Document:

Unassociated Document

Exhibit 10.3

 

__________, 2011

 

Grassmere Acquisition Corporation

801 W. 47th Street

Suite 400

Kansas City, Missouri 64112

 

Re:           Initial Public Offering

 

Gentlemen:

 

This letter (“Letter Agreement”) is being delivered to you in accordance with the Underwriting Agreement (the “Underwriting Agreement”) entered into by and between Grassmere Acquisition Corporation, a Delaware corporation (the “Company”) and Lazard Capital Markets LLC, as representative of the several underwriters (the “Underwriters”), relating to an underwritten initial public offering (the “Public Offering”), of 5,000,000 of the Company’s units (the “Units”), each comprised of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and one warrant exercisable for one share of the Common Stock (each, a “Warrant”).  The Units sold in the Public Offering shall be quoted and traded on the Over-the-Counter Bulletin Board quotation system pursuant to a registration statement on Form S-1 and prospectus (the “Prospectus”) filed by the Company with the Securities and Exchange Commission (the “Commission”).  Certain capitalized terms used herein are defined in paragraph 6 hereof.

 

In order to induce the Company and the Underwriters to enter into the Underwriting Agreement and to proceed with the Public Offering and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby agrees with the Company as follows:

 

  

 

  

1.           The undersigned hereby agrees that in the event that the Company fails to consummate a Business Combination (as defined in the Underwriting Agreement) within 21 months from the date of the Prospectus, he or she shall take all reasonable steps to cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible, redeem 100% of the Common Stock sold as part of the Units in the Public Offering (the “Offering Shares”), at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest but net of franchise and income taxes payable (less up to $100,000 of such net interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and subject to the requirement that any refund of income taxes that were paid from the Trust Account which is received after the redemption shall be distributed to the former Public Stockholders, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and other requirements of applicable law.  The undersigned agrees that he or she will not propose any amendment to the Company’s amended and restated certificate of incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its public shares if the Company does not complete a Business Combination within 21 months from the date of the Prospectus unless the Company provides the Public Stockholders with the opportunity to redeem their shares of Common Stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including interest but net of franchise and income taxes payable and less any interest the Company may withdraw for working capital requirements, divided by the number of then outstanding Offering Shares.

 

2.           (a)  The undersigned agrees that if the Company seeks stockholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, he or she shall vote all the Founder Shares and any shares acquired by him or her in the Public Offering or the secondary public market in favor of such proposed Business Combination.

 

(b)           To the extent that the Underwriters do not exercise their over-allotment option to purchase an additional 750,000 shares of Common Stock (as described in the Prospectus), the undersigned agrees that he or she shall return to the Company for cancellation, at no cost, the number of Founder Shares held by him or her determined by multiplying 9,314 by a fraction, (i) the numerator of which is 750,000 minus the number of shares of the Common Stock purchased by the Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of which is 750,000.  The undersigned further agrees that to the extent that (a) the size of the Public Offering is increased or decreased and (b) the undersigned has either purchased or sold shares of the Common Stock or an adjustment to the number of Founder Shares has been effected by way of a stock split, stock dividend, reverse stock split, contribution back to capital or otherwise, in each case in connection with such increase or decrease in the size of the Public Offering, then (i) the references to 750,000 in the numerator and denominator of the formula in the immediately preceding sentence shall be changed to a number equal to 15% of the number of shares included in the Units issued in the Public Offering and (ii) the reference to 9,314 in the formula set forth in the immediately preceding sentence shall be adjusted proportionately by the percentage increase or decrease in the size of the Public Offering.  In addition, a portion of the Founder Shares held by him or her in an amount equal to 25% of the number of Founder Shares held by him or her immediately after the Public Offering (the “Earnout Shares”), shall be returned to the Company for cancellation, at no cost, pursuant to the following schedule: (i) unless the last sales price of the Company’s stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period within twenty-four (24) months following the closing of the Company’s initial Business Combination or the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of its stockholders having the right to exchange their shares of common stock for consideration in cash, securities or other property which equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), 50% of the Earnout Shares shall be returned to the Company for cancellation, and (ii) unless the last sales price of the Company’s stock equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period within thirty-six (36) months following the closing of the Company’s initial Business Combination or the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of its stockholders having the right to exchange their shares of common stock for consideration in cash, securities or other property which equals or exceeds $13.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like), 50% of the Earnout Shares shall be returned to the Company for cancellation.

 

  

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(c)           The undersigned acknowledges that he or she has no right, title, interest or claim of any kind in or to any monies held in the Trust Account or any other asset of the Company as a result of any liquidation of the Company with respect to the Founder Shares held by him or her.  The undersigned hereby further waives, with respect to any shares of the Common Stock held by him or her, any redemption rights he or she may have in connection with the consummation of a Business Combination, including, without limitation, any such rights available in the context of a stockholder vote to approve such Business Combination or in the context of a tender offer made by the Company to purchase shares of the Common Stock (although the undersigned shall be entitled to redemption and liquidation rights with respect to any shares of the Common Stock (other than the Founder Shares) he or she holds if the Company fails to consummate a Business Combination within 21 months from the date of the Prospectus).

 

(d)           In the case of any of the Founder Shares owned by the undersigned, until one year after the completion of the Company’s initial Business Combination or earlier if, subsequent to the Company’s initial Business Combination (such applicable period being the “Founder Lock-Up Period”), the last sales price of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s initial Business Combination the undersigned shall not, except as described in the Prospectus, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, with respect to, the Founder Shares owned by him or her, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Founder Shares owned by him or her, whether any such transaction is to be settled by delivery of the Common Stock or such other securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii).

 

(e)  Until 30 days after the completion of the Company’s initial Business Combination (“Private Placement Warrant Lock-Up Period”), the undersigned shall not, except as described in the Prospectus, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder, with respect to, the Private Placement Warrants and the respective Common Stock underlying the Private Placement Warrants, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of the Private Placement Warrants and the respective Common Stock underlying the Private Placement Warrants, whether any such transaction is to be settled by delivery of the Common Stock or such other securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii).

 

 

  

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(f)           Notwithstanding the provisions of paragraphs 2(d) and 2(e) herein, the undersigned may transfer the Founder Shares and/or Private Placement Warrants and the Common Stock underlying the Private Placement Warrants (i) to the Company’s officers or directors, any affiliate or family member of any of the Company’s officers or directors or any affiliate of Grassmere Acquisition Holdings, LLC (the "Sponsor") or to any member(s) of the Sponsor; (ii) by gift to a member of the undersigned’s immediate family or to a trust, the beneficiary of which is a member of the undersigned’s immediate family, an affiliate of the undersigned or to a charitable organization; (iii) by virtue of the laws of descent and distribution upon death of the undersigned; (iv) pursuant to a qualified domestic relations order; (v) in the event of the Company’s liquidation prior to the completion of the Company’s initial Business Combination; or (vi) in the event that, subsequent to the consummation of the Company’s initial Business Combination, the Company consummates a merger, stock exchange or other similar transaction that results in all of its stockholders having the right to exchange their shares of the Common Stock for cash, securities or other property; provided, however, that, in the case of clauses (i) through (iv), these permitted transferees enter into a written agreement with the Company agreeing to be bound by the transfer restrictions in paragraphs 2(d) and 2(e) herein, as the case may be.

 

(g)           Further, the undersigned agrees that after the Founder Lock-Up Period or the Private Placement Warrant Lock-Up Period, as applicable, has elapsed, the Founder Shares and/or Private Placement Warrants and the Common Stock underlying the Private Placement Warrants shall only be transferable or saleable pursuant to a sale registered under the Securities Act or pursuant to an available exemption from registration under the Securities Act. The Company and the undersigned each acknowledge that pursuant to that certain registration rights agreement to be entered into between the Company, the Sponsor and the Company’s independent directors, each of the holders of the Founder Shares and Private Placement Warrants may request that a registration statement relating to the Founder Shares and the Private Placement Warrants and the share of Common Stock underlying the Private Placement Warrants be filed with the Commission prior to the end of the Founder Lock-Up Period or the Private Placement Lock-Up Period, as the case may be; provided, however, that such registration statement does not become effective prior to the end of the Founder Lock-Up Period or the Private Placement Warrant Lock-Up Period, as applicable.

 

3.           The undersigned’s biographical information furnished to the Company is true and accurate in all respects and does not omit any material information with respect to the undersigned’s background.  The undersigned’s questionnaire furnished to the Company is true and accurate in all respects.  The undersigned represents and warrants that:

 

(a)           the undersigned is not subject to or a respondent in any legal action for, any injunction, cease-and-desist order or order or stipulation to desist or refrain from any act or practice relating to the offering of securities in any jurisdiction;

 

(b)           the undersigned has never been convicted of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any financial transaction or handling of funds of another person, or (iii) pertaining to any dealings in any securities and the undersigned is not currently a defendant in any such criminal proceeding; and

 

(c)           the undersigned has never been suspended or expelled from membership in any securities or commodities exchange or association or had a securities or commodities license or registration denied, suspended or revoked.

 

4.           Except as disclosed in the Prospectus, neither the undersigned nor any affiliate of the undersigned, shall receive any finder’s fee, reimbursement, consulting fee, monies in respect of any repayment of a loan or other compensation prior to, or in connection with any services rendered in order to effectuate the consummation of the Company’s initial Business Combination (regardless of the type of transaction that it is), other than the following:

 

  

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(a)           repayment of a loan of up to $376,527 made to the Company by the Sponsor and an affiliate of the Sponsor, pursuant to a Promissory Note, dated April 21, 2011 and a Promissory Note dated June 6, 2011 ;

 

(b)           payment of an aggregate of $15,000 per month to Grassmere Partners, LLC, for office space, secretarial and administrative services, pursuant to an Administrative Support Agreement, dated __________, 2011;

 

(c)           reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial Business Combination, so long as no proceeds of the Public Offering held in the Trust Account may be applied to the payment of such expenses prior to the consummation of a Business Combination, except that the Company may, for purposes of funding its working capital requirements (including paying such expenses), receive from the Trust Account up to $1,500,000 in interest income (net of franchise and income taxes payable; and

 

(d)           repayment of loans, if any, and on such terms as to be determined by the Company from time to time, made by the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers and directors to finance transaction costs in connection with an intended initial Business Combination, provided, that, if the Company does not consummate an initial Business Combination, a portion of the working capital held outside the Trust Account may be used by the Company to repay such loaned amounts so long as no proceeds from the Trust Account are used for such repayment; provided, however, that the Company may, for purposes of funding its working capital requirements (including repaying such loans), receive from the Trust Account up to $1,500,000 in interest income (net of taxes payable on such interest).

 

5.           The undersigned has full right and power, without violating any agreement to which he or she is bound (including, without limitation, any non-competition or non-solicitation agreement with any employer or former employer), to enter into this Letter Agreement and to serve as an officer of the Company or as a director on the board of directors of the Company, as applicable, and hereby consents to being named in the Prospectus as an officer and/or as a director of the Company, as applicable.

 

6.           As used in this Letter Agreement, (i) “Business Combination” shall mean a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses; (ii) “Founder Shares” shall mean the 1,437,500 shares of the Common Stock of the Company acquired by the Sponsor for an aggregate purchase price of $25,000, or approximately $0.01 per share, prior to the consummation of the Public Offering, of which 71,404 shares were subsequently transferred to the undersigned; (iii) “Private Placement Warrants” shall mean the Warrants to purchase up to 3,733,333 shares of the Common Stock of the Company that are acquired the sponsor and the independent directors of the Company for an aggregate purchase price of $2,800,000, or $0.75 per Warrant in a private placement that shall occur simultaneously with the consummation of the Public Offering; (iv) “Public Stockholders” shall mean the holders of securities issued in the Public Offering; and (v) “Trust Account” shall mean the trust fund into which a portion of the net proceeds of the Public Offering will be deposited.

 

7.           This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersede all prior understandings, agreements, or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby.  This Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by the parties hereto.

 

  

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8.           Neither party may assign either this Letter Agreement or any of its rights, interests, or obligations hereunder without the prior written consent of the other party.  Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee.  This Letter Agreement shall be binding on the undersigned and each of his or her heirs, personal representatives and assigns.

 

9.           This Letter 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.  The parties hereto (i) agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in the courts of New York City, in the State of New York, and irrevocably submits to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waives any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum.

 

10.         Any notice, consent or request to be given in connection with any of the terms or provisions of this Letter Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or facsimile transmission.

 

11.         This Letter Agreement shall terminate on the liquidation of the Company; provided, however, that this Letter Agreement shall earlier terminate in the event that the Public Offering is not consummated and closed by September 30, 2011.

 

[Signature page follows]

  

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	  	  	  	Sincerely,
	  	  	  	  	  
	  	  	  	
 

	
 

	  	  	  	  	  
	
Acknowledged and Agreed:

	  	  	  
	  	  	  	  
	
GRASSMERE ACQUISITION CORPORATION

	  	  	  
	  	  	  	  	  
	
By: 

	
 

	  	  	  
	  	
Name:     Brian M. Hagenhoff

	  	  	  
	  	
Title:       Chief Financial Officer

	  	  	  

  

7Exhibit 10.4

 

INVESTMENT MANAGEMENT TRUST AGREEMENT

 

This Agreement is made effective as of ____________ by and between Grassmere Acquisition Corporation, a Delaware corporation (the “Company”), and Continental Stock Transfer & Trust Company (the “Trustee”).

 

WHEREAS, the Company’s registration statement on Form S-1, No. 333-173930 (the “Registration Statement”) and prospectus (the “Prospectus”) for the initial public offering of the Company’s units (the “Units”), each of which consists of one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and one warrant to purchase the Company’s Common Stock (the “Warrants”) (such initial public offering hereinafter referred to as the “Offering”), has been declared effective as of the date hereof (the “Effective Date”) by the Securities and Exchange Commission; and

 

WHEREAS, the Company has entered into an Underwriting Agreement with Lazard Capital Markets LLC as representative of the several underwriters (the “Underwriters”) named therein (the “Underwriting Agreement”); and

 

WHEREAS, as described in the Registration Statement, $50,500,000 of the gross proceeds of the Offering and sale of the Private Placement Warrants (as defined in the Underwriting Agreement) (or $57,831,250 if the Underwriters’ over-allotment option is exercised in full) will be delivered to the Trustee to be deposited and held in a segregated trust account located in the United States (the “Trust Account”) for the benefit of the Company and the holders of the Company’s Common Stock included in the Units issued in the Offering as hereinafter provided (the amount to be delivered to the Trustee will be referred to hereinafter as the “Property,” the stockholders for whose benefit the Trustee shall hold the Property will be referred to as the “Public Stockholders,” and the Public Stockholders and the Company will be referred to together as the “Beneficiaries”); and

 

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

 

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 in the Trust Account at JPMorgan Chase Bank, N.A. and at a brokerage institution selected by the Trustee that is 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 written instruction of the Company 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, as amended, having a maturity of 180 days or less, or in money market funds meeting the conditions of paragraphs (c)(2), (c)(3), (c)(4) and (c)(5) of Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended, which invest only in direct U.S. government treasury obligations, as determined by the Company; it being understood that the Trust Account will earn no interest while account funds are uninvested awaiting the Company’s instructions hereunder;

 

(d)           Collect and receive, when due, all interest or other income arising from the Property, which shall become part of the “Property,” as such term is used herein;

 

(e)           Promptly notify the Company and Lazard Capital Markets LLC of all communications received by the Trustee with respect to any Property requiring action by the Company;

 

(f)           Supply any necessary information or documents as may be requested by the Company (or its authorized agents) in connection with the Company’s preparation of the tax returns relating to assets held in the Trust Account;

 

(g)           Participate in any plan or proceeding for protecting or enforcing any right or interest arising from the Property if, as and when instructed by the Company to do so;

 

(h)           Render to the Company monthly written statements of the activities of, and amounts in, the Trust Account reflecting all receipts and disbursements of the Trust Account;

 

(i)           Commence liquidation of the Trust Account only after and promptly after (x) receipt of, and only in accordance with, the terms of a letter from the Company (“Termination Letter”) in a form substantially similar to that attached hereto as either Exhibit A or Exhibit B, and complete the liquidation of the Trust Account and distribute the Property in the Trust Account only as directed in the Termination Letter and the other documents referred to therein (in the case of a liquidation pursuant to a Termination Letter in the form of Exhibit B, less up to $100,000 of all interest arising from the Property that may be released to the Company to pay dissolution expenses) or (y) __________1, if a Termination Letter has not been received by the Trustee prior to such date, in which case the Trust Account shall be liquidated in accordance with the procedures set forth in the Termination Letter attached as Exhibit B and the Property in the Trust Account distributed to the Public Stockholders of record as of such date (less up to $100,000 of all interest arising from the Property that may be released to the Company to pay dissolution expenses);

1 Insert date that is 21 months from the date of the Prospectus.

  

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(j)           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 (a “Tax Payment Withdrawal Instruction”), withdraw interest income earned on the Property from the Trust Account and distribute to the Company the amount requested by the Company to cover any franchise or income tax obligation owed by the Company as a result of assets of the Company or interest or other income earned on the Property, which amount shall be delivered directly to the Company by electronic funds transfer or other method of prompt payment, and the Company shall forward such payment to the relevant taxing authority; provided, however, that to the extent there is not sufficient cash in the Trust Account to pay such tax obligation, the Trustee shall liquidate such assets held in the Trust Account as shall be designated by the Company in writing to make such distribution; provided further that if the tax to be paid is a franchise tax, the written request by the Company to make such distribution shall be accompanied by a copy of the franchise tax bill from the State of Delaware for the Company and a written statement from the principal financial officer of the Company setting forth the actual amount payable.  The written request of the Company referenced above shall constitute presumptive evidence that the Company is entitled to said funds, and the Trustee shall have no responsibility to look beyond said request;

 

(k)           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 D (an “Interest Withdrawal Instruction”), distribute to the Company the amount requested by the Company to be used for working capital requirements; provided, however, that the aggregate amount of all such distributions pursuant to this Section 1(k) shall not exceed $1,500,000 in interest income (net of franchise and income taxes payable);

 

(l)           Upon written request from the Company, which may be given in a form substantially similar to that attached hereto as Exhibit E (a “Special Redemption Withdrawal Instruction”), distribute to the Company the amount requested by the Company to be used to redeem shares of Common Stock sold as part of the Units in the Offering (“Public Shares”) upon approval by the Company’s stockholders of any amendment to the Company’s Amended and Restated Certificate of Incorporation (and corresponding provisions of this Agreement) that would affect the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination (as defined below) within 21 months from the date of the Prospectus, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest but net of franchise and income taxes payable and less any interest the Company may withdraw pursuant to Section 1(k), divided by the number of then outstanding Public Shares (such redemptions, the “Special Redemptions”); provided, however, that to the extent there is not sufficient cash in the Trust Account to make such distribution the Trustee shall liquidate such assets held in the Trust Account as shall be designated by the Company in writing to make such distribution;

 

(m)           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 F (a “Permitted Purchase of Shares Withdrawal Instruction”), distribute to the Company the amount requested by the Company to be used to purchase up to 2,500,000 shares of the Common Stock, in the event the underwriters’ over-allotment option in the Offering is not exercised in full or up to 2,875,000 shares of the Common Stock in the event the underwriters’ over-allotment option in the Offering is exercised in full, not to exceed the per share amount then held in the Trust Account (or, if the over-allotment option is not exercised in full, but is exercised in part, the number of shares that may be purchased shall be increased above 2,500,000 proportionally in relation to the proportion of the over-allotment option which was exercised) (such purchase hereinafter referred to as the “Permitted Purchases”); provided, however, that to the extent there is not sufficient cash in the Trust Account to make such distribution the Trustee shall liquidate such assets held in the Trust Account as shall be designated by the Company in writing to make such distribution; and

 

  

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(n)           Not make any withdrawals or distributions from the Trust Account other than pursuant to Section 1(i), (j), (k), (l) or (m) above.

 

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

 

(a)           Give all instructions to the Trustee hereunder in writing, signed by the Company’s Chairman of the Board, President, Chief Executive Officer or Chief Financial Officer.  In addition, except with respect to its duties under Sections 1(i) through 1(m) hereof, the Trustee shall be entitled to rely on, and shall be protected in relying on, any verbal or telephonic advice or instruction which it, in good faith and with reasonable care, 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 Section 4 hereof, hold the Trustee harmless and indemnify the Trustee from and against any and all expenses, including reasonable counsel fees and disbursements, or losses suffered by the Trustee in connection with any action taken by it hereunder and in connection with any action, suit or other proceeding brought against the Trustee involving any claim, or in connection with any claim or demand, which in any way arises out of or relates to this Agreement, the services of the Trustee hereunder, or the Property or any interest earned on the Property, except for expenses and losses resulting from the Trustee’s gross negligence, fraud 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 2(b), 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 such 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, which fees shall be subject to modification by the parties from time to time.  It is expressly understood that the Property shall not be used to pay such fees unless and until it is distributed to the Company pursuant to Sections 1(j) through 1(m) hereof.  The Company shall pay the Trustee the initial acceptance fee and the first year annual fee at the consummation of the Offering.  The Trustee shall refund to the Company the annual fee (on a pro rata basis) with respect to any period after the liquidation of the Trust Account.  The Company shall not be responsible for any other fees or charges of the Trustee except as set forth in this Section 2(c) and as may be provided in Section 2(b) hereof;

 

  

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(d)           In connection with any vote of the Company’s stockholders regarding a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination involving the Company and one or more businesses (a “Business Combination”), or any amendment to this Agreement provide to the Trustee an affidavit or certificate of the inspector of elections for the stockholder meeting verifying the vote of such stockholders regarding such Business Combination or amendment;

 

(e)           Provide Lazard Capital Markets LLC with a copy of any Termination Letter(s) and/or any other correspondence that is sent to the Trustee with respect to any proposed withdrawal from the Trust Account promptly after it issues the same; and

 

(f)           Instruct the Trustee to make only those distributions that are permitted under this Agreement, and refrain from instructing the Trustee to make any distributions that are not permitted under this Agreement.

 

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

 

(a)           Take any action with respect to the Property, other than as directed in Section 1 hereof, and the Trustee shall have no liability to any party except for liability arising out of the Trustee’s gross negligence, fraud or willful misconduct;

 

(b)           Institute any proceeding for the collection of any principal and income arising from, or institute, appear in or defend any proceeding of any kind with respect to, any of the Property unless and until it shall have received instructions from the Company given as provided herein to do so and the Company shall have advanced or guaranteed to it funds sufficient to pay any expenses incident thereto;

 

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

 

(d)           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;

 

(e)           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 Trustee’s best judgment, except for the Trustee’s gross negligence, fraud or willful misconduct.  The Trustee may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Trustee, which counsel may be the Company’s 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 the Trustee believes, in good faith and with reasonable care, 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;

 

  

5

  

 

(f)           Verify the accuracy of the information contained in the Registration Statement,

 

(g)           Provide any assurance that any Business Combination entered into by the Company or any other action taken by the Company is as contemplated by the Registration Statement;

 

(h)           File information returns with respect to the Trust Account with any local, state or federal taxing authority or provide periodic written statements to the Company documenting the taxes payable by the Company, if any, relating to any interest income earned on the Property;

 

(i)           Prepare, execute and file tax reports, income or other tax returns and pay any taxes with respect to any income generated by, 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;

 

(j)           Verify calculations, qualify or otherwise approve the Company’s written requests for distributions pursuant to Sections 1(i) through 1(m) hereof; or

 

(k)           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.

 

4.           Trust Account Waiver.  The Trustee has no right of set-off or any right, title, interest or claim of any kind (“Claim”) to, or to any monies in, the Trust Account, and hereby irrevocably waives any Claim to, or to any monies in, the Trust Account that it may have now or in the future.  In the event the Trustee has any Claim against the Company under this Agreement, including, without limitation, under Section 2(b) or Section 2(c) hereof, the Trustee shall pursue such Claim solely against the Company and its assets outside the Trust Account and not against the Property or any monies in the Trust Account.

 

5.           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, pending which the Trustee shall continue to act in accordance with this Agreement.  At such time that the Company notifies the Trustee that a successor trustee has been appointed 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 (90) 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 and its obligations 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 2(b).

 

  

6

  

 

6.           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 confidential information, or of any change in its authorized personnel.  In executing funds transfers, the Trustee shall 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.  Except for any liability arising out of the Trustee’s gross negligence, fraud or willful misconduct, the Trustee shall not be liable for any loss, liability or expense resulting from any error in the information or transmission of the funds.

 

(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.  This Agreement may be executed in several original or facsimile counterparts, each one of which shall constitute an original, and together shall constitute but one instrument.

 

(c)           This Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof.  This Agreement or any provision hereof may only be changed, amended or modified (other than to correct a typographical error) by a writing signed by each of the parties hereto; provided, however, that any change, amendment or modification to any of Sections 1(i) through 1(m) shall additionally require the affirmative vote of 65% of the then outstanding Common Stock; and provided, further, that no change, amendment or modification to any of Sections 1(i) through 1(m) that would affect the substance or timing of the Company’s obligation to redeem 100% of the Public Shares if the Company does not complete a Business Combination within 21 months from the date of the Prospectus shall be effective with respect to any Public Stockholder unless such Public Stockholder was provided with the opportunity to obtain a Special Redemption of its Public Shares upon the effectiveness of such change, amendment or modification. The Trustee may require from counsel for the Company an opinion as to the propriety of any proposed amendment.

 

(d)           The parties hereto consent to the jurisdiction and venue of any state or federal court located in the City of New York, State of New York, for purposes of resolving any disputes hereunder.  AS TO ANY CLAIM, CROSS-CLAIM OR COUNTERCLAIM IN ANY WAY RELATING TO THIS AGREEMENT, EACH PARTY WAIVES THE RIGHT TO TRIAL BY JURY.

 

(e)           Any notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or by facsimile transmission:

 

  

7

  

if to the Trustee, to:

Continental Stock Transfer & Trust Company

17 Battery Place 8th Floor

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:

Grassmere Acquisition Corporation

801 W. 47th Street Suite 400

Kansas City, Missouri 64112

Attn: Brian M. Hagenhoff

Fax No.: (816) 531-0701

in each case, with copies to:

McDermott Will & Emery LLP

340 Madison Avenue

New York, New York 10173

Attn: Joel L. Rubinstein

Fax No.: (212) 547-5444

and

Polsinelli Shughart PC

700 W. 47th Street, Suite 1000

Kansas City, Missouri 64112

Attn: Scott M. Herpich, Esq.

Fax No.: (816) 753-1536

and

Lazard Capital Markets LLC

30 Rockefeller Plaza

New York, New York, 10020

Attn: General Counsel

Fax No.: (212) 641-2671

and

Greenberg Traurig, LLP

MetLife Building

200 Park Avenue

New York, NY 10166

Attn: Allen I. Annex, Esq.

Fax No.: (212) 801-6400

  

8

  

(f)           Each of the Company and the Trustee 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.

 

(g)           Each of the Company and the Trustee hereby acknowledges and agrees that Lazard Capital Markets LLC, on behalf of the Underwriters, is a third party beneficiary of this Agreement.

 

(h)           Except as specified herein, no party to this Agreement may assign its rights or delegate its obligations hereunder to any other person or entity.

 

[Signature Page Follows]

 

  

9

  

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:

	  	  	
Title:

	  	  	  
	  	
Grassmere Acquisition Corporation

	  	  	  
	  	
By:

	  
	  	  	
Name: Brian M. Hagenhoff

	  	  	
Title: Chief Financial Officer

  

10

  

SCHEDULE A

 

	
Fee Item

	 	
Time and method of payment

	 	
Amount

	
Initial acceptance fee

	 	
Initial closing of IPO by wire transfer

	 	
$3,000

	
Annual fee

	 	
First year, initial closing of IPO by wire transfer; thereafter on the anniversary of the effective date of the IPO by wire transfer or check

	 	
$5,000

	
Transaction processing fee for disbursements to Company pursuant to Sections 1 and 2.

	 	
Deduction by Trustee from accumulated income following disbursement made to Company under Section 2

	 	
$250

	
Paying Agent services as required pursuant to section 1(i) and 1(l).

	 	
Billed to Company upon delivery of service

	 	
Prevailing rates

 

  

 

  

EXHIBIT A

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust Company

17 Battery Place 8th Floor

New York, New York 10004

Attn: Steven G. Nelson

 

Re:           Trust Account No.       Termination Letter

 

Gentlemen:

 

Pursuant to Section 1(i) of the Investment Management Trust Agreement between Grassmere Acquisition Corporation (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of _______, 2011 (“Trust Agreement”), this is to advise you that the Company has entered into an agreement with ___________ (“Target Business”) to consummate a business combination with Target Business (“Business Combination”) on or about [insert date].  The Company shall notify you at least forty-eight (48) hours in advance of the actual date of the consummation of the Business Combination (“Consummation Date”).  Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.

 

In accordance with the terms of the Trust Agreement, we hereby authorize you to commence to liquidate all of the assets of the Trust Account on [insert date], and to transfer the proceeds into the trust checking account at JP Morgan Chase Bank, N.A. to the effect that, on the Consummation Date, all of funds held in the Trust Account will be immediately available for transfer to the account or accounts that the Company shall direct on the Consummation Date.  It is acknowledged and agreed that while the funds are on deposit in the trust checking account at JP Morgan Chase Bank, N.A. awaiting distribution, the Company will not earn any interest or dividends.

 

On the Consummation Date (i) counsel for the Company shall deliver to you written notification that the Business Combination is in the process of being consummated (the “Notification”) and (ii) the Company shall deliver to you a written instruction signed by the Company and Lazard Capital Markets LLC with respect to the transfer of the funds held in the Trust Account (the “Instruction Letter”).  You are hereby directed and authorized to transfer the funds held in the Trust Account immediately upon your receipt of the Notification 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 in writing 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.  Upon the distribution of all the funds, your obligations under the Trust Agreement shall be terminated.

 

  

 

  

 

In the event that the Business Combination is not consummated on the Consummation Date described in the notice thereof and we have not notified you on or before the original Consummation Date of a new Consummation Date, then upon receipt by the Trustee of written instructions from the Company, the funds held in the Trust Account shall be reinvested as provided in Section 1(c) of the Trust Agreement on the business day immediately following the Consummation Date as set forth in the notice as soon thereafter as possible.

 

	  	
Very truly yours,

	  	  
	  	
Grassmere Acquisition Corporation

	  	  	  
	  	
By: 

	  
	  	  	
Name:

	  	  	
Title:

cc:  Lazard Capital Markets LLC

  

2

  

EXHIBIT B

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust Company

17 Battery Place 8th Floor

New York, New York 10004

Attn: Steven G. Nelson

 

Re:           Trust Account No.       Termination Letter

 

Gentlemen:

 

Pursuant to Section 1(i) of the Investment Management Trust Agreement between Grassmere Acquisition Corporation (“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 Business (“Business Combination”) within the time frame specified in the Company’s certificate of incorporation, as described in the Company’s Prospectus relating to the Offering.  Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.

 

In accordance with the terms of the Trust Agreement, we hereby authorize you to liquidate all of the assets in the Trust Account on ____________, 20___ and to transfer the total proceeds into the trust checking account at JP Morgan Chase Bank, N.A. to await distribution to the Public Stockholders.  The Company has selected  __________2 as the record date for the purpose of determining the Public Stockholders entitled to receive their share of the liquidation proceeds.  You agree to be the Paying Agent of record and, in your separate capacity as Paying Agent, agree to distribute said funds directly to the Company’s Public Stockholders in accordance with the terms of the Trust Agreement and the certificate of incorporation of the Company.  Upon the distribution of all the funds, your obligations under the Trust Agreement shall be terminated.

 

	  	
Very truly yours,

	  	  
	  	
Grassmere Acquisition Corporation

	  	  	  
	  	
By: 

	  
	  	  	
Name:

	  	  	
Title:

cc:  Lazard Capital Markets LLC

2 Insert date that is 21 months from the date of the Prospectus.

  

 

  

EXHIBIT C

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust Company

17 Battery Place 8th Floor

New York, New York 10004

Attn: Steven G. Nelson

 

Re:           Trust Account No.       Tax Payment Withdrawal Instruction

 

Gentlemen:

 

Pursuant to Section 1(j) of the Investment Management Trust Agreement between Grassmere Acquisition Corporation (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), 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.  Capitalized terms used but not defined herein shall have the meanings set forth in the Trust Agreement.

 

The Company needs such funds to pay for the tax obligations as set forth on the attached tax return or tax statement.  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]

 

	  	
Very truly yours,

	  	  
	  	
Grassmere Acquisition Corporation

	  	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

cc:  Lazard Capital Markets LLC

  

 

  

EXHIBIT D

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust Company

17 Battery Place 8th Floor

New York, New York 10004

Attn: Steven G. Nelson

 

Re:           Trust Account No.       Interest Withdrawal Instruction

 

Gentlemen:

 

Pursuant to Section 1(k) of the Investment Management Trust Agreement between Grassmere Acquisition Corporation (“Company”)  and Continental Stock Transfer & Trust Company (“Trustee”), dated as of _________, 2011 (“Trust Agreement”), this is to advise you that the Company hereby requests that you deliver to the Company $__________ of the interest, net of franchise and income taxes payable, earned on the Property as of the date hereof, which does not exceed, in the aggregate with all such prior disbursements pursuant to Section 1(k), if any, the maximum amount set forth in Section 1(k).

 

The Company needs such funds to cover working capital requirements.  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]

 

	  	
Very truly yours,

	  	  
	  	
Grassmere Acquisition Corporation

	  	  	  
	  	
By:

	  
	  	  	
Name:

	  	  	
Title:

cc:  Lazard Capital Markets LLC

  

 

  

EXHIBIT E

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust Company

17 Battery Place 8th Floor

New York, New York 10004

Attn: Steven G. Nelson

 

Re:           Trust Account No.       Early Redemption Withdrawal Instruction

 

Gentlemen:

 

Pursuant to Section 1(l) of the Investment Management Trust Agreement between Grassmere Acquisition Corporation (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of ________, 2011 (“Trust Agreement”), this is to advise you that the Company hereby requests that you deliver to the Company $____________ to fund the Special Redemptions (as defined in the Trust Agreement).

 

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]

 

	  	
Very truly yours,

	  	  
	  	
Grassmere Acquisition Corporation

	  	  	  
	  	
By: 

	  
	  	  	
Name:

	  	  	
Title:

cc:  Lazard Capital Markets LLC

  

 

  

EXHIBIT F

 

[Letterhead of Company]

 

[Insert date]

 

Continental Stock Transfer & Trust Company

17 Battery Place 8th Floor

New York, New York 10004

Attn: Steven G. Nelson

 

Re:           Trust Account No.       Permitted Purchase of Shares Withdrawal Instruction

 

Gentlemen:

 

Pursuant to Section 1(m) of the Investment Management Trust Agreement between Grassmere Acquisition Corporation (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of ________, 2011 (“Trust Agreement”), this is to advise you that the Company hereby requests that you deliver to the Company $____________ to fund the Permitted Purchases (as defined in the Trust Agreement).

 

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]

 

	  	
Very truly yours,

	  	  
	  	
Grassmere Acquisition Corporation

	  	  	  
	  	
By: 

	  
	  	  	
Name:

	  	  	
Title:

cc:  Lazard Capital Markets LLC

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