Document:

Form of Representative’s Purchase Option Agreement

 

THE REGISTERED HOLDER OF THIS PURCHASE OPTION BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS PURCHASE OPTION EXCEPT AS HEREIN PROVIDED AND THE REGISTERED HOLDER OF THIS PURCHASE OPTION AGREES THAT IT WILL NOT SELL, TRANSFER, ASSIGN, PLEDGE OR HYPOTHECATE THIS PURCHASE OPTION FOR A PERIOD OF ONE HUNDRED EIGHTY DAYS FOLLOWING THE EFFECTIVE DATE (DEFINED BELOW) TO ANYONE OTHER THAN (I) RODMAN & RENSHAW, LLC OR AN UNDERWRITER OR A SELECTED DEALER IN CONNECTION WITH THE OFFERING, OR (II) A BONA FIDE OFFICER OR PARTNER OF RODMAN &RENSHAW, LLC OR OF ANY SUCH UNDERWRITER OR SELECTED DEALER.

 

THIS PURCHASE OPTION IS NOT EXERCISABLE PRIOR TO THE LATER OF: (I) THIRTY DAYS AFTER THE CONSUMMATION OF AN ACQUISITION TRANSACTION, POST-ACQUISITION TRANSACTION OR POST-ACQUISITION AUTOMATIC TRUST LIQUIDATION (AS SUCH TERMS ARE DEFINED IN THE UNDERWRITING AGREEMENT, AS DEFINED HEREIN), AS THE CASE MAY BE, OR (II) ___________  ________________ [DATE THAT IS ONE YEAR FROM DATE OF PROSPECTUS]. VOID AFTER 5:00 P.M. EASTERN TIME, THE EARLIER OF (I) ___________________ [DATE THAT IS FIVE YEARS THE FROM DATE OF THE PROSPECTUS], OR THE DATE IN WHICH THIS PURCHASE OPTION IN ACCORDANCE IS REDEEMED IN ACCORDNACE WITH THE TERMS HEREOF.

 

UNIT PURCHASE OPTION

 

For the Purchase of  Units Consisting of

One Share of Common Stock and

One Warrant to Purchase Common Stock

of

SELWAY CAPITAL ACQUISITION CORPORATION

 

1.           Purchase Option. THIS CERTIFIES THAT, in consideration of funds duly paid by or on behalf of [ ]("Holder"), as registered owner of this Purchase Option, to Selway Capital Acquisition Corporation (the "Company"), Holder is entitled, at any time or from time to time from the later of: (i)  thirty days after the consummation of an Acquisition Transaction,  Post-Acquisition Tender Offer or Post-Acquisition Automatic Trust Liquidation, as the case may be, or (ii)  one year from ________________ [DATE THAT IS ONE YEAR FROM DATE OF PROSPECTUS] (the "Commencement Date"), and at or before 5:00p.m., Eastern Time, ending on the earlier of (i) ___________________ [DATE THAT IS FIVE YEARS THE FROM DATE OF THE PROSPECTUS], or (ii) the date in which this purchase warrant is redeemed, in accordance with the terms hereof (the "Expiration Date"), but not thereafter, to subscribe for, purchase and receive, in whole or in part, up to [____] Units of the Company, as described in the Prospectus of the Company dated the date hereof (the "Units") subject to adjustment as provided in Section 6 hereof. If the Expiration Date is a day on which banking institutions are authorized by law to close in New York City, then this Purchase Option may be exercised on the next succeeding day which is not such a day in accordance with the terms herein. During the period ending on the Expiration Date, the Company agrees not to take any action that would terminate this Purchase Option. This Purchase Option is initially exercisable at $12.50 per Unit; provided, however, that upon the occurrence of any of the events specified in Section 6 hereof, the rights granted by this Purchase Option, including the exercise price per Unit and the number of Units to be received upon such exercise, shall be adjusted as therein specified. The term "Exercise Price" shall mean the initial exercise price or the adjusted exercise price, depending on the context.

  

  

  

 

2.           Exercise.

 

2.1           Exercise Form. In order to exercise this Purchase Option, the exercise form attached hereto must be duly executed and completed and delivered to the Company, together with this Purchase Option and payment of the Exercise Price for the Units being purchased payable in cash by wire transfer of immediately available funds to an account designated by the Company or by certified check or official bank check. If the subscription rights represented hereby shall not be exercised at or before 5:00 p.m., Eastern time, on the Expiration Date, this Purchase Option shall become and be void without further force or effect, and all rights represented hereby shall cease and expire.

 

2.2           Cashless Exercise.  In lieu of exercising this Purchase Option by payment of cash or certified check or official bank check payable to the order of the Company pursuant to Section 2.1 above, Holder may elect to receive the number of Units equal to the value of this Purchase Option (or the portion thereof being exercised), by surrender of this Purchase Option to the Company, together with the exercise form attached hereto, in which event the Company shall issue to Holder Units in accordance with the following formula:

X      =     Y(A-B)

     A

	
Where,

	
X

	
=

	
The number of Units to be issued to Holder;

	  	
Y

	
=

	
The number of Units for which the Purchase Option is being exercised;

	  	
A

	
=

	
The fair market value of one Unit; and

	  	
B

	
=

	
The Exercise Price.

 

For purposes of this Section 2.2, the fair market value of a Unit is defined as follows:

 

(i)      if the Company’s Units are traded on a securities exchange, the value shall be deemed to be the average of the closing prices on such exchange or market over the thirty (30) day period ending three (3) days prior to the date of the exercise form being submitted in connection with the exercise of the Purchase Option; or

 

(ii)     if the Company’s Units are actively traded over-the-counter, the value shall be deemed to be the average of the closing bid prices over the thirty (30) day period ending three (3) days prior to the date of the exercise form being submitted in connection with the exercise of the Purchase Option; or

 

(iii)    if the Company’s Units are not actively traded but shares of the Company’s common stock (the “Shares”) are actively traded and the warrants that comprise or comprised a part of the Units (the “Warrants”) are actively traded, then a Unit shall be deemed to have a value equal to the value of the shares of common stock and Warrants underlying the Units; or

 

(iv)   if there is no active public market for either the Shares or the Warrants, the value of either or both, as applicable, shall be the fair market value thereof, as determined in good faith by the Company’s Board of Directors.

2.3           Legend. Each certificate for the securities purchased under this Purchase Option shall bear a legend as follows unless such securities have been registered under the Securities Act of 1933, as amended (the "Act"):

  

  

  

 

"The securities represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act") or applicable state law. Neither the securities nor any interest therein may be offered for sale, sold or otherwise transferred except pursuant to an effective registration statement under the Act, or pursuant to an exemption from registration under the Act and applicable state law which, in the opinion of counsel to the Company, is available."

 

3.           Transfer.

 

3.1           General Restrictions. The registered Holder of this Purchase Option agrees by his, her or its acceptance hereof, that such Holder will not: (a) sell, transfer, assign, pledge or  hypothecate this Purchase Option for a period of one hundred eighty (180) days following the  Effective Date to anyone other than: (i) Rodman & Renshaw, LLC ("Rodman & Renshaw") or an underwriter or a selected dealer participating in the Offering, or (ii) a bona fide officer or partner of Rodman & Renshaw or of any such underwriter or selected dealer, in each case in accordance with FINRA Conduct Rule 5110(g)(1), or (b) cause this Purchase Option or the securities issuable hereunder to be the subject of any hedging, short sale, derivative, put or call transaction that would result in the effective economic disposition of this Purchase Option or the securities hereunder, except as provided for in FINRA Rule 5110(g)(2). On and after 180 days from the Effective Date, transfers to others may be made subject to compliance with or exemptions from applicable securities laws. In order to make any permitted assignment, the Holder must deliver to the Company the assignment form attached hereto duly executed and completed, together with this Purchase Option and payment of all transfer taxes, if any, payable in connection therewith. The Company shall within five business days transfer this Purchase Option on the books of the Company and shall execute and deliver a new Purchase Option or Purchase Options of like tenor to the appropriate assignee(s) expressly evidencing the right to purchase the aggregate number of Units purchasable hereunder or such portion of such number as shall be contemplated by any such assignment.

 

3.2           Restrictions Imposed by the Act. The securities evidenced by this Purchase Option shall not be transferred unless and until: (i) the Company has received the opinion of counsel for the Holder that the securities may be transferred pursuant to an exemption from registration under the Act and applicable state securities laws, the availability of which is established to the reasonable satisfaction of the Company (the Company hereby agreeing that the opinion of Zysman, Aharoni Gayer and Sullivan & Worcester LLP shall be deemed satisfactory evidence of the availability of an exemption), or (ii) a registration statement or a post-effective amendment to the Registration Statement relating to the offer and sale of such securities has been filed by the Company and declared effective by the Securities and Exchange Commission (the "Commission") and compliance with applicable state securities law has been established.

  

  

  

 

4.           Registration Rights.

 

4.1           Demand Registration.

 

4.1.1        Grant of Right. The Company, upon written demand (a "Demand Notice") of the Holder(s) of at least 51% of the Shares underlying the Purchase Options (including Shares underlying the Warrants) and/or Shares previously issued upon exercise of the Purchase Options and/or the Warrants ("Majority Holders"), agrees to register, on one occasion, all or any portion of the Shares underlying the Purchase Options (including Shares underlying the Warrants) (collectively the "Registrable Securities"). On such occasion, the Company will file a registration statement with the SEC covering the Registrable Securities within sixty (60) days after receipt of a Demand Notice and use its reasonable best efforts to have the registration statement declared effective promptly thereafter, subject to compliance with review by the SEC; provided, however, that the Company shall not be required to comply with a Demand Notice if the Company has filed a registration statement with respect to which the Holder is entitled to piggyback registration rights pursuant to Section 4.2 hereof and either: (i) the Holder has elected to participate in the offering covered by such registration statement or (ii) if such registration statement relates to an underwritten primary offering of securities of the Company, until the offering covered by such registration statement has been withdrawn or until thirty (30) days after such offering is consummated. The demand for registration may be made at any time during a period of four (4) years beginning one (1) year from the Effective Date. The Company covenants and agrees to give written notice of its receipt of any Demand Notice by any Holder(s) to all other registered Holders of the Purchase Options and/or the Registrable Securities within ten (10) days from the date of the receipt of any such Demand Notice.

 

4.1.2        Terms. The Company shall bear all fees and expenses attendant to the registration of the Registrable Securities pursuant to Section 4.1.1, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities. The Company agrees to use its reasonable best efforts to cause the filing required herein to become effective promptly and to qualify or register the Registrable Securities in such States as are reasonably requested by the Holder(s); provided, however, that in no event shall the Company be required to register the Registrable Securities in a State in which such registration would cause: (i) the Company to be obligated to register or license to do business in such State or submit to general service of process in such State, or (ii) the principal shareholders of the Company to be obligated to escrow their shares of capital stock of the Company. The Company shall cause any registration statement filed pursuant to the demand right granted under Section 4.1.1 to remain effective for a period of at least twelve consecutive months from the date that the Holders of the Registrable Securities covered by such registration statement are first given the opportunity to sell all of such securities. The Holders shall only use the prospectuses provided by the Company to sell the shares covered by such registration statement, and will immediately cease to use any prospectus furnished by the Company if the Company advises the Holder that such prospectus may no longer be used due to a material misstatement or omission.

 

4.2           "Piggy-Back" Registration.

 

4.2.1        Grant of Right. In addition to the demand right of registration, described in Section 4.1 hereof the Holder shall have the right, for a period of four (4) years commencing one(1) year from the Closing Date, to include the Registrable Securities as part of any other registration of securities filed by the Company (other than in connection with a transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-8 or any equivalent form); provided, however, that if, solely in connection with any primary underwritten public offering for the account of the Company, the managing underwriter(s) thereof shall, in its reasonable discretion, impose a limitation on the number of shares of Common Stock which may be included in the Registration Statement because, in such underwriter(s)' judgment, marketing or other factors dictate such limitation is necessary to facilitate public distribution, then the Company shall be obligated to include in such Registration Statement only such limited portion of the Registrable Securities with respect to which the Holder requested inclusion hereunder as the underwriter shall reasonably permit. Any exclusion of Registrable Securities shall be made pro rata among the Holders seeking to include Registrable Securities in proportion to the number of Registrable Securities sought to be included by such Holders; provided, however, that the Company shall not exclude any Registrable Securities unless the Company has first excluded all outstanding securities, the holders of which are not entitled to inclusion of such securities in such Registration Statement or are not entitled to pro rata inclusion with the Registrable Securities.

  

  

  

 

4.2.2       Terms. The Company shall bear all fees and expenses attendant to registering the Registrable Securities pursuant to Section 4.2.1 hereof, but the Holders shall pay any and all underwriting commissions and the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities. In the event of such a proposed registration, the Company shall furnish the then Holders of outstanding Registrable Securities with not less than thirty (30) days written notice prior to the proposed date of filing of such registration statement. Such notice to the Holders shall continue to be given for each registration statement filed by the Company until such time as all of the Registrable Securities have been sold by the Holder. The holders of the Registrable Securities shall exercise the "piggy-back" rights provided for herein by giving written. notice, within ten (10) days of the receipt of the Company's notice of its intention to file a registration statement.

 

4.3           General Terms.

 

4.3.1        Indemnification. The Company shall indemnify the Holder(s) of the Registrable Securities to be sold pursuant to any registration statement hereunder and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20 (a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense or liability (including all reasonable attorneys' fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify the Underwriters contained in Section 5.1 of the Underwriting Agreement between the Underwriters and the Company, dated as of [_________________] (the “Underwriting Agreement”). The Holder(s) of the Registrable Securities to be sold pursuant to such registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, its officers and directors and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or liability (including all reasonable attorneys' fees and other expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, in writing, for specific inclusion in such registration statement to the same extent and with the same effect as the provisions contained in Section 5.2 of the Underwriting Agreement pursuant to which the Underwriters have agreed to indemnify the Company.

 

4.3.2        Exercise of Purchase Options. Nothing contained in this Purchase Option shall be construed as requiring the Holder(s) to exercise their Purchase Options prior to or after the initial filing of any registration statement or the effectiveness thereof.

 

4.3.3        Documents Delivered to Holders. The Company shall furnish to each Holder participating in any of the foregoing offerings and to each underwriter of any such offering, if any, a signed counterpart, addressed to such Holder or underwriter, of. (i) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under any underwriting agreement related thereto), and (ii) a "cold comfort" letter dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the Company's financial statements included in such registration statement, in each case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities. The Company shall also deliver promptly to each Holder participating in the offering requesting the correspondence and memoranda described below and to the managing underwriter, if any, copies of all correspondence between the SEC and the Company, its counsel or auditors and all memoranda relating to discussions with the SEC or its staff with respect to the registration statement and permit each Holder and underwriter to do such investigation, upon reasonable advance notice, with respect to information contained in or omitted from the registration statement as it deems reasonably necessary to comply with applicable securities laws or rules of FINRA. Such investigation shall include access to books, records and properties and opportunities to discuss the business of the Company with its officers and independent auditors, all to such reasonable extent and at such reasonable times as any such Holder shall reasonably request.  Notwithstanding the above, the Company shall not be obligated to provide a Holder with material nonpublic information under such Holder signed a non-disclosure agreement in form acceptable to the Company.

  

  

  

 

4.3.4        Underwriting Agreement. The Company shall enter into an underwriting agreement with the managing underwriter(s), if any, selected by any Holders whose Registrable Securities are being registered pursuant to this Section 4, which managing underwriter shall be reasonably satisfactory to the Company. Such agreement shall be reasonably satisfactory in form and substance to the Company, each Holder and such managing underwriters, and shall contain such representations, warranties and covenants by the Company and such other terms as are customarily contained in agreements of that type used by the managing underwriter. The Holders shall be parties to any underwriting agreement relating to an underwritten sale of their Registrable Securities and may, at their option, require that any or all the representations, warranties and covenants of the Company to or for the benefit of such underwriters shall also be made to and for the benefit of such Holders. Such Holders shall not be required to make any representations or warranties to or agreements with the Company or the underwriters except as they may relate to such Holders, their Shares and their intended methods of distribution and in such case agree to customary covenants and indemnification provisions for the benefit of the selling security holders.

 

4.3.5        Documents to be Delivered by Holder(s). Each of the Holder(s) participating in any of the foregoing offerings shall furnish to the Company a completed and executed questionnaire provided by the Company requesting information customarily sought of selling security holders, together with such other information as Company may reasonably request.

 

4.3.6        Damages. Should the registration or the effectiveness thereof required by Sections 4.1 and 4.2 hereof be delayed by the Company or the Company otherwise fails to comply with such provisions, the Holder(s) shall, in addition to any other legal or other relief available to the Holder(s), be entitled to obtain specific performance or other equitable (including injunctive) relief against the threatened breach of such provisions or the continuation of any such breach, without the necessity of proving actual damages and without the necessity of posting bond or other security.

 

5.           New Purchase Options to be Issued.

 

5.1           Partial Exercise or Transfer. Subject to the restrictions in Section 3 hereof, this Purchase Option may be exercised or assigned in whole or in part. In the event of the exercise or assignment hereof in part only, upon surrender of this Purchase Option for cancellation, together with the duly executed exercise or assignment form and funds sufficient to pay any Exercise Price and/or transfer tax if exercised pursuant to Section 2.1 hereto, the Company shall cause to be delivered to the Holder without charge a new Purchase Option of like tenor to this Purchase Option in the name of the Holder evidencing the right of the Holder to purchase the number of Units purchasable hereunder as to which this Purchase Option has not been exercised or assigned.

  

  

  

 

5.2           Lost Certificate. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Purchase Option and of reasonably satisfactory indemnification or the posting of a bond, the Company shall execute and deliver a new Purchase Option of like tenor and date. Any such new Purchase Option executed and delivered as a result of such loss, theft, mutilation or destruction shall constitute a substitute contractual obligation on the part of the Company.

 

6.           Adjustments.

 

6.1           Adjustments to Exercise Price and Number of Securities. The Exercise Price and the number of Units underlying the Purchase Option (including Shares underlying the Warrants, but without duplication of the adjustment provisions of the Warrants) shall be subject to adjustment from time to time as hereinafter set forth:

 

6.1.1        Share Dividends; Split Ups. If after the date hereof, and subject to the provisions of Section 6.3 below, the number of outstanding Shares is increased by a stock dividend payable in Shares or by a split up of Shares or other similar event, then, on the effective day thereof, the number of Units (or the number of Shares directly or indirectly underlying this Purchase Option) purchasable hereunder shall be increased in proportion to such increase in outstanding shares, and the Exercise Price shall be proportionately adjusted.

 

6.1.2        Aggregation of Shares. If after the date hereof, and subject to the provisions of Section 6.3, the number of outstanding Shares is decreased by a consolidation, combination or reclassification of Shares or other similar event, then, on the effective date thereof, the number of Units (or the number of Shares directly or indirectly underlying this Purchase Option) purchasable hereunder shall be decreased in proportion to such decrease in outstanding shares.

 

6.1.3        Replacement of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding Shares other than a change covered by Section 6.1.1 or 6.1.2 hereof or that solely affects the par value of such Shares, or in the case of any share reconstruction or amalgamation or consolidation of the Company with or into another corporation (other than a consolidation or share reconstruction or amalgamation in which the Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding Shares), or in the case of any sale or conveyance to another corporation or entity of the property of the Company as an entirety or substantially as an entirety in connection with which the Company is dissolved, the Holder of this Purchase Option shall have the right thereafter (until the expiration of the right of exercise of this Purchase Option) to receive upon the exercise hereof, for the same aggregate Exercise Price payable hereunder immediately prior to such event, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such reclassification, reorganization, share reconstruction or amalgamation, or consolidation, or upon a dissolution following any such sale or transfer, by a Holder of the number of Shares of the Company obtainable upon exercise of this Purchase Option (and without duplication, obtainable upon exercise of the Warrants) immediately prior to such event; and if any reclassification also results in a change in Shares covered by Section 6.1.1 or 6.1.2, then such adjustment shall be made pursuant to Sections 6.1.1, 6.1.2 and this Section 6.1.3. The provisions of this Section 6.1.3 shall similarly apply to successive reclassifications, reorganizations, share reconstructions or amalgamations, or consolidations, sales or other transfers.

 

6.1.4        Changes in Form of Purchase Option. This form of Purchase Option need not be changed because of any change pursuant to this Section 6.1, and Purchase Options issued after such change may state the same Exercise Price and the same number of Shares as are stated in the Purchase Options initially issued pursuant to this Agreement. The acceptance by any Holder of the issuance of new Purchase Options reflecting a required or permissive change shall not be deemed to waive any rights to an adjustment occurring after the Commencement Date or the computation thereof.

  

  

  

 

6.2           Substitute Purchase Option. In case of any consolidation of the Company with, or share reconstruction or amalgamation of the Company with or into, another corporation (other than a consolidation or share reconstruction or amalgamation which does not result in any reclassification or change of the outstanding Shares), the corporation formed by such consolidation or share reconstruction or amalgamation shall execute and deliver to the Holder a supplemental Purchase Option providing that the holder of each Purchase Option then outstanding or to be outstanding shall have the right thereafter (until the stated expiration of such Purchase Option) to receive, upon exercise of such Purchase Option, the kind and amount of shares of stock and other securities and property receivable upon such consolidation or share reconstruction or amalgamation, by a holder of the number of Units and underlying securities of the Company for which such Purchase Option might have been exercised immediately prior to such consolidation, share reconstruction or amalgamation, sale or transfer. Such supplemental Purchase Option shall provide for adjustments which shall be identical to the adjustments provided for in this Section 6. The above provision of this Section shall similarly apply to successive consolidations or share reconstructions or amalgamations.

 

6.3           Elimination of Fractional Interests. The Company shall not be required to issue certificates representing fractions of Shares upon the exercise of the Purchase Option, nor shall it be required to issue scrip or pay cash in lieu of any fractional interests, it being the intent of the parties that all fractional interests shall be eliminated by rounding any fraction up or down, as the case may be, to the nearest whole number of Shares or other securities, properties or rights.

 

7.           Reservation and Listing. The Company shall at all times reserve and keep available out of its authorized Shares, solely for the purpose of issuance upon exercise of the Purchase Options, such number of Shares or other securities, properties or rights as shall be issuable upon the exercise thereof. The Company covenants and agrees that, upon exercise of the Purchase Options and payment of the Exercise Price therefore, in accordance with the terms hereby, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder. The Company further covenants and agrees that upon exercise of the Purchase Options and payment of the exercise price therefore, all Shares and other securities issuable upon such exercise shall be duly and validly issued, fully paid and non-assessable and not subject to preemptive rights of any shareholder. As long as the Purchase Options shall be outstanding, the Company shall use its commercially reasonable efforts to cause all securities directly or indirectly issuable upon exercise of the Purchase Options to be listed (subject to official notice of issuance) on all securities exchanges (or, if applicable on the Nasdaq Global Market, Capital Market, OTC Bulletin Board or any successor trading market) on which the Units issued to the public in the Offering may then be listed and/or quoted.

 

8.           Certain Notice Requirements.

 

8.1           Holder's Right to Receive Notice. Nothing herein shall be construed as conferring upon the Holders the right to vote or consent or to receive notice as a shareholder for the election of directors or any other matter, or as having any rights whatsoever as a shareholder of the Company. If, however, at any time prior to the expiration of the Purchase Options and their exercise, any of the events described in Section 8.2 shall occur, then, in one or more of said events, the Company shall give written notice of such event at least fifteen days prior to the date fixed as a record date or the date of closing the transfer books for the determination of the shareholders entitled to such dividend, distribution, conversion or exchange of securities or subscription rights, or entitled to vote on such proposed dissolution, liquidation, winding up or sale. Such notice shall specify such record date or the date of the closing of the transfer books, as the case may be. Notwithstanding the foregoing, the Company shall deliver to each Holder a copy of each notice given to the other shareholders of the Company at the same time and in the same manner that such notice is given to the shareholders.

  

  

  

 

8.2           Events Requiring Notice. The Company shall be required to give the notice described in this Section 8 upon one or more of the following events: (i) if the Company shall take a record of the holders of its Shares for the purpose of entitling them to receive a dividend or distribution payable otherwise than in cash, or a cash dividend or distribution payable otherwise than out of retained earnings, as indicated by the accounting treatment of such dividend or distribution on the books of the Company, (ii) the Company shall offer to all the holders of its Shares any additional shares of capital stock of the Company or securities convertible into or exchangeable for shares of capital stock of the Company, or any option, right or warrant to subscribe therefore, or (iii) a dissolution, liquidation or winding up of the Company(other than in connection with a consolidation or share reconstruction or amalgamation) or a sale of all or substantially all of its property, assets and business shall be proposed.

 

8.3           Notice of Change in Exercise Price. The Company shall, promptly after an event requiring a change in the Exercise Price pursuant to Section 6 hereof, send notice to the Holders of such event and change ("Price Notice"). The Price Notice shall describe the event causing the change and the method of calculating same and shall be certified as being true and accurate by the Company's Chief Financial Officer.

 

8.4           Transmittal of Notices. All notices, requests, consents and other communications under this Purchase Option shall be in writing and shall be deemed to have been duly made when hand delivered, or mailed by express mail or private courier service: (i) if to the registered Holder of the Purchase Option, to the address of such Holder as shown on the books of the Company, or (ii) if to the Company, to following address or to such other address as the Company may designate by notice to the Holders:

 

Selway Capital Acquisition Corporation

74 Grand Avenue, 2nd Floor

Englewood, NJ 07631

Attention: Chief Executive Officer

 

With a copy to:

 

Loeb & Loeb LLP

345 Park Avenue

New York, New York 1015

Attention:  Mitchell S. Nussbaum and Giovanni Caruso

 

9.           Miscellaneous.

 

9.1           Amendments. The Company and Rodman & Renshaw may from time to time supplement or amend this Purchase Option without the approval of any of the Holders in order to cure any ambiguity, to correct or supplement any provision contained herein that may be defective or inconsistent with any other provisions herein, or to make any other provisions in regard to matters or questions arising hereunder that the Company and Rodman & Renshaw may deem necessary or desirable and that the Company and Rodman & Renshaw deem shall not adversely affect the interest of the Holders. All other modifications or amendments shall require the written consent of and be signed by the party against whom enforcement of the modification or amendment is sought.

  

  

  

 

9.2           Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Purchase Option.

 

9.3.          Entire Agreement. This Purchase Option (together with the other agreements and documents being delivered pursuant to or in connection with this Purchase Option) constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof.

 

9.4           Binding Effect. This Purchase Option shall inure solely to the benefit of and shall be binding upon, the Holder and the Company and their permitted assignees, respective successors, legal representative and assigns, and no other person shall have or be construed to have any legal or equitable right, remedy or claim under or in respect of or by virtue of this Purchase Option or any provisions herein contained.

 

9.5           Governing Law; Submission to Jurisdiction. This Purchase Option shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflict of laws principles thereof. The Company hereby agrees that any action, proceeding or claim against it arising out of, or relating in any way to this Purchase Option shall be brought and enforced in the New York Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any process or summons to be served upon the Company may be served by transmitting a copy thereof by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the address set forth in Section 8 hereof. Such mailing shall be deemed personal service and shall be legal and binding upon the Company in any action, proceeding or claim. The Company and the Holder agree that the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies) all of its reasonable attorneys' fees and expenses relating to such action or proceeding and/or incurred in connection with the preparation therefore.

 

9.6           Waiver, etc. The failure of the Company or the Holder to at any time enforce any of the provisions of this Purchase Option shall not be deemed or construed to be a waiver of any such provision, nor to in any way affect the validity of this Purchase Option or any provision hereof or the right of the Company or any Holder to thereafter enforce each and every provision of this Purchase Option. No waiver of any breach, non-compliance or non-fulfillment of any of the provisions of this Purchase Option shall be effective unless set forth in a written instrument executed by the party or parties against whom or which enforcement of such waiver is sought; and no waiver of any such breach, non-compliance or non-fulfillment shall be construed or deemed to be a waiver of any other or subsequent breach, non-compliance or non-fulfillment.

 

9.7           Execution in Counterparts. This Purchase Option may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement, and shall become effective when one or more counterparts has been signed by each of the parties hereto and delivered to each of the other parties hereto. Such counterparts may be delivered by facsimile transmission or other electronic transmission.

  

  

  

 

9.8           Exchange Agreement. As a condition of the Holder's receipt and acceptance of this Purchase Option, Holder agrees that, at any time prior to the complete exercise of this Purchase Option by Holder, if the Company and Rodman & Renshaw enter into an agreement ("Exchange Agreement") pursuant to which they agree that all outstanding Purchase Options will be exchanged for securities or cash or a combination of both, then Holder shall agree to such exchange and become a party to the Exchange Agreement.

 

[Remainder of page deliberately left blank.]

  

  

  

 

IN WITNESS WHEREOF, the Company has caused this Purchase Option to be signed by its duly authorized officer as of the ____ day of _______, 20___.

	
SELWAY CAPITAL ACQUISITION CORPORATION

	  
	
By:

	  
	
Name:

	
Title:

  

  

  

 

[Form to be used to exercise Purchase Option:

 

Date:                  ,                      20___

 

The undersigned hereby elects irrevocably to exercise the Purchase Option for [___] Units of Selway Capital Acquisition Corporation and hereby makes payment of $[_________] (at the rate of $[___________] per Unit) in payment of the Exercise Price pursuant thereto. Please issue the Units as to which this Purchase Option is exercised in accordance with the instructions given below and, if applicable, a new Purchase Option representing the number of Shares for which this Purchase Option has not been exercised.

 

or

 

The undersigned hereby elects irrevocably to convert its right to purchase [___] Units under the Purchase Option for [___] Shares, as determined in accordance with the following formula:

X        =        Y(A-B)

      A

	
Where,

	
X

	
=

	
The number of Units to be issued to Holder;

	  	
Y

	
=

	
The number of Units for which the Purchase Option is being exercised;

	  	
A

	
=

	
The fair market value of one Unit which is equal to $[____]; and

	  	
B

	
=

	
The Exercise Price which is equal to $[_____] per Unit

 

The undersigned agrees and acknowledges that the calculation set forth above is subject to confirmation by the Company and any disagreement with respect to the calculation shall be resolved by the Company in its sole discretion.

 

Please issue the Units as to which this Purchase Option is exercised in accordance with the instructions given below and, if applicable, a new Purchase Option representing the number of Shares for which this Purchase Option has not been converted.

Signature

 

Signature Guaranteed

  

  

  

 

INSTRUCTIONS FOR REGISTRATION OF SECURITIES

 

Name:

 

(Print in Block Letters)

 

Address:

 

NOTICE: The signature to this form must correspond with the name as written upon the face of the Purchase Option without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.

  

  

  

 

Form to be used to assign Purchase Option:

 

ASSIGNMENT

 

(To be executed by the registered Holder to effect a transfer of the within Purchase Option):

 

FOR VALUE RECEIVED,       does hereby sell, assign and transfer unto the right to purchase Units of Selway Capital Acquisition Corporation ("Company") evidenced by the Purchase Option and does hereby authorize the Company to transfer such right on the books of the Company.

 

Dated:    , 20__

 

Signature

 

Signature Guaranteed

 

NOTICE: The signature to this form must correspond with the name as written upon the face of the within Purchase Option without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank, other than a savings bank, or by a trust company or by a firm having membership on a registered national securities exchange.Unassociated Document

INVESTMENT MANAGEMENT TRUST AGREEMENT

 

This Agreement is made as of _________, 2011 by and between Selway Capital Acquisition Corporation (the “Company”) and American Stock Transfer & Trust Company, LLC, as trustee (the “Trustee”).

 

WHEREAS, the Company’s Registration Statement on Form S-1, No. 333-172714 (as amended from time to time) (“Registration Statement”), for its initial public offering of securities (“IPO”) has been declared effective as of the date hereof by the Securities and Exchange Commission (“Effective Date”); and

 

WHEREAS, [___] is acting as the representative (the “Representative”) of the underwriters in the IPO; and

 

WHEREAS, the Company has issued securities in a private placement that will occur immediately prior to the IPO (the “Placement”); and

 

WHEREAS, as described in the Company’s Registration Statement, and in accordance with the Company’s Amended and Restated Certificate of Incorporation, a maximum of $[__________] of the proceeds of the Placement and the IPO, net of all discounts and commissions including the Deferred Compensation (as defined below), if all of the IPO Shares are sold pursuant to a directed unit program (the “Directed Unit Program”) and if the over-allotment option is not exercised (or a minimum of $[_________] if the underwriters’ over-allotment option is exercised in full and no IPO Shares are sold pursuant to the Directed Unit Program) will be delivered to the Trustee to be deposited and held in a trust account (the “Trust Account”) for the benefit of the Company and the holders of the Company’s Series A shares of common stock, par value $0.0001 per share (the “Series A Shares”), issued in the IPO (the “IPO Shares”) as hereinafter provided, and in the event the units issued in the IPO are registered in Colorado, pursuant to Section 11-51-302(6) of the Colorado revised statutes (the “CRS”). A copy of Section 11-51-302(6) of the CRS is attached hereto and made a part hereof; and

 

WHEREAS, pursuant to the Underwriting Agreement, an additional $[_________] (or $[________] if the Representative’s over-allotment option is exercised in full) (or the amount specified in the notice delivered pursuant to Section 2(d) hereof), representing a portion of the underwriters’ discount (the “Deferred Compensation”) which the Representative, on behalf of the underwriters, has agreed to deposit into the Trust Account; and

 

WHEREAS, the amount to be delivered to the Trustee, including the proceeds of the IPO, the Placement and the Deferred Compensation (a maximum of $[_________] if all of the IPO Shares are sold pursuant to the Directed Unit Program and if the Representative's over-allotment option is not exercised (or a minimum of $[________], if the over-allotment option is exercised in full and no IPO Shares are sold pursuant to the Directed Unit Program) will be referred to herein as the “Property,” the holders of IPO Shares for whose benefit the Trustee shall hold the Property will be referred to as the “Public Shareholders;” and the Public Shareholders, the Representative and the Company will be referred to together as the “Beneficiaries;” and

 

WHEREAS, the Company and the Trustee desire to enter into this Agreement to set forth the terms and conditions pursuant to which the Trustee shall hold the Property;

 

 

  

  

  

 

 

IT IS AGREED:

 

1. Agreements and Covenants of Trustee.  The Trustee hereby agrees and covenants to:

 

(a) Hold the Property in trust for the Beneficiaries in accordance with the terms of this Agreement, including without limitation, the terms of Section 11-51-302(6) of the CRS, in a segregated trust account established by the Trustee at a branch of First Republic Bank;

 

(b) Manage, supervise and administer the Trust Account subject to the terms and conditions set forth herein;

 

(c) In a timely manner, upon the instruction of the Company, to invest and reinvest the Property in cash or any “Government Security.”  As used herein, Government Security means any Treasury Bill issued by the United States, having a maturity of 180 days or less or any open ended investment company registered under the Investment Company Act of 1940 that holds itself out as a money market fund meeting the conditions of Rule 2a-7 promulgated under the Investment Company Act of 1940;

 

(d) Collect and receive, when due, all principal and income arising from the Property, which shall become part of the “Property,” as such term is used herein;

 

(e) Notify the Company and the Representative of all communications received by it with respect to any Property requiring action by the Company;

 

(f) Supply any necessary information or documents as may be requested by the Company in connection with the Company’s preparation of the tax returns for the Trust Account;

 

(g) Participate in any plan or proceeding for protecting or enforcing any right or interest arising from the Property if, as and when instructed by the Company and/or the Representative to do so;

 

(h) Render to the Company and to the Representative, and to such other person as the Company may instruct, monthly written statements of the activities of and amounts in the Trust Account reflecting all receipts and disbursements of the Trust Account; and

 

(i) If there is any tax obligation relating to the Property in the Trust Account or to fund the working capital of the Company, then, only at the written instruction of the Company in a form substantially similar to that attached hereto as Exhibit A, to make available in cash or by check from the Property in the Trust Account an amount specified by the Company by electronic funds transfer, account debit or other method of payment; provided, however, that such distributions may only be made if and to the extent that interest has been earned on the amount initially deposited in the Trust Account sufficient to pay for such distribution (it being expressly understood that the principal of the Property shall not be used to pay any such distribution); and

 

(j) Commence liquidation of the Trust Account only after receipt of and only in accordance with the terms of a letter (“Termination Letter”), in a form substantially similar to that attached hereto as either Exhibit B, Exhibit C, Exhibit D or Exhibit E, signed on behalf of the Company by its Chief Executive Officer or Chief Financial Officer, and complete the liquidation of the Trust Account and disburse the Property in the Trust Account (which disbursement shall include, in the event of an Acquisition Transaction (as hereafter defined), Post-Acquisition Tender Offer (as hereinafter defined), a trust liquidation in the event the Company does not commence a Post-Acquisition Tender Offer within 30 days of the consummation of the Acquisition Transaction as required by its Amended and Restated Articles of Incorporation or a Post-Acquisition Automatic Trust Liquidation (as hereinafter defined), payment of the Deferred Compensation to the Representative) only as directed in the Termination Letter and the other documents referred to therein.  The Trustee understands and agrees that, except as provided in this paragraph and paragraphs 1(i), 1(k) and 6(a) hereof, disbursements from the Trust Account shall be made only pursuant to a duly executed Termination Letter, together with the other documents referenced herein.  For purposes of this Agreement, (i) an “Acquisition Transaction” shall mean an acquisition through a merger, stock exchange, asset acquisition, stock purchase or similar acquisition transaction of one or more operating businesses, (ii) a “Post-Acquisition Tender Offer” shall mean an issuer tender offer for all IPO Shares following the consummation of an Acquisition Transaction where the Company has elected to grant Public Shareholders their redemption rights by means of such issuer tender offer and (iii) a “Post-Acquisition Automatic Trust Liquidation” shall mean a liquidation of the Trust Account following the consummation of an Acquisition Transaction where each Share of Series B Common Stock is automatically converted into the right to receive a pro rata portion of the Trust Account;

 

(k) If the Company structures the Acquisition Transaction to require a Post-Acquisition Tender Offer, then it may, after a Current Report on Form 8-K describing the terms of the Acquisition Transaction is filed with the SEC, seek that holders of 5% or more of the Series A Shares who are also accredited investors elect to convert all of their Series A Shares into shares of Series C common stock (the “Series C Shares”) immediately prior to consummation of the Acquisition Transaction, with any remaining Series A Shares automatically converting to shares of Series B common stock (the “Series B Shares”) immediately following consummation of the Acquisition Transaction. The exchange ratio may be on a one-for-one basis, or at other exchange ratios to be negotiated with the individual shareholders. Such opportunity to convert would only be available to these certain shareholders, and not to our other holders of Series A Shares. Holders of shares of Series A Shares who elect to convert their shares into Series C Shares prior to consummation of the Acquisition Transaction shall not be entitled to participate in the Post-Acquisition Tender Offer, while holders of shares of Series A Shares that have their shares automatically converted to shares of Series B Shares shall be entitled to participate in the Post-Acquisition Tender Offer.  Upon written confirmation from the Company of the date of consummation of an Acquisition Transaction (the “Consummation Date”) and the conversion of Series A Shares into Series C Shares , in a form substantially similar to that attached hereto as Exhibit F, signed on behalf of the Company by its Chief Executive Officer or Chief Financial Officer, the Trustee shall distribute to the Company a pro rata share of the amounts in the Trust Account as of two business days prior to the Consummation Date in the Trust Account for each such share of Series A Shares converted to Series C Shares on the Consummation Date; and 

 

  

2

  

 

 

(l) Permit or effect no distribution from the Trust Account except in accordance with Sections 1(i), 1(j), 1(k) and 6(a).

 

2. Agreements and Covenants of the Company.  The Company hereby agrees and covenants to:

 

(a) Provide all instructions to the Trustee hereunder in writing, signed by the Company’s Chief Executive Officer or Chief Financial Officer.  In addition, except with respect to its duties under Section 1(i) above, the Trustee shall be entitled to rely on, and shall be protected in relying on, any verbal or telephonic advice or instruction which it in good faith believes to be given by the Chief Executive Officer or the Chief Financial Officer;

 

(b) Hold the Trustee harmless and indemnify the Trustee from and against any and all expenses, including reasonable counsel fees and disbursements, or loss suffered by the Trustee in connection with any action, suit or other proceeding brought against the Trustee involving any claim, or in connection with any claim or demand which in any way arises out of or relates to this Agreement, the services of the Trustee hereunder, or the Property or any income earned from investment of the Property, except for expenses and losses resulting from the Trustee’s gross negligence or willful misconduct.  Promptly after the receipt by the Trustee of notice of demand or claim or the commencement of any action, suit or proceeding, pursuant to which the Trustee intends to seek indemnification under this paragraph, it shall notify the Company in writing of such claim (hereinafter referred to as the “Indemnified Claim”).  The Trustee shall have the right to conduct and manage the defense against such Indemnified Claim, provided, that the Trustee shall obtain the consent of the Company with respect to the selection of counsel, which consent shall not be unreasonably withheld.  The Trustee may not agree to settle any Indemnified Claim without the prior written consent of the Company.  The Company may participate in such action with its own counsel;

 

(c) Pay the Trustee an initial acceptance fee of $[__] and an annual fee of $[__] (it being expressly understood that the Property shall not be used to pay such fee).  The Company shall pay the Trustee the initial acceptance fee and first year’s fee at the consummation of the IPO and shall thereafter pay the annual fee on the anniversary of the Effective Date.  The Trustee shall refund to the Company the fee (on a pro rata basis) with respect to any period after the liquidation of the Trust Fund.  The Company shall not be responsible for any other fees or charges of the Trustee except as may be provided in Section 2(b) hereof (it being expressly understood that the Property shall not be used to make any payments to the Trustee under such Section) and for accountable out-of-pocket expenses actually incurred by the Trustee acting as Trustee of the Property in accordance with this Agreement;

 

  

3

  

 

(d) Within five business days after the Representative’s over-allotment option (or any unexercised portion thereof) expires or is exercised in full, provide the Trustee notice in writing (with a copy to the Representative) of the total amount of the Deferred Compensation, which shall in no event be less than $[_____]; and

 

(e) In connection with a vote of the Company’s shareholders regarding a Acquisition Transaction, if any, provide to the Trustee an affidavit or certificate of a firm regularly engaged in the business of soliciting proxies and tabulating shareholder votes verifying the vote of the Company’s shareholders and the Company’s Public Shareholders regarding such Acquisition Transaction.

 

3. Limitations of Liability.  The Trustee shall have no responsibility or liability to:

 

(a) Take any action with respect to the Property, other than as directed in Section 1 hereof and the Trustee shall have no liability to any party except for liability arising out of its own gross negligence or willful misconduct;

 

(b) Institute any proceeding for the collection of any principal and income arising from, or institute, appear in or defend any proceeding of any kind with respect to, any of the Property unless and until it shall have received written instructions from the Company given as provided herein to do so and the Company shall have advanced or guaranteed to it funds sufficient to pay any expenses incident thereto;

 

(c) Change the investment of any Property, other than in compliance with Section 1(c);

 

(d) Refund any depreciation in principal of any Property;

 

(e) Assume that the authority of any person designated by the Company or the Representative to give instructions hereunder shall not be continuing unless provided otherwise in such designation, or unless the Company or the Representative shall have delivered a written revocation of such authority to the Trustee;

 

(f) The other parties hereto or to anyone else for any action taken or omitted by it, or any action suffered by it to be taken or omitted, in good faith and in the exercise of its own best judgment, except for its gross negligence or willful misconduct.  The Trustee may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Trustee), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Trustee, in good faith, to be genuine and to be signed or presented by the proper person or persons.  The Trustee shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement or any of the terms hereof, unless evidenced by a written instrument delivered to the Trustee signed by the proper party or parties and, if the duties or rights of the Trustee are affected, unless it shall give its prior written consent thereto;

 

(g) Verify the correctness of the information set forth in the Registration Statement or to confirm or assure that any acquisition made by the Company or any other action taken by it is as contemplated by the Registration Statement, unless an officer of the Trustee has actual knowledge thereof, or written notice of such event is sent to the Trustee or as otherwise required under Section 1(j) hereof; and

 

  

4

  

 

(h) Pay any taxes on behalf of the Trust Account (it being expressly understood that, as set forth in Section 1(i), if there is any income tax obligation relating to the income of the Property in the Trust Account, then, at the written instruction of the Company, the Trustee shall make available by check or in cash for transfer by account debit or wire in the amount indicated by the Company).

 

4. Certain Rights Of Trustee.

 

(a) Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or opinion of counsel or both. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officer’s Certificate or opinion of counsel. The Trustee may consult with counsel and the advice of such counsel or any opinion of counsel shall be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

 

(b) The Trustee may act through its attorneys and agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

 

(c) The Trustee shall not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Agreement.

 

(d) The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Agreement; it shall not be accountable for the Company’s use of the proceeds from the Trust Account. Notwithstanding the effective date of this Agreement or anything to the contrary contained in this Agreement, the Trustee shall have no liability or responsibility for any act or event relating to this Agreement or the transactions related thereto which occur prior to the date of this Agreement, and shall have no contractual obligations to the Beneficiaries until the date of this Agreement.

 

5. No Right of Set-Off.   The Trustee waives any right of set-off or any right, title, interest or claim of any kind that the Trustee may have against the Property held in the Trust Account.  In the event that the Trustee has a claim against the Company under this Agreement, including, without limitation, under Section 2(b), the Trustee will pursue such claim solely against the Company and not against the Property held in the Trust Account.

 

6. Termination.  This Agreement shall terminate as follows:

 

(a) If the Trustee gives written notice to the Company that it desires to resign under this Agreement, the Company shall use its reasonable efforts to locate a successor trustee.  At such time that the Company notifies the Trustee that a successor trustee has been appointed by the Company and has agreed to become subject to the terms of this Agreement, the Trustee shall transfer the management of the Trust Account to the successor trustee, including but not limited to the transfer of copies of the reports and statements relating to the Trust Account, whereupon this Agreement shall terminate; provided, however, that, in the event that the Company does not locate a successor trustee within [ninety] days of receipt of the resignation notice from the Trustee, the Trustee may submit an application to have the Property deposited with the United States District Court for the Southern District of New York and upon such deposit, the Trustee shall be immune from any liability whatsoever that arises due to any actions or omissions to act by any party after such deposit; or

 

  

5

  

 

(b) At such time that the Trustee has completed the liquidation of the Trust Account in accordance with the provisions of Section 1(j) hereof, and distributed the Property in accordance with the provisions of the Termination Letter, this Agreement shall terminate except with respect to Section 2(b).

 

7. Miscellaneous.

 

(a) The Company and the Trustee will each restrict access to confidential information relating to such security procedures to authorized persons.  Each party must notify the other party immediately if it has reason to believe unauthorized persons may have obtained access to such information, or of any change in its authorized personnel.  In executing funds transfers, the Trustee will rely upon account numbers or other identifying numbers of a Beneficiary, Beneficiary’s bank or intermediary bank, rather than names.  The Trustee shall not be liable for any loss, liability or expense resulting from any error in an account number or other identifying number, provided it has accurately transmitted the numbers provided.

 

(b) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.  It may be executed in several counterparts, each one of which shall constitute an original, and together shall constitute but one instrument.

 

(c) This Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof.  This Agreement or any provision hereof may only be changed, amended or modified by a writing signed by each of the parties hereto; provided, however, that no such change, amendment or modification (other than to correct a typographical or similar technical error) may be made to Sections 1(i), 1(j), 1(k), and 1(l) hereof without the consent of the holders of 80% of the IPO Shares, it being the specific intention of the parties hereto that each Public Shareholder is and shall be a third-party beneficiary of this Section 7(c) with the same right and power to enforce this Section 7(c) as either of the parties hereto.  For purposes of this Section 7(c), the “consent of the holders of 80% of the IPO Shares” shall mean receipt by the Trustee of a certificate from an entity certifying that (i) such entity regularly engages in the business of serving as inspector of elections for companies whose securities are publicly traded, and (ii) either (a) the holders of record of 80% of the IPO Shares of record as of a record date established in accordance with the applicable provisions of the Delaware General Corporation Law (the “DGCL”), have voted in favor of such amendment or modification or (b) the holders of record of 80% of the IPO Shares of record as of a record date established in accordance with the applicable provisions of the DGCL have delivered to such entity a signed writing approving such amendment or modification.

 

(d) As to any claim, cross-claim or counterclaim in any way relating to this Agreement, each party waives the right to trial by jury.

 

(e) The parties hereto consent to the jurisdiction and venue of any state or federal court located in the City of New York, Borough of Manhattan, for purposes of resolving any disputes hereunder.

 

  

6

  

 

(f) Any notice, consent or request to be given in connection with any of the terms or provisions of this Agreement shall be in writing and shall be sent by express mail or similar private courier service, by certified mail (return receipt requested), by hand delivery or by facsimile transmission:

 

if to the Trustee, to:

 

American Stock Transfer & Trust Company, LLC

59 Maiden Lane

New York, New York 10038

Attn: Compliance Department

Fax No.: (718) 921-8355

 

if to the Company, to:

 

Selway Capital Acquisition Corporation

74 Grand Avenue, 2nd Floor

Englewood, NJ 07631

Attn: Yaron Eitan, Chief Executive Officer

Fax No.: (201) 541-1084

 

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

 

Rodman & Renshaw, LLC

[Address]

Attn: [Name, Title]

Fax No.: [__]

 

and

 

Z.A.G./S&W LLP

1290 Avenue of the Americas

29th Floor

New York, New York 10104 

Attn: Oded Har - Even

Fax .: (212) 660-3001

 

and

 

Loeb & Loeb LLP

345 Park Avenue

New York, New York 10154

Attn: Mitchell S. Nussbaum, Esq.

Fax No.: (212) 407-4990

 

(g) This Agreement may not be assigned by the Trustee without the prior written consent of the Company.

 

(h) Each of the Trustee and the Company hereby represents that it has the full right and power and has been duly authorized to enter into this Agreement and to perform its respective obligations as contemplated hereunder.  The Trustee acknowledges and agrees that it shall not make any claims or proceed against the Trust Account, including by way of set-off, and shall not be entitled to any funds in the Trust Account under any circumstance.

 

[Signature page follows]

  

7

  

 

IN WITNESS WHEREOF, the parties have duly executed this Investment Management Trust Agreement as of the date first written above.

 

	 	
AMERICAN STOCK TRANSFER & TRUST COMPANY, LLC, as Trustee

	 	  
	 	
By:

	  
	 	
Name:

	  
	 	
Title:

	  
	 	  
	 	
SELWAY CAPITAL ACQUISITION CORPORATION

	 	  
	 	
By:

	  
	 	
Name:

	
Yaron Eitan

	 	
Title:

	
Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Investment Management

 

Trust Agreement

  

8

  

 

EXHIBIT A

 

[Letterhead of Company]

 

[Insert date]

 

American Stock Transfer

 

& Trust Company, LLC

 

59 Maiden Lane

 

New York, New York 10038

 

Attn:

 

Re:           Trust Account No. [                    ]

 

Gentlemen:

 

Pursuant to paragraph 1(i) of the Investment Management Trust Agreement between Selway Capital Acquisition Corporation (“Company”) and American Stock Transfer & Trust Company, LLC (“Trustee”), dated as of _________, 2011 (“Trust Agreement”), the Company hereby requests that you deliver to the Company $_______ of the income earned on the Property as of the date hereof. The Company needs such funds [for working capital purposes] [to pay for the tax obligations as set forth on the attached tax return or tax statement]. In accordance with the terms of the Trust Agreement, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter to the Company’s operating account at:

 

[WIRE INSTRUCTION INFORMATION]

 

	 	
Very truly yours,

	 	  
	 	
SELWAY CAPITAL ACQUISITION CORPORATION

	 	  
	 	
By:

	  
	 	
Name:

	  
	 	
Title:

	  

 

	 	  	  

  

9

  

 

EXHIBIT B

 

[Letterhead of Company]

 

[Insert date]

 

American Stock Transfer

 

& Trust Company, LLC

 

59 Maiden Lane

 

New York, New York 10038

 

Attn:

 

Re:           Trust Account No. [                    ] Termination Letter

 

Gentlemen:

 

Pursuant to Section 1(j) of the Investment Management Trust Agreement between Selway Capital Acquisition Corporation (“Company”) and American Stock Transfer & Trust Company, LLC (“Trustee”), dated as of ______, 2011 (“Trust Agreement”), this is to advise you that the Company has entered into an agreement (“Business Agreement”) with __________________ (“Target Business”) to consummate an acquisition transaction with Target Business (“Acquisition Transaction”) on or about [insert date] and has elected to grant Public Shareholders their redemption rights at the time of the consummation of the Acquisition Transaction.  The Company shall notify you at least 48 hours in advance of the actual date of the consummation of the Acquisition Transaction (“Consummation Date”) and shall provide you with a certificate or affidavit [in accordance with Section 2(e) of the Trust Agreement][verifying that a vote of shareholders is not required].  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Trust Agreement.

 

In accordance with the terms of the Trust Agreement, we hereby authorize you to commence liquidation of the Trust Account to the effect that, on the Consummation Date, all of funds held in the Trust Account will be immediately available for transfer to the account or accounts that the Company shall direct on the Consummation Date.

 

On the Consummation Date (i) counsel for the Company shall deliver to you written notification that (a) the Acquisition Transaction has been consummated and [(b) the provisions of Section 11-51-302(6) and Rule 51-3.4 of the CRS have been met,] and (ii) the Company and the Representative shall deliver to you written instructions with respect to the transfer of the funds held in the Trust Account (“Instructions”), and (iii) the Company and the Representative shall deliver to you written instructions for delivery of the Deferred Compensation.  You are hereby directed and authorized to transfer the funds, including the Deferred Compensation, held in the Trust Account immediately upon your receipt of the counsel’s letter and the Instructions, in accordance with the terms of the Instructions.  Notwithstanding the foregoing, upon verification of receipt by you of the Instruction Letter, we hereby agree and acknowledge that the Property in the Trust Account shall be distributed as follows: (1) first, to Public Shareholders who exercised their redemption rights in connection with the Acquisition Transaction, in an amount equal to their pro rata share of the amounts in the Trust Account as of two business days prior to the Consummation Date (including the Deferred Compensation and accrued but undistributed income, net of (i) taxes payable, and (ii) interest income earned previously released to the Company); (2) to the Representative by wire transfer (or as otherwise directed by the Representative) in immediately available funds, the aggregate amount of $__________; and (3) thereafter, to any other Beneficiary in accordance with the terms of the Instructions. In the event that certain deposits held in the Trust Account may not be liquidated by the Consummation Date without penalty, you will notify the Company of the same and the Company, if the amount set forth in clause (1) shall not have been paid in full, the Company and shall issue written instructions directing you as to whether such funds should remain in the Trust Account and be distributed after the Consummation Date to the Company.  Upon the distribution of all funds in the Trust Account pursuant to the terms hereof, the Trust Agreement shall be terminated.

 

 

  

10

  

 

In the event that the Acquisition Transaction is not consummated on the Consummation Date described in the notice thereof and we have not notified you on or before the original Consummation Date of a new Consummation Date, then the funds held in the Trust Account shall be reinvested as provided in the Trust Agreement on the business day immediately following the Consummation Date as set forth in the notice.

 

	 	
Very truly yours,

	 	  
	 	
SELWAY CAPITAL ACQUISITION CORPORATION

	 	  
	 	
By:

	  
	 	
Name:

	  
	 	
Title:

	  

	 	  	  

  

11

  

 

EXHIBIT C

 

[Letterhead of Company]

 

[Insert date]

 

American Stock Transfer

 

& Trust Company, LLC

 

59 Maiden Lane

 

New York, New York 10038

 

Attn:

 

Re:           Trust Account No. [                    ] Termination Letter

 

Gentlemen:

 

Pursuant to Section 1(j) of the Investment Management Trust Agreement between Selway Capital Acquisition Corporation (“Company”) and American Stock Transfer & Trust Company, LLC (“Trustee”), dated as of ______, 2011 (“Trust Agreement”), this is to advise you that the Company entered into an agreement (“Business Agreement”) with __________________ (“Target Business”) and consummated an acquisition transaction with Target Business (“Acquisition Transaction”) on [insert date] and has elected to grant Public Shareholders their redemption rights following the consummation of the Acquisition Transaction pursuant to a Post-Acquisition Tender Offer.  The Company shall notify you at least 48 hours in advance of the actual date of the consummation of the Post-Acquisition Tender Offer (“Consummation Date”) and shall provide you with a certificate or affidavit [in accordance with Section 2(e) of the Trust Agreement][verifying that a vote of shareholders is not required].  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Trust Agreement.

 

In accordance with the terms of the Trust Agreement, we hereby authorize you to commence liquidation of the Trust Account to the effect that, on the Consummation Date, all of funds held in the Trust Account will be immediately available for transfer to the account or accounts that the Company shall direct on the Consummation Date.

 

On the Consummation Date (i) counsel for the Company shall deliver to you written notification that (a) the Acquisition Transaction has been consummated and [(b) the provisions of Section 11-51-302(6) and Rule 51-3.4 of the CRS have been met,] and (ii) the Company and the Representative shall deliver to you written instructions with respect to the transfer of the funds held in the Trust Account (“Instructions”), and (iii) the Company and the Representative shall deliver to you written instructions for delivery of the Deferred Compensation.  You are hereby directed and authorized to transfer the funds, including the Deferred Compensation, held in the Trust Account immediately upon your receipt of the counsel’s letter and the Instructions, in accordance with the terms of the Instructions.  Notwithstanding the foregoing, upon verification of receipt by you of the Instruction Letter, we hereby agree and acknowledge that the Property in the Trust Account shall be distributed as follows: (1) first, to Public Shareholders who exercised their redemption rights in connection with the Post-Acquisition Tender Offer, in an amount equal to their pro rata share of the amounts in the Trust Account as of two business days prior to the Consummation Date (including the Deferred Compensation and accrued but undistributed income, net of (i) taxes payable, and (ii) interest income earned previously released to the Company); (2) to the Representative by wire transfer (or as otherwise directed by the Representative) in immediately available funds, the aggregate amount of $__________; and (3) thereafter, to any other Beneficiary in accordance with the terms of the Instructions. In the event that certain deposits held in the Trust Account may not be liquidated by the Consummation Date without penalty, you will notify the Company of the same and the Company, if the amount set forth in clause (1) shall not have been paid in full, the Company and shall issue written instructions directing you as to whether such funds should remain in the Trust Account and be distributed after the Consummation Date to the Company.  Upon the distribution of all funds in the Trust Account pursuant to the terms hereof, the Trust Agreement shall be terminated.

 

 

  

12

  

 

In the event that the Post-Acquisition Tender Offer is not consummated on the Consummation Date described in the notice thereof and we have not notified you on or before the original Consummation Date of a new Consummation Date, then the funds held in the Trust Account shall be reinvested as provided in the Trust Agreement on the business day immediately following the Consummation Date as set forth in the notice.

 

	 	
Very truly yours,

	 	  
	 	
SELWAY CAPITAL ACQUISITION CORPORATION

	 	  
	 	
By:

	  
	 	
Name:

	  
	 	
Title:

	  

	 	  	  

  

13

  

 

EXHIBIT D

 

[Letterhead of Company]

 

[Insert date]

 

American Stock Transfer

 

& Trust Company, LLC

 

59 Maiden Lane

 

New York, New York 10038

 

Attn:

 

Re:           Trust Account No. [                    ] Termination Letter

 

Gentlemen:

 

Pursuant to Section 1(j) of the Investment Management Trust Agreement between Selway Capital Acquisition Corporation (“Company”) and American Stock Transfer & Trust Company, LLC (“Trustee”), dated as of ______, 2011 (“Trust Agreement”), this is to advise you that the Company entered into an agreement (“Business Agreement”) with __________________ (“Target Business”) and consummated an acquisition transaction with Target Business (“Acquisition Transaction”) on [insert date] and has [elected to grant Public Shareholders their redemption rights following consummation of the Acquisition Transaction pursuant to a Post-Acquisition Automatic Trust Liquidation] [not initiated and will not initiate a Post-Acquisition Tender Offer within 30 days of the closing of the Acquisition Transaction] and accordingly is required to liquidate the trust account and distribute to Public Shareholders a pro rata portion of the Trust Account within 5 business days (such date, the “Trust Liquidation Date”).  The Company shall notify you at least 48 hours in advance of the actual Trust Liquidation Date.  Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Trust Agreement.

 

In accordance with the terms of the Trust Agreement, we hereby authorize you to commence liquidation of the Trust Account to the effect that, on the Trust Liquidation Date, all of funds held in the Trust Account will be immediately available for transfer to the account or accounts that the Company shall direct on the Trust Liquidation Date.

 

On the Trust Liquidation Date (i) the Company and the Representative shall deliver to you written instructions with respect to the transfer of the funds held in the Trust Account (“Instructions”), and (ii) the Company and the Representative shall deliver to you written instructions for delivery of the Deferred Compensation.  You are hereby directed and authorized to transfer the funds, including the Deferred Compensation, held in the Trust Account immediately upon your receipt of the Instructions, in accordance with the terms of the Instructions.  Notwithstanding the foregoing, upon verification of receipt by you of the Instruction Letter, we hereby agree and acknowledge that the Property in the Trust Account shall be distributed as follows: (1) first, to Public Shareholders who have not waived their redemption rights prior to the Trust Liquidation Date, in an amount equal to their pro rata share of the amounts in the Trust Account as of two business days prior to the Trust Liquidation Date (including the Deferred Compensation and accrued but undistributed income, net of (i) taxes payable, and (ii) interest income earned previously released to the Company); (2) to the Representative by wire transfer (or as otherwise directed by the Representative) in immediately available funds, the aggregate amount of $__________; and (3) thereafter, to any other Beneficiary in accordance with the terms of the Instructions. In the event that certain deposits held in the Trust Account may not be liquidated by the Consummation Date without penalty, you will notify the Company of the same and the Company, if the amount set forth in clause (1) shall not have been paid in full, the Company and shall issue written instructions directing you as to whether such funds should remain in the Trust Account and be distributed after the Consummation Date to the Company.  Upon the distribution of all funds in the Trust Account pursuant to the terms hereof, the Trust Agreement shall be terminated.

 

 

  

14

  

 

In the event that the Trust Liquidation is not consummated on the Trust Liquidation Date described in the notice thereof and we have not notified you on or before the original Trust Liquidation Date of a new Trust Liquidation Date, then the funds held in the Trust Account shall be reinvested as provided in the Trust Agreement on the business day immediately following the Trust Liquidation Date as set forth in the notice.

 

	 	
Very truly yours,

	 	  
	 	
SELWAY CAPITAL ACQUISITION CORPORATION

	 	  
	 	
By:

	  
	 	
Name:

	  
	 	
Title:

	  

	 	  	  

  

15

  

 

EXHIBIT E

 

 [Letterhead of Company]

 

[Insert date]

 

American Stock Transfer & Trust Company, LLC

 

59 Maiden Lane

 

New York, New York 10038

 

Attn:

 

Re:            Trust Account No. [                    ] Termination Letter 

Gentlemen:

 

Pursuant to Section 1(j) of the Investment Management Trust Agreement between Selway Capital Acquisition Corporation (“Company”) and American Stock Transfer & Trust Company, LLC (“Trustee”), dated as of ________, 2011 (“Trust Agreement”), this is to advise you that the Board of Directors of the Company has adopted a plan of dissolution and liquidation relating to the winding up of the affairs of the Company and liquidation of the Trust Account (as defined in the Trust Agreement). Attached hereto is a copy of the minutes, including a copy of the plan of dissolution and liquidation, of the meeting of the Board of Directors of the Company relating thereto, certified by an executive officer of the Company as true and correct and in full force and effect.

 

In accordance with the terms of the Trust Agreement, we hereby (a) certify to you that, if applicable, the provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado Statute have been met and (b) authorize you to commence liquidation of the Trust Account as part of the Company’s plan of dissolution and distribution.  In connection with this liquidation, you are hereby authorized to establish a record date for the purposes of determining the shareholders of record entitled to receive their per share portion of the Trust Account.  The record date shall be within ten (10) days of the liquidation date, or as soon as thereafter as is practicable.  You will notify the Company and ______________ (“Designated Paying Agent”) in writing as to when all of the funds in the Trust Account will be available for immediate transfer (“Transfer Date”).  The Designated Paying Agent shall thereafter notify you as to the account or accounts of the Designated Paying Agent that the funds in the Trust Account should be transferred to on the Transfer Date so that the Designated Paying Agent may commence distribution of such funds in accordance with the terms of the Trust Agreement and the Company’s Amended and Restated Certificate of Incorporation.  Upon the payment of all the funds in the Trust Account, the Trust Agreement shall be terminated and the Trust Account closed.

 

	 	
Very truly yours,

	 	  
	 	
SELWAY CAPITAL ACQUISITION CORPORATION

	 	  
	 	
By:

	  
	 	
Name:

	  
	 	
Title:

	  

 

  

16

  

 

EXHIBIT F

 

[Letterhead of Company]

 

[Insert date]

 

American Stock Transfer & Trust Company, LLC

59 Maiden Lane

New York, New York 10038

Attn:

 

Re:           Trust Account No. [             ]

 

Gentlemen:

 

Pursuant to Section 1(k) of the Investment Management Trust Agreement between Selway Capital Acquisition Corporation (“Company”) and American Stock Transfer & Trust Company, LLC (“Trustee”), dated as of ________, 2011 (“Trust Agreement”), this is to advise you that the Company entered into an agreement (“Business Agreement”) with __________________ (“Target Business”) and consummated an acquisition transaction with Target Business (“Acquisition Transaction”) on [insert date] (the “Consummation Date”), and in connection with the Acquisition Transaction an aggregate of [_______] shares of Series A common stock have been converted to shares of Series C common stock.

 

In accordance with the terms of the Trust Agreement, we hereby (a) certify to you that, if applicable, the provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado Statute have been met and (b) instruct you to deliver an aggregate of $[______] from the proceeds held in trust, representing a pro rata share of the amounts in the Trust Account as of two business days prior to the Consummation Date in the Trust Account for each share of Series A common stock converted to Series C common stock on the Consummation Date.

	
Very truly yours,

	  
	
SELWAY CAPITAL ACQUISITION

CORPORATION

	  
	
By:

	  
	
Name:  

	  
	
Title:

	  

 

  

17

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