Document:

Unassociated Document

Exhibit 10.5

INVESTMENT MANAGEMENT TRUST AGREEMENT

This agreement (“Agreement”) is made as of __________________ __, 2011 by and between Global Cornerstone Holdings Limited (the “Company”), a British Virgin Islands business company and Continental Stock Transfer & Trust Company (“Trustee”) located at 17 Battery Place, New York, New York 10004.  Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Registration Statement.

WHEREAS, the Company’s initial registration statement, as amended, on Form S-1, No. 333-172120 (the “Registration Statement”), for its initial public offering of securities (“IPO”) have been declared effective as of the date hereof by the Securities and Exchange Commission (“Commission”); and

WHEREAS, Citigroup Global Markets Inc. (“Citi”) is acting as the representative of the several underwriters in the IPO pursuant to an underwriting agreement (the “Underwriting Agreement”); and

WHEREAS, simultaneously with the IPO, Global Cornerstone Holdings LLC (“GCH”), the sponsor of the Company, will be purchasing an aggregate of 3,000,000 warrants (“Sponsor Warrants”) from the Company for an aggregate purchase price of $3,000,000; and

WHEREAS, as described in the Registration Statement, and in accordance with the Company’s Memorandum and Articles of Association, (as amended, the “Memorandum and Articles of Association”), $80,00,000 of the gross proceeds of the IPO and sale of the Sponsor Warrants ($92,650,000, 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 (the “Trust Account”) for the benefit of the Company and the holders of the Company’s ordinary shares, no par value per share (the “Ordinary Shares”), issued in the IPO as hereinafter provided 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 the Colorado Statute is attached hereto and made a part hereof (the aggregate amount to be delivered to the Trustee, will be referred to herein as the “Property”; the ordinary 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, pursuant to certain provisions in the Company’s Memorandum and Articles of Association, the Public Shareholders may, regardless of how such shareholder votes in connection with the Company’s initial acquisition, share exchange, share reconstruction and amalgamation or contractual control arrangement with, purchase of all or substantially all of the assets of, or any other similar business combination with operating businesses or assets (a “Business Combination”), demand the Company redeem such Public Shareholder’s Ordinary Shares into cash or redeem such Ordinary Shares pursuant to a tender offer pursuant to the Rule 13e-4 and Regulation 14E of the Commission, as applicable and based upon the Company’s choice of proceeding under the proxy rules or tender offer rules, each as promulgated by the Commission (“Redemption Rights”); and

 

  

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WHEREAS, pursuant to the Underwriting Agreement, a portion of the Property equal to a deferred fee of 3.5% of the gross proceeds of the IPO (“Deferred Fee”) payable to Citi; and

WHEREAS, pursuant to the Underwriting Agreement, the Deferred Fee is payable solely upon the consummation of the Company’s Business Combination and pursuant to the terms thereof; and

WHEREAS, the Company and the Trustee are entering into this Agreement to set forth the terms and conditions pursuant to which the Trustee shall hold the Property.

NOW THEREFORE, 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 Trust Accounts which shall be established by the Trustee at JP Morgan Chase Bank, NA and at a brokerage institution selected by the Trustee that is reasonably satisfactory to the Company;

 

(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 United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940 having a maturity of 180 days or less, and/or in any open ended investment company that holds itself out as a money market fund, which invests solely in government securities, selected by the Company meeting the conditions of paragraphs (c)(2), (c)(3) and (c)(4) of Rule 2a-7 promulgated under the Investment Company Act of 1940, as determined by the Company.

(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 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 its tax returns;

(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 to do so, so long as the Company shall have advanced funds sufficient to pay the Trustee’s expenses incident thereto.

(h)          Render to the Company, 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; and

 

  

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(i)           Commence liquidation of the Trust Account only after and 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 hereto, signed on behalf of the Company by an executive officer and complete the liquidation of the Trust Account and distribute the Property in the Trust Account only as directed by the Company; provided, however, that in the event that a Termination Letter has not been received by the Trustee by 11:59 P.M. New York City time on the 21-month anniversary of the closing of the IPO (“Closing Date”) (“Termination Date”), the Trust Account shall be liquidated as soon as practicable thereafter in accordance with the procedures set forth in the Termination Letter attached as Exhibit B hereto and distributed to the Public Shareholders of record at the close of trading (4:00 P.M. New York City time) on the applicable Termination Date.  For the purposes of clarity, any transmission of such Termination Letter electronically, whether by facsimile, electronic mail (e-mail), PDF or otherwise, shall constitute an original of such termination Letter hereunder.

2.           Limited Distributions of Income from Trust Account.

(a)           Upon written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto as Exhibit C, the Trustee shall distribute to the Company by wire transfer from the Trust Account the amount necessary to cover any tax obligation owed by the Company and, to the extent there is not sufficient cash in the Trust Account to pay such tax obligation, liquidate such assets held in the Trust Account as shall be designated by the Company in writing to make such distribution.

(b)          The Company may withdraw funds from the Trust Account for working capital purposes by delivery of Exhibit C to the Trustee.  The distributions referred to herein shall be made only from income collected on the Property.

(c)           Also by delivery of Exhibit C and only if the Company proceeds under the proxy rules and not the tender offer rules, the Company may request funds necessary to repurchase up to fifteen percent (15%) of its Ordinary Shares.  In connection therewith, the Company shall deliver, in addition to Exhibit C, a “trade ticket” or similar confirmation evidencing such purchase by the Company.  Upon receipt of such evidence, the Trustee shall, as soon as practicable, release the necessary funds to the Company in order to complete such trade within “T+2.”  The Trustee shall pay to the Company such amount equal to: (x) Ordinary Shares purchased (evidenced by the trade ticket) multiplied by (y) an amount not to exceed the lesser of $10.00 (per Ordinary Share) or the pro rata per share amount held in the Trust Account; provided, however, in no event shall the Trustee release funds to repurchase in excess of 1,200,000 Ordinary Shares (1,380,000 if the over-allotment option of the IPO is exercised in full or such other amount provided to the Trustee if the over-allotment option is partially exercised but not to exceed 1,380,000 Ordinary Shares).

(d)           In no event shall the payments authorized by Sections 2(a) and 2(b) cause the amount in the Trust Account to fall below the amount initially deposited into the Trust Account.  Except as provided in Sections 2(a), 2(b) and 2(c) above, no other distributions from the Trust Account shall be permitted except in accordance with Section 1(i) hereof.

(e)           The written request of the Company referenced above shall constitute presumptive evidence that the Company is entitled to such funds, and the Trustee has no responsibility to look beyond said request.

 

  

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3.           Agreements and Covenants of the Company.  The Company hereby agrees and covenants to:

(a)           Give all instructions to the Trustee hereunder in writing or the electronic equivalent, as specified in Section 1(i).  In addition, except with respect to its duties under Sections 1(i), 2(a), 2(b) and 2(c) above, the Trustee shall be entitled to rely on, and shall be protected in relying on, any verbal, electronic 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)           Subject to the provisions of Section 5, 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 taken by the trustee hereunder or any claim, potential claim, 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 section, it shall notify the Company in writing of such claim (hereinafter referred to as the “Indemnified Claim”).  The Trustee shall have the right to conduct and manage the defense against such Indemnified Claim, provided, that the Trustee shall obtain the consent of the Company with respect to the selection of counsel, which consent shall not be unreasonably withheld.  The Trustee may not agree to settle any Indemnified Claim without the prior written consent of the Company, which consent shall not be unreasonably withheld.  The Company may participate in such action with its own counsel;

(c)           Pay the Trustee the fees set forth on Schedule A hereto;

(d)           In connection with the vote, if any, 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/or tabulating shareholder votes verifying the vote of the Company’s shareholders regarding such Business Combination; and

(e)           In the event that the Company directs the Trustee to commence liquidation of the Trust Account pursuant to Section 1(i), the Company agrees that it will not direct the Trustee to make any payments that are not specifically authorized by this Agreement.

(f)           Promptly after the Deferred Fee shall become determinable on a final basis, to provide the Trustee notice in writing (with a copy to Citi) of the total amount of the Deferred Fee.

4.           Limitations of Liability.  The Trustee shall have no responsibility or liability to:

(a)           Imply obligations, perform duties, inquire or otherwise be subject to the provisions of any agreement or document other than this agreement and that which is expressly set forth herein;

(b)           Take any action with respect to the Property, other than as directed in Sections 1 and 2 hereof and the Trustee shall have no liability to any party except for liability arising out of its own gross negligence or willful misconduct;

 

  

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(c)           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 written instructions from the Company given as provided herein to do so and the Company shall have advanced to it funds sufficient to pay any expenses incident thereto;

(d)           Change the investment of any Property, other than in compliance with Section 1(c);

(e)           Refund any depreciation in principal of any Property;

(f)           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;

(g)           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, judgment, instruction, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Trustee, (which counsel may be company counsel) 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;

(h)           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

(i)            Prepare, execute and file tax reports, income or other tax returns and pay any taxes with respect to income and activities relating to the Trust Account, regardless of whether such tax is payable by the Trust Account or the Company (including but not limited to income tax obligations), it being expressly understood that as set forth in Section 2(a), if there is any income or other tax obligation relating to the Trust Account or the Property in the Trust Account, as determined from time to time by the Company and regardless of  whether such tax is payable by the Company or the Trust, at the written instruction of the Company, the Trustee shall make funds available in cash from the Property in the Trust Account an amount specified by the Company as owing to the applicable taxing authority, which amount shall be paid directly to the Company by electronic funds transfer, account debit or other method of payment, and the Company shall forward such payment to the taxing authority;

 

(j)            Pay or report any taxes on behalf of the Trust Account other than pursuant to Section 2(a).

(k)           Verify calculations, qualify or otherwise approve Company requests for distributions pursuant to Sections 1(i), 2(a), 2(b) or 2(c).

 

  

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5.           No Right of Set-Off.  The Trustee waives any right of set-off or any right, title, interest or claim of any kind that the Trustee may have against the Property held in the Trust Account.  In the event the Trustee has a claim against the Company under this Agreement, including, without limitation, under Section 3(b), the Trustee will pursue such claim solely against the Company and not against the Property held in the Trust Account.

6.           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 during which time the Trustee shall act in accordance with this Agreement.  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 any court in the State of New York or 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; or

(b)           At such time that the Trustee has completed the liquidation of the Trust Account in accordance with the provisions of Section 1(i) hereof, and distributed the Property in accordance with the provisions of the Termination Letter, this Agreement shall terminate except with respect to Section 3(b).

7.           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.  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 all information supplied to it by the Company, including, account names, account numbers, and all other identifying information relating to a beneficiary, beneficiary’s bank or intermediary bank. The Trustee shall not be liable for any loss, liability or expense resulting from any error in the information or transmission of the wire.

 

(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 conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.  It may be executed in several original or facsimile counterparts, each one of which shall constitute an original, and together shall constitute but one instrument.

 

  

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(c)          This Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof.  Except for Sections 1(i), 2(a), 2(b), 2(c) and 2(d) (which may not be modified, amended or deleted without the affirmative vote of 65% of the then outstanding Ordinary Shares except that no such amendment will affect any public shareholder who has otherwise either (i) indicated his election to redeem his Ordinary Shares or (ii) has not consented to any extension to the time he would be entitled to a return of his pro rata amount in the Trust Account), this Agreement or any provision hereof may only be changed, amended or modified (other than to correct a typographical error) by a writing signed by each of the parties hereto.  As to any claim, cross-claim or counterclaim in any way relating to this Agreement, each party waives the right to trial by jury and the right to set-off as a defense.  The Trustee may request an opinion from Company counsel as to the legality of any proposed amendment as a condition to its executing such amendment.

 

(d)          The parties hereto consent to the personal jurisdiction and venue of any state or federal court located in the City of New York, Borough of Manhattan, for purposes of resolving any disputes hereunder.

(e)          Unless otherwise specified herein, 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 or delivery confirmation requested), by hand delivery or by electronic  or facsimile transmission:

if to the Trustee, to:

Continental Stock Transfer

& Trust Company

17 Battery Place

New York, New York 10004

Attn:  Steven G. Nelson, Chairman, and

Frank A. DiPaolo, CFO

Fax No.:  (212) 509-5150

if to the Company, to:

James D. Dunning, Jr.

Global Cornerstone Holdings Limited

641 Lexington Avenue

28th Floor, New York, NY 10022

Attn:  James D. Dunning, Jr.

Fax No.:  ( )  -

with a copy to (which shall not constitute notice):

Ellenoff Grossman & Schole LLP

150 East 42nd Street, 11th Floor

New York, New York 10017

Attn: Douglas S. Ellenoff

Fax No: (212)-370-7889

(e)          This Agreement may not be assigned by the Trustee without the prior consent of the Company.

(f)           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 the event that the Trustee has a claim against the Company under this Agreement, the Trustee will pursue such claim solely against the Company and not against the Property held in the Trust Account.

 

  

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(g)          This Agreement is the joint product of the Trustee and the Company and each provision hereof has been subject to the mutual consultation, negotiation and agreement of such parties and shall not be construed for or against any party hereto

(h)          This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument.  Delivery of a signed counterpart of this Agreement by facsimile or electronic transmission shall constitute valid and sufficient delivery thereof.

(i)           The Company has also retained the Trustee to serve as its share transfer agent and warrant agent and shall pay the fees set forth in Schedule A for such services.  Additionally, the Trustee has agreed to provide all services, including, but not limited to: the mailing of proxy or tender documents to registered holders, all wires in connection with Business Combination (including the exercise of Redemption Rights) and maintaining the official record of the exercise of Redemption Rights and shareholder voting (if applicable).

[Signature page follows]

 

  

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IN WITNESS WHEREOF, the parties have duly executed this Investment Management Trust Agreement as of the date first written above.

	
CONTINENTAL STOCK TRANSFER

	
& TRUST COMPANY, as Trustee

	  	  
	
By:

	  	  
	
Name: Steven G. Nelson

	
Title: President and Chairman of the Board

	  	  
	
GLOBAL CORNERSTONE HOLDINGS LIMITED

	  	  
	
By:

	  	  
	
Name: James D. Dunning, Jr.

	
Title:  Chief Executive Officer

 

  

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SCHEDULE A

	
Fee Item

	 	
Time and method of payment

	 	
Amount(1)

	 
	
Closing fee

	 	
Consummation of IPO by wire transfer of funds

	 	$	3,500	 
	
Share transfer agent fee

	 	
Monthly until consummation of Business Combination

	 	$	500	(2)
	
Warrant agent fee

	 	
Monthly until consummation of Business Combination

	 	$	200	(3)
	
All services in connection with a Business Combination and/or all services in connection with liquidation of Trust Account if no Business Combination

	 	
Upon final liquidation of the Trust Account but, upon liquidation if no Business Combination, only from interest earned or from the Company or GCH by wire transfer of funds

	 	$	5,000	(4)

 

	
(1) 

	
Any amounts owed by the Company are subject in their entirety to the provisions of Section 5 of this Agreement.

	
(2) 

	
The Company will be billed $200 per month with $300 per month deferred and contingent on the Company consummating its initial Business Combination and payable following the Business Combination.

	
(3) 

	
The Company will be billed $100 per month with $100 per month deferred and contingent on the Company consummating its initial Business Combination and payable following the Business Combination.

	
(4) 

	
The Company will be billed $3,000 per year with $2,000 per year deferred and contingent on the consummation of a Business Combination by the Company and payable following the Business Combination.

 

 

 

  

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EXHIBIT A

[Letterhead of Company]

[Insert date]

Continental Stock Transfer

& Trust Company

17 Battery Place

New York, New York 10004

Attn:  Steven Nelson and Frank Di Paolo

	 	
Re: 

	
Trust Account No. [     ]   - Termination Letter

Gentlemen:

Pursuant to Section 1(i) of the Investment Management Trust Agreement between Global Cornerstone Holdings Limited (“Company”) and Continental Stock Transfer & Trust Company, dated as of [        ], 2011 (“Trust Agreement”), this is to advise you that the Company has entered into an agreement with [       ] (the “Target Businesses”) to consummate a Business Combination with the Target Businesses on or before [         ] (the “ Consummation Date ”). This letter shall serve as the 48 hour notice required with respect to the Business Combination. Capitalized words used herein and not otherwise defined shall have the meanings ascribed to them in the Trust Agreement.

 

In accordance with the terms of the Trust Agreement, we hereby authorize you to liquidate the Trust Account investments on [       ] and to transfer the entire proceeds to the above referenced Trust checking account at [          ] to the effect that, on the Consummation Date, all of the 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.  It is acknowledged and agreed that while the funds are on deposit in the Trust checking account awaiting distribution, the Company will not earn any interest or dividends.

 

On or before the Consummation Date: (i) counsel for the Company shall deliver to you (a) an affidavit which verifies the vote of the Company’s shareholders in connection with the Business Combination1, (b) written notification that the Business Combination has been consummated or will, concurrently with your transfer of funds to the accounts as directed by the Company, be consummated and (c) notice 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 be distributed after the Consummation Date to the Company or be distributed immediately and the penalty incurred. Upon the distribution of all the funds in the Trust Account pursuant to the terms hereof, the Trust Agreement shall be terminated.

 

1 Only if shareholder vote held

 

  

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In the event the Business Combination is not consummated by 11:59 p.m. on the Consummation Date and we have not notified you of a new Consummation Date, then the funds held in the Trust checking account shall be reinvested as provided for by the Trust Agreement as soon as practicable thereafter.

	  	
Very truly yours,

	  
	  	  	  
	  	
GLOBAL CORNERSTONE HOLDINGS LIMITED

	  	  	  
	  	
By:

	  	  
	  	
Name:

	  
	  	
Title:

	  

 

  

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EXHIBIT B                 

[Letterhead of Company]

[Insert date]

Continental Stock Transfer

& Trust Company

17 Battery Place

New York, New York 10004

Attn:  Steven Nelson and Frank Di Paolo

	 	
Re: 

	
Trust Account No. [    ]   -       Termination Letter

Gentlemen:

Pursuant to Section 1(i) of the Investment Management Trust Agreement between Global Cornerstone Holdings Limited (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of ________, 2011 (“Trust Agreement”), this is to advise you that the Company has been unable to effect a Business Combination with a Target Company within the time frame specified in the Company’s Memorandum and Articles of Association, as described in the Company’s prospectus relating to its IPO.

In accordance with the terms of the Trust Agreement, we hereby authorize you to liquidate the Trust Account on [      ] and to transfer the total proceeds to the Trust checking account at [         ] for distribution to the shareholders. The Company has selected [       ] as the record date for the purpose of determining the shareholders entitled to receive their pro rata share of the liquidation proceeds.  You agree to be the paying agent of record and in your separate capacity as paying agent, to distribute said funds directly to the Company’s shareholders (other than with respect to the initial, or insider shares) in accordance with the terms of the Trust Agreement, the Memorandum and Articles of Association of the Company and the fee set forth on Schedule A.   Upon the distribution of all of the funds in the Trust Account, your obligations under the Trust Agreement shall be terminated.

	  	
Very truly yours,

	  
	  	  	  
	  	
GLOBAL CORNERSTONE HOLDINGS LIMITED

	  	  	  
	  	
By:

	  	  
	  	
Name:

	  
	  	
Title:

	  

 

  

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EXHIBIT C                 

[Letterhead of Company]

[Insert date]

Continental Stock Transfer

& Trust Company

17 Battery Place, 8th Floor

New York, New York 10004

Attn:  Steven Nelson and Frank DiPaolo

	 	
Re: 

	
Trust Account No. [    ]

Gentlemen:

Pursuant to Section [2(a), 2(b) or 2(c)] of the Investment Management Trust Agreement between Global Cornerstone Holdings Limited (“Company”) and Continental Stock Transfer & Trust Company, dated as of ___________, 2011 (“Trust Agreement”), the Company hereby requests that you deliver to the Company $_______ of the interest income earned on the Property as of the date hereof. The Company needs such funds [to pay for the tax obligations as set forth on the attached tax return or tax statement] or [for working capital purposes] or [for repurchase of ______ Ordinary Shares].  [We have attached the “trade ticket” or similar confirmation as an exhibit to this letter1].  In accordance with the terms of the Trust Agreement, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter to the Company’s operating account at:

[WIRE INSTRUCTION INFORMATION]

	  	
GLOBAL CORNERSTONE HOLDINGS LIMITED

	  	  
	  	
By:

	  	  
	  	
Name:

	  	
Title:

 

1 Only include if this letter is being delivered in connection with a repurchase of Ordinary Shares

 

  

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EXHIBIT D                 

	
AUTHORIZED INDIVIDUAL(S)

	  	
AUTHORIZED

	
FOR TELEPHONE CALL BACK

	  	
TELEPHONE NUMBER(S)

	  	  	  
	
Company:

	  	  
	  	  	  
	
Global Cornerstone Holdings Limited

	  	  
	
641 Lexington Avenue

	  	  
	
28th Floor

	  	  
	
New York, NY  10022

	  	  
	
Attn:  James D. Dunning Jr., Chief Executive Officer

	  	
(212)-822-8165

	Byron Sproule, Chief Financial Officer and Executive Vice-President 	 	 
	  	  	  
	
Ellenoff Grossman & Schole LLP

	  	  
	
150 East 42nd Street, 11th Floor

	  	  
	
New York, New York, 10017

	  	  
	
Attn: Douglas S. Ellenoff, Esq.

	  	
(212)-370-1300

	
         Stuart Neuhauser, Esq.

	  	  
	
         Asim Grabowski-Shaikh

	  	  
	  	  	  
	
Trustee:

	  	  
	  	  	  
	
Continental Stock Transfer

	  	  
	
& Trust Company

	  	  
	
17 Battery Place

	  	  
	
New York, New York 10004

	  	  
	
Attn:     Frank Di Paolo, CFO

	  	
(212) 845-3270

 

  

15Unassociated Document

 

WARRANT AGREEMENT

WARRANT AGREEMENT (“Agreement”), dated as of April 8, 2011 by and between Gunpowder Gold Corp., a Nevada corporation (the “ Company ”), and NRG Enterprises Ltd. (“Warrant holder”). Certain capitalized terms used herein are defined in Section 14 hereof.

 

In consideration of the mutual terms, conditions, representations, warranties and agreements herein set forth, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto hereby agree as follows:

 

	 	
Section 1.

	
Issuance of Warrants.

 

The Company hereby issues and grants to Warrant holder 235,294 Warrants (“Warrants”) to purchase 235,294 shares of common stock of the Company (the “ Common Stock ”). Commencing on April 15, 2011 (the “ Warrant Commencement Date ”), and terminating on April 15, 2013 (the “ Warrant Expiration Date ”), the holder shall have the right, subject to the satisfaction of the conditions to exercise set forth in Section 7 of this Agreement, to purchase 235,294 shares of Common Stock (the shares of Common Stock issuable upon exercise of the Warrants being collectively referred to herein as the “ Warrant Shares ”) at an exercise price of $1.00 per Warrant Share (the “ Exercise Price ”). The number of Warrant Shares issuable on exercise of each Warrant and the Exercise Price are all subject to adjustment pursuant to Section 8 of this Agreement. Notwithstanding, the Company may, in its sole and absolute discretion, reduce the Exercise Price.

 

	 	
Section 2.

	
Form of Warrant Certificates.

 

Promptly after the execution and delivery of this Agreement by the parties hereto, the Company shall cause to be executed and delivered to Warrant holder one or more certificates evidencing the Warrants (the “Warrant Certificates”). Each Warrant Certificate delivered hereunder shall be substantially in the form set forth in Exhibit A attached hereto and may have such letters, numbers or other identification marks and legends, summaries or endorsements printed thereon as the Company may deem appropriate and that are not inconsistent with the terms of this Agreement or as may be required by applicable law, rule or regulation. Each Warrant Certificate shall be dated the date of execution by the Company.

 

	 	
Section 3.

	
Execution of Warrant Certificates.

 

Each Warrant Certificate delivered hereunder shall be signed on behalf of the Company by its Chairman of the Board, Chief Executive Officer, President or a Vice President, Secretary or an Assistant Secretary. Each such signature may be in the form of a facsimile thereof and may be imprinted or otherwise reproduced on the Warrant Certificates.

 

If any officer of the Company who signed any Warrant Certificate ceases to be an officer of the Company before the Warrant Certificate so signed shall have been delivered by the Company, such Warrant Certificate nevertheless may be delivered as though such person had not ceased to be such officer of the Company.

  

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Section 4.

	
Registration.

 

Warrant Certificates shall be issued in registered form only. The Company will keep or cause to be kept books for registration of ownership and transfer of each Warrant Certificate issued pursuant to this Agreement. Each Warrant Certificate issued pursuant to this Agreement shall be numbered by the Company and shall be registered by the Company in the name of the holder thereof (initially the Warrant holder). The Company may deem and treat the registered holder of any Warrant Certificate as the absolute owner thereof (notwithstanding any notation of ownership or other writing thereon made by anyone) for the purpose of any exercise thereof and for all other purposes, and the Company shall not be affected by any notice to the contrary.

 

	 	
Section 5.

	
No Transfers.

 

A. Restrictions on Transfer. No Warrant may be sold, pledged, hypothecated, assigned, conveyed, transferred or otherwise disposed of (each a “ transfer ”) unless (i) the transfer complies with all applicable United States securities laws and (ii) the transferee agrees in writing to be bound by the terms of this Agreement.

 

B. Cancellation. Warrant Certificates surrendered for transfer or exchange shall be canceled by the Company.

 

	 	
Section 6.

	
Mutilated or Missing Warrant Certificates.

 

If any Warrant Certificate is mutilated, lost, stolen or destroyed, the Company shall issue, upon surrender and cancellation of any mutilated Warrant Certificate, or in lieu of and substitution for any lost, stolen or destroyed Warrant Certificate, a new Warrant Certificate of like tenor and representing an equal number of Warrants. In the case of a lost, stolen or destroyed Warrant Certificate, a new Warrant Certificate shall be issued by the Company only upon the Company’s receipt of reasonably satisfactory evidence of such loss, theft or destruction and, if requested, an indemnity or bond reasonably satisfactory to the Company.

 

	 	
Section 7.

	
Exercise of Warrants.

 

A. Exercise. Subject to the terms and conditions set forth in this Section 7, Warrants may be exercised, in whole or in part (but not as to any fractional part of a Warrant), at any time or from time to time on and after the Warrant Commencement Date and on or prior to 5:00 p.m. on the Warrant Expiration Date.

 

The Warrant shall be exercisable only on and after the Warrant Commencement Date. If the Company determines in its sole and absolute discretion to accelerate the date that this Warrant first becomes exercisable to a date which is earlier than the first anniversary date of the date hereof, the Company shall send notice to the Warrant holder prior to the date thereof.

 

In order to exercise any Warrant, Warrant holder shall deliver to the Company at its office referred to in Section 15 the following: (i) a written notice in the form of the Election to Purchase appearing at the end of the form of Warrant Certificate attached as Exhibit A hereto of such Warrant holder’s election to exercise the Warrants, which notice shall specify the number of such Warrant holder’s Warrants being exercised; (ii) the Warrant Certificate or Warrant Certificates evidencing the Warrants being exercised; and (iii) payment of the aggregate Exercise Price.

 

 

  

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All rights of Warrant holder with respect to any Warrant that has not been exercised, on or prior to 5:00 p.m. on the Warrant Expiration Date shall immediately cease and such Warrants shall be automatically cancelled and void.

 

B. Payment of Exercise Price. Payment of the Exercise Price with respect to Warrants being exercised hereunder may, at the election of Warrant holder, be made as follows: (i) by the payment to the Company, in cash, by check or wire transfer, of an amount equal to the Exercise Price multiplied by the number of Warrants then being exercised; or (ii) by surrendering to the Company for cancellation Warrant Certificates evidencing Warrants to acquire a number of Warrant Shares equal to (x) the aggregate Exercise Price divided by (y) the fair market value of one Warrant Share (a “ cashless exercise ”).

If a Warrant holder elects a cashless exercise, the number of Warrant Shares to be issued to Warrant holder upon such exercise shall be computed using the following formula:

 

 

	
  

	
X =

	
Y(A-B)

A

	
  

	 

	
  

	
X =

	
the number of Warrant Shares to be issued to Warrant holder

	
  

	 

	
  

	
Y =

	
the number of Warrant Shares underlying the Warrants being exercised

	
  

	 

	
  

	
A =

	
the fair market value of one Warrant Share

	
  

	 

	
  

	
B =

	
the Exercise Price

 

(a) As used herein, the “fair market value of one Warrant Share” means an amount equal to the number of shares of Common Stock into which a Warrant Share is convertible times the average, over the 5 trading-day period ending on the trading day which is two trading days prior to the date of surrender, of the closing sales prices (or, if on any day there is no closing sales price, the average of the highest bid and lowest asked price) in the United States Over-the -Counter Bulletin Board as reported by the National Quotation Bureau, Incorporated, or any similar successor organization.

 

(b) For the purpose of this section, the “closing” shall mean 4:00 p.m., New York City time.

 

C. Payment of Taxes. The Company shall be responsible for paying any and all issue, documentary, stamp or other taxes that may be payable in respect of any issuance or delivery of Warrant Shares on exercise of a Warrant.

 

  

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D. Delivery of Warrant Shares. Upon receipt of the items referred to in Section 7A, the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute and deliver or cause to be executed and delivered, to or upon the written order of Warrant holder, and in the name of Warrant holder or Warrant holder’s designee, a stock certificate or stock certificates representing the number of Warrant Shares to be issued on exercise of the Warrant(s). If the Warrant Shares shall in accordance with the terms thereof have become automatically convertible into shares of the Company’s Common Stock prior to the time a Warrant is exercised, the Company shall in lieu of issuing shares of Common Stock, issue to the Warrant holder or its designee on exercise of such Warrant, a stock certificate or stock certificates representing the number of shares of Common Stock into which the Warrant Shares issuable on exercise of such Warrant are convertible. The certificates issued to Warrant holder or its designee shall bear any restrictive legend required under applicable law, rule or regulation. The stock certificate or certificates so delivered shall be registered in the name of Warrant holder or such other name as shall be designated in said notice. A Warrant shall be deemed to have been exercised and such stock certificate or stock certificates shall be deemed to have been issued, and such holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date that such notice, together with payment of the aggregate Exercise Price and the Warrant Certificate or Warrant Certificates evidencing the Warrants to be exercised, is received by the Company as aforesaid. If the Warrants evidenced by any Warrant Certificate are exercised in part, the Company shall, at the time of delivery of the stock certificates, deliver to the holder thereof a new Warrant Certificate evidencing the Warrants that were not exercised or surrendered, which shall in all respects (other than as to the number of Warrants evidenced thereby) be identical to the Warrant Certificate being exercised. Any Warrant Certificates surrendered upon exercise of Warrants shall be canceled by the Company.

 

	 	
Section 8.

	
Adjustment of Number of Warrant Shares Issuable Upon Exercise of a Warrant and Adjustment of Exercise Price.

 

A. Adjustment for Stock Splits, Stock Dividends, Recapitalizations. The number of Warrant Shares issuable upon exercise of each Warrant and the Exercise Price shall each be proportionately adjusted to reflect any stock dividend, stock split, reverse stock split, recapitalization or the like affecting the number of outstanding shares of Common Stock that occurs after the date hereof.

 

B. Adjustments for Reorganization, Consolidation, Merger. If after the date hereof, the Company (or any other entity, the stock or other securities of which are at the time receivable on the exercise of the Warrants), consolidates with or merges into another entity or conveys all or substantially all of its assets to another entity, then, in each such case, Warrant holder, upon any permitted exercise of a Warrant (as provided in Section 7), at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the exercise of the Warrant prior to such consummation, the stock or other securities or property to which such Warrant holder would have been entitled upon the consummation of such reorganization, consolidation, merger or conveyance if such Warrant holder had exercised the Warrant immediately prior thereto, all subject to further adjustment as provided in this Section 8. The successor or purchasing entity in any such reorganization, consolidation, merger or conveyance (if other than the Company) shall duly execute and deliver to Warrant holder a written acknowledgment of such entity’s obligations under the Warrants and this Agreement.

 

  

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C. Notice of Certain Events.

 

Upon the occurrence of any event resulting in an adjustment in the number of Warrant Shares (or other stock or securities or property) receivable upon the exercise of the Warrants or the Exercise Price, the Company shall promptly thereafter (i) compute such adjustment in accordance with the terms of the Warrants, (ii) prepare a certificate setting forth such adjustment and showing in detail the facts upon which such adjustment is based, and (iii) mail copies of such certificate to Warrant holder.

 

D. Adjustment to the Exercise Price.

 

The Company has the right, in its sole and absolute discretion, to reduce the Exercise Price. Upon any such determination, the Company shall notice to the Warrant holder thereof.

 

	 	
Section 9.

	
Reservation of Shares.

 

The Company shall at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued Common Stock, or its authorized and issued Common Stock held in its treasury, the aggregate number of the Warrant Shares deliverable upon the exercise of all outstanding Warrants, for the purpose of enabling it to satisfy any obligation to issue the Warrant Shares upon the due and punctual exercise of the Warrants, through 5:00 p.m. on the Warrant Expiration Date.

 

	 	
Section 10.

	
No Impairment.

 

The Company shall not, by amendment of its certificate of incorporation or bylaws, or through reorganization, consolidation, merger, dissolution, issuance or sale of securities, sale of assets or any other voluntary action, willfully avoid or seek to avoid the observance or performance of any of the terms of the Warrants or this Agreement, and shall at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of Warrant holder under the Warrants and this Agreement against wrongful impairment. Without limiting the generality of the foregoing, the Company: (i) shall not set or increase the par value of any Warrant Shares above the amount payable therefor upon exercise, and (ii) shall take all actions that are necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of the Warrants.

 

	 	
Section 11.

	
Representations and Warranties of Warrant holder.

 

Warrant holder represents and warrants to the Company that, on the date hereof and on the date the Warrant holder exercises the Warrant pursuant to the terms of this Agreement:

 

(i) Warrant holder is an “accredited investor”, as such term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

(ii) Warrant holder understands that the Warrants and the Warrant Shares have not been registered under the Securities Act and acknowledges that the Warrants and the Warrant Shares must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration becomes available.

 

(iii) Warrant holder is acquiring the Warrants for Warrant holder’s own account for investment and not with a view to, or for sale in connection with, any distribution thereof.

 

  

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(iv) All the representations made by the Warrant holder on the date hereof in the Subscription Agreement between the Company and the Warrant holder shall be true and correct as of the date the Warrant holder exercises the Warrant.

 

	 	
Section 12.

	
No Rights or Liabilities as Stockholder.

 

No holder, as such, of any Warrant Certificate shall be entitled to vote, receive dividends or be deemed the holder of Common Stock which may at any time be issuable on the exercise of the Warrants represented thereby for any purpose whatever, nor shall anything contained herein or in any Warrant Certificate be construed to confer upon the holder of any Warrant Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise), or to receive notice of meetings or other actions affecting stockholders or to receive dividend or subscription rights, or otherwise, until such Warrant Certificate shall have been exercised in accordance with the provisions hereof and the receipt and collection of the Exercise Price and any other amounts payable upon such exercise by the Company. No provision hereof, in the absence of affirmative action by Warrant holder to purchase Warrant Shares shall give rise to any liability of such holder for the Exercise Price or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

	 	
Section 13.

	
Fractional Interests.

 

The Company shall not be required to issue fractional shares of Common Stock upon exercise of the Warrants or to distribute certificates that evidence fractional shares of Common Stock. If any fraction of a Warrant Share would, except for the provisions of this Section 13, be issuable on the exercise of a Warrant, the number of Warrant Shares to be issued by the Company shall be rounded to the nearest whole number, with one-half or greater being rounded up.

 

	 	
Section 14.

	
Definitions.

 

Unless the context otherwise requires, the terms defined in this Section 14, whenever used in this Agreement shall have the respective meanings hereinafter specified and words in the singular or in the plural shall each include the singular and the plural and the use of any gender shall include all genders.

 

“Business Day” shall mean any day on which banking institutions are generally open for business in Nevada.

 

“Common Stock” means the common stock of the Company.

 

“Exercise Price” shall be the price per Warrant Share at which Warrant holder is entitled to purchase Warrant Shares upon exercise of any Warrant determined in accordance with Section 7 and subject to adjustment as provided in Sections 8 and 16 hereof.

 

“Person” shall mean any corporation, association, partnership, joint venture, trust, organization, business, individual, government or political subdivision thereof or governmental body.

 

  

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“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal statute as at the time in effect, and any reference to a particular section of such Act shall include a reference to the comparable section, if any, of such successor federal statute.

 

	 	
Section 15.

	
Notices.

 

All notices, consents, requests, waivers or other communications required or permitted under this Agreement (each a “ Notice ”) shall be in writing and shall be sufficiently given (a) if hand delivered, (b) if sent by nationally recognized overnight courier, or (c) if sent by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:

 

if to the Company:

Gunpowder Gold Corp.

10 th Floor

3 Hardman Street, Manchester

United Kingdom, M3 3HF

if to Warrant holder, to its address in the Subscription Agreement.

or such other address as shall be furnished by any of the parties hereto in a Notice. Any Notice shall be deemed given upon receipt.

 

	 	
Section 16.

	
Supplements, Amendments and Waivers; Unilateral Changes by the Company.

 

This Agreement may be supplemented or amended only by a subsequent writing signed by each of the parties hereto (or their successors or permitted assigns), and any provision hereof may be waived only by a written instrument signed by the party charged therewith.

 

The Company shall have the right, in its sole and absolute discretion, to (i) accelerate the exercise date of this Warrant to a date which is prior to the first anniversary of the date hereof and/or (ii) reduce the Exercise Price. If the Company exercises its right hereunder, it shall provide notice thereof to the Warrant holder.

 

	 	
Section 17.

	
Successors and Assigns.

 

Except as otherwise provided herein, the provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and permitted assigns of the parties hereto. Warrants issued under this Agreement may be assigned by Warrant holder only to the extent such assignment satisfies the restrictions on transfer set forth in this Agreement; any attempted assignment of Warrants in violation of the terms hereof shall be void ab initio .

 

	 	
Section 18.

	
Termination.

 

This Agreement (other than Sections 7C, 11, and Sections 15 through 26, inclusive, and all related definitions, all of which shall survive such termination) shall terminate on the earlier of (i) the Warrant Expiration Date and (ii) the date on which all Warrants have been exercised.

 

  

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Section 19.

	
Governing Law; Jurisdiction.

 

A. Governing Law. This Agreement and each Warrant Certificate issued hereunder shall be governed by and construed in accordance with the laws of the State of Nevada and the federal laws of the United States applicable herein.

 

B. Submission to Jurisdiction. Each party to this Agreement hereby irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of the State of Nevada, and any appellate court from any thereof, as determined by the Company in its sole and absolute discretion, in respect of actions brought against it as a defendant, in any action, suit or proceeding arising out of or relating to this Agreement or the Warrant Certificates and Warrants to be issued pursuant hereto, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action, suit or proceeding may be heard and determined in such courts. Each of the parties hereto agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.

 

C. Venue. Each party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement, or the Warrant Certificates and Warrants to be issued pursuant hereto, in any court referred to in this Subsection B. Each of the parties hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action, suit proceeding in any such court and waives any other right to which it may be entitled on account of its place of residence or domicile.

 

	 	
Section 20.

	
Third Party Beneficiaries.

 

Each party intends that this Agreement shall not benefit or create any right or cause of action in or on behalf of any Person other than the parties hereto and their successors and permitted assigns.

 

	 	
Section 21.

	
Headings.

 

The headings in this Agreement are for convenience only and shall not affect the construction or interpretation of this Agreement.

 

	 	
Section 22.

	
Entire Agreement.

 

This Agreement, together with the Warrant Certificates and Exhibits, constitutes the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and shall supersede any prior agreements and understandings between the parties hereto with respect to such subject matter.

 

	 	
Section 23.

	
Expenses.

 

Each of the parties hereto shall pay its own expenses and costs incurred or to be incurred in negotiating, closing and carrying out this Agreement and in consummating the transactions contemplated herein, except as otherwise expressly provided for herein.

 

  

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Section 24.

	
Neutral Construction.

 

The parties to this Agreement agree that this Agreement was negotiated fairly between them at arm’s length and that the final terms of this Agreement are the product of the parties’ negotiations. Each party represents and warrants that it has sought and received legal counsel of its own choosing with regard to the contents of this Agreement and the rights and obligations affected hereby. The parties agree that this Agreement shall be deemed to have been jointly and equally drafting by them, and that the provisions of this Agreement therefore should not be construed against a party or parties on the grounds that such party or parties drafted or was more responsible for the drafting of any such provision(s).

 

	 	
Section 25.

	
Representations and Warranties.

 

The Company hereby represents and warrants to the Warrant holder that:

 

(a) the Company has all requisite corporate power and authority to (i) execute and deliver this Agreement and (ii) issue and sell the Common Stock upon the conversion thereof and carry out provisions of this Agreement. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization, execution and delivery of this Agreement, the performance of all obligations of the Company hereunder, and the authorization (or reservation for issuance), sale and issuance of the Common Stock to be sold hereunder has been taken or will be taken prior to the date hereof;

 

(b) this Agreement constitutes a valid and legally binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws relating to application affecting enforcement of creditor’s rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief of other equitable remedies;

 

(c) the Common Stock issuable upon the conversion thereof that is being purchased hereunder, when issued, sold and delivered in accordance with the terms of this Agreement for the consideration expressed herein, will be duly and validly issued, fully paid and non assessable and will be free of restrictions on transfer, other than restrictions on transfer under applicable state and federal securities laws;

 

(d) subject in part to the truth and accuracy of Warrant holder’s representations set forth in Section 11 of this Agreement, the offer, sale and issuance of the Common Stock issuable upon the conversion thereof as contemplated by this Agreement are exempt from the registration requirements of the Securities Act and the qualification or registration requirements of any state securities or other applicable blue sky laws; and

 

(e) the execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not result in any such violation, or be in conflict with or constitute, with or without the passage of time and giving of notice, either a default under any such provision or an event that results in creation of any lien, charge or encumbrance upon any assets of the Company or the suspension, revocation, impairment, forfeiture or non removal of any material permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties.

 

  

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Section 26.

	
Counterparts.

 

This Agreement may be executed in counterparts and by facsimile and each such counterpart shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

 

	  	
Gunpowder Gold Corp.

	  	  	  
	  	
By:   

	
 /s/ Neil Jason Pestell

	  	  	  
	  	
Name: Neil Jason Pestell

	  	  	  
	  	
Title: Chief Executive Officer, President, Secretary, and Treasurer

  

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EXHIBIT A

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH SUCH ACT AND LAWS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND CONDITIONS OF, AND MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH, A WARRANT AGREEMENT BETWEEN GUNPOWDER GOLD CORP. AND THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY.

 

NO. 235,294 WARRANTS

 

Form of

 

Warrant Certificate

 

 

GUNPOWDER GOLD CORP.

 

This Warrant Certificate certifies that NRG Enterprises Ltd.. a Non Us Resident, is the registered holder of 235,294 Warrants (the “ Warrant holder ”) to purchase shares (the “ Warrant Shares”) of Common Stock of Gunpowder Gold Corp. (the “ Company ”). Each Warrant entitles the holder, subject to the satisfaction of the conditions to exercise set forth in Section 7 of the Warrant Agreement referred to below, to purchase from the Company at any time or from time to time on and after April 15 2011, (the “Warrant Commencement Date”) and terminate on or prior to 5:00 p.m. on April 15, 2013 (the “Warrant Expiration Date ”) one fully paid and non assessable Warrant Share at the Exercise Price set forth in the Warrant Agreement. The number of Warrant Shares for which each Warrant is exercisable and the Exercise Price are subject to adjustment as provided in the Warrant Agreement.

 

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants to purchase Warrant Shares and are issued pursuant to a Warrant Agreement, dated as of April 8, 2011 (the “ Warrant Agreement ”), between the Company and NRG Enterprises Ltd.., which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Company and Warrant holder.

 

Warrant holder may exercise vested Warrants by surrendering this Warrant Certificate, with the Election to Purchase attached hereto properly completed and executed, together with payment of the aggregate Exercise Price, at the offices of the Company specified in Section 15 of the Warrant Agreement. If upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or its assignee a new Warrant Certificate evidencing the number of Warrants not exercised.

 

  

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This Warrant Certificate, when surrendered at the offices of the Company specified in Section 15 of the Warrant Agreement, by the registered holder thereof in person, by legal representative or by attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, for one or more other Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

 

 

The Company may deem and treat the registered holder hereof as the absolute owner of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof and for all other purposes, and the Company shall not be affected by any notice to the contrary.

 

 

WITNESS the signatures of the duly authorized officers of the Company.

 

Dated: April 8, 2011

 

	  	
Gunpowder Gold Corp.

	  	  	  
	  	
By:   

	
 /s/ Neil Jason Pestell

	  	  	  
	  	
Name: Neil Jason Pestell

	  	  	  
	  	
Title: Chief Executive Officer, President, Secretary, and Treasurer

  

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FORM OF

 

Election to Purchase

 

The undersigned hereby irrevocably elects to exercise _________ of the Warrants evidenced by the attached Warrant Certificate to purchase Warrant Shares, and herewith tenders (or is concurrently tendering) payment for such Warrant Shares in an amount determined in accordance with the terms of the Warrant Agreement. The undersigned requests that a certificate representing such Warrant Shares be registered in the name of , whose address is and that such certificate be delivered to , whose address is . If said number of Warrants is less than the number of Warrants evidenced by the Warrant Certificate (as calculated pursuant to the Warrant Agreement), the undersigned requests that a new Warrant Certificate evidencing the number of Warrants evidenced by this Warrant Certificate that are not being exercised be registered in the name of , whose address is and that such Warrant Certificate be delivered to , whose address is .

 

	  	
Dated:           ,

	  	  
	  	
Name of holder of Warrant Certificate:

	  	  
	  	  
	  	  
	  	  
	  	
(Please Print)

	  	  
	  	
Address:

	  	  
	  	  
	  	  
	  	  
	  	  
	  	
Signature:

	 	
Note: 

	
The above signature must correspond with the name as written in the first sentence of the attached Warrant Certificate in every particular, without alteration or enlargement or any change whatever, and if the certificate evidencing the Warrant Shares or any Warrant Certificate representing Warrants not exercised is to be registered in a name other than that in which this Warrant Certificate is registered, the signature above must be guaranteed.

Signature Guaranteed: _________________________

Dated:        ,

 

  

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