prior to the Termination Date of this Purchase Plan, and Dawin
represents and warrants that its shareholders and creditors do not and will
not
have any claims to recover any amount in the Account prior to the Termination
Date.
7. Compliance
with the Securities Laws
(a) It
is the intent of the parties that this Purchase Plan comply with the
requirements of Rule 10b5-1(c)(1)(i)(B), and the parties agree that this
Purchase Plan shall be interpreted to comply with the requirements of
Rule 10b5-1(c).
(b) Broker
agrees that the purchases of Warrants under this Purchase Plan shall comply
with
all applicable U.S. federal securities laws.
8. Indemnification
(a) Purchaser
agrees to indemnify and hold harmless Broker (and its directors, officers,
employees and affiliates) from and against all claims, liabilities, losses,
damages and expenses (including reasonable attorney’s fees and costs) arising
out of or attributable to (i) any material breach by the Company or
Purchaser of this Purchase Plan (including the Company’s and Purchaser’s
representations and warranties), and (ii) any violation by the Company or
Purchaser of applicable laws or regulations with respect to the transactions
contemplated by this Purchase Plan. This indemnification will survive the
termination of this Purchase Plan. Purchaser will have no indemnification
obligations hereunder in the case of gross negligence or willful misconduct of
Broker or any other indemnified person or if Broker fails to comply with Section
7(b) hereof (unless such failure arises out of or is attributable to a breach
by
the Company or Purchaser of its representations, warranties or obligations
hereunder), as determined by a final, non-appealable judgment of a court of
competent jurisdiction.
(b) Notwithstanding
any other provision herein, no party hereto will be liable to the other for
(i) special, indirect, punitive, exemplary, or consequential damages, or
incidental losses or damages of any kind, including but not limited to lost
profits, lost savings, loss of use of facility or equipment, regardless of
whether arising from breach of contract, warranty, tort, strict liability or
otherwise, and even if advised of the possibility of such losses or damages
or
if such losses or damages could have been reasonably foreseen, or (ii) any
failure to perform or for any delay in performance that results from a cause
or
circumstance that is beyond its reasonable control, including but not limited
to
failure of electronic or mechanical equipment, strikes, failure of common
carrier or utility systems, severe weather, market disruptions or other causes
commonly known as “acts of God”.
(c) The
Company and Purchaser acknowledge and agree that Broker has not provided the
Company or Purchaser with any tax, accounting or legal advice with respect
to
this Purchase Plan, including whether Purchaser would be entitled to any of
the
affirmative defenses under Rule 10b5-1.
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9. General
(a) This
Purchase Plan (including any Appendices, Annexes or Exhibits) constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof, and supersedes any previous or contemporaneous agreements,
understandings, proposals or promises with respect thereto, whether written
or
oral.
(b) Governing
Law.
This
Purchase Plan shall be governed by, interpreted under, and construed in
accordance with the internal laws of the State of New York applicable to
agreements made and to be performed within the State of New York, without giving
effect to any choice-of-law provisions thereof that would compel the application
of the substantive laws of any other jurisdiction. The parties hereto agree
that
any action, proceeding or claim against the undersigned arising out of or
relating in any way to this Purchase Plan shall be brought and enforced in
the
courts of the State of New York or the United States District Court for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The parties hereto hereby waive any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum. The
parties hereto hereby irrevocably and unconditionally waive the right to a
trial
by jury in any action, suit, counterclaim or other proceeding (whether based
on
contract, tort, or otherwise) arising out of, connected with or relating to
this
Purchase Plan. Xxx, Xxxxx and the Company each hereby appoints, without
power of revocation, Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C., 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attn: Xxxxxxx X. Xxxx, Esq. as his or
its
agent to accept and acknowledge on his or its behalf service of any and all
process which may be served in any action, proceeding or counterclaim in any
way
relating to or arising out of this Purchase Plan.
(c) This
Purchase Plan and each party’s rights and obligations hereunder may not be
assigned or delegated without the written permission of the other party and
shall inure to the benefit of each party’s successors and permitted assigns,
whether by merger, consolidation or otherwise.
(d) This
Purchase Plan may be executed in two or more counterparts and by facsimile
signature.
[Remainder
of page intentionally left blank. Signature page to follow.]
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IN
WITNESS WHEREOF,
the
undersigned have signed this Purchase Plan as of the date first written
above.
DAEWOO
SECURITIES CO., LTD.
By:_______________________________
Name:
Xxx,
Xxxx-Tae___________
Title:
President and Chief Executive Officer
By:_______________________________
Name:_________________________
Title:__________________________
PURCHASER:
DAWIN
TECHNOLOGY, INC.
By:_______________________________
Name: ___________
Title:
___________
_______________________________
Sang-Xxxx
Xxx
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APPENDIX
A
Daily
Time-Sequenced Schedule Obligations
|
|
|
|
|
Obligor
|
|
Obligation
|
|
Broker
|
|
Broker
is to make, keep and produce promptly upon request a daily time-sequenced
schedule of all Warrant purchases made under this Purchase Plan,
on a
transaction-by-transaction basis, including:
|
|
|
|
•
size, time of execution, price of purchase; and
|
|
|
|
•
the exchange, quotation system, or other facility through which the
Warrant purchase occurred.
|
All
Warrant amounts and limit prices listed herein shall be increased or decreased
to reflect stock
splits
should they occur.
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APPENDIX
B
| Certificate of Deposit No. | Amount (Korean Won) |
| 1022-100-XXXXXX | 2,000,000,000 |
| 1022-900-XXXXXX | 2,000,000,000 |
| Money Trust Account No. | Amount (Korean Won) |
| 257-026858-XX-XXX | 3,000,000,000 |
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