Document:

Unassociated Document

 

PLACEMENT WARRANT PURCHASE AGREEMENT

 

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

 

WHEREAS, the Company has filed with the Securities and Exchange Commission (“SEC”) a registration statement on Form S-1, as amended (File No. 333-172714) (the “Registration Statement”), in connection with the Company’s initial public offering (the “IPO”) of up to 2,750,000 units, each unit (“Unit”) consisting of one (1) Series A Share of common stock of the Company, $0.0001 par value (the “Series A Shares”), and (ii) one (1) warrant (the “Warrants”) to purchase one share of common stock; and

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

  

  

  

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

[Signature Page Follows]

 

  

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

 

	  	
SELWAY CAPITAL ACQUISITION

CORPORATION

	  	  
	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  

	  	
Purchaser:

	  	
SELWAY CAPITAL HOLDINGS, LLC

	 	 
	  	
By:

	  
	  	
Name:

	  
	  	
Title:

	  

 

Placement Warrant Purchase Agreement

 

  

3Unassociated Document

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

PROMISSORY NOTE

 

	
Principal Amount: $5,500.00

	
Dated as of October 14, 2011

 

Selway Capital Acquisition Corp., a blank check company formed as a Delaware limited liability corporation promises to pay to the order of Selway Capital Holdings LLC or its registered assigns or successors in interest (the “Payee”), or order, the principal sum of fifteen thousand dollars ($5,500.00) in lawful money of the United States of America, on the terms and conditions described below. All payments on this Note shall be made by check or wire transfer of immediately available funds or as otherwise determined by the Maker to such account as the Payee may from time to time designate by written notice in accordance with the provisions of this Note.

 

1.           Principal. The principal balance of this Promissory Note (this “Note”) shall be payable on the earlier of (i) October 13, 2012 or (ii) the date on which Maker consummates an initial public offering of its securities. The principal balance may be prepaid at any time.

 

2.           Interest. No interest shall accrue on the unpaid principal balance of this Note.

 

3.           Application of Payments. All payments shall be applied first to payment in full of any costs incurred in the collection of any sum due under this Note, including (without limitation) reasonable attorney’s fees, then to the payment in full of any late charges and finally to the reduction of the unpaid principal balance of this Note.

 

4.           Events of Default. The following shall constitute an event of default (“Event of Default”):

 

(a)           Failure to Make Required Payments. Failure by Maker to pay the principal of this Note within five (5) business days following the date when due.

 

(b)           Voluntary Liquidation, Etc. If the Maker selects or is forced to enter into voluntary liquidation.

 

(c)           Involuntary Bankruptcy, Etc. If the Maker is forced to enter insolvent liquidation or a petition to wind up the company is filed against the Maker

 

5.           Remedies.

 

(a)           Upon the occurrence of an Event of Default specified in Section 4(a) hereof, Payee may, by written notice to Maker, declare this Note to be due immediately and payable, whereupon the unpaid principal amount of this Note, and all other amounts payable thereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.

  

  

 

 

(b)           Upon the occurrence of an Event of Default specified in Sections 4(b) and 4(c), the unpaid principal balance of this Note, and all other sums payable with regard to this Note, shall automatically and immediately become due and payable, in all cases without any action on the part of Payee.

 

6.           Waivers. Maker and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to the Note, all errors, defects and imperfections in any proceedings instituted by Payee under the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any real estate that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by Payee.

 

7.           Unconditional Liability. Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Payee with respect to the payment or other provisions of this Note, and agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to Maker or affecting Maker’s liability hereunder.

 

8.           Notices. Any notice called for hereunder shall be deemed properly given if (i) sent by certified mail, return receipt requested, (ii) personally delivered, (iii) dispatched by any form of private or governmental express mail or delivery service providing receipted delivery or (iv) sent by telefacsimile or (v) to the following addresses or to such other address as either party may designate by notice in accordance with this Section:

 

If to Maker:

 

Selway Capital Acquisition Corp.

74 Grand Avenue, 2nd Floor, Englewood, NJ 07631

Attn: Yaron Eitan, Chief Executive Officer

 

If to Payee:

 

Selway Capital Holdings LLC

74 Grand Avenue, 2nd Floor,

Englewood, NJ 07631

  

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Notice shall be deemed given on the earlier of (i) actual receipt by the receiving party, (ii) the date shown on a telefacsimile transmission confirmation, (iii) the date reflected on a signed delivery receipt, or (iv) two (2) Business Days following tender of delivery or dispatch by express mail or delivery service.

 

9.           Construction. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.

 

10.         Jurisdiction. The courts of New York have exclusive jurisdiction to settle any dispute arising out of or in connection with this agreement (including a dispute relating to any non-contractual obligations arising out of or in connection with this agreement) and the parties submit to the exclusive jurisdiction of the courts of New York.

 

11.         Severability. Any provision contained in this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

12.         Trust Waiver. Notwithstanding anything herein to the contrary, the Payee hereby waives any and all right, title, interest or claim of any kind (“Claim”) in or to any distribution of or from the trust account in which the proceeds of the initial public offering (the “IPO”) conducted by the Maker (including the deferred underwriters discounts and commissions) and the proceeds of the sale of the warrants issued in a private placement to occur prior to the effectiveness of the IPO, as described in greater detail in the registration statement and prospectus to be filed with the Securities and Exchange Commission in connection with the IPO, and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the trust account for any reason whatsoever.

 

13.         Amendment; Waiver. Any amendment hereto or waiver of any provision hereof may be made with, and only with, the written consent of the Maker and the Payee.

 

14.         Assignment. No assignment or transfer of this Note or any rights or obligations hereunder may be made by any party hereto (by operation of law or otherwise) without the prior written consent of the other party hereto and any attempted assignment without the required consent shall be void.

 

15.         Further Assurance the Maker shall, at its own cost and expense, execute and do (or procure to be executed and done by any other necessary party) all such deeds, documents, acts and things as the Payee may from time to time require as may be necessary to give full effect to this Promissory Note.

  

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IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed by its Chief Executive Officer the day and year first above written.

 

	 	
SELWAY CAPITAL ACQUISITION CORP.

	 	 
	 	
By:

	
/s/ Yaron Eitan

	 	  	
Name:  Yaron Eitan

	 	  	
Title:    Chief Executive Officer

 

  

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