Exhibit 10.1

 

EXECUTION VERSION

 

 

 

 

 

 

 

MERGER AGREEMENT

 

dated

 

July 25, 2016

 

by and among

 

E-compass Acquisition Corp., a Cayman Islands exempted company

 

as the Parent,

 

iFresh Inc., a Delaware corporation,

 

as the Purchaser,

 

iFresh Merger Sub Inc., a Delaware corporation,

 

as the Merger Sub,

 

NYM Holding, Inc., a Delaware corporation,

 

as the Company,

 

Stockholders of the Company, as the Stockholders

 

and Long Deng,

 

as the Stockholders’ Representative

 

   

 

 

TABLE OF CONTENTS

 

    Page       ARTICLE I DEFINITIONS 1     ARTICLE II REDOMESTICATION MERGER 7
2.1 Redomestication Merger 7 2.2 Redomestication Effective Time 7 2.3 Effect of
the Redomestication Merger 7 2.4 Memorandum and Articles of Association 8 2.5
Directors and Officers of the Redomestication Surviving Corporation 8 2.6 Effect
on Issued Securities of Parent. 8 2.7 Surrender of Certificates 10 2.8 Lost
Stolen or Destroyed Certificates 10 2.9 Section 368 Reorganization 10 2.10
Taking of Necessary Action; Further Action 10 2.11 Agreement of Fair Value 10  
    ARTICLE III THE MERGER 11 3.1 The Merger 11 3.2 Closing; Effective Time. 11
3.3 Board of Directors 11 3.4 Effects of the Merger 11 3.5 Certificate of
Incorporation; Bylaws 11 3.6 No Further Ownership Rights in Company Capital
Stock 12 3.7 Withholding Rights 12 3.8 Rights Not Transferable 12 3.9 Taking of
Necessary Action; Further Action 12 3.10 Section 368 Reorganization 12      
ARTICLE IV CONVERSION OF SHARES; CLOSING MERGER CONSIDERATION 13 4.1 Conversion
of Capital Stock 13 4.2 Cash Merger Consideration; Aggregate Merger Price 14 4.3
Payment of Merger Consideration 14       ARTICLE V REPRESENTATIONS AND
WARRANTIES OF THE COMPANY 15 5.1 Corporate Existence and Power 15 5.2
Authorization 15 5.3 Governmental Authorization 15 5.4 Non-Contravention 15 5.5
Capitalization 16 5.6 Certificate of Formation and Operating Agreement 16 5.7
Corporate Records 16

 

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5.8 Third Parties 17 5.9 Assumed Names 17 5.10 Subsidiaries 17 5.11 Consents 18
5.12 Financial Statements 18 5.13 Books and Records 19 5.14 Absence of Certain
Changes 19 5.15 Properties; Title to the Company’s Assets 21 5.16 Litigation 22
5.17 Contracts 22 5.18 Insurance 24 5.19 Licenses and Permits 24 5.20 Compliance
with Laws 25 5.21 Intellectual Property 25 5.22 Customers and Suppliers 26 5.23
Accounts Receivable and Payable; Loans 26 5.24 Pre-payments 27 5.25 Employees 27
5.26 Employment Matters 28 5.27 Withholding 29 5.28 Employee Benefits and
Compensation 29 5.29 Real Property 31 5.30 Accounts 31 5.31 Tax Matters 32 5.32
Environmental Laws 34 5.33 Finders’ Fees 34 5.34 Powers of Attorney and
Suretyships 34 5.35 Directors and Officers 34 5.36 Other Information 35 5.37
Certain Business Practices 35 5.38 Money Laundering Laws 35 5.39 OFAC 35 5.40
Not an Investment Company 35 5.41 Financial Projections 36 5.42 Unanimous
Approval.. 36       ARTICLE VI REPRESENTATIONS AND WARRANTIES OF PARENT,
PURCHASER AND MERGER SUB 36 6.1 Corporate Existence and Power 36 6.2 Corporate
Authorization 36 6.3 Governmental Authorization 36 6.4 Non-Contravention 37 6.5
Finders’ Fees 37 6.6 Issuance of Shares 37 6.7 Capitalization 37 6.8 Information
Supplied 38 6.9 Trust Fund 38 6.10 Listing 38 6.11 Board Approval 38 6.12 Parent
SEC Documents and Purchaser Financial Statements 39

 

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ARTICLE VII COVENANTS OF THE COMPANY PENDING CLOSING 40 7.1 Conduct of the
Business 40 7.2 Access to Information 41 7.3 Notices of Certain Events 42 7.4
Annual and Interim Financial Statements 42 7.5 SEC Filings. 43 7.6 Financial
Information 43 7.7 Trust Account 43 7.8 Employees of the Company and the Manager
43 7.9 Application for Permits 44       ARTICLE VIII COVENANTS OF THE COMPANY 44
8.1 Reporting and Compliance with Laws 44 8.2 Best Efforts to Obtain Consents 44
      ARTICLE IX COVENANTS OF ALL PARTIES HERETO 44 9.1 Best Efforts; Further
Assurances 44 9.2 Tax Matters 44 9.3 Settlement of Purchaser Liabilities 45 9.4
Compliance with SPAC Agreements 45 9.5 Registration Statement 46 9.6
Confidentiality 46 9.7 Available Funding 46       ARTICLE X CONDITIONS TO
CLOSING 47 10.1 Condition to the Obligations of the Parties 47 10.2 Conditions
to Obligations of Parent and Purchaser 47 10.3 Conditions to Obligations of the
Company 48       ARTICLE XI INDEMNIFICATION 49 11.1 Indemnification of Purchaser
49 11.2 Procedure 49 11.3 Escrow of Escrow Shares by Stockholder 51 11.4
Periodic Payments 52 11.5 Right of Set Off 52 11.6 Payment of Indemnification 52
11.7 Insurance 52 11.8 Survival of Indemnification Rights 52

 

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ARTICLE XII DISPUTE RESOLUTION 53 12.1 Arbitration 53 12.2 Waiver of Jury Trial;
Exemplary Damages 54       ARTICLE XIII TERMINATION 55 13.1 Termination Without
Default 55 13.2 Termination Upon Default 55 13.3 No Other Termination 55 13.4
Survival 55     ARTICLE XIV MISCELLANEOUS 56 14.1 Notices 56 14.2 Amendments; No
Waivers; Remedies 57 14.3 Arm’s length bargaining; no presumption against
drafter 57 14.4 Publicity 57 14.5 Expenses 58 14.6 No Assignment or Delegation
58 14.7 Governing Law 58 14.8 Counterparts; facsimile signatures 58 14.9 Entire
Agreement 58 14.10 Severability 58 14.11 Construction of certain terms and
references; captions 58 14.12 Further Assurances 59 14.13 Third Party
Beneficiaries 59 14.14 Waiver 59 14.15 Stockholders’ Representative 60

 

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MERGER AGREEMENT

 

This MERGER AGREEMENT (the “Agreement”), dated as of July 25, 2016 (the “Signing
Date”), by and among E-compass Acquisition Corp., a Cayman Islands exempted
company (the “Parent”), iFresh Inc., a Delaware corporation and wholly-owned
subsidiary of Parent (the “Purchaser”), iFresh Merger Sub Inc., a Delaware
corporation and wholly-owned subsidiary of Purchaser (the “Merger Sub”), NYM
Holding, Inc., a Delaware corporation (the “Company”), the stockholders of the
Company (each, a “Stockholder” and collectively the “Stockholders”), and Long
Deng, an individual, as the representative of the Stockholders (the
“Stockholders’ Representative”).

 

W I T N E S S E T H :

 

  A. The Company is in the business of operating Asian/Chinese supermarkets and
wholesale facilities that sell food and various other merchandise not typically
available in mainstream supermarkets (the “Business”);         B. Parent is a
blank check company formed for the sole purpose of entering into a share
exchange, asset acquisition, share purchase, recapitalization, reorganization or
other similar business combination with one or more businesses or entities;    
    C. Purchaser is a wholly-owned subsidiary of Parent and was formed for the
sole purpose of the merger of the Parent with and into Purchaser, in which
Purchaser will be the surviving corporation (the “Redomestication Merger”);    
      D. Immediately after the Redomestication Merger, the parties desire that
Merger Sub merge with and into the Company, upon the terms and subject to the
conditions set forth herein and in accordance with the Delaware General
Corporation Law (the “Merger”), and that the shares of Company Common Stock
(excluding any shares held in the treasury of the Company) and Company Stock
Rights be converted upon the Merger into the right to receive the Applicable Per
Share Merger Consideration, as is provided herein (Merger Sub and the Company
are sometimes hereinafter referred to as the “Constituent Corporations” and the
Company following the Merger is sometimes hereinafter referred to as the
“Surviving Corporation”);

 

The parties accordingly agree as follows:

 

ARTICLE I
DEFINITIONS

 

The following terms, as used herein, have the following meanings:

 

1.1     “Action” means any legal action, suit, claim, investigation, hearing or
proceeding, including any audit, claim or assessment for Taxes or otherwise.

 

 1 

 

 

1.2     “Additional Agreements” means the Voting Agreement, Registration Rights
Agreement, Escrow Agreement, Lock-Up Agreements and the Option Agreement.

 

1.3     “Affiliate” means, with respect to any Person, any other Person directly
or indirectly Controlling, Controlled by, or under common Control with such
Person. For avoidance of any doubt, (a) with respect to all periods prior to the
Closing, each Principal Stockholder is an Affiliate of the Company, and (ii)
with respect to all periods subsequent to the Closing, Purchaser is an Affiliate
of the Company.

 

1.4     “Authority” means any governmental, regulatory or administrative body,
agency or authority, any court or judicial authority, any arbitrator, or any
public, private or industry regulatory authority, whether international,
national, Federal, state, or local.

 

1.5     “Books and Records” means all books and records, ledgers, employee
records, customer lists, files, correspondence, and other records of every kind
(whether written, electronic, or otherwise embodied) owned or used by a Person
or in which a Person’s assets, the business or its transactions are otherwise
reflected, other than stock books and minute books.

 

1.6     “Business Day” means any day other than a Saturday, Sunday or a legal
holiday on which commercial banking institutions in New York are authorized to
close for business.

 

1.7     “Closing Payment” means $5 million in cash and stock certificates
representing, in the aggregate, 12,000,000 shares of Purchaser Common Stock (the
“Closing Payment Shares”) payable to the Stockholders and in such amounts set
forth opposite each Stockholder’s name on Schedule 1.7, with a deemed price per
share of no less than $10.00.

 

1.8     “COBRA” means collectively, the requirements of Sections 601 through 606
of ERISA and Section 4980B of the Code.

 

1.9     “Code” means the Internal Revenue Code of 1986, as amended.

 

1.10     “Company Stock Rights” means all options, warrants or other rights to
purchase, convert or exchange into Company Common Stock.

 

1.11     “Contracts” means the Leases and all contracts, agreements, leases
(including equipment leases, car leases and capital leases), licenses,
commitments, client contracts, statements of work (SOWs), sales and purchase
orders and similar instruments, oral or written, to which the Company is a party
or by which any of its respective assets are bound, including any entered into
by the Company in compliance with Section 7.1 after the Signing Date and prior
to the Closing, and all rights and benefits thereunder, including all rights and
benefits thereunder with respect to all cash and other property of third parties
under the Company’s dominion or control.

 

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1.12     “Control” of a Person means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract, or
otherwise. “Controlled”, “Controlling” and “under common Control with” have
correlative meanings. Without limiting the foregoing, a Person (the “Controlled
Person”) shall be deemed Controlled by (a) any other Person (the “10% Owner”)
(i) owning beneficially, as meant in Rule 13d-3 under the Exchange Act,
securities entitling such Person to cast 10% or more of the votes for election
of directors or equivalent governing authority of the Controlled Person or (ii)
entitled to be allocated or receive 10% or more of the profits, losses, or
distributions of the Controlled Person; (b) an officer, director, general
partner, partner (other than a limited partner), manager, or member (other than
a member having no management authority that is not a 10% Owner) of the
Controlled Person; or (c) a spouse, parent, lineal descendant, sibling, aunt,
uncle, niece, nephew, mother-in-law, father-in-law, sister-in-law, or
brother-in-law of an Affiliate of the Controlled Person or a trust for the
benefit of an Affiliate of the Controlled Person or of which an Affiliate of the
Controlled Person is a trustee.

 

1.13     “Deferred Underwriting Amount” means the portion of the underwriting
discounts and commissions held in the Trust Account, which the underwriters of
the IPO are entitled to receive upon the Closing in accordance with the Trust
Agreement.

 

1.14     “Dissenting Shares” means any shares of Company Common Stock held by
Stockholders who are entitled to appraisal rights under Delaware law, and who
have properly exercised, perfected and not subsequently withdrawn or lost or
waived their rights to demand payment with respect to their shares in accordance
with Delaware law.

 

1.15     “Environmental Laws” shall mean all Laws that prohibit, regulate or
control any Hazardous Material or any Hazardous Material Activity, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Resource Recovery and Conservation Act of 1976, the
Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act and the Clean Water Act.

 

1.16     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, and the regulations thereunder.

 

1.17     “Escrow Agreement” means the agreement in the form attached as Exhibit
A hereto governing the Escrow Shares.

 

1.18     “Escrow Shares” means shares of Purchaser Common Stock representing 20%
of the aggregate amount of Closing Payment Shares.

 

1.19     “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

1.20     “Hazardous Material” shall mean any material, emission, chemical,
substance or waste that has been designated by any Governmental Authority to be
radioactive, toxic, hazardous, a pollutant or a contaminant.

 

1.21     “Hazardous Materials Activity” shall mean the transportation, transfer,
recycling, storage, use, treatment, manufacture, removal, remediation, release,
exposure of others to, sale, labeling, or distribution of any Hazardous Material
or any product or waste containing a Hazardous Material, or product manufactured
with ozone depleting substances, including, without limitation, any required
labeling, payment of waste fees or charges (including so-called e-waste fees)
and compliance with any recycling, product take-back or product content
requirements.

 

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1.22     “IPO” means the initial public offering of Parent pursuant to a
prospectus dated August 12, 2015.

 

1.23     “Indebtedness” means with respect to any Person, (a) all obligations of
such Person for borrowed money, or with respect to deposits or advances of any
kind (including amounts by reason of overdrafts and amounts owed by reason of
letter of credit reimbursement agreements) including with respect thereto, all
interests, fees and costs, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of such
Person under conditional sale or other title retention agreements relating to
property purchased by such Person, (d) all obligations of such Person issued or
assumed as the deferred purchase price of property or services (other than
accounts payable to creditors for goods and services incurred in the ordinary
course of business), (e) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any lien or security interest on property owned or acquired by
such Person, whether or not the obligations secured thereby have been assumed,
(f) all obligations of such Person under leases required to be accounted for as
capital leases under U.S. GAAP, (g) all guarantees by such Person and (h) any
agreement to incur any of the same.

 

1.24     “Intellectual Property Right” means any trademark, service mark,
registration thereof or application for registration therefor, trade name,
license, invention, patent, patent application, trade secret, trade dress,
know-how, copyright, copyrightable materials, copyright registration,
application for copyright registration, software programs, data bases, u.r.l.s.,
and any other type of proprietary intellectual property right, and all
embodiments and fixations thereof and related documentation, registrations and
franchises and all additions, improvements and accessions thereto, and with
respect to each of the forgoing items in this definition, which is owned or
licensed or filed by the Company, or used or held for use in the Business,
whether registered or unregistered or domestic or foreign.

 

1.25     “Inventory” is defined in the UCC.

 

1.26     “Law” means any domestic or foreign, federal, state, municipality or
local law, statute, ordinance, code, rule, or regulation.

 

1.27     “Leases” means the leases with respect to the stores, warehouses and
parking lots leased by the Company at the locations as set forth on Schedule
1.27 attached hereto, together with all fixtures and improvements erected on the
premises leased thereby.

 

1.28     “Lien” means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
and any conditional sale or voting agreement or proxy, including any agreement
to give any of the foregoing.

 

1.29     “Lock-Up Agreements” means the Lock-Up Agreements between Purchaser and
each of the Stockholders, pursuant to which the Purchaser Common Stock of each
Stockholder will be locked up for one (1) year, each such Lock-Up Agreement in
the form attached hereto as Exhibit B.

 

1.30     “Material Adverse Effect” or “Material Adverse Change” means a material
adverse change or a material adverse effect, individually or in the aggregate,
upon on the assets, liabilities, condition (financial or otherwise), prospects,
net worth, management, earnings, cash flows, business, operations or properties
of the Company and the Business, taken as a whole, whether or not arising from
transactions in the ordinary course of business.

 

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1.31     “Option Agreement” means the agreement in the form attached as Exhibit
C hereto governing the terms of Purchaser’s option to purchase additional
grocery stores owned by Long Deng.

 

1.32     “Order” means any decree, order, judgment, writ, award, injunction,
rule or consent of or by an Authority.

 

1.33     “Parent Ordinary Shares” means the ordinary shares of common stock, par
value $0.0001 per share, of Parent.

 

1.34     “Parent Rights” means the right to receive one-tenth (1/10) of a Parent
Ordinary Share.

 

1.35     “Parent Securities” means the Parent Ordinary Shares, Parent Rights,
Parent Units and Parent UPO, collectively.

 

1.36     “Parent UPO” means the option issued to Cantor Fitzgerald & Co. (and/or
its designee), to purchase up to an aggregate of 300,000 Parent Units at a price
of $10.00 per Parent Unit.

 

1.37     “Parent Unit” means one Parent Ordinary Share and one Parent Right.

 

1.38     “Permitted Liens” means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been made available to Purchaser; and (ii) mechanics’,
carriers’, workers’, repairers’ and similar statutory Liens arising or incurred
in the ordinary course of business for amounts (A) that are not delinquent, (B)
that are not material to the business, operations and financial condition of the
Company so encumbered, either individually or in the aggregate, (C) not
resulting from a breach, default or violation by the Company of any Contract or
Law, and (D) the Liens set forth on Schedule 5.15(c).

 

1.39     “Person” means an individual, corporation, partnership (including a
general partnership, limited partnership or limited liability partnership),
limited liability company, association, trust or other entity or organization,
including a government, domestic or foreign, or political subdivision thereof,
or an agency or instrumentality thereof.

 

1.40     “Pre-Closing Period” means any period that ends on or before the
Closing Date or with respect to a period that includes but does not end on the
Closing Date, the portion of such period through and including the day of the
Closing.

 

1.41     “Principal Stockholder” means Long Deng.

 

1.42     “Purchaser Common Stock” means the common stock of Purchaser.

 

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1.43     “Purchaser Securities” means the Purchaser Common Stock, Purchaser
Preferred Stock, Purchaser Units, Purchaser Rights and Purchaser UPO,
collectively.

 

1.44     “Purchaser Rights” means the right to receive one-tenth (1/10) of a
Purchaser Ordinary Share.

 

1.45     “Purchaser UPO” means the option issued to Cantor Fitzgerald & Co.
(and/or its designee) to purchase up to an aggregate of 300,000 Purchaser Units
at a price of $10.00 per Purchaser Unit.

 

1.46     “Purchaser Unit” means one Purchaser Ordinary Share and one Purchaser
Right.

 

1.47     “Real Property” means, collectively, all real properties and interests
therein (including the right to use), together with all buildings, fixtures,
trade fixtures, plant and other improvements located thereon or attached
thereto; all rights arising out of use thereof (including air, water, oil and
mineral rights); and all subleases, franchises, licenses, permits, easements and
rights-of-way which are appurtenant thereto.

 

1.48     “Registration Rights Agreement” means the agreement in the form
attached as Exhibit D hereto governing the resale of the Closing Payment Shares.

 

1.49     “Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002, as amended.

 

1.50     “SEC” means the Securities and Exchange Commission.

 

1.51     “Securities Act” means the Securities Act of 1933, as amended.

 

1.52     “Subsidiary” means each entity of which at least fifty percent (50%) of
the capital stock or other equity or voting securities are Controlled or owned,
directly or indirectly, by the Company.

 

1.53     “Tangible Personal Property” means all tangible personal property and
interests therein, including machinery, computers and accessories, furniture,
office equipment, communications equipment, automobiles, trucks, forklifts and
other vehicles owned or leased by the Company and other tangible property,
including the items listed on Schedule 5.15(b).

 

1.54     “Tax(es)” means any federal, state, local or foreign tax, charge, fee,
levy, custom, duty, deficiency, or other assessment of any kind or nature
imposed by any Taxing Authority (including any income (net or gross), gross
receipts, profits, windfall profit, sales, use, goods and services, ad valorem,
franchise, license, withholding, employment, social security, workers
compensation, unemployment compensation, employment, payroll, transfer, excise,
import, real property, personal property, intangible property, occupancy,
recording, minimum, alternative minimum, environmental or estimated tax),
including any liability therefor as a transferee (including under Section 6901
of the Code or similar provision of applicable Law) or successor, as a result of
Treasury Regulation Section 1.1502-6 or similar provision of applicable Law or
as a result of any Tax sharing, indemnification or similar agreement, together
with any interest, penalty, additions to tax or additional amount imposed with
respect thereto.

 

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1.55     “Taxing Authority” means the Internal Revenue Service and any other
Authority responsible for the collection, assessment or imposition of any Tax or
the administration of any Law relating to any Tax.

 

1.56     “Tax Return” means any return, information return, declaration, claim
for refund or credit, report or any similar statement, and any amendment
thereto, including any attached schedule and supporting information, whether on
a separate, consolidated, combined, unitary or other basis, that is filed or
required to be filed with any Taxing Authority in connection with the
determination, assessment, collection or payment of a Tax or the administration
of any Law relating to any Tax.

 

1.57     “UCC” means the Uniform Commercial Code of the State of New York, or
any corresponding or succeeding provisions of Laws of the State of New York, or
any corresponding or succeeding provisions of Laws, in each case as the same may
have been and hereafter may be adopted, supplemented, modified, amended,
restated or replaced from time to time.

 

1.58     “U.S. GAAP” means U.S. generally accepted accounting principles,
consistently applied.

 

ARTICLE II
REDOMESTICATION MERGER

 

2.1     Redomestication Merger. At the Redomestication Effective Time (as
defined in Section 2.2), and subject to and upon the terms and conditions of
this Agreement, and in accordance with the applicable provisions of the Cayman
Islands Companies Law (2013 Revision) (“Cayman Law”) and the Delaware General
Corporation Law (“Delaware Law”), respectively, Parent shall be merged with and
into Purchaser, the separate corporate existence of Parent shall cease and
Purchaser shall continue as the surviving corporation. Purchaser as the
surviving corporation after the Redomestication Merger is hereinafter sometimes
referred to as the “Redomestication Surviving Corporation”.

 

2.2     Redomestication Effective Time. The parties hereto shall cause the
Redomestication Merger to be consummated by filing the Certificate of Merger
with the Secretary of State of the State of Delaware, in accordance with the
relevant provisions of Delaware Law, and the Plan of Merger (and other documents
required by Cayman Law) with the Registrar of Companies in the Cayman Islands,
in accordance with the relevant provisions of Cayman Law (the time of such
filings, or such later time as specified in the Certificate of Merger and the
Plan of Merger, being the “Redomestication Effective Time”).

 

2.3     Effect of the Redomestication Merger. At the Redomestication Effective
Time, the effect of the Redomestication Merger shall be as provided in this
Agreement, the Certificate of Merger, the Plan of Merger and the applicable
provisions of Delaware Law and Cayman Law. Without limiting the generality of
the foregoing, and subject thereto, at the Redomestication Effective Time, all
the property, rights, privileges, agreements, powers and franchises, debts,
liabilities, duties and obligations of the Parent and Purchaser shall become the
property, rights, privileges, agreements, powers and franchises, debts,
liabilities, duties and obligations of the Redomestication Surviving
Corporation, which shall include the assumption by the Redomestication Surviving
Corporation of any and all agreements, covenants, duties and obligations of the
Parent set forth in this Agreement to be performed after the Closing, and all
securities of the Redomestication Surviving Corporation issued and outstanding
as a result of the conversion under Sections 2.6(b) and (d) hereof shall be
listed on the public trading market on which the Parent Units were trading prior
to the Redomestication Merger.

 

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2.4     Memorandum and Articles of Association. At the Redomestication Effective
Time, the Amended and Restated Memorandum and Articles of Association of the
Parent, as in effect immediately prior to the Redomestication Effective Time,
shall cease and the Certificate of Incorporation and By-Laws of Purchaser (the
“Charter Documents”), as in effect immediately prior to the Redomestication
Effective Time, shall be the Charter Documents of the Redomestication Surviving
Corporation.

 

2.5     Directors and Officers of the Redomestication Surviving Corporation.
Immediately after the Redomestication Effective Time and prior to the Closing of
the Transaction, the board of directors of the Redomestication Surviving
Corporation shall be the board of directors of the Parent immediately prior to
the Redomestication Merger.

 

2.6     Effect on Issued Securities of Parent.

 

(a)     Conversion of Parent Ordinary Shares.

 

(i)     At the Redomestication Effective Time, every issued and outstanding
Parent Ordinary Share (other than those described in Section 2.6(f) or Section
2.11 below) shall be converted automatically into one share of Purchaser Common
Stock. At the Redomestication Effective Time, all Parent Ordinary Shares shall
cease to be issued and shall automatically be canceled and retired and shall
cease to exist. The holders of issued Parent Ordinary Shares immediately prior
to the Redomestication Effective Time, as evidenced by the register of members
of the Parent (the “Register of Members”), shall cease to have any rights with
respect to such Parent Ordinary Shares, except as provided herein or by Law.
Each certificate (if any) previously evidencing Parent Ordinary Shares shall be
exchanged for a certificate representing the same number of shares of Purchaser
Common Stock upon the surrender of such certificate in accordance with Section
2.7.

 

(ii)     Each holder of Parent Ordinary Shares (other those described in Section
2.6(f) or Section 2.11 below) listed on the Register of Members shall thereafter
have the right to receive the same number of shares of Purchaser Common Stock
only.

 

(b)     Parent Units. At the Redomestication Effective Time, every issued and
outstanding Parent Unit shall be converted automatically into one Purchaser
Unit. At the Redomestication Effective Time, all Parent Units shall cease to be
outstanding and shall automatically be canceled and retired and shall cease to
exist. The holders of issued Parent Units immediately prior to the
Redomestication Effective Time, as evidenced by the register of members, shall
cease to have any rights with respect to such Parent Units, except as provided
herein or by Law. Each certificate (if any) previously evidencing Parent Units
shall be exchanged for a certificate representing the same number of Purchaser
Units upon the surrender of such certificate in accordance with Section 2.7.

 

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(c)     Parent Rights. At the Redomestication Effective Time, every issued and
outstanding Parent Right shall be converted automatically into one Purchaser
Right. At the Redomestication Effective Time, all Parent Rights shall cease to
be outstanding and shall automatically be canceled and retired and shall cease
to exist. The holders of issued Parent Rights immediately prior to the
Redomestication Effective Time, as evidenced by the register of members shall
cease to have any rights with respect to such Parent Rights, except as provided
herein or by Law. Each certificate (if any) previously evidencing Parent Rights
shall be exchanged for a certificate representing the same number of Purchaser
Rights upon the surrender of such certificate in accordance with Section 2.7.

 

(d)     Parent Unit Purchase Option. At the Redomestication Effective Time, each
Parent UPO shall be converted into a Purchaser UPO. At the Redomestication
Effective Time, each Parent UPO shall cease to be outstanding and shall
automatically be canceled and retired and shall cease to exist. Each of the
Purchaser UPOs shall have, and be subject to, the same terms and conditions set
forth in the applicable agreements governing the Parent UPOs that are
outstanding immediately prior to the Redomestication Effective Time. At or prior
to the Redomestication Effective Time, Purchaser shall take all corporate action
necessary to reserve for future issuance, and shall maintain such reservation
for so long as any of the Purchaser UPOs remain outstanding, a sufficient number
of Purchaser Units for delivery upon the exercise of such Purchaser UPOs and the
exercise of the Purchaser Rights included in such Purchaser UPOs.

 

(e)     Cancellation of Parent Ordinary Shares Owned by Parent. At the
Redomestication Effective Time, if there are any Parent Ordinary Shares that are
owned by the Parent as treasury shares or any Parent Ordinary Shares owned by
any direct or indirect wholly owned subsidiary of the Parent immediately prior
to the Redomestication Effective Time, such shares shall be canceled and
extinguished without any conversion thereof or payment therefor.

 

(f)     Transfers of Ownership. If any certificate for securities of Purchaser
is to be issued in a name other than that in which the certificate surrendered
in exchange therefor is registered, it will be a condition of the issuance
thereof that the certificate so surrendered will be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer and that the person requesting such exchange will have paid to
Purchaser or any agent designated by it any transfer or other Taxes required by
reason of the issuance of a certificate for securities of Purchaser in any name
other than that of the registered holder of the certificate surrendered, or
established to the satisfaction of Purchaser or any agent designated by it that
such tax has been paid or is not payable.

 

(g)     No Liability. Notwithstanding anything to the contrary in this Section
2.6, none of the Redomestication Surviving Corporation, Purchaser or any party
hereto shall be liable to any person for any amount properly paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.

 

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2.7     Surrender of Certificates. All securities issued upon the surrender of
Parent Securities in accordance with the terms hereof, shall be deemed to have
been issued in full satisfaction of all rights pertaining to such securities,
provided that any restrictions on the sale and transfer of Parent Securities
shall also apply to the Purchaser Securities so issued in exchange.

 

2.8     Lost Stolen or Destroyed Certificates. In the event any certificates
shall have been lost, stolen or destroyed, Purchaser shall issue in exchange for
such lost, stolen or destroyed certificates or securities, as the case may be,
upon the making of an affidavit of that fact by the holder thereof, such
securities, as may be required pursuant to Section 2.7; provided, however, that
Redomestication Surviving Corporation may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against the Redomestication
Surviving Corporation with respect to the certificates alleged to have been
lost, stolen or destroyed

 

2.9     Section 368 Reorganization. For U.S. federal income tax purposes, the
Redomestication Merger is intended to constitute a “reorganization” within the
meaning of Section 368(a) of the Code. The parties to this Agreement hereby (i)
adopt this Agreement as a “plan of reorganization” within the meaning of Section
1.368-2(g) of the United States Treasury Regulations, (ii) agree to file and
retain such information as shall be required under Section 1.368-3 of the United
States Treasury Regulations, and (iii) agree to file all Tax and other
informational returns on a basis consistent with such characterization.
Notwithstanding the foregoing or anything else to the contrary contained in this
Agreement, the parties acknowledge and agree that no party is making any
representation or warranty as to the qualification of the Redomestication Merger
as a reorganization under Section 368 of the Code or as to the effect, if any,
that any transaction consummated on, after or prior to the Redomestication
Effective Time has or may have on any such reorganization status. Each of the
parties acknowledge and agree that each (i) has had the opportunity to obtain
independent legal and tax advice with respect to the transactions contemplated
by this Agreement, and (ii) is responsible for paying its own Taxes, including
any adverse Tax consequences that may result if the Redomestication Merger is
determined not to qualify as a reorganization under Section 368 of the Code.

 

2.10     Taking of Necessary Action; Further Action. If, at any time after the
Redomestication Effective Time, any further action is necessary or desirable to
carry out the purposes of this Agreement and to vest the Redomestication
Surviving Corporation with full right, title and possession to all assets,
property, rights, privileges, powers and franchises of the Parent and Purchaser,
the officers and directors of Parent and Purchaser are fully authorized in the
name of their respective corporations or otherwise to take, and will take, all
such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.

 

2.11     Agreement of Fair Value. Parent, Purchaser and the Company respectively
agree that the consideration payable for the Parent Ordinary Shares represents
the fair value of such Parent Ordinary Shares for the purposes of Section 238(8)
of Cayman Law.

 

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ARTICLE III
THE MERGER

 

3.1     The Merger. Upon the terms and subject to the conditions set forth in
this Agreement, on the Closing Date, immediately after the Redomestication
Merger, pursuant to an appropriate certificate of merger (the “Certificate of
Merger“) and in accordance with Delaware Law, Merger Sub shall be merged with
and into the Company. Following the Merger, the separate corporate existence of
Merger Sub shall cease, and the Company shall continue as the surviving
corporation in the Merger (the “Surviving Corporation“).

 

3.2     Closing; Effective Time. Unless this Agreement is earlier terminated in
accordance with Article XIII, the closing of the Merger (the “Closing”) shall
take place at the offices of Loeb & Loeb LLP, 345 Park Avenue, New York, New
York, at 10:00 a.m. local time, on or before February 18, 2017, subject to the
satisfaction or waiver (to the extent permitted by applicable law) of the
conditions set forth in Article X. The parties may participate in the Closing
via electronic means. The date on which the Closing actually occurs is
hereinafter referred to as the “Closing Date”. At the Closing, the parties
hereto shall cause the Certificate of Merger to be filed with the Secretary of
State of the State of Delaware, in such form as is required by, and executed in
accordance with, the relevant provisions of Delaware Law, and, as soon as
practicable on or after the Closing Date, shall make any and all other filings
or recordings required under Delaware Law. The Merger shall become effective at
such date and time as the Certificate of Merger is duly filed with the Delaware
Secretary of State or at such other date and time as Merger Sub and the Company
shall agree in writing and shall specify in the Certificate of Merger (the date
and time the Merger becomes effective being the “Effective Time”).

 

3.3     Board of Directors. Immediately after the Closing, the Redomestication
Surviving Corporation’s board of directors will consist of five (5) directors.
The Company shall designate four (4) directors, at least two (2) of whom shall
qualify as independent directors under the Securities Act and the rules of any
applicable securities exchange. The Redomestication Surviving Corporation shall
designate (1) director from its pre-Merger board who shall qualify as an
independent director under the Securities Act and the rules of any applicable
securities exchange. The parties to this Agreement shall enter into a two (2)
year voting agreement (the “Voting Agreement”) in form agreed to by the parties
hereto relating to election of directors of the Surviving Corporation.

 

3.4     Effects of the Merger. The Merger shall have the effects set forth in
this Agreement, the Certificate of Merger and in the relevant provisions of
Delaware Law.

 

3.5     Certificate of Incorporation; Bylaws.

 

(a)     At the Effective Time, the certificate of incorporation of the Company
shall become the certificate of incorporation of the Surviving Corporation until
thereafter amended in accordance with their terms and as provided by law.

 

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(b)     At the Effective Time, and without any further action on the part of the
Company or Merger Sub, the bylaws of the Company shall be amended so that they
read in their entirety as set forth in Exhibit E annexed hereto, and, as so
amended, shall be the bylaws of the Surviving Corporation until thereafter
amended in accordance with their terms, the certificate of incorporation of the
Surviving Corporation and as provided by law.

 

3.6     No Further Ownership Rights in Company Capital Stock. At the Effective
Time, the stock transfer books of the Company shall be closed and thereafter
there shall be no further registration of transfers of shares of Company Capital
Stock (as defined in Section 5.5) on the records of the Company. From and after
the Effective Time, the holders of certificates evidencing ownership of shares
of Company Capital Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company Capital
Stock, except as otherwise provided for herein or by Law.

 

3.7     Withholding Rights. Notwithstanding anything to the contrary contained
in this Agreement, Purchaser, the Company or the Stockholders’ Representative
shall be entitled to deduct and withhold from the cash otherwise deliverable
under this Agreement, and from any other payments otherwise required pursuant to
this Agreement or any Additional Agreement, such amounts as Purchaser, the
Company or the Stockholders’ Representative, as the case may be, are required to
withhold and pay over to the applicable Authority with respect to any such
deliveries and payments under the Code or any provision of state, local,
provincial or foreign Tax Law. To the extent that amounts are so withheld and
paid over, such withheld amounts shall be treated for all purposes of this
Agreement as having been delivered and paid to such Person in respect of which
such deduction and withholding was made.

 

3.8     Rights Not Transferable. The rights of the holders of Company Capital
Stock as of immediately prior to the Effective Time are personal to each such
holder and shall not be assignable or otherwise transferable for any reason
(except by will or by the operation of the laws of descent after the death of a
natural holder thereof). Any attempted transfer of such right by any holder
thereof (otherwise than as permitted by the immediately preceding sentence)
shall be null and void.

 

3.9     Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and interest in, to and under, and/or possession of, all assets,
property, rights, privileges, powers and franchises of the Company, the officers
and directors of the Surviving Corporation are fully authorized in the name and
on behalf of the Company, to take all lawful action necessary or desirable to
accomplish such purpose or acts, so long as such action is not inconsistent with
this Agreement.

 

3.10     Section 368 Reorganization. For U.S. federal income tax purposes, the
Merger is intended to constitute a “reorganization” within the meaning of
Section 368(a) of the Code. The parties to this Agreement hereby (i) adopt this
Agreement insofar as it relates to the Merger as a “plan of reorganization”
within the meaning of Section 1.368-2(g) of the United States Treasury
regulations, (ii) agree to file and retain such information as shall be required
under Section 1.368-3 of the United States Treasury regulations, and (iii) agree
to file all Tax and other informational returns on a basis consistent with such
characterization. Notwithstanding the foregoing or anything else to the contrary
contained in this Agreement, the parties acknowledge and agree that no party is
making any representation or warranty as to the qualification of the Merger as a
reorganization under Section 368 of the Code or as to the effect, if any, that
any transaction consummated on, after or prior to the Effective Time has or may
have on any such reorganization status. Each of the parties acknowledge and
agree that each such party and each of the stockholders of the Company (i) has
had the opportunity to obtain independent legal and tax advice with respect to
the transactions contemplated by this Agreement, and (ii) is responsible for
paying its own Taxes, including any adverse Tax consequences that may result if
the Merger is determined not to qualify as a reorganization under Section 368 of
the Code.

 

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ARTICLE IV
CONVERSION OF SHARES; CLOSING MERGER CONSIDERATION

 

4.1     Conversion of Capital Stock.

 

(a)     Conversion of Common Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Purchaser, Merger Sub, the Company
or the Stockholders, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time shall be canceled and automatically
converted into the right to receive, without interest, the applicable portion of
the Closing Payment for such share of Company Common Stock (the “Applicable Per
Share Merger Consideration”) as specified on Schedule 1.7 hereto. All fractional
shares of Company Common Stock held by Stockholders shall be entitled to receive
the Applicable Per Share Merger Consideration with respect to such fractional
shares.

 

(b)     Capital Stock of Merger Sub. Each share of capital stock of Merger Sub
that is issued and outstanding immediately prior to the Effective Time will, by
virtue of the Merger and without further action on the part of the sole
stockholder of Merger Sub, be converted into and become one share of common
stock of the Surviving Corporation (and the shares of Surviving Corporation into
which the shares of Merger Sub capital stock are so converted shall be the only
shares of the Surviving Corporation’s capital stock that are issued and
outstanding immediately after the Effective Time). Each certificate evidencing
ownership of shares of Merger Sub common stock will, as of the Effective Time,
evidence ownership of such share of common stock of the Surviving Corporation.

 

(c)     Treatment of Company Capital Stock Owned by the Company. At the
Effective Time, all shares of Company Capital Stock that are owned by the
Company as treasury stock immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.

 

(d)     No Liability. Notwithstanding anything to the contrary in this Section
4.1, none of Surviving Corporation or any party hereto shall be liable to any
person for any amount properly paid to a public official pursuant to any
applicable abandoned property, escheat or similar law.

 

(e)     Surrender of Certificates. All shares of Purchaser Common Stock issued
upon the surrender of shares of the Company Common Stock in accordance with the
terms hereof, shall be deemed to have been issued in full satisfaction of all
rights pertaining to such securities, other than any additional rights pursuant
to this Agreement, provided that any restrictions on the sale and transfer of
such shares shall also apply to the Purchaser Common Stock so issued in
exchange.

 

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(f)     Lost, Stolen or Destroyed Certificates. In the event any certificates
for any Company Common Stock shall have been lost, stolen or destroyed,
Purchaser shall cause to be issued in exchange for such lost, stolen or
destroyed certificates and for each such share, upon the making of an affidavit
of that fact by the holder thereof, the Applicable Per Share Merger
Consideration; provided, however, that Purchaser may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Purchaser with respect to the certificates alleged to have been lost, stolen or
destroyed.

 

4.2     Cash Merger Consideration; Aggregate Merger Price. In addition to the
Applicable Per Share Merger Consideration, the Stockholders shall be entitled to
receive, in the aggregate, $5 million, which will be distributed at the Closing
via wire transfer to an account to be provided by the Stockholders’
Representative (the “Cash Merger Consideration” and, together with the
Applicable Per Share Merger Consideration, the “Aggregate Merger Price”).

 

4.3     Payment of Merger Consideration.

 

(a)     No certificates or scrip representing fractional shares of Purchaser
Common Stock will be issued pursuant to the Merger, and such fractional share
interests will not entitle the owner thereof to vote or to any rights of a
stockholder of Purchaser.

 

(b)     Legend. Each certificate issued pursuant to the Merger to any holder of
Company Common Stock shall bear the legend set forth below, or legend
substantially equivalent thereto, together with any other legends that may be
required by any securities laws at the time of the issuance of the Purchaser
Common Stock:

 

THE ORDINARY SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS
AND UNTIL (I) SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION HAS BEEN
REGISTERED UNDER THE ACT OR (II) THE ISSUER OF THE ORDINARY SHARES HAS RECEIVED
AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE WITH THE ACT.

 

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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby represents and warrants to Purchaser that each of the
following representations and warranties is true, correct and complete as of the
date of this Agreement and as of the Closing Date.

 

5.1     Corporate Existence and Power. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. The Company has all power and authority, corporate and otherwise, and
all governmental licenses, franchises, Permits, authorizations, consents and
approvals required to own and operate its properties and assets and to carry on
the Business as presently conducted and as proposed to be conducted. The Company
is not qualified to do business as a foreign entity in any jurisdiction, except
as set forth on Schedule 5.1, and there is no other jurisdiction in which the
character of the property owned or leased by the Company or the nature of its
activities make qualification of the Company in any such jurisdiction necessary.
The Company has offices located only at the addresses set forth on Schedule 5.1.
The Company has not taken any action, adopted any plan, or made any agreement or
commitment in respect of any merger, consolidation, sale of all or substantially
all of its assets, reorganization, recapitalization, dissolution or liquidation.

 

5.2     Authorization. The execution, delivery and performance by the Company of
this Agreement and the Additional Agreements and the consummation by the Company
of the transactions contemplated hereby and thereby are within the corporate
powers of the Company and have been duly authorized by all necessary action on
the part of the Company, including the unanimous approval of the stockholders of
the Company. This Agreement constitutes, and, upon their execution and delivery,
each of the Additional Agreements will constitute, a valid and legally binding
agreement of the Company enforceable against the Company in accordance with
their respective terms.

 

5.3     Governmental Authorization. Neither the execution, delivery nor
performance by the Company of this Agreement or any Additional Agreements
requires any consent, approval, license or other action by or in respect of, or
registration, declaration or filing with, any Authority requiring a consent,
approval, authorization, order or other action of or filing with any Authority
as a result of the execution, delivery and performance of this Agreement or any
of the Additional Agreements or the consummation of the transactions
contemplated hereby or thereby (each of the foregoing, a “Governmental
Approval”).

 

5.4     Non-Contravention. None of the execution, delivery or performance by the
Company of this Agreement or any Additional Agreements does or will (a)
contravene or conflict with the organizational or constitutive documents of the
Company, (b) contravene or conflict with or constitute a violation of any
provision of any Law or Order binding upon or applicable to the Company, (c)
except for the Contracts listed on Schedule 5.11 requiring Company Consents (but
only as to the need to obtain such Company Consents), constitute a default under
or breach of (with or without the giving of notice or the passage of time or
both) or violate or give rise to any right of termination, cancellation,
amendment or acceleration of any right or obligation of the Company or require
any payment or reimbursement or to a loss of any material benefit relating to
the Business to which the Company is entitled under any provision of any Permit,
Contract or other instrument or obligations binding upon the Company or by which
any of the Company Capital Stock or any of the Company’s assets is or may be
bound or any Permit, (d) result in the creation or imposition of any Lien on any
of the Company Capital Stock or any of the Company’s assets, (e) cause a loss of
any material benefit relating to the Business to which the Company is entitled
under any provision of any Permit or Contract binding upon the Company, or (f)
result in the creation or imposition of any Lien (except for Permitted Liens) on
any of the Company’s assets.

 

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5.5     Capitalization. The Company has an authorized capitalization consisting
of 10,000 shares of common stock, $0.001 par value per share (the “Company
Common Stock”) and 0 shares of preferred stock, no par value per share (the
“Company Preferred Stock” and together with the Company Common Stock, and the
Company Stock Rights, the “Company Capital Stock”) of which 1,000 shares of
Company Common Stock are issued and outstanding as of the date hereof and 0
shares of Company Preferred Stock are issued and outstanding. No Company Capital
Stock is held in its treasury. All of the issued and outstanding Company Capital
Stock has been duly authorized and validly issued, is fully paid and
non-assessable and has not been issued in violation of any preemptive or similar
rights of any Person. All of the issued and outstanding Company Capital Stock is
owned (and always has been owned) of record and beneficially by the Persons set
forth on Schedule 1.17. The only shares of Company Common Stock that will be
outstanding immediately after the Closing will be the Company Capital Stock
owned by Purchaser. No other class of capital stock of the Company is authorized
or outstanding. There are no: (a) outstanding subscriptions, options, warrants,
rights (including “phantom stock rights”), calls, commitments, understandings,
conversion rights, rights of exchange, plans or other agreements of any kind
providing for the purchase, issuance or sale of any shares of the capital stock
of the Company, or (b) to the knowledge of the Company, agreements with respect
to any of the Company Capital Stock, including any voting trust, other voting
agreement or proxy with respect thereto.

 

5.6     Certificate of Formation and Operating Agreement. Copies of (a) the
certificate of incorporation of the Company, as certified by the Secretary of
State of its state of incorporation, and (b) the bylaws of the Company,
certified by the secretary of the Company, have heretofore been made available
to Purchaser, and such copies are each true and complete copies of such
instruments as amended and in effect on the date hereof. The Company has not
taken any action in violation or derogation of its certificate of incorporation
or bylaws.

 

5.7     Corporate Records. All proceedings occurring since December 30, 2014 of
the board of directors, including committees thereof, and all consents to
actions taken thereby, are accurately reflected in the minutes and records
contained in the corporate minute books of the Company. The stock ledgers and
stock transfer books of the Company are complete and accurate. The stock ledgers
and stock transfer books and minute book records of the Company relating to all
issuances and transfers of stock by the Company, and all proceedings of the
board of directors, including committees thereof, and stockholders of the
Company since December 30, 2014 have been made available to Purchaser, and are
the original stock ledgers and stock transfer books and minute book records of
the Company or true, correct and complete copies thereof.

 

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5.8     Third Parties. Other than the Principal Stockholder, the Company is not
Controlled by any Person and, other than the Persons listed on Schedule 5.8, the
Company is not in Control of any other Person. Except as set forth on Schedule
5.8, to the Company’s knowledge, no Key Personnel (as defined in Section 7.8)
(a) engage in any business, except through the Company, or are employees of or
provide any service for compensation to, any other business concern or (b) own
any equity security of any business concern, except for publicly traded
securities not in excess of 5% of the issued and outstanding securities with
respect to such publicly traded securities. Schedule 5.8 lists each Contract to
which the Company, on the one hand, and any Stockholder beneficially owning more
than 10% of the common stock of the Company, or any affiliate of such a
Stockholder (collectively, a “10% Stockholder”), on the other hand, is a party.
No Stockholder or any Affiliate of a Stockholder (i) owns, directly or
indirectly, in whole or in part, any tangible or intangible property (including
Intellectual Property Rights) that the Company uses or the use of which is
necessary for the conduct of the Business or the ownership or operation of the
Company’s assets, or (ii) have engaged in any transactions with the Company.
Schedule 5.8 sets forth a complete and accurate list of the Affiliates of the
Company and the ownership interests in the Affiliate of the Company and each
Stockholder.

 

5.9     Assumed Names. Schedule 5.9 is a complete and correct list of all
assumed or “doing business as” names currently or, within five (5) years of the
date of this Agreement, used by the Company, including names on any websites.
Since December 30, 2014, the Company has not used any name other than the names
listed on Schedule 5.9 to conduct the Business. The Company has filed
appropriate “doing business as” certificates in all applicable jurisdictions
with respect to itself.

 

5.10     Subsidiaries.

 

(a)     Except as set forth on Schedule 5.10, the Company does not currently own
and within the past five (5) years has not owned directly or indirectly,
securities or other ownership interests in any other entity. The Company owns
100% of the issued and outstanding capital stock and securities of each Person
listed on Schedule 5.10. None of the Company or any of its Subsidiaries is a
party to any agreement relating to the formation of any joint venture,
association or other entity.

 

(b)     Each Subsidiary is a corporation duly organized, validly existing and in
good standing under and by virtue of the Laws of the jurisdiction of its
formation set forth by its name on Schedule 5.10. Each Subsidiary has all power
and authority, corporate and otherwise, and all governmental licenses,
franchises, Permits, authorizations, consents and approvals required to own and
operate its properties and assets and to carry on the Business as presently
conducted and as proposed to be conducted. No Subsidiary is qualified to do
business as a foreign entity in any jurisdiction, except as set forth by its
name on Schedule 5.10, and there is no other jurisdiction in which the character
of the property owned or leased by any Subsidiary or the nature of its
activities make qualification of such Subsidiary in any such jurisdiction
necessary. Each Subsidiary has offices located only at the addresses set forth
by its name on Schedule 5.10. No Subsidiary has taken any action, adopted any
plan, or made any agreement or commitment in respect of any merger,
consolidation, sale of all or substantially all of its assets, reorganization,
recapitalization, dissolution or liquidation.

 

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5.11     Consents. The Contracts listed on Schedule 5.11 are the only Contracts
binding upon the Company or by which any of the Company Capital Stock or any of
the Company’s assets are bound, requiring a consent, approval, authorization,
order or other action of or filing with any Person as a result of the execution,
delivery and performance of this Agreement or any of the Additional Agreements
or the consummation of the transactions contemplated hereby or thereby (each of
the foregoing, a “Company Consent”).

 

5.12     Financial Statements.

 

(a)     Schedule 5.12 includes (i) the audited consolidated financial statements
of the Company as of and for the fiscal years ended March 31, 2016 and 2015,
consisting of the audited consolidated balance sheets as of such dates, the
audited consolidated income statements for the twelve (12) month periods ended
on such dates, and the audited consolidated cash flow statements for the twelve
(12) month periods ended on such dates (collectively, the “Financial Statements”
and the audited consolidated balance sheet as of March 31, 2016 included
therein, the “Balance Sheet”)).

 

(b)     The Financial Statements are complete and accurate and fairly present,
in conformity with U.S. GAAP applied on a consistent basis, the financial
position of the Company as of the dates thereof and the results of operations of
the Company for the periods reflected therein. The Financial Statements (i) were
prepared from the Books and Records of the Company; (ii) were prepared on an
accrual basis in accordance with U.S. GAAP consistently applied; (iii) contain
and reflect all necessary adjustments and accruals for a fair presentation of
the Company’s financial condition as of their dates including for all warranty,
maintenance, service and indemnification obligations; and (iv) contain and
reflect adequate provisions for all liabilities for all material Taxes
applicable to the Company with respect to the periods then ended. The Company
has delivered to Purchaser complete and accurate copies of all “management
letters” received by it from its accountants and all responses during the last
five (5) years by lawyers engaged by the Company to inquiries from its
accountant or any predecessor accountants.

 

(c)     Except as specifically disclosed, reflected or fully reserved against on
the Balance Sheet, and for liabilities and obligations of a similar nature and
in similar amounts incurred in the ordinary course of business since the date of
the Balance Sheet, there are no liabilities, debts or obligations of any nature
(whether accrued, fixed or contingent, liquidated or unliquidated, asserted or
unasserted or otherwise) relating to the Company. All debts and liabilities,
fixed or contingent, which should be included under U.S. GAAP on the Balance
Sheet are included therein.

 

(d)     The balance sheet included in the Financial Statements accurately
reflects the outstanding Indebtedness of the Company as of the date thereof.
Except as set forth on Schedule 5.12, the Company does not have any
Indebtedness.

 

(e)     All financial projections delivered by or on behalf of the Company to
Purchaser with respect to the Business were prepared in good faith using
assumptions that the Company believes to be reasonable and the Company is not
aware of the existence of any fact or occurrence of any circumstances that is
reasonably likely to have an Material Adverse Effect.

 

 18 

 

 

5.13     Books and Records. The Company shall make all Books and Records of the
Company available to Purchaser for its inspection and shall deliver to Purchaser
complete and accurate copies of all documents referred to in the Schedules to
this Agreement or that Purchaser otherwise has requested within 30 days from the
Signing Date. All Contracts, documents, and other papers or copies thereof
delivered to Purchaser by or on behalf of the Company are accurate, complete,
and authentic.

 

(a)     The Books and Records accurately and fairly, in reasonable detail,
reflect the transactions and dispositions of assets of and the providing of
services by the Company. The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that:

 

(i)     transactions are executed only in accordance with the respective
management’s authorization;

 

(ii)     all income and expense items are promptly and properly recorded for the
relevant periods in accordance with the revenue recognition and expense policies
maintained by the Company, as permitted by U.S. GAAP;

 

(iii)     access to assets is permitted only in accordance with the respective
management’s authorization; and

 

(iv)     recorded assets are compared with existing assets at reasonable
intervals, and appropriate action is taken with respect to any differences.

 

(b)     All accounts, books and ledgers of the Company have been properly and
accurately kept and completed in all material respects, and there are no
material inaccuracies or discrepancies of any kind contained or reflected
therein. The Company does not have any records, systems controls, data or
information recorded, stored, maintained, operated or otherwise wholly or partly
dependent on or held by any means (including any mechanical, electronic or
photographic process, whether computerized or not) which (including all means of
access thereto and therefrom) are not under the exclusive ownership (excluding
licensed software programs) and direct control of the Company and which is not
located at the relevant office.

 

5.14     Absence of Certain Changes. Since the date of the Balance Sheet (the
“Balance Sheet Date”), the Company has conducted the Business in the ordinary
course consistent with past practices. Without limiting the generality of the
foregoing, since the Balance Sheet Date, there has not been:

 

(a)     any Material Adverse Effect or any material diminishment in the value to
Purchaser of the transactions contemplated hereby;

 

(b)     any transaction, Contract or other instrument entered into, or
commitment made, by the Company relating to the Business, or any of the
Company’s assets (including the acquisition or disposition of any assets) or any
relinquishment by the Company of any Contract or other right, in either case
other than transactions and commitments in the ordinary course of business
consistent in all respects, including kind and amount, with past practices and
those contemplated by this Agreement;

 

 19 

 

 

(c)     (i) any redemption of, declaration, setting aside or payment of any
dividend or other distribution with respect to any capital stock or other equity
interests in the Company; (ii) any issuance by the Company of shares of capital
stock or other equity interests in the Company, or (iii) any repurchase,
redemption or other acquisition, or any amendment of any term, by the Company of
any outstanding shares of capital stock or other equity interests;

 

(d)     (i) any creation or other incurrence of any Lien other than Permitted
Liens on the Company Capital Stock or any of the Company’s assets, and (ii) any
making of any loan, advance or capital contributions to or investment in any
Person by the Company;

 

(e)     any material personal property damage, destruction or casualty loss or
personal injury loss (whether or not covered by insurance) affecting the
business or assets of the Company;

 

(f)     increased benefits payable under any existing severance or termination
pay policies or employment agreements; entered into any employment, deferred
compensation or other similar agreement (or amended any such existing agreement)
with any director, officer, manager or employee of the Company; established,
adopted or amended (except as required by law) any bonus, profit-sharing,
thrift, pension, retirement, deferred compensation, compensation, stock option,
restricted stock or other benefit plan or arrangement covering any director,
officer, manager or employee of the Company; or increased any compensation,
bonus or other benefits payable to any director, officer, manager or employee of
the Company, other than increases to non-officer employees in the ordinary
course of business consistent with past practices;

 

(g)     any material labor dispute, other than routine individual grievances, or
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company, which employees were not subject to a
collective bargaining agreement at the Balance Sheet Date, or any lockouts,
strikes, slowdowns, work stoppages or threats thereof by or with respect to any
employees of the Company;

 

(h)     any sale, transfer, lease to others or otherwise disposition of any of
its assets by the Company except for inventory sold in the ordinary course of
business consistent with past practices or immaterial amounts of other Tangible
Personal Property not required by its business;

 

(i)     (i) any amendment to or termination of any Material Contract, (ii) any
amendment to any material license or material permit from any Authority held by
the Company, (iii) any receipt of any notice of termination of any of the items
referenced in (i) and (ii); and (iv) a material default by the Company under any
Material Contract, or any material license or material permit from any Authority
held by the Company;

 

(j)     any capital expenditure by the Company in excess in any fiscal month of
an aggregate of $500,000 or entering into any lease of capital equipment or
property under which the annual lease charges exceed $200,000 in the aggregate
by the Company;

 

 20 

 

 

(k)     any institution of litigation, settlement or agreement to settle any
litigation, action, proceeding or investigation before any court or governmental
body relating to the Company or its property or suffering of any actual or
threatened litigation, action, proceeding or investigation before any court or
governmental body relating to the Company or its property;

 

(l)     any loan of any monies to any Person or guarantee of any obligations of
any Person by the Company;

 

(m)     except as required by GAAP, any change in the accounting methods or
practices (including, without limitation, any change in depreciation or
amortization policies or rates) of the Company or any revaluation of any of the
assets of the Company;

 

(n)     any amendment to the Company’s organizational documents, or any
engagement by the Company in any merger, consolidation, reorganization,
reclassification, liquidation, dissolution or similar transaction;

 

(o)     any acquisition of assets (other than acquisitions of inventory in the
ordinary course of business consistent with past practice) or business of any
Person;

 

(p)     any material Tax election made by the Company outside of the ordinary
course of business consistent with past practice, or any material Tax election
changed or revoked by the Company; any material claim, notice, audit report or
assessment in respect of Taxes settled or compromised by the Company; any annual
Tax accounting period changed by the Company; any Tax allocation agreement, Tax
sharing agreement, Tax indemnity agreement or closing agreement relating to any
Tax entered into by the Company; or any right to claim a material Tax refund
surrendered by the Company; or

 

(q)     any commitment or agreement to do any of the foregoing.

 

     Since the Balance Sheet Date through and including the date hereof, the
Company has not taken any action nor has any event occurred which would have
violated the covenants of the Company set forth in Section 8.1 herein if such
action had been taken or such event had occurred between the date hereof and the
Closing Date.

 

5.15     Properties; Title to the Company’s Assets.

 

(a)     The items of Tangible Personal Property have no defects, are in good
operating condition and repair and function in accordance with their intended
uses (ordinary wear and tear excepted) and have been properly maintained, and
are suitable for their present uses and meet all specifications and warranty
requirements with respect thereto.

 

(b)     Schedule 5.15(b) sets forth a description and location of each item of
the Tangible Personal Property, as of a date within five days of the date of
this Agreement. All of the Tangible Personal Property is located at the office
of the Company.

 

(c)     The Company has good, valid and marketable title in and to, or in the
case of the Leases and the assets which are leased or licensed pursuant to
Contracts, a valid leasehold interest or license in or a right to use, all of
their assets reflected on the Balance Sheet or acquired after March 31, 2016. No
such asset is subject to any Liens other than Permitted Liens. The Company’s
assets constitute all of the assets of any kind or description whatsoever,
including goodwill, for the Company to operate the Business immediately after
the Closing in the same manner as the Business is currently being conducted.

 

 21 

 

 

5.16     Litigation. There is no Action (or any basis therefore) pending
against, or to the best knowledge of the Company threatened against or
affecting, the Company, any of its officers or directors, the Business, or any
Company Capital Stock or any of the Company’s assets or any Contract before any
court, Authority or official or which in any manner challenges or seeks to
prevent, enjoin, alter or delay the transactions contemplated hereby or by the
Additional Agreements. There are no outstanding judgments against the Company.
The Company is not, and has not been in the past five (5) years, subject to any
proceeding with any Authority.

 

5.17     Contracts.

 

(a)     Schedule 5.17(a) lists all material Contracts, oral or written
(collectively, “Material Contracts”) to which the Company is a party and which
are currently in effect and constitute the following:

 

(i)     all Contracts that require annual payments or expenses by, or annual
payments or income to, the Company of $1,000,000 or more (other than standard
purchase and sale orders entered into in the ordinary course of business
consistent with past practice);

 

(ii)     all sales, advertising, agency, lobbying, broker, sales promotion,
market research, marketing or similar contracts and agreements, in each case
requiring the payment of any commissions by the Company in excess of $1,000,000
annually;

 

(iii)     all employment Contracts, employee leasing Contracts, and consultant
and sales representatives Contracts with any current or former officer,
director, employee or consultant of the Company or other Person, under which the
Company (A) has continuing obligations for payment of annual compensation of at
least $1,000,000 (other than oral arrangements for at-will employment), (B) has
severance or post termination obligations to such Person (other than COBRA
obligations), or (C) has an obligation to make a payment upon consummation of
the transactions contemplated hereby or as a result of a change of control of
the Company;

 

(iv)     all Contracts creating a joint venture, strategic alliance, limited
liability company and partnership agreements to which the Company is a party;

 

(v)     all Contracts relating to any acquisitions or dispositions of assets by
the Company;

 

(vi)     all Contracts for material licensing agreements, including Contracts
licensing Intellectual Property Rights, other than “shrink wrap” licenses;

 

 22 

 

 

(vii)     all Contracts relating to secrecy, confidentiality and nondisclosure
agreements restricting the conduct of the Company or substantially limiting the
freedom of the Company to compete in any line of business or with any Person or
in any geographic area;

 

(viii)     all Contracts relating to patents, trademarks, service marks, trade
names, brands, copyrights, trade secrets and other Intellectual Property Rights
of the Company;

 

(ix)     all Contracts providing for guarantees, indemnification arrangements
and other hold harmless arrangements made or provided by the Company, including
all ongoing agreements for repair, warranty, maintenance, service,
indemnification or similar obligations;

 

(x)     all Contracts with or pertaining to the Company to which any 10%
Stockholder is a party;

 

(xi)     all Contracts relating to property or assets (whether real or personal,
tangible or intangible) in which the Company holds a leasehold interest
(including the Leases) and which involve payments to the lessor thereunder in
excess of $100,000 per month;

 

(xii)     all Contracts relating to outstanding Indebtedness, including
financial instruments of indenture or security instruments (typically
interest-bearing) such as notes, mortgages, loans and lines of credit;

 

(xiii)     any Contract relating to the voting or control of the equity
interests of the Company or the election of directors of the Company (other than
the Organizational Documents of the Company);

 

(xiv)     any Contract not cancellable by the Company with no more than 60 days’
notice if the effect of such cancellation would result in monetary penalty to
the Company in excess of $500,000 per the terms of such contract;

 

(xv)     any Contract that can be terminated, or the provisions of which are
altered, as a result of the consummation of the transactions contemplated by
this Agreement or any of the Additional Agreements to which the Company is a
party; and

 

(xvi)     any Contract for which any of the benefits, compensation or payments
(or the vesting thereof) will be increased or accelerated by the consummation of
the transactions contemplated hereby or the amount or value thereof will be
calculated on the basis of any of the transactions contemplated by this
Agreement.

 

 23 

 

 

(b)     Each Contract is a valid and binding agreement, and is in full force and
effect, and neither the Company nor, to the Company’s best knowledge, any other
party thereto, is in breach or default (whether with or without the passage of
time or the giving of notice or both) under the terms of any such Material
Contract. The Company has not assigned, delegated, or otherwise transferred any
of its rights or obligations with respect to any Material Contracts, or granted
any power of attorney with respect thereto or to any of the Company’s assets. No
Contract (i) requires the Company to post a bond or deliver any other form of
security or payment to secure its obligations thereunder or (ii) imposes any
non-competition covenants that may be binding on, or restrict the Business or
require any payments by or with respect to Purchaser or any of its Affiliates.
The Company shall, within 30 days of the Signing Date, provide to Purchaser true
and correct (A) fully executed copies of each written Material Contract and (B)
written summaries of each oral Material Contract.

 

(c)     None of the execution, delivery or performance by the Company of this
Agreement or Additional Agreements to which the Company is a party or the
consummation by the Company of the transactions contemplated hereby or thereby
constitutes a default under or gives rise to any right of termination,
cancellation or acceleration of any obligation of the Company or to a loss of
any material benefit to which the Company is entitled under any provision of any
Material Contract.

 

(d)     The Company is in compliance with all covenants, including all financial
covenants, in all notes, indentures, bonds and other instruments or agreements
evidencing any Indebtedness.

 

5.18     Insurance. Schedule 5.18 contains a true, complete and correct list
(including the names and addresses of the insurers, the names of the Persons if
other than the Company to whom such insurance policies have been issued, the
expiration dates thereof, the annual premiums and payment terms thereof, whether
it is a “claims made” or an “occurrence” policy and a brief identification of
the nature of the policy) of all liability, property, workers’ compensation and
other insurance policies currently in effect that insure the property, assets or
business of the Company or its employees (other than self-obtained insurance
policies by such employees). Each such insurance policy is valid and binding and
in full force and effect, all premiums due thereunder have been paid and the
Company has not received any notice of cancellation or termination in respect of
any such policy or default thereunder. The Company believes such insurance
policies, in light of the nature of the Company’s business, assets and
properties, are in amounts and have coverage that are reasonable and customary
for Persons engaged in such business and having such assets and properties.
Neither the Company, nor, to the knowledge of the Company, the Person to whom
such policy has been issued, has received notice that any insurer under any
policy referred to in this Section 5.18 is denying liability with respect to a
claim thereunder or defending under a reservation of rights clause. Within the
last two (2) years the Company has not filed for any claims exceeding $2,000,000
against any of its insurance policies, exclusive of automobile and health
insurance policies. The Company has not received written notice from any of its
insurance carriers or brokers that any premiums will be materially increased in
the future, and does not have any reason to believe that any insurance coverage
listed on Schedule 5.18 will not be available in the future on substantially the
same terms as now in effect.

 

5.19     Licenses and Permits. Schedule 5.19 correctly lists each license,
franchise, permit, order or approval or other similar authorization affecting,
or relating in any way to, the Business, together with the name of the Authority
issuing the same (the “Permits”). Except as indicated on Schedule ‎5.19, such
Permits are valid and in full force and effect, and none of the Permits will,
assuming the related third party consents have been obtained or waived prior to
the Closing Date, be terminated or impaired or become terminable as a result of
the transactions contemplated hereby. The Company has all Permits necessary to
operate the Business.

 

 24 

 

 

5.20     Compliance with Laws. The Company is not in violation of, has not
violated, and to the Company’s best knowledge, is neither under investigation
with respect to nor has been threatened to be charged with or given notice of
any violation or alleged violation of, any Law, or judgment, order or decree
entered by any court, arbitrator or Authority, domestic or foreign, nor is there
any basis for any such charge and within the last 24 months the Company has not
received any subpoenas by any Authority.

 

(a)     Without limiting the foregoing paragraph, the Company is not in
violation of, has not violated, and to the Company’s best knowledge is not under
investigation with respect to nor has been threatened or charged with or given
notice of any violation of any provisions of:

 

(i)     any Law applicable due to the specific nature of the Business;

 

(ii)     the Foreign Corrupt Practices Act of 1977 (§§ 78dd-1 et seq.), as
amended (the “Foreign Corrupt Practices Act”);

 

(iii)     any comparable or similar Law of any jurisdiction; or

 

(iv)     any Law regulating or covering conduct in, or the nature of, the
workplace, including regarding sexual harassment or, on any impermissible basis,
a hostile work environment.

 

No permit, license or registration is required by the Company in the conduct of
the Business under any of the Laws described in this Section 5.20.

 

5.21     Intellectual Property.

 

(a)     Schedule 5.21 sets forth a true, correct and complete list of all
Intellectual Property Rights, specifying as to each, as applicable: (i) the
nature of such Intellectual Property Right; (ii) the owner of such Intellectual
Property Right; (iii) the jurisdictions by or in which such Intellectual
Property Right has been issued or registered or in which an application for such
issuance or registration has been filed; and (iv) all licenses, sublicenses and
other agreements pursuant to which any Person is authorized to use such
Intellectual Property Right.

 

(b)     Within the past five (5) years (or prior thereto if the same is still
pending or subject to appeal or reinstatement) the Company has not been sued or
charged in writing with or been a defendant in any Action that involves a claim
of infringement of any Intellectual Property Rights, and the Company has no
knowledge of any other claim of infringement by the Company, and no knowledge of
any continuing infringement by any other Person of any Intellectual Property
Rights of the Company.

 

 25 

 

 

(c)     The current use by the Company of the Intellectual Property Rights does
not infringe, and the use by the Company of the Intellectual Property Rights
after the closing will not infringe, the rights of any other Person. Any
Intellectual Property Rights used by the Company in the performance of any
services under any Contract is, and upon the performance of such Contract
remains, owned by the Company and no client, customer or other third-party has
any claim of ownership on the Intellectual Property Rights.

 

(d)     All employees, agents, consultants or contractors who have contributed
to or participated in the creation or development of any copyrightable,
patentable or trade secret material on behalf of the Company or any predecessor
in interest thereto either: (i) is a party to a “work-for-hire” agreement under
which the Company is deemed to be the original owner/author of all property
rights therein; or (ii) has executed an assignment or an agreement to assign in
favor of the Company (or such predecessor in interest, as applicable) all right,
title and interest in such material.

 

(e)     None of the execution, delivery or performance by the Company of this
Agreement or any of the Additional Agreements to which the Company is a party or
the consummation by the Company of the transactions contemplated hereby or
thereby will cause any material item of Intellectual Property Rights owned,
licensed, used or held for use by the Company immediately prior to the Closing
to not be owned, licensed or available for use by the Company on substantially
the same terms and conditions immediately following the Closing.

 

(f)     The Company has taken reasonable measures to safeguard and maintain the
confidentiality and value of all trade secrets and other items of Company
Intellectual Property that are confidential and all other confidential
information, data and materials licensed by the Company or otherwise used in the
operation of the Business.

 

5.22     Customers and Suppliers.

 

(a)     Schedule 5.22(a) sets forth a list of the Company’s ten (10) largest
customers and the ten (10) largest suppliers as measured by the dollar amount of
purchases therefrom or thereby, for the Company’s March 31, 2016 and 2015 fiscal
years, showing the approximate total sales by the Company to each such customer
and the approximate total purchases by the Company from each such supplier,
during each such period.

 

(b)     No supplier listed on Schedule 5.22(a) and, to the actual knowledge of
the Company, no customer listed on Schedule 5.22(a), has (i) terminated its
relationship with the Company, (ii) materially reduced its business with the
Company or materially and adversely modified its relationship with the Company,
(iii) notified the Company in writing of its intention to take any such action,
or (iv) to the Knowledge of the Company, become insolvent or subject to
bankruptcy proceedings.

 

5.23     Accounts Receivable and Payable; Loans.

 

(a)     All accounts receivable and notes of the Company reflected on the
Financial Statements, and all accounts receivable and notes arising subsequent
to the date thereof, represent valid obligations arising from services actually
performed or goods actually sold by the Company in the ordinary course of
business consistent with past practice. The accounts payable of the Company
reflected on the Financial Statements, and all accounts payable arising
subsequent to the date thereof, arose from bona fide transactions in the
ordinary course consistent with past practice.

 

 26 

 

 

(b)     To the best of the Company’s knowledge, there is no contest, claim, or
right of setoff in any agreement with any maker of an account receivable or note
relating to the amount or validity of such account, receivables or note that
could reasonably result in a Material Adverse Effect. To the best of the
Company’s knowledge, all accounts, receivables or notes are good and collectible
in the ordinary course of business.

 

(c)     The information set forth on Schedule 5.23(c) separately identifies any
and all accounts, receivables or notes of the Company which are owed by any
Affiliate of the Company. Except as set forth on Schedule 5.23(c), the Company
is not indebted to any of its Affiliates and no Affiliates are indebted to the
Company.

 

5.24     Pre-payments. The Company has not received any payments with respect to
any services to be rendered or goods to be provided after the Closing except in
the ordinary course of business.

 

5.25     Employees.

 

(a)     Schedule 5.25(a) sets forth a true, correct and complete list of the ten
(10) highest paid employees and independent contractors of the Company as of
June 30, 2016, including the name, department, title, employment or engagement
commencement date, current salary or compensation rate for each such person and
total compensation (including bonuses) paid to each such person for the fiscal
year ended March 31, 2016. Unless indicated in such list, no salaried employee
or independent contractor included in such list (i) is currently on leave, (ii)
has given written notice of his or her intent to terminate his or her
relationship with the Company, or (iii) has received written notice of such
termination from the Company. To the actual knowledge of the Company, no
salaried employee or independent contractor (but specifically excluding all
account executives) of the Company that earned an aggregate amount of
compensation in excess of $75,000 in the March 31, 2016 fiscal year intends to
terminate his or her relationship with the Company within six (6) months
following the Closing Date. Schedule 5.25(a) sets forth all proceedings,
governmental investigations or administrative proceedings of any kind against
the Company of which the Company has been notified regarding its employees or
employment practices, or operations as they pertain to conditions of employment
within two (2) years preceding the date of this Agreement.

 

(b)     The Company is not a party to or subject to any employment contract,
consulting agreement, collective bargaining agreement, confidentiality agreement
restricting the activities of the Company, non-competition agreement restricting
the activities of the Company, or any similar agreement, and there has been no
activity or proceeding by a labor union or representative thereof to organize
any employees of the Company.

 

(c)     There are no pending or, to the knowledge of the Company, threatened
claims or proceedings against the Company under any worker’s compensation policy
or long-term disability policy.

 

(d)     Except as would not have a Material Adverse Effect, the Company has
properly classified all of its employees as exempt or non-exempt.

 

 27 

 

 

5.26     Employment Matters.

 

(a)     Schedule 5.26(a) sets forth a true and complete list of every employment
agreement, commission agreement, employee group or executive medical, life, or
disability insurance plan, and each incentive, bonus, profit sharing,
retirement, deferred compensation, equity, phantom stock, stock option, stock
purchase, stock appreciation right or severance plan of the Company now in
effect or under which the Company has or might have any obligation, or any
understanding between the Company and any employee concerning the terms of such
employee’s employment that does not apply to the Company’s employees generally
(collectively, “Labor Agreements”). The Company has previously delivered to
Purchaser true and complete copies of each such Labor Agreement, any employee
handbook or policy statement of the Company, and complete and correct
information concerning the Company’s employees, including with respect to the
(i) name, residence address, and social security number; (ii) position; (iii)
compensation; (iv) vacation and other fringe benefits; (v) claims under any
benefit plan; and (vii) resident alien status (if applicable). Schedule 5.26(a)
sets forth a true and complete list of the names, addresses and titles of the
directors, officers and managers of the Company.

 

(b)     Except as disclosed on Schedule 5.26(b):

 

(i)     all employees of the Company are employees at will, and the employment
of each employee by the Company may be terminated immediately by the Company, as
applicable, without any cost or liability except severance in accordance with
the Company’s standard severance practice as disclosed on Schedule 5.26(b);

 

(ii)     to the best knowledge of the Company, no employee of the Company has
any plan to terminate his or her employment now or in the near future, whether
as a result of the transactions contemplated hereby or otherwise;

 

(iii)     to the best knowledge of the Company, no employee of the Company, in
the ordinary course of his or her duties, has breached or will breach any
obligation to a former employer in respect of any covenant against competition
or soliciting clients or employees or servicing clients or confidentiality or
any proprietary right of such former employer; and

 

(iv)     the Company is not a party to any collective bargaining agreement, does
not have any material labor relations problems, and there is no pending
representation question or union organizing activity respecting employees of the
Company.

 

(c)     The Company has complied in all material respects with all Labor
Agreements and all applicable laws relating to employment or labor. There is no
legal prohibition with respect to the permanent residence of any employee of the
Company in the United States or his or her permanent employment by the Company.
No present or former employee, officer, director or manager of the Company has,
or will have at the Closing Date, any claim against the Company for any matter
including for wages, salary, or vacation or sick pay, or otherwise under any
Labor Agreement. All accrued obligations of the Company applicable to its
employees, whether arising by operation of Law, by Contract, by past custom or
otherwise, for payments by the Company to any trust or other fund or to any
Authority, with respect to unemployment or disability compensation benefits,
social security benefits, under ERISA or otherwise, have been paid or adequate
accruals therefor have been made.

 

 28 

 

 

5.27     Withholding. All obligations of the Company applicable to its
employees, whether arising by operation of Law, by contract, by past custom or
otherwise, or attributable to payments by the Company to trusts or other funds
or to any governmental agency, with respect to unemployment compensation
benefits, social security benefits or any other benefits for its employees with
respect to the employment of said employees through the date hereof have been
paid or adequate accruals therefor have been made on the Financial Statements.
All reasonably anticipated obligations of the Company with respect to such
employees (except for those related to wages during the pay period immediately
prior to the Closing Date and arising in the ordinary course of business),
whether arising by operation of Law, by contract, by past custom, or otherwise,
for salaries and holiday pay, bonuses and other forms of compensation payable to
such employees in respect of the services rendered by any of them prior to the
date hereof have been or will be paid by the Company prior to the Closing Date.

 

5.28     Employee Benefits and Compensation.

 

(a)     Schedule 5.28 sets forth a true and complete list of each “employee
benefit plan” (as defined in Section 3(3) of ERISA), bonus, deferred
compensation, equity-based or non-equity-based incentive, severance or other
plan or written agreement relating to employee or director benefits or employee
or director compensation or fringe benefits, maintained or contributed to by the
Company at any time during the 7-calendar year period immediately preceding the
date hereof and/or with respect to which the Company could incur or could have
incurred any direct or indirect, fixed or contingent liability (each a “Plan”
and collectively, the “Plans”). Each Plan is and has been maintained in
substantial compliance with all applicable laws, including but not limited to
ERISA, and has been administered and operated in all material respects in
accordance with its terms.

 

(b)     Each Plan which is intended to be “qualified” within the meaning of
Section 401(a) of the Code, has received a favorable determination letter from
the Internal Revenue Service and, to the knowledge of the Company, no event has
occurred and no condition exists which could reasonably be expected to result in
the revocation of any such determination. No event which constitutes a
“reportable event” (as defined in Section 4043(c) of ERISA) for which the 30-day
notice requirement has not been waived by the Pension Benefit Guaranty
Corporation (the “PBGC”) has occurred with respect to any Plan. No Plan subject
to Title IV of ERISA has been terminated or is or has been the subject of
termination proceedings pursuant to Title IV of ERISA. Full payment has been
made of all amounts which the Company was required under the terms of the Plans
to have paid as contributions to such Plans on or prior to the date hereof
(excluding any amounts not yet due) and no Plan which is subject to Part 3 of
Subtitle B of Title I of ERISA has incurred an “accumulated funding deficiency”
(within the meaning of Section 302 of ERISA or Section 412 of the Code), whether
or not waived.

 

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(c)     Neither the Company nor to the knowledge of the Company, any other
“disqualified person” or “party in interest” (as defined in Section 4975(e)(2)
of the Code and Section 3(14) of ERISA, respectively), has engaged in any
transaction in connection with any Plan that could reasonably be expected to
result in the imposition of a penalty pursuant to Section 502(i) of ERISA,
damages pursuant to Section 409 of ERISA or a tax pursuant to Section 4975(a) of
the Code. The Company has not maintained any Plan (other than a Plan which is
intended to be “qualified” within the meaning of Section 401(a) of the Code)
which provides benefits with respect to current or former employees or directors
following their termination of service with the Company (other than as required
pursuant to COBRA). Each Plan subject to the requirements of COBRA has been
operated in substantial compliance therewith.

 

(d)     No individual will accrue or receive additional benefits, service or
accelerated rights to payment of benefits as a direct result of the Transaction.
No material liability, claim, investigation, audit, action or litigation has
been incurred, made, commenced or, to the knowledge of the Company, threatened,
by or against any Plan or the Company with respect to any Plan (other than for
benefits payable in the ordinary course and PBGC insurance premiums). No Plan or
related trust owns any securities in violation of Section 407 of ERISA. With
respect to each Plan which is an “employee pension benefit plan” (as defined in
Section 3(2) of ERISA) as of the most recent actuarial valuation report prepared
for each such Plan, the aggregate present value of the accrued liabilities
thereof (determined in accordance with Statement of Financial Accounting
Standards No. 35) did not exceed the aggregate fair market value of the assets
allocable thereto.

 

(e)     No Plan is a “multiemployer plan” (as defined in Section 4001(a)(3) of
ERISA) and the Company has not been obligated to contribute to any multiemployer
plan. No material liability has been, or could reasonably be expected to be,
incurred under Title IV of ERISA (other than for PBGC insurance premiums payable
in the ordinary course) or Section 412(f) or (n) of the Code, by the Company or
any entity required to be aggregated with the Company pursuant to Section
4001(b) of ERISA and/or Section 414 (b), (c), (m) or (o) of the Code with
respect to any “employee pension benefit plan” (as defined in Section 3(2) of
ERISA).

 

(f)     There is no unfunded non-tax-qualified Plan which provides a pension or
retirement benefit.

 

(g)     The Company has not made any commitment to create or cause to exist any
employee benefit plan which is not listed on Schedule 5.28, or to modify, change
or terminate any Plan (other than as may be necessary for compliance with
applicable law).

 

(h)     The Company does not have any plan, arrangement or agreement providing
for “deferred compensation” that is subject to Section 409A(a) of the Code, or
any plan, arrangement or agreement that is subject to Section 409A(b) of the
Code.

 

(i)     With respect to each Plan, the Company has delivered or caused to be
delivered to Purchaser and its counsel true and complete copies of the following
documents, as applicable, for each respective Plan: (i) all Plan documents, with
all amendments thereto; (ii) the current summary plan description with any
applicable summaries of material modifications thereto as well as any other
material employee or government communications; (iii) all current trust
agreements and/or other documents establishing Plan funding arrangements; (iv)
the most recent IRS determination letter and, if a request for such a letter has
been filed and is currently pending with the IRS, a copy of such filing; (v) the
three most recently prepared IRS Forms 5500; (vi) the three most recently
prepared financial statements; and (vii) all material related contracts,
including without limitation, insurance contracts, service provider agreements
and investment management and investment advisory agreements.

 

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5.29     Real Property.

 

(a)     Except as set forth on Schedule 5.29, the Company does not own, or
otherwise have an interest in, any Real Property, including under any Real
Property lease, sublease, space sharing, license or other occupancy agreement.
The Company has good, valid and subsisting title to its respective leasehold
estates in the offices described on Schedule 5.29, free and clear of all Liens.
The Company has not breached or violated any local zoning ordinance, and no
notice from any Person has been received by the Company or served upon the
Company claiming any violation of any local zoning ordinance.

 

(b)     With respect to the Leases: (i) they are valid, binding and in full
force and effect; (ii) all rents and additional rents and other sums, expenses
and charges due thereunder have been paid; (iii) the lessees have been in
peaceable possession since the commencement of the original term thereof; (iv)
no waiver, indulgence or postponement of the lessees’ obligations thereunder
have been granted by the lessors; (v) there exists no default or event of
default thereunder by the Company or, to the Company’s knowledge, by any other
party thereto; (vi) there exists no occurrence, condition or act which, with the
giving of notice, the lapse of time or the happening of any further event or
condition, would become a default or event of default by the Company thereunder;
and (vii) there are no outstanding claims of breach or indemnification or notice
of default or termination thereunder. The Company holds the leasehold estate on
the Leases free and clear of all Liens, except for Liens of mortgagees of the
Real Property in which such leasehold estate is located. The Real Property
leased by the Company is in a state of maintenance and repair in all material
respects adequate and suitable for the purposes for which it is presently being
used, and there are no material repair or restoration works likely to be
required in connection with any of the leased Real Property. The Company is in
physical possession and actual and exclusive occupation of the whole of the
leased properties, none of which are subleased or assigned to another Person.
The Leases lease all useable square footage of the premises located at the
leased Real Property locations. The Company does not owe any brokerage
commission with respect to any Real Property.

 

5.30     Accounts. Schedule 5.30 sets forth a true, complete and correct list of
the checking accounts, deposit accounts, safe deposit boxes, and brokerage,
commodity and similar accounts of the Company, including the account number and
name, the name of each depositary or financial institution and the address where
such account is located and the authorized signatories thereto.

 

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5.31     Tax Matters.

 

(a)     (i) The Company has duly and timely filed all Tax Returns which are
required to be filed by or with respect to it, and has paid all Taxes which have
become due; (ii) all such Tax Returns are true, correct and complete and
accurate and disclose all Taxes required to be paid; (iii) all such Tax Returns
have been examined by the relevant Taxing Authority or the period for assessment
for Taxes in respect of such Tax Returns has expired; (iv) there is no Action,
pending or proposed or, to the best knowledge of the Company, threatened, with
respect to Taxes of the Company or for which a Lien may be imposed upon any of
the Company’s assets and, to the best of the Company’s knowledge, no basis
exists therefor; (v) no statute of limitations in respect of the assessment or
collection of any Taxes of the Company for which a Lien may be imposed on any of
the Company’s assets has been waived or extended, which waiver or extension is
in effect; (vi) the Company has complied in all material respects with all
applicable Laws relating to the reporting, payment, collection and withholding
of Taxes and has duly and timely withheld or collected, paid over to the
applicable Taxing Authority and reported all Taxes (including income, social,
security and other payroll Taxes) required to be withheld or collected by the
Company; (vii) the transactions contemplated hereby are not subject to
withholding under Section 1445 of the Code; (viii) no stock transfer Tax, sales
Tax, use Tax, real estate transfer Tax or other similar Tax will be imposed with
respect to or as a result of any transaction contemplated by this Agreement;
(ix) none of the assets of the Company is required to be treated as owned by
another Person for income Tax purposes pursuant to Section 168(f)(8) of the Code
(as in effect prior to its amendment by the Tax Reform Act of 1986) or
otherwise; (x) none of the assets of the Company is “tax-exempt use property”
within the meaning of Section 168(h) of the Code, “tax-exempt bond financed
property” within the meaning of Section 168(g)(5) of the Code, or subject to a
“TRAC lease” under Section 7701(h) of the Code (or any predecessor provision);
(xi) there is no Lien for Taxes upon any of the assets of the Company; (xii)
there is no outstanding request for a ruling from any Taxing Authority, request
for a consent by a Taxing Authority for a change in a method of accounting,
subpoena or request for information by any Taxing Authority, or closing
agreement (within the meaning of Section 7121 of the Code or any analogous
provision of applicable Law), with respect to the Company; (xiii) no claim has
ever been made by a Taxing Authority in a jurisdiction where the Company has not
paid any Tax or filed Tax Returns, asserting that the Company is or may be
subject to Tax in such jurisdiction; (xiv) the Company has provided to Purchaser
true, complete and correct copies of all Tax Returns relating to, and all audit
reports and correspondence relating to each proposed adjustment, if any, made by
any Taxing Authority with respect to, any taxable period ending after March 31,
2010; (xv) there is no outstanding power of attorney from the Company
authorizing anyone to act on behalf of the Company in connection with any Tax,
Tax Return or Action relating to any Tax or Tax Return of the Company; (xvi) the
Company is not, and has ever been, a party to any Tax sharing or Tax allocation
Contract; (xvii) the Company is and has never been included in any consolidated,
combined or unitary Tax Return; (xviii) to the knowledge of the Company, no
issue has been raised by a Taxing Authority in any prior Action relating to the
Company with respect to any Tax for any period which, by application of the same
or similar principles, could reasonably be expected to result in a proposed Tax
deficiency of the Company for any other period; (xix) the Company has not
requested any extension of time within which to file any Tax Return, which Tax
Return has since not been filed; (xx) the Company is not a party to any Contract
for services that would result, individually or in the aggregate, in the payment
of any amount that would not be deductible by the Company by reason of Section
162 or 404 of the Code; (xxi) the Company is not a party to a Contract that
requires or would upon the occurrence of certain events require the Company to
make a payment which would not be fully deductible under Section 280G of the
Code without regard to whether such payment is reasonable compensation for
services rendered and without regard to any exception that requires future
action by any Person; (xxii) the Company is not a “consenting corporation”
within the meaning of Section 341(f) of the Code (as in effect prior to the
repeal of such provision); (xxiii) the Company has never made or been required
to make an election under Section 336 or 338 of the Code; (xxiv) during the last
two years, the Company has not engaged in any exchange under which gain realized
on the exchange was not recognized under Section 1031 of the Code; (xxv) the
Company was not a “distributing corporation” or a “controlled corporation” under
Section 355 of the Code in any transaction within the last two years or pursuant
to a plan or series of related transactions (within the meaning of Section
355(e) of the Code) with any transaction contemplated by this Agreement; (xxvi)
the Company is not, and has never been, a “personal holding company” (within the
meaning of Section 542 of the Code), a stockholder in a “controlled foreign
corporation” (within the meaning of Section 957 of the Code), a “foreign
personal holding company” (within the meaning of Section 552 of the Code as in
effect prior to the repeal of such section), or a “passive foreign investment
company” (within the meaning of Section 1297 of the Code), or, an owner in any
entity treated as a partnership or disregarded entity for U.S. federal income
tax purposes; (xxvii) none of the outstanding indebtedness of the Company
constitutes indebtedness to which any interest deduction may be limited or
disallowed under Section 163(i), (j) or (l), 265 or 279 of the Code (or any
comparable provision of applicable Law); (xxviii) the Company is not and has not
been a “United States real property holding corporation” (within the meaning of
Code Section 897(c)(2)) at any time during the period specified in Section
897(c)(l)(A)(ii) of the Code; (xxix) the Company is not and has not been treated
as a foreign corporation for U.S. federal income tax purposes, and (xxx) the
Company is not an “investment company” for purposes of Sections 351(e) or 368 of
the Code and the Treasury Regulations promulgated thereunder.

 

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(b)     The Company has not entered into a “reportable transaction” (within the
meaning of Section 6707A of the Code or Treasury Regulations §1.6011-4 or any
predecessor thereof) and has not participated in any “nondisclosed noneconomic
substance transaction” within the meaning of Section 6662(i)(2) of the Code. In
the case of any transaction that could result in a “substantial understatement
of income tax” (within the meaning of Section 6662(d) of the Code) of the
Company if the claimed Tax treatment were disallowed, the Company has
“substantial authority” (within the meaning of Section 6662(d) of the Code) for
the claimed treatment, or in the case of a transaction other than a “tax
shelter” (within the meaning of Section 6662(d)(2)(C)(ii) of the Code), has
“adequately disclosed” (within the meaning of Section 6662(d) of the Code) on
its applicable income Tax Return the relevant facts affecting the Tax treatment
and there is a reasonable basis for such Tax treatment. The Company has not been
a party to a transaction that does not have economic substance within the
meaning of Section 7701(a) of the Code or that fails to meet the requirements of
any similar rule of law as used in Section 6662(b)(6) of the Code.

 

(c)     The Company is not required to include any adjustment under Section 481
or 482 of the Code (or any corresponding provision of applicable Law) in income
for any period ending after the Balance Sheet Date. The Company will not be
required to include any item of income or exclude any item of deduction for any
taxable period ending after the Closing Date as a result of: (i) any
intercompany transaction or excess loss account described in Treasury
Regulations under Section 1502 of the Code (or any corresponding provision of
applicable Law); (ii) an election under Section 108(i) of the Code; or (iii) use
of an installment sale, open transaction, income forecast or completed contract
method of accounting with respect to any transaction that occurred on or before
the Closing Date.

 

(d)     The unpaid Taxes of the Company (i) did not, as of the most recent
fiscal month end, exceed the reserve for Tax liability (rather than any reserve
for deferred Taxes established to reflect timing differences between book and
Tax income) set forth on the Balance Sheet and (ii) will not exceed that reserve
as adjusted for the passage of time through the Closing Date in accordance with
the past custom and practice of the Company in filing its Tax Return.

 

 33 

 

 

(e)     The Stockholders acknowledge that following the Closing, any FIRPTA
Certificate or IRS Forms W-9 or applicable W-8 delivered to Purchaser pursuant
to Section 10.2(p) will be retained by Purchaser, and will be made available to
the Taxing Authorities upon request.

 

5.32     Environmental Laws.

 

(a)     The Company has not (i) received any written notice of any alleged
claim, violation of or liability under any Environmental Law which has not
heretofore been cured or for which there is any remaining liability; (ii)
disposed of, emitted, discharged, handled, stored, transported, used or released
any Hazardous Materials, arranged for the disposal, discharge, storage or
release of any Hazardous Materials, or exposed any employee or other individual
to any Hazardous Materials so as to give rise to any liability or corrective or
remedial obligation under any Environmental Laws; or (iii) entered into any
agreement that may require it to guarantee, reimburse, pledge, defend, hold
harmless or indemnify any other Person with respect to liabilities arising out
of Environmental Laws or the Hazardous Materials Activities of the Company,
except in each case as would not, individually or in the aggregate, have a
Material Adverse Effect.

 

(b)     The Company has delivered to Purchaser all material records in its
possession concerning the Hazardous Materials Activities of the Company and all
environmental audits and environmental assessments in the possession or control
of the Company of any facility currently owned, leased or used by the Company
which identifies the potential for any violations of Environmental Law or the
presence of Hazardous Materials on any property currently owned, leased or used
by the Company.

 

(c)     There are no Hazardous Materials in, on, or under any properties owned,
leased or used at any time by the Company such as could give rise to any
material liability or corrective or remedial obligation of the Company under any
Environmental Laws.

 

5.33     Finders’ Fees. There is no investment banker, broker, finder or other
intermediary which has been retained by or is authorized to act on behalf of the
Company or any of Affiliates who might be entitled to any fee or commission from
Purchaser or any of its Affiliates (including the Company following the Closing)
upon consummation of the transactions contemplated by this Agreement.

 

5.34     Powers of Attorney and Suretyships. The Company does not have any
general or special powers of attorney outstanding (whether as grantor or grantee
thereof) or any obligation or liability (whether actual, accrued, accruing,
contingent, or otherwise) as guarantor, surety, co-signer, endorser, co-maker,
indemnitor or otherwise in respect of the obligation of any Person.

 

5.35     Directors and Officers. Schedule 5.35 sets forth a true, correct and
complete list of all directors and officers of the Company.

 

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5.36     Other Information. Neither this Agreement nor any of the documents or
other information made available to Purchaser or its Affiliates, attorneys,
accountants, agents or representatives pursuant hereto or in connection with
Purchaser’s due diligence review of the Business, the Company Capital Stock, the
Company’s assets or the transactions contemplated by this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements contained
therein not misleading. The Company has provided Purchaser with all requested
material information regarding the Business.

 

5.37     Certain Business Practices. Neither the Company, nor any director,
officer, agent or employee of the Company (in their capacities as such) has (i)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful payment
to foreign or domestic government officials or employees, to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977 or (iii) made any other unlawful payment. Neither the
Company, nor any director, officer, agent or employee of the Company (nor any
Person acting on behalf of any of the foregoing, but solely in his or her
capacity as a director, officer, employee or agent of the Company) has, since
December 30, 2014, directly or indirectly, given or agreed to give any gift or
similar benefit in any material amount to any customer, supplier, governmental
employee or other Person who is or may be in a position to help or hinder the
Company or assist the Company in connection with any actual or proposed
transaction, which, if not given could reasonably be expected to have had a
Material Adverse Effect on the Company, or which, if not continued in the
future, could reasonably be expected to adversely affect the business or
prospects of the Company or that could reasonably be expected to subject the
Company to suit or penalty in any private or governmental litigation or
proceeding.

 

5.38     Money Laundering Laws. The operations of the Company are and have been
conducted at all times in compliance with laundering statutes in all applicable
jurisdictions, the rules and regulations thereunder and any related or similar
rules, regulations or guidelines, issued, administered or enforced by any
governmental authority (collectively, the “Money Laundering Laws”), and no
Action involving the Company with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company, threatened.

 

5.39     OFAC. Neither the Company, nor any director or officer of the Company
(nor, to the knowledge of the Company, any agent, employee, affiliate or Person
acting on behalf of the Company) is currently identified on the specially
designated nationals or other blocked person list or otherwise currently subject
to any U.S. sanctions administered by the Office of Foreign Assets Control of
the U.S. Treasury Department (“OFAC”); and the Company has not, directly or
indirectly, used any funds, or loaned, contributed or otherwise made available
such funds to any subsidiary, joint venture partner or other Person, in
connection with any sales or operations in Cuba, Iran, Syria, Sudan, Myanmar or
any other country sanctioned by OFAC or for the purpose of financing the
activities of any Person currently subject to, or otherwise in violation of, any
U.S. sanctions administered by OFAC in the last five (5) fiscal years.

 

5.40     Not an Investment Company. The Company is not an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations promulgated thereunder.

 

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5.41     Financial Projections. The Company’s EBITDA (Earnings Before Interest,
Taxes, Depreciation and Amortization) for the fiscal years ended March 31, 2017,
2018 and 2019 will be $12 million, $15 million and $20 million, respectively.
The Company will have 13, 21 and 41 grocery stores in operation by March 31,
2017, 2018 and 2019, respectively.

 

5.42     Unanimous Approval. The Stockholders have unanimously approved this
Agreement and the transactions contemplated hereby. Accordingly, there are no
Dissenting Shares.

 

ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PARENT, PURCHASER AND MERGER SUB

 

Parent, Purchaser and Merger Sub (the “Purchaser Parties”), jointly and
severally, hereby represent and warrant to the Company that, except as disclosed
in the Parent SEC Documents:

 

6.1     Corporate Existence and Power. Parent is a exempted company duly
incorporated, validly existing and in good standing under the laws of the Cayman
Islands. Purchaser is a company duly organized, validly existing and in good
standing under the laws of the State of Delaware. Merger Sub is a company duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Each of the Purchaser Parties has all power and authority, corporate
and otherwise, and all governmental licenses, franchises, Permits,
authorizations, consents and approvals required to own and operate its
properties and assets and to carry on its business as presently conducted and as
proposed to be conducted. None of the Purchaser Parties has entered into any
definitive agreements with respect to any merger, consolidation, sale of all or
substantially all of its assets, reorganization, recapitalization, dissolution
or liquidation.

 

6.2     Corporate Authorization. The execution, delivery and performance by the
Purchaser Parties of this Agreement and the Additional Agreements and the
consummation by the Purchaser Parties of the transactions contemplated hereby
and thereby are within the corporate powers of the Purchaser Parties and have
been duly authorized by all necessary corporate action on the part of the
Purchaser Parties, including each of the Purchaser Parties’ board of directors
and shareholders (excluding the Parent’s) to the extent required by the their
organizational documents, Cayman Law, any other applicable Law or any contract
to which the Company or any of its shareholders is a party or by which or its
securities are bound. This Agreement has been duly executed and delivered by
each Purchaser Party and it constitutes, and upon their execution and delivery,
the Additional Agreements will constitute, a valid and legally binding agreement
of each Purchaser Party, enforceable against them in accordance with its terms.

 

6.3     Governmental Authorization. Other than as required under Cayman Law or
Delaware Law, or as otherwise set forth on Schedule 6.3, neither the execution,
delivery nor performance of this Agreement requires any consent, approval,
license or other action by or in respect of, or registration, declaration or
filing with any Authority.

 

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6.4     Non-Contravention. The execution, delivery and performance by the
Purchaser Parties of this Agreement do not and will not, (i) provided that
holders of fewer than the number of Parent Ordinary Shares specified in the
Parent’s organizational documents exercise their redemption rights with respect
to such transaction, contravene or conflict with the organizational or
constitutive documents of Parent, or (ii) contravene or conflict with or
constitute a violation of any provision of any Law, judgment, injunction, order,
writ, or decree binding upon the Purchaser Parties.

 

6.5     Finders’ Fees. Except for the Deferred Underwriting Amount, there is no
investment banker, broker, finder or other intermediary which has been retained
by or is authorized to act on behalf of any Purchaser Party or its Affiliates
who might be entitled to any fee or commission from the Company or any of its
Affiliates upon consummation of the transactions contemplated by this Agreement
or any of the Additional Agreements.

 

6.6     Issuance of Shares. The Closing Payment Shares, when issued in
accordance with this Agreement, will be duly authorized and validly issued, and
will be fully paid and nonassessable.

 

6.7     Capitalization.

 

(a)     The authorized share capital of Parent consists of 100,000,000 Parent
Ordinary Shares, and 1,000,000 preferred shares, par value $0.0001 per share, of
which 5,310,000 Parent Ordinary Shares are issued and outstanding as of the date
hereof and 0 preferred shares are issued and outstanding. 330,000 Parent
Ordinary Shares are reserved for issuance upon the exercise of the Parent Units
underlying the Parent UPO and 431,000 Parent Ordinary Shares are reserved for
issuance upon the exercise of the Parent Rights. All outstanding Parent Ordinary
Shares are duly authorized, validly issued, fully paid and nonassessable and not
subject to or issued in violation of any purchase option, right of first
refusal, preemptive right, subscription right or any similar right under any
provision of Cayman Law, the Parent’s organizational documents or any contract
to which Parent is a party or by which Parent is bound. Except as set forth in
the Parent’s organizational documents and the Parent SEC Documents, there are no
outstanding contractual obligations of Parent to repurchase, redeem or otherwise
acquire any Parent Ordinary Shares or any capital equity of Parent. There are no
outstanding contractual obligations of Parent to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person.

 

(b)     The authorized capital stock of Purchaser consists of 100,000,000 shares
of common stock, par value $0.0001 per share (“Purchaser Common Stock”), and
1,000,000 preferred shares, par value $0.0001 per share, of which 100 shares of
Purchaser Common Stock and 0 shares of such preferred stock are issued and
outstanding as of the date hereof. No other shares of capital stock or other
voting securities of Purchaser are issued, reserved for issuance or outstanding.
All issued and outstanding shares of Purchaser Common Stock are duly authorized,
validly issued, fully paid and nonassessable and not subject to or issued in
violation of any purchase option, right of first refusal, preemptive right,
subscription right or any similar right under any provision of Delaware Law, the
Purchaser’s organizational documents or any contract to which Purchaser is a
party or by which Purchaser is bound. Except as set forth in the Purchaser’s
organizational documents, there are no outstanding contractual obligations of
Purchaser to repurchase, redeem or otherwise acquire any shares of Purchaser
Common Stock or any capital equity of Purchaser. There are no outstanding
contractual obligations of Purchaser to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any other Person.

 

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(c)     The authorized capital stock of Merger Sub consists of 1,000 shares of
common stock, par value $0.001 per share (“Merger Sub Common Stock”) of which
100 shares of Merger Sub Common Stock are issued and outstanding as of the date
hereof. No other shares of capital stock or other voting securities of Merger
Sub are issued, reserved for issuance or outstanding. All issued and outstanding
shares of Merger Sub Common Stock are duly authorized, validly issued, fully
paid and nonassessable and not subject to or issued in violation of any purchase
option, right of first refusal, preemptive right, subscription right or any
similar right under any provision of Delaware Law, the Merger Sub’s
organizational documents or any contract to which Merger Sub is a party or by
which Merger Sub is bound. Except as set forth in the Merger Sub’s
organizational documents, there are no outstanding contractual obligations of
Merger Sub to repurchase, redeem or otherwise acquire any shares of Merger Sub
Common Stock or any capital equity of Merger Sub. There are no outstanding
contractual obligations of Merger Sub to provide funds to, or make any
investment (in the form of a loan, capital contribution or otherwise) in, any
other Person.

 

6.8     Information Supplied. None of the information supplied or to be supplied
by any Purchaser Party expressly for inclusion or incorporation by reference in
the filings with the SEC and mailings to Parent’s stockholders with respect to
the solicitation of proxies to approve the transactions contemplated by this
Agreement will, at the date of filing and/ or mailing, as the case may be,
contain any 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 are made, not misleading
(subject to the qualifications and limitations set forth in the materials
provided by Parent or that is included in the Parent SEC Documents).

 

6.9     Trust Fund. As of the date of this Agreement, Purchaser has at least
$40,800,000 in the trust fund established by Parent for the benefit of its
public stockholders (the “Trust Fund”) in a trust account at Morgan Stanley (the
“Trust Account”), and such monies are invested in “government securities” (as
such term is defined in the Investment Company Act of 1940, as amended) and held
in trust by Continental Stock Transfer & Trust Company (the “Trustee”) pursuant
to the Investment Management Trust Agreement, dated as of August 12, 2015,
between Parent and the Trustee (the “Trust Agreement”).

 

6.10     Listing. The Parent Units are listed on the Nasdaq Capital Market, with
trading tickets ECACU, ECAC and ECAR.

 

6.11     Board Approval. Each of the Parent Board, Purchaser Board and Merger
Sub Board (including any required committee or subgroup of such boards) has, as
of the date of this Agreement, unanimously (i) declared the advisability of the
transactions contemplated by this Agreement, (ii) determined that the
transactions contemplated hereby are in the best interests of the stockholders
of Parent, Purchaser and Merger Sub, as applicable, and (iii) determined that
the transactions contemplated hereby constitutes an "Acquisition Transaction" as
such term is defined in Purchaser’s amended and restated certificate of
incorporation and bylaws.

 

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6.12     Parent SEC Documents and Purchaser Financial Statements. Parent has
filed all forms, reports, schedules, statements and other documents, including
any exhibits thereto, required to be filed or furnished by Parent with the SEC
since Parent’s formation under the Exchange Act or the Securities Act, together
with any amendments, restatements or supplements thereto, and will file all such
forms, reports, schedules, statements and other documents required to be filed
subsequent to the date of this Agreement (the “Additional Parent SEC
Documents”). Parent has made available to the Company copies in the form filed
with the SEC of all of the following, except to the extent available in full
without redaction on the SEC’s website through EDGAR for at least two (2) days
prior to the date of this Agreement: (i) Parent’s Annual Reports on Form 10-K
for each fiscal year of Parent beginning with the first year Parent was required
to file such a form, (ii) all proxy statements relating to Parent’s meetings of
stockholders (whether annual or special) held, and all information statements
relating to stockholder consents, since the beginning of the first fiscal year
referred to in clause (i) above, (iii) its Quarterly Reports on Form 10-Q filed
since the beginning of the first fiscal year referred to in clause (i) above,
(iv) its Current Reports on Form 8-K filed since the beginning of the first
fiscal year referred to in clause (i) above, and (v) all other forms, reports,
registration statements and other documents (other than preliminary materials if
the corresponding definitive materials have been provided to the Company
pursuant to this Section 6.12) filed by Parent with the SEC since Parent’s
formation (the forms, reports, registration statements and other documents
referred to in clauses (i), (ii), (iii), (iv) and (v) above, whether or not
available through EDGAR, are, collectively, the (“Parent SEC Documents”). The
Parent SEC Documents were, and the Additional Parent SEC Documents will be,
prepared in all material respects in accordance with the requirements of the
Securities Act, the Exchange Act, and the Sarbanes-Oxley Act, as the case may
be, and the rules and regulations thereunder. The Parent SEC Documents did not,
and the Additional Parent SEC Documents will not, at the time they were or are
filed, as the case may be, with the SEC (except to the extent that information
contained in any Parent SEC Document or Additional Parent SEC Document has been
or is revised or superseded by a later filed Parent SEC Document or Additional
Parent SEC Document, then on the date of such filing) contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. As used
in this Section 6.12, the term “file” shall be broadly construed to include any
manner in which a document or information is furnished, supplied or otherwise
made available to the SEC.

 

ARTICLE VII
COVENANTS OF THE COMPANY PENDING CLOSING

 

The Company and the Stockholders covenant and agree that:

 

7.1     Conduct of the Business. (a) From the date hereof through the Closing
Date, the Company shall conduct the Business only in the ordinary course,
(including the payment of accounts payable and the collection of accounts
receivable), consistent with past practices, and shall not enter into any
material transactions without the prior written consent of Purchaser, and shall
use its best efforts to preserve intact its business relationships with
employees, clients, suppliers and other third parties. Without limiting the
generality of the foregoing, from the date hereof until and including the
Closing Date, without Purchaser’s prior written consent (which shall not be
unreasonably withheld), the Company shall not:

 

(i)          amend, modify or supplement its certificate of incorporation and
bylaws or other organizational or governing documents;

 

(ii)         amend, waive any provision of, terminate prior to its scheduled
expiration date, or otherwise compromise in any way, any Contract (including
Contracts described in Section 7.1(a)(iii)) below), or any other right or asset
of the Company;

 

 39 

 

 

(iii)         modify, amend or enter into any contract, agreement, lease,
license or commitment, which (A) is with respect to Real Property, (B) extends
for a term of one year or more or (C) obligates the payment of more than
$1,000,000 (individually or in the aggregate);

 

(iv)        make any capital expenditures in excess of $1,000,000 (individually
or in the aggregate);

 

(v)         sell, lease, license or otherwise dispose of any of the Company’s
assets or assets covered by any Contract except (i) pursuant to existing
contracts or commitments disclosed herein and (ii) sales of Inventory in the
ordinary course consistent with past practice;

 

(vi)        accept returns of products sold from Inventory except in the
ordinary course, consistent with past practice;

 

(vii)       pay, declare or promise to pay any dividends or other distributions
with respect to its capital stock, or pay, declare or promise to pay any other
payments to any stockholder of the Company (other than, in the case of any
stockholder that is an employee of the Company, payments of salary accrued in
said period at the current salary rate set forth on Schedule 5.25(a)) or any
Affiliate of the Company;

 

(viii)      authorize any salary increase of more than 10% for any employee of
the Company making an annual salary equal to or greater than $100,000 or in
excess of $100,000 in the aggregate on an annual basis or change the bonus or
profit sharing policies of the Company;

 

(ix)        obtain or incur any loan or other Indebtedness, including drawings
under the Company’s existing lines of credit;

 

(x)         suffer or incur any Lien, except for Permitted Liens, on the
Company’s assets;

 

(xi)        suffer any damage, destruction or loss of property related to any of
the Company’s assets, whether or not covered by insurance;

 

(xii)       delay, accelerate or cancel any receivables or Indebtedness owed to
the Company or write off or make further reserves against the same;

 

 40 

 

 

(xiii)       merge or consolidate with or acquire any other Person or be
acquired by any other Person;

 

(xiv)      suffer any insurance policy protecting any of the Company’s assets to
lapse;

 

(xv)       amend any of its plans set forth in Section 5.28(a) or fail to
continue to make timely contributions thereto in accordance with the terms
thereof;

 

(xvi)      make any change in its accounting principles or methods or write down
the value of any Inventory or assets;

 

(xvii)     change the place of business or jurisdiction of organization of the
Company;

 

(xviii)    extend any loans other than travel or other expense advances to
employees in the ordinary course of business not to exceed $1,000.00
individually or $10,000.00 in the aggregate;

 

(xix)       issue, redeem or repurchase any capital stock, membership interests
or other securities, or issue any securities exchangeable for or convertible
into any shares of its capital stock;

 

(xx)        effect or agree to any change in any practices or terms, including
payment terms, with respect to customers or suppliers;

 

(xxi)       make or change any material Tax election or change any annual Tax
accounting periods; or

 

(xxii)       agree to do any of the foregoing.

 

(b)     The Company shall not (i) take or agree to take any action that might
make any representation or warranty of the Company inaccurate or misleading in
any respect at, or as of any time prior to, the Closing Date or (ii) omit to
take, or agree to omit to take, any action necessary to prevent any such
representation or warranty from being inaccurate or misleading in any respect at
any such time.

 

7.2     Access to Information.

 

(a)     From the date hereof until and including the Closing Date, the Company
shall, to the best of its ability, (a) continue to give the Parent, its legal
counsel and other representatives full access to the offices, properties and
Books and Records, (b) furnish to the Parent, its legal counsel and other
representatives such information relating to the Business as such Persons may
request and (c) cause the employees, legal counsel, accountants and
representatives of the Company to cooperate with Parent in its investigation of
the Business; provided that no investigation pursuant to this Section (or any
investigation prior to the date hereof) shall affect any representation or
warranty given by the Company and, provided further, that any investigation
pursuant to this Section shall be conducted in such manner as not to interfere
unreasonably with the conduct of the Business of the Company.

 

 41 

 

 

(b)     If requested by the Purchaser, the Company shall arrange for
representatives of Purchaser to meet with or speak to the representatives of the
ten (10) largest suppliers of the Company.

 

7.3     Notices of Certain Events. The Company shall promptly notify Purchaser
of:

 

(a)     any notice or other communication from any Person alleging or raising
the possibility that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement or that the
transactions contemplated by this Agreement might give rise to any Action or
other rights by or on behalf of such Person or result in the loss of any rights
or privileges of the Company (or Purchaser, post-Closing) to any such Person or
create any Lien on any Company Capital Stock or any of the Company’s assets;

 

(b)     any notice or other communication from any Authority in connection with
the transactions contemplated by this Agreement or the Additional Agreements;

 

(c)     any Actions commenced or threatened against, relating to or involving or
otherwise affecting the Company, any stockholder of the Company, Company Capital
Stock or the Company’s assets or the Business or that relate to the consummation
of the transactions contemplated by this Agreement or the Additional Agreements;

 

(d)     the occurrence of any fact or circumstance which constitutes or results,
or might reasonably be expected to constitute or result, in a Material Adverse
Change; and

 

(e)     the occurrence of any fact or circumstance which results, or might
reasonably be expected to result, in any representation made hereunder by the
Company to be false or misleading in any respect or to omit or fail to state a
material fact.

 

7.4     Annual and Interim Financial Statements. From the date hereof through
the Closing Date, within forty (45) calendar days following the end of each
three-month quarterly period, the Company shall deliver to Purchaser an
unaudited consolidated summary of its earnings and an unaudited consolidated
balance sheet for the period from the Balance Sheet Date through the end of such
quarterly period and the applicable comparative period in the preceding fiscal
year, in each case accompanied by a certificate of the Chief Financial Officer
of the Company to the effect that all such financial statements fairly present
the financial position and results of operations of the Company as of the date
or for the periods indicated, in accordance with U.S. GAAP, except as otherwise
indicated in such statements and subject to year-end audit adjustments. Such
certificate shall also state that except as noted, from the Balance Sheet Date
through the end of the previous quarterly period there has been no Material
Adverse Effect. The Company shall also promptly deliver to Purchaser copies of
any audited consolidated financial statements of the Company that the Company’s
certified public accountants may issue.

 

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7.5     SEC Filings.

 

(a)     The Company acknowledges that:

 

(i)     the Parent’s stockholders must approve the transactions contemplated by
this Agreement prior to the transactions contemplated hereby being consummated
and that, in connection with such approval, the Parent must call a special
meeting of its stockholders requiring Parent to prepare and file with the SEC a
proxy statement and proxy card (the “Proxy Statement”), which will be included
in the Registration Statement;

 

(ii)     the Parent will be required to file Quarterly and Annual reports that
may be required to contain information about the transactions contemplated by
this Agreement; and

 

(iii)     the Parent will be required to file Current Reports on Form 8-K to
announce the transactions contemplated hereby and other significant events that
may occur in connection with such transactions.

 

(b)     In connection with any filing the Parent makes with the SEC that
requires information about the transactions contemplated by this Agreement to be
included, the Company will, and will use its best efforts to cause its
Affiliates, in connection with the disclosure included in any such filing or the
responses provided to the SEC in connection with the SEC’s comments to a filing,
to use their best efforts to (i) cooperate with the Parent, (ii) respond to
questions about the Company required in any filing or requested by the SEC in a
timely fashion, and (iii) promptly provide any information requested by Parent
or Parent’s representatives in connection with any filing with the SEC. In the
Proxy Statement distributed to the Parent’s stockholders, the effectiveness of
the Transaction shall be conditioned upon the approval of the Redomestication
Merger, and the effectiveness of the Redomestication Merger shall be conditioned
upon the approval of the Transaction.

 

7.6     Financial Information. The Company will promptly provide additional
financial information requested by the Parent for inclusion in any filings to be
made by the Parent with the SEC. If requested by the Parent, such information
must be reviewed or audited by the Company’s auditors.

 

7.7     Trust Account. The Company acknowledges that the Parent shall make
appropriate arrangements to cause the funds in the Trust Account to be disbursed
in accordance with the Trust Agreement and for the payment of (i) all amounts
payable to stockholders of Parent holding Parent Ordinary Shares who shall have
validly redeemed their Parent Ordinary Shares upon acceptance by the Parent of
such Parent Ordinary Shares, (ii) the expenses owed to third parties, (iii) the
Deferred Underwriting Amount to the underwriter in the IPO and (iv) the
remaining monies in the Trust Account to Purchaser.

 

7.8     Employees of the Company and the Manager. Schedule 7.8 lists those
employees designated by the Company as key personnel of the Company (the “Key
Personnel”). The Key Personnel shall, as a condition to their continued
employment with the Company, execute and deliver to the Company
non-solicitation, non-service and confidentiality agreements in form and
substance satisfactory to Purchaser (the “Confidentiality and Non-Solicitation
Agreements”). The Company shall use its best efforts to enter into Labor
Agreements with each of its employees to the extent required by law prior to the
Closing Date, and to satisfy all accrued obligations of the Company applicable
to its employees, whether arising by operation of Law, by Contract, by past
custom or otherwise, for payments by the Company to any trust or other fund or
to any Authority, with respect to, social insurance benefits, housing fund
benefits, unemployment or disability compensation benefits or otherwise.

 

 43 

 

 

7.9     Application for Permits. The Company shall apply for all Permits listed
on Schedule ‎5.19 as not being valid and in full force and effect (the
“Outstanding Permits”), and shall use its best efforts to obtain each
Outstanding Permit and ensure that the same are valid and in full force and
effect as promptly as practicable hereafter, but in any event no later than the
Closing Date.

 

ARTICLE VIII
COVENANTS OF THE COMPANY

 

The Company agrees that:

 

8.1     Reporting and Compliance with Laws. From the date hereof through the
Closing Date, the Company shall duly and timely file all Tax Returns required to
be filed with the applicable Taxing Authorities, pay any and all Taxes required
by any Taxing Authority and duly observe and conform in all material respects,
to all applicable Laws and Orders.

 

8.2     Best Efforts to Obtain Consents. The Company shall use its best efforts
to obtain each third party consent required under this Agreement as promptly as
practicable hereafter.

 

ARTICLE IX
COVENANTS OF ALL PARTIES HERETO

 

The parties hereto covenant and agree that:

 

9.1     Best Efforts; Further Assurances. Subject to the terms and conditions of
this Agreement, each party shall use its best efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable Laws, and in the case of the Company, as reasonably
requested by Purchaser, to consummate and implement expeditiously each of the
transactions contemplated by this Agreement. The parties hereto shall execute
and deliver, or cause to be executed and delivered, such other documents,
certificates, agreements and other writings and take such other actions as may
be necessary or desirable in order to consummate or implement expeditiously each
of the transactions contemplated by this Agreement.

 

9.2     Tax Matters.

 

(a)     The Stockholders’ Representative shall prepare (or cause to be prepared)
and file (or cause to be filed) on a timely basis (taking into account valid
extensions of time to file) all Tax Returns of the Company required to be filed
by the Company after the Closing Date for taxable periods ending on or before
the Closing Date. Such Tax Returns shall be true, correct and complete, shall be
prepared on a basis consistent with the similar Tax Returns for the immediately
preceding taxable period, and shall not make, amend, revoke or terminate any Tax
election or change any accounting practice or procedure without the prior
written consent of the Purchaser. The cost of preparing such Tax Returns shall
be borne by the Company. The Stockholders’ Representative shall give a copy of
each such Tax Return to the Purchaser with sufficient time prior to filing for
its review and comment. The Stockholders’ Representative (prior to the Closing)
and the Purchaser (following the Closing) shall cause the Company to cooperate
in connection with the preparation and filing of such Tax Returns, to timely pay
the Tax shown to be due thereon, and to furnish the Purchaser proof of such
payment.

 

 44 

 

 

(b)     Purchaser shall prepare (or cause to be prepared) and file (or cause to
be filed) on a timely basis (taking into account valid extensions of time to
file) all Tax Returns of the Company for taxable periods ending after the
Closing Date. Any such Tax Returns for a period that includes the Closing Date
shall be true, correct and complete in all material respects, shall be prepared
on a basis consistent with the similar Tax Returns for the immediately preceding
taxable period, and shall not make, amend, revoke or terminate and tax election
or change any accounting practice or procedure without the prior consent of the
Stockholders’ Representative, which consent shall not unreasonably be withheld,
delayed or conditioned.

 

(c)     Following the Closing, the Stockholders’ Representative may amend any
Tax Return of the Company for any taxable period ending on or before the Closing
with the consent of Purchaser, which consent shall not unreasonably be withheld,
delayed or conditioned. Purchaser shall cause the Company to cooperate with the
Stockholders’ Representative in connection with the preparation and filing of
such amended Tax Returns and any Tax proceeding in connection therewith. The
cost of preparing and filing such amended Tax Returns or participating in any
such Tax proceeding shall be borne by the Company.

 

(d)     Following the Closing, the Purchaser may amend any Tax Return of the
Company for any taxable period ending on or before the Closing to correct any
errors, with the consent of the Stockholders’ Representative, which consent
shall not unreasonably be withheld, delayed or conditioned. The cost of
preparing and filing such amended Tax Returns shall be borne by the Company.

 

(e)     Purchaser shall retain (or cause the Company to retain) all Books and
Records with respect to Tax matters of the Company for Pre-Closing Periods for
at least seven (7) years following the Closing Date and shall abide by all
record retention agreements entered into by or with respect to the Company with
any Taxing Authority.

 

9.3     Settlement of Purchaser Liabilities. Concurrently with the Closing, all
outstanding liabilities of the Purchaser shall be settled and paid in full,
including reimbursement of out-of-pocket expenses reasonably incurred by
Purchaser’s officers, directors, or any of their respective Affiliates, in
connection with identifying, investigating and consummating a business
combination.

 

9.4     Compliance with SPAC Agreements. The Company and Parent shall comply
with each of the agreements entered into in connection with the IPO, including
without limitation that certain registration rights agreement, dated as of
August 12, 2015 by and between Parent and the investors named therein.

 

 45 

 

 

9.5     Registration Statement. As soon as practicable after the date hereof,
Parent shall prepare and file with the SEC a registration statement on Form S-4
to register the issuance of the Purchaser Common Stock and Purchaser Units to be
issued in the Redomestication Merger (the “Registration Statement”). Parent
shall cooperate and provide the Company (and its counsel) with a reasonable
opportunity to review and comment on the Registration Statement and any
amendment or supplement thereto prior to filing the same with the SEC. The
Company shall promptly provide Parent with such information concerning it that
may be required or appropriate for inclusion in the Registration Statement, or
in any amendments or supplements thereto. Parent will use all commercially
reasonable efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as practicable after such filing and to
keep the Registration Statement effective as long as is necessary to consummate
the Merger and the transactions contemplated hereby.

 

9.6     Confidentiality. Except as necessary to complete the Proxy Statement and
Registration Statement, the Company and the Stockholders, on the one hand, and
the Parent, the Purchaser, and Merger Sub, on the other hand, shall hold and
shall cause their respective representatives to hold in strict confidence,
unless compelled to disclose by judicial or administrative process or by other
requirements of Law, all documents and information concerning the other party
furnished to it by such other party or its representatives in connection with
the transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been (a) previously known by the party to which
it was furnished, (b) in the public domain through no fault of such party or (c)
later lawfully acquired from other sources, which source is not the agent of the
other party, by the party to which it was furnished), and each party shall not
release or disclose such information to any other person, except its
representatives in connection with this Agreement. In the event that any party
believes that it is required to disclose any such confidential information
pursuant to applicable Laws, such party shall give timely written notice to the
other parties so that such parties may have an opportunity to obtain a
protective order or other appropriate relief. Each party shall be deemed to have
satisfied its obligations to hold confidential information concerning or
supplied by the other parties if it exercises the same care as it takes to
preserve confidentiality for its own similar information. The parties
acknowledge that some previously confidential information will be required to be
disclosed in the Proxy Statement.

 

9.7     Available Funding. Concurrently with or prior to the Closing, each party
will use its best efforts to ensure that (a) Parent sells no less than $15
million of Parent Ordinary Shares, convertible preferred shares, convertible
notes or debt notes in a private placement, and/or (ii) third-party investors
have purchased Parent Ordinary Shares in the public markets prior to the
Closing, such that, in the aggregate, Purchaser has a gross amount of no less
than $15 million in cash available to it immediately after the Closing.

 

 46 

 

 

ARTICLE X
CONDITIONS TO CLOSING

 

10.1     Condition to the Obligations of the Parties. The obligations of all of
the parties to consummate the Closing are subject to the satisfaction of all the
following conditions:

 

(a)     No provisions of any applicable Law, and no Order shall prohibit or
impose any condition on the consummation of the Closing;

 

(b)     There shall not be any Action brought by a third-party non-Affiliate to
enjoin or otherwise restrict the consummation of the Closing;

 

(c)     The Redomestication Merger shall have been consummated and the
applicable certificates filed in the appropriate jurisdictions; and

 

(d)     The SEC shall have declared the Registration Statement effective. No
stop order suspending the effectiveness of the Registration Statement or any
part thereof shall have been issued.

 

10.2     Conditions to Obligations of Parent and Purchaser. The obligation of
Parent and Purchaser to consummate the Closing is subject to the satisfaction,
or the waiver at Purchaser’s sole and absolute discretion, of all the following
further conditions:

 

(a)     The Company shall have duly performed all of its obligations hereunder
required to be performed by it at or prior to the Closing Date.

 

(b)     All of the representations and warranties of the Company contained in
this Agreement, the Additional Agreements and in any certificate delivered by
the Company pursuant hereto, disregarding all qualifications and exceptions
contained therein relating to materiality or Material Adverse Effect, regardless
of whether it involved a known risk, shall: (i) be true, correct and complete at
and as of the date of this Agreement (except as provided in the disclosure
schedules or as provided for in Article V), or, (ii) if otherwise specified,
when made or when deemed to have been made, and (iii) be true, correct and
complete as of the Closing Date, in the case of (i) and (ii) with only such
exceptions as could not in the aggregate reasonably be expected to have a
Material Adverse Effect.

 

(c)     There shall have been no event, change or occurrence which individually
or together with any other event, change or occurrence, could reasonably be
expected to have a Material Adverse Effect, regardless of whether it involved a
known risk.

 

(d)     Purchaser shall have received a certificate signed by the Chief
Executive Officer and Chief Financial Officer of the Company to the effect set
forth in clauses (a) through (c) of this Section 10.2.

 

(e)     No court, arbitrator or other Authority shall have issued any judgment,
injunction, decree or order, or have pending before it a proceeding for the
issuance of any thereof, and there shall not be any provision of any applicable
Law restraining or prohibiting the consummation of the Closing, the ownership by
Purchaser of any of the Company Capital Stock or the effective operation of the
Business by the Company after the Closing Date.

 

 47 

 

 

(f)     Purchaser shall have received copies of all required third party
consents (including the consents of the landlords under the Leases), in form and
substance reasonably satisfactory to Purchaser, and no such third party consents
shall have been revoked.

 

(g)     Purchaser shall have received copies of all Governmental Approvals, in
form and substance reasonably satisfactory to Purchaser, and no such
Governmental Approval shall have been revoked.

 

(h)     Counsel to the Company shall have delivered an opinion in form and
substance satisfactory to Purchaser’s counsel.

 

(i)     Parent and Purchaser shall have received Schedules updated as of the
Closing Date.

 

(j)     The requisite majority of Parent’s shareholders shall have approved the
transactions contemplated by this Agreement in accordance with the provisions of
Parent’s organizational documents and Cayman Law.

 

(k)     Purchaser shall have at least $5,000,001 of net tangible assets on the
Closing Date as detailed in the final prospectus from the IPO.

 

10.3     Conditions to Obligations of the Company. The obligations of the
Company to consummate the Closing is subject to the satisfaction, or the waiver
at the Company’s discretion, of all of the following further conditions:

 

(a)     (i) Each of the Parent and Purchaser shall have performed in all
material respects all of their respective obligations hereunder required to be
performed by it at or prior to the Closing Date, (ii) the representations and
warranties of Parent contained in this Agreement, and in any certificate or
other writing delivered by Parent or the Purchaser pursuant hereto, disregarding
all qualifications and exceptions contained therein relating to materiality
shall be true and correct in all material respects at and as of the Closing
Date, as if made at and as of such date and (iii) the Company shall have
received a certificate signed by an authorized officer of Parent and the
Purchaser to the foregoing effect.

 

(b)     Parent has raised a minimum of $15 million in cash from its debt
financing on terms reasonably acceptable to the Company prior to the Closing.

 

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ARTICLE XI
INDEMNIFICATION

 

11.1     Indemnification of Purchaser. The Company (solely with respect to
claims made under this Section 11.1 prior to the Closing), and the Stockholders
hereby jointly and severally agree to indemnify and hold harmless Purchaser,
each of its Affiliates and each of its and their respective members, managers,
partners, directors, officers, employees, stockholders, attorneys and agents and
permitted assignees (the “Purchaser Indemnitees”), against and in respect of any
and all out-of-pocket loss, cost, payment, demand, penalty, forfeiture, expense,
liability, judgment, deficiency or damage, and diminution in value or claim
(including actual costs of investigation and attorneys’ fees and other costs and
expenses) (all of the foregoing collectively, “Losses”) incurred or sustained by
any Purchaser Indemnitee as a result of or in connection with (a) any breach,
inaccuracy or nonfulfillment or the alleged breach, inaccuracy or nonfulfillment
of any of the representations, warranties and covenants of the Company or the
Stockholders contained herein or in any of the Additional Agreements or any
certificate or other writing delivered pursuant hereto, (b) any actions by any
third parties with respect to the Business (including breach of contract claims,
violations of warranties, trademark infringement, privacy violations, torts or
consumer complaints) for any period on or prior to the Closing Date (c) the
violation of any Laws in connection with or with respect to the operation of the
Business on prior to the Closing Date, (d) any claims by any employee of the
Company or any of its Subsidiaries with respect to any period or event occurring
on or prior to the Closing Date, or relating to the termination of employee’s
employment status in connection with the transactions contemplated by this
Agreement, or the termination, amendment or curtailment of any employee benefit
plans, (e) the failure of the Company or any of its Subsidiaries to pay any
Taxes to any Taxing Authority or to file any Tax Return with any Taxing
Authority with respect to any Pre-Closing Period, or (f) any sales, use,
transfer or similar Tax imposed on Purchaser or its Affiliates as a result of
any transaction contemplated by this Agreement. The total payments made by the
Stockholders to the Purchaser Indemnitees with respect to Losses shall not
exceed $24 million (the “Indemnifiable Loss Limit”), except that the
Indemnifiable Loss Limit shall not apply with respect to any Losses relating to
or arising under or in connection with breaches of Sections 5.15 (Properties;
Title to the Company’s Assets), 5.25 (Employees), 5.26 (Employment Matters),
5.27 (Withholding), 5.28 (Employee Benefits and Compensation), 5.29 (Real
Property), Section 5.31 (Tax Matters) or any of clauses (b) through (f) of this
Section 11.1. Notwithstanding anything set forth in this Section 11.1, any
Losses incurred by any Purchaser Indemnitee arising out of the failure of any
Stockholder to perform any covenant or obligation to be performed by it at or
after the Closing Date, shall not, in any such case, be subject to or applied
against the Indemnifiable Loss Limit. Any liability incurred by the Stockholders
pursuant to the terms of this Article XI shall be paid first by the return for
cancellation of the Escrow Shares in accordance with the terms of the Escrow
Agreement.

 

11.2     Procedure. The following shall apply with respect to all claims by any
Purchaser Indemnitee (an “Indemnified Party”) for indemnification:

 

(a)     An Indemnified Party shall give the Stockholders’ Representative prompt
notice (an “Indemnification Notice”) of any third-party action with respect to
which such Indemnified Party seeks indemnification pursuant to Section 11.1 (a
“Third-Party Claim”), which shall describe in reasonable detail the Loss that
has been or may be suffered by the Indemnified Party. The failure to give the
Indemnification Notice shall not impair any of the rights or benefits of such
Indemnified Party under Section 11.1, except to the extent such failure
materially and adversely affects the ability of the Stockholders or the
Purchaser, as applicable (any of such parties, “Indemnifying Parties”) to defend
such claim or increases the amount of such liability.

 

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(b)     In the case of any Third-Party Claims as to which indemnification is
sought by any Indemnified Party, such Indemnified Party shall be entitled, at
the sole expense and liability of the Indemnifying Parties, to exercise full
control of the defense, compromise or settlement of any Third-Party Claim unless
the Indemnifying Parties, within a reasonable time after the giving of an
Indemnification Notice by the Indemnified Party (but in any event within ten
(10) days thereafter), shall (i) deliver a written confirmation to such
Indemnified Party that the indemnification provisions of Section 11.1 are
applicable to such action and the Indemnifying Parties will indemnify such
Indemnified Party in respect of such action pursuant to the terms of Section
11.1 and, notwithstanding anything to the contrary, shall do so without
asserting any challenge, defense, limitation on the Indemnifying Parties’
liability for Losses, counterclaim or offset, (ii) notify such Indemnified Party
in writing of the intention of the Indemnifying Parties to assume the defense
thereof, and (iii) retain legal counsel reasonably satisfactory to such
Indemnified Party to conduct the defense of such Third-Party Claim.

 

(c)     If the Indemnifying Parties assume the defense of any such Third-Party
Claim pursuant to Section 11.2(b), then the Indemnified Party shall cooperate
with the Indemnifying Parties in any manner reasonably requested in connection
with the defense, and the Indemnified Party shall have the right to be kept
fully informed by the Indemnifying Parties and their legal counsel with respect
to the status of any legal proceedings, to the extent not inconsistent with the
preservation of attorney-client or work product privilege. If the Indemnifying
Parties so assume the defense of any such Third-Party Claim, the Indemnified
Party shall have the right to employ separate counsel and to participate in (but
not control) the defense, compromise, or settlement thereof, but the fees and
expenses of such counsel employed by the Indemnified Party shall be at the
expense of such Indemnified Party unless (i) the Indemnifying Parties have
agreed to pay such fees and expenses, or (ii) the named parties to any such
Third-Party Claim (including any impleaded parties) include an Indemnified Party
and an Indemnifying Party and such Indemnified Party shall have been advised by
its counsel that there may be a conflict of interest between such Indemnified
Party and the Indemnifying Parties in the conduct of the defense thereof, and in
any such case the reasonable fees and expenses of such separate counsel shall be
borne by the Indemnifying Parties.

 

(d)     If the Indemnifying Parties elect to assume the defense of any
Third-Party Claim pursuant to Section 11.2(b), the Indemnified Party shall not
pay, or permit to be paid, any part of any claim or demand arising from such
asserted liability unless the Indemnifying Parties withdraw from or fail to
vigorously prosecute the defense of such asserted liability, or unless a
judgment is entered against the Indemnified Party for such liability. If the
Indemnifying Parties do not elect to defend, or if, after commencing or
undertaking any such defense, the Indemnifying Parties fail to adequately
prosecute or withdraw such defense, the Indemnified Party shall have the right
to undertake the defense or settlement thereof, at the Indemnifying Parties’
expense. Notwithstanding anything to the contrary, the Indemnifying Parties
shall not be entitled to control, but may participate in, and the Indemnified
Party (at the expense of the Indemnifying Parties) shall be entitled to have
sole control over, the defense or settlement of (x) that part of any Third-Party
Claim (i) that seeks a temporary restraining order, a preliminary or permanent
injunction or specific performance against the Indemnified Party, or (ii) to the
extent such Third-Party Claim involves criminal allegations against the
Indemnified Party or (y) the entire Third-Party Claim if such Third-Party Claim
would impose liability on the part of the Indemnified Party in an amount which
is greater than the amount as to which the Indemnified Party is entitled to
indemnification under this Agreement. In the event the Indemnified Party retains
control of the Third-Party Claim, the Indemnified Party will not settle the
subject claim without the prior written consent of the Indemnifying Party, which
consent will not be unreasonably withheld or delayed.

 

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(e)     If the Indemnifying Parties undertake the defense of any such
Third-Party Claim pursuant to Section 11.1 and propose to settle the same prior
to a final judgment thereon or to forgo appeal with respect thereto, then the
Indemnified Party shall give the Indemnifying Parties prompt written notice
thereof and the Indemnifying Parties shall have the right to participate in the
settlement, assume or reassume the defense thereof or prosecute such appeal, in
each case at the Indemnifying Parties’ expense. The Indemnifying Parties shall
not, without the prior written consent of such Indemnified Party settle or
compromise or consent to entry of any judgment with respect to any such
Third-Party Claim (i) in which any relief other than the payment of money
damages is or may be sought against such Indemnified Party, (ii) in which such
Third-Party Claim could be reasonably expected to impose or create a monetary
liability on the part of the Indemnified Party (such as an increase in the
Indemnified Party’s income Tax) other than the monetary claim of the third party
in such Third-Party Claim being paid pursuant to such settlement or judgment, or
(iii) which does not include as an unconditional term thereof the giving by the
claimant, person conducting such investigation or initiating such hearing,
plaintiff or petitioner to such Indemnified Party of a release from all
liability with respect to such Third-Party Claim and all other actions (known or
unknown) arising or which might arise out of the same facts.

 

11.3     Escrow of Escrow Shares by Stockholders. The Company and the
Stockholders hereby authorize Purchaser to deliver the Escrow Shares into escrow
(the “Escrow Fund”) pursuant to the Escrow Agreement. For purposes of this
Article XI, the Escrow Shares are valued at $10.00 per share.

 

(a)     Escrow Shares. Payment of Dividends; Voting. Any dividends, interest
payments, or other distributions of any kind made in respect of the Escrow
Shares will be delivered promptly to the Escrow Agent to be held in escrow. The
Stockholders shall be entitled to vote the Escrow Shares on any matters to come
before the stockholders of Purchaser.

 

(b)     Distribution of Escrow Shares. At the times provided for in Section
11.3(d), the Escrow Shares shall be released to the Stockholders’ Representative
for distribution to the Stockholders. Purchaser will take such action as may be
necessary to cause such certificates to be issued in the names of the
appropriate persons. Certificates representing Escrow Shares so issued that are
subject to resale restrictions under applicable securities laws will bear a
legend to that effect. No fractional shares shall be released and delivered from
the Escrow Fund to the Stockholders’ Representative and all fractional shares
shall be rounded to the nearest whole share.

 

(c)     Assignability. No Escrow Shares or any beneficial interest therein may
be pledged, sold, assigned or transferred, including by operation of law, by the
Stockholders or be taken or reached by any legal or equitable process in
satisfaction of any debt or other liability of the Stockholders, prior to the
delivery to such Stockholders by the Stockholders’ Representative of the Escrow
Shares by the Escrow Agent as provided herein.

 

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(d)     Release from Escrow Fund. Within five (5) business days following
expiration of the Survival Period (the “Release Date”), the remaining Escrow
Shares will be released from escrow to the Stockholders’ Representative less the
number or amount of Escrow Shares (at an assumed value of $10.00 per Escrow
Share) equal to the amount of any potential Losses set forth in any
Indemnification Notice from Purchaser with respect to any pending but unresolved
claim for indemnification. Prior to the Release Date, the Stockholders’
Representative shall issue to the Escrow Agent a certificate executed by it
instructing the Escrow Agent to release such number of Escrow Shares determined
in accordance with this Section 11.3(d). Any Escrow Shares retained in escrow as
a result of the immediately preceding sentence shall be released to the
Stockholders’ Representative promptly upon resolution of the related claim for
indemnification in accordance with the provisions of this Article XI.

 

11.4     Periodic Payments. Any indemnification required by Section 11.1 for
costs, disbursements or expenses of any Indemnified Party in connection with
investigating, preparing to defend or defending any Action shall be made by
periodic payments by the Indemnifying Parties to each Indemnified Party during
the course of the investigation or defense, as and when bills are received or
costs, disbursements or expenses are incurred.

 

11.5     Right of Set Off. In the event that Purchaser is entitled to any
indemnification pursuant to this Article XI, Purchaser shall be entitled to set
off any amounts owed to the Stockholders and/or against the amount of such
indemnification. Any such set-off will be treated as an adjustment to the
Purchase Price.

 

11.6     Payment of Indemnification. In the event that Purchaser is entitled to
any indemnification pursuant to this Article XI and Purchaser is unable to set
off such indemnification pursuant to Section 11.5, the Stockholders shall
jointly and severally pay the amount of the indemnification (subject to the
limitation set forth in Section 11.1) in shares of Purchaser Common Stock at
$10.00 per share. Any payments by the Stockholders to a Purchaser Indemnitee
will be treated as an adjustment to the Purchase Price.

 

11.7     Insurance. Any indemnification payments hereunder shall take into
account any insurance proceeds or other third party reimbursement actually
received.

 

11.8     Survival of Indemnification Rights. Except for the representations and
warranties in Section 5.1 (Corporate Existence and Power), 5.2 (Authorization),
5.3. (Governmental Authorization), 5.5 (Capitalization), 5.6 (Certificate of
Formation and Operating Agreement), 5.7 (Corporate Records), 5.10
(Subsidiaries), 5.15 (Properties; Title to the Company’s Assets), 5.20
(Compliance with Laws), 5.26 (Employment Matters), 5.28 (Employee Benefits and
Compensation), 5.29 (Real Property), 5.31 (Tax Matters), 5.33 (Finder’s Fees),
Section 6.1 (Corporate Existence and Power), Section 6.2 (Corporate
Authorization), and Section 6.5 (Finders’ Fees) which shall survive until ninety
(90) days after the expiration of the statute of limitations with respect
thereto (including any extensions and waivers thereof), the representations and
warranties of the Company, the Stockholders and Purchaser shall survive until
twelve months (the “Survival Period”) following the Closing. The indemnification
to which any Indemnified Party is entitled from the Indemnifying Parties
pursuant to Section 11.1 for Losses shall be effective so long as it is asserted
prior to: (x) ninety (90) days after the expiration of the applicable statute of
limitations (including all extensions and waivers thereof), in the case of the
representations and warranties referred to in the first part of the sentence of
Section 11.8 and the breach or the alleged breach of any covenant or agreement
of any Indemnifying Party; and (y) twelve months following the Closing, in the
case of all other representations and warranties of the Company, the
Stockholders and Purchaser hereunder. The obligations of the Company (but not of
the Stockholders) in Articles VII and IX shall terminate upon the Closing.

 

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ARTICLE XII
DISPUTE RESOLUTION

 

12.1     Arbitration.

 

(a)     The parties shall promptly submit any dispute, claim, or controversy
arising out of or relating to this Agreement, or any Additional Agreement
(including with respect to the meaning, effect, validity, termination,
interpretation, performance, or enforcement of this Agreement or any Additional
Agreement) or any alleged breach thereof (including any action in tort,
contract, equity, or otherwise), to binding arbitration before one arbitrator
(the “Arbitrator”). Binding arbitration shall be the sole means of resolving any
dispute, claim, or controversy arising out of or relating to this Agreement or
any Additional Agreement (including with respect to the meaning, effect,
validity, termination, interpretation, performance or enforcement of this
Agreement or any Additional Agreement) or any alleged breach thereof (including
any claim in tort, contract, equity, or otherwise).

 

(b)     If the parties cannot agree upon the Arbitrator, the Arbitrator shall be
selected by the New York, New York chapter head of the American Arbitration
Association upon the written request of either side. The Arbitrator shall be
selected within thirty (30) days of such written request.

 

(c)     The laws of the State of New York shall apply to any arbitration
hereunder. In any arbitration hereunder, this Agreement and any agreement
contemplated hereby shall be governed by the laws of the State of New York
applicable to a contract negotiated, signed, and wholly to be performed in the
State of New York, which laws the Arbitrator shall apply in rendering his
decision. The Arbitrator shall issue a written decision, setting forth findings
of fact and conclusions of law, within sixty (60) days after he shall have been
selected. The Arbitrator shall have no authority to award punitive or other
exemplary damages.

 

(d)     The arbitration shall be held in New York, New York in accordance with
and under the then-current provisions of the rules of the American Arbitration
Association, except as otherwise provided herein.

 

(e)     On application to the Arbitrator, any party shall have rights to
discovery to the same extent as would be provided under the Federal Rules of
Civil Procedure, and the Federal Rules of Evidence shall apply to any
arbitration under this Agreement; provided, however, that the Arbitrator shall
limit any discovery or evidence such that his decision shall be rendered within
the period referred to in Section 12.1(c).

 

 53 

 

 

(f)     The Arbitrator may, at his discretion and at the expense of the party
who will bear the cost of the arbitration, employ experts to assist him in his
determinations.

 

(g)     The costs of the arbitration proceeding and any proceeding in court to
confirm any arbitration award or to obtain relief (including actual attorneys’
fees and costs) shall be borne by the unsuccessful party and shall be awarded as
part of the Arbitrator’s decision, unless the Arbitrator shall otherwise
allocate such costs in such decision. The determination of the Arbitrator shall
be final and binding upon the parties and not subject to appeal.

 

(h)     Any judgment upon any award rendered by the Arbitrator may be entered in
and enforced by any court of competent jurisdiction. The parties expressly
consent to the non-exclusive jurisdiction of the courts (Federal and state) in
New York, New York to enforce any award of the Arbitrator or to render any
provisional, temporary, or injunctive relief in connection with or in aid of the
Arbitration. The parties expressly consent to the personal and subject matter
jurisdiction of the Arbitrator to arbitrate any and all matters to be submitted
to arbitration hereunder. None of the parties hereto shall challenge any
arbitration hereunder on the grounds that any party necessary to such
arbitration (including the parties hereto) shall have been absent from such
arbitration for any reason, including that such party shall have been the
subject of any bankruptcy, reorganization, or insolvency proceeding.

 

(i)     The parties shall indemnify the Arbitrator and any experts employed by
the Arbitrator and hold them harmless from and against any claim or demand
arising out of any arbitration under this Agreement or any agreement
contemplated hereby, unless resulting from the gross negligence or willful
misconduct of the person indemnified.

 

(j)     This arbitration section shall survive the termination of this Agreement
and any agreement contemplated hereby.

 

12.2     Waiver of Jury Trial; Exemplary Damages.

 

(a)     THE PARTIES TO THIS AGREEMENT HEREBY KNOWINGLY, VOLUNTARILY AND
IRREVOCABLY WAIVE ANY RIGHT EACH SUCH PARTY MAY HAVE TO TRIAL BY JURY IN ANY
ACTION OF ANY KIND OR NATURE, IN ANY COURT IN WHICH AN ACTION MAY BE COMMENCED,
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY ADDITIONAL AGREEMENT,
OR BY REASON OF ANY OTHER CAUSE OR DISPUTE WHATSOEVER BETWEEN OR AMONG ANY OF
THE PARTIES TO THIS AGREEMENT OF ANY KIND OR NATURE. NO PARTY SHALL BE AWARDED
PUNITIVE OR OTHER EXEMPLARY DAMAGES RESPECTING ANY DISPUTE ARISING UNDER THIS
AGREEMENT OR ANY ADDITIONAL AGREEMENT.

 

(b)     Each of the parties to this Agreement acknowledge that each has been
represented in connection with the signing of this waiver by independent legal
counsel selected by the respective party and that such party has discussed the
legal consequences and import of this waiver with legal counsel. Each of the
parties to this Agreement further acknowledge that each has read and understands
the meaning of this waiver and grants this waiver knowingly, voluntarily,
without duress and only after consideration of the consequences of this waiver
with legal counsel.

 

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ARTICLE XIII
TERMINATION

 

13.1     Termination Without Default.

 

(a)      In the event that the Closing of the transactions contemplated
hereunder has not occurred by February 18, 2017 (the “Outside Closing Date”) and
no material breach of this Agreement by the party seeking to terminate this
Agreement shall have occurred or have been made (as provided in Section 13.2
hereof), Parent or the Company shall have the right, at its sole option, to
terminate this Agreement without liability to the other side. Such right may be
exercised by Parent or the Company, as the case may be, giving written notice to
the other at any time after the Outside Closing Date.

 

(b)      In the event that the preliminary Proxy Statement soliciting the vote
of Parent’s shareholders with respect to the Merger is not filed with the SEC by
August 31, 2016 (the “Filing Date”), and no material breach of this Agreement by
the party seeking to terminate this Agreement shall have occurred or have been
made (as provided in Section 13.2 hereof), Parent or the Company shall have the
right, at its sole option, to terminate this Agreement without liability to the
other side. Such right may be exercised by Parent or the Company, as the case
may be, giving written notice to the other at any time after the Filing Date.

 

13.2     Termination Upon Default.

 

(a)     Parent may terminate this Agreement by giving notice to the Company on
or prior to the Closing Date, without prejudice to any rights or obligations
Purchaser may have, if the Company or the Stockholders shall have materially
breached any representation, warranty, agreement or covenant contained herein or
in any Additional Agreement to be performed on or prior to the Closing Date and
such breach shall not be cured by the earlier of the Outside Closing Date and
fifteen (15) days following receipt by the Company or the Stockholders’
Representative, as the case may be, of a notice describing in reasonable detail
the nature of such breach.

 

(b)     The Company may terminate this Agreement by giving notice to Purchaser,
without prejudice to any rights or obligations the Company may have, if
Purchaser shall have materially breached any of its covenants, agreements,
representations, and warranties contained herein to be performed on or prior to
the Closing Date and such breach shall not be cured by the earlier of the
Outside Closing Date and fifteen (15) days following receipt by Purchaser of a
notice describing in reasonable detail the nature of such breach.

 

13.3     No Other Termination. Except as otherwise specified herein, neither the
Purchaser nor the Company may terminate this Agreement without the prior written
consent of the other party.

 

13.4     Survival. The provisions of Article XI through Article XIV shall
survive any termination hereof.

 

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ARTICLE XIV
MISCELLANEOUS

 

14.1     Notices. Any notice hereunder shall be sent in writing, addressed as
specified below, and shall be deemed given: (a) if by hand or recognized courier
service, by 4:00PM on a business day, addressee’s day and time, on the date of
delivery, and otherwise on the first business day after such delivery; (b) if by
fax or email, on the date that transmission is confirmed electronically, if by
4:00PM on a business day, addressee’s day and time, and otherwise on the first
business day after the date of such confirmation; or (c) five days after mailing
by certified or registered mail, return receipt requested. Notices shall be
addressed to the respective parties as follows (excluding telephone numbers,
which are for convenience only), or to such other address as a party shall
specify to the others in accordance with these notice provisions:

 

if to Purchaser or the Company (following the Closing), to:

 

iFresh Inc.

7 Times Square

New York, NY 10036

Attention: Richard Xu

Telecopy: 646-912-8918

 

with a copy to (which shall not constitute notice):

 

Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

Attention: Giovanni Caruso

Telecopy: 212 407-4866

 

if to the Company (prior to the Closing):

 

NYM Holding, Inc.

2-39 54th Avenue

Long Island City, NY 11101

Attn: Long Deng

C/o: Simon She

Fax: 718-628-3822

 

with a copy to (which shall not constitute notice):

 

Pryor Cashman LLP

7 Times Square, New York, NY 10036

Attn: Elizabeth Fei Chen

Fax: 212-798-6366

 

if to the Stockholders’ Representative:

 

2-39 54th Avenue

Long Island City, NY 11101

Attn: Long Deng

Fax: 718-628-3822

 

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14.2     Amendments; No Waivers; Remedies.

 

 (a)     This Agreement cannot be amended, except by a writing signed by each
party, and cannot be terminated orally or by course of conduct. No provision
hereof can be waived, except by a writing signed by the party against whom such
waiver is to be enforced, and any such waiver shall apply only in the particular
instance in which such waiver shall have been given.

 

(b)     Neither any failure or delay in exercising any right or remedy hereunder
or in requiring satisfaction of any condition herein nor any course of dealing
shall constitute a waiver of or prevent any party from enforcing any right or
remedy or from requiring satisfaction of any condition. No notice to or demand
on a party shall waive or otherwise affect any obligation of that party or
impair any right of the party giving such notice or making such demand,
including any right to take any action without notice or demand not otherwise
required by this Agreement. No exercise of any right or remedy with respect to a
breach of this Agreement shall preclude exercise of any other right or remedy,
as appropriate to make the aggrieved party whole with respect to such breach, or
subsequent exercise of any right or remedy with respect to any other breach.

 

(c)     Except as otherwise expressly provided herein, no statement herein of
any right or remedy shall impair any other right or remedy stated herein or that
otherwise may be available.

 

(d)     Notwithstanding anything else contained herein, neither shall any party
seek, nor shall any party be liable for, punitive or exemplary damages, under
any tort, contract, equity, or other legal theory, with respect to any breach
(or alleged breach) of this Agreement or any provision hereof or any matter
otherwise relating hereto or arising in connection herewith.

 

14.3     Arm’s length bargaining; no presumption against drafter. This Agreement
has been negotiated at arm’s-length by parties of equal bargaining strength,
each represented by counsel or having had but declined the opportunity to be
represented by counsel and having participated in the drafting of this
Agreement. This Agreement creates no fiduciary or other special relationship
between the parties, and no such relationship otherwise exists. No presumption
in favor of or against any party in the construction or interpretation of this
Agreement or any provision hereof shall be made based upon which Person might
have drafted this Agreement or such provision.

 

14.4     Publicity. Except as required by law and except with respect to the
Parent SEC Documents, the parties agree that neither they nor their agents shall
issue any press release or make any other public disclosure concerning the
transactions contemplated hereunder without the prior approval of the other
party hereto. If a party is required to make such a disclosure as required by
law, the parties will use their best efforts to cause a mutually agreeable
release or public disclosure to be issued.

 

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14.5     Expenses. Each party shall bear its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby, unless
otherwise specified herein.

 

14.6     No Assignment or Delegation. No party may assign any right or delegate
any obligation hereunder, including by merger, consolidation, operation of law,
or otherwise, without the written consent of the other party. Any purported
assignment or delegation without such consent shall be void, in addition to
constituting a material breach of this Agreement.

 

14.7     Governing Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.

 

14.8     Counterparts; facsimile signatures. This Agreement may be executed in
counterparts, each of which shall constitute an original, but all of which shall
constitute one agreement. This Agreement shall become effective upon delivery to
each party of an executed counterpart or the earlier delivery to each party of
original, photocopied, or electronically transmitted signature pages that
together (but need not individually) bear the signatures of all other parties.

 

14.9     Entire Agreement. This Agreement together with the Additional
Agreements, sets forth the entire agreement of the parties with respect to the
subject matter hereof and thereof and supersedes all prior and contemporaneous
understandings and agreements related thereto (whether written or oral), all of
which are merged herein. No provision of this Agreement or any Additional
Agreement may be explained or qualified by any agreement, negotiations,
understanding, discussion, conduct or course of conduct or by any trade usage.
Except as otherwise expressly stated herein or any Additional Agreement, there
is no condition precedent to the effectiveness of any provision hereof or
thereof. No party has relied on any representation from, or warranty or
agreement of, any person in entering into this Agreement, prior hereto or
contemporaneous herewith or any Additional Agreement, except those expressly
stated herein or therein.

 

14.10     Severability. A determination by a court or other legal authority that
any provision that is not of the essence of this Agreement is legally invalid
shall not affect the validity or enforceability of any other provision hereof.
The parties shall cooperate in good faith to substitute (or cause such court or
other legal authority to substitute) for any provision so held to be invalid a
valid provision, as alike in substance to such invalid provision as is lawful.

 

14.11     Construction of certain terms and references; captions. In this
Agreement:

 

(a)     References to particular sections and subsections, schedules, and
exhibits not otherwise specified are cross-references to sections and
subsections, schedules, and exhibits of this Agreement.

 

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(b)     The words “herein,” “hereof,” “hereunder,” and words of similar import
refer to this Agreement as a whole and not to any particular provision of this
Agreement, and, unless the context requires otherwise, “party” means a party
signatory hereto.

 

(c)     Any use of the singular or plural, or the masculine, feminine, or neuter
gender, includes the others, unless the context otherwise requires; “including”
means “including without limitation;” “or” means “and/or;” “any” means “any one,
more than one, or all;” and, unless otherwise specified, any financial or
accounting term has the meaning of the term under United States generally
accepted accounting principles as consistently applied heretofore by the
Company.

 

(d)     Unless otherwise specified, any reference to any agreement (including
this Agreement), instrument, or other document includes all schedules, exhibits,
or other attachments referred to therein, and any reference to a statute or
other law includes any rule, regulation, ordinance, or the like promulgated
thereunder, in each case, as amended, restated, supplemented, or otherwise
modified from time to time. Any reference to a numbered schedule means the
same-numbered section of the disclosure schedule.

 

(e)     If any action is required to be taken or notice is required to be given
within a specified number of days following a specific date or event, the day of
such date or event is not counted in determining the last day for such action or
notice. If any action is required to be taken or notice is required to be given
on or before a particular day which is not a Business Day, such action or notice
shall be considered timely if it is taken or given on or before the next
Business Day.

 

(f)     Captions are not a part of this Agreement, but are included for
convenience, only.

 

(g)     For the avoidance of any doubt, all references in this Agreement to “the
knowledge or best knowledge of the Company” or similar terms shall be deemed to
include the actual or constructive (e.g., implied by Law) knowledge of the Key
Personnel.

 

14.12     Further Assurances. Each party shall execute and deliver such
documents and take such action, as may reasonably be considered within the scope
of such party’s obligations hereunder, necessary to effectuate the transactions
contemplated by this Agreement.

 

14.13     Third Party Beneficiaries. Neither this Agreement nor any provision
hereof confers any benefit or right upon or may be enforced by any Person not a
signatory hereto.

 

14.14     Waiver. Reference is made to the final prospectus of the Parent, dated
August 12, 2015 (the “Prospectus”). The Company has read the Prospectus and
understands that the Parent has established the Trust Account for the benefit of
the public stockholders of the Parent and the underwriters of the IPO pursuant
to the Trust Agreement and that, except for a portion of the interest earned on
the amounts held in the Trust Account, the Parent may disburse monies from the
Trust Account only for the purposes set forth in the Trust Agreement. For and in
consideration of the Parent agreeing to enter into this Agreement, the Company
hereby agrees that it does not have any right, title, interest or claim of any
kind in or to any monies in the Trust Account and hereby agrees that it will not
seek recourse against the Trust Account for any claim it may have in the future
as a result of, or arising out of, any negotiations, contracts or agreements
with the Purchaser.

 

 59 

 

 

14.15     Stockholders’ Representative. Long Deng is hereby appointed as agent
and attorney-in-fact (the “Stockholders’ Representative”) for each Stockholder,
(i) to give and receive notices and communications to or by Parent and Purchaser
for any purpose under this Agreement and the Additional Agreements, (ii) to
agree to, negotiate, enter into settlements and compromises of and demand
arbitration and comply with orders of courts and awards of arbitrators with
respect to any indemnification claims (including Third-Party Claims) under
Article XI or other disputes arising under or related to this Agreement, (iii)
to enter into and deliver the Escrow Agreement on behalf of each of the
Stockholders, (iv) to authorize or object to delivery to Parent, Purchaser and
the Surviving Corporation of the Escrow Fund, or any portion thereof, in
satisfaction of indemnification claims by Parent, Purchaser and the Surviving
Corporation in accordance with the provisions of the Escrow Agreement, (v) to
act on behalf of Stockholders in accordance with the provisions of the
Agreement, the securities described herein and any other document or instrument
executed in connection with the Agreement and the Merger and (vi) to take all
actions necessary or appropriate in the judgment of the Stockholders’
Representative for the accomplishment of the foregoing. Such agency may be
changed by the Stockholders from time to time upon no less than twenty (20) days
prior written notice to the Purchaser and, if after the Effective Time, the
Surviving Corporation, provided, however, that the Stockholders’ Representative
may not be removed unless holders of at least 51% of all of the Company Common
Stock on an as-if converted basis outstanding immediately prior to the
transaction contemplated by this Agreement agrees to such removal. Any vacancy
in the position of Stockholders’ Representative may be filled by approval of the
holders of at least 51% of all of the Company Common Stock on an as-if converted
basis outstanding immediately prior to the transaction contemplated by this
Agreement. Any removal or change of the Stockholders’ Representative shall not
be effective until written notice is delivered to Purchaser. No bond shall be
required of the Stockholders’ Representative, and the Stockholders’
Representative shall not receive any compensation for his services. Notices or
communications to or from the Stockholders’ Representative shall constitute
notice to or from the Stockholders. The Stockholders’ Representative shall not
be liable for any act done or omitted hereunder while acting in good faith and
in the exercise of reasonable business judgment. A decision, act, consent or
instruction of the Stockholders’ Representative shall, for all purposes
hereunder, constitute a decision, act, consent or instruction of all of the
Stockholders of the Company and shall be final, binding and conclusive upon each
of the Stockholders. The Stockholders shall severally indemnify the
Stockholders’ Representative and hold him harmless against any loss, liability,
or expense incurred without gross negligence or bad faith on the part of the
Stockholders’ Representative and arising out of or in connection with the
acceptance or administration of his duties hereunder. Notwithstanding anything
in this Section 14.15 to the contrary, the Stockholders’ Representative (in his
capacity as such) shall have no obligation or authority with respect to any
indemnification claims against a Stockholder made by a Purchaser Indemnitee
under Section 11.1.

  

[The remainder of this page intentionally left blank; signature pages to follow]

 

 60 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

 

 

Parent:

      E-COMPASS ACQUISITION CORP., a Cayman Islands exempted company        By:
      Name:     Title:        

Purchaser:

 

IFRESH INC., a Delaware corporation

      By:      

Name:

    Title:        

Merger Sub:

 

IFRESH MERGER SUB INC., a Delaware corporation

      By:      

Name:

    Title:        

Company:

 

NYM Holding, Inc., a Delaware corporation 

      By:       Name:     Title:

  

[Stockholder signature page begins on next page]

 

 61 

 

 

  Stockholders:           Long Deng           Faming Lin           Haiquan Chen
          Shengbao Zhang           Shunwah Gee           Yongguang Li          
Tongrui Huang           Xin Wu           Mei Deng           Mingzhe Zhang

 

[Stockholder signature page continues on next page]

 

 62 

 

  

  Stockholders (continued):           Yi Fei Ling           Xiaodan Wu          
Sheng Feng Song           Shizhen Wu           Shunyu She

 

  CLOUD BEST LIMITED         By:       Name:     Title:           Stockholders’
Representative:                 Long Deng

  

 63 

 

 

EXHIBIT A

 

Escrow Agreement

 

 64 

 

 

EXHIBIT B

 

Lock-up Agreement

 

 65 

 

 

EXHIBIT C

 

Option Agreement

 

 66 

 

 

EXHIBIT D

 

Registration Rights Agreement

 

 67 

 

 

EXHIBIT E

 

Amended By-Laws

 

 

 

68