FORM OF STOCK ESCROW AGREEMENT
Exhibit 10.3
STOCK
ESCROW AGREEMENT, dated as of ______, 2017 (the
“Agreement”) by and among Big Rock Partners Acquisition
Corp., a Delaware corporation (the “Company”), Big Rock
Partners Sponsor LLC, a Delaware limited liability company (the
“Sponsor”), and Continental Stock Transfer & Trust
Company (the “Escrow Agent”).
WHEREAS,
the Company has entered into an Underwriting Agreement, dated
______, 2017 (the “Underwriting Agreement”), with
EarlyBirdCapital, Inc. (the “Representative”), acting
as representative of the several underwriters (collectively, the
“Underwriters”), pursuant to which, among other
matters, the Underwriters have agreed to purchase in a public
offering (the “IPO”) 5,000,000 units (plus up to
750,000 units to cover over-allotments, if any) (the
“Units”) of the Company’s securities, each Unit
consisting of one share of the Company’s common stock, par
value $0.001 per share (the “Common Stock”), one right
to receive one-tenth (1/10) of one share of Common Stock upon the
consummation of an initial business combination, and one-half of
one warrant (a “Warrant”), each whole Warrant entitling
the holder to purchase one share of Common Stock, all as more fully
described in the Company’s Prospectus dated ______, 2017
(“Prospectus”), comprising part of the Company’s
Registration Statement on Form S-1 (File No. 333-220947) under the
Securities Act of 1933, as amended (the “Registration
Statement”), declared effective on ______, 2017 (the
“Effective Date”);
WHEREAS,
the Sponsor has agreed, as a condition to the Underwriters’
obligation to purchase the Units pursuant to the Underwriting
Agreement and to offer them to the public, to deposit all of the
number of shares of Common Stock as set forth opposite
Sponsor’s name on Exhibit A attached hereto, in the aggregate
1,437,500 shares, which includes all shares of Common Stock
outstanding prior to the date of the closing of the IPO (the
“Closing Date”), up to 187,500 shares of which will be
forfeited if the Underwriters’ over-allotment option is not
exercised in full (the “Founder Shares” or
“Escrow Shares”), in escrow with the Escrow Agent as
hereinafter provided; and
WHEREAS,
the Company and the Sponsor desire that the Escrow Agent accept the
Escrow Shares, in escrow, to be held and disbursed as hereinafter
provided.
IT IS
AGREED:
1. Appointment of
Escrow Agent. The Company and the Sponsor hereby appoint the
Escrow Agent to act in accordance with and subject to the terms of
this Agreement, and the Escrow Agent hereby accepts such
appointment and agrees to act in accordance with and subject to
such terms.
2. Deposit of Escrow
Shares. On or before the Closing Date, the Sponsor shall
deliver to the Escrow Agent certificates representing their
respective Escrow Shares, in proper transfer order with Medallion
guaranteed stock powers, to be held and disbursed subject to the
terms and conditions of this Agreement. The Sponsor acknowledges
and agrees that the certificates representing the Escrow Shares
will bear a legend to reflect the deposit of such Escrow Shares
under this Agreement.
3. Disbursement of the
Escrow Shares. The Escrow Agent shall hold the Escrow Shares
until the termination of the Escrow Period (as defined below). In
the case of the Escrow Shares, the “Escrow Period”
shall be the period beginning on the date the certificates
representing the Escrow Shares are deposited with the Escrow Agent
and ending on the earliest of (x) the first anniversary of the
completion of the Company’s initial business combination (as
such term is defined in the Registration Statement), (y) such time
subsequent to the Company’s initial business combination as
the last sales price of the Company’s Common Stock equals or
exceeds $12.50 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any
20 trading days within any 30-trading day period, and (z) the date
on which the Company completes a liquidation, merger, stock
exchange or other similar transaction after the Company’s
initial business combination that results in all of the
Company’s stockholders having the right to exchange their
shares of Common Stock for cash, securities or other
property.
On the
termination date of the Escrow Period, the Escrow Agent shall, upon
written instructions from the Company, disburse the Escrow Shares
to the Sponsor; provided, however, that if the Escrow Agent is
notified by the Company, with written notice to the Sponsor,
pursuant to Section 6.6 hereof that up to an aggregate of 187,500
of the Escrow Shares have been forfeited because the Underwriters
did not exercise their over-allotment option in full then the
Escrow Agent shall promptly destroy the certificates representing
such Escrow Shares (or portion thereof, as applicable). In
addition, notwithstanding anything to the contrary contained
herein, the Escrow Agent shall disburse the Escrow Shares to the
Sponsor upon being notified by the Company that the trust account
into which substantially all of the proceeds of the IPO has been
deposited as described in the Prospectus (the “Trust
Account”) is being liquidated because the Company has been
unable to consummate its initial business combination within the
required time frame. The Escrow Agent shall have no further duties
hereunder after the disbursement or destruction of the Escrow
Shares in accordance with this Section 3.
4. Rights of Sponsor
in Escrow Shares.
4.1 Voting Rights as a
Stockholder. Subject to the terms of the Insider Letter
described in Section 4.4 hereof and except as herein provided, the
Sponsor shall retain all of its rights as a stockholder of the
Company during the Escrow Period, including, without limitation,
the right to vote the Escrow Shares.
4.2 Dividends and Other
Distributions in Respect of the Escrow Shares. During the
Escrow Period, all dividends payable in cash with respect to the
Escrow Shares shall be paid to the Sponsor, but all dividends
payable in stock or other non-cash property with respect to all of
the Escrow Shares (“Non-Cash Dividends”) shall be
delivered to the Escrow Agent to hold in accordance with the terms
hereof. As used herein, the term “Escrow Shares” shall
be deemed to include the Non-Cash Dividends distributed thereon, if
any.
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4.3 Restrictions on
Transfer. During the applicable Escrow Period, no sale,
transfer or other disposition may be made of any or all of the
Escrow Shares except (i) to the Sponsor's or the
Company’s officers, directors, employees, consultants or
their affiliates, (ii) to a Sponsor’s officers, directors,
employees or members; (iii) to relatives and trusts of the Sponsor
for estate planning purposes; (iv) pursuant to a qualified domestic
relations order; (v) by private sales made at or prior to the
consummation of a business combination at prices no greater than
the price at which the shares were originally purchased; or (vi) to
the Company for no value for cancellation in connection with the
consummation of a business combination; provided, however, that in
the case of clauses (i) through (vi), except with the
Company’s prior written consent, these permitted transferees
must enter into a written agreement agreeing to be bound by these
transfer restrictions. Even if transferred in accordance with this
Section 4.3, the Escrow Shares will remain subject to this
Agreement and may be released from escrow only in accordance with
Section 3 hereof. During the applicable Escrow Period, the Sponsor
shall not pledge or grant a security interest in the Escrow Shares
or grant a security interest in its rights under this Agreement.
The Escrow Shares shall bear the legend provided on Exhibit B
attached hereto.
4.4 Insider
Letter. Sponsor has executed a letter agreement with the
Representative and the Company, dated as of the Effective Date, and
which is filed as an exhibit to the Registration Statement (the
“Insider Letter”), which contains certain rights and
obligations of the Sponsor with respect to the Company, including,
but not limited to, certain voting obligations in respect of the
Escrow Shares.
5. Concerning the
Escrow Agent.
5.1 Good Faith
Reliance. The Escrow Agent shall not be liable for any
action taken or omitted by it in good faith and in the exercise of
its own best judgment, and 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
Escrow Agent, which counsel may be company counsel), 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 Escrow Agent to be
genuine and to be signed or presented by the proper person or
persons. The Escrow Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of
this Agreement unless evidenced by a writing delivered to the
Escrow Agent signed by the proper party or parties and, if the
duties or rights of the Escrow Agent are affected, unless it shall
have given its prior written consent thereto.
5.2 Indemnification.
The Escrow Agent shall be indemnified and held harmless by the
Company from and against any expenses, including reasonable counsel
fees and disbursements, or loss suffered by the Escrow Agent in
connection with any action taken by it hereunder, action, suit or
other proceeding involving any claim which in any way, directly or
indirectly, arises out of or relates to this Agreement, the
services of the Escrow Agent hereunder, or the Escrow Shares held
by it hereunder, other than expenses or losses arising from the
gross negligence, willful misconduct or bad faith of the Escrow
Agent. Promptly after the receipt by the Escrow Agent of notice of
any demand or claim or the commencement of any action, suit or
proceeding, the Escrow Agent shall notify the other parties hereto
in writing. In the event of the receipt of such notice, the Escrow
Agent, in its sole discretion, may commence an action in the nature
of interpleader in an appropriate court to determine ownership or
disposition of the Escrow Shares or it may deposit the Escrow
Shares with the clerk of any appropriate court or it may retain the
Escrow Shares pending receipt of a final, non-appealable order of a
court having jurisdiction over all of the parties hereto directing
to whom and under what circumstances the Escrow Shares are to be
disbursed and delivered. The provisions of this Section 5.2 shall
survive in the event the Escrow Agent resigns or is discharged
pursuant to Sections 5.5 or 5.6 below.
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5.3 Compensation.
The Escrow Agent shall be entitled to reasonable compensation from
the Company for all services rendered by it hereunder, as set forth
on Exhibit C hereto. The Escrow Agent shall also be entitled to
reimbursement from the Company for all reasonable expenses paid or
incurred by it in the administration of its duties hereunder
including, but not limited to, all counsel, advisors’ and
agents’ fees and disbursements and all taxes or other
governmental charges.
5.4 Further
Assurances. From time to time on and after the date hereof,
the Company and the Sponsor shall deliver or cause to be delivered
to the Escrow Agent such further documents and instruments and
shall do or cause to be done such further acts as the Escrow Agent
shall reasonably request to carry out more effectively the
provisions and purposes of this Agreement, to evidence compliance
herewith or to assure itself that it is protected in acting
hereunder.
5.5 Resignation.
The Escrow Agent may resign at any time and be discharged from its
duties as escrow agent hereunder by its giving the other parties
hereto written notice and such resignation shall become effective
as hereinafter provided. Such resignation shall become effective at
such time that the Escrow Agent shall turn over to a successor
escrow agent appointed by the Company and approved by the
Representative, which approval will not be unreasonably withheld,
conditioned or delayed, the Escrow Shares held hereunder. If no new
escrow agent is so appointed within the 60 day period following the
giving of such notice of resignation, the Escrow Agent may deposit
the Escrow Shares with any court it reasonably deems appropriate in
the State of New York.
5.6 Discharge of Escrow
Agent. The Escrow Agent shall resign and be discharged from
its duties as escrow agent hereunder if so requested in writing at
any time by all of the other parties hereto, jointly, provided,
however, that such resignation shall become effective only upon
acceptance of appointment by a successor escrow agent as provided
in Section 5.5.
5.7 Liability.
Notwithstanding anything herein to the contrary, the Escrow Agent
shall not be relieved from liability hereunder for its own gross
negligence, fraud or willful misconduct.
6. Miscellaneous.
6.1 Governing
Law. This Agreement shall for all purposes be deemed to be
made under and shall be construed in accordance with the laws of
the State of New York without reference to its principles of
conflicts of law which would require the application of the laws of
another jurisdiction. Each of the parties hereby agrees that any
action, proceeding or claim against it arising out of or relating
in any way to this Agreement shall be brought and enforced in the
courts of the State of New York or the United States District Court
for the Southern District of New York, and irrevocably submits to
such personal jurisdiction, which jurisdiction shall be exclusive.
Each of the parties hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient
forum.
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6.2 Entire
Agreement. This Agreement and the Insider Letters contain
the entire agreement of the parties hereto with respect to the
subject matter hereof and, except as expressly provided herein, may
not be changed or modified except by an instrument in writing
signed by the party to be charged. In connection with any proposed
amendment, the Escrow Agent may request an opinion of the
Company’s counsel as to the validity of the proposed
amendment as a condition to its execution of said
amendment.
6.3 Headings.
The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
thereof.
6.4 Binding
Effect. This Agreement shall be binding upon and inure to
the benefit of the respective parties hereto and their legal
representative, successors and assigns.
6.5 Notices. Any
notice or other communication required or which may be given
hereunder shall be in writing and either be delivered personally or
by private national courier service, or be mailed, certified or
registered mail, return receipt requested, postage prepaid, and
shall be deemed given when so delivered personally or by private
national courier service, or, if mailed, four business days after
the date of mailing, in the case of the Sponsor to the address
listed on Exhibit A attached hereto, and to the other parties, as
follows:
if to
the Escrow Agent, to:
Continental Stock
Transfer & Trust Company
Xxx
Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attn:
Xxxxxx X. Xxxxxx or Xxxxxxx Xxxxxx
Fax
No.: (000) 000-0000
if to
the Company, to:
0000 X.
Xxxxxxx Xxxxxxx
Xxxxx
000
Xxxxxx
Xxxxx, XX 00000
Attn:
Xxxxxxx Xxxxxxxx
and a
copy, which shall not constitute notice, to:
Akerman
LLP
Three
Brickell City Centre
00
Xxxxxxxxx 0xx
Xxxxxx,
Xxxxx
0000
Xxxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxxx, Esq.
Fax
No.: (000) 000-0000
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if to
the Sponsor, to the address set forth in Exhibit A
hereto.
A copy
of any notice sent hereunder shall be sent to:
EarlyBirdCapital,
Inc.
Xxx
Xxxxxxxxxx Xxxxxxxxxx, Xxxxx 0X00
Xxxxxxxx, Xxx Xxxx
00000
Attn:
Xxxxxx Xxxxx
Fax
No.: []
with a
copy, to:
Xxxxxxxx
Xxxxxx
The
Chrysler Building
000
Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attn:
Xxxxx Xxxx Xxxxxx, Esq.
Fax
No.: (000) 000-0000
The
parties may change the persons and addresses to which the notices
or other communications are to be sent by giving written notice to
any such change in the manner provided herein for giving
notice.
6.6 Liquidation of
Company; Forfeiture. The Company shall give the Escrow Agent
prompt written notification of (i) the liquidation of the Trust
Account or (ii) forfeiture of up to an aggregate of 187,500 Escrow
Shares held by the Sponsor to the extent the Underwriters’
over-allotment option is not exercised in full, as further
described in the Registration Statement.
6.7 Trust Account
Waiver. Notwithstanding anything herein to the contrary, the
Escrow Agent hereby waives any and all right, title, interest,
demand, damages, action, causes of action or claim of any kind
whatsoever, known or unknown, foreseen or unforeseen, in law or
equity (a “Claim”) that it has or may have against the
Company or in or to any distribution of the Trust Account, and
hereby agrees not to seek recourse, reimbursement, payment or
satisfaction for any Claim against the Trust Account for any reason
whatsoever.
6.8 Third-Party
Beneficiaries. Sponsor hereby acknowledges that the
Underwriters, including, without limitation, the Representative,
are third-party beneficiaries of this Agreement and this Agreement
cannot be modified or changed without the prior written consent of
the Representative.
6.9 Counterparts.
This Agreement may be executed in several counterparts each one of
which shall constitute an original and may be delivered by
facsimile transmission and together shall constitute one
instrument.
[Remainder
of page intentionally left blank]
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IN
WITNESS WHEREOF, the Company has caused the execution of this
Agreement as of the date first above written.
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By:
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Name
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Title
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CONTINENTAL STOCK
TRANSFER & TRUST COMPANY
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By:
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Name
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Title
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BIG ROCK PARTNER
SPONSOR, LLC
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By:
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Name
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Title
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[Signature Page to
Securities Escrow Agreement]
EXHIBIT A
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Name
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Founder
Shares
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Big
Rock Partners Sponsor, XXX.0000 X. Xxxxxxx XxxxxxxXxxxx 000Xxxxxx
Xxxxx, XX 00000Xxxx: Xxxxxxx Xxxxxxxx
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1,437,500
(up to 187,500 of which will be forfeited if the
Underwriters’ over-allotment option is not exercised in
full)
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Exhibit A-1
EXHIBIT B
LEGEND
The
following legend shall be included on the certificates representing
the Founder Shares:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, 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 SUCH ACT OR SUCH LAWS
OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS
WHICH, IN THE OPINION OF COUNSEL, IS AVAILABLE.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
OF A STOCK ESCROW AGREEMENT AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF THE
ESCROW AGREEMENT.”
Exhibit B-1
EXHIBIT C
ESCROW
AGENT FEES
$200
escrow agent fee per month to be billed on the Closing
Date.
Exhibit C-1
