Document:

Unassociated Document

 

EXHIBIT 10.2

 

                     __, 2011

 

China Growth Equity Investment Ltd.

A12 Jianguomenwai Avenue

NCI Tower, Suite 1602

Beijing, PRC 100022

 

Deutsche Bank Securities Inc.

300 South Grand Avenue

Los Angeles, California 90071

	
Re:

	  	
Initial Public Offering

 

Gentlemen:

 

This letter (“Letter Agreement”) is being delivered to you in accordance with the Underwriting Agreement (the “ Underwriting Agreement ”) to be entered into by and between China Growth Equity Investment Ltd., a Cayman Islands limited life exempted company (the “ Company ”), and Deutsche Bank Securities Inc., as representative of the several underwriters (the “ Underwriters ”), relating to an underwritten initial public offering (the “ Offering ”) of 6,000,000 of the Company’s units (the “ Units ”), each comprised of one of the Company’s ordinary shares, par value $0.001 per share (the “Ordinary Shares”), and one warrant exercisable for one Ordinary Share (each, a “ Warrant ”). The Units sold in the Offering shall be quoted and traded on the Nasdaq Capital Market 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 11 hereof.

 

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

 

1. The Undersigned agrees that if the Company seeks stockholder approval of a proposed Business Combination, then in connection with such proposed Business Combination, it (i) shall vote all of the undersigned’s shares in accordance with the majority of the votes cast by the Public Stockholders and (ii) shall vote any shares acquired by it in the Offering or the secondary public market in favor of such proposed Business Combination.

 

2. The Undersigned hereby agrees that in the event that the Company fails to consummate a Business Combination within 24 months from the closing of the Offering, the Undersigned 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 Public Shares, at a per-share price, payable in cash, equal to the aggregate amount including interest then on deposit in the Trust Account, but net of any taxes payable, divided by the number of Public Shares then outstanding, and (iii) as promptly as reasonably possible following such redemption, dissolve and liquidate, subject in each case to the Company’s obligations under the laws of the Cayman Islands to provide for claims of creditors and other requirements of applicable law.

 

[For Initial Shareholders Only]

 

3. The Undersigned acknowledges that he 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 undersigned’s shares. The Undersigned hereby further waives, with respect to any Ordinary Shares, any redemption rights it 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 Ordinary Shares (although the Undersigned shall be entitled to redemption and liquidation rights with respect to any Ordinary Shares (other than the Founder Shares) it holds if the Company fails to consummate a Business Combination within 24 months from the date of the closing of the Offering).

 

  

  

  

 

4. In the event of the liquidation of the Trust Account, the Undersigned agrees, jointly and severally, to indemnify and hold harmless, jointly and severally, the Company against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all legal or other expenses reasonably incurred in investigating, preparing or defending against any litigation, whether pending or threatened, or any claim whatsoever) to which the Company may become subject as a result of any claim by (i) any third party for services rendered or products sold to the Company or (ii) a prospective target business with which the Company has entered into an acquisition agreement with (a “ Target ”); provided , however , that such indemnification of the Company shall apply only to the extent necessary to ensure that such claims by a third party for services rendered (other than the Company’s independent public accountants) or products sold to the Company or a Target do not reduce the amount of funds in the Trust Account to below $9.95 per Ordinary Share sold in the Offering (the “ Offering Shares ”) (or approximately $9.92 per Offering Share if the underwriters’ over-allotment option, as described in the Prospectus, is exercised in full, or such pro rata amount in between $9.92 and $9.95 per Offering Share that corresponds to the portion of the over-allotment option that is exercised), and provided , further , that only if such third party or Target has not executed an agreement waiving claims against and all rights to seek access to the Trust Account whether or not such agreement is enforceable. In the event that any such executed waiver is deemed to be unenforceable against such third party, the Undersigned shall not be responsible for any liability as a result of any such third party claims. Notwithstanding any of the foregoing, such indemnification of the Company by the Undersigned shall not apply as to any claims under the Company’s obligation to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. The Undersigned shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within 15 days following written receipt of notice of the claim to the Undersigned, the Undersigned notifies the Company in writing that the Undersigned shall undertake such defense.

 

5. To the extent that the Underwriters do not exercise their over-allotment option to purchase an additional 900,000 shares of the Ordinary Shares (as described in the Prospectus), the Initial Shareholder agrees to return its pro rata portion of the 225,000 shares held by such shareholder.

 

6. (a) In order to minimize potential conflicts of interest that may arise from multiple corporate affiliations, the Undersigned agrees that until the earliest of the Company’s initial Business Combination, liquidation or such time as the Undersigned ceases to be an officer, director or shareholder of the Company, he, she or it shall present to the Company for its consideration, prior to presentation to any other entity, any suitable business opportunity which may reasonably be required to be presented to the Company, subject to any pre-existing fiduciary or contractual obligations the Undersigned might have.

 

    (b) The Undersigned understands that the Company may effect a Business Combination with a single target business or multiple target businesses simultaneously and agrees that he shall not participate in the formation of, or become an officer or director of, any blank check company until the Company has entered into a definitive agreement regarding its initial Business Combination or the Company has failed to complete an initial Business Combination within 24 months from the closing of the Offering; provided , however , that nothing contained herein shall override the Undersigned’s fiduciary obligations to any entity with which he is currently directly or indirectly associated or affiliated or by whom he is currently employed.

 

    (c) The Undersigned hereby agrees and acknowledges that (i) each of the Underwriters and the Company would be irreparably injured in the event of a breach by the Undersigned of his obligations under paragraphs 6(a) and/or 6(b) herein, (ii) monetary damages may not be an adequate remedy for such breach and (iii) the non-breaching party shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach.

 

  

  

  

 

[Applies to the Initial Shareholder]

 

7. (a) Until one year after the completion of the Company’s initial Business Combination (such applicable period being the “ 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 Commission promulgated thereunder, with respect to the Undersigned’s Shares, (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 Undersigned’s Shares, whether any such transaction is to be settled by delivery of the Ordinary Shares or such other securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii).  Not withstanding the foregoing, (i) 50% of the Undersigned’s Shares shall be released from the Lock-Up Period if  the last sales price of the Ordinary Shares 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, and (ii) 50% of the Undersigned’s Shares shall be released from the Lock-Up Period if  the last sales price of the Ordinary Shares equals or exceeds $15.00 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.

 

[Applies to the sponsor who purchases warrants]

 

    (b) Until 30 days after the completion of the Company’s initial Business Combination (“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 Undersigned’s Warrants and the respective Ordinary Shares underlying the Undersigned’s 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 Undersigned’s Warrants and the respective Ordinary Shares underlying the Undersigned’s Warrants, whether any such transaction is to be settled by delivery of the Ordinary Shares or such other securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii).

 

[Applies to all officers, directors and initial shareholders]

During the period commencing on the date of the Underwriting Agreement and ending 180 days after the consummation of the Offering, the undersigned shall not (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 promulgated thereunder, with respect to, any Units, Ordinary Shares, Warrants or any securities convertible into, or exercisable, or exchangeable for, Ordinary Shares, (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 Units, Ordinary Shares, Warrants or any securities convertible into, or exercisable, or exchangeable for, Ordinary Shares, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii).

 

    (c) Notwithstanding the provisions of paragraphs 7(a), 7(b) and 7(c) herein, the Undersigned may transfer the Undersigned’s Shares and/or Undersigned’s Warrants and the respective Ordinary Shares underlying the Undersigned’s 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 the Undersigned or to any limited partner(s) of the Undersigned; (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) in by virtue of the laws of descent and distribution upon death of the Undersigned; (iv) pursuant to a qualified domestic relations order; (v)  with respect to limited liability companies and partnerships to their respective members or partners, (vi) by certain pledges to secure obligations incurred in connection with purchases of our securities, or (vii) by private sales made at or prior to the consummation of our initial business combination at prices no greater than the price at which the shares were originally purchased;  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 7(a) and 7(b) herein, as the case may be.

 

    (d) Further, the Undersigned agrees that after the Lock-Up Period, as applicable, has elapsed, the Undersigned’s Shares and the Undersigned’s Warrants and the respective Ordinary Shares underlying such 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, the Undersigned acknowledges that pursuant to that certain registration rights agreement to be entered into between the Company, the Undersigned’s and the Undersigned, the Undersigned may request that a registration statement relating to the Founder Shares, and the Sponsor Warrants and/or the shares of the Ordinary Shares underlying the Undersigned’s Warrants be filed with the Commission prior to the end of the Lock-Up Period, as the case may be; provided , however , that such registration statement does not become effective prior to the end of the Lock-Up Period, as applicable.

 

    (e) The Undersigned and the Company understands and agrees that the transfer restrictions set forth in this paragraph 7 shall supersede any and all transfer restrictions relating to (i) the Undersigned’s Shares set forth in that certain Securities Purchase Agreement, effective as of [__________], by and between the Company and the Undersigned, and (ii) the Undersigned’s Warrants set forth in that certain Undersigned’s Warrants Purchase Agreement, effective as of[________], by and between the Company and the Undersigned’s.

 

8. 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 questionnaires 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.

 

9. Except as disclosed in the Prospectus, neither the Founder, the Sponsor, any affiliate of the Founder or the Sponsor, nor any director or officer of the Company, 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:

 

    (a) repayment of a $200,000 loan made to the Company by the Founder, pursuant to a Promissory Note dated January 12, 2010;

 

    (b) payment of an aggregate of $10,000 per month to Chum Capital Group Limited, an affiliate of the Founder, 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 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 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 interest income (net of taxes payable on such interest)

 

10. The undersigned has full right and power, without violating any agreement to which he or it 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, in the case of the Founder, to serve as chairman of the board of directors of the Company, and hereby consents to being named in the Prospectus as an officer and director of the Company.

 

11. As used herein, (i) “Business Combination” shall mean the acquisition by the Company, directly or indirectly, whether by merger, share capital exchange, asset or share acquisition, plan of arrangement, recapitalisation, reorganisation or other similar type of transaction, of an operating business, or control of such operating business through contractual arrangements, which is an operating business having its principal business and/or material operations in the People's Republic of China; (ii) “ Founder Shares ” shall mean the 1,725,000 Ordinary Shares of the Company acquired by the Sponsor for an aggregate purchase price of $25,000, or approximately $0.013 per share, prior to the consummation of the Offering; (iii) “ Sponsor Warrants ” shall mean the Warrants to purchase up to 3,966,667 Ordinary Shares of the Company that are acquired by the Sponsor for an aggregate purchase price of $2.975 million, or approximately $0.75 per Warrant in a private placement that shall occur simultaneously with the consummation of the Offering; (iv) “ Public Stockholders ” shall mean the holders of securities issued in the Offering; (v) “ Trust Account ” shall mean the trust fund into which a portion of the net proceeds of the Offering shall be deposited; and (vi) “ Public Shares ” shall mean the ordinary shares which are being sold as part of the units in offering.

 

12. This Letter Agreement, and the exhibits thereto, constitute 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 all parties hereto.

 

  

  

  

 

13. No party hereto 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 each of the Founder and the Sponsor and each of their respective successors, heirs, personal representatives and assigns.

 

14. 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 parities hereto (i) all 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 County, 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.

 

15. 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.

 

16. This Letter Agreement shall terminate on the earlier of (i) the expiration of the Founder Lock-up Period or the Sponsor Lock-Up Period, whichever is longer, or (ii) the liquidation of the Company; provided , however , that this Letter Agreement shall earlier terminate in the event that the Offering is not consummated and closed by December 31, 2011, provided further  that paragraph 4 of this Letter Agreement shall survive such liquidation.

 

[Underlined paragraphs 17 and 18 herein to apply only to Chum Capital Group Limited]

 

17. From the consummation of the Offering until the earlier of (i) the consummation of an Initial Business Combination and (ii) the Company’s liquidation (the “Right of First Refusal Period”), Chum Capital Group Limited shall first present for consideration to the Company any business combination opportunity involving the potential acquisition of a controlling interest in any entity where the value of such investment is in excess of $25 million or where there target of such business combination opportunity is an entity that is seeking to consummate a public offering. During the Right of First Refusal Period, Chum Capital Group Limited (a) will first offer, and will cause such companies or other entities under its management or control to first offer any such business combination opportunity to the Company and (b) will not, and will cause each company or other entity under its or control not to, pursue such business combination opportunity unless and until the independent directors of the Company’s board of directors have determined for any reason that the Company will not pursue such opportunity.

 

18. In the event of the liquidation of the Company, the undersigned agrees to advance the Company the funds necessary to complete the Company’s liquidation to the extent that the Company does not have sufficient funds to complete such liquidation outside of the Trust Account (up to a maximum of $15,000). The undersigned agrees not to seek repayment of such expenses from the Company or its shareholders.

 

[Signature page follows]

 

  

  

  

   

	  	
Sincerely,

	  
	  	  	  
	  	
[_________]

	  

 

	  	
By:  

	  	  

 

	  	  	  

 

Acknowledged and Agreed:

 

	
CHINA GROWTH EQUITY INVESTMENT LTD. 

	  	  
	 	 	 
	
By:Unassociated Document

EXHIBIT 10.3

 

INVESTMENT MANAGEMENT TRUST AGREEMENT

 

This Agreement is made effective as of                     , 2011 by and between China Growth Equity Investment Ltd. (the “ Company ”) and American Stock Transfer & Trust Company (the “ Trustee ”).

 

WHEREAS, the Company’s registration statement, as amended on Form S-1, No. 333-173323 (the “Registration Statement ”) and prospectus (the “ Prospectus ”) for the initial public offering of the Company’s units (the “ Units ”), which consist of one share of the Company’s ordinary shares, par value $0.001 per share (the “ Ordinary Shares”) and one warrant to purchase the Company’s Ordinary Shares (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 Deutsche Bank Securities Inc. as representative of the several underwriters (the “ Underwriters ”) named therein (the “ Underwriting Agreement ”); and

 

WHEREAS, as described in the Registration Statement, $62,975,000 of the gross proceeds of the Offering and sale of the Insider Warrants (as defined in the Underwriting Agreement) (or $71,975,000 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 (the “ Trust Account ”) for the benefit of the Company and the holders of the Company’s Ordinary Shares underlying 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 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 ”) (capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Registration Statement); 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.

 

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 JP Morgan Chase, 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 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, as amended, having a maturity of 180 days or less, or in money market funds 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 amended and that invest solely in U.S. government treasury bill with a maturity of 180 days or less, as determined by the Company;

 

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

 

 (e) Promptly notify the Company and Deutsche Bank Securities Inc. 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 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  signed on behalf of the Company by its Chief Executive Officer or Chairman of the board of directors (the “ Board ”) or other authorized officer of the Company, 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. The Trustee understands and agrees that, except as provided in this Section 1(i)  and in  Section 1(n) , disbursements from the Trust Account shall be made only pursuant to the terms of a duly executed Tax Payment Withdrawal Instruction, Interest Withdrawal Instruction or Permitted Purchase of Shares Withdrawal Instruction, as set forth in  Section 1(j) , 1(k) , or  1(l)  respectively, as the case may be;   provided,  however, that in the event the Trustee receives a Termination Letter in a form substantially similar to Exhibit B  hereto, or if the Trustee begins to liquidate the Property because it has received no such Termination Letter by the date that is 24 months from the closing of the offering, or on such other date as may be determined in the Company’s memorandum and articles of association following the liquidation of the Property, the Trustee shall keep the Trust Account open until the earliest to occur of (i) twelve (12) months following the date the Property has been distributed to the Public Shareholders or (ii) the Trustee’s receipt of a letter in a form substantially similar to Exhibit D  hereto.  The provisions of this Section 1(i)  may not be modified, amended or deleted under any circumstances;

 

(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 an “Interest Withdrawal Instruction ”), the Trustee shall distribute to the Company the amount requested by the Company to be used for working capital requirements.

 

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(l)  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, including an initial acceptance fee, an annual fee and a transaction processing fee for each disbursement made pursuant to Sections 1(j) and 1(l), and the usual and customary service fees of the Trustee as paying agent (“ Paying Agent ”) pursuant to Section 1(k)  hereof, 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(l)  hereof. The Company shall pay the Trustee the initial acceptance fee and the first annual fee at the consummation of the Offering and thereafter on the anniversary of the Effective Date. 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;

 

 (d) In connection with any vote of the Company’s Public Shareholders 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 ”), provide to the Trustee an affidavit or certificate of the inspector of elections for the shareholder meeting verifying the vote of the Public Shareholders, if applicable, regarding such Business Combination;

 

 (e) Provide Deutsche Bank Securities Inc. with a copy of any Termination Letter(s) and/or any other correspondence that the Company sends to the Trustee with respect to any proposed withdrawal from the Trust Account promptly after it issues the same;

 

 (f) In the event the Company is entitled to receive a tax refund on its income tax obligation, and promptly after the amount of such refund is determined on a final basis, provide the Trustee with notice in writing (with a copy to Deutsche Bank Securities Inc.) of the amount of such income tax refund; and

 

 (g) 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 for:

 

 (a) Taking 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) Instituting 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) Refunding any depreciation in principal of any Property;

 

 (d) Assuming 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) 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 whether to the other parties hereto or anyone else. 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 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) to 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;

 

  

  

  

 

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

 

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

 

 (h) Filing information returns on behalf of the Trust Account with any local, state or federal taxing authority or providing 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) Preparing, executing and filing tax reports, income or other tax returns and paying any taxes with respect to any income earned 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 (it being expressly understood that, as set forth in Section 1(j) hereof, if there is any income tax obligation relating to the income of the Property in the Trust Account, then, only at the written instruction of the Company, the Trustee shall make funds available in cash from the Property in the Trust Account in 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 or other method of prompt payment, and the Company shall forward such payment to the appropriate taxing authority; and

 

 (j) Verifying calculations, qualifying or otherwise approving the Company’s written requests for distributions pursuant to Sections 1(j)  through 1(l)  hereof.

 

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 in the future. In the event the Trustee has any Claim against the Company under this Agreement, including, without limitation, under Section 2(b)  hereof, the Trustee shall pursue such Claim solely against the Company 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. 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 (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 (which section may not be amended under any circumstances) and distributed the Property in accordance with the provisions of the Termination Letter, thereafter this Agreement shall terminate except with respect to Section 2(b) .

 

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. 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.

 

 (c) This Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. Except for Section 1(i)  hereof (which section may not be amended under any circumstances), 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.

 

 (d) This Agreement or any provision hereof may only be changed, amended or modified pursuant to Section 6(c) hereof with the Consent of the Public Shareholders; provided , however , that no such change, amendment or modification may be made to Section 1(i)  hereof (which section may not be amended under any circumstances), it being the specific intention of the parties hereto that each Public Stockholder is, and shall be, a third party beneficiary of this Section 6(d)  with the same right and power to enforce this Section 6(d)  as either of the parties hereto. For purposes of this Section 6(d) , the “ Consent of the Public Shareholders ” means receipt by the Trustee of a certificate from the inspector of elections of the stockholder meeting certifying that either (a) the Public Shareholders of record as of a record date established in accordance with the laws of the Cayman Islands, who hold sixty-five percent (65%) or more of all then outstanding Ordinary Shares, have voted in favor of such change, amendment or modification, or (b) the Public Shareholders of record as of the record date who hold sixty-five percent (65%) or more of all then outstanding Ordinary Shares, have delivered to such entity a signed writing approving such change, amendment or modification. Except for any liability arising out of the Trustee’s gross negligence, fraud or willful misconduct, the Trustee may rely conclusively on the certification from the inspector or elections referenced above and shall be relieved of all liability to any party for executing the proposes amendment in reliance thereon.

 

 (e) 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.

 

 (f) 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:

 

if to the Trustee, to:

 

American Stock Transfer & Trust Company

50 Maiden Lane

New York, New York 10038

 

if to the Company, to:

 

China Growth Equity Investment Ltd.

A12 Jianguomenwai Avenue

NCI Tower, Suite 1602

Beijing, PRC 100022

 

in either case with a copy to:

 

Deutsche Bank Securities Inc.

300 South Grand Avenue

Los Angeles, California 90071

 

  

  

  

 

Deutsche Bank Securities Inc.

300 South Grand Avenue, 40th floor

Los Angeles, CA  90071

Attn: Stan Budeshtsky

Fax: (213)9852425

And

Skadden, Arps, Slate, Meagher & Flom LLP

300 South Grand Avenue, Suite 3400

Los Angeles, California 90071

Attn: Gregg A. Noel, Esq.

Fax: (213) 687-5600

 

 (g) 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.

 

 (h) Each of the Company and the Trustee hereby acknowledge that the Public Shareholders, solely for purposes of Sections 6(c)  and 6(d)  hereof, are third party beneficiaries of this Agreement.

 

[Signature Page Follows]

 

  

  

  

 

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

 

	  	
American Stock Transfer & Trust Company, as Trustee

	  	  
	  	  	  	  
	  	  	
By:

	  	  	  	  
	  	  	
Name:

	  	  	  	  
	  	  	
Title:

	  	  	  	  
	  	  	  	  	  	  	  
	  	  	
China Growth Equity Investment Ltd.

	  	  
	  	  	  	  	  	  	  
	  	  	
By:

	  	  	  	  

 

  

  

  

 

SCHEDULE A

 

	  	  	
Time and method of

	  	  
	
Fee Item

	  	
payment

	  	
Amount

	
Initial acceptance fee.

	  	
Initial closing of Offering by wire transfer.

	  	
$

	
[___]

	  
	  	  	  	  	  	  	  
	
Annual fee.

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

	  	
$

	
[___]

	  
	  	  	  	  	  	  	  
	
Transaction processing fee for disbursements to Company under Sections 1(j)   and 1(l) .

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

	  	
$

	
[___]

	  
	  	  	  	  	  	  	  
	
Paying Agent services for distributions made to shareholders pursuant to Section 1(k) .

	  	
Liquidation of the Trust Account pursuant to Section 1(i) and distribution of income tax refunds, as directed by the Company pursuant Section 1(k)  and letter instruction in the form of Exhibit D.

	  	
Usual and customary service fees from time to time applicable to Paying Agent services of Trustee.

 

  

  

  

 

EXHIBIT A

 

[Letterhead of Company]

 

[Insert date]

 

American Stock Transfer & Trust Company

50 Maiden Lane

New York, New York 10038

 Attn: [____________________]

	
 Re:

	  	
Trust Account No.      Termination Letter

 

Gentlemen:

 

Pursuant to Section 1(i) of the Investment Management Trust Agreement between China Growth Equity Investment Ltd. (“ Company ”) and American Stock Transfer & Trust Company (“ Trustee ”), dated as of                      , 2011 (“ Trust Agreement ”), this is to advise you that the Company has entered into an agreement (“ Business 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, 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, 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 Deutsche Bank Securities Inc. 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 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, net of any payments necessary for reasonable unreimbursed expenses related to liquidating the Trust Account, 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,

	  	  
	  	  	  	  	  	  	  
	  	  	
China Growth Equity Investment Ltd.

	  	  
	  	  	  	  	  	  	  
	  	  	
By:

	  	  	  	  
	  	  	
Name:

	  	  	  	  
	  	  	
Title:

	  	  	  	  

 

cc: Deutsche Bank Securities Inc.

 

  

  

  

 

EXHIBIT B

 

[Letterhead of Company]

 

[Insert date]

American Stock Transfer & Trust Company

50 Maiden Lane

New York, New York 10038

	
           Re:

	  	
Trust Account No.       Termination Letter                       

 

Gentlemen:

 

Pursuant to Section 1(i) of the Investment Management Trust Agreement between China Growth Equity Investment Ltd. (“ Company ”) and American 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 (“ Business Combination ”) within the time frame specified in the Company’s Memorandum and Articles of Association, 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, N.A. to await distribution to the remaining Public Shareholders. The Company has selected the date that is 24 months from the closing of the Offering as the record date for the purpose of determining the remaining Public Shareholders 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 Shareholders in accordance with the terms of the Trust Agreement and the Memorandum and Articles of Association of the Company. Upon the distribution of all the funds, net of any payments necessary for reasonable unreimbursed expenses related to liquidating the Trust Account, your obligations under the Trust Agreement shall be terminated, except to the extent otherwise provided in Section 1(k) of the Trust Agreement.

  

	  	  	
Very truly yours,

	  	  
	  	  	  	  	  	  	  
	  	  	
China Growth Equity Investment Ltd.

	  	  
	  	  	  	  	  	  	  
	  	  	
By:

	  	  	  	  
	  	  	
Name:

	  	  	  	  
	  	  	
Title:

	  	  	  	  

 

cc: Deutsche Bank Securities Inc.

 

  

  

  

 

EXHIBIT C

 [Letterhead of Company]

 

[Insert date]

 

American Stock Transfer & Trust Company

50 Maiden Lane

New York, New York 10038

 

	
          Re:

	  	
Trust Account No.                   

 

Gentlemen:

 

Pursuant to Section 1(l) of the Investment Management Trust Agreement between China Growth Equity Investment Ltd. (“ Company ”) and American 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(l) , if any, the maximum amount set forth in Section 1(l) .

 

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,

	  
	  	  	  
	  	
China Growth Equity Investment Ltd.

	  
	  	  	  
	  	
By:  

	  	  
	  	
Name:  

	  	  	  
	  	
Title:  

	  	  	  

 

cc: Deutsche Bank Securities Inc.

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