Document:

___________,
2011

     

    Prime
Acquisition Corp

    No. 322,
Zhongshan East Road

    Shijiazhuang

    Hebei
Province, 050011

    People’s
Republic of China

    

    Chardan
Capital Markets, LLC

    17 State
Street

    Suite
1600

    New York,
NY 10004

     

    Re:        Initial Public
Offering

     

    Gentlemen:

     

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

     

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

     

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

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
    

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

     

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

     

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

    
      
         

      

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

     

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

     

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

     

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

     

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

     

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

     

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

    
      
         

      

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

     

    11.         This
letter agreement shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without giving effect to conflicts of
law principles that would result in the application of the substantive laws of
another jurisdiction.  The undersigned hereby (i) agrees that any
action, proceeding or claim against him arising out of or relating in any way to
this letter agreement (a “Proceeding”) shall be brought and enforced in the
courts of the State of New York of the United States of America for the Southern
District of New York, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive, (ii) waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum and (iii)
irrevocably agrees to appoint Loeb & Loeb LLP as agent for the service of
process in the State of New York to receive, for the undersigned and on his
behalf, service of process in any Proceeding.  If for any reason such
agent is unable to act as such, the undersigned will promptly notify the Company
and Chardan and appoint a substitute agent acceptable to each of the Company and
Chardan within 30 days and nothing in this letter will affect the right of
either party to serve process in any other manner permitted by
law.

     

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

    
    

    
      	 
      	
              By:

            	
                         

            	 
      
	 
      	
              Name:

            

    

    
    

    
      
         

      

      
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    EXHIBIT
A

    
    

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

    
    

    
      
         

      

      
        1PROMISSORY
NOTE

    

    
      	
              $12,500

            	
              As
      of March 25, 2010

            

    

     

    FOR VALUE
RECEIVED, PRIME ACQUISITION CORP., a Cayman Islands exempted company (the
“Maker”), promises to pay to the order of Diana Chia-Huei Liu (the “Payee”), at
such address as may be provided in writing to the Maker, the principal sum of
Twelve Thousand Five Hundred Dollars ($12,500) in lawful money of the United
States of America, on the terms and conditions described below.

     

    1.           Principal.  The
principal balance outstanding under this Note shall be payable no later than the earlier of the consummation of
the initial
public offering of the Maker and December 31, 2010, in U.S. dollars, in
cash, by wire transfer of immediately available funds, or by certified check or
by official bank check.

     

    2.           Interest.  Interest
shall not accrue on the principal balance of this Note.

     

    3.           Repayment/Application of
Payments.  This Note may be
voluntarily repaid at any time without premium or penalty. All payments
under this Note 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 attorneys’ fees, and then to the reduction of the unpaid principal
balance of this Note.

     

    4.           Events of Default.
The following shall constitute Events 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 Bankruptcy,
Etc. The commencement by Maker of a voluntary case under any applicable
bankruptcy, insolvency, reorganization, rehabilitation or other similar law, or
the consent by it to the appointment of or taking possession by a receiver,
liquidator, assignee, trustee, custodian, sequestrator (or other similar
official) of Maker or for any substantial part of its property, or the making by
it of any assignment for the benefit of creditors, or the failure of Maker
generally to pay its debts as such debts become due, or the taking of corporate
action by Maker in furtherance of any of the foregoing.

     

    (c)           Involuntary Bankruptcy,
Etc.  The entry of a decree or order for relief by a court
having jurisdiction in the premises in respect of maker in an involuntary case
under any applicable bankruptcy, insolvency or other similar law, or appointing
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Maker or for any substantial part of its property, or ordering the
winding-up or liquidation of the affairs of Maker, and the continuance of any
such decree or order unstayed and in effect for a period of 60 consecutive
days.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    5.           Remedies.

     

    (a)           Upon
the occurrence of an Event of Default specified in Section 4(a), Payee may, by
written notice to Maker, declare this Note to be due and payable, whereupon the
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, 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
waives presentment, demand for payment, notice of dishonor and any or all
notices or demands in connection with the delivery, acceptance, performance,
default or enforcement of this Note and consents to any or all delays,
extensions of time, renewals, release of any party to any document related to
this Note, and of any available security therefor, and any and all waivers or
modifications that may be granted or consented to by the Payee with regard to
the time of payment, and agrees that no such action, delay or failure to act on
the part of Payee shall be construed as a waiver by Payee of, or otherwise
affect, in whole or in part, its right to avail itself of any remedy with
respect thereto.

     

    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 Maker 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
them or affecting their liability hereunder.

     

    8.           Amendments. This Note
may not be modified, amended or otherwise changed except by an agreement in
writing signed by Maker and Payee.  No waiver of any term, covenant or
provision of this Note shall be effective unless given in writing by Payee and,
if so given by Payee, shall only be effective in the specific instance in which
given.

     

    9.           Assignability. This
Note shall be binding upon Maker and its heirs, executors, successors and
assigns, and shall inure to the benefit of Payee and its successors and assigns,
and may be assigned by Payee.  Maker may not assign any of its
obligations under this Note without the prior written consent of Payee, any such
purported assignment without such consent being null and void.

     

    10.           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, (iv) sent by telefacsimile or (v) sent by
e-mail, to the following addresses or to such other address as either party may
designate by notice in accordance with this Section:

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    If to
Maker:

    

    Prime
Acquisition Corp.

    No. 322,
Zhongshan East Road

    Shijiazhuang

    Hebei
Province, 050011

    People’s
Republic of China

    Attn:
Chief Executive Officer

     

    If to
Payee:

    

    Diana
Chia-Huei Liu

    c/o
Cansbridge Capital Corp.

    486 Walsh
Rd.

    Atherton,
CA 94027

     

    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 on which an e-mail transmission was received by the receiving party’s
on-line access provider (iv) the date reflected on a signed delivery receipt, or
(vi) two (2) Business Days following tender of delivery or dispatch by express
mail or delivery service.

     

    11.           Construction.  This
Note shall be construed and enforced in accordance with the domestic, internal
law, but not the law of conflict of laws, of the State of New York.

     

    12.           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.

     

    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.

     

    
      
        
          	
                  PRIME
      ACQUISITION CORP.

                
	 
      
	
                  By:

                	/s/
      Diana Chia-Huei Liu
	 
      	
                  Name:
      Diana Chia-Huei Liu

                
	 
      	
                  Title:
      Chief Executive Officer

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