PUT AND CALL OPTION AGREEMENT
THIS PUT AND CALL OPTION AGREEMENT (this “ Agreement ”) is dated as of August 17, 2009 by and among Barry J. Gordon (“ Gordon ”), Marc H. Klee (“ Klee ”), Robert Sroka (“ Sroka ”), Arthur H. Goldberg (“ Goldberg ”), Harvey Granat (“ Granat ”), Alan J. Loewenstein (“ Loewenstein ”), Sang-Chul Kim (the “ Investor ”) and North Shore Acquisition Corp., a Delaware corporation (the “ Company ”). Gordon, Klee, Sroka, Goldberg, Granat and Loewenstein are each herein referred to individually as a “ Seller ” and collectively as the “ Sellers ”.
The Company was formed on June 26, 2007 for the purpose of acquiring an operating business (“ Business Combination ”).
Sellers collectively own an aggregate of 1,600,000 warrants to purchase shares of common stock, par value $0.0001 per share (the “ Common Stock ”), of the Company (the “ Warrants ”). In addition, Sellers collectively own an aggregate of 1,588,250 shares (the “ Shares ”) of Common Stock of the Company.
Gordon, Klee, Sroka, Goldberg, Granat and Loewenstein are officers, directors and/or stockholders of the Company.
The Investor has approached the Company and the Sellers with a proposal to take control of the Company’s Board of Directors and use his best efforts to introduce the Company to suitable targets for a Business Combination, and, in consideration therefor, to obtain the right to purchase the Warrants.
The Company’s Board of Directors has determined that the Investor offers the Company the best chance to consummate a Business Combination and that it is in the best interests of the Company’s stockholders to enter into this Agreement.
Pursuant to this Agreement, the Sellers will have the option to sell to the Investor and the Investor will have the option to purchase from the Sellers all of the Warrants upon the earlier of (i) the Company’s consummation of a Business Combination, (ii) the Company’s liquidation of its trust account (the “ Trust Account ”) and (iii) December 31, 2009, all upon the terms and subject to the conditions set forth in this Agreement.
As a condition to this Agreement, and in consideration of the Investor’s efforts in assisting the Company to consummate a Business Combination, upon consummation of a Business Combination, the Sellers shall transfer, for no additional consideration, an aggregate of 1,488,250 shares of Common Stock to the Investor.
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
The following terms, as used herein, have the following meanings:
“ 1933 Act ” means the Securities Act of 1933, as amended.
“ 1934 Act ” means the Securities Exchange Act of 1934, as amended.
“ Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in the 1933 Act and the rules and regulations promulgated thereunder.
“ Business Combination ” has the meaning set forth in the Preamble.
“ Business Day ” means any day other than a Saturday, Sunday or legal or bank holiday in the City of New York, State of New York. If any time period set forth in this Agreement expires on other than a Business Day, such period shall be extended to and through the next succeeding Business Day.
“ Call Option ” has the meaning set forth in Section 2.1.2 .
“ Claim ” has the meaning set forth in Section 8.16 .
“ Closing ” has the meaning set forth in Section 2.1.3 .
“ Common Stock ” has the meaning set forth in the Preamble.
“ Company SEC Documents ” means all documents, as such documents may have been amended (and, if amended, only the most recent form of such document shall be deemed to be one of the “Company SEC Documents”), filed by the Company with the SEC under either the 1933 Act or the 1934 Act since its formation.
“ Graubard Miller ” means Graubard Miller, counsel to the Company and the Sellers.
“ Indemnified Damages ” has the meaning set forth in Section 6.1 .
“ Investor ” has the meaning set forth in the Preamble.
“ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset, other than (i) Liens created by the Investor and (ii) restrictions on transfer pursuant to securities laws, the Stock Escrow Agreement or the Subscription Agreement. For purposes of this Agreement, a Person shall be deemed to own subject to a Lien, any property or asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset.
“ Mintz Levin ” means Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., counsel to the Investor.
“ Option ” has the meaning set forth in Section 2.1.2 .
“ Option Trigger ” means the earlier of (i) the Company’s consummation of a Business Combination, (ii) the Company’s liquidation of the Trust Account and (iii) December 31, 2009.
“ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.
“ Purchase Price ” has the meaning set forth in Section 3.1 .
“ Put/Call Escrow Agent ” has the meaning set forth in Section 2.1.4 .
“ Put/Call Escrow Agreement ” has the meaning set forth in Section 2.1.4
“ Put Option ” has the meaning set forth in Section 2.1.1 .
“ SEC ” means the Securities and Exchange Commission.
“ Seller ” and “ Sellers ” has the meaning set forth in the Preamble.
“ Several Provisions ” has the meaning set forth in the preamble to Article 4.
“ Share Escrow Agent ” means Continental Stock Transfer and Trust Company.
“ Stock Escrow Agreement ” means that certain Stock Escrow Agreement dated November 30, 2007 by and among the Sellers, the Company and Continental Stock Transfer & Trust Company.
“ Subscription Agreement ” is the agreement executed by each Seller in connection with the purchase of his Warrants.
“ Transferred Shares ” has the meaning set forth in Section 2.2 .
“ Trust Account ” has the meaning set forth in the Preamble.
“ Warrants ” has the meaning set forth in the Preamble.
Any reference in this Agreement to (i) a statute shall be to such statute, as amended from time to time, and to the rules and regulations promulgated thereunder and (ii) the word “including” shall mean “including, without limitation.”
PUT AND CALL OPTIONS; TRANSFERS
2.1. Put and Call Options for Purchase and Sale of Warrants .
2.1.1 Grant of Put Option . The Investor hereby grants to the Sellers an irrevocable option (the “ Put Option ”) to require the Investor to purchase all, but not less than all, of the Warrants at the Purchase Price, which Put Option may be exercised by the Sellers only following the Option Trigger. The Put Option shall be terminated and be of no further force or effect in the event that Sellers are in breach or default of the representations and warranties contained in Section 4.6 of this Agreement.
2.1.2 Grant of Call Option . Sellers, jointly and severally, hereby grant to the Investor an irrevocable option (the “ Call Option ”; the Call Option and the Put Option shall sometimes be referred to herein as an “ Option ”) to purchase at any time following the Option Trigger, all, but not less than all, of the Warrants at the Purchase Price.
2.1.3 Exercise of Option . The Investor or the Sellers, as applicable, may exercise an Option following the Option Trigger by delivering written notice of exercise to the Sellers or the Investor, as applicable, and, in either case, to the Put/Call Escrow Agent. Sellers’ written notice of exercise of their Put Option may be executed only by either Gordon or Klee, and all Sellers will be bound by such executed notice. The closing of the purchase and sale of the Warrants pursuant to such an exercise of an Option (the “ Closing ”) will occur within two (2) business days following the delivery of such notice of exercise. At the Closing, (i) the Put/Call Escrow Agent will deliver to the Investor the certificates representing the Warrants being purchased by the Investor, which shall be transferred by the Sellers free and clear of all Liens, together with the warrant powers related thereto referenced below in Section 3.2.1 and (ii) the Put/Call Escrow Agent will deliver the Purchase Price to the Sellers. The payment shall be made by immediately available funds transferred to a bank account designated by the Sellers to the Put/Call Escrow Agent prior to Closing. Upon receipt of the Purchase Price, the Sellers hereby acknowledge that they will have no further interest in the Warrants.
2.1.4 Put/Call Escrow . On the date of this Agreement, (i) the Investor shall deposit the Purchase Price by wire transfer into an interest-bearing escrow account maintained by Graubard Miller (“ Put/Call Escrow Agent ”); and (ii) the Sellers shall deposit the Warrants and the warrant powers with the Put/Call Escrow Agent. The Purchase Price, Warrants and warrant powers shall be held in escrow by the Put/Call Escrow Agent until the exercise of an Option, pursuant to an escrow agreement dated the date hereof (“ Put/Call Escrow Agreement ”).
2.2. Transfer of Shares . Upon consummation of a Business Combination, Sellers shall transfer an aggregate of 1,488,250 of the Shares (such Shares referred to herein as the “ Transferred Shares ”) to the Investor, in the amount set forth next to such Seller’s name as set forth on Schedule 2.2 attached hereto, which Transferred Shares shall continue to be held in escrow pursuant to the Stock Escrow Agreement. Sellers have delivered duly executed stock powers and a notice to the Share Escrow Agent evidencing the agreement of the Sellers set forth herein. The Sellers will receive no cash consideration for the transfer of the Transferred Shares to the Investor.
PURCHASE PRICE; DELIVERIES
3.1. Purchase Price . The consideration to be paid by the Investor to the Sellers for the Warrants pursuant to the exercise of an Option shall be an aggregate purchase price of $1,000,000 (the “ Purchase Price ”), to be paid after the exercise of an Option to each Seller in the amounts as set forth on Schedule 3.1 .
3.2. Deliveries by Sellers, Investor and Company . The Sellers, the Investor or the Company, as the case may be, shall deliver on the date hereof:
3.2.1 Warrants and duly executed warrant powers with respect to the Warrants, which shall be held in escrow by the Put/Call Escrow Agent until their release upon the exercise of an Option;
3.2.2 Amendments to the insider letters previously executed by each Seller, in the forms attached hereto as Exhibits A-1 through A-2 .
3.2.3 An executed letter agreement addressed to the Share Escrow Agent, in the form attached hereto as Exhibit B , with respect to the transfer of the Transferred Shares upon the consummation of a Business Combination, along with appropriate stock powers to effectuate same;
3.2.4 Resignations of (i) Gordon as an officer and director, (ii) Klee and Loewenstein as officers and (iii) Sroka as a director;
3.2.5 Insider letters, in the forms attached hereto as Exhibits C-1 through C-3 , for each of the Investor, Byong-Yub Ahn (“ Ahn ”) and Yo-Shin Song (“ Song ”) (which shall include Trust Account indemnity provisions and, with respect to the Investor, an acknowledgement by the Investor to become a party to the Stock Escrow Agreement with respect to his Transferred Shares);
3.2.6 A notice to the Company from the Sellers, in the form attached hereto as Exhibit D , with respect to the assignment of Sellers’ registration rights with respect to the Warrants, the shares of Common Stock underlying the Warrants and the Transferred Shares;
3.2.7 An executed letter agreement, in the form attached hereto as Exhibit E , terminating the Company’s use of office space, administrative, technology and secretarial services, at 175 Great Neck Road, Suite 204, Great Neck, New York;
3.2.8 Irrevocable proxies with respect to voting of the Shares at a meeting of stockholders;
3.2.9 A certificate, signed by Gordon, Klee and the Chief Executive Officer of the Company, that (i) the Company has extinguished any and all liabilities, including the prepayment of certain insurance and tax obligations, except for the prepaid assets and the liabilities set forth on Schedule 3.2 attached hereto and such other liabilities known to the signatories that would not, when paid, reduce the Company’s out of trust cash balance below $0, and (ii) the Company has not executed any definitive agreements, letters of intent or any other agreement or understanding with respect to any Business Combination that has not been abandoned prior to the date hereof;
3.2.10 A certificate, signed by the Chief Executive Officer of the Company, attaching resolutions adopted by the remaining directors following the resignations described in Section 3.2.4 hereto that (i) elect (a) the Investor as a Class C director and Chairman of the Board, (b) elect Ahn as a Class C director, and (c) elect Song as a Class B director of the Company to fill the vacancies created by such resignations, (ii) reclassify Klee as a Class A director, (iii) appoint Ahn as Chief Executive Officer and President, and Song as Chief Financial Officer of the Company, respectively, and (iv) ratify the issuance of an additional 300,000 Warrants pursuant to the Subscription Agreements,;
3.2.11 An opinion of Graubard Miller in form and substance reasonably acceptable to the Investor and an opinion of Mintz Levin in form and substance reasonably acceptable to the Company;
3.2.12 The Put/Call Escrow Agreement; and
3.2.13 Such other certificates, instruments and documents of transfer, if any, as may be necessary to consummate the transactions contemplated by this Agreement.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each of the Sellers, severally and jointly (except for Sections 4.1 , 4.4(b) , 4.5(b) , 4.6 , 4.10(b) and 4.15(b) (“ Several Provisions ”), which shall be made only severally), makes the representations and warranties contained in this Article 4 to the Investor, intending that the Investor relies on each of such representations and warranties in order to induce the Investor to enter into and complete the transactions contemplated by this Agreement.
4.1. Authorization of Sellers . The execution, delivery and performance by each Seller of this Agreement and the consummation by each Seller of the transactions contemplated hereby are within each Seller’s powers and have been duly authorized by all necessary action on the part of such Seller. This Agreement constitutes a valid and binding agreement of each Seller, enforceable against each Seller in accordance with its terms.
4.2. Company Authorization . This Agreement is the valid and binding obligation of the Company, enforceable in accordance with its terms. The execution, delivery and performance of this Agreement has been duly authorized by all necessary corporate or other action of the Company. The issuance, sale and delivery of the shares of Common Stock issuable upon exercise of the Warrants have been duly authorized and reserved for issuance by all necessary corporate action on the part of the Company. The shares of Common Stock issuable upon exercise of the Warrants, when issued, will be duly and validly issued, fully paid and non-assessable.
4.3. Corporate Existence and Power . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers and all governmental licenses, authorizations, permits, consents and approvals required to carry on its business as now conducted. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary.
4.4. Governmental Authorization . The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby by (a) the Company and (b) each Seller, require no action by or in respect of, or filing with, any governmental body, agency, official or authority, domestic or foreign, other than compliance with a