|
Exhibit
10.1
INVESTMENT MANAGEMENT
TRUST AGREEMENT
This INVESTMENT MANAGEMENT TRUST AGREEMENT (this
“Agreement”) is made as of November 15, 2007, by and
between China Holdings Acquisition Corp. whose principal office is
located at 33 Riverside Avenue, 5th Floor, Westport, CT 06880 (the
“Company”) and Continental Stock Transfer and Trust
Company, located at 17 Battery Place, New York, NY 10004 (the
“Trustee”).
WHEREAS, the Company’s Registration Statement on Form
S-1, No. 333-145085 (the “Registration Statement”), for
its initial public offering of securities (the “IPO”)
has been declared effective as of the date hereof by the Securities
and Exchange Commission (the “Effective Date”);
and
WHEREAS, Citigroup Global Markets Inc. is acting as the
representative (the “Representative”) of the
underwriters in the IPO pursuant to an underwriting agreement
between the Company and the Representative (the “Underwriting
Agreement”); and
WHEREAS, as described in the Company’s Registration
Statement, and in accordance with the Company’s Amended and
Restated Certificate of Incorporation, upon execution of this
Agreement or as promptly thereafter as practicable, the Company
shall deliver to the Trustee an amount equal to the sum of (i)
$117,570,000 of the net proceeds of the IPO, including $4,020,000
in deferred underwriting compensation (or $134,913,000 of the net
proceeds, including $4,623,000 in deferred underwriting
compensation, if the over-allotment option is exercised in full)
and (ii) $2,750,000 of the proceeds from the Company’s
issuance and sale in a private placement of 2,750,000 warrants
issued to its founding stockholders to be deposited and held in a
trust account for the benefit of the Company and the holders of the
Company’s common stock, par value $0.001 per share, issued in
the IPO (the Company’s “Public Stockholders”).
The amount to be delivered to the Trustee is referred to herein as
the “Property,” and the parties for whose benefit the
Trustee shall hold the Property are referred to together with the
Company as the “Beneficiaries”; and
WHEREAS, pursuant to the Underwriting Agreement, a portion
of the Property equal to $4,020,000 ($4,623,000, if the
underwriters’ over-allotment option is exercised in full) (or
the amount specified in a notice pursuant to Paragraph 3(d) hereof)
is attributable to deferred underwriting commissions that will
become payable by the Company to the Representative upon the
consummation of an Initial Business Combination (as defined in the
Company’s Amended and Restated Certificate of Incorporation)
(the “Deferred Discount”); 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, in consideration of the premises herein
contained and other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties agree as
follows:
1. Agreements and Covenants of
Trustee . The Trustee is hereby appointed to serve as Trustee
hereunder, and the Trustee hereby agrees to act as Trustee upon the
terms and conditions set forth herein. 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 a segregated trust account (the “Trust
Account”) established by the Trustee at JP Morgan
Chase;
(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 only in U.S. “government securities” within
the meaning of Section 2(a)(16) of the Investment Company Act of
1940, as amended (the “Investment Company Act”), with a
maturity of 180 days or less or in money market funds selected by
the Company which invest principally in either short term
securities issued or guaranteed by the United States having a
rating in the highest investment category granted thereby by a
recognized credit rating agency at the time of acquisition or tax
exempt municipal bonds issued by governmental entities located
within the United States or otherwise meeting the conditions under
Rule 2a 7 under the Investment Company Act;
(d) Collect and receive, when
due, all principal and income arising from the Property, which
shall become part of the “Property,” as such term is
used herein;
(e) Promptly notify the Company
and Citigroup Global Markets Inc. of all communications received by
it with respect to any Property requiring action by the
Company;
(f) Supply any necessary
information or documents as may be requested by the Company in
connection with the Company’s preparation of the tax returns
for the Company and 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 and to
such other person as the Company may instruct monthly written
statements of the activities of and amounts in the Trust Account
reflecting all receipts and disbursements of the Trust Account;
and
(i) If there is any income or
other tax obligation relating to the income from the Property in
the Trust Account as determined by the Company, then, from time to
time, at the written instruction of the Company, the Trustee shall
promptly to the extent there is not sufficient cash outside the
Trust Account to pay such tax obligation, liquidate such assets
held in the Trust Account as shall be designated by the Company in
writing, and disburse to the Company by wire transfer, out of the
Property in the Trust Account, the amount indicated by the Company
as owing in respect of such income tax obligation.
2
2. Limited Distributions Of
Income From Trust Account .
The Trustee shall disburse funds from the Trust
Account:
(a) from time to time as may be
necessary timely to pay any taxes incurred as a result of interest
or other income earned on the Property held in the Trust Account,
only upon receipt and in accordance with the terms of a letter in
form substantially similar to that attached hereto as Exhibit D (a
“Tax Disbursement Letter”), signed on behalf of the
Company by its Chief Executive Officer or President and copied to
Authorized Counsel, as evidenced by his or her countersignature
thereto, and complete the disbursement of funds from the Trust
Account and distribute such funds only as directed in the Tax
Disbursement Letter and any other documents referred to therein,
and
(b) from time to time, only upon
receipt and in accordance with the terms of a letter in form
substantially similar to that attached hereto as Exhibit E (a
“Disbursement Letter”), signed on behalf of the Company
by its Chief Executive Officer or President and copied to
Authorized Counsel, the Trustee shall disburse to the Company such
amount as may be requested by the Company as directed in the
Disbursement Letter and the other documents referred to therein,
provided, however, that the aggregate amount distributed by the
Trustee to the Company pursuant to this Paragraph 2(b) may not
exceed the lesser of (y) the aggregate amount of interest and any
other income actually received or paid on amounts in the Trust
Account less an amount equal to estimated taxes that are or will be
due on such income at an assumed rate of 40% and (z) $3,000,000.
The amount of interest income permitted to be released from the
Trust Account to the Company may be increased by up to $450,000 if
the Representative’s over allotment is exercised in full. If
the Representative’s over-allotment is not exercised in full,
but is exercised in part, the amount of interest income permitted
to be released from the Trust Account shall be increased
proportionally in relation to the proportion of the over allotment
option which was exercised by the Representative.
(c) upon notice by the Company to
pay the Deferred Discount to the Representative.
For purposes of this Agreement, “Authorized
Counsel” shall mean, at any date, the attorney retained and
authorized by the Company to perform such functions.
3. 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 Chief
Executive Officer or President. In addition, except with respect to
its duties under Paragraphs 2 and 4, 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 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) Hold the Trustee harmless and
indemnify the Trustee from and against any and all expenses,
including reasonable counsel fees and disbursements, or loss
suffered by the Trustee in connection with any action, 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
3
this Agreement, the services of
the Trustee hereunder, or the Property or any income earned from
investment of the Property, except for expenses and losses
resulting from the Trustee’s gross negligence or willful
misconduct. Promptly after the receipt by the Trustee of notice of
demand or claim or the commencement of any action, suit or
proceeding, pursuant to which the Trustee intends to seek
indemnification under this Paragraph, it shall notify the Company
in writing of such claim (hereinafter referred to as the
“Indemnified Claim”). The Trustee shall have the right
to conduct and manage the defense against such Indemnified
Claim, provided that the Trustee shall obtain the consent of the Company
with respect to the selection of counsel, which consent shall not
be unreasonably withheld. The Trustee may not agree to settle any
Indemnified Claim without the prior written consent of the Company,
which consent shall not be unreasonably withheld. The Trustee may
participate in such action with its own counsel at its own
expense;
(c) Pay the Trustee an initial
acceptance fee, an annual fee and a transaction processing fee for
each disbursement made pursuant to Paragraph 2 as 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 and further agreed that
said transaction processing fees shall be deducted by the Trustee
from the disbursements made to the Company pursuant to Paragraph
2(b). The Company shall pay the Trustee the initial acceptance fee
and first year’s fee at the consummation of the IPO 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 Fund.
The Company shall not be responsible for any other fees or charges
of the Trustee except as set forth in this Paragraph 3(c) and as
may be provided in Paragraph 3(b) hereof (it being expressly
understood that the Property shall not be used to make any payments
to the Trustee under such Paragraphs).
(d) Within five business days
after the Representative’s over-allotment option (or any
unexercised portion thereof) expires or is exercised in full,
provide the Trustee with a notice in writing (with a copy to the
Representative) of the total amount of the Deferred Discount, which
shall in no event be less than $4,020,000;
(e) In connection with any vote
of the Company’s stockholders on whether to approve an
Initial Business Combination, the Company’s perpetual
existence and the Extended Period (as defined in Paragraph 4),
provide to the Trustee an affidavit or certificate of a firm
regularly engaged in the business of soliciting proxies and
tabulating stockholder votes verifying the vote of the
Company’s stockholders regarding such Initial Business
Combination, the Company’s perpetual existence or the
Extended Period;
(f) Provide Citigroup Global
Markets Inc. with a copy of any Termination Letters and/or any
other correspondence that it sends to the Trustee with respect to
any proposed withdrawal from the Trust Account promptly after it
issues the same; 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.
4. Liquidation and
Distribution of Trust Account Property . The Trustee shall commence
liquidation of the Trust Account only upon receipt of, and only in
accordance with
4
the terms of, a letter in form
substantially similar to that attached hereto as either Exhibit A,
Exhibit B or Exhibit C (a “Termination Letter”), signed
on behalf of the Company by its Chief Executive Officer and
affirmed by the Chairman or Vice Chairman of the Board of
Directors, and complete the liquidation of the Trust Account and
distribute the Property in the Trust Account only as directed in
the Termination Letter and any other documents referred to
therein.
In the event that a Termination Letter has not been
received by the Business Combination Deadline Date, the Trust
Account shall be liquidated in accordance with the procedures set
forth in the Termination Letter attached as Exhibit B hereto and
distributed to the stockholders of record. The “Business
Combination Deadline Date” means the date that is eighteen
(18) months from the date of the Prospectus, subject to extension
to twenty-four (24) months, if the Company has entered into a
letter of intent or definitive agreement with respect to a business
combination within such eighteen (18) month period and subject to
extension to thirty-six (36) months (the “Extended
Period”) in the event that the Company anticipates that it
may not be able to consummate the Initial Business Combination
within the twenty-four (24) month period and seeks stockholder
approval to extend the period of time to consummate the Initial
Business Combination by an additional twelve (12) months and the
stockholders approve such extension.
5. 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 Paragraphs 1 and 2
hereof, and the Trustee shall have no liability to any party except
for liability arising out of its own gross negligence or willful
misconduct;
(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) Change the investment of any
Property, other than in compliance with Paragraph 1(c);
(d) Refund any depreciation in
principal of any Property;
(e) 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
| 
