4,000,000
Units
[Ÿ], 2011
Chardan
Capital Markets, LLC
00 Xxxxx
Xxxxxx, Xxxxx 0000
Xxx Xxxx,
Xxx Xxxx 00000
As
Representative of the Underwriters
named
on Schedule A
hereto
Ladies
and Gentlemen:
The
undersigned, Prime Acquisition Corp., an exempted company organized under the
laws of the Cayman Islands (“Company”), hereby confirms its
agreement with Chardan Capital Markets, LLC (hereinafter referred to as “you”, “Chardan”, or as the “Representative”) and with the
other underwriters named on Schedule A hereto for which
you are acting as representative (the Representative and the other Underwriters
being collectively referred to herein as the “Underwriters” or,
individually, an “Underwriter”) as
follows:
1.1.1 Purchase of Firm
Units. On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell, severally and not jointly, to the several
Underwriters, an aggregate of 4,000,000 units (the “Firm Units”) of the Company at
a purchase price (net of discounts and commissions, $0.28 of which shall be
deposited into the Trust Fund (as defined herein)) of $9.50 per Firm
Unit. The Underwriters, severally and not jointly, agree to purchase
from the Company the number of Firm Units set forth opposite their respective
names on Schedule A
attached hereto and made a part hereof at a purchase price (net of discounts and
commissions, $0.28 of which shall be deposited into the Trust Fund) of $9.50 per
Firm Unit. The Firm Units (and the Option Units (as hereinafter
defined), if any) are to be offered initially to the public (the “Offering”) at the offering
price of $10.00 per Unit. Each Firm Unit consists of one ordinary
share, par value $0.001 per share of the Company (the “Ordinary Shares”), and
one-half of a warrant to purchase one Ordinary Share (the “Warrant(s)”). The
Ordinary Shares and the Warrants included in the Firm Units will not be
separately transferable until ninety (90) days after the Effective Date (as
defined below). The Representative may decide to allow continued
trading of the Units following such separation. In no event will the
Company allow separate trading until (i) the preparation of an audited balance
sheet of the Company reflecting receipt by the Company of the proceeds of the
Offering and the filing of such audited balance sheet with the Commission (as
herein defined) on a Form 6-K or similar form by the Company which includes such
balance sheet and (ii) the issuance of a press release announcing when such
separate trading shall begin. Each full Warrant entitles its holder
to purchase one Ordinary Share for $7.50 per share during the period commencing
on the later of (a) the consummation by the Company of its “Business
Combination” or (b) one (1) year from the effective date (the “Effective Date”) of the
Registration Statement and terminating on the five (5) year anniversary of the
Effective Date. As used herein, the term “Business Combination” shall
mean any acquisition by merger, capital stock exchange, asset acquisition, stock
purchase or similar business combination, or control through contractual
arrangements, of one or more operating businesses by the Company. The
Company’s initial focus will be on acquiring an operating business in
the Greater China region. The Company has the right to redeem the
Warrants, with the prior consent of the Representative, upon not less than
thirty (30) days written notice at a price of $0.01 per Warrant at any time
after the Warrants become exercisable; so long as the last sales price of the
Ordinary Shares has been at least $15.00 for any twenty (20) trading days within
a thirty (30) trading day period ending on the third (3rd) Business Day prior to
the day on which notice is given, provided there is an effective registration
statement covering the resale of the Ordinary Shares issuable upon exercise of
the Warrants and a current prospectus is available throughout the thirty (30)
day written notice period. Notwithstanding
the foregoing, holders of the redeemable warrants may exercise their warrants on
a cashless basis if such registration statement or post effective amendment
relating to the exercise of the warrants is not declared effective
within 90 days from completing a business combination. As
used herein, the term “Business
Day” shall mean any day other than a Saturday, Sunday or any day on which
national banks in New York, New York are not open for business.
1.1.2 Payment and
Delivery. Delivery and payment for the Firm Units shall be
made at 10:00 A.M., New York time, on the third (3rd) Business Day following the
Effective Date of the Registration Statement (or the fourth (4th) Business Day
following the Effective Date, if the Registration Statement is declared
effective after 4:30 p.m.) or at such earlier time as shall be agreed upon by
the Representative and the Company at the offices of Chardan or at such other
place as shall be agreed upon by the Representative and the
Company. The closing of the public offering contemplated by this
Agreement is referred to herein as the “Closing” and the hour and
date of delivery and payment for the Firm Units is referred to herein as the
“Closing
Date.” Payment for the Firm Units shall be made on the Closing
Date at the Representative’s election by wire transfer in Federal (same day)
funds or by certified or bank cashier’s check(s) in New York Clearing House
funds. $40,000,000 ($45,868,000 if the Over-allotment Option (as
defined in Section 1.2) is exercised in full), or approximately $10.00 per unit
(or $9.97 per unit if the Over-allotment Option is exercised in full), of the
proceeds received by the Company for the Firm Units and from the Private
Placement (as defined in Section 1.4) shall be deposited in the trust fund
established by the Company for the benefit of the public shareholders as
described in the Registration Statement (the “Trust Fund”) pursuant to the
terms of an Investment Management Trust Agreement (the “Trust Agreement”) which amount
includes up to $1,120,000 ($0.28 per Firm Unit; $1,288,000 if the Over-allotment
Option is exercised in full) payable to the Representative as contingent
compensation upon consummation of a Business Combination. The
proceeds (less commissions, expense allowance and actual expense payments or
other fees payable pursuant to this Agreement) shall be paid to the order of the
Company upon delivery to the Representative of certificates (in form and
substance satisfactory to the Underwriters) representing the Firm Units (or
through the facilities of the Depository Trust Company (the “DTC”)) for the account of the
Underwriters. The Firm Units shall be registered in such name or
names and in such authorized denominations as the Representative may request in
writing at least two (2) Business Days prior to the Closing Date. The
Company will permit the Representative to examine and package the Firm Units for
delivery, at least one (1) full Business Day prior to the Closing
Date. The Company shall not be obligated to sell or deliver the Firm
Units except upon tender of payment by the Representative for all the Firm
Units.
1.2.3 Payment and
Delivery. Payment for the Option Units shall be made on the
Option Closing Date at the Representative’s election by wire transfer in Federal
(same day) funds or by certified or bank cashier’s check(s) in New York Clearing
House funds, by deposit of the sum of $9.50 per Option Unit (of which $0.28 of
the Underwriters’ discounts and commission shall be deposited in the Trust Fund
pursuant to Section 1.5) in the Trust Fund pursuant to the Trust Agreement upon
delivery to the Representative of certificates (in form and substance
satisfactory to the Underwriters) representing the Option Units (or through the
facilities of DTC) for the account of the Underwriters. The
certificates representing the Option Units to be delivered will be in such
denominations and registered in such names as the Representative requests
not less than two (2) Business Days prior to the Closing Date or the Option
Closing Date, as the case may be, and will be made available to the
Representative for inspection, checking and packaging at the aforesaid office of
the Company’s transfer agent or correspondent not less than one (1) full
Business Day prior to such Closing Date or Option Closing Date.
1.3.1 Purchase
Option. As additional consideration, the Company hereby agrees
to issue and sell to the Representative (and/or their designees) on the
Effective Date an option (“Representative’s Purchase
Option”) for the purchase of an aggregate of 360,000 units (the
“Representative’s
Units”) for an aggregate purchase price of $100.00, provided that in the
event that the over-allotment option is not exercised in full, a certain amount
of Representative's Unit Option shall be cancelled so that the number of
Representative's Units equals 10% of the number of units sold in the
Offering. The Representative’s Purchase Option shall be exercisable,
in whole or in part, commencing on the later of the consummation of the Business
Combination or the six (6) month anniversary date of the Effective Date and
expiring on the five (5) year anniversary date of the Effective Date, for cash
or on a cashless basis, at an initial exercise price per Representative’s Unit
of $12.00, which is equal to one hundred and twenty percent (120%) of the
initial public offering price of a Unit. The Representative’s
Purchase Option, the Representative’s Units, the Ordinary Shares and the
Warrants included in the Representative’s Units (the “Representative’s Warrants”)
and the Ordinary Shares issuable upon exercise of the Representative’s Warrants
are hereinafter referred to collectively as the “Representative’s
Securities.” The Public Securities and the Representative’s
Securities are hereinafter referred to collectively as the “Securities.” The
Representative understands and agrees that there are significant restrictions
against transferring the Representative’s Purchase Option during the first six
(6) months after the Effective Date, as set forth in Section 3 of the
Representative’s Purchase Option.
1.5 Contingent Portion of
Underwriters’ Discount. The Representative, on its own behalf
and behalf of the other Underwriters, agree that 2.8% of the gross proceeds from
the sale of the Firm Units ($1,120,000) and the Option Units (an aggregate of
$1,288,000 if the Over-allotment Option is exercised in full) (the “Contingent Discount”) will be
deposited in and held in the Trust Fund and payable to the Representative upon
the consummation of a Business Combination. In addition, in the event
the Company is unable to consummate a Business Combination and American Stock
Transfer & Trust Company (“AST” or “Escrow Agent”), the trustee of
the Trust Fund, commences liquidation of the Trust Fund as provided in the Trust
Agreement, the Representative, on its own behalf and on behalf of the other
Underwriters, agree that (i) the several Underwriters shall forfeit any rights
or claims to the Contingent Discount; and (ii) the Contingent Discount, together
with all other amounts on deposit in the Trust Fund, and any accrued interest
thereon (net of taxes payable), shall be distributed on a pro-rata basis among
the holders of the Ordinary Shares included in the Units sold in the
Offering.
2.1.1 Pursuant to the
Act. The Company has filed with the Securities and Exchange
Commission (the “Commission”) a registration
statement and an amendment or amendments thereto, on Form F-1 (File No.
333-_______), including any related preliminary prospectus (the “Preliminary Prospectus”,
including any prospectus that is included in the Registration Statement
immediately prior to the effectiveness of the Registration Statement), for the
registration of the Public Securities under the Act, which registration
statement and amendment or amendments have been prepared by the Company in
conformity with the requirements of the Act, and the rules and regulations (the
“Regulations”) of the
Commission under the Act. The conditions for use of Form F-1 to
register the Offering under the Act, as set forth in the General Instructions to
such Form, have been satisfied in all material respects. Except as
the context may otherwise require, such registration statement, as amended, on
file with the Commission at the time the registration statement becomes
effective (including the prospectus, financial statements, schedules, exhibits
and all other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to Rule 430A of
the Regulations), is hereinafter called the “Registration Statement,” and
the form of the final prospectus dated the Effective Date included in the
Registration Statement (or, if applicable, the form of final prospectus
containing information permitted to be omitted at the time of effectiveness by
Rule 430A of the Regulations filed with the Commission pursuant to Rule 424 of
the Regulations), is hereinafter called the “Prospectus.” For
purposes of this Agreement, “Time of Sale”, as used in the
Act, means 5:00 p.m., New York City time, on the date of this
Agreement. If the Company has filed, or is required pursuant to the
terms hereof to file, a registration statement pursuant to Rule 462(b) under the
Securities Act registering the Securities (a “Rule 462(b) Registration
Statement”), then, unless otherwise specified, any reference herein to
the term “Registration
Statement” shall be deemed to include such Rule 462(b) Registration
Statement. Other than a Rule 462(b) Registration Statement, which, if
filed, becomes effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the
Commission. All of the Public Securities have been registered under
the Securities Act pursuant to the Registration Statement or, if any Rule 462(b)
Registration Statement is filed, will be duly registered under the Securities
Act with the filing of such Rule 462(b) Registration Statement. The
Registration Statement has been declared effective by the Commission on the date
hereof. If, subsequent to the date of this
Agreement, the Company or the Representative have determined that at the Time of
Sale the Prospectus included an untrue statement of a material fact or omitted a
statement of material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and have agreed to
provide an opportunity to purchasers of the Firm Units to terminate their old
purchase contracts and enter into new purchase contracts, the Prospectus will be
deemed to include any additional information available to purchasers at the time
of entry into the first such new purchase contract.
2.3.1 10b-5
Representation. At the time the Registration Statement became
effective, upon the filing or first use (within the meaning of the Regulations)
of the Prospectus and at the Closing Date and the Option Closing Date, if any,
the Registration Statement and the Prospectus contained or will contain all
material statements that are required to be stated therein in accordance with
the Act and the Regulations, and did or will in all material respects conform to
the requirements of the Act and the Regulations. Neither the
Registration Statement nor any Preliminary Prospectus or the Prospectus, nor any
amendment or supplement thereto, on their respective dates, did or will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Preliminary Prospectus and the Prospectus, in light of the
circumstances under which they were made), not misleading. When any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Securities or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) or first used
(within the meaning of the Regulations) and when any amendment thereof or
supplement thereto was first filed with the Commission or first used (within the
meaning of the Regulations), such Preliminary Prospectus and any amendments
thereof and supplements thereto complied or will have been corrected in the
Prospectus to comply in all material respects with the applicable provisions of
the Act and the Regulations and did not and will not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
representation and warranty made in this Section 2.3.1 does not apply to
statements made or statements omitted in reliance upon and in conformity with
written information furnished to the Company with respect to the Underwriters by
the Representative expressly for use in the Registration Statement or Prospectus
or any amendment thereof or supplement thereto. It is understood the
statements set forth in the Prospectus under the heading “Underwriting”
constitute, for the purposes of this Agreement, information furnished by the
Representative with respect to the Underwriters.
2.3.2 Disclosure of
Agreements. The agreements and documents described in the
Registration Statement, the Preliminary Prospectus and the Prospectus conform to
the descriptions thereof contained therein and there are no agreements or other
documents required to be described in the Registration Statement, the
Preliminary Prospectus or the Prospectus or to be filed with the Commission as
exhibits to the Registration Statement, that have not been so described or
filed. Each agreement or other instrument (however characterized or
described) to which the Company is a party or by which its property or business
is or may be bound or affected and (i) that is referred to in the Registration
Statement, Preliminary Prospectus or the Prospectus or attached as an exhibit
thereto, or (ii) is material to the Company’s business, has been duly and
validly executed by the Company, is in full force and effect in all material
respects and is enforceable against the Company and, to the Company’s knowledge,
the other parties thereto, in accordance with its terms, except (x) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the federal and
state securities laws, and (z) that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought, and none of such agreements or
instruments has been assigned by the Company, and neither the Company nor, to
the Company’s knowledge, any other party is in breach or default thereunder and,
to the Company’s knowledge, no event has occurred that, with the lapse of time
or the giving of notice, or both, would constitute a breach or default
thereunder. To the Company’s knowledge, performance by the Company of
the material provisions of such agreements or instruments will not result in a
material violation of any existing applicable law, rule, regulation, judgment,
order or decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its assets or businesses, including,
without limitation, those relating to environmental laws and
regulations.
2.6.1 Financial
Statements. The financial statements, including the notes
thereto and supporting schedules included in the Registration Statement, the
Preliminary Prospectus and the Prospectus fairly present the financial position
and the results of operations of the Company at the dates and for the periods to
which they apply; and such financial statements have been prepared in conformity
with generally accepted accounting principles, consistently applied throughout
the periods involved; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated
therein. To the best of the Company’s knowledge, no other financial
statements or supporting schedules are required to be included or incorporated
by reference in the Registration Statement, the Preliminary Prospectus or the
Prospectus. The Registration Statement, the Preliminary Prospectus
and the Prospectus disclose all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and other
relationships of the Company with unconsolidated entities or other persons that
may have a material current or future effect on the Company’s financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses. To the best of the Company’s knowledge, there are no pro
forma or as adjusted financial statements which are required to be included in
the Registration Statement and the Prospectus in accordance with Regulation S-X
which have not been included as so required.
2.7 Authorized Capital; Options,
Etc. The Company had at the date or dates indicated in the
Registration Statement, the Preliminary Prospectus and the Prospectus, as the
case may be, duly authorized, issued and outstanding capitalization as set forth
in the Registration Statement, the Preliminary Prospectus and the
Prospectus. Based on the assumptions stated in the Registration
Statement, the Preliminary Prospectus and the Prospectus, the Company will have
on the Closing Date the adjusted stock capitalization set forth
therein. Except as set forth in, or contemplated by, the Registration
Statement, the Preliminary Prospectus and the Prospectus, on the Effective Date
of the Prospectus and on the Closing Date and the Option Closing Date, if any,
there will be no options, warrants, or other rights to purchase or otherwise
acquire any authorized, but unissued Ordinary Shares of the Company or any
security convertible into Ordinary Shares of the Company, or any contracts or
commitments to issue or sell Ordinary Shares or any such options, warrants,
rights or convertible securities.
2.8.2 Securities Sold Pursuant to
this Agreement. The Securities have been duly authorized and
reserved for issuance and when issued and paid for, will be validly issued,
fully paid and non-assessable; the holders thereof are not and will not be
subject to personal liability by reason of being such holders; the Securities
are not and will not be subject to the preemptive rights of any holders of any
security of the Company or similar contractual rights granted by the Company;
and all corporate action required to be taken for the authorization, issuance
and sale of the Securities has been duly and validly taken. The
Securities conform in all material respects to all statements with respect
thereto contained in the Registration Statement, the Preliminary Prospectus and
the Prospectus, as the case may be. When issued, the Representative’s
Purchase Option, the Representative’s Warrants and the Warrants will constitute
valid and binding obligations of the Company to issue and sell, upon exercise
thereof and payment of the respective exercise prices therefor, the number and
type of securities of the Company called for thereby in accordance with the
terms thereof and such Representative’s Purchase Option, the Representative’s
Warrants and the Warrants are enforceable against the Company in accordance with
their respective terms, except: (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under federal and state securities laws; and (iii) that
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. The
Ordinary Shares issuable upon exercise of the Representative’s Purchase Option,
the Representative’s Warrants and the Warrants have been reserved for issuance
upon the exercise of the Representative’s Purchase Option, the Representative’s
Warrants and the Warrants, respectively, and, when issued in accordance with the
terms of such securities, will be duly and validly authorized, validly issued,
fully paid and non-assessable; the holders thereof are not and will not be
subject to personal liability by reason of being such holders.
2.8.3 Placement
Warrants. The Placement Warrants constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
of the respective exercise prices therefor, the number and type of securities of
the Company called for thereby in accordance with the terms thereof, and such
Placement Warrants are enforceable against the Company in accordance with their
respective terms, except: (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under federal and state securities laws; and (iii) that
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. The
Ordinary Shares issuable upon exercise of the Placement Warrants have been
reserved for issuance upon the exercise of the Placement Warrants and, when
issued in accordance with the terms of the Placement Warrants, will be duly and
validly authorized, validly issued, fully paid and non-assessable, and the
holders thereof are not and will not be subject to personal liability by reason
of being such holders.
2.11 No Conflicts,
Etc. The execution, delivery, and performance by the Company
of this Agreement, the Warrant Agreement, Representative’s Purchase Option, the
Trust Agreement, the Services Agreement, the Placement Warrant Purchase
Agreement, and the Escrow Agreement, the consummation by the Company of the
transactions herein and therein contemplated and the compliance by the Company
with the terms hereof and thereof do not and will not, with or without the
giving of notice or the lapse of time or both: (i) result in a breach of, or
conflict with any of the terms and provisions of, or constitute a default under,
or result in the creation, modification, termination or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to the
terms of any agreement or instrument to which the Company is a party; (ii)
result in any violation of the provisions of the Amended and Restated Articles
of Incorporation or the By-laws of the Company; or (iii) violate any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its properties or business.
2.12 No Defaults;
Violations. No material default exists in the due performance
and observance of any term, covenant or condition of any material license,
contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or
any other agreement or instrument evidencing an obligation for borrowed money,
or any other material agreement or instrument to which the Company is a party or
by which the Company may be bound or to which any of the properties or assets of
the Company is subject. The Company is not in violation of any term or provision
of its Amended and Restated Articles of Incorporation or By-laws or in violation
of any material franchise, license, permit, applicable law, rule, regulation,
judgment or decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its properties or
businesses.
2.13.1 Conduct of
Business. The Company has all requisite corporate power and
authority, and has all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory officials and
bodies that it needs as of the date hereof to conduct its business for the
purposes described in the Registration Statement, the Preliminary Prospectus and
the Prospectus. The disclosures in the Registration Statement and the
Prospectus concerning the effects of federal, state and local regulation on this
Offering and the Company’s business purpose as currently contemplated are
correct in all material respects and do not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Since its formation, the Company has conducted no
business and has incurred no liabilities other than in connection with and in
furtherance of the Offering.
2.13.2 Transactions Contemplated
Herein. The Company has all corporate power and authority to
enter into this Agreement and to carry out the provisions and conditions hereof,
and all consents, authorizations, approvals and orders required in connection
therewith have been obtained. No consent, authorization or order of,
and no filing with, any court, government agency or other body is required for
the valid issuance, sale and delivery, of the Securities and the consummation of
the transactions and agreements contemplated by this Agreement, the Warrant
Agreement, Representative’s Purchase Option, the Trust Agreement, the Services
Agreement, the Placement Warrant Purchase Agreement and the Escrow Agreement and
as contemplated by the Prospectus, except with respect to applicable federal and
state securities laws and the rules and regulations promulgated by the Financial
Industry Regulatory Authority (the “FINRA”).
2.15 Litigation; Governmental
Proceedings. There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding pending or, to
the best of the Company’s knowledge, threatened against, or involving the
Company or, to the best of the Company’s knowledge, any Initial Shareholder
which has not been disclosed in the Registration Statement, the Questionnaires,
the Preliminary Prospectus and the Prospectus.
2.18.1 Except
as described in the Preliminary Prospectus and/or the Prospectus, there are no
claims, payments, arrangements, agreements or understandings relating to the
payment of a finder’s, consulting or origination fee by the Company or any
Initial Shareholder with respect to the sale of the Securities hereunder or any
other arrangements, agreements or understandings of the Company or, to the
Company’s knowledge, any Initial Shareholder that may affect the Underwriters’
compensation, as determined by the FINRA.
2.18.2 The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise,
in consideration of such person raising capital for the Company or introducing
to the Company persons who raised or provided capital to the Company; (ii) to
any FINRA member; or (iii) to any person or entity that has any direct or
indirect affiliation or association with any FINRA member, within the twelve
(12) months prior to the Effective Date, other than payments to the
Representative.
2.18.3 No
officer, director, or beneficial owner of any class of the Company’s securities
(whether debt or equity, registered or unregistered, regardless of the time
acquired or the source from which derived) (any such individual or entity, a
“Company Affiliate”) is
a member, a person associated, or affiliated with a member of the
FINRA.
2.18.4 No
Company Affiliate is an owner of stock or other securities of any member of the
FINRA (other than securities purchased on the open market).
2.18.5 No
Company Affiliate has made a subordinated loan to any member of the
FINRA.
2.18.6 No
proceeds from the sale of the Public Securities (excluding underwriting
compensation) or the Placement Securities will be paid to any FINRA member, or
any persons associated or affiliated with a member of the FINRA, except as
specifically authorized herein and in the Placement Warrant Purchase
Agreement.
2.18.7 Except
with respect to the Representative, the Company has not issued any warrants or
other securities, or granted any options, directly or indirectly to anyone who
is a potential underwriter in the Offering or a related person (as defined by
FINRA rules) of such an underwriter within the 180-day period prior to the
initial filing date of the Registration Statement.
2.18.8 No
person to whom securities of the Company have been privately issued within the
180-day period prior to the initial filing date of the Registration Statement
has any relationship or affiliation or association with any member of the
FINRA.
2.18.9 No
FINRA member intending to participate in the Offering has a conflict of interest
with the Company. For this purpose, a “conflict of interest” exists
when a member of the FINRA and its associated persons, parent or affiliates in
the aggregate beneficially own 10% or more of the Company’s outstanding
subordinated debt or common equity, or 10% or more of the Company’s preferred
equity. “Members participating in the Offering” include managing
agents, syndicate group members and all dealers which are members of the
FINRA.
2.18.10 Except with respect to the
Representative in connection with the Offering, the Company has not entered into
any agreement or arrangement (including, without limitation, any consulting
agreement or any other type of agreement) during the 180-day period prior to the
initial filing date of the Registration Statement, which arrangement or
agreement provides for the receipt of any item of value and/or the transfer of
any warrants, options, or other securities from the Company to a FINRA member,
any person associated with a member (as defined by FINRA rules), any potential
underwriters in the Offering and any related persons.
2.19 Foreign Corrupt Practices
Act. Neither the Company nor any of the Initial Shareholders
or any other person acting on behalf of the Company has, directly or indirectly,
given or agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or official or
employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or any political party or candidate for office (domestic or foreign)
or other person who was, is, or may be in a position to help or hinder the
business of the Company (or assist it in connection with any actual or proposed
transaction) that: (i) might subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding; (ii) if not given in
the past, might have had a material adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Registration Statement, the Preliminary Prospectus and/or the
Prospectus; or (iii) if not continued in the future, might adversely affect the
assets, business, operations or prospects of the Company. The
Company’s internal accounting controls and procedures are sufficient to cause
the Company to comply with the Foreign Corrupt Practices Act of 1977, as
amended.
2.23.3 Escrow
Agreement. The Company has caused the Initial Shareholders and
the purchasers of the Placement Warrants to enter into an escrow agreement (the
“Escrow Agreement”) with
the Escrow Agent substantially in the form filed as an exhibit to the
Registration Statement, whereby the Ordinary Shares owned by the Initial
Shareholders and Placement Warrants will be held in escrow by the Escrow Agent
until, with respect to 50% of the shares and Placement Warrants held by each
Initial Shareholder and holder of Placement Warrants, nine (9) months after the
consummation of a Business Combination, and, with respect to the balance, until
12 months after the consummation of a Business Combination. During such escrow
period, the Initial Shareholders and holders of the Placement Warrants shall be
prohibited from selling or otherwise transferring such shares and Placement
Warrants (except as otherwise set forth in the Escrow Agreement) but will retain
the right to vote any such Ordinary Shares. To the Company’s knowledge, the
Escrow Agreement is enforceable against each of the Initial Shareholders and the
holders of the Placement Warrants and will not, with or without the giving of
notice or the lapse of time or both, result in a breach of, or conflict with any
of the terms and provisions of, or constitute a default under, any agreement or
instrument to which any of the Initial Shareholders is a party. The Escrow
Agreement shall not be amended, modified or otherwise changed without the prior
written consent of the Representative.
2.28 Related Party
Transactions. No relationship, direct or indirect, exists
between or among any of the Company or any Company Affiliate, on the one hand,
and any director, officer, shareholder, customer or supplier of the Company or
any Company Affiliate, on the other hand, which is required by the Act, the
Exchange Act or the Regulations to be described in the Registration Statement,
the Preliminary Prospectus and/or the Prospectus which is not so described and
described as required. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of their respective
family members, except as disclosed in the Registration Statement, the
Preliminary Prospectus and/or the Prospectus. The Company has not
extended or maintained credit, arranged for the extension of credit, or renewed
an extension of credit, in the form of a personal loan to or for any director or
officer of the Company.
2.31 Definition of
“Knowledge”. As used in herein, the term “knowledge of the Company” (or
similar language) shall mean the knowledge of the officers and directors of the
Company who are named in the Prospectus, with the assumption that such officers
and directors shall have made reasonable and diligent inquiry of the matters
presented.
3.2.1 Compliance. During
the time when a Prospectus is required to be delivered under the Act, the
Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Public Securities in
accordance with the provisions hereof and the Prospectus. If at any
time when a Prospectus relating to the Public Securities is required to be
delivered under the Act, any event shall have occurred as a result of which, in
the opinion of counsel for the Company or counsel for the Underwriters, the
Prospectus, as then amended or supplemented, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary during such period
to amend the Registration Statement or amend or supplement the Prospectus to
comply with the Act, the Company will notify the Representative promptly and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment to the Registration Statement or amendment or supplement
to the Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
3.3 Blue Sky
Filing. Unless the Public Securities are listed on the Nasdaq
Capital Market or another national securities exchange, the Company will
endeavor in good faith, in cooperation with the Representative, at or prior to
the time the Registration Statement becomes effective, to qualify the Public
Securities for offering and sale under the securities laws of such jurisdictions
as the Representative may reasonably designate, provided that no such
qualification shall be required in any jurisdiction where, as a result thereof,
the Company would be subject to service of general process or to taxation as a
foreign corporation doing business in such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
3.5 Effectiveness and Events
Requiring Notice to the Representative. The Company will use
its best efforts to cause the Registration Statement to remain effective and
will notify the Representative immediately and confirm the notice in writing:
(i) of the effectiveness of the Registration Statement and any amendment
thereto; (ii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, or any post-effective amendment
thereto or preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or of the initiation, or the threatening, of any proceeding for that
purpose; (iii) of the issuance by any state securities commission of any
proceedings for the suspension of the qualification of the Public Securities for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that purpose; (iv) of the mailing and delivery to the
Commission for filing of any amendment or supplement to the Registration
Statement or Prospectus; (v) of the receipt of any comments or request for any
additional information from the Commission; and (vi) of the happening of any
event during the period described in Section 3.4 hereof that, in the judgment of
the Company, makes any statement of a material fact made in the Registration
Statement, the Preliminary Prospectus and/or the Prospectus untrue or that
requires the making of any changes in the Registration Statement, the
Preliminary Prospectus and/or the Prospectus in order to make the statements
therein, (with respect to the Prospectus in light of the circumstances under
which they were made), not misleading. If the Commission or any state
securities commission shall enter a stop order or suspend such qualification at
any time, the Company will make every reasonable effort to obtain promptly the
lifting of such order.
3.11.3 Secondary Market Trading
Survey. Until such time as the Public Securities are listed or
quoted, as the case may be, on the New York Stock Exchange, the American Stock
Exchange or quoted on the Nasdaq Global Select Market or Nasdaq Global Market,
or until such earlier time upon which the Company is required to be liquidated,
the Company shall engage Xxxxx Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx, PC (“ML”), for a one-time fee of
$5,000 payable on the Closing Date, to deliver and update to the Underwriters on
a timely basis, but in any event on the Effective Date and at the beginning of
each fiscal quarter, a written report detailing those states in which the Public
Securities may be traded in non-issuer transactions under the Blue Sky laws of
the fifty States (the “Secondary Market Trading
Survey”), a copy of which will be provided to the Company and Xxxxx
Xxxxx.
3.11.4 Trading
Reports. During such time as the Public Securities are quoted
on the OTC Bulletin Board (or any successor trading market) or the Pink Sheets,
LLC (or similar publisher of quotations) and no other automated quotation
system, the Company shall provide to the Representative, at its expense, such
reports published by the OTC Bulletin Board or the Pink Sheets, LLC relating to
price trading of the Public Securities, as the Representative shall reasonably
request. In addition to the requirements of the preceding sentence,
for a period of two (2) years from the Closing Date, the Company, at its
expense, shall provide Chardan a subscription to the Company’s weekly Depository
Transfer Company Security Position Reports.
3.13.1 General Expenses Related to
the Offering. The Company hereby agrees to pay on each of the
Closing Date and the Option Closing Date, if any, to the extent not paid at
Closing Date, all expenses incident to the performance of the obligations of the
Company under this Agreement, including, but not limited to: (i) the
preparation, printing, filing and mailing (including the payment of postage with
respect to such mailing) of the Registration Statement, the Preliminary
Prospectus and/or the final Prospectus and the printing and mailing of this
Agreement and related documents, including the cost of all copies thereof and
any amendments thereof or supplements thereto supplied to the Underwriters in
quantities as may be required by the Underwriters; (ii) the printing, engraving,
issuance and delivery of the Units, the Ordinary Shares and the Warrants
included in the Units and the Representative’s Purchase Option, including any
transfer or other taxes payable thereon; (iii) the qualification of the Public
Securities under state or foreign securities or Blue Sky laws, including the
costs of printing and mailing the “Preliminary Blue Sky Memorandum,” and all
amendments and supplements thereto, fees and disbursements for counsel of
Chardan’s choice retained for such purpose (such fees shall be $35,000 in the
aggregate to be due on the Closing Date (of which $7,500 has previously been
paid)), and a one-time fee of $5,000 payable to the counsel of Chardan’s choice
for the preparation of the Secondary Market Trading Survey; (iv) filing fees
incurred in registering the Offering with the FINRA (including all COBRADesk
fees); (v) fees and disbursements of the transfer and warrant agent; (vi) the
Company’s expenses associated with “due diligence” meetings arranged by the
Representative (none of which will be received or paid on behalf of an
underwriter and related person); (vii) the preparation, binding and delivery of
bound volumes in form and style reasonably satisfactory to Chardan and 12
transaction lucite cubes or similar commemorative items in a style as reasonably
requested by Chardan; (viii) all costs and expenses associated with “road show”
marketing and “due diligence” trips for the Company’s management to meet with
prospective investors, including without limitation, all travel, food and
lodging expenses associated with such trips; (ix) all costs associated with an
independent third-party background investigation of each of the Company’s
officers, directors and Initial Shareholders in an amount not to exceed $15,000;
and (x) all other reasonable costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section 3.13.1. The Representative may deduct from the net
proceeds of the Offering payable to the Company on the Closing Date, or the
Option Closing Date, if any, the expenses set forth above to be paid by the
Company to the Representative and others, as agreed to by the Company in
writing. If the Offering is not consummated for any reason
whatsoever, except as a result of the Representative’s or any Underwriter’s
breach or default with respect to any of its obligations described in this
Agreement, then the Company shall reimburse the Representative in full for their
out-of-pocket accountable expenses actually incurred by the Representative,
including, without limitation, their legal fees (less any amounts previously
paid). Additionally, upon any such termination, the Representative
shall return to the Company any portion of the amounts advanced towards the
Underwriters’ discount (of which $50,000 has previously been paid (“Advance”)) in excess of the
out-of-pocket accountable expenses actually incurred by the Representative,
including, without limitation, their legal fees.
3.13.3 Fee on Termination of
Offering. Notwithstanding anything contained herein to the
contrary, upon termination of the Offering the Company shall: (A) reimburse the
Representative for, or otherwise pay and bear, the expenses and fees to be paid
and borne by the Company as provided for in Paragraph 3.13.1 above, as
applicable, and (B) reimburse the Representative for the full amount of their
accountable out-of-pocket expenses actually incurred to such date (which shall
include, but shall not be limited to, all fees and disbursements of the
Representative’s counsel, travel, lodging and other “road show” expenses,
mailing, printing and reproduction expenses, and any expenses incurred by the
Representative in conducting their due diligence), less the amounts previously
paid and any amounts previously paid to the Representative in reimbursement for
such expenses. If applicable, and solely in the event of a
termination of this Offering, the Representative shall refund to the Company any
portion of the Advance previously received by the Representative which is in
excess of the accountable out-of-pocket expenses actually incurred to such date
by the Representative.
3.28 Electronic
Prospectus. The Company shall cause to be prepared and delivered to
the Representative, at its expense, within one (1) Business Day from the
effective date of this Agreement, an Electronic Prospectus to be used by the Underwriters in
connection with the Offering. As used herein, the term “Electronic Prospectus” means a
form of prospectus, and any amendment or supplement thereto, that meets each of
the following conditions: (i) it shall be encoded in an electronic format,
satisfactory to the Representative, that may be transmitted electronically by
the other Underwriters to offerees and purchasers of the Units for at least the
period during which a Prospectus relating to the Units is required to be
delivered under the Securities Act; (ii) it shall disclose the same information
as the paper prospectus and prospectus filed pursuant to XXXXX, except to the
extent that graphic and image material cannot be disseminated electronically, in
which case such graphic and image material shall be replaced in the electronic
prospectus with a fair and accurate narrative description or tabular
representation of such material, as appropriate; and (iii) it shall be in or
convertible into a paper format or an electronic format, satisfactory to the
Representative, that will allow recipients thereof to store and have
continuously ready access to the prospectus at any future time, without charge
to such recipients (other than any fee charged for subscription to the Internet
as a whole and for on-line time). The Company hereby confirms that it
has included or will include in the Prospectus filed pursuant to XXXXX or
otherwise with the Commission and in the Registration Statement at the time it
was declared effective an undertaking that, upon receipt of a request by an investor or his or her
representative within the period when a prospectus relating to the Units is
required to be delivered under the Securities Act, the Company shall transmit or
cause to be transmitted promptly, without charge, a paper copy of the
Prospectus.
3.30 Right of First
Refusal. In the event that gross cash available from the Trust
Fund to the Company (net of any cash required to repurchase Ordinary Shares from
shareholders pursuant to agreements entered into prior to the Business
Combination to ensure that the Business Combination is approved) is equal to or
greater than $20 million or $32 million, respectively, the Company shall engage
the Representative, for a period of not less than twelve (12) or eighteen (18)
months, respectively, as the Company’s exclusive financial advisor, merger and
acquisition advisor, placement agent, and underwriter under market terms and
rates and shall give notice and a right of first refusal to the Representative
with respect to any proposed securities issuances, securities placements,
acquisitions, mergers, reorganizations, or other similar
transactions.
(i) The
Company covenants and agrees it will not seek to amend or modify Article 156 of
its Amended and Restated Memorandum and Articles of Association without the
prior approval of holders of 80% or more of the Company’s IPO Shares (as defined
in Section 7.6(ii) of this Agreement).
(ii) The
Company acknowledges that the purchasers of the Firm Units and Option Units in
this Offering shall be deemed to be third party beneficiaries of Section 3.32 of
this Agreement.
(iii) The
Representative and the Company specifically agree that, except pursuant to its
own terms, this Section 3.32 shall not be modified or amended in any
way.
Each opinion of counsel shall further
include a statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company and
representatives of the Underwriters at which the contents of the Registration
Statement, Preliminary Prospectus, the Prospectus and related matters were
discussed and although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, Preliminary Prospectus and the
Prospectus (except as otherwise set forth in this opinion), no facts have come
to the attention of such counsel which lead them to believe that either the
Registration Statement, Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, as of the date of such opinion contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and related notes and schedules and other financial and
statistical data included in the Registration Statement, Preliminary Prospectus
or the Prospectus). The opinion of counsel shall state that such
counsel is not opining as to the Placement Securities with respect to any rights
to rescind or the effect any exercise of such rights will have on any other
securities of the Company or on the Offering.
(i) Confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations and that they have not, during
the periods covered by the financial statements included in the Registration
Statement, the Preliminary Prospectus and the Prospectus, provided to the
Company any non-audit services, as such term is used in Section 10A(g) of the
Exchange Act;
(ii) Stating
that in their opinion the financial statements of the Company included in the
Registration Statement, the Preliminary Prospectus and the Prospectus comply as
to form in all material respects with the applicable accounting requirements of
the Act and the published Regulations thereunder;
(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available minutes of the shareholders and board of directors and the various
committees of the board of directors, consultations with officers and other
employees of the Company responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that: (a) the unaudited financial statements of
the Company included in the Registration Statement, the Preliminary Prospectus
and the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Regulations or are not
fairly presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited financial
statements of the Company included in the Registration Statement, Preliminary
Prospectus and the Prospectus; (b) at a date not later than five (5) days prior
to the Effective Date, Closing Date or Option Closing Date, as the case may be,
there was any change in the capital stock or long-term debt of the Company, or
any decrease in the shareholders’ equity of the Company as compared with amounts
shown in the September 30, 2010 balance sheet included in the Registration
Statement, the Preliminary Prospectus and the Prospectus, other than as set
forth in or contemplated by the Registration Statement, the Preliminary
Prospectus and the Prospectus, or, if there was any decrease, setting forth the
amount of such decrease; and (c) during the period from September 30, 2010
(balance sheet date) to a specified date not later than five (5) days prior to
the Effective Date, Closing Date or Option Closing Date, as the case may be,
there was any decrease in revenues, net earnings or net earnings per Ordinary
Share, in each case as compared with the corresponding period in the preceding
year and as compared with the corresponding period in the preceding quarter,
other than as set forth in or contemplated by the Registration Statement, the
Preliminary Prospectus and the Prospectus, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) Stating
they have compared specific dollar amounts, numbers of shares, percentages of
revenues and earnings, statements and other financial information pertaining to
the Company set forth in the Registration Statement, the Preliminary Prospectus
and the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(v) Stating
they have not, since inception, provided the Company’s management with any
written communication in accordance with Statement on Auditing Standards No. 60
“Communication of Internal Control Structure Related Matters Noted in an Audit”;
and
(vi) Statements
as to such other matters incident to the transaction contemplated hereby as the
Representative may reasonably request.
4.4.1 Officers’
Certificate. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received a certificate of
the Company signed by the Chairman of the Board or the President and the
Secretary or Assistant Secretary of the Company, dated the Closing Date or the
Option Closing Date, as the case may be, respectively, to the effect that the
Company has performed all covenants and complied with all conditions required by
this Agreement to be performed or complied with by the Company prior to and as
of the Closing Date, or the Option Closing Date, as the case may be, and that
the conditions set forth in Section 4.5 hereof have been satisfied as of such
date and that, as of Closing Date and the Option Closing Date, as the case may
be, the representations and warranties of the Company set forth in Section 2
hereof are true and correct. In addition, the Representative will
have received such other and further certificates of officers of the Company as
the Representative may reasonably request.
4.5 No Material
Changes. Prior to and on each of the Closing Date and the
Option Closing Date, if any: (i) there shall have been no material adverse
change or development that is likely to result in a material adverse change in
the condition or prospects or the business activities, financial or otherwise,
of the Company from the latest dates as of which such condition is set forth in
the Registration Statement and Prospectus; (ii) no action suit or proceeding, at
law or in equity, shall have been pending or threatened against the Company or
any Initial Shareholder before or by any court or federal or state commission,
board or other administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations, prospects or
financial condition or income of the Company, except as set forth in the
Registration Statement, the Preliminary Prospectus and Prospectus; (iii) no stop
order shall have been issued under the Act and no proceedings therefor shall
have been initiated or threatened by the Commission; and (iv) the Registration
Statement, the Preliminary Prospectus and the Prospectus and any amendments or
supplements thereto shall contain all material statements which are required to
be stated therein in accordance with the Act and the Regulations and shall
conform in all material respects to the requirements of the Act and the
Regulations, and neither the Registration Statement, the Preliminary Prospectus
nor the Prospectus nor any amendment or supplement thereto shall contain any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which they were made), not
misleading.
5.1.1 General. Subject
to the conditions set forth below, the Company agrees to indemnify and hold
harmless each of the Underwriters and each dealer selected by the Representative
that participates in the offer and sale of the Units (each a “Selected Dealer”)
and each of their respective directors, officers and employees and each person,
if any, who controls any such Underwriter (“Controlling Person”) within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever
(including but not limited to any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising out of any
action between any of the Underwriters and the Company or between any of the
Underwriters and any third party or otherwise) to which they or any of them may
become subject under the Act, the Exchange Act or any other federal, state or
local statute, law, rule, regulation or ordinance or at common law or otherwise
or under the laws, rules and regulation of foreign countries, arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in: (i) any Preliminary Prospectus, the Registration Statement, or the
Prospectus (as from time to time each may be amended and supplemented); (ii) in
any post-effective amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Representative’s Purchase Option; or (iii) any application
or other document or written communication (in this Section 5 collectively
called “Application”)
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Units under the securities
laws thereof or filed with the Commission, any state securities commission or
agency, the OTC Bulletin Board or Nasdaq or any securities exchange; or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to an Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement
thereof. With respect to any untrue statement or omission or alleged
untrue statement or omission made in the Preliminary Prospectus, the indemnity
agreement contained in this paragraph shall not inure to the benefit of any
Underwriter to the extent that any loss, liability, claim, damage or expense of
such Underwriter results from the fact that a copy of the Prospectus was not
given or sent to the person asserting any such loss, liability, claim or damage
at or prior to the written confirmation of sale of the Securities to such person
as required by the Act and the Regulations, and if the untrue statement or
omission has been corrected in the Prospectus, unless such failure to deliver
the Prospectus was a result of non-compliance by the Company with its
obligations under Section 3.4 hereof. The Company agrees promptly to
notify the Representative of the commencement of any litigation or proceedings
against the Company or any of its officers, directors or Controlling Persons in
connection with the issue and sale of the Securities or in connection with the
Preliminary Prospectus, the Registration Statement, or the
Prospectus.
5.2 Indemnification of the
Company. Each Underwriter, severally and not jointly, agrees
to indemnify and hold harmless the Company, its directors, officers and
employees and agents who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act against any and all loss, liability,
claim, damage and expense described in the foregoing indemnity from the Company
to the several Underwriters, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions made in any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or in any Application, in reliance upon, and in
strict conformity with, written information furnished to the Company with
respect to such Underwriter by or on behalf of the Underwriter expressly for use
in such Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto or in any such Application, which
furnished written information, it is expressly agreed, consists solely of the
information described in the last sentence of Section 2.3.1. In case
any action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto or any Application, and
in respect of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the several Underwriters by the provisions of Section
5.1.2.
5.3.1 Contribution
Rights. In order to provide for just and equitable
contribution under the Act in any case in which: (i) any person entitled to
indemnification under this Section 5 makes claim for indemnification pursuant
hereto but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for
indemnification in such case; or (ii) contribution under the Act, the Exchange
Act or otherwise may be required on the part of any such person in circumstances
for which indemnification is provided under this Section 5, then, and in each
such case, the Company and the Underwriters shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Company and the Underwriters, as
incurred, in such proportions that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount appearing
on the cover page of the Prospectus bears to the initial offering price
appearing thereon and the Company is responsible for the balance; provided, that, no person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding the provisions of
this Section 5.3.1, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Public Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section, each director, officer and
employee of an Underwriter or the Company, as applicable, and each person, if
any, who controls an Underwriter or the Company, as applicable, within the
meaning of Section 15 of the Act shall have the same rights to contribution as
the Underwriters or the Company, as applicable.
5.3.2 Contribution
Procedure. Within fifteen (15) days after receipt by any party
to this Agreement (or its representative) of notice of the commencement of any
action, suit or proceeding, such party will, if a claim for contribution in
respect thereof is to be made against another party (“Contributing Party”), notify
the Contributing Party of the commencement thereof, but the omission to so
notify the Contributing Party will not relieve it from any liability which it
may have to any other party other than for contribution hereunder. In
case any such action, suit or proceeding is brought against any party, and such
party notifies a Contributing Party or its representative of the commencement
thereof within the aforesaid fifteen (15) days, the Contributing Party will be
entitled to participate therein with the notifying party and any other
Contributing Party similarly notified. Any such Contributing Party
shall not be liable to any party seeking contribution on account of any
settlement of any claim, action or proceeding effected by such party seeking
contribution on account of any settlement of any claim, action or proceeding
effected by such party seeking contribution without the written consent of such
Contributing Party. The contribution provisions contained in this
Section are intended to supersede, to the extent permitted by law, any right to
contribution under the Act, the Exchange Act or otherwise
available. The Underwriters’ obligations to contribute pursuant to
this Section 5.3 are several and not joint.
6.2 Default Exceeding 10% of
Firm Units or Option Units. In the event that the default
addressed in Section 6.1 above relates to more than 10% of the Firm Units or
Option Units, the Representative may in its discretion arrange for itself or for
another party or parties to purchase such Firm Units or Option Units to which
such default relates on the terms contained herein. If, within one
(1) Business Day after such default relating to more than 10% of the Firm Units
or Option Units, the Representative does not arrange for the purchase of such
Firm Units or Option Units, then the Company shall be entitled to a further
period of one (1) Business Day within which to procure another party or parties
satisfactory to the Company and the Representative to purchase said Firm Units
or Option Units on such terms. In the event the Representative does
not arrange for the purchase of the Firm Units or Option Units to which a
default relates as provided in this Section 6, this Agreement may be terminated
by the Company without liability on the part of the Company (except as provided
in Sections 3.13 and 5 hereof) or the several Underwriters (except as provided
in Section 5 hereof); provided, however, that if such default
occurs with respect to the Option Units, this Agreement will not terminate as to
the Firm Units; and provided
further that nothing herein shall relieve a defaulting Underwriter of its
liability, if any, to the other several Underwriters and to the Company for
damages occasioned by its default hereunder.
6.3 Postponement of Closing
Date. In the event the Firm Units or Option Units to which the
default relates are to be purchased by the non-defaulting Underwriters, or are
to be purchased by another party or parties as aforesaid, the Representative or
the Company shall have the right to postpone the Closing Date or Option Closing
Date for a reasonable period, but not in any event exceeding five (5) Business
Days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement, the Preliminary Prospectus and/or the Prospectus, as the
case may be, or in any other documents and arrangements, and the Company agrees
to file promptly any amendment to, or to supplement, the Registration Statement,
the Preliminary Prospectus and/or the Prospectus, as the case may be, that in
the opinion of counsel for the Underwriters may thereby be made necessary. The
term “Underwriter” as used in this Agreement shall include any party substituted
under this Section 6 with like effect as if it had originally been a party to
this Agreement with respect to such Securities.
7.2 Trust Fund Waiver
Acknowledgments. The Company hereby agrees that it will not
commence its due diligence investigation of any operating business or businesses
which the Company seeks to acquire (each, a “Target Business”) or obtain
the services of any vendor unless and until such Target Business or vendor
acknowledges in writing, whether through a letter of intent, memorandum of
understanding or other similar document (and subsequently acknowledges the same
in any definitive document replacing any of the foregoing), that: (i) it has
read the Prospectus and understands that the Company has established the Trust
Fund, initially in an amount of $40,000,000 (which includes $1,120,000 of
deferred underwriting discounts and which does not give effect to any exercise
of the Over-allotment Option) for the benefit of the Public Shareholders and
that, except for a portion of the interest earned on the amounts held in the
Trust Fund, the Company may disburse monies from the Trust Fund only: (a) to the
Public Shareholders in the event of the redemption of their shares or the
dissolution and liquidation of the Trust Fund as part of the Company’s plan of
dissolution and liquidation; or (b) to the Company after it consummates a
Business Combination; and (ii) for and in consideration of the Company (A)
agreeing to evaluate such Target Business for purposes of consummating a
Business Combination with it; or (B) agreeing to engage the services of the
vendor, as the case may be, such Target Business or vendor agrees that it does
not have any right, title, interest or claim of any kind in or to any monies of
the Trust Fund (“Claim”)
and waives any Claim it may have in the future as a result of, or arising out
of, any negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever. The
foregoing letters shall substantially be in the form attached hereto as Exhibit A and B,
respectively. Furthermore, each officer and director of the Company
shall execute a waiver letter in the form attached hereto as Exhibit
C.
8. Representations and
Agreements to Survive Delivery. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Closing Date or the Option Closing Date, if any, and such
representations, warranties and agreements of the Underwriters and Company,
including the indemnity agreements contained in Section 5 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company or any Controlling Person, and
shall survive termination of this Agreement or the issuance and delivery of the
Securities to the several Underwriters until the earlier of the expiration of
any applicable statute of limitations and the seventh anniversary of the later
of the Closing Date or the Option Closing Date, if any, at which time the
representations, warranties and agreements shall terminate and be of no further
force and effect.
9.2 Termination. The
Representative shall have the right to terminate this Agreement at any time
prior to any Closing Date: (i) if any domestic or international event or act or
occurrence has materially disrupted, or in the Representative’s opinions will in
the immediate future materially disrupt, general securities markets in the
United States; or (ii) if trading on the New York Stock Exchange, the American
Stock Exchange, the Nasdaq Stock Market or on the OTC Bulletin Board (or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the OTC Bulletin Board or by order of the Commission
or any other government authority having jurisdiction; or (iii) if the United
States or any Asian country (as defined in the Prospectus) shall have become
involved in a war or an increase in major hostilities, or (iv) if a banking
moratorium has been declared by a New York State or federal authority, or (v) if
a moratorium on foreign exchange trading has been declared which materially
adversely impacts the United States securities markets; or (vi) if the Company
shall have sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether or
not such loss shall have been insured, will, in the Representative’s opinions,
make it inadvisable to proceed with the delivery of the Units; or (vii) if any
of the Company’s representations, warranties or covenants hereunder are
breached; or (viii) if the Representative shall have become aware after the date
hereof of such a material adverse change in the conditions or prospects of the
Company, or such adverse material change in general market conditions,
including, without limitation, as a result of terrorist activities after the
date hereof, as in the Representative’s judgment would make it impracticable to
proceed with the offering, sale and/or delivery of the Units or to enforce
contracts made by the Underwriters for the sale of the Units.
If to the
Representative:
Chardan
Capital Markets, LLC
00 Xxxxx
Xxxxxx, Xxxxx 0000
Xxx Xxxx,
Xxx Xxxx 00000
Attn.: Xxxxx
Xxxxxxx, Chief Executive Officer
Fax: (000)-000-0000
Copy
to:
Xxxxx
Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx, P.C.
000 Xxxxx
Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn.:
Xxxxxxx X. Xxxx, Esq.
Fax: (000)
000-0000
If to the
Company:
Xx. 000,
Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx
Xxxxx
Xxxxxxxx, 000000
People’s
Republic of China
Telephone:
00 (000) 0000 0000
Copy
to:
Loeb
& Loeb
000 Xxxx
Xxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxxx X. Xxxxxxxx, Esq.
Fax: (000)
000-0000
10.6.1 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 the conflict of laws
principles thereof. The Company irrevocably appoints Loeb & Loeb,
LLP, with offices at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (and its
successors) as its authorized agent in the Borough of Manhattan in The City of
New York upon which process may be served in any such suit or proceeding, and
agrees that service of process upon such agent, and written notice of said
service to the Company by the person serving the same to the address provided in
Section 10.1, shall be deemed in every respect effective service of process upon
the Company in any such suit or proceeding. The Company irrevocably appoints
Loeb and Loeb, LLP as its authorized agent in the Borough of Manhattan in The
City of New York upon which process may be served in any such suit or
proceeding, and agrees that service of process upon such agent, and written
notice of said service to the Company by the person serving the same to the
address provided in Section 10.1, shall be deemed in every respect effective
service of process upon the Company in any such suit or proceeding. Each of the
Representative and the Company (and any individual signatory hereto): (i) agrees
that any legal suit, action or proceeding arising out of or relating to this
agreement and/or the transactions contemplated hereby shall be instituted
exclusively in New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York; (ii) waives any
objection which such party may have or hereafter to the venue of any such suit,
action or proceeding; and (iii) irrevocably and exclusively consents to the
jurisdiction of the New York Supreme Court, County of New York, and the United
States District Court for the Southern District of New York in any such suit,
action or proceeding.
10.6.2 Each of
the Representative and the Company (and any individual signatory hereto) further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York and agrees that service of process upon the Company or any
such individual mailed by certified mail to the Company’s address shall be
deemed in every respect effective service of process upon the Company or any
such individual in any such suit, action or proceeding, and service of process
upon the Representative mailed by certified mail to the Representative’s
addresses shall be deemed in every respect effective service process upon the
Representative, in any such suit, action or proceeding.
10.6.3 THE
COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON
BEHALF OF ITS EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE
REGISTRATION STATEMENT AND THE PROSPECTUS.
10.6.4 The
Company agrees that the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of its reasonable attorneys’
fees and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
10.9 No Fiduciary
Relationship. The Company hereby acknowledges that the Underwriters are
acting solely as underwriters in connection with the offering of the Company’s
securities. The Company further acknowledges that the Underwriters are acting
pursuant to a contractual relationship created solely by this Agreement entered
into on an arm’s length basis and in no event do the parties intend that the
Underwriters act or be responsible as a fiduciary to the Company, its
management, shareholders, creditors or any other person in connection with any
activity that the Underwriters may undertake or have undertaken in furtherance
of the offering of the Company’s securities, either before or after the date
hereof. The Underwriters hereby expressly disclaim any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that effect.
The Company and the Underwriters agree that they are each responsible for making
their own independent judgments with respect to any such transactions, and that
any opinions or views expressed by the Underwriters to the Company regarding
such transactions, including but not limited to any opinions or views with
respect to the price or market for the Company’s securities, do not constitute
advice or recommendations to the Company. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company
may have against the Underwriters with respect to any breach or alleged breach
of any fiduciary or similar duty to the Company in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
If the
foregoing correctly sets forth the understanding between the Underwriters and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
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Very
truly yours,
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By:
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Name:
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Xxxxx
Xxxx-Xxxx Xxx
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Title:
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Chief
Executive
Officer
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Agreed
to and accepted on the
date
first above written.
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Chardan
Capital Markets, LLC,
as
Representative of the several Underwriters
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By:
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Name: Xxxxx
Xxxxxxx
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Title:
Chief Executive Officer
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SCHEDULE
A
4,000,000
units
Underwriter
|
|
Number of Firm Units
to be Purchased
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Chardan
Capital Markets, LLC
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Xxxxxx
& Xxxxxxx, LLC
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Maxim
Group LLC
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4,000,000 |
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EXHIBIT
A
Form
of Target Business Letter
Prime
Acquisition Xxxx.Xx. 000, Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx
Xxxxx
Xxxxxxxx, 000000
People’s
Republic of China
Attn.: Xxxxx
Xxxx-Xxxx Xxx, Chief Executive Officer
Gentlemen:
Reference
is made to the Final Prospectus of Prime Acquisition Corp., (the “Company”), dated [Ÿ] (the “Prospectus”). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
We have
read the Prospectus and understand that the Company has established the Trust
Fund, initially in an amount of at least $40,000,000 for the benefit of the
Public Shareholders and the underwriters of the Company’s initial public
offering (the “Underwriters”) and that, except for the interest earned on the
amounts held in the Trust Fund, the Company may disburse monies from the Trust
Fund only: (i) to the Public Shareholders in the event of the redemption of
their shares or the dissolution and liquidation of the Company; (ii) to the
Company and the Underwriters after it consummates a Business Combination; or
(iii) for the payment of taxes.
For and
in consideration of the Company agreeing to evaluate the undersigned for
purposes of consummating a Business Combination with it, the undersigned hereby
agrees that it does not have any right, title, interest or claim of any kind in
or to any monies in the Trust Fund (the “Claim”) and hereby waives any
Claim it may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever.
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Print
Name of Target Business
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Authorized
Signature of Target
Business
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Form
of Vendor Letter
Xx. 000,
Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx
Xxxxx
Xxxxxxxx, 000000
People’s
Republic of China
Attn.: Xxxxx
Xxxx-Xxxx Xxx, Chief Executive Officer
Gentlemen:
Reference
is made to the Final Prospectus of Prime Acquisition Corp. (the “Company”), dated [Ÿ] (the “Prospectus”). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
We have
read the Prospectus and understand that the Company has established the Trust
Fund, initially in an amount of at least $40,000,000 for the benefit of the
Public Shareholders and the underwriters of the Company’s initial public
offering (the “Underwriters”) and that, except for the interest earned on the
amounts held in the Trust Fund, the Company may disburse monies from the Trust
Fund only: (i) to the Public Shareholders in the event of the redemption of
their shares or the dissolution and liquidation of the Company; (ii) to the
Company and the Underwriters after it consummates a Business Combination; or
(iii) for the payment of taxes.
For and
in consideration of the Company agreeing to use the products or services of the
undersigned, the undersigned hereby agrees that it does not have any right,
title, interest or claim of any kind in or to any monies in the Trust Fund (the
“Claim”) and hereby
waives any Claim it may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever.
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Print
Name of Vendor
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Authorized
Signature of Vendor
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Form
of Director/Officer Letter
Xx. 000,
Xxxxxxxxx Xxxx Xxxx
Xxxxxxxxxxxx
Xxxxx
Xxxxxxxx, 000000
People’s
Republic of China
Attn.: Xxxxx
Xxxx-Xxxx Xxx, Chief Executive Officer
Gentlemen:
The
undersigned officer or director of Prime Acquisition Corp. (the “Company”) hereby acknowledges
that the Company has established the Trust Fund, initially in an amount of at
least $40,000,000 for the benefit of the Public Shareholders and the
underwriters of the Company’s initial public offering (the “Underwriters”) and
that, except for the interest earned on the amounts held in the Trust Fund, the
Company may disburse monies from the Trust Fund only: (i) to the Public
Shareholders in the event of the redemption of their shares or the dissolution
and liquidation of the Company; (ii) to the Company and the Underwriters after
it consummates a Business Combination; or (iii) for the payment of
taxes.
The
undersigned hereby agrees that it does not have any right, title, interest or
claim of any kind in or to any monies in the Trust Fund (the “Claim”) and hereby waives any
Claim it may have in the future as a result of, or arising out of, any contracts
or agreements with the Company and will not seek recourse against the Trust Fund
for any reason whatsoever.
Notwithstanding
the foregoing, such waiver shall not apply to any shares acquired by the
undersigned in the public market.
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Print
Name of Officer/Director
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Authorized
Signature of
Officer/Director
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