INVESTMENT MANAGEMENT TRUST AGREEMENT

 

 

This Agreement is made as of _________, 2006 by and between Shine Media Acquisition Corp. (the “Company”) and Continental Stock Transfer & Trust Company (“Trustee”).

 

WHEREAS, the Company’s Registration Statement on Form S-1, No. 333- 127093 (as amended from time to time) (“Registration Statement”), for its initial public offering of securities (“IPO”) has been declared effective as of the date hereof by the Securities and Exchange Commission (“Effective Date”); and

 

WHEREAS, Merriman Curhan Ford & Co. is acting as the representative (the “Representative”) of the underwriters in the IPO; and

 

WHEREAS, the Company has agreed to issue securities in a private placement that will occur immediately prior to the IPO (the “Placement”); and

 

WHEREAS, as described in the Company’s Registration Statement, and in accordance with the Company's Third Amended and Restated Certificate of Incorporation, $32,217,500 of the proceeds of the IPO, net of all discounts and commissions including the Deferred Compensation (as defined below) (37,293,500 if the underwriters’ over-allotment option is exercised in full), will be delivered to the Trustee to be deposited and held in a trust account (the “Trust Account") for the benefit of the Company and the holder's of the Company's Common Stock, par value $.0001 per share, issued in the IPO as hereinafter provided, and in the event the Units are registered in Colorado, pursuant to Section 11-51-302(6) of the Colorado revised statutes (the “CRS”). A copy of Section 11-51-302(6) of the CRS is attached hereto and made a part hereof; and

 

WHEREAS, pursuant to the Placement Unit Purchase Agreement, dated as of _____, 2006, among the Company and certain purchasers, the entire proceeds of the private placement of the units with the Company's purchasers, equal to $800,000, will be delivered to the Trustee to be deposited in the Trust Account; and

 

WHEREAS, pursuant to the Underwriting Agreement, an additional $900,000, (or the amount specified in the notice delivered pursuant to Section [__] hereof), representing a portion of the underwriters' discount (the “Deferred Compensation”) which the Representative, on behalf of the underwriters, has agreed to deposit into the Trust Account; and

 

WHEREAS, the amount to be delivered to the Trustee, including the proceeds of the IPO and the private placement and the Deferred Compensation, will be referred to herein as the “Property,” the stockholders for whose benefit the Trustee shall hold the Property will be referred to as the “Public Stockholders;” and the Public Stockholders, the Representative and the Company will be referred to together as the “Beneficiaries;” and 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; 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, including without limitation, the terms of Section 11-51-302(6) of the CRS, in segregated trust accounts established by the Trustee at JPMorgan Chase N.A. and at Morgan Stanley;

 

(b)    Manage, supervise and administer the Trust Account subject to the terms and conditions set forth herein;

 

(c)    In a timely manner, upon the instruction of the Company, to invest and reinvest the Property in any “Government Security.” As used herein, Government Security means any Treasury Bill issued by the United States, having a maturity of 180 days or less or any open ended investment company selected by the Company and registered under the Investment Company Act of 1940 that holds itself out as a money market fund meeting the conditions of paragraphs (c)(2), (c)(3) and (c)(4) under Rule 2a-7 promulgated under the Investment as determined by the Company;

 

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

 

(e)    Notify the Company and the Representative 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 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 and/or the Representative to do so;

 

(h)    Render to the Company and to the Representative, 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 in the Trust Account to pay such tax obligation, liquidate such assets held in the Trust Account as shall be designated by the Company in writing, 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; and

 

(j)    Commence liquidation of the Trust Account only 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 (i) Chief Executive Officer or Chairman of the Board and (ii) Chief Financial Officer and complete the liquidation of the Trust Account and disburse the Property in the Trust Account (which disbursement shall include, in the event of a Business Combination, payment of the Deferred Discount to the Representative) only as directed in the Termination Letter and the other documents referred to therein. The Trustee understands and agrees that, except as provided in paragraphs 1(i), 1(k) and 6(a) hereof, disbursements from the Trust Account shall be made only pursuant to a duly executed Termination Letter, together with the other documents referenced herein; and

 

(k)    Upon one or more written requests from the Company, which may be given not more than once in any calendar month period, the Trustee shall distribute to the Company interest earned on the Trust Account, net of taxes payable, up to a maximum of $600,000. The distributions requested by the Company may be for any amount, provided that (i) in the aggregate, all distributions under this Section 1(l) may not exceed $600,000 and (ii) that such distributions may only be made if and to the extent that interest has been earned on the amount initially deposited into the Trust Account; and

 

(l)    Permit or effect no distribution from the Trust Account except in accordance with Sections 1(i), 1(j), 1(k) and 5(b).

 

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

 

(a)    Provide all instructions to the Trustee hereunder in writing, signed by the Company’s Chief Executive Officer, President, Chairman of the Board or Chief Financial Officer. In addition, except with respect to its duties under Section 1(i) above, 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 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. The Company may participate in such action with its own counsel;

 

(c)    Pay the Trustee an initial acceptance fee, an annual fee and a transaction processing fee for each disbursement made pursuant to Sections 1(i) and 1(k) 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 Section 1(k). The Company shall pay the Trustee the initial acceptance fee and first year’s fee at the consummation of the IPO and shall thereafter pay the annual fee on the anniversary of the Effective Date. The Trustee shall refund to the Company the 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 Section 2(c) and as may be provided in Section 2(b) hereof (it being expressly understood that the Property shall not be used to make any payments to the Trustee under such Section);

 

(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 notice in writing (with a copy to the Representative) of the total amount of the Deferred Compensation, which shall in no event be less than $900,000;

 

(e)    Provide to the Trustee any letter of intent, agreement in principle or definitive agreement that is executed in connection with a Business Combination, together with a certified copy of a unanimous resolution of the Board of Directors of the Company affirming that such letter of intent, agreement in principle or definitive agreement is in effect; and

 

(f)    In connection with any vote of the Company’s stockholders regarding a Business Combination, 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 Business Combination.

 

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

 

(a)    Take any action with respect to the Property, other than as directed in Section 1 hereof and the Trustee shall have no liability to any party except for liability arising out of 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 written 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 Section 1(c);

 

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

 

(e)    Assume that the authority of any person designated by the Company or the Representative to give instructions hereunder shall not be continuing unless provided otherwise in such designation, or unless the Company or the Representative shall have delivered a written revocation of such authority to the Trustee;

 

(f)    The other parties hereto or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, except for its gross negligence or willful misconduct. The Trustee may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Trustee), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Trustee, in good faith, to be genuine and to be signed or presented by the proper person or persons. The Trustee shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced by a written instrument delivered to the Trustee signed by the proper party or parties and, if the duties or rights of the Trustee are affected, unless it shall give its prior written consent thereto;

 

(g)    Verify the correctness of the information set forth in the Registration Statement or to confirm or assure that any acquisition made by the Company or any other action taken by it is as contemplated by the Registration Statement, unless an officer of the Trustee has actual knowledge thereof, written notice of such event is sent to the Trustee or as otherwise required under Section 1(j) hereof; and

 

(h)    Pay any taxes on behalf of the Trust Account (it being expressly understood that, as set forth in Section 1(i), if there is any income tax obligation relating to the income of the Property in the Trust Account, then, at the written instruction of the Company, the Trustee shall disburse to the Company the amount indicated by the Company as owing is respect of such income tax obligation.

 

 

4.    Certain Rights Of Trustee.

 

(a)    Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or opinion of counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or opinion of counsel. The Trustee may consult with counsel and the advice of such counsel or any opinion of counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(b)    The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

 

(c)    The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Agreement.

 

(d)    The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Agreement; it shall not be accountable for the Company’s use of the proceeds from the Trust Account. Notwithstanding the effective date of this Agreement or anything to the contrary contained in this Agreement, the Trustee shall have no liability or responsibility for any act or event relating to this Agreement or the transactions related thereto which occurs prior to the date of this Agreement, and shall have no contractual obligations to the Beneficiaries until the date of this Agreement.

 

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

 

6.    Termination. This Agreement shall terminate as follows:

 

(a)    If the Trustee gives written notice to the Company that it desires to resign under this Agreement, the Company shall use its reasonable efforts to locate a successor trustee. At such time that the Company notifies the Trustee that a successor trustee has been appointed by the Company and has agreed to become subject to the terms of this Agreement, the Trustee shall transfer the management of the Trust Account to the successor trustee, including but not limited to the transfer of copies of the reports and statements relating to the Trust Account, whereupon this Agreement shall terminate; provided, however, that, in the event that the Company does not locate a successor trustee within ninety days of receipt of the resignation notice from the Trustee, the Trustee may submit an application to have the Property deposited with 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 that arises due to any actions or omissions to act by any party after such deposit; or

 

(b)    At such time that the Trustee has completed the liquidation of the Trust Account in accordance with the provisions of Section 1(j) hereof, and distributed the Property in accordance with the provisions of the Termination Letter, this Agreement shall terminate except with respect to Section 2(b).

 

7.    Miscellaneous.

 

(a)    The Company and the Trustee each acknowledge that the Trustee will follow the security procedures set forth below with respect to funds transferred from the Trust Account. Upon receipt of written instructions, the Trustee will confirm such instructions with an Authorized Individual at an Authorized Telephone Number listed on the attached Exhibit C. The Company and the Trustee will each restrict access to confidential information relating to such security procedures to authorized persons. Each party must notify the other party immediately if it has reason to believe unauthorized persons may have obtained access to such information, or of any change in its authorized personnel. In executing funds transfers, the Trustee will rely upon account numbers or other identifying numbers of a beneficiary, beneficiary’s bank or intermediary bank, rather than names. The Trustee shall not be liable for any loss, liability or expense resulting from any error in an account number or other identifying number, provided it has accurately transmitted the numbers provided.

 

(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 counterparts, each one of which shall constitute an original, and together shall constitute but one instrument.

 

(c)    This Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof. This Agreement or any provision hereof may only be changed, amended or modified by a writing signed by each of the parties hereto; provided, however, that no such change, amendment or modification (other than to correct a typographical or similar technical error) may be made to Sections 1(i), 1(j), 1(k) and 1(l) hereof without the consent of 95% of the Public Stockholders, it being the specific intention of the parties hereto that each Public Stockholder is and shall be a third-party beneficiary of this Section 7(c) with the same right and power to enforce this Section 7(c) as either of the parties hereto. For purposes of this Section 7(c), the “consent of 95% of the Public Stockholders” shall mean receipt by the Trustee of a certificate from an entity certifying that (i) such entity regularly engages in the business of serving as inspector of elections for companies whose securities are publicly traded, and (ii) either (a) 95% of the Public Stockholders of record as of a record date established in accordance with Section 213(a) of the Delaware General Corporation Law, as amended (the “DGCL”), have voted in favor of such amendment or modification or (b) 95% of the Public Stockholders of record as of a record date established in accordance with Section 213(b) of the DGCL has delivered to such entity a signed writing approving such amendment or modification.

 

(d)    As to any claim, cross-claim or counterclaim in any way relating to this Agreement, each party waives the right to trial by jury.

 

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

 

(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:

 

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: _________________

Fax No.: (212) ___________]

 

if to the Company, to:

 

Shine Media Acquisition Corp.

Rockefeller Center

1230 Avenue of the Americas

New York, NY 10020

Attn: David Y. Chen, Chief Executive Officer and President

Fax No.:

 

in either case with a copy to:

 

Merriman Curhan Ford & Co.

600 California Street, 9^th Floor

San Francisco, CA 94108

Attn: Steven R. Foland

Fax No.: (415) 248-5692

 

and

 

Bingham McCutchen LLP

399 Park Avenue

New York, New York 10022

Attn: Floyd I. Wittlin, Esq.

Fax No.: (212) 752-5370

 

and

 

Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

Attn: Mitchell S. Nussbaum, Esq.

 

Fax No.: (212) 407-4990

 

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

 

(h)    Each of the Trustee and the Company hereby represents that it has the full right and power and has been duly authorized to enter into this Agreement and to perform its respective obligations as contemplated hereunder. The Trustee acknowledges and agrees that it shall not make any claims or proceed against the Trust Account, including by way of set-off, and shall not be entitled to any funds in the Trust Account under any circumstance.

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

 

	CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Trustee
	By:
		Name:
		Title:

 

	SHINE MEDIA ACQUISITION CORP.
	By:
		Name: David Y. Chen
		Title: Chief Executive Officer and  President

 

 

Continental Stock Transfer

  & Trust Company

17 Battery Place

New York, New York 10004

Attn:

 

Re: Trust Account No. [               ] Termination Letter

 

Gentlemen:

 

Pursuant to Section 1(i) of the Investment Management Trust Agreement between Shine Media Acquisition Corp. (“Company”) and [Continental Stock Transfer & Trust Company] (“Trustee”), dated as of __________, 2006 (“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 48 hours in advance of the actual date of the consummation of the Business Combination (“Consummation Date”) and shall provide you with a certificate or affidavit in accordance with Section 2(f) of the Trust Agreement. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Trust Agreement.

 

In accordance with the terms of the Trust Agreement, we hereby authorize you to commence liquidation of the Trust Account 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.

 

On the Consummation Date (i) counsel for the Company shall deliver to you written notification that (a) the Business Combination has been consummated and [(b) the provisions of Section 11-51-302(6) and Rule 51-3.4 of the CRS have been met,] and (ii) the Company and Merriman Curhan Ford & Co., as representative of the underwriters of the Company’s IPO (the “Representative”) shall deliver to you joint written instructions with respect to the transfer of the funds held in the Trust Account, including the Deferred Compensation (“Instructions”). You are hereby directed and authorized to transfer the funds, including the Deferred Compensation, held in the Trust Account immediately upon your receipt of the counsel’s letter, evidence of delivery of the Stock Certificates, the Officer’s Certificate and the Instructions, in accordance with the terms of the Instructions. Notwithstanding the foregoing, upon verification of receipt by you of the Instruction Letter, we hereby agree and acknowledge that the Property in the Trust Account shall be distributed as follows: (1) first, to the Representative by wire transfer (or as otherwise directed by the Representative) in immediately available funds, the aggregate amount of $__________ plus any interest accrued thereon; and (2) thereafter, to any other Beneficiary in accordance with the terms of the Instructions. In the event that certain deposits held in the Trust Account may not be liquidated by the Consummation Date without penalty, you will notify the Company of the same and the Company, if the amount set forth in clause (1) shall not have been paid in full, the Company and the Representative shall issue joint written instructions directing you as to whether such funds should remain in the Trust Account and distributed after the Consummation Date to the Company. Upon the distribution of all the funds in the Trust Account pursuant to the terms hereof, 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 the funds held in the Trust Account shall be reinvested as provided in the Trust Agreement on the business day immediately following the Consummation Date as set forth in the notice.

 

 

	Very truly yours,
	SHINE MEDIA ACQUISITION CORP.
	By:
		Name:
		Title:

 

 

 

 

Continental Stock Transfer & Trust Company

  & Trust Company

17 Battery Place

New York, New York 10004

Attn:

 

Re: Trust Account No. [ ] Termination Letter

 

Gentlemen:

 

Pursuant to Section 1(j) of the Investment Management Trust Agreement between Shine Media Acquisition Corp. (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of _____________, 2006 (“Trust Agreement”), this is to advise you that the Board of Directors of the Company has voted to dissolve the Company and liquidate the Trust Account (as defined in the Trust Agreement). Attached hereto is a copy of the minutes of the meeting of the Board of Directors of the Company relating thereto, certified by an executive officer of the Company as true and correct and in full force and effect.

 

In accordance with the terms of the Trust Agreement, we hereby (a) certify to you that, if applicable, the provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado Statute have been met and (b) authorize you, to commence liquidation of the Trust Account as part of the Company’s plan of dissolution and distribution. In connection with this liquidation, you are hereby authorized to establish a record date for the purposes of determining the stockholders of record entitled to receive their per share portion of the Trust Account. The record date shall be within ten (10) days of the liquidation date, or as soon as thereafter as is practicable. You will notify the Company and ______________ (“Designated Paying Agent”) in writing as to when all of the funds in the Trust Account will be available for immediate transfer (“Transfer Date”). The Designated Paying Agent shall thereafter notify you as to the account or accounts of the Designated Paying Agent that the funds in the Trust Account should be transferred to on the Transfer Date so that the Designated Paying Agent may commence distribution of such funds in accordance with the terms of the Trust Agreement and the Company’s Third Amended and Restated Certificate of Incorporation. Upon the payment of all the funds in the Trust Account, the Trust Agreement shall be terminated and the Trust Account closed.

 

 

 

AUTHORIZED INDIVIDUAL(S) FOR TELEPHONE CALL BACK	AUTHORIZED TELEPHONE NUMBER(S)
Company:
Shine Media Acquisition Corp. Attn: Richard L. Chang, Chairman	()
Trustee:
Continental Stock Transfer & Trust Company 17 Battery Place New York, New York 10004 Attn:	(212)