WARRANT SUBSCRIPTION AGREEMENT
WARRANT
SUBSCRIPTION AGREEMENT (this “Agreement”) is made as of this 30th day of
October, 2009 by and between 00xx Xxxxxx
General Acquisition Corp., a Delaware corporation (the “Company”), having its
principal place of business at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, and 57th Street GAC Holdings LLC (“Sponsor”), having its principal
place of business at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000.
WHEREAS,
the Company desires to sell on a private placement basis (the “Offering”) an
aggregate of 3,000,000 warrants (the “Warrants”) of the Company for a purchase
price of $0.50 per Warrant. Each Warrant is exercisable to purchase
one share of Common Stock at an exercise price of $11.50 per share during the
period commencing on the later of: (i) one year from the date of the prospectus
relating to the Company’s IPO (as defined below) and (ii) 30 days following the
consummation of a Business Transaction (as defined in Section 5 below) and
expiring on the fifth anniversary of the consummation of an initial Business
Transaction;
WHEREAS,
Sponsor wishes to purchase the Warrants and the Company wishes to accept such
subscription.
NOW,
THEREFORE, in consideration of the premises and the mutual covenants hereinafter
set forth and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Sponsor hereby agree as
follows
1. Agreement to
Subscribe
1.1.
Purchase and Issuance
of the Warrants. Upon the terms and subject to the conditions of this
Agreement, Sponsor hereby agrees to purchase from the Company, and the Company
hereby agrees to sell to the Sponsor, on the Closing Date, the Warrants for an
aggregate purchase price of $1,500,000 (the “Purchase Price”).
1.2.
Delivery of the
Purchase Price. Upon execution of this Agreement, the undersigned is
hereby bound to fulfill its obligations hereunder and hereby irrevocably commits
to deliver into a trust account at a financial institution to be chosen by the
Company, maintained by Continental Stock Transfer & Trust Company,
acting as Trustee on the date of Closing (as hereinafter defined), the Purchase
Price in immediately available funds by certified bank check, wire transfer or
such other form of payment as shall be acceptable to the Trustee, in its sole
and absolute discretion, at the Closing.
1.3.
Closing. The
closing (the “Closing”) of the Offering, shall take place at the offices of the
Company, on or prior to the effective date of the registration statement
relating to the Company’s initial public offering (“IPO”) of 5,000,000 units of
Common Stock and Warrants (the “Closing Date”).
2. Representations and Warranties of
the Sponsor
Sponsor
represents and warrants to the Company that:
2.1.
No Government
Recommendation or Approval. Sponsor understands that no United States
federal or state agency has passed upon or made any recommendation or
endorsement of the Company or the Offering of the Warrants or the Common Stock
underlying the Warrants (the “Warrant Shares” and, collectively with the
Warrants, the “Securities”).
2.2.
Regulation D
Offering. Sponsor represents that it is an “accredited investor” as such
term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933,
as amended (the “Securities Act”) and acknowledges the sale contemplated hereby
is being made in reliance on a private placement exemption to “Accredited
Investors” within the meaning of Section 501(a) of Regulation D under the
Securities Act or similar exemptions under state law.
2.3.
Intent. Sponsor
is purchasing the Warrants solely for investment purposes, for the Sponsor’s own
account and not for the account or benefit of any U.S. Person, and not with a
view towards the distribution thereof and Sponsor has no present arrangement to
sell the Securities to or through any person or entity. Sponsor shall not engage
in hedging transactions with regard to the Warrants and the underlying
securities unless in compliance with the Securities Act.
2.4.
Restrictions on
Transfer. Sponsor acknowledges and understands the Warrants are being
offered in a transaction not involving a public offering in the United States
within the meaning of the Securities Act. The Securities have not been
registered under the Securities Act, and, if in the future the Sponsor decides
to offer, resell, pledge or otherwise transfer the Securities, such Securities
may be offered, resold, pledged or otherwise transferred only (A) pursuant
to an effective registration statement filed under the Securities Act,
(B) pursuant to an exemption from registration under Rule 144 promulgated
under the Securities Act, if available, or (C) pursuant to any other
available exemption from the registration requirements of the Securities Act,
and in each case in accordance with any applicable securities laws of any state
or any other jurisdiction. Sponsor agrees that if any transfer of its Securities
or any interest therein is proposed to be made, as a condition precedent to any
such transfer, Sponsor may be required to deliver to the Company an opinion of
counsel satisfactory to the Company. Absent registration or another available
exemption from registration, the Sponsor agrees it will not resell the
Securities. Sponsor further acknowledges that because the Company is a shell
company Rule 144 may not be available to the Sponsor for the resale of the
Securities until one year anniversary following consummation of the initial
Business Transaction of the Company, despite technical compliance with the
requirements of Rule 144 and the release or waiver of any contractual transfer
restrictions.
2.5.
Sophisticated
Investor.
(i)
Sponsor is sophisticated in financial matters and is able to evaluate the risks
and benefits of the investment in the Securities.
(ii)
Sponsor is aware that an investment in the Warrants is highly speculative and
subject to substantial risks because, among other things, none of the Securities
have been registered under the Securities Act and therefore cannot be sold
unless subsequently registered under the Securities Act or an exemption from
such registration is available. Sponsor is able to bear the economic risk of its
investment in the Securities for an indefinite period of time.
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2.6.
Independent
Investigation. Sponsor, in making the decision to purchase the Warrants,
has relied upon an independent investigation of the Company and has not relied
upon any information or representations made by any third parties or upon any
oral or written representations or assurances from the Company, its officers,
directors or employees or any other representatives or agents of the Company,
other than as set forth in this Agreement. Sponsor is familiar with the
business, operations and financial condition of the Company and has had an
opportunity to ask questions of, and receive answers from the Company’s officers
and directors concerning the Company and the terms and conditions of the
offering of the Warrants and has had full access to such other information
concerning the Company as the Sponsor has requested. Sponsor confirms that all
documents that it has requested have been made available and that the Sponsor
has been supplied with all of the additional information concerning this
investment which Sponsor has requested.
2.7 Organization and
Authority. The Sponsor is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware
and possesses all requisite power and authority necessary to carry out the
transactions contemplated by this Agreement.
2.8.
Authority. This
Agreement has been validly authorized, executed and delivered by Sponsor and is
a valid and binding agreement enforceable in accordance with its terms, subject
to the general principles of equity and to bankruptcy or other laws affecting
the enforcement of creditors’ rights generally.
2.9. No Conflicts. The
execution, delivery and performance of this Agreement and the consummation by
the Sponsor of the transactions contemplated hereby do not violate, conflict
with or constitute a default under (i) the Sponsor's Certificate of
Formation or Operating Agreement, (ii) any agreement, indenture or
instrument to which the Sponsor is a party or (iii) any law, statute, rule or
regulation to which the Sponsor is subject, or any agreement, order, judgment or
decree to which the Sponsor is subject.
2.10.
No Legal Advice from
Company. Sponsor acknowledges it has had the opportunity to review this
Agreement and the transactions contemplated by this Agreement and the other
agreements entered into between the parties hereto with the Sponsor’s own legal
counsel and investment and tax advisors. Except for any statements or
representations of the Company made in this Agreement and the other agreements
entered into between the parties hereto, Sponsor is relying solely on such
counsel and advisors and not on any statements or representations of the Company
or any of its representatives or agents for legal, tax or investment advice with
respect to this investment, the transactions contemplated by this Agreement or
the securities laws of any jurisdiction.
2.11.
Reliance on
Representations and Warranties. Sponsor understands the Warrants are
being offered and sold to Sponsor in reliance on exemptions from the
registration requirements under the Securities Act, and analogous provisions in
the laws and regulations of various states, and that the Company is relying upon
the truth and accuracy of the representations, warranties, agreements,
acknowledgments and understandings of the Sponsor set forth in this Agreement in
order to determine the applicability of such provisions.
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2.12.
No
Advertisements. The undersigned is not subscribing for the Warrants as a
result of or subsequent to any advertisement, article, notice or other
communication published in any newspaper, magazine, or similar media or
broadcast over television or radio, or presented at any seminar or
meeting.
2.13.
Legend. Sponsor
acknowledges and agrees the certificates evidencing the Warrants and the Warrant
Shares shall bear a restrictive legend (the “Legend”), in form and substance as
set forth in Section 4 hereof, prohibiting the offer, sale, pledge or
transfer of the securities, except (i) pursuant to an effective
registration statement covering these securities under the Securities Act or
(ii) pursuant to any other exemptions from the registration requirements
under the Securities Act and such laws which, in the opinion of counsel for this
Company, is available.
3. Representations and Warranties of
the Company
The
Company represents and warrants to Sponsor that:
3.1.
Valid Issuance of
Capital Stock. The total number of shares of all classes of capital stock
which the Company has authority to issue is 100,000,000 shares of Common Stock
and 1,000,000 shares of Preferred Stock. As of the date hereof, the Company has
638,889 shares of Common Stock (of which 83,333 shares are subject to forfeiture
as described in the registration statement related to the Company’s IPO) and no
shares of Preferred Stock issued and outstanding. All of the issued shares of
capital stock of the Company have been duly authorized, validly issued, and are
fully paid and non-assessable.
3.2 Title to
Warrants. Upon issuance in accordance with, and payment pursuant to, the
terms hereof and the Warrant Agreement, as the case may be, each of the Warrants
and the shares of Common Stock issued upon exercise of the Warrants will be duly
and validly issued, fully paid and non-assessable. Upon issuance in accordance
with, and payment pursuant to, the terms hereof and the Warrant Agreement, as
the case may be, the Sponsor will have or receive good title to the Warrants,
free and clear of all liens, claims and encumbrances of any kind, other than (i)
transfer restrictions hereunder and under the other agreements contemplated
hereby and (ii) transfer restrictions under federal and state securities
laws.
3.2.
Organization and
Qualification. The Company is a corporation duly incorporated and
existing in good standing under the laws of the state of Delaware and has the
requisite corporate power to own its properties and assets and to carry on its
business as now being conducted.
3.3.
Authorization;
Enforcement. (i) The Company has the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and to
issue the Warrants and the underlying securities in accordance with the terms
hereof, (ii) the execution, delivery and performance of this Agreement by
the Company and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action, and no further
consent or authorization of the Company or its Board of Directors or
stockholders is required, and (iii) this Agreement constitutes valid and
binding obligations of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, moratorium, reorganization, or
similar laws relating to, or affecting generally the enforcement of, creditors’
rights and remedies or by equitable principles of general application and except
as enforcement of rights to indemnity and contribution may be limited by federal
and state securities laws or principles of public policy.
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3.4.
No Conflicts.
The execution, delivery and performance of this Agreement and the consummation
by the Company of the transactions contemplated hereby do not (i) result in
a violation of the Company’s Certificate of Incorporation or Bylaws,
(ii) conflict with, or constitute a default under any agreement, indenture
or instrument to which the Company is a party or (iii) any law statute, rule or
regulation to which the Company is subject or any agreement, order, judgment or
decree to which the Company is subject. Other than any Securities Exchange
Commission (“SEC”) or state securities filings which may be required to be made
by the Company subsequent to the Closing, and any registration statement which
may be filed pursuant thereto, the Company is not required under federal, state
or local law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency or
self-regulatory entity in order for it to perform any of its obligations under
this Agreement or issue the Warrants or the Common Stock issuable upon exercise
thereof in accordance with the terms hereof.
4. Legends
4.1.
Legend. The
Company will issue the Warrants, and when issued, the Warrant Shares, purchased
by the Sponsor in the name of the Sponsor. The Securities will bear the
following Legend and appropriate “stop transfer” instructions:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION
OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.”
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS CONTAINED IN A SECURITIES ESCROW AGREEMENT (THE “AGREEMENT”) AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM
OF THE ESCROW PERIOD (AS DEFINED IN THE AGREEMENT).”
4.2.
Sponsors’
Compliance. Nothing in this Section 4 shall affect in any way the
Sponsors’ obligations and agreements to comply with all applicable securities
laws upon resale of the Securities.
4.3.
Company’s Refusal to
Register Transfer of the Securities. The Company shall refuse to register
any transfer of the Securities, if in the sole judgment of the Company such
purported transfer would not be made (i) pursuant to an effective
registration statement filed under the Securities Act, or (ii) pursuant to
an available exemption from the registration requirements of the Securities
Act.
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4.4 Registration
Rights. Subscriber will be entitled to certain registration
rights which will be governed by a registration rights agreement (“Registration
Rights Agreement”) to be entered into with the Company on or prior to the
closing of the IPO.
5. Escrow. Upon consummation of
the IPO, the holders of the Warrants shall enter into a securities escrow
agreement (the “Escrow Agreement”) with Continental Stock Transfer &
Trust Company, whereby the Warrants shall be held in escrow until one day
following consummation of a Business Transaction (as defined therein) subject to
certain restrictions as set forth in the Escrow Agreement.
6. Securities Laws
Restrictions.
In
addition to the restrictions contained in the Escrow Agreement, Sponsor agrees
not to sell, transfer, pledge, hypothecate or otherwise dispose of all or any
part of the Securities unless, prior thereto (a) a registration statement
on the appropriate form under the Securities Act and applicable state securities
laws with respect to the Securities proposed to be transferred shall then be
effective or (b) the Company shall have received an opinion from counsel
reasonably satisfactory to the Company, that such registration is not required
because such transaction complies with the Securities Act and the rules
promulgated by the SEC thereunder and with all applicable state securities
laws.
7. Waiver of Liquidation
Distributions.
In
connection with the Securities purchased pursuant to this Agreement, and with
respect to any Common Stock purchased by Sponsor prior to the private placement,
Sponsor hereby waives any and all right, title, interest or claim of any kind in
or to any distributions of the trust account, whether in connection with (i) the
exercise of redemption rights if the Company consummates a Business Transaction
or (ii) upon the Company’s redemption of shares of Common Stock sold in the
Company’s IPO upon the Company’s failure to timely complete a Business
Transaction. For purposes of clarity, in the event Sponsor purchases shares of
Common Stock in the IPO or in the aftermarket, any additional shares so
purchased shall be eligible to receive the redemption value of such shares of
Common Stock upon the same terms offered to all other purchasers of Common Stock
in the IPO. In no event will a Sponsor have the right to exercise any Warrants
prior to the later of: (i) one year from the date of the prospectus
relating to the Company’s IPO and (ii) 30 days following the consummation
of a Business Transaction.
8. Forfeiture of
Warrants.
8.1.
Failure to Consummate
Business Transaction. The Warrants shall be forfeited to the Company upon
the dissolution of the Company in the event that the Company does not consummate
a Business Transaction within 15 months from the consummation of the
IPO.
8.2.
Termination of Rights
as holder; Escrow. If the Warrants are forfeited in accordance with this
Section 8, then after such time the Sponsor (or successor in interest),
shall no longer have any rights as a holder of such Warrants, and the Company
shall take such action as is appropriate to cancel such Warrants. To effectuate
the foregoing, all certificates representing the Warrants shall be held in
escrow as provided in Section 5 hereof. In addition, Sponsor hereby
irrevocably grants the Company a limited power of attorney for the purpose of
effectuating the foregoing and agrees to take any and all measures reasonably
requested by the Company necessary to effect the foregoing.
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9. Rescission Right Waiver and
Indemnification.
9.1.
Sponsor understands and acknowledges an exemption from the registration
requirements of the Securities Act requires there be no general solicitation of
purchasers of the Warrants. In this regard, if the IPO were deemed to be a
general solicitation with respect to the Warrants, the offer and sale of such
Warrants may not be exempt from registration and, if not, the Sponsor may have a
right to rescind its purchase of the Warrants. In order to facilitate the
completion of the Offering and in order to protect the Company, its stockholders
and the trust account from claims that may adversely affect the Company or the
interests of its stockholders, Sponsor hereby agrees to waive, to the maximum
extent permitted by applicable law, any claims, right to xxx or rights in law or
arbitration, as the case may be, to seek rescission of its purchase of the
Warrants. Sponsor acknowledges and agrees this waiver is being made in order to
induce the Company to sell the Warrants to the Sponsor. Sponsor agrees the
foregoing waiver of rescission rights shall apply to any and all known or
unknown actions, causes of action, suits, claims or proceedings (collectively,
“Claims”) and related losses, costs, penalties, fees, liabilities and damages,
whether compensatory, consequential or exemplary, and expenses in connection
therewith, including reasonable attorneys’ and expert witness fees and
disbursements and all other expenses reasonably incurred in investigating,
preparing or defending against any Claims, whether pending or threatened, in
connection with any present or future actual or asserted right to rescind the
purchase of the Warrants hereunder or relating to the purchase of the Warrants
and the transactions contemplated hereby.
9.2. Sponsor
agrees not to seek recourse against the trust account for any reason whatsoever
in connection with its purchase of the Warrants or any Claim that may arise now
or in the future.
9.3. Sponsor
acknowledges and agrees the stockholders of the Company and Xxxxxx Xxxxxx &
Co., Inc. (“MJ”) are and shall be third-party beneficiaries of the foregoing
provisions of this Agreement.
9.4. Sponsor
agrees that to the extent any waiver of rights under this Section 9 is
ineffective as a matter of law, Sponsor has offered such waiver for the benefit
of the Company as an equitable right that shall survive any statutory
disqualification or bar that applies to a legal right. Sponsor acknowledges the
receipt and sufficiency of consideration received from the Company hereunder in
this regard.
10. Terms of the
Warrant
The
Warrants are substantially identical to the warrants included in the units
offered in the IPO as set forth in the Warrant Agreement to be entered into with
Continental Stock Transfer and Trust Company on or prior to the closing of the
IPO, except: (i) they will not have a claim to the funds held in the trust
account, (ii) they will be placed in escrow and not released before, except
in limited circumstances, until 30 days following the consummation of a Business
Transaction, (iii) they are being purchased pursuant to an exemption from
the registration requirements of the Securities Act and will become freely
tradable only after they are registered pursuant to the Registration Rights
Agreement to be signed on or before the date of this prospectus, (iv) they
will be non-redeemable so long as they are held by the initial holder thereof
(or any of its permitted transferees), and (v) they are exercisable
(a) on a “cashless” basis if held by the Sponsor or its permitted assigns
and (b) in the absence of an effective registration statement covering the
shares of common stock underlying the warrants.
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11. Governing Law; Jurisdiction;
Waiver of Jury
Trial
This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware for agreements made and to be wholly performed within such
state. The parties hereto hereby waive any right to a jury trial in connection
with any litigation pursuant to this Agreement and the transactions contemplated
hereby.
12. Assignment; Entire Agreement;
Amendment
12.1.
Assignment.
Neither this Agreement nor any rights hereunder may be assigned by any party to
any other person other than by Sponsor to a person agreeing to be bound by the
terms hereof.
12.2.
Entire
Agreement. This Subscription Agreement sets forth the entire agreement
and understanding between the parties as to the subject matter thereof and
merges and supersedes all prior discussions, agreements and understandings of
any and every nature among them.
12.3.
Amendment.
Except as expressly provided in this Agreement, neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
12.4.
Binding upon
Successors. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and to their respective heirs, legal representatives,
successors and permitted assigns.
13. Notices;
Indemnity
13.1
Notices. Unless
otherwise provided herein, any notice or other communication to a party
hereunder shall be sufficiently given if in writing and personally delivered or
sent by facsimile or other electronic transmission with copy sent in another
manner herein provided or sent by courier (which for all purposes of this
Agreement shall include Federal Express or other recognized overnight courier)
or mailed to said party by certified mail, return receipt requested, at its
address provided for herein or such other address as either may designate for
itself in such notice to the other. Communications shall be deemed to have been
received when delivered personally, on the scheduled arrival date when sent by
next day or 2nd-day courier service, or if sent by facsimile upon receipt of
confirmation of transmittal or, if sent by mail, then three days after deposit
in the mail. If given by electronic transmission, such notice shall be deemed to
be delivered (a) if by electronic mail, when directed to an electronic mail
address at which the stockholder has consented to receive notice; (b) if by
a posting on an electronic network together with separate notice to the
stockholder of such specific posting, upon the later of (1) such posting
and (2) the giving of such separate notice; and (c) if by any other
form of electronic transmission, when directed to the
stockholder.
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13.2
Indemnification. Each
party shall indemnify the other and the underwriters of the IPO against any
loss, cost or damages (including reasonable attorney’s fees and expenses)
incurred as a result of such party’s breach of any representation, warranty,
covenant or agreement in this Agreement.
14. Counterparts
This
Agreement may be executed in one or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
15. Survival;
Severability
15.1.
Survival. The
representations, warranties, covenants and agreements of the parties hereto
shall survive the Closing.
15.2.
Severability.
In the event that any provision of this Agreement becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this
Agreement shall continue in full force and effect without said provision;
provided that no such severability shall be effective if it materially changes
the economic benefit of this Agreement to any party.
16. Headings.
The
titles and subtitles used in this Agreement are used for convenience only and
are not to be considered in construing or interpreting this
Agreement.
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This
subscription is accepted by the Company on the 30th day of
October, 2009.
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By:
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/s/ Xxxx X. Xxxxx
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Name:
Xxxx X. Xxxxx
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Title:
Chief Executive Officer
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Accepted
and agreed this
October
30, 0000
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00XX
XXXXXX XXX HOLDINGS LLC
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By:
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/s/ Xxxx X. Xxxxx
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Name: Xxxx
X. Xxxxx
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Title:
Managing Member
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