REVOLVING LINE OF CREDIT AGREEMENT
This
Revolving Line of Credit Agreement (this “Agreement”) is made as of July 10,
2008 by and between Redstar Partners, Inc., a Cayman Islands company
(“Borrower”), and Parallax Power Components LLC and McWong Investments LLC
(collectively, the “Lender”), with reference to the following facts.
(a) Borrower
has been organized for the purpose of effecting a merger, capital stock
exchange, asset acquisition or other similar business combination with an
operating business (a “Business Combination”).
(b)
Borrower
proposes to: (a) make a public offering (the “Public Offering”) of its
securities pursuant to a registration statement (the “Registration Statement”)
filed with and to be declared effective by the Securities and Exchange
Commission (the “SEC”); (b) deposit the proceeds from the Public Offering
into a trust account (the “Trust Account”) for the benefit of the purchasers of
securities in the Public Offering, net of offering costs and underwriting
discounts to be held and disbursed in accordance with the terms of the
Investment Management Trust Agreement to be entered into between Borrower and
Continental Stock Transfer & Trust Company as trustee (the “Trust
Agreement”); and (c) utilize the funds in the Trust Account in connection
with a Business Combination.
(c)
Borrower
may need funds to pay costs and expenses prior to consummation of a Business
Combination.
(d)
On
the
terms and subject to the conditions set forth in this Agreement, Lender is
willing to make available to Borrower a revolving line of credit to pay certain
costs and expenses that may arise prior to a Business Combination (the “Loan”).
AGREEMENT
Section 1.
The Loan.
1.1. Lender
agrees to make advances to Borrower, and Borrower agrees to repay such advances,
from time to time in accordance with the terms and conditions of this Agreement
and the form of revolving promissory note attached hereto as Exhibit A (the
“Note”); provided, however, that notwithstanding anything to the contrary in
this Agreement, at no time shall the aggregate of all advances and readvances
outstanding under the Loan at any time exceed Three Hundred Fifty Thousand
Dollars ($350,000). This Agreement and the Note are each sometimes referred
to
in this Agreement individually as a “Loan Document,” and are sometimes
collectively referred to as the “Loan Documents.”
1.2. Lender’s
obligation to make advances shall expire upon the first to occur of the
following:
1.2.1. Upon
a material breach or default of any representation, warranty or agreement of
Borrower that is not cured or corrected within 20 days of notice of such
breach from Lender;
1.2.2. Upon
consummation of a Business Combination;
1.2.3. Upon
notice from Lender at any time prior to the effectiveness of the Registration
Statement; and
1.2.4. Upon
the adoption of a resolution by the Board of Directors of Borrower authorizing
or approving the dissolution and/or liquidation Borrower.
Section 2. Conditions
of Advances. Upon
reasonable advance request from Borrower, Lender shall make advances to or
as
directed by Borrower, provided that each and all of the following conditions
is
satisfied:
2.1. Borrower
shall have executed and delivered the Note to Lender;
2.2. The
aggregate amount of outstanding advances following such advance shall not exceed
Three Hundred Fifty Thousand Dollars ($350,000);
2.3. The
representations and warranties of Borrower in the Loan Documents shall be true
and correct in all material respects;
2.4. Borrower
shall have complied in all material respects with each of its agreements in
the
Loan Documents;
2.5. The
advances shall be used only for such purposes as are set forth in
Section 4.1 of this Agreement; and
2.6. Prior
to the effectiveness of the Registration Statement, Lender consents to the
advance.
3.1. Borrower
represents and warrants as follows:
3.1.1. Borrower
has full power and authority to execute and deliver this Agreement and the
other
Loan Documents to be executed and delivered by it pursuant hereto and to perform
its obligations hereunder and thereunder. This Agreement and such Loan Documents
constitute the valid and legally binding obligations of the Borrower and are
enforceable against Borrower in accordance with their terms.
3.1.2. Neither
the execution and the delivery of the Loan Documents by Borrower, nor the
consummation of the transactions contemplated by the Loan Documents, nor the
borrowing by Borrower, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which Borrower
is subject or any provision of the Memorandum and Articles of Association,
as
amended, of Borrower, or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any entity
or natural person (each, a “Person”) the right to accelerate, terminate, modify,
or cancel, any agreement, contract, lease, license, instrument, or other
arrangement to which Borrower is a party or by which it is bound or to which
any
of its assets are subject (or result in the imposition of any security interest
upon any of its assets), in each case other than where such violation, conflict,
breach, default, acceleration or creation of right would not reasonably be
expected to have a material adverse effect on the ability of Borrower to repay
amounts due under the Note in accordance with the terms of the Loan Documents
(a
“Material Adverse Effect”).
3.1.3. Borrower
does not need to give any notice to, make any filing with, or obtain any
authorization, permit, certificate, registration, consent, approval or order
of
any government or governmental agency in order for the parties to consummate
the
transactions contemplated by this Agreement, except whether the failure would
not reasonably be expected to have a Material Adverse Effect.
3.1.4. The
conditions to the obligation of Lender to make the advance, as set forth in
Section 2, shall be satisfied.
3.2. Each
and every representation and warranty made by Borrower in this Agreement shall
be deemed renewed and remade upon the making of each and every advance or
readvance under the Note that Lender may make.
Section 4. Borrower
Covenants. For
as long as Lender shall have a commitment to make advances or there shall be
any
outstanding balance on the Loan, without the prior consent of Lender, Borrower
shall:
4.1. Use
the proceeds only for: (a) prior to the closing of the Public Offering,
costs and expenses of the Offering, including legal, accounting, printing and
“road show” expenses; and (b) after the Closing of the Offering, ordinary
and reasonable operating costs and expenses during the period Borrower seeks
to
identify, investigate, negotiate and consummate a Business Combination,
including Borrower’s reporting obligations with the SEC, the audit and review of
Borrower’s financial statements, identifying and investigating potential targets
for a Business Combination, negotiating and closing the Business Combination,
legal and other professional fees and expenses and insurance premiums;
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4.2. Within
three business days following the closing of the Public Offering, pay all
outstanding principal and interest on the Loan and the Note outstanding as
of
the closing of the Public Offering to the extent such amounts were borrowed
in
respect of offering costs for which Borrower may utilize the funds held by
it
which were not deposited into the Trust Account;
4.3. Not
declare or pay any dividend or distribution with respect to, or repurchase
or
redeem any shares of, the capital shares of Borrower, provided that this shall
not prohibit payments from the Trust Account to shareholders of Borrower in
accordance with the Trust Agreement;
4.4. Not
engage in any business other than identifying, investigating, negotiating and
closing a Business Combination;
4.5. Make
any material capital expenditure or purchase any material property or asset
(other than office supplies and equipment); and
4.6. Upon
request of Lender, provide to Lender copies of all filings with the Securities
and Exchange Commission.
Section 5. No
Recourse to Trust Account. Lender,
on behalf of itself and its successors and assigns, hereby acknowledges and
agrees that under no circumstance shall Lender have any right, title or interest
in or to any of the funds in the Trust Account, or any funds distributed from
the Trust Account other than in a Business Combination Distribution (as defined
below), and that its sole recourse for repayment of any and all amounts due
under the Note shall be against the assets or properties of Borrower distributed
to Borrower from the Trust Account in a Business Combination Distribution.
Lender hereby irrevocably waives any claim that it might have to funds in the
Trust Account, and any funds distributed from the Trust Account other than
in a
Business Combination Distribution, at law or in equity, agrees not to make
any
such claim, and agrees to indemnify and hold the Borrower harmless from any
such
claim made by or on behalf of Lender. For purposes of this Section 5, a
“Business Combination Distribution” means a distribution from the Trust Account
in connection with the consummation of Business Combination pursuant to the
Trust Agreement.
Section 6. Events
of Default. The
occurrence of any of the following shall constitute an event of default (an
“Event of Default”) hereunder and under each and every other Loan Document:
6.1. The
Borrower shall fail to pay any principal, interest or any other amount as and
when due and payable under any Loan Document;
6.2. Any
representation or warranty which is made or deemed made in any Loan Document
by
the Borrower shall prove to have been incorrect or misleading in any material
respect on or as of the date made or deemed made or remade;
6.3. The
Borrower shall fail to perform or observe any term, provision, covenant, or
agreement contained in any Loan Document to be performed or observed by the
Borrower (other than any payment obligation) and such failure shall continue
more than 20 days after notice thereof from Lender;
6.4. The
Borrower shall (a) generally not, or be unable to, or admit in writing its
inability to, pay its debts as such debts become due; or (b) make an
assignment for the benefit of creditors, or petition or apply to any tribunal
for the appointment of a custodian, receiver, or trustee for it or a substantial
part of its assets; or (c) commence any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect; or
(d) have any such petition or application filed or any such proceeding
commenced against it in which an order for relief is entered or adjudication
or
appointment is made and which remains undismissed for a period of 30 days
or more; or (e) by any act or omission to act indicate consent to, approval
of, or acquiescence in any such petition, application, or proceeding, or order
for relief, or the appointment of a custodian, receiver, or trustee for all
or
any such substantial part of its properties; or (f) suffer any such
custodianship, receivership, or trusteeship for all or any substantial part
of
its properties; or (g) suffer any such custodianship, receivership, or
trusteeship to continue undischarged for a period of 30 days or more; or
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6.5. At
any time after execution and delivery of this Agreement, and for any reason
at
no fault of Lender, any Loan Document shall cease to be in full force and effect
and enforceable in accordance with its terms, or shall be declared null and
void.
Section 7. Consequences
of Default. If
an Event of Default shall occur, Lender:
7.1. Shall
have no further obligation to make advances under the Loan Documents; and
7.2. May
declare the Note, all interest thereon, and all other amounts payable under
this
Agreement and any other Loan Document to be forthwith due and payable, whereupon
the Note, all such interest, and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest, or further notice of
any
kind, all of which are hereby expressly waived by Borrower.
8.1. Notices. All
notices, requests, demands and other communications (collectively, “Notices”)
given pursuant to this Agreement shall be in writing, and shall be delivered
by
personal service, courier, facsimile transmission or by United States first
class, registered or certified mail, addressed to the following addresses:
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If
to Borrower:
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000
Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxx X. Xxxxxxx
Facsimile:
(000) 000-0000
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If
to Lender:
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Parallax
Power Components LLC
c/o
Xxxxxx X. Xxxxxxx
000
Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
and
McWong
Investments LLC
c/o
Xxxxxxxx Xxxx
000
Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
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Any
Notice, other than a Notice sent by registered or certified mail, shall be
effective when received; a Notice sent by registered or certified mail, postage
prepaid return receipt requested, shall be effective on the earlier of when
received or the third day following deposit in the United States mails (or
on
the seventh day if sent to or from an address outside the United States). Any
party may from time to time change its address for further Notices hereunder
by
giving notice to the other party in the manner prescribed in this Section.
8.2. No
Waivers; Remedies Cumulative. No
failure or delay by a party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies provided herein
shall be cumulative and not exclusive of any rights or remedies provided by
law.
4
8.3. Amendments
and Waivers. Any
provision of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by Borrower and Lender and
such
amendment is approved by the Board of Directors of Borrower.
8.4. Successors
and Assigns. Borrower
may not assign its right or duties hereunder without the prior written consent
of Lender, which consent Lender may deny, withhold or delay in its sole and
absolute discretion.
8.5. Governing
Law. This
Agreement has been made and entered into in the State of New York and shall
be
construed in accordance with the laws of the State of New York without giving
effect to the principles of conflicts of law thereof.
8.6. Prior
Understandings. This
Agreement supersedes all prior understandings and agreements (whether written,
oral or otherwise) pertaining to the subject matter hereof, and constitutes
the
entire agreement between the parties hereto relating to the subject matter
hereof and the transactions provided for herein.
8.7. Counterparts. This
Agreement may be executed in any number of counterparts each of which shall
be
deemed an original and all of which shall constitute one and the same agreement
with the same effect as if all parties had signed the same signature page.
The
parties shall accept facsimile signatures as the equivalent of original ones.
8.8. Severability. If
any provision of this Agreement or the application of such provision to any
Person or circumstance will be held invalid, the remainder of this Agreement
or
the application of such provision to Persons or circumstances other than those
to which it is held invalid will not be affected thereby.
8.9. Additional
Documents and Acts. Borrower
shall execute and deliver such additional documents and instruments and shall
perform such additional acts as may be necessary or appropriate to effectuate,
carry out and perform all of the terms, provisions, and conditions of this
Agreement and the transactions contemplated by this Agreement.
8.10. Survival. All
indemnities, rights, remedies, representations and warranties contained herein
shall survive the expiration or termination of this Agreement, and no
termination or expiration hereof shall relieve either party from liability
for
any breach of this Agreement.
5
IN
WITNESS WHEREOF, the parties have executed and delivered this Agreement to
one
another as of the date first above written.
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LENDER:
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PARALLAX
POWER COMPONENTS LLC
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| By: | /s/ Xxxxxx X. Xxxxxxx | |
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MCWONG
INVESTMENTS LLC
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| By: | /s/ Xxxxxxxx Xxxx | |
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BORROWER:
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| By: | /s/ Xxxxxx X. Xxxxxxx | |
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Xxxxxx
X. Xxxxxxx, Chief Executive Officer
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EXHIBIT
A
REVOLVING LINE OF CREDIT NOTE
REVOLVING LINE OF CREDIT NOTE
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Not
to Exceed $350,000 in Principal
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_________,
2008
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For
value
received, the undersigned REDSTAR
PARTNERS, INC.,
a
Cayman Islands company (“Borrower”), promises to pay, in lawful money of the
United States, to the order of ______________,
a
_______________ company, together with its successors and assigns (“Holder”), at
such address as Holder may direct, the principal sum of ____________ Dollars
($________), or so much thereof as shall have been advanced and shall remain
unpaid hereunder, together with interest from date of disbursement at the rate
of 3% per annum (the “Interest Rate”). Interest shall be computed at the
Interest Rate on the basis of the actual number of days during which the
principal balance is outstanding, divided by 365, which shall, for interest
computation purposes, be considered one year. Notwithstanding anything to the
contrary expressed or implied herein, all payments made by Borrower hereunder
(including, without limitation, any prepayments) shall be applied first to
accrued but unpaid interest and second to the reduction of the principal due
hereunder.
This
Note
is delivered pursuant to, and is subject to all of the terms and conditions
of,
that certain Revolving Line of Credit Agreement dated July __, 2008 (as from
time to time amended, the “Loan Agreement”) between Borrower and Holder. Unless
otherwise defined in this Note, capitalized terms used in this Note shall have
the meanings ascribed to them in the Loan Agreement, and in the event of any
conflict between the terms of this Note and the terms of the Loan Agreement,
the
terms of the Loan Agreement shall govern.
Section 1. Maturity. This
Note shall mature and become due and payable upon the first to occur of the
following:
1.1. Upon
the occurrence of a Business Combination;
1.2. Upon
declaration of Holder upon the occurrence of an Event of Default, as provided
in
Section 7.2 of the Loan Agreement;
1.3. Upon
the adoption of a resolution by the Board of Directors of Borrower authorizing
or approving the dissolution and/or liquidation of Borrower; or
1.4. Upon
demand of Holder at any time prior to the effectiveness of the Registration
Statement.
Section 2. Prepayment. This
Note may be repaid in whole or in part at any time without penalty or premium.
Section 3. Event
of Default. Should
an Event of Default (as defined in the Loan Agreement) occur, Lender shall
have
the rights set forth in Section 7 of the Loan Agreement.
Section 4. Borrower’s
Acknowledgement. Borrower
acknowledges that Holder is extending the credit contemplated hereby solely
as
an accommodation to Borrower, and is willing to do so in reliance upon
Borrower’s monetary and non-monetary covenants contained herein and in the Loan
Agreement.
Section 5. Holder’s
Acknowledgement. The
Holder acknowledges and agrees that, as specified in Section 5 of the Loan
Agreement, the Holder has limited recourse against Borrower for repayment of
any
and all amounts due and owing under this Note.
Section 6. Miscellaneous. If
this Note (or any payment due hereunder) is not paid when due, Borrower promises
to pay all costs and expenses of collection and reasonable attorneys’ fees
incurred by the Holder hereof on account of such collection, plus interest
at
the rate applicable to principal, whether or not suit is filed hereon. Borrower
consents to renewals, replacements and extensions of time for payment hereof,
before, at, or after maturity, consents to the acceptance, release or
substitution of security for this Note, and waives demand and protest. The
indebtedness evidenced hereby shall be payable in lawful money of the United
States. In any action brought under or arising out of this Note, Borrower,
including successor(s) or assign(s), hereby consents to the application of
Indiana law, to the jurisdiction of any competent court within the State of
Indiana, and to service of process by any means authorized by Indiana law.
No
single or partial exercise of any power hereunder, or under any other Loan
Document in connection herewith, shall preclude other or further exercises
thereof or the exercise of any other such power.
IN
WITNESS WHEREOF, Borrower has executed and delivered this Note as of the date
first above written.
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| By: | ||
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Xxxxxx
X. Xxxxxxx, Chief Executive Officer
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