PLACEMENT WARRANT PURCHASE AGREEMENT


 


PLACEMENT WARRANT PURCHASE AGREEMENT
(this “Agreement”) made as of this 7th day of November, 2011 among Selway Capital Acquisition Corporation,
a Delaware corporation (the “Company”), and Selway Capital Holdings LLC (the “Purchaser”).


 


WHEREAS, the Company has filed with
the Securities and Exchange Commission (“SEC”) a registration statement on Form S-1, as amended (File No. 333-172714)
(the “Registration Statement”), in connection with the Company’s initial public offering (the “IPO”)
of up to 2,000,000 units, each unit (“Unit”) consisting of one (1) Series A Share of common stock of the Company,
$0.0001 par value (the “Series A Shares”), and (ii) one (1) warrant (the “Warrants”) to purchase one share
of common stock; and


 


WHEREAS, the Company desires to sell
in a private placement to the Purchaser (the “Placement”) an aggregate of 2,333,333 Warrants (the “Placement
Warrants”) substantially identical to the Warrants being issued in the IPO pursuant to the terms and conditions hereof and
as set forth in the Registration Statement, except that the Placement Warrants to be issued in the Placement shall not be registered
under the Securities Act of 1933, as amended (the “Securities Act”);


 


WHEREAS, the Placement Warrants shall
be governed by the Warrant Agreement filed as an exhibit to the Registration Statement (the “Warrant Agreement”); and


 


WHEREAS, the Purchaser is entitled
to registration rights with respect to the Placement Warrants and the shares of common stock underlying such Placement Warrants
(collectively, the “Registrable Securities”) on the terms set forth in the Registration Rights Agreement filed as an
exhibit to the Registration Statement.


 


NOW, THEREFORE, for and in consideration
of the premises and the mutual covenants hereinafter set forth, the parties hereto do hereby agree as follows:


 


1.          Purchase
of Placement Warrants. The Purchaser hereby agrees, directly or through nominees, to purchase an aggregate of 2,333,333
Placement Warrants at a purchase price of $0.75 per Placement Warrant, or an aggregate of approximately $1,750,000 (the “Purchase
Price”).


 


2.          Closing.
The closing of the purchase and sale of the Placement Warrants (the “Closing”) will take place at such time and place
as the parties may agree (the “Closing Date”), but in no event later than immediately prior to the closing of the IPO.
At least 24 hours prior to the date on which the SEC declares the Registration Statement effective (the “Effective Date”),
the Purchaser shall pay the Purchase Price by wire transfer of funds to an account maintained by Loeb & Loeb LLP (“Loeb”),
counsel for the Company. Prior to the closing of the IPO, Loeb shall deposit the Purchase Price into the trust account described
in the Registration Statement (the “Trust Account”). The certificate for the Warrants comprising the Placement Warrants
shall be delivered to the Purchaser promptly after the closing of the IPO.


 


3.          Redemption.
The Placement Warrants shall not be redeemable.


 


4.          Cashless
Exercise. The Placement Warrants may be exercised on a cashless basis any time while they are exercisable and prior to their
expiration in accordance with the terms set out in the Warrant Agreement.


 


5.          Escrow
of Placement Warrants. From the Effective Date until the earlier of the consummation by the Company of an Acquisition Transaction or,
if the Acquisition Transaction is completed without granting the Company’s shareholders redemption rights in connection
with such Acquisition Transaction, the consummation of a post-acquisition tender offer or post-acquisition automatic trust liquidation
(the “Escrow Period”), the Placement Warrants shall be placed in escrow.  The terms and conditions of the
escrow of the Placement Warrants and their release therefrom shall be set forth in the Securities Escrow Agreement, dated as of
November 7, 2011, among the Company and the Purchaser.  Any terms not herein defined shall have the meanings assigned to them
in such Securities Escrow Agreement.


 






    	 



    	 	



    
 


6.          Waiver
of Liquidation Distributions. In connection with the Placement Warrants purchased pursuant to this Agreement, the Purchaser
hereby waives any and all right, title, interest or claim of any kind in or to any liquidating distributions by the Company in
the event of a liquidation of the Company upon the Company’s failure to timely complete a Business Combination. For purposes
of clarity, any shares of common stock purchased in the IPO or the aftermarket by the Purchaser shall be eligible to receive any
liquidating distributions by the Company.


 


7.          Representations
and Warranties of the Purchaser. The Purchaser hereby represents and warrants on behalf of itself to the Company that:


 


7.1     The
Purchaser is an “accredited investor” as that term is defined in Rule 501 of Regulation D promulgated under the Securities
Act.


 


7.2     The
Placement Warrants are being acquired by the Purchaser for its own account, only for investment purposes and not with a view to,
or for resale in connection with, any distribution or public offering thereof within the meaning of the Securities Act.


 


7.3     The
Purchaser has the full right, power and authority to enter into this Agreement and this Agreement is a valid and legally binding
obligation of the Purchaser enforceable against the Purchaser in accordance with its terms.


 


8.          Waiver
and Indemnification. The Purchaser hereby waives any and all rights to assert any present or future claims, including any right
of rescission, against the Company with respect to its purchase of the Placement Warrants, and the Purchaser agrees to indemnify
and hold the Company harmless from all losses, damages or expenses that relate to claims or proceedings brought against the Company
by the Purchaser of the Placement Warrants or its transferees, heirs, assigns or any subsequent holders of the Placement Warrants.


 


9.          Counterparts;
Facsimile. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same instrument. This Agreement or any counterpart
may be executed via facsimile transmission, and any such executed facsimile copy shall be treated as an original.


 


10.          Governing
Law. This Agreement shall for all purposes be deemed to be made under and shall be construed in accordance with the laws of
the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive
laws of any other jurisdiction. Each of the parties hereby agrees that any action, proceeding or claim against it arising out of
or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United States
District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. Each of the parties hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient
forum.


 


[Signature Page Follows]


 






    	 



    	 	



    
 


IN WITNESS WHEREOF , the undersigned
have executed this Agreement as of the date first written above.


 


	 	
        SELWAY CAPITAL ACQUISITION

        CORPORATION

	 	 
	 	By:	/s/ Yaron Eitan
	 	Name:	Yaron Eitan
	 	Title:	Chief Executive Officer


 


	 	Purchaser:
	 	SELWAY CAPITAL HOLDINGS LLC
	 	 
	 	By:	/s/ Yaron Eitan
	 	Name:	Yaron Eitan
	 	Title:	Board Manager


 


 


 


 


Placement Warrant Purchase Agreement