Form of Letter Agreement for ASM SPAC(1) Limited]
[Form
of
Letter Agreement for ASM SPAC(1) Limited]
[date]
ASM
Acquisition Company Limited
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UBS
Securities LLC
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| Re: |
Initial
Public Offering of ASM Acquisition Company
Limited
|
Ladies
and Gentlemen:
This
letter is being delivered to you in accordance with the Underwriting Agreement
(the “Underwriting
Agreement”)
entered into by and among ASM Acquisition Company Limited, an exempted company
organized under the laws of the Cayman Islands (the “Company”),
and
UBS Securities LLC as the representative (the “Representative”)
of the
underwriters named in Schedule A thereto (collectively, the “Underwriters”),
relating to an underwritten initial public offering (the “IPO”)
of the
Company’s units (the “Units”),
each
composed of one of the Company’s ordinary shares, par value $0.001 per share
(the “Ordinary
Shares”),
and
one warrant, which is exercisable for one Ordinary Share (the “Warrants”).
Certain capitalized terms used herein are defined in paragraph 19
hereof.
In
order
to induce the Company and the Underwriters to enter into the Underwriting
Agreement and to proceed with the IPO, and in recognition of the benefit that
such IPO will confer upon the undersigned shareholder of the Company, 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. Neither
the undersigned nor any affiliate of the undersigned will be entitled to
receive, and no such person will accept, any finder’s fee, consulting fee,
reimbursement or cash payment or any other form of compensation, including
the
issuance of the Company’s securities, from the Company for services rendered to
the Company prior to or in connection with the consummation of a Business
Combination, other than (subject to the following sentence) (a) repayment
of those certain Promissory Notes in the amount of $125,000 and $250,000 made
to
the Company by the undersigned to cover offering expenses; (b) a payment of
an
aggregate of $7,500 per month to Argyle Street Management Limited, a British
Virgin Islands incorporated company, for office space, administrative services
and secretarial support; (c) reimbursement for any reasonably incurred
out-of-pocket expenses related to identifying, investigating and
consummating a Business Combination; (d) other expenses or advances that the
Company is permitted to incur; or (e) compensation or fees that may be received
for any services provided following such Business Combination. The undersigned
acknowledges that the Company’s Audit Committee (or the Company’s Board of
Directors, with any interested director abstaining from such review and
approval, in the case of a director who is a member of the Company’s Audit
Committee) will review and approve all payments made to the undersigned, the
Company’s Existing Holders, Founders, officers, directors and advisors and the
Company’s or their affiliates, other than the payments described in clauses (a)
and (b) of the immediately preceding sentence.
2. The
undersigned acknowledges and agrees that the Company will not enter into
any transaction with any of the Company’s officers, directors or advisors or any
of the Company’s or their respective affiliates, including loans by the
Company’s officers, directors and advisors and any forgiveness of loans,
(a) without the prior approval by a majority of the Company’s
disinterested, “independent” (as defined below) directors or, in the event the
Company has no “independent” directors, the members of the Company’s Board of
Directors who do not have an interest in the transaction, in either case who
had
access, at the Company’s expense, to the Company’s attorneys or independent
legal counsel, and (b) unless the Company’s disinterested, “independent”
directors determine that the terms of such transaction are no less favorable
to
the Company than those that would be available to the Company with respect
to
such a transaction from unaffiliated third parties. As used herein “independent”
means
a
director who qualifies as (a) an “independent director” under
Section 121 of the American Stock Exchange’s AMEX Company Guide and
(b) independent under Rule 10A-3 under the Securities Exchange Act of
1934, as amended.
3. The
undersigned acknowledges and agrees that (i) the Company will not (a) consummate
a Business Combination with a Target Business that is either (x) a portfolio
company of, or has otherwise received a financial investment from, the Founders
or their affiliates, or (y) affiliated with the Founders or the Company’s
directors, officers or advisors, or (b) consummate a Business Combination with
any Underwriter, or IPO selling group member, or any of their affiliates,
unless, in each case, the Company obtains an opinion from an unaffiliated,
independent investment banking firm which is a member of the Financial Industry
Regulatory Authority (“FINRA”)
that a
Business Combination with such Target Business is fair to the Company’s
shareholders from a financial point of view; and (ii) if, in connection with
a
Business Combination, any entity or entities with which the Company’s officers,
directors or advisors are affiliated purchases a minority interest in the Target
Business, the entity or entities affiliated with such officers, directors and/or
advisors will be required to pay the same price per share or unit for their
interest in the Target Business as the Company pays, the other terms of the
investment of such affiliated entity or entities will be required to be no
more
favorable than the terms of the Company’s investment and such investment will
require the prior approval by a majority of the Company’s disinterested,
“independent” directors.
4. The
undersigned will escrow any and all of (A) the Founders’ Units, Founders’
Shares and Founders’ Warrants (including the Ordinary Shares to be issued upon
the exercise of the Founders’ Warrants) beneficially owned by it until one year
after the consummation by the Company of a Business Combination and (B) the
Insider Warrants (including the Ordinary Shares to be issued upon exercise
of
the Insider Warrants) beneficially owned by it until the consummation by the
Company of a Business Combination subject to the terms of an Escrow Agreement
which the Company will enter into with the Founders and the Existing Holders
and
an escrow agent acceptable to the Company.
5. The
undersigned’s questionnaire(s) furnished to the Company and the Underwriters and
attached hereto as Exhibit A 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 any fraud or (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
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(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.
6. The
undersigned hereby agrees (i) not to request that the Company’s Board of
Directors consider any proposal to eliminate or amend Article 170 of the
Company’s Amended and Restated Memorandum and Articles of Association, (ii) in
connection with any shareholder vote on a proposal to amend the Company’s
Amended and Restated Memorandum and Articles of Association, to vote any and
all
of the Founders’ Shares owned directly or indirectly by it in the same manner as
a majority of the Public Shareholders, and (iii) not to seek shareholder
approval to extend the amount of time the Company has to consummate a Business
Combination beyond the Extended Period. This paragraph may not be modified
or
amended under any circumstances.
7. The
undersigned has full right and power, without violating any agreement by which
it is bound (including, without limitation, any non-competition or
non-solicitation agreement with any employer or former employer), to enter
into
and perform under this letter agreement and serve as sponsor of the
Company.
8. If
the
Company seeks approval of its shareholders of either the Extended Period or
a
Business Combination, the undersigned will:
(a) vote
any
Founder’s Shares owned directly or indirectly by it in accordance with the
majority of the Ordinary Shares voted by the Company’s Public Shareholders in
connection with the vote on the Extended Period or any Business Combination,
as
applicable; and
(b) vote
all
Ordinary Shares that it may acquire in or following the IPO in favor of the
Extended Period or the Business Combination, as applicable.
In
addition, the undersigned waives its right to exercise redemption rights with
respect to any Ordinary Shares owned or to be owned by the undersigned, directly
or indirectly, and agrees that it will not seek redemption with respect to
such
shares in connection with any vote to approve the Extended Period or a Business
Combination.
9. The
undersigned hereby waives any and all right, title, interest or claim of any
kind in or to (i) any and all of the quarterly distributions (the “Quarterly
Distributions”)
required by the Company’s Amended and Restated Memorandum and Articles of
Association and described in the Company’s final prospectus relating to the IPO
and (ii) any distributions of the Trust Account, or to any other amounts
distributed in connection with a liquidating distribution of the Company, in
each case, with respect to its Founders’ Shares and the Ordinary Shares
underlying the Founders’ Warrants or the Insider Warrants (any “Claim”),
and
hereby waives any Claim the undersigned may have in the future as a result
of,
or arising out of, any contracts or agreements with the Company and will not
seek recourse against the Company or the Trust Account for any reason
whatsoever; provided that the foregoing shall not apply to any Ordinary Shares
underlying the Units issued in the IPO (the “IPO
Shares”)
acquired by the undersigned. The undersigned hereby agrees that the Company
shall be entitled to reimbursement from the undersigned for any Quarterly
Distribution, any distribution of the Trust Account or any other amounts
distributed by the Company in connection with a liquidating distribution
received by the undersigned with respect to its Founders’ Shares or the Ordinary
Shares underlying the Founders’ Warrants or the Insider Warrants.
3
10. The
undersigned agrees to indemnify and hold harmless the Company, jointly and
severally with the other Founders, against any and all losses, liabilities,
claims, damages and expenses 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) (collectively, “Damages”)
to
which the Company may become subject, but only if, and to the extent (a) the
claims reduce the amounts in the Trust Account available for payment to holders
of the IPO Shares in the event of a liquidation of the Trust Account and (b)
the
claims are made (i) by a vendor for services rendered, or products sold, to
the
Company; (ii) by a third party with which the Company enters into a contractual
relationship following consummation of the IPO; or (iii) by a prospective Target
Business arising out of any negotiations, contracts or agreements with the
Company, provided that such indemnity shall not apply to any amounts claimed
owed to a third party who executed a valid and legally enforceable waiver of
any
right, title, interest or claim of any kind in or to the Trust Account, or
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. In the case of the Company’s dissolution and liquidation, the
undersigned understands that the Company expects that all costs and expenses
associated with implementing the Company’s plan of distribution, as well as
payments to any creditors, will be funded from amounts remaining out of the
$50,000 of proceeds from the IPO held outside the Trust Account and from the
up
to $2.5 million in interest income on the balance of the Trust Account that
will
be released to the Company to fund its working capital and general corporate
requirements. Should the aforementioned funds not be sufficient, the undersigned
hereby agrees to reimburse the Company for its out-of-pocket costs associated
with its dissolution and liquidation, excluding any special, indirect or
consequential costs, such as litigation, pertaining to the dissolution and
liquidation. The undersigned hereby represents and warrants to the Company
that
it is an accredited investor as such term is defined in Regulation D under
the Securities Act of 1933, as amended.
11. The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to the Underwriters and its legal representatives
or
agents (including any investigative search firm retained by the Underwriters)
any information they may have about the undersigned’s background and finances
(“Information”).
Neither the Underwriters nor its agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
12. The
undersigned acknowledges and understands that the Company and the Underwriters
will rely upon the agreements, representations and warranties set forth herein
in proceeding with the IPO. Nothing contained herein shall be deemed to render
the Underwriters a representative of, or a fiduciary with respect to, the
Company, its shareholders, or any creditor or vendor of the Company with respect
to the subject matter hereof.
13. This
letter agreement shall be binding on the undersigned and its respective
successors, heirs, representatives and assigns. This letter agreement shall
terminate on the earlier of (a) the consummation of a Business Combination
and
(b) the Liquidation Date; provided that such termination shall not relieve
the
undersigned from liability for any breach of this agreement prior to its
termination.
14. This
letter agreement shall be governed by and interpreted and construed in
accordance with the laws of the State of New York applicable to contracts formed
and to be performed entirely within the State of New York, without regard to
the
conflicts of law provisions thereof to the extent such principles or rules
would
require or permit the application of the laws of another
jurisdiction.
15. No
term
or provision of this letter agreement may be amended, changed, waived, altered
or modified except by written instrument executed and delivered by the party
against whom such amendment, change, waiver, alteration or modification is
to be
enforced.
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16. As
used
herein:
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·
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“Business
Combination”
means the acquisition of all or at least a majority of the equity
interest
in one or more Target Businesses through a merger, capital stock
exchange,
asset acquisition, stock purchase, or other similar transaction,
including
obtaining a majority interest through contractual
arrangements.
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·
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“Existing
Holders”
means all of the holders of the Company’s securities before completion of
the IPO.
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·
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“Extended
Period”
means the 12 month extension to the time period within which the
Company
must complete a Business Combination, which extension is conditioned
upon
(i) the Company entering into a letter of intent, agreement in principle
or definitive agreement with respect to a Business Combination within
24
months following the consummation of the IPO, (ii) the Company’s
shareholders approving the Extended Period at a special meeting of
the
Company’s shareholders for the purpose of soliciting their approval for
such extension, and (iii) holders of less than 30.0% of the IPO Shares
both voting against the Extended Period and exercising their redemption
rights in connection with such
vote.
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·
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“Founders”
means the Company’s officers and directors and the
undersigned.
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·
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“Founders’
Units”
means the 4,312,500 units purchased from the Company by ASM SPAC(1)
Limited on December 12, 2007 (up to 562,500 of which Founders’ Units will
be redeemed by the Company to the extent that the Underwriters do
not
exercise their over-allotment option) for a purchase price of $25,000,
or
approximately $0.006 per Founders’ Unit. Each Founders’ Unit consists of
one Ordinary Share (each a “Founders’
Share”)
and one warrant to purchase one Ordinary Share (each a “Founders’
Warrant”).
In February 2008, (a) ▇▇▇▇▇ ▇▇ purchased 215,625 Founders’ Units, (b)
▇▇▇▇▇▇▇ ▇▇▇ purchased 215,625 Founders’ Units, (c) ▇▇▇▇▇▇▇ ▇▇▇▇ purchased
269,531 Founders’ Units and (d) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ purchased 53,906 Founders’
Units (an aggregate of 754,687 Founders’ Units) from ASM SPAC(1) Limited
for approximately $0.006 per Founders’
Unit.
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“Insider
Warrants”
means the 4,550,000 warrants the ASM SPAC(1) Limited, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ have committed to purchase
at a
price of $1.00 per warrant for an aggregate purchase price of $4,550,000
in a private placement that will occur immediately prior to the completion
of the IPO.
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·
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“Liquidation
Date”
means the earliest date on which both (a) the Trust Account has been
liquidated and distributed to the Public Shareholders and (b) the
Company
has completed its voluntary winding-up.
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·
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“Public
Shareholders”
means purchasers of Ordinary Shares in the IPO or in the secondary
market,
including any of the Company’s officers or directors and their affiliates
to the extent that they purchase or acquire Ordinary Shares in the
IPO or
in the secondary market.
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·
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“Target
Business”
means one or more operating businesses having its primary operations
in
Asia (including, without limitation, each country located in the
Eastern,
Southern and South Eastern subregions of Asia, but specifically excluding
North Korea), which, after completion of the IPO, the Company may
target
for a Business Combination.
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·
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“Trust
Account”
means the trust account established under the Investment Management
Trust
Agreement, dated as of [________], 2008, by and between the Company
and Continental Stock Transfer & Trust
Company.
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ASM
SPAC(1) LIMITED
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By:
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Name:
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Title:
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Accepted
and agreed:
ASM
ACQUISITION COMPANY LIMITED
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By:
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Name:
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Title:
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6
Exhibit
A
[NASD
Questionnaire]
A-1