SECURITIES ESCROW AGREEMENT
SECURITIES ESCROW
AGREEMENT, dated as of ________, 2008 (“Agreement”), by and among REDSTAR
PARTNERS, INC., a Cayman Islands company (“Company”), PARALLAX POWER COMPONENTS
LLC, MCWONG INVESTMENTS LLC and XXXXXXXX
XXXXXXX (collectively “Initial Shareholders”) and CONTINENTAL STOCK
TRANSFER & TRUST COMPANY, a New York corporation (“Escrow
Agent”).
WHEREAS,
the Company has entered into an Underwriting Agreement, dated ___________,
2008
(“Underwriting Agreement”), with Xxxxxx Xxxxxx & Co. Inc. (“MJC”) acting as
representative of the several underwriters (collectively, the “Underwriters”),
pursuant to which, among other matters, the Underwriters have agreed to purchase
3,000,000 units (“Units”) of the Company. Each Unit consists of one ordinary
share of the Company, par value $.0001 per share (“Ordinary Shares”), and one
Warrant, each Warrant to purchase one Ordinary Share, all as more fully
described in the Company’s final Prospectus, dated _________, 2008
(“Prospectus”) comprising part of the Company’s Registration Statement on Form
S-1 (File No. 333-149327) under the Securities Act of 1933, as amended
(“Registration Statement”), declared effective on _______, 2008 (“Effective
Date”).
WHEREAS,
the Initial Shareholders have agreed as a condition of the sale of the Units
to
deposit their Ordinary Shares and Warrants of the Company, as set forth opposite
their respective names in Exhibit A attached hereto (collectively “Escrow
Securities”), in escrow as hereinafter provided.
WHEREAS,
the Company and the Initial Shareholders desire that the Escrow Agent accept
the
Escrow Securities, in escrow, to be held and disbursed as hereinafter
provided.
IT
IS
AGREED:
1. Appointment
of Escrow Agent.
The
Company and the Initial Shareholders hereby appoint the Escrow Agent to act
in
accordance with and subject to the terms of this Agreement and the Escrow Agent
hereby accepts such appointment and agrees to act in accordance with and subject
to such terms.
2. Deposit
of Escrow Securities.
On or
before the Effective Date, each of the Initial Shareholders shall deliver to
the
Escrow Agent certificates representing his respective Escrow Securities, to
be
held and disbursed subject to the terms and conditions of this Agreement. Each
Initial Shareholder acknowledges that the certificate representing his Escrow
Securities is legended to reflect the deposit of such Escrow Securities under
this Agreement.
3. Disbursement
of the Escrow Securities.
3.1 The
Escrow Agent shall hold the Escrow Securities until one year after the
consummation of a business combination (the “Escrow Period”), on which date,
upon written instructions from each Initial Shareholder, the Escrow Agent shall
disburse such amount of each Initial Shareholder’s Escrow Securities (and
any applicable stock power) to such Initial Shareholder; provided, further,
that
if the Underwriters exercise their over-allotment option to purchase an
additional 450,000 Units of the Company (as described in the Prospectus), the
Initial Stockholders agree that no later than by the end of the 45-day period
in
which the Underwriters may exercise their over-allotment option, the Company
shall give the Escrow Agent notice with respect to the amount, if any, of the
over-allotment that was exercised by the Underwriters and, upon such notice,
the
Escrow Agent shall return to the Company for cancellation, at no cost, the
number of Escrow Securities held by each Initial Stockholder determined by
multiplying (a) the product of (i) 112,500, multiplied by (ii) a fraction,
(x)
the numerator of which is the number of Escrow Securities held by each Initial
Stockholder, and (y) the denominator of which is the total number of Escrow
Securities, by (b) a fraction, (i) the numerator of which is 450,000 minus
the
number of shares of Common Stock purchased by the Underwriters upon the exercise
of their over-allotment option, and (ii) the denominator of which is 450,000;
provided further, however, that if, the Escrow Agent is notified by the Company
pursuant to Section 6.6 hereof that the Company is being liquidated at any
time
during the Escrow Period, then the Escrow Agent shall promptly destroy the
certificates representing the Escrow Securities; provided further, however,
that
if, within one year after the Company consummates a Business Combination (as
such term is defined in the Registration Statement), the Company (or the
surviving entity) subsequently consummates a liquidation, merger, stock exchange
or other similar transaction which results in all of the shareholders of such
entity having the right to exchange their Ordinary Shares for cash, securities
or other property then the Escrow Agent will, upon receipt of a notice executed
by the Chairman of the Board, Vice Chairman or other authorized officer of
the
Company, in form reasonably acceptable to the Escrow Agent, certifying that
such
transaction is then being consummated or such conditions have been achieved,
as
applicable, release the Escrow Securities to the Initial Shareholders. The
Escrow Agent shall have no further duties hereunder after the disbursement
or
destruction of the Escrow Securities in accordance with this Section
3.
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4. Rights
of Initial Shareholders in Escrow Securities.
4.1 Voting
Rights as a Shareholder.
Subject
to the terms of the Insider Letters described in Section 4.4 hereof and except
as herein provided, the Initial Shareholders shall retain all of their rights
as
shareholders of the Company during the Escrow Period, including, without
limitation, the right to vote such shares.
4.2 Dividends
and Other Distributions in Respect of the Escrow Securities.
During
the Escrow Period, all dividends payable in cash with respect to the Escrow
Securities shall be paid to the Initial Shareholders, but all dividends payable
in stock or other non-cash property (“Non-Cash Dividends”) shall be delivered to
the Escrow Agent to hold in accordance with the terms hereof. As used herein,
the term “Escrow Securities” shall be deemed to include the Non-Cash Dividends
distributed thereon, if any.
4.3 Restrictions
on Transfer.
During
the Escrow Period, no sale, transfer or other disposition may be made of any
or
all of the Escrow Securities except (i) to an entity’s members upon its
liquidation, (ii) by bona fide gift to a member of an Initial Shareholder’s
immediate family or to a trust, the beneficiary of which is an Initial
Shareholder or a member of an Initial Shareholder’s immediate family, (iii) by
virtue of the laws of descent and distribution upon death of any Initial
Shareholder, (iv) pursuant to a qualified domestic relations order or (v) by
private sales of the Escrow Securities made at or prior to the consummation
of a
Business Combination at prices no greater than the price at which the securities
were originally purchased; provided, however, that such permissive transfers
may
be implemented only upon the respective transferee’s written agreement to be
bound by the terms and conditions of this Agreement and of the Insider Letter
signed by the Initial Shareholder transferring the Escrow Securities. During
the
Escrow Period, the Initial Shareholders shall not pledge or grant a security
interest in the Escrow Securities or grant a security interest in their rights
under this Agreement.
4.4 Insider
Letters.
Each of
the Initial Shareholders has executed a letter agreement with MJC and the
Company, dated as indicated on Exhibit A hereto, and which is filed as an
exhibit to the Registration Statement (“Insider Letter”), respecting the rights
and obligations of such Initial Shareholder in certain events, including but
not
limited to the liquidation of the Company.
5. Concerning
the Escrow Agent.
5.1 Good
Faith Reliance.
The
Escrow Agent shall not be liable for any action taken or omitted by it in good
faith and in the exercise of its own best judgment, and 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 Escrow Agent),
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 Escrow Agent to be genuine and to be signed or presented by
the
proper person or persons. The Escrow Agent shall not be bound by any notice
or
demand, or any waiver, modification, termination or rescission of this Agreement
unless evidenced by a writing delivered to the Escrow Agent signed by the proper
party or parties and, if the duties or rights of the Escrow Agent are affected,
unless it shall have given its prior written consent thereto.
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5.2 Indemnification.
The
Escrow Agent shall be indemnified and held harmless by the Company from and
against any expenses, including counsel fees and disbursements, or loss suffered
by the Escrow Agent in connection with any action, suit or other proceeding
involving any claim which in any way, directly or indirectly, arises out of
or
relates to this Agreement, the services of the Escrow Agent hereunder, or the
Escrow Securities held by it hereunder, other than expenses or losses
arising from the gross negligence or willful misconduct of the Escrow Agent.
Promptly after the receipt by the Escrow Agent of notice of any demand or claim
or the commencement of any action, suit or proceeding, the Escrow Agent shall
notify the other parties hereto in writing. In the event of the receipt of
such
notice, the Escrow Agent, in its sole discretion, may commence an action in
the
nature of interpleader in an appropriate court to determine ownership or
disposition of the Escrow Securities or it may deposit the Escrow Securities
with the clerk of any appropriate court or it may retain the Escrow Shares
pending receipt of a final, non appealable order of a court having jurisdiction
over all of the parties hereto directing to whom and under what circumstances
the Escrow Shares are to be disbursed and delivered. The provisions of this
Section 5.2 shall survive in the event the Escrow Agent resigns or is discharged
pursuant to Sections 5.5 or 5.6 below.
5.3 Compensation.
The
Escrow Agent shall be entitled to reasonable compensation from the Company
for
all services rendered by it hereunder. The Escrow Agent shall also be entitled
to reimbursement from the Company for all expenses paid or incurred by it in
the
administration of its duties hereunder including, but not limited to, all
counsel, advisors’ and agents’ fees and disbursements and all taxes or other
governmental charges.
5.4 Further
Assurances.
From
time to time on and after the date hereof, the Company and the Initial
Shareholders shall deliver or cause to be delivered to the Escrow Agent such
further documents and instruments and shall do or cause to be done such further
acts as the Escrow Agent shall reasonably request to carry out more effectively
the provisions and purposes of this Agreement, to evidence compliance herewith
or to assure itself that it is protected in acting hereunder.
5.5 Resignation.
The
Escrow Agent may resign at any time and be discharged from its duties as escrow
agent hereunder by its giving the other parties hereto written notice and such
resignation shall become effective as hereinafter provided. Such resignation
shall become effective at such time that the Escrow Agent shall turn over to
a
successor escrow agent appointed by the Company, the Escrow Securities held
hereunder. If no new escrow agent is so appointed within the 60 day period
following the giving of such notice of resignation, the Escrow Agent may deposit
the Escrow Securities with any court it reasonably deems
appropriate.
5.6 Discharge
of Escrow Agent.
The
Escrow Agent shall resign and be discharged from its duties as escrow agent
hereunder if so requested in writing at any time by the other parties hereto,
jointly, provided, however, that such resignation shall become effective only
upon acceptance of appointment by a successor escrow agent as provided in
Section 5.5.
5.7 Liability.
Notwithstanding anything herein to the contrary, the Escrow Agent shall not
be
relieved from liability hereunder for its own gross negligence or its own
willful misconduct.
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6. Miscellaneous.
6.1 Governing
Law.
This
Agreement shall for all purposes be deemed to be made under and shall be
construed 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.
6.2 Third
Party Beneficiaries.
Each of
the Initial Shareholders hereby acknowledges that the Underwriters are third
party beneficiaries of this Agreement and this Agreement may not be modified
or
changed without the prior written consent of MJC.
6.3 Entire
Agreement.
This
Agreement contains the entire agreement of the parties hereto with respect
to
the subject matter hereof and, except as expressly provided herein, may not
be
changed or modified except by an instrument in writing signed by the party
to
the charged.
6.4 Headings.
The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation thereof.
6.5 Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and their legal representatives, successors and
assigns.
6.6 Notices.
Any
notice or other communication required or which may be given hereunder shall
be
in writing and either be delivered personally or be mailed, certified or
registered mail, or by private national courier service, return receipt
requested, postage prepaid, and shall be deemed given when so delivered
personally or, if mailed, two days after the date of mailing, as
follows:
If
to the
Company, to:
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx X. Xxxxxxx, Chairman
If
to a
Shareholder, to his address set forth in Exhibit A.
and
if to
the Escrow Agent, to:
Continental
Stock Transfer & Trust Company
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Chairman
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A
copy of
any notice sent hereunder shall be sent to:
Xxxxxx
Xxxxxx & Co. Inc.
000
Xxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxx Xxxxxx
and:
Xxxxxxxx
Xxxxxx
The
Chrysler Building
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxx Xxxx Xxxxxx, Esq.
and:
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxx
00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Attn:
Xxxxxxx X. Xxxxxxxx, Esq.
The
parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice to any such change in
the
manner provided herein for giving notice.
6.7 Liquidation
of the Company.
The
Company shall give the Escrow Agent written notification of the liquidation
and
dissolution of the Company in the event that the Company fails to consummate
a
Business Combination within the time period(s) specified in the
Prospectus.
6
WITNESS
the execution of this Agreement as of the date first above written.
| MCWONG INVESTMENTS LLC | ||
| |
|
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| By: | ||
|
Name:
Title:
|
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Xxxxxxxx
Xxxxxxx
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CONTINENTAL
STOCK TRANSFER
&
TRUST COMPANY
|
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| By: | ||
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Name:
Title:
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7
EXHIBIT
A
|
Name
and Address of
Initial
Shareholder
|
Number
of
Shares
|
Number
of Warrants |
Date
of
Insider
Letter
|
|||||||
|
Parallax
Power Components LLC
000
Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
|
534,055
|
534,055
|
____________,
2008
|
|||||||
|
McWong Investments
LLC
000
Xxxx 00xx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
|
301,875
|
301,875
|
____________,
2008
|
|||||||
|
Xxxxxxxx Xxxxxxx
000
Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
|
26,570 | 26,570 |
____________,
2008
|
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