Unassociated Document


     

    ___________,
2011

     

    Prime
Acquisition Corp

    No. 322,
Zhongshan East Road

    Shijiazhuang

    Hebei
Province, 050011

    People’s
Republic of China

    


    Chardan
Capital Markets, LLC

    17 State
Street

    Suite
1600

    New York,
NY 10004

     

    Re:        Initial Public
Offering

     

    Gentlemen:

     

    The
undersigned shareholder [and [Insert position]] of Prime Acquisition Corp. (the
“Company”), in consideration of Chardan Capital Markets, LLC (“Chardan”)
entering into an agreement to underwrite an initial public offering of the
securities of the Company (“IPO”) and embarking on the IPO process, hereby
agrees as follows (certain capitalized terms used herein are defined in
paragraph 12 hereof):

     

    1.           If the
Company initiates an issuer tender offer in connection with the consummation of
a Business Combination, the undersigned will not tender any Insider Shares or
Ordinary Shares acquired in the IPO and aftermarket owned by the undersigned in
such tender offer. If the Company solicits approval of its shareholders to
approve a Business Combination and/or amend Article 156 of its Amended and
Restated Memorandum and Articles of Association prior to consummation of a
Business Combination, the undersigned will vote all Insider Shares owned by him
in accordance with the majority of the votes cast by the holders of the IPO
Shares. If the Company solicits approval of its shareholders to approve a
Business Combination, the undersigned will vote all Ordinary Shares acquired in
the IPO and aftermarket in favor of the Business Combination, and will not
exercise redemption rights with respect to any Insider Shares, IPO Shares and
Ordinary Shares acquired in the aftermarket owned by the undersigned. The
undersigned will not exercise any appraisal rights (if such appraisal rights are
available) to which the undersigned may be entitled under the Companies Law
(2009 Revision) of the Cayman Islands (the “Companies Law”) in connection with
the vote to approve any Business Combination, as the case may be, with respect
to any Insider Shares, IPO Shares and Ordinary Shares acquired in the
aftermarket owned by the undersigned.

     

    2.           In
the event that the Company fails to consummate a Business Combination
within 18 months from the consummation of the IPO, or 24 months if the
period is automatically extended (such date being referred to herein as the
“Termination Date”), the undersigned shall take all such action reasonably
within its power as is necessary to dissolve the Company and liquidate the Trust
Fund to holders of IPO Shares as soon as reasonably practicable, subject to any
applicable requirements of the Companies Law.  [The undersigned in
[his/her] capacity as a member of the board of directors of the Company hereby
agrees not to recommend to shareholders of the company to vote in favor of an
amendment to Article 156 of the Company’s Amended and Restated Memorandum and
Articles of Incorporation, if such amendment would take effect prior to the
consummation of a Business Combination.] The undersigned hereby waives any and
all right, title, interest or claim of any kind in or to any distribution of the
Trust Fund and any remaining net assets of the Company as a result of such
liquidation with respect to his Insider Shares, and his Placement Warrants
(“Claim”). The undersigned hereby agrees that he will not seek recourse against
the Trust Account for any Claim he may have in the future as a result of, or
arising out of, any negotiations, contracts or agreements with the Company and
will not seek recourse against the Trust Fund for any reason whatsoever, other
than liquidation distributions for any shares acquired by him in the
aftermarket.


    
      
         


      

      
         


        
          

        

      

      
         


      

    

    
    

    3.           The
undersigned agrees to indemnify and hold harmless the Company against any and
all loss, liability, claims, damage and expense whatsoever (including, but not
limited to, any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, whether pending or
threatened, or any claim whatsoever) which the Company may become subject as a
result of any claim by any vendor or other person who is owed money by the
Company for services rendered or products sold or contracted for, or by any
target business (“Third-Party Claimant”), but only to the extent necessary to
ensure that such loss, liability, claim, damage or expense does not reduce the
amount in the Trust Fund; provided, however, that the undersigned shall not be
required to so indemnify the Company if the Third-Party Claimant has waived its
right to proceed against the Trust Fund.  The undersigned further
agrees to advance such funds as are necessary to complete the plan of
dissolution and distribution, and not seek repayment thereof, if and to the
extent the Company’s assets outside of the Trust Fund are
insufficient.

     

    4.           In
order to minimize potential conflicts of interest which may arise from multiple
affiliations, the undersigned agrees to present to the Company for its
consideration, prior to presentation to any other person or entity, any suitable
opportunity to acquire a Target Business, until the earlier of the consummation
by the Company of a Business Combination, the liquidation of the Company or
until such time as the undersigned ceases to be a director of the Company,
subject to any pre-existing fiduciary and contractual obligations the
undersigned might have. The undersigned agrees that he will not become involved
with any other blank check company seeking to acquire a target business in
Greater China until after the Company has announced a Business
Combination.

     

    5.           To
further minimize potential conflicts of interest, the undersigned acknowledges
and agrees that the Company will not consummate any Business Combination with an
entity which is affiliated with any of its founding shareholders unless the
Company obtains an opinion from an independent investment banking firm that the
Business Combination is fair to the Company’s unaffiliated shareholders from a
financial point of view. In addition, the undersigned acknowledges and agrees
that, in the event that an entity which is affiliated with any of the Company’s
officers or directors (an “Affiliate”) purchases a minority interest in the
Target Business concurrently with the Business Combination, (i) the Affiliate
will be required to pay the same price per share or unit for their interest in
the Target Business as the Company pays, (ii) the other terms of the investment
of the Affiliate will be required to be no more favorable than the terms of the
Company’s investment, (iii) such investment will require the prior approval by a
majority of the Company’s disinterested directors, and (iv)  the proxy
materials disclosing the Business Combination would disclose the terms of the
co-investment by the Affiliate.


    
      
         


      

      
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    6.           Neither
the undersigned, any member of the family of the undersigned, nor any affiliate
(“Affiliate”) of the undersigned will be entitled to receive and will not accept
any compensation for services rendered to the Company prior to the consummation
of the Business Combination.  Notwithstanding the foregoing, the
undersigned shall be entitled to reimbursement from the Company for its
reasonable out-of-pocket expenses incurred in connection with identifying,
investigating and consummating a Business Combination and the undersigned
acknowledges that Kaiyuan Real Estate Development, an affiliate of the Company’s
Chairman (“Related
Party”), shall be allowed to charge the Company up to $7,500 per month to
compensate it for the Company’s use of Related Party’s office space, utilities
and secretarial services.

     

    7.           Neither
the undersigned, any member of the family of the undersigned, nor any Affiliate
of the undersigned will be entitled to receive or accept a finder’s fee or any
other compensation in the event the undersigned, any member of the family of the
undersigned or any Affiliate of the undersigned originates a Business
Combination.

     

    8.           The
undersigned will escrow half of his Insider Units until the date which is nine
(9) months after the date on which the Company consummates its initial Business
Combination and the undersigned will escrow the remaining half of his Insider
Units until the date which is one (1) year after the date on which the Company
consummates its initial Business Combination, in accordance with the terms of a
Share Escrow Agreement which the Company will enter into with the undersigned,
certain other holders of the Ordinary Shares and American Stock Transfer &
Trust Company, as escrow agent.

     

    9.           [The
undersigned agrees to be [a member of the Company’s board of directors] [and]
[the Company’s Insert Officer Position] [until the earlier of the consummation
by the Company of a Business Combination or the liquidation of the
Company.  The undersigned’s biographical information furnished to the
Company and Chardan and attached hereto as Exhibit A is true and accurate in all
respects, does not omit any material information with respect to the
undersigned’s background and contains all of the information required to be
disclosed pursuant to Item 401 of Regulation S-K, promulgated under the
Securities Act of 1933, as amended.]  The undersigned’s Questionnaire
furnished to the Company and Chardan is true and accurate in all
respects.  The undersigned represents and warrants that:

     

    (a)         The
undersigned is not subject to or a respondent in any legal action for, any
injunction, cease-and-desist order or order or stipulation to desist or refrain
from any act or practice relating to the offering of securities in any
jurisdiction;

     

    (b)         The
undersigned has never been convicted of or pleaded guilty to any crime (i)
involving any fraud or (ii) relating to any financial transaction or handling of
funds of another person, or (iii) pertaining to any dealings in any securities
and he is not currently a defendant in any such criminal proceeding;
and

     

    (c)         The
undersigned has never been suspended or expelled from membership in any
securities or commodities exchange or association or had a securities or
commodities license or registration denied, suspended or
revoked.


    
      
         


      

      
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    10.         [The
undersigned has full right and power, without violating any agreement by which
he is bound, to enter into this letter agreement and to serve as [a member of
the Company’s board of directors] [and] [the Company’s Insert Officer
Position].

     

    11.         This
letter agreement shall be governed by and construed and enforced 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
another jurisdiction.  The undersigned hereby (i) agrees that any
action, proceeding or claim against him arising out of or relating in any way to
this letter agreement (a “Proceeding”) shall be brought and enforced in the
courts of the State of New York of the United States of America for the Southern
District of New York, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive, (ii) waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum and (iii)
irrevocably agrees to appoint Loeb & Loeb LLP as agent for the service of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding.  If for any reason such
agent is unable to act as such, the undersigned will promptly notify the Company
and Chardan and appoint a substitute agent acceptable to each of the Company and
Chardan within 30 days and nothing in this letter will affect the right of
either party to serve process in any other manner permitted by
law.

     

    12.         As
used herein, (i) a “Business Combination” shall mean an acquisition by a stock
exchange, asset acquisition or other similar business combination, or
controlling, through contractual arrangements, of one or more Target Businesses
having a fair market value of at least 80% of the Company’s net assets at the
time of such acquisition; (ii) “Ordinary Shares” shall mean the Company’s
ordinary shares, par value $.001 per share; (iii) “Insiders” shall mean all
officers, directors and shareholders of the Company immediately prior to the
Private Placement; (iv) “Insider Shares” shall mean all of the Ordinary Shares
owned by an Insider prior to the Private Placement; (v) “Insider Units” shall
mean all of the units owned by an Insider prior to the Private Placement, each
unit consisting of one Ordinary Share and one-half of a warrant, each full
warrant entitling its holder to purchase one Ordinary Share; (vi) “IPO
Shares” shall mean the Ordinary Shares issued in the Company’s IPO; (vii)
“Private Placement” shall mean the private placement of securities of the
Company consummated immediately prior to the IPO; (viii) “Placement Warrants”
shall mean the warrants issued in the Private Placement; (ix) “Target Business”
shall mean an operating business that has its principal operations in the
Greater China region; (x) “Trust Fund” shall mean the trust account established
by the Company at the consummation of its IPO and into which a certain amount of
the net proceeds of the IPO is deposited, (xi) “Extended Period” shall mean
the 6 month extension to the time period within which the Company must
complete the Business Combination, which extension will become automatic upon
the Company entering into a letter of intent, agreement in principle or
definitive agreement with respect to a business combination within 18
months following the consummation of the IPO, and (xii) “Greater China” shall
mean the People’s Republic of China as well as the Hong Kong Special
Administrative Region, the Macau Special Administrative Region and
Taiwan.

    
    

    
      	 
      	
              By:

            	
                         

            	 
      
	 
      	
              Name:

            


    

    
    

    
      
         


      

      
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    EXHIBIT
A

    
    

    [Insert
Biographical Information from “Management” section of Final
Prospectus]

    
    

    
      
         


      

      
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