Asia Special Situation Acquisition Corp. c/o M&C Corporate Services Limited South Church Street George Town, Grand Cayman
c/o
M&C Corporate Services Limited
P.O. Box
309GT, ▇▇▇▇▇▇ House
South
Church Street
▇▇▇▇▇▇
Town, Grand Cayman
December
18, 2009
Stillwater
Capital Partners, Inc.
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▇▇▇ ▇▇▇▇,
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Attn: ▇▇▇▇▇▇▇
▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇
Principals
Gentlemen:
This
letter will serve as our mutual agreement and understanding in respect of
certain proposed transactions described below, pursuant to which it is
contemplated that Stillwater Capital Partners, Inc. (“Stillwater”) and its
affiliates, including ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ individually (collectively,
with Stillwater, the “Stillwater Group”)
will assist Asia Special Situation Acquisition Corp., a Cayman Islands special
purpose acquisition corporation (“ASSAC”) in consummating a “business
combination” (as that term is defined in ASSAC prospectus, declared effective by
the SEC on January 16, 2008.
1.
The
Transactions. As we
have discussed, ASSAC desires to consummate by not later than January 23, 2010
(the “Outside Closing
Date”) the acquisition of one or more businesses and/or assets that (a)
have a fair market value of not less than $92.0 million, and (b) are engaged in
investments, financing and the sale of insurance products, or which constitute
portfolios of assets related to the foregoing (collectively, the “Businesses”).
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1.1
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Background.
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You have
advised that Stillwater and certain of its “Funds” (as hereinafter defined) are
investors in Northstar Group Holdings, Inc. (“Northstar”), an
entity that directly, or through one or more subsidiaries, owns and operates a
reinsurance business located in Bermuda (“Northstar Re
Bermuda”) and a reinsurance business in Ireland (“Northstar Re
Ireland”).
You have
further advised that Stillwater and its affiliate Stillwater Capital Partners
LLC is the investment manager or general partner of all of the hedge funds and
private equity funds described below (hereinafter collectively referred to as
the “Funds”). Such
Funds consist of the following, in each of which Stillwater and its affiliate
Stillwater Capital Partners LLC or Stillwater Capital Partners, Inc. is the
investment manager and/or general partner:
(a)
Each of
(i) Stillwater Asset Backed Fund, LP, a Delaware limited partnership (“Stillwater Fund Delaware
I”), (ii) Stillwater Asset Backed Fund II, LP, a Delaware limited
partnership (“Stillwater Fund Delaware
II”) and (iii) Stillwater Loan Opportunities Fund LLC, a Delaware limited
liability company (“Stillwater LOF” and
together with Stillwater Fund Delaware I, and Stillwater Fund Delaware II, the
“Stillwater Delaware
Lending Funds”). According to their offering documents, the
Stillwater Delaware Lending Funds finance portfolios of mostly illiquid and
privately offered short and medium term loans and other asset backed obligations
(“Asset Backed
Loans”) for various types of borrowers, and participate in loans and loan
portfolios of other lenders. You have advised that as at December 31,
2009, the aggregate net asset value of the Stillwater Lending Funds Delaware is
approximately $103.0 million. (subject to change upon valuation process being
completed in December).
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(b) Each of
(i) Stillwater Real Estate Partners LP, a Delaware limited partnership (the
“Stillwater
REP”), and (ii) each of (A) Stillwater WPB Venture Partners I LP, a
Delaware limited Partnership (“Stillwater WPB I”)
and (B) Stillwater WPB Venture Partners II LP, a Delaware limited Partnership
(“collectively, the “Stillwater West Palm Beach
Funds” and with Stillwater REP, the “Stillwater Real Estate
Funds”). According to its offering documents, the Stillwater
Real Estate Funds are primarily engaged in the purchase of undervalued real
estate, distressed real estate and real estate sold at foreclosure
sales. The initial capital invested in the real estate assets managed
by the Stillwater Real Estate Funds, including participations in other real
estate loans and real estate syndication interests, was approximately $79.0
million.
(c) Each of
(i) Stillwater Market Neutral Fund, LP, a Delaware limited partnership (“SMNF-I”), (ii)
Stillwater Market Neutral Fund II, LP (“SMNF-II”), a Delaware
limited partnership, (and with SMNF-I, collectively, the “SMNF Funds”), and
(iii) Stillwater Matrix Fund LP, a Delaware limited partnership (“Stillwater Matrix Fund
Delaware”). According to its offering documents, the SMNF
Funds are fund of funds that invest in a portfolio of hedge funds with
diversified investment strategies. You have advised that as at
December 31, 2009, the aggregate net asset value of the SMNF Funds and the
Stillwater Matrix Fund Delaware (net of debt of approximately $5.0 million) will
be approximately $52.0 million.
(d) Each
of (A) Stillwater Asset Backed Offshore Fund, Ltd., a Cayman Islands exempted
company (“Stillwater
ABOF Cayman”), (B) Stillwater Asset Backed Fund SPV, a Cayman Islands
exempted company (“Stillwater ABF SPV”
), (C) Stillwater Asset Backed Fund II Onshore SPV, a Cayman Islands exempted
company (“Stillwater
ABF II SPV”) and (D) Stillwater Loan Opportunities Fund SPC (“Stillwater LOF
Cayman” collectively with Stillwater ABOF Cayman, Stillwater ABF SPV and
Stillwater ABF II SPV, the “Stillwater Lending Funds
Cayman”). You have advised that as at December 31, 2009, the
aggregate net asset value of the Stillwater Lending Funds Cayman will be
approximately $250.0 million.
(e) Each
of (i) Stillwater Market Neutral Fund Ltd., a Cayman Islands exempted company
(“SMNF-Cayman”); and
(ii) the Stillwater Market Neutral Fund III SPC, a Cayman Islands exempted
company registered as a segregated portfolio company, and its sub funds,
Stillwater Matrix Segregated Portfolio (collectively, “Stillwater Matrix
Cayman”).You have advised that as at September 30, 2009, the aggregate
net asset value of the SMNF-Cayman and Stillwater Matrix Cayman (collectively,
“Stillwater Fund of
Funds Cayman”) is approximately $173.0 million.
1.2 The Proposed
Transactions. With your
assistance, subject to its due diligence and satisfaction of all conditions to
closing, ASSAC will seek to consummate the proposed acquisitions (the “Transactions”):
(a) ASSAC
shall undertake to acquire 100% of the capital stock of Northstar for a cash
purchase price of approximately $7.0 million and shall further arrange to
release certain encumbered assets of investor shareholders in Northstar by not
later than June 30, 2010;
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(b) ASSAC
shall undertake to acquire either 100% or a substantial majority of the
portfolio of assets or securities (limited partnership interests or shares) of
all or certain of the Funds (collectively, the “Acquired
Assets”).
The
Acquired Assets of each of the following Funds shall be valued at designated
percentages set forth below of their unaudited estimated net asset value at
December 31, 2009 (the “Estimated NAV”), as
adjusted following the Closing Date to 100% of their independently appraised net
asset value as at December 31, 2009 (“Appraised NAV”), all
as follows:
(i) The
Acquired Assets of the Stillwater Lending Funds Delaware and Stillwater Lending
Funds Cayman (collectively, the “Stillwater Lending
Funds”) would be purchased for 100% of its Estimated NAV which shall be
delivered to ASSAC on or before December 22, 2009;
(ii) The
Acquired Assets of the Stillwater Real Estate Funds, loan participation
interests and real estate syndication assets would be purchased for 65% of its
initial capital invested;
(iii) The
Acquired Assets of the SMNF Funds would be purchased for 75% of its Estimated
NAV;
(iv) The
Acquired Assets of the Stillwater Matrix Cayman Fund would be purchased for 90%
of its Estimated NAV;
(v) The
Acquired Assets of the SMNF-Cayman Fund would be purchased for 75% of its
Estimated NAV;
(vi) The
Acquired Assets of the Stillwater Matrix Fund Delaware would be purchased for
90% of its Estimated NAV;
(c) The
purchase values and Merger Consideration for the Acquired Assets would be paid
in the form of shares of ASSAC convertible preferred shares (“ASSAC Preferred
Shares”). As indicated terms, the ASSAC Preferred Shares
would, pursuant to its terms:
(i) have
a per share liquidation value of $1,000 per share, as a result of which if there
were to be a sale or liquidation of ASSAC prior to
the automatic conversion of the ASSAC Preferred Shares into Ordinary Shares, the
holders of the ASSAC Preferred Shares would be entitled to receive $1,000 for
each such share, before any payments are made with respect to the then
outstanding Ordinary Shares;
(ii) vote
on an “as converted basis” with the holders of ordinary shares of ASSAC (the
“ASSAC Ordinary
Shares”);
(iii) pay
a 5% annual dividend (payable semi-annually at the time of conversion in
additional ASSAC Preferred Shares);
(iv) on
July 31, 2010, automatically
convert into ASSAC Ordinary Shares (the “Conversion Shares”), at a conversion
price of $7.50 per share, subject to certain equitable adjustments for
consolidations, stock splits and the like (the “Conversion Shares”);
and
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(v) contain
mutually acceptable provisions to protect the holders against
dilution.
(d) Following
the Closing, the number of Conversion Shares and the ratio by which each ASSAC
Preferred Share will be converted into Ordinary Shares (the “Conversion Ratio”)
will be subject to post-closing increase or decrease, depending on the Appraised
NAV of each of the Funds, all as set forth in the Transaction Memorandum (Exhibit
A hereto).
(e) ASSAC
would agree that on or before six months following the Closing, it will register
the ASSAC Ordinary Shares issuable upon conversion of the ASSAC Preferred Shares
(the “Conversion
Shares”) for resale under the Securities Act of 1933, as amended, so that
such Conversion Shares will be freely tradable by the holders. In the event that
ASSAC does not register the Conversion Shares by July 31, 2010, it will be
required to pay customary financial penalties consistent with other hedge fund
investment documents.
(f) As a
condition to Closing ASSAC will acquire all or certain of the above referenced
Acquired Assets having a fair market value (based solely on the purchase price
paid by ASSAC) of not less than $400.0 million and issue not less than 400,000
ASSAC Preferred Shares having a stated or liquidation value of not less than
$400.0 million and convertible into 53.333 million ASSAC Ordinary
Shares.
(g) The
anticipated business terms and legal structure of the above acquisitions are set
forth in a transaction memorandum annexed hereto as Exhibit
A and made a part hereof (the “Transaction
Memorandum”).
2.
Stillwater
Services: Both
prior and subsequent to Closing, Stillwater and its principals will assist ASSAC
in achieving the foregoing business combinations and managing the Acquired
Assets (collectively, the “Stillwater
Services”); which Stillwater Services shall include:
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Assisting
ASSAC in negotiating and closing the acquisition of Northstar and
subsidiaries;
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Vote
Stillwater shares in favor of the Northstar sale to
ASSAC;
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Work
with related shareholders of Northstar to execute on
sale;
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Negotiating
for the acquisition of regulatory capital that can be purchased for stock
and included in ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
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Assisting
ASSAC in selecting those of the above referenced Funds to be included in
the Acquired Assets;
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Spearhead
solicitation of approvals from investors in the designated Funds that the
Parties agree to include in the Acquired
Assets;
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Manage
the Funds and Acquired Assets;
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Originating
and assisting senior management of ASSAC in consummating additional hedge
fund acquisitions;
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Originating
and managing a portfolio of asset based loans for the Stillwater Lending
Funds, if included in the Acquired Assets;
and
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Re-invest
capital generated from liquidation of Acquired
Assets
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3.
Stillwater
Consideration. As consideration for the Stillwater Services,
ASSAC hereby agrees, subject at all times to the consummation of the proposed
business combinations, to pay Stillwater or its affiliates, the consideration
set forth below.
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3.1 Cash
Fee. a
fee equal to two percent (2%) of the aggregate Purchase Price paid by ASSAC in
cash for Northstar and for the Acquired Assets from the Funds (the “Cash
Fee”). Such Cash fee shall be payable in full at closing
of the business combinations; provided, that:
(a) if
the Cash Fee is more than 20% of net cash available to ASSAC after all
redemptions, transaction expenses and payments in connection with the Northstar
acquisition or otherwise (“Net ASSAC Cash”),
then the balance, after payment of as much of the Cash Fee as 20% of the Net
ASSAC Cash will cover, will be in the form of a promissory note of ASSAC,
payable in cash in 6-months after closing and accruing interest at the rate of
7% per annum (the “ASSAC
Note”).
(b) ASSAC
may extend the payment date of the ASSAC Note for an additional period of
three-months provided that, at the time of the extension, (i) interest shall
accrue at the rate of 12% per annum, and (ii) ASSAC shall make a payment of 20%
of the then outstanding balance of the ASSAC Note.
3.2 Management Agreement.
Stillwater shall receive a three (3) year management agreement to manage the
Acquired Assets, at standard Stillwater fees currently in effect under the
relevant Fund documents. Such management agreement
shall:
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(a)
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cover
all of the Acquired Assets and shall not be terminable for a period of
three (3) years from closing;
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(b)
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be
automatically renewable for subsequent one-year periods assuming minimum
return targets of 7% IRR during prior contract
period;
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(c)
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be
automatically renewable for subsequent 2-year periods assuming minimum
return targets of 8% IRR during prior contract period;
and
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(d)
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be
automatically renewable for subsequent 3-year periods assuming minimum
return targets of 9% IRR during prior contract
period.
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3.3 ASSAC
Equity. At closing, Stillwater shall receive 266,666 ASSAC
Ordinary Shares. These shares will be registered by ASSAC for resale
promptly after the Closing as part of the same registration statement in which
the Conversion Shares are registered.
4.
Additional Post-Closing
Agreements. Subject to
further discussion, analysis and due diligence, the parties presently intend
that following consummation of the Transactions that:
4.1 Cash
generated from the Acquired Assets will be invested as follows:
(a) approximately:
8% for use in Northstar insurance business as regulatory capital;
(b) approximately
20% to buy other assets under management to create more liquidity;
and
(c) the
balance will be used to purchase other insurance company assets and invested in
various Stillwater managed funds.
4.2 Additional ABL
Funds. ASSAC covenants and
agrees that promptly following the Closing it will undertake to raise not less
than $200.0 million over a period to two years (at the rate of approximately
$25.0 million per calendar quarter, commencing with the quarter ending June 30,
2010) for investment in additional domestic or offshore asset backed loan funds
(“ABL Funds”)
or other investments to be managed by Stillwater. In such connection,
it is our mutual goal that:
(a) the
majority of such funds will come from the “reserves” of the insurance company
assets (or “floats”); and
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(b) the
balance of such funds will be equity contributed by ASSAC though the public or
private sale of additional ASSAC Ordinary Shares or other ASSAC
securities. In such connection ASSAC covenants and agrees to (i)
complete the preparation of one or more registration statements or private
placement memorandum with respect to the proposed public or private sale of such
Ordinary Shares or other securities within six months of the Closing, (ii) if
applicable, file such registration statement with the SEC and will cause such
registration statement to be declared effective as soon as practicable
thereafter, and (iii) consummate the sale(s) of such Ordinary Shares or other
securities.
Unless
Stillwater directs otherwise, there will be at least a three year lock up period
on investors’ capital in these additional ABL Funds. Stillwater
Group, as investment manager and general partner, will receive its standard
management and performance based fees, as are set forth in the various private
placement memoranda and other governing documents for the Funds referred to in
Section 1 above.
5. Miscellaneous.
(a) In
order to induce ASSAC to incur the effort and expense of due diligence
examinations and analysis of the proposed Transactions, Stillwater Group hereby,
jointly and severally, agree that, for the period through and including the
earlier of (i) January 31, 2010, or (ii) notice from ASSAC that it is unable or
unwilling to continue to proceed with any of the above Transactions (the “No-Shop Period”),
none of them will elicit, discuss, explore, entertain or consider any possible
sale of all or any part of the securities or assets or any other change in
control of Northstar, Northstar Re Bermuda, Northstar Re Ireland or any of the
Funds (individually a “Target Company” and
collectively, the “Target Companies”)
with any other person, firm or other entity (a “Competitor”) or
provide any information to any such Competitor, other than such ordinary course
of such business operations in circumstances where none of them has any reason
to believe that such information may be used to evaluate a possible purchase or
sale of some or all of the assets or securities of the Target
Companies. Notwithstanding the foregoing, in the event and to the
extent that ASSAC advises the Stillwater Group in writing, or ASSAC and the
Stillwater Group mutual agree in writing, that a proposed acquisition of
Acquired Assets of any one or more of the Target Companies is not advisable,
practicable or feasible (a “Rejected Target
Company”), then and in such event the provisions of this Section 5(a)
shall thereafter no longer be applicable to such Rejected Target
Company.
(b) ASSAC
and each of the Stillwater Group agree that during the No-Shop Period they will
undertake to execute a definitive share purchase, asset purchase and/or merger
agreement, as applicable (collectively, “Transaction
Documents”) with Northstar and one or more of the other Target
Companies. Notwithstanding the foregoing, each of the parties hereto
recognize that consummation of any of the Transactions will require, in addition
to the conditions precedent to be set forth in such Transaction Documents (i)
the consent of the requisite majority of the limited partners or shareholders of
the Funds and the stockholders of Northstar and/or its subsidiaries; and (ii)
the affirmative vote or consent of the holders of a majority of the outstanding
publicly traded ASSAC Ordinary Shares at a shareholders meeting to be held on or
about January 17, 2010 (the “ASSAC Shareholders
Meeting”), and other required conditions specified in the ASSAC
prospectus dated January 17, 2008. The parties further acknowledge
that time is of the essence as, unless ASSAC is able to consummate the
Transactions or another acceptable business combination by not later than
January 23, 2010, it will likely be forced to liquidate its trust fund and
liquidate as an entity.
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In connection with obtaining the
requisite number of “yes” votes required to approve the transactions at the
ASSAC Shareholders Meeting, it is presently contemplated that ASSAC will offer
only to each ASSAC shareholder owning any of the 11.5 million publicly traded
ASSAC Ordinary Shares (the “ASSAC Public Shareholders”), in addition to any cash
payment required, one-third (1/3) of an additional ASSAC Ordinary Share for each
full Ordinary Share owned on the record date of the ASSAC Shareholders Meeting
by such ASSAC Public Shareholder. In addition, subject to their
agreement to become Chief Executive Officer of ASSAC and a member of the ASSAC
Board of Directors following consummation of the Closing, ASSAC presently
intends to issue additional ASSAC Ordinary Shares and options to ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, respectively, subject to appropriate “clawbacks” and
vesting agreements.
(c)
During the No-Shop Period, as
investment manager or general partner, the Stillwater Group shall cause each
Target Company to operate its business in the ordinary course consistent with
past practices and maintain the goodwill of its employees, investors and other
interested parties. In addition, during the No-Shop Period, unless
otherwise agreed to in writing by ASSAC, subject at all times to its fiduciary
obligations to the Funds and investors in such Funds, the Stillwater Group shall
not take any action in its capacity as general partner or investment manager
that would make the proposed acquisition of the securities of Northstar or the
Acquired Assets of the Funds, impossible or impracticable.
(d)
The Stillwater Group will coordinate with
Northstar and the Funds to permit ASSAC, its representatives, accountants and
counsel, to conduct an investigation and evaluation of each of the Target
Companies during the No-Shop Period, and in connection therewith will provide
such assistance to such persons as is reasonably requested. ASSAC and
its representatives,
subject to the approval of the Stillwater Group (which approval shall not
be unreasonably withheld), Northstar and the Funds, shall be permitted, upon
request and subject to appropriate confidentiality and other safeguards, to
contact and communicate with the bankers, accountants, attorneys, key personnel
and certain material investors in the Target Companies. ASSAC will
similarly permit the Stillwater Group, its representatives, accountants and
counsel, to conduct an investigation and evaluation of ASSAC during the No-Shop
Period, and in connection therewith will provide such assistance to such persons
as is reasonably requested. The Stillwater Group and its
representatives, subject to the approval of ASSAC (which approval shall not be
unreasonably withheld), shall be permitted, upon request and subject to
appropriate safeguards, to contact and communicate with the ASSAC’s bankers,
accountants, attorneys, key personnel and other advisors on
request.
(e) Subject
at all time to the provisions of Section 5(f) below, each of ASSAC and
Stillwater will bear all of their own respective costs and expenses (including,
but not limited to, fees and expenses of legal counsel, accountants, and other
representatives and consultants) incurred in connection with the transactions
contemplated hereby. In the event that such transactions are
consummated, ASSAC shall promptly pay all of Stillwater’s costs and expenses
incurred in connection with the transactions contemplated hereby or reimburse
Stillwater for any such costs and expenses previously paid.
(f) ASSAC
hereby covenants and agrees to:
(i)
take all steps reasonably
required to obtain the request approvals of the holders of ASSAC publicly traded
Ordinary Shares at the ASSAC Stockholders Meeting, including, without
limitation, (A) mailing a definitive Proxy Statement to such ASSAC Shareholders
as soon as reasonably practicable following execution of the Transaction
Documents, (B) borrowing such amounts from Victory Park or such other lender(s)
as shall be required to obtain assurances of obtaining a sufficient number of
affirmative votes for the proposals contained in such Proxy Statement to obtain
the required number of votes or consents to approve the proposals contained in
such Proxy Statement (the “ASSAC Shareholder
Approvals”); provided,
however, that all of the covenants and agreements of ASSAC contained in
this Section 5(f) are conditional upon and subject to (x) execution of
definitive Transaction Documents in respect of the Northstar acquisition and the
Selected Fund Acquisitions, (y) obtaining the requisite consents and approvals
of the investors or stockholders of Northstar and such Selected Fund
Acquisitions, and (z) compliance by each of Stillwater, ▇▇▇▇ and Doueck with
their agreements set forth in Section 5(g) below; and
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(ii) if
to the extent ASSAC Shareholder Approvals are obtained, at Closing, ASSAC will
have not less than $15.0 million of cash funds available in the Trust Account
described below to (A) purchase Northstar, (B) pay transaction costs and
expenses, and (C) to the extent remaining, provide working capital for
ASSAC.
In the event that, for any reason other
than the failure to satisfy the conditions precedent to ASSAC’s covenants and
agreements set forth above, ASSAC fails to comply with its covenants set forth
in this Section 5(f) and as a result thereof, the transactions contemplated by
this Agreement are not consummated, ASSAC shall be responsible to either pay all
of Stillwater’s costs and expenses incurred in connection with the transactions
contemplated hereby, or reimburse Stillwater for any such costs and expenses
previously paid.
(g) Stillwater
and its principals, including ▇▇▇▇ and ▇▇▇▇▇▇, hereby covenant and agree to (i)
provide full cooperation and assistance to ASSAC and its representatives in
negotiating and executing Transaction Documents with Northstar and any one or
more of the other Target Companies (the “Selected Fund
Acquisitions”), (ii) provide information with respect to Northstar and
the Selected Fund Acquisitions required for inclusion in such Proxy Statement;
and (iii) use their best efforts to obtain the requisite consents and approvals
of the investors or stockholders of such Selected Fund
Acquisitions. In connection therewith, Northstar shall be obligated
to bear its own legal and accounting fees and expenses.
(h) Each
of the Stillwater Group and ASSAC shall be responsible for the payment of 50% of
any finders or origination fee to ▇▇▇▇▇ ▇▇▇▇▇▇▇ or his affiliates, and each of
such parties shall cooperate with a view toward minimizing the amount of such
fee that they will be required to pay. Unless otherwise agreed, in no
event will either ASSAC or Stillwater be individually responsible to pay a
finders or origination fee in excess of one (1%) percent of the Cash Fee payable
to Stillwater under this Agreement. Except as aforesaid, neither ASSAC nor the
Stillwater Group has incurred or will incur any liability or obligation for all
or any part of any finder's or brokerage fee with respect to the transactions
contemplated hereby which was incurred, or purportedly incurred, by any of
them.
(i)
Each of
ASSAC and the Stillwater Group agree not to make or permit to be made any public
disclosure of the existence of the terms of this letter without the prior
written consent of the others, except as otherwise required by law, including
the Securities Laws, or as advised by legal counsel, and except to their
respective advisors and attorneys.
(j) This
letter agreement shall be governed by and interpreted in accordance with the
laws of the State of New York without giving effect to the conflicts of laws
principles thereof. The parties hereto hereby irrevocably and
unconditionally consent to the exclusive jurisdiction of the courts located in
New York County, New York in connection with any claims, actions or other
proceeding relating to this letter agreement or the transactions contemplated
hereby.
(k) Except
(i) for the business and financial terms contained in this letter agreement and
in Exhibit A hereto, which are mutually agreed upon by the parties, and (ii) all
of the provisions of Section 5 hereof which constitute legal and binding
obligations of each of the parties hereto, the legal obligations of the parties
are subject to the negotiation and execution of the Transaction Documents with
Northstar and the other Selected Acquisitions and mutually acceptable management
agreements with the Stillwater Group.
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(l)
Neither Stillwater, the Stillwater Group,
any of their respective representatives or affiliates shall have any lien,
security interest, claim against or any other right to (a) any of the maximum
$115.0 million principal amount of the proceeds held in that certain trust
administered and maintained by Continental Stock Transfer & Trust Company,
as trustee (and any successor trust or substitute arrangement) for the benefit
of ASSAC and certain of the shareholders of ASSAC (the “Trust”), (b) any
interest earned on such maximum $115.0 million principal amount of proceeds held
in the Trust, or (c) any of the $2,000,000 of interest income proceeds earned on
the proceeds held in such Trust. Stillwater, on behalf of itself, the
Stillwater Group and each of its representatives and affiliates (including
legal counsel and other professionals retained by Stillwater), does hereby
expressly waive and relinquish any claim or other rights to the Trust, its
corpus or any interest earned thereon. Notwithstanding the
foregoing, ASSAC hereby acknowledges that it has received approximately $2.5
million in connection with the termination of its proposed agreement with White
Energy Company Limited, and after payment of all accrued debts and obligations
through and including the date hereof, has approximately $0.5 million to defray
transaction expenses contemplated hereby.
(l) This
agreement may be executed in counterparts. Facsimile and pdf
signatures hereto shall have the same validity as original signatures
hereto.
Upon execution and delivery of this
letter in the space provided below, ASSAC shall instruct ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, its
legal counsel to begin preparation of the Transaction Documents and other
related agreements, including preparation of the ASSAC proxy statement required
to be mailed to ASSAC shareholders prior to the ASSAC Shareholders
Meeting.
[The
balance of this page intentionally left blank – signature page
follows]
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If the foregoing accurately reflects
the substance of our mutual agreement and understanding, please so indicate by
executing and returning a copy of this letter agreement. We look
forward to working with you in connection with this Transaction.
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Very
truly yours,
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By:
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/s/ ▇▇▇▇ ▇.
▇▇▇▇▇
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▇▇▇▇
▇. ▇▇▇▇▇, President
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ACCEPTED
AND AGREED TO
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this
18th
day of December 2009:
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STILLWATER
CAPITAL PARTNERS, INC.
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By:
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/s/ ▇▇▇▇▇▇▇
▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇, Principal
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/s/ ▇▇▇▇
▇▇▇▇▇▇
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▇▇▇▇
▇▇▇▇▇▇, Principal
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As
to Section 5(a) of this letter agreement:
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/s/ ▇▇▇▇▇▇▇
▇▇▇▇
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▇▇▇▇▇▇▇
▇▇▇▇
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/s/ ▇▇▇▇
▇▇▇▇▇▇
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▇▇▇▇
▇▇▇▇▇▇
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- 10
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