Exhibit 8.1
The following is a diagram of Hunter Maritime’s subsidiaries. NCF Wealth Holdings Limited is a wholly owned subsidiary of Hunter Maritime.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
FORM 20-F
| ¨ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| ¨ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| For the fiscal year ended ________________. |
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| for the transition period from __________ to ___________ |
OR
| x | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
| Date of event requiring this shell company report: March 21, 2019 |
Commission file number: 000-37947
Hunter Maritime Acquisition Corp.
________________________________
(Exact name of the Registrant as specified in its charter)
Republic of the Marshall Islands
_____________________________
(Jurisdiction of incorporation or organization)
Tower A, WangXin Building
28 Xiaoyun Rd
Chaoyang District, Beijing, 100027
___________________________
(Address of principal executive offices)
Jia Sheng
Chief Executive Officer
Tower A, WangXin Building
28 Xiaoyun Rd
Chaoyang District, Beijing, 100027
(646) 308-0546
___________________________
(Name, Telephone, E-mail and/or Facsimile Number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Name of each exchange on which registered | |
| Class A Common Stock, par value $0.0001 per share | The Nasdaq Stock Market LLC | |
| Warrants to purchase one share of Class A Common Stock | The Nasdaq Stock Market LLC | |
| Units, each consisting of one share of Class A Common Stock and one half of one Warrant | The Nasdaq Stock Market LLC |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
On March 21, 2019, the registrant had 204,041,004 shares of Class A common stock outstanding.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
| ¨ Yes | x No |
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
| ¨ Yes | ¨ No |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
| xYes | ¨ No |
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
| xYes | ¨ No |
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer, "accelerated filer,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| ¨ Large Accelerated filer | x Accelerated filer | ¨ Non-accelerated filer |
| x Emerging Growth Company |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| x US GAAP | ¨ International Financial Reporting Standards as issued by the International Accounting Standards Board | ¨ Other |
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
| ¨ Item 17 | ¨ Item 18 |
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
| ¨ Yes | x No |
TABLE OF CONTENTS
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CERTAIN INFORMATION
In this Shell Company Report on Form 20-F (the “Report”), unless otherwise indicated, “Hunter Maritime,” “we,” “us,” “our,” or “Company” refers to Hunter Maritime Acquisition Corp., a company incorporated under the laws of the Marshall Islands, and its subsidiaries subsequent to the Business Combination (as defined and described below). The “Business Combination” refers to the merger of Hunter Maritime (BVI) Limited, a British Virgin Islands company (“Merger Sub”) with and into NCF Wealth Holdings Limited (“NCF”) , a British Virgin Islands company, which was consummated on March 21, 2019, which resulted in NCF becoming a wholly owned subsidiary of Hunter Maritime.
References to the “PRC” refers to the People’s Republic of China. All references to “provincial-level regions” or “regions,” include provinces as well as autonomous regions and directly controlled municipalities in China, which have an administrative status equal to provinces, including Beijing.
All references to “Renminbi,” “RMB” or “yuan” are to the legal currency of the People’s Republic of the PRC and all references to “U.S. dollars,” “dollars,” “$” are to the legal currency of the United States. This Report contains translations of Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader. We make no representation that the Renminbi or U.S. dollar amounts referred to in this Report could have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all.
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FORWARD-LOOKING STATEMENTS
This Report contains ‘‘forward-looking statements’’ that represent our beliefs, projections and predictions about future events. All statements other than statements of historical fact are ‘‘forward-looking statements’’ including any projections of earnings, revenue or other financial items, any statements of the plans, strategies and objectives of management for future operations, any statements concerning proposed new projects or other developments, any statements regarding future economic conditions or performance, any statements of management’s beliefs, goals, strategies, intentions and objectives, and any statements of assumptions underlying any of the foregoing. Words such as “may,” “‘will,” “‘should,” “could,” “would,” “predicts,” “potential,” “continue,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates” and similar expressions, as well as statements in the future tense, identify forward-looking statements.
These statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements, or industry results, to differ materially from any future results, performance or achievements described in or implied by such statements. Actual results may differ materially from expected results described in our forward-looking statements, including with respect to correct measurement and identification of factors affecting our business or the extent of their likely impact, the accuracy and completeness of the publicly available information with respect to the factors upon which our business strategy is based or the success of our business.
Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of whether, or the times by which, our performance or results may be achieved. Forward-looking statements are based on information available at the time those statements are made and management’s belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Important factors that could cause such differences include, but are not limited to, those factors discussed under the headings “Risk Factors,” “Operating and Financial Review and Prospects,” “Information on our Company” and elsewhere in this Report.
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ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
| A. | Directors and Senior Management |
Our directors and executive officers are as follows, each of whom was appointed to such position in connection with the closing of the Business Combination on March 21, 2019:
| Name(1) | Age | Position in Hunter Maritime | ||
| Huanxiang Li | 47 | President and Director | ||
| Jia Sheng | 38 | Chief Executive Officer and Director | ||
| Li Wei | 38 | Chief Financial Officer | ||
| Xin Li | 34 | Chief Operating Officer | ||
| Ruoshi Zhang | 38 | Chief Technology Officer | ||
| Tao Yang | 45 | Independent Director | ||
| David X. Li | 55 | Independent Director | ||
| Kevin C. Wei | 51 | Independent Director |
(1) The business address of each such person is the address
of the Company, which is Tower A, WangXin Building
28 Xiaoyun Rd, Chaoyang District, Beijing, 100027.
Huanxiang Li (President)
Ms. Li has been the President and a director of NCF since 2014. Ms. Li has 15 years of experience in the financial industry. Prior to joining NCF, she was Vice-President of the United Venture Financial Guarantee Group from 2003 to 2013, President of Tianjin United Venture Capital Guarantee Co., Ltd. from 2013 to 2015, and President of Dongfang Credit Management Co., Ltd. from 2015 to 2017. Ms. Li holds an EMBA degree from the PBC School of Finance of Tsinghua University.
Jia Sheng (Chief Executive Officer)
Mr. Sheng has been the Chief Executive Officer and a director of NCF since June 2013. Mr. Sheng has 12 years of experience in the Internet and the financial industry. Prior to joining NCF Wealth Holdings, he was Product Manager in Google China and Mountain View from June 2007 to October 2010, and a Co-founder of Yunrang (Beijing) Information Technology Co. Ltd. From November 2010 to May 2013. Mr. Sheng holds an EMBA degree from the PBC School of Finance of Tsinghua University, a Master degree in Computer Science from the University of Toronto in Canada and a Bachelor degree in Computer Science and Technology from Tsinghua University.
Li Wei (Chief Financial Officer)
Ms. Wei joined the management team of NCF in October 2014. She has 12 years of experience in auditing & consulting services and more than 12 years of management experience. Prior to joining NCF, Ms. Wei worked at KPMG from August 2002 to April 2008 and PricewaterhouseCoopers from May 2008 to October 2014. Ms. Wei got her MBA from the School of Economics and Management of Tsinghua University. She obtained her bachelor's degree in Finance from Renmin University of China. Ms. Wei is a CICPA and an internationally registered internal auditor.
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Xin Li (Chief Operating Officer)
Ms. Li joined the management team of NCF in February 2014. She worked at China Ping An Life Insurance Co., Ltd. from September 2007 to November 2010 and China International Futures Co., Ltd. from April 2012 to January 2014. Ms. Li has more than 10 years of experience in the finance industry and is an expert in operations management, marketing, and financial product design. She holds a bachelor's degree in finance from Heilongjiang University.
Ruoshi Zhang (Chief Technology Officer)
Mr. Zhang joined the management team of NCF in May 2014. He has more than 10 years of experience in R&D management and distributed system design and development. Mr. Zhang worked at Visual China Group from October 2005 to August 2011, IFeng.com from August 2011 to August 2012 and Credit Ease from January 2013 to April 2013. Mr. Zhang specializes in the development and design of distributed storage systems, social networking sites and financial trading systems. Mr. Zhang got his Bachelor from Information Engineering University.
Tao Yang (Independent Director)
Mr. Yang has been a researcher and an advisor to doctoral candidates of the Institute of Finance & Banking of the Chinese Academy of Social Sciences since August 2003. He has also been the Chief Economist of the China FinTech 50 Forum since April 2017. Mr. Yang’s main scope of research covers monetary and fiscal policies, financial markets, financial technology as well as payments and settlements. He received his PhD degree in Economics from Graduate School of Chinese Academy of Social Sciences, a master’s degree from Chinese Academy of Fiscal Sciences, and a bachelor’s degree from Nanjing University of Science and Technology.
David X. Li (Independent Director)
Mr. Li has been a professor of finance, and faculty co-director of Master of Finance (MF) program at Shanghai Advanced Institute of Finance (SAIF) since Jan 2018, and an associate director of Chinese Academy of Financial Research (CAFR) at Shanghai Jiaotong University since Jan 2018. Previously, he worked at leading financial institutions for more than two decades in the areas of new product development, risk management, asset/liability management and investment analytics. He was the chief-risk-officer for China International Capital Corporation (CICC) Ltd from May 2008 to Jan 2013, head of credit derivative research and analytics at Citigroup and Barclays Capital from Oct 2001 to April 2008, and head of modeling for AIG Investments from Jan 2012 to March 2016.
David has a PhD degree in statistics from the University of Waterloo, a Master’s degrees in economics, finance and actuarial science, and a bachelor’s degree in mathematics. Mr. Li is currently an associate editor for North American Actuarial Journal, an adjunct professor at the University of Waterloo. Mr. Li was one of the pioneers in credit derivatives. His seminal work of using copula functions for credit portfolio modeling has been widely cited by academic research, broadly used by practitioners for credit portfolio trading, risk management and rating, and well covered by media such as Wall Street Journal, Financial Times, Nikkei, CBC News.
Kevin C. Wei (Independent Director)
Mr. Wei has been a managing partner of Fontainburg Corporation Limited, a corporate finance advisory firm, since November 2013. Mr. Wei served as chief financial officer of IFM Investments Limited (stock code: CTC), a New York Stock Exchange listed company headquartered in Beijing, from December 2007 to September 2013, and served as its director from November 2008 until December 2014. From 2006 to 2007, Mr. Wei served as the chief financial officer of a Chinese solar company listed on Nasdaq. From 1999 to 2005, Mr. Wei worked in the internal audit and risk management functions for multinational companies including LG Philips Displays International Ltd. From 1991 to 1999, Mr. Wei worked with KPMG LLP and Deloitte Touche LLP in various audit and consulting roles in the United States of America and China. Mr. Wei graduated from Central Washington University in 1991, where he received his bachelor’s degree (cum laude) with a double major in accounting and business administration.
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There are no family relationships between the officers or directors of the Company.
| B. | Advisers |
Not applicable.
| C. | Auditors |
UHY LLP, located at 1185 Avenue of the Americas, 38th Floor New York, NY 10036. UHY LLP has been our auditor since October 2018 and the auditor of NCF since 2018.
KPMG Bedrijfsrevisoren—Réviseurs d' Entreprises CVBA ("KPMG") was the Company’s auditor from the Company’s inception until October 2018. KPMG’s address is Business Park De Alverberg
Herkenrodesingel 6B bus 4.01, 3500 Hasselt, Belgium.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
| A. | Selected Financial Data |
The disclosure under the caption “Selected Historical Financial Information of NCF” beginning on page 43 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
| B. | Capitalization and Indebtedness |
The following table shows the capitalization of NCF as of February 28, 2019
| Actual (unaudited) | ||||
| Current Assets | ||||
| Cash and cash equivalents | $ | 167,987,450 | ||
| Restricted Cash | 14,334,653 | |||
| Current Liabilities | ||||
| Total current liabilities | $ | 49,562,586 | ||
| Long term debt | 4,077,000 | |||
| Shareholders’ Equity | ||||
| Common Stock: | $ | 10,916 | ||
| Series B preferred shares | 294 | |||
| Series C-1 preferred shares | 247 | |||
| Shares in Employee Benefit Trust | -4,077,600 | |||
| Statutory reserve | 6,667,678 | |||
| Additional paid-in capital | 140,250,168 | |||
| Retained Earnings | 21,610,036 | |||
| Accumulated other comprehensive income | 5,735,128 | |||
| Non-controlling interest | -167,698 | |||
| Total shareholders’ equity | 170,029,169 | |||
| Total liabilities and shareholders’ equity | $ | 223,668,755 | ||
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| C. | Reasons for the Offer and Use of Proceeds |
Not applicable.
| D. | Risk Factors |
The disclosure under the caption “Risk Factors” beginning on page 12 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
ITEM 4. INFORMATION ON THE COMPANY
| A. | History and Development of the Company |
Our Corporate Structure
The disclosure under the caption “Information about the Companies” beginning on page 40 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
Capital Expenditures
We incurred capital expenditures of RMB67.2million (US$9.8 million), RMB37.1 million (US$5.5 million) and RMB11.9 million (US$1.8 million) in 2018, 2017 and 2016, respectively. In these periods, our capital expenditures were mainly used for purchases of equity shares, equipment and software. We will continue to incur capital expenditures in connection with the expected growth of our business. We incurred capital divestitures of RMB16.6 million (US$2.4 million), RMB0.0 million (US$0.0 million) and RMB0.0 million (US$0.0million) in 2018, 2017 and 2016, respectively.
We incurred capital expenditures of RMB0.9 million (US$0.1 million) and capital divestitures of RMB0.0 million (US$0.0 million) in two months as of February 28, 2019. The capital expenditures were mainly used for purchases of equipment and software.
The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC and state the address of that site (http://
www.sec.gov). We maintain a website at ir.ncfwx.com.
| B. | Business Overview |
The disclosure under the caption “Description of the Combined Company Following the Business Combination” beginning on page 66 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
| C. | Organizational Structure |
The disclosure under the caption “Information about the Companies” beginning on page 40 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
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| D. | Property, Plant and Equipment |
The disclosure under the caption “Description of the Combined Company Following the Business Combination - Facilities” beginning on page 74 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The disclosure under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations of NCF Wealth Group” beginning on page 86 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF HUNTER MARITIME
The following discussion contains forward-looking statements that reflect Hunter Maritime’s future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside Hunter Maritime’s control. Hunter Maritime’s actual results could differ materially from those discussed in these forward-looking statements. Please read “Risk Factors” and “Forward-Looking Statements.” In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur.
Overview
We are a blank check company formed on June 24, 2016 under the laws of the Republic of the Marshall Islands for the purpose of acquiring through a merger, capital stock exchange, asset acquisition, debt acquisition, stock purchase, reorganization or other similar business combination, vessels, vessel contracts (including for the purchase and charter-in by us of vessels) or one or more operating businesses or assets, intended to be in the international maritime shipping industry.
Description of Merger:
On October 5, 2018, Hunter Maritime and
Merger Sub entered into the Merger Agreement with NCF and Zhenxin Zhang, as representative of the NCF Stockholders, pursuant to
which NCF merged with and into Merger Sub, with NCF continuing as the surviving company and as a wholly-owned subsidiary of Hunter
Maritime.
NCF is a fintech company in China. Among other businesses, NCF operates an online consumer and business finance marketplace in China, focused on facilitating the origination of debt financing by directly connecting individual and commercial borrowers with lenders as an alternative to traditional lending sources. NCF generates revenues primarily from fees charged to borrowers for services in matching them with lenders through the facilities of its online platform. NCF’s platform does not pool funds from investors or grant loans to any customer or provide any credit services; that is, NCF does not itself finance the loans offered on its platform with its own funds.
On November 6, 2018, we completed the Extension Tender Offer, funded with the proceeds then held in the Trust Account, in connection with an amendment to our Amended and Restated Articles of Incorporation to extend the deadline by which a business combination must be consummated, by a period of five months, until April 23, 2019. Our shareholders approved the Extension Amendment at a special meeting of shareholders held on October 31, 2018. We purchased 12,999,350 Class A common shares at $10.125 per share, for an aggregate purchase price of approximately $131.6 million in the Extension Tender Offer.
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On March 21, 2019, the Merger closed. The aggregate consideration provided by Hunter Maritime to the NCF Stockholders pursuant to the Merger Agreement consists of: (i) 200,000,000 Class A common shares (the “Closing Payment Shares”), of which 15,000,000 Class A common shares were deposited into escrow to secure certain indemnification obligations of NCF and the NCF Stockholders (the “Escrow Shares”), plus (ii) earnout payments consisting of up to an additional 50,000,000 Class A common shares if Hunter Maritime (and its subsidiaries on a consolidated basis) meets certain financial performance targets for the 2019 and 2020 fiscal years.
Accounting for the Acquisition
The merger will be accounted for, in accordance with GAAP, as a “reverse merger” and recapitalization at the date of the consummation of the transaction since the stockholders of NCF will own at least 50.1% of the outstanding common stock of Hunter Maritime immediately following the completion of the merger, NCF will have its current officers assuming all corporate and day-to-day management offices of Hunter Maritime, including chief executive officer and chief financial officer, and board members appointed by NCF will constitute a majority of the board of the Successor after the Business Combination. Accordingly, NCF will be deemed to be the accounting acquirer in the transaction and, consequently, the transaction is treated as a recapitalization of NCF. Accordingly, the assets and liabilities and the historical operations that will be reflected in the Hunter Maritime financial statements after consummation of the merger will be those of NCF and will be recorded at the historical cost basis of NCF. Hunter Maritime’s assets, liabilities and results of operations will be consolidated with the assets, liabilities and results of operations of NCF upon consummation of the merger.
Results of Operations
For the period from June 24, 2016 (inception) through December 31, 2018, our activities consisted of formation and preparation for the Public Offering and subsequent to the Public Offering, and efforts directed toward locating and completing a suitable business combination. Our operating costs for those periods include our search for a business combination and are largely associated with our governance and public reporting, and charges of $10,000 per month payable to an affiliate of our Sponsor for administrative services.
For the period from June 24, 2016 (inception) to December 31, 2016 (‘the period ended December 31, 2016’) and for the year ended December 31, 2017 we had a net loss of $398,874 and $382,605, respectively. The formation and operating costs for the year ended December 31 2017 was $1,324,088, an increase of $926,721, from $397,367 for the period ended December 31, 2016. The overall increase was mainly caused by increased expenses for Directors and Officers Liability Insurance, advisory and legal fees. The interest income from investments in our Trust Account for the year ended December 31, 2017 was $1,084,213, an increase of $1,052,405, from $31,808 for the period ended December 31, 2016. During the year ended December 31, 2017 we earned a full year of interest income from our investment whereas for the period ended December 31, 2016,we only earned investment income during one month.
For the years ended December 31, 2018 and 2017, we had a net loss of 1,550,352 and $382,605, respectively. The formation and operating costs for the year ended December 31 2018 was $949,114, a decrease of $374,974, from $1,324,088 for the year ended December 31, 2017. The decrease was mainly caused by a reduction in legal fees. The interest income from investments in our Trust Account for the year ended December 31, 2018 was $1,482,889, an increase of $398,676 as a result of an increase in US Treasury Bond rates, from $1,084,213 for the year ended December 31, 2017. During the years ended December 31, 2018 and December 31, 2017, we earned the full year of interest income from our investment.
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Liquidity and Capital Resources
On July 11, 2016, Bocimar Hunter NV, the Company’s sponsor (the "Sponsor") purchased 4,312,500 Class B Common Shares of the Company (the "Founder Shares") for $25,000, or $0.006 per share.
On November 23, 2016, Hunter Maritime consummated its initial public offering of 15,000,000 Units. Each Unit (“Unit”) issued in the Initial Public Offering (‘IPO’) consists of one Class A common share and one-half of one Warrant (“Warrant”). Each whole Warrant entitles the holder to purchase one Class A common share at a price of $11.50. Simultaneously with the consummation of the IPO, Hunter Maritime completed a private placement of 3,333,333 Warrants (“private placement Warrants”) at a purchase price of $1.50 per Warrant to its Sponsor, generating gross proceeds of $5,000,000. On November 18, 2016, the Units commenced trading on the NASDAQ under the symbol “HUNTU.”
On December 16, 2016, the underwriters of the IPO exercised their overallotment option in part, for a total of an additional 173,100 Units. As a result of the partial exercise of the overallotment option, as of January 3, 2017, the Sponsor forfeited 519,225 Class B common shares in order to maintain its ownership, on an as-converted basis, at 20% of Hunter Maritime’s issued and outstanding common shares. In addition, Hunter Maritime completed the private sale of an additional 23,080 private placement Warrants to the Sponsor at a purchase price of $1.50 per Warrant, generating gross proceeds of $34,620, in accordance with the terms of the private placement agreement entered into concurrently with the IPO.
The 15,173,100 Units sold in the IPO, including the 173,100 Units sold pursuant to the overallotment option, were sold at an offering price of $10.00 per Unit, generating gross proceeds of $151,731,000, which been placed in the Trust Account pending Hunter Maritime’s completion of an initial business combination.
On January 9, 2017, the Class A common shares and Warrants underlying the Units sold in the IPO began to trade separately.
On September 27, 2018, pursuant to the terms of a Securities Purchase Agreement, Bocimar Hunter transferred ownership of its (i) 3,793,275 Class B common shares and (ii) 3,356,413 private placement Warrants of the Company to CMB NV (“CMB”) which we now consider the Sponsor. See also Note 9 Related Party Transactions.
On November 6, 2018, we completed a tender offer, funded with the proceeds then held in the Trust Account, in connection with an amendment to our Amended and Restated Articles of Incorporation to extend the deadline (the “Extension Amendment”) by which a business combination must be consummated to April 23, 2019 (the “Extended Date” or “Business Combination Deadline”), pursuant to which we purchased 12,999,350 Class A common shares at $10.125 per share, for an aggregate purchase price of approximately $131.6 million (the “Extension Tender Offer”). In connection with the Extension Tender Offer, we deposited into the Trust Account an additional $1,896,638 to make the total amount on deposit in the Trust Account equal to $10.125 per Class A common share (the “First Tender Contribution”). As a result, approximately $22.1 million remained in the Trust Account.
In connection with the Extension Amendment, the Sponsor, or persons on its behalf, has agreed to contribute to us $0.03 for each Public Share that was not purchased in the Extension Tender Offer for each calendar month commencing on November 23, 2018 (the day by which were initially required to complete our initial business combination) until April 23, 2019, or such earlier date that we complete our initial business combination (the “Monthly Extension Contribution”). The aggregate amount of the Monthly Extension Contribution will be repayable by us to the Sponsor if we complete an initial business combination. On each of December 27, 2018 and January 30, 2019, $65,213 was contributed to the Trust Account for the Monthly Extension Contribution. As a result, following the Extension Tender Offer, First Tender Contribution, and Monthly Extension Contributions, approximately $22.1 million remains in the Trust Account.
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At November 6, 2018, the per public share redemption or conversion price increased to $10.125 per share as a result of the $1,896,638 deposit into the Trust Account relating to the other expenses to extend the time to complete the initial business combination. At November 23, 2018, the per public share redemption or conversion price increased to $10.155 per share as a result of the $65,213 deposit into the Trust Account relating to the other expenses to extend the time to complete the initial business combination.
On November 6, 2018, December 19, 2018 and January 30, 2019, Hunter Maritime has drawn an amount of $500,000, $300,000 and $200,000 respectively under a promissory note with its sponsor CMB. These loans are unsecured and bear interest at a rate per annum of LIBOR plus 0.60%.
On February 19, 2019 Hunter Maritime announced the commencement of a tender offer pursuant to the terms of the Merger Agreement by and among Hunter Maritime, and NCF Wealth Holdings Limited.
On February 22, 2019, Hunter Maritime has drawn an amount of $400,000, under a promissory note with its Sponsor. The loan is unsecured and bears interest at a rate per annum of LIBOR plus 0.60%.
On March 20, 2019, Hunter Maritime announced the final results of its previously announced tender offer. A total of 1,926,021 Class A common shares were validly tendered and accepted for purchase for a total cost of approximately $19.7 million, excluding fees and expenses related to the Tender Offer, which will be released from the Company’s trust account.
On March 21, 2019, Hunter Maritime closed the Merger.
Prior to the closing of the Merger Hunter Maritime has neither engaged in any operations nor generated significant revenue to date. Hunter Maritime’s only activities between inception and the closing of its Public Offering were organizational activities and those necessary to prepare for and close the Public Offering. Since the consummation of the Public Offering, Hunter Maritime’s activity has been limited to evaluating candidates for its initial business combination.
Critical Accounting Policies
Management’s discussion and analysis of our results of operations and liquidity and capital resources are based on our audited financial information. We describe our significant accounting policies in Note 2 - Significant Accounting Policies, of the Notes to Financial Statements included as Exhibit 99.1 to this Shell Company Report. Our audited financial statements have been prepared in accordance with U.S. GAAP. Certain of our accounting policies require that management apply significant judgments in defining the appropriate assumptions integral to financial estimates. On an ongoing basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. Judgments are based on historical experience, terms of existing contracts, industry trends and information available from outside sources, as appropriate. However, by their nature, judgments are subject to an inherent degree of uncertainty, and, therefore, actual results could differ from our estimates.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
| A. | Directors and Senior Management |
The information set forth in Item 1.A. of this Shell Company Report on Form 20-F is incorporated herein by reference.
| B. | Compensation |
Compensation of Directors and Executive officers of Hunter Maritime
Prior to the Business Combination, Hunter Maritime did not provide any compensation to its officers and directors.
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For the fiscal year ended December 31, 2018, NCF paid an aggregate of approximately RMB3.1 million (US$0.45 million) in cash to our executive officers, and it did not pay any compensation to its non-executive directors.
We have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. We also have not provided any profit sharing plan and stock options to our executive officers and directors. Our PRC subsidiaries and our variable interest entity are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, unemployment insurance, maternity insurance, on-the job injury insurance, and housing fund plans through a PRC government-mandated defined contribution plan.
| C. | Board Practices |
Term of Service
Our board of directors consists of five directors and is divided into three classes with only one class of directors being elected in each year and each class serving a three-year term.
The members of our board of directors are expected to play a key role in identifying and evaluating prospective acquisition candidates, selecting the target business, and structuring, negotiating and consummating its acquisition..
Our Audit Committee consists of Tao Yang, David X. Li and Kevin C. Wei. Kevin C. Wei serves as chairman and as the Audit Committee financial expert. The Audit Committee provides assistance to our board of directors in fulfilling their responsibilities to shareholders, and investment community relating to our corporate accounting, reporting practices, and the quality and integrity of our financial reports. The Audit Committee, among other duties, recommends the independent auditors to be selected to audit our consolidated financial statements, meets with our independent auditors and financial management to review the scope of the proposed audit for the current year and the audit procedures to be utilized, reviews with the independent auditors, and financial and accounting personnel, the adequacy and effectiveness of our accounting and financial controls, and reviews the consolidated financial statements contained in the annual report to shareholders with management and the independent auditors.
There are no contracts between us and any of our directors providing for benefits upon termination of their employment.
| D. | Employees |
The disclosure under the caption “Description of the Combined Company Following the Business Combination - Employees” beginning on page 74 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
| E. | Share Ownership |
The disclosure set forth in Item 7A of this Shell Company Report on Form 20-F is incorporated herein by reference.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
| A. | Major Shareholders |
The following table sets forth information with respect to the beneficial ownership of Hunter Maritime’s common shares as of March 21, 2019:
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| ¨ | each person known to us to own beneficially more than 5% of our common shares; |
| ¨ | each of our current executive officers and directors; and |
| ¨ | each of our directors and executive officers as a group. |
Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. Except as indicated by the footnotes below, Hunter Maritime believes that the persons and entities named in the table below have, as of March 21, 2019, sole voting and investment power with respect to all stock that they beneficially own, subject to applicable community property laws. All Hunter Maritime stock subject to options or warrants exercisable within 60 days of the consummation of the Business Combination are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person.
Subject to the paragraph above, percentage ownership of outstanding shares is based on 204,041,004 Class A common shares of Hunter Maritime to be outstanding upon consummation of the Business Combination. All of the below shareholders acquired their shares in the Business Combination. The shares owned by such persons do not have voting rights different from the shares owned by other holders.
| Name and Address (1) | Number of Shares Beneficially Owned | Percentage of Ownership | ||||||
| Zhenxin Zhang(2) | 122,815,857 | 60.2 | % | |||||
| Great Reap Ventures Limited (3) | 103,613,734 | 50.8 | % | |||||
| TMF (Cayman) Ltd.(4) | 19,202,123 | 9.4 | % | |||||
| Ever Step Holdings Limited(5) | 17,625,804 | 8.6 | % | |||||
| Highlight Limited(6) | 12,114,794 | 5.9 | % | |||||
| Huanxiang Li(7) | 349,129 | * | ||||||
| Jia Sheng(7) | 209,477 | * | ||||||
| Ruoshi Zhang(7) | 192,021 | * | ||||||
| Xin Li(7) | 122,195 | * | ||||||
| Li Wei(7) | 78,989 | * | ||||||
| Tao Yang | 0 | 0 | ||||||
| David X. Li | 0 | 0 | ||||||
| Kevin C. Wei | 0 | 0 | ||||||
| All directors and executive officers as a group (8 individuals) | 951,811 | * | ||||||
| * | Less than 1% |
| (1) | Unless otherwise indicated, the business address of each of the individuals is Tower A, WangXin Building, 28 Xiaoyun Rd, Chaoyang District, Beijing, 100027. |
| (2) | Consists of shares owned by Great Reap Ventures Limited and TMF (Cayman) Ltd. |
| (3) | Great Reap Ventures Limited is owned and controlled by Mr. Zhenxin Zhang. |
| (4) | TMF (Cayman) Ltd is owned by employees of NCF Wealth Holdings Limited and Mr. Zhenxin Zhang has voting power over the shares owned by TMF (Cayman) Ltd. |
| (5) | Ever Step Holdings Limited is owned and controlled by Chong Sing Holdings FinTech Group Limited, a company listed on the Hong Kong Stock Exchange with stock code 8207. |
| (6) | Highlight Limited is owned and controlled by Mr. Kecun Hu. |
| (7) | Consists of shares owned by TMF (Cayman) Ltd., which the beneficial owner can demand TMF (Cayman) Ltd. distribute to the beneficial owner at any time. |
Except as disclosed herein, we are not aware of any arrangement that may, at a subsequent date, result in a change of control of the combined company.
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| B. | Related Party Transactions |
The disclosure under the caption “Certain Relationships and Related party Transactions” beginning on page 127 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
| C. | Interests of Experts and Counsel |
Not Applicable.
| A. | Consolidated Statements and Other Financial Information. |
See Item 17.
| B. | Significant Changes |
None.
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
| A. | Share Capital |
Status of Outstanding Ordinary Shares.
As of March 21, 2019, we had a total of 204,041,004 shares of Class A Common Stock issued and outstanding. No classes of stock are issued or outstanding.
The information contained in Item 10(B) of this Shell Company Report is incorporated by reference herein.
| B. | Memorandum and Articles of Association |
We are a corporation formed under the laws of the Republic of the Marshall Islands on June 24, 2016 and our affairs are governed by our amended and restated articles of incorporation, our amended and restated bylaws, which are filed as exhibit 1.1 and 1.2, respectively, to this annual report, and the laws of the Republic of the Marshall Islands.
Below is a summary of the description of our capital stock, including the rights, preferences and restrictions attaching to each class of stock. Because the following is a summary, it does not contain all information that you may find useful. For more complete information, you should read our amended and restated articles of incorporation and amended and restated bylaws, which are incorporated by reference herein.
Purpose
Our purpose, as stated in our amended and restated articles of incorporation, is to engage in any lawful act or activity for which corporations may be organized under the Marshall Islands Business Corporation Act (the “BCA”), and we may exercise all the powers and privileges that are necessary or convenient to the conduct, promotion or attainment of our business or purposes.
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Authorized Capitalization
Pursuant to our amended and restated articles of incorporation, we are authorized to issue up to 400,000,000 Class A common shares, par value $0.0001 per share, 100,000,000 Class B common shares, par value $0.0001 per share, and 50,000,000 preferred shares, par value $0.0001 per share. As of the date of this annual report, we had 15,173,100 Class A common shares and 3,793,275 Class B common shares outstanding, and no preferred shares outstanding.
Units
Each unit consists of one Class A common share and one-half warrant. Holders have the option to continue to hold units or separate their units into the component securities. Holders must have their brokers contact our transfer agent in order to separate the units into Class A common shares and warrants. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. Accordingly, unless you purchase at least two units, you will not be able to receive or trade warrants.
Common Shares
Our shareholders are entitled to one vote for each share held of record on all matters to be voted on by shareholders. Our Class A common shares have no conversion, preemptive, or other subscription rights and there are no sinking fund or redemption provisions applicable to the common shares.
Preferred Shares
Our amended and restated articles of incorporation authorize the issuance of up to 50,000,000 shares, par value $0.0001 per share, of blank check preferred stock with such designation, rights and preferences as may be determined from time to time by our board of directors. No shares of preferred stock have been or are being issued or registered in the IPO. Accordingly, our board of directors is empowered, without shareholder approval, to issue preferred stock with dividend, liquidation, conversion, voting, or other rights which could adversely affect the voting power or other rights of the holders of common shares. In addition, the preferred stock could be utilized as a method of discouraging, delaying or preventing a change in control of us. Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future.
Warrants
Public Warrants
Each full warrant entitles the holder to purchase one Class A common share at a price of $11.50 per share, subject to adjustment as discussed below, at any time, unless the warrants have previously expired, commencing on the later of:
| · | 30 days after the consummation of the initial Business Combination; and |
| · | 12 months from the closing of the IPO; provided that, during the period in which the warrants are exercisable, a registration statement under the Securities Act covering the Class A common shares issuable upon exercise of the warrants is effective and a current prospectus relating to the Class A common shares issuable upon the exercise of the warrants is available. |
We have agreed to use our best efforts to have an effective registration statement covering our Class A common shares reserved for issuance upon exercise of the warrants from the date the warrants become exercisable and to maintain a current prospectus relating to those Class A common shares until the warrants expire or are redeemed by us.
The warrants will expire at 5:00 p.m., New York City time, March 21, 2024 or, if an effective registration statement covering the Class A common shares issuable upon exercise of the warrants is not then effective and a prospectus relating to such Class A common shares is not then available, upon such registration statement being effective and such prospectus being available for five consecutive business days, or in either case, earlier upon redemption or liquidation or, in either case, earlier upon redemption or liquidation by us. If we elect to redeem the warrants, we will have the option to require all holders who elect to exercise their warrants prior to redemption to do so on a cashless basis. We may redeem the warrants (except as described herein with respect to the private placement warrants) at any time after the warrants become exercisable:
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| · | in whole and not in part; |
| · | at a price of $0.01 per warrant; |
| · | upon a minimum of 30 days' prior written notice of redemption to each warrant holder; and |
| · | only if (x) the closing price of our Class A common shares on NASDAQ, or any other national securities exchange on which our Class A common shares may be traded, equals or exceeds $18.00 per share for any 20 trading days within a 30 trading-day period ending three business days before we send the notice of redemption to warrant holders, (y) a registration statement under the Securities Act covering Class A common shares issuable upon exercise of the warrants is effective and remains effective from the date on which we send a redemption notice to and including the redemption date and (z) a current prospectus relating to the Class A common shares issuable upon exercise of the warrants is available from the date on which we send a redemption notice to and including the redemption date. |
We established this last criterion to provide warrant holders with the opportunity to realize a premium to the warrant exercise price prior to the redemption of their warrants, as well as to provide them with a degree of liquidity to cushion the market reaction, if any, to our election to redeem the warrants. If the foregoing conditions are satisfied and we call the warrants for redemption, each warrant holder will then be entitled to exercise his, her or its warrants prior to the scheduled redemption date. There can be no assurance that the price of our Class A common shares will not fall below the $18.00 per share trigger price or the $11.50 per share warrant exercise price after the redemption notice is delivered. We do not need the consent of the underwriters or our shareholders to redeem the outstanding warrants.
If we call the warrants for redemption, our management will have the option to require all holders that elect to exercise such warrants to do so on a "cashless basis," provided that such cashless exercise is permitted under the laws of our corporate jurisdiction. In such event, each holder would pay the exercise price by surrendering the warrants and would receive on exercise that number of Class A common shares equal to the quotient obtained by dividing (x) the product of the number of common shares underlying the warrants being surrendered, multiplied by the difference between the exercise price of the warrants and the "fair market value" by (y) the fair market value and then would receive Class A common shares underlying the non-surrendered warrants. The "fair market value" shall mean the average reported closing price of our Class A common shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. Such warrants may not be settled on a cashless basis unless they have been called for redemption and we have required all such warrants to be settled on a cashless basis.
The right to exercise the warrants will be forfeited unless they are exercised before the redemption date specified in the notice of redemption. From and after the redemption date, the record holder of a warrant will have no further rights except to receive, upon surrender of the warrants, the redemption price.
The warrants are issued in registered form under a warrant agreement between Continental Stock Transfer & Trust Company, as warrant agent, and us, which is attached to this shell company report as Exhibit 4.2.
The exercise price and number of Class A common shares issuable on exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend or our recapitalization, reorganization, merger or consolidation.
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If the number of outstanding Class A common shares is increased by a capitalization or share dividend payable in Class A common shares, or by a split-up of Class A common shares or other similar event, then, on the effective date of such share dividend, split-up or similar event, the number of Class A common shares issuable on exercise of each warrant will be increased in proportion to such increase in the outstanding Class A common shares. A rights offering to holders of Class A common shares entitling holders to purchase Class A common shares at a price less than the fair market value will be deemed a capitalization of a number of Class A common shares equal to the product of (i) the number of Class A common shares actually sold in such rights offering (or issuable under any other equity securities sold in such rights offering that are convertible into or exercisable for Class A common shares) multiplied by (ii) one (1) minus the quotient of (x) the price per Class A ordinary share paid in such rights offering divided by (y) the fair market value. For these purposes (i) if the rights offering is for securities convertible into or exercisable for Class A common shares, in determining the price payable for Class A common shares, there will be taken into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market value means the volume weighted average price of Class A common shares as reported during the ten (10) trading day period ending on the trading day prior to the first date on which the Class A common shares trade on the applicable exchange or in the applicable market, regular way, without the right to receive such rights.
If the number of outstanding Class A common shares is decreased by a consolidation, combination, reverse share split or redesignation of Class A common shares or other similar event, then, on the effective date of such consolidation, combination, reverse share split, redesignation or similar event, the number of Class A common shares issuable on exercise of each warrant will be decreased in proportion to such decrease in outstanding Class A common shares.
Whenever the number of Class A common shares purchasable upon the exercise of the warrants is adjusted, as described above, the warrant exercise price will be adjusted by multiplying the warrant exercise price immediately prior to such adjustment by a fraction (x) the numerator of which will be the number of Class A common shares purchasable upon the exercise of the warrants immediately prior to such adjustment, and (y) the denominator of which will be the number of Class A common shares so purchasable immediately thereafter.
In case of any redesignation or reorganization of the outstanding Class A common shares (other than those described above or that solely affects the par value of such Class A common shares), or in the case of any merger or consolidation of us with or into another corporation (other than a consolidation or merger in which we are the continuing corporation and that does not result in any redesignation or reorganization of our outstanding Class A common shares), or in the case of any sale or conveyance to another corporation or entity of the assets or other property of us as an entirety or substantially as an entirety in connection with which we are dissolved, the holders of the warrants will thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the warrants and in lieu of our Class A common shares immediately theretofore purchasable and receivable upon the exercise of the rights represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such redesignation, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the holder of the warrants would have received if such holder had exercised their warrants immediately prior to such event. However, if the holders of our Class A common shares were entitled to exercise a right of election as to the kind or amount of securities, cash or other assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets for which each warrant will become exercisable will be deemed to be the weighted average of the kind and amount received per share by the holders of Class A common shares in such consolidation or merger that affirmatively make such election, and if a tender, exchange or redemption offer has been made to and accepted by such shareholders under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) of which such maker is a part, and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the meaning of Rule 13d-3 under the Exchange Act) more than 50% of the outstanding Class A common shares, the holder of a warrant will be entitled to receive the highest amount of cash, securities or other property to which such holder would actually have been entitled as a shareholder if such warrant holder had exercised the warrant prior to the expiration of such tender or exchange offer, accepted such offer and all of the Class A common shares held by such holder had been purchased pursuant to such tender or exchange offer, subject to adjustment (from and after the consummation of such tender or exchange offer) as nearly equivalent as possible to the adjustments provided for in the warrant agreement. Additionally, if less than 70% of the consideration receivable by the holders of Class A common shares in such a transaction is payable in the form of capital stock or shares in the successor entity that is listed for trading on a national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted immediately following such event, and if the registered holder of the warrant properly exercises the warrant within thirty days following the public disclosure of such transaction, the warrant exercise price will be reduced as specified in the warrant agreement based on the per share consideration minus Black-Scholes Warrant Value (as defined in the warrant agreement) of the warrant.
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The warrants may be exercised upon surrender of the warrant certificate on or prior to the expiration date at the offices of the warrant agent, with the exercise form on the reverse side of the warrant certificate completed and executed as indicated, accompanied (except in the event we have required cashless exercise of the warrants in connection with a redemption) by full payment of the exercise price, by certified check payable to us, for the number of warrants being exercised. The warrant holders do not have the rights or privileges of holders of Class A common shares and any voting rights until they exercise their warrants and receive Class A common shares. After the issuance of Class A common shares upon exercise of the warrants, each holder will be entitled to one vote for each share held of record on all matters to be voted on by shareholders.
No warrants will be exercisable unless at the time of exercise a registration statement relating to Class A common shares issuable upon exercise of the warrants is effective and a prospectus relating to Class A common shares issuable upon exercise of the warrants is available and the Class A common shares have been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Holders of the warrants are not entitled to net cash settlement and the warrants may only be settled by delivery of shares of our Class A common shares and not cash. Under the terms of the warrant agreement, we have agreed to meet these conditions and use our commercially reasonable efforts to maintain an effective registration statement and to make available a current prospectus relating to Class A common shares issuable upon exercise of the warrants until the expiration or earlier redemption of the warrants. However, we cannot assure you that we will be able to do so. We have no obligation to settle the warrants or otherwise permit the warrants to be exercised in the absence of an effective registration statement or a currently available prospectus. The warrants may never become exercisable if we fail to comply with these registration requirements. The warrants may be deprived of any value and the market for the warrants may be limited if holders are prohibited from exercising warrants because an effective registration statement and the prospectus relating to the Class A common shares issuable upon the exercise of the warrants is not currently available or if the Class A common shares are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside and we will not be required to cash settle any such warrant exercise. Warrants included in the units sold in the IPO will not be exercisable at the option of the holder on a cashless basis, provided that in connection with a call for redemption of the warrants, we may require all holders who wish to exercise their warrants to do so on a cashless basis. The private placement warrants will not be exercisable at any time unless a registration statement is effective and a prospectus is available. We have not registered the Class A common shares issuable upon exercise of the warrants at this time. However, we have agreed that, as soon as practicable, but in no event later than 30 days after the closing of our initial Business Combination, we will use our best efforts to file with the SEC a registration statement covering the Class A common shares issuable upon exercise of the warrants. After the filing of such registration statement, we will use our best efforts to cause the effectiveness thereof as soon as reasonably practicable and to maintain a current prospectus relating to those Class A common shares until the warrants expire or are redeemed, as specified in the warrant agreement. See "Risk Factors—Risks Associated with the Company and the Offering—We have not registered the Class A common shares issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to expire worthless."
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Private Placement Warrants
CMB NV, the sponsor in our initial public offering (the “sponsor”), purchased an aggregate of 3,333,333 private placement warrants at a price of $1.50 per warrant in private placement transactions that occurred in connection with our IPO. Pursuant to the underwriters' partial exercise of the overallotment option on December 16, 2016, we sold an additional 23,080 private placement warrants to the sponsor. Each private placement warrant entitles the holder to purchase one Class A common share at $11.50 per share.
The private placement warrants are identical to the warrants included in the units sold in the IPO, except that:
| · | the private placement warrants will be exercisable at the option of the holder on a cashless basis so long as they are held by the original purchaser or its permitted transferees and such cashless exercise is permitted under the laws of our corporate jurisdiction; |
| · | the private placement warrants will not be redeemable by us; and |
| · | the private placement warrants (including the Class A common shares issuable upon exercise of the private placement warrants) may not, subject to certain limited exceptions, be transferred, assigned or sold until 30 days after the completion of our initial Business Combination. |
If a holder of the private placement warrants elects to exercise them on a cashless basis, that holder would pay the exercise price by surrendering his, her or its warrants for that number of Class A common shares equal to the quotient obtained by dividing (x) the product of the number of Class A common shares underlying the warrants, multiplied by the difference between the exercise price of the warrants and the "fair market value" by (y) the fair market value. The "fair market value" shall mean the average reported closing price of the Class A common shares for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants.
On March 21, 2019, we issued an additional 933,333 private warrants to the sponsor in exchange for the cancellation of $1,400,000 of promissory notes which we made in the sponsor’s favor.
Directors
Our directors are elected by a plurality of the votes cast by shareholders entitled to vote. There is no provision for cumulative voting.
Our amended and restated articles of incorporation require our board of directors to consist of at least one member. Our board of directors currently consists of six members. Our amended and restated bylaws may be amended by the vote of a majority of our entire board of directors. Directors are elected annually on a staggered basis, with the term of office of one or another of the three classes expiring each year. Each director elected holds office for a three-year term or until his successor is duly elected and qualified, except in the event of his death, resignation, removal or the earlier termination of his term of office.
Shareholder meetings
Under our amended and restated bylaws, annual meetings of shareholders will be held at a time and place selected by our board of directors. The meetings may be held in or outside of the Marshall Islands. Special meetings may be called at any time by a majority of our board of directors or our Chief Executive Officer. Our board of directors may set a record date between 15 and 60 days before the date of any meeting to determine the shareholders that will be eligible to receive notice and vote at the meeting. One or more shareholders representing at least one-third of the total voting rights of our total issued and outstanding shares present in person or by proxy at a shareholder meeting shall constitute a quorum for the purposes of the meeting.
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Dissenters' rights of appraisal and payment
Under the BCA, our shareholders have the right to dissent from various corporate actions, including any merger or consolidation and the sale of all or substantially all of our assets not made in the usual course of our business, and receive payment of the fair value of their shares. In the event of any further amendment of our amended and restated articles of incorporation, a shareholder also has the right to dissent and receive payment for his or her shares if the amendment alters certain rights in respect of those shares. The dissenting shareholder must follow the procedures set forth in the BCA to receive payment. In the event that we and any dissenting shareholder fail to agree on a price for the common shares, the BCA procedures involve, among other things, the institution of proceedings in the high court of the Republic of the Marshall Islands or in any appropriate court in any jurisdiction in which our shares are primarily traded on a local or national securities exchange.
Shareholders' derivative actions
The BCA authorizes corporations to limit or eliminate the personal liability of directors to corporations and their shareholders for monetary damages for certain breaches of directors' fiduciary duties. Our amended and restated articles of incorporation and amended and restated bylaws include a provision that eliminates the personal liability of directors for monetary damages for actions taken as a director to the fullest extent permitted by law. Our amended and restated articles of incorporation provide that we must indemnify our directors and officers to the fullest extent authorized by law, and further, that we may advance expenses incurred while defending a civil or criminal proceeding. The foregoing obligations could result in us incurring substantial expenditures to cover the cost of settlement or damage awards against our officers and directors, which we may be unable to recoup.
Our amended and restated bylaws further permit us to secure insurance on behalf of any officer, director or employee for any liability arising out of his or her actions, regardless of whether Marshall Islands law would permit indemnification. We have purchased a policy of directors' and officers' liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify the directors and officers.
These provisions and resultant costs may discourage us and our shareholders from bringing a lawsuit against our officers and directors for breaches of their fiduciary duties, and may similarly reduce the likelihood of derivative litigation by our shareholders against our officers and directors even though such actions, if successful, might otherwise benefit us and our shareholders. Furthermore, a shareholder's investment may be adversely affected to the extent we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. We believe that these provisions, the insurance and the indemnity agreements are necessary to attract and retain talented and experienced directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
There is currently no pending material litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought.
Anti-takeover effect of certain provisions of our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws
Several provisions of our amended and restated articles of incorporation and amended and restated bylaws, which are summarized below, may have anti-takeover effects. These provisions are intended to avoid costly takeover battles, lessen our vulnerability to a hostile change of control and enhance the ability of our board of directors to maximize shareholder value in connection with any unsolicited offer to acquire us. However, these anti-takeover provisions, which are summarized below, could also discourage, delay or prevent (1) the merger or acquisition of us by means of a tender offer, a proxy contest or otherwise that a shareholder may consider in its best interest and (2) the removal of incumbent officers and directors.
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Blank check preferred stock
Under the terms of our amended and restated articles of incorporation, our board of directors has authority, without any further vote or action by our shareholders, to issue up to 50,000,000 shares of blank check preferred stock. Our board of directors may issue preferred shares on terms calculated to discourage, delay or prevent a change of control of us or the removal of our management and might harm the market price of our common shares. We have no current plans to issue any preferred shares.
Election and removal of directors
Our amended and restated articles of incorporation prohibit cumulative voting in the election of directors. Our amended and restated bylaws require parties other than the board of directors to give advance written notice of nominations for the election of directors. Our amended and restated articles of incorporation also provide that our directors may be removed for cause upon the affirmative vote of not less than 70% of the outstanding shares of our capital stock entitled to vote for those directors. These provisions may discourage, delay or prevent the removal of incumbent officers and directors.
Limited actions by shareholders
Our amended and restated articles of incorporation and our amended and restated bylaws provide that any action required or permitted to be taken by our shareholders must be effected at an annual or special meeting of shareholders or by the unanimous written consent of our shareholders. Our amended and restated articles of incorporation and our amended and restated bylaws provide that, unless otherwise prescribed by law, only a majority of our board of directors or the Chief Executive Officer may call special meetings of our shareholders and the business transacted at the special meeting is limited to the purposes stated in the notice. Accordingly, a shareholder will be prevented from calling a special meeting for shareholder consideration of a proposal unless scheduled by our board of directors and shareholder consideration of a proposal may be delayed until the next annual meeting.
Advance notice requirements for shareholder proposals and director nominations
Our amended and restated bylaws provide that shareholders seeking to nominate candidates for election as directors or to bring business before an annual meeting of shareholders must provide timely notice of their proposal in writing to the corporate secretary. Generally, to be timely, a shareholder's notice must be received at our principal executive offices not less than 150 days nor more than 180 days prior to the one year anniversary of the immediately preceding annual meeting of shareholders. Our amended and restated bylaws also specify requirements as to the form and content of a shareholder's notice. These provisions may impede shareholders' ability to bring matters before an annual meeting of shareholders or make nominations for directors at an annual meeting of shareholders.
Classified Board of Directors
As described above, our amended and restated articles of incorporation provide for the division of our board of directors into three classes of directors, with each class as nearly equal in number as possible, serving staggered three year terms beginning on the expiration of the initial term for each class. Accordingly, approximately one-third of our board of directors will be elected each year. This classified board provision could discourage a third party from making a tender offer for our shares or attempting to obtain control of us. It could also delay shareholders who do not agree with the policies of our board of directors from removing a majority of our board of directors for two years.
Listing
Our units, Class A common shares and warrants are listing for trading on NASDAQ under the symbols "HUNTU", "HUNT" and "HUNTW", respectively.
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Transfer Agent
The registrar and transfer agent for securities and the warrant agent for our warrants is Continental Stock Transfer & Trust Company.
| C. | Material Contracts |
All material contracts entered into other than during the ordinary course of our business and for the two years preceding the date hereof are described elsewhere in this Shell Company Report on Form 20-F or in the information incorporated by reference herein.
| D. | Exchange Controls |
The disclosure under the caption “Description of the Combined Company Following the Business Combination – Regulations Relating to Foreign Exchange” beginning on page 82 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
| E. | Taxation |
The disclosure under the caption “Material U.S. Federal Income Tax Consequences” beginning on page 129 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
| F. | Dividends and Paying Agents |
None.
| G. | Statement by Experts |
Not applicable.
| H. | Documents on Display |
Documents concerning us that are referred to in this document may be inspected at our principal executive offices at Tower A, WangXin Building, 28 Xiaoyun Rd, Chaoyang District, Beijing, 100027.
In addition, we will file annual reports and other information with the Securities and Exchange Commission. We will file annual reports on Form 20-F and submit other information under cover of Form 6-K. As a foreign private issuer, we are exempt from the proxy requirements of Section 14 of the Exchange Act and our officers, directors and principal shareholders will be exempt from the insider short-swing disclosure and profit recovery rules of Section 16 of the Exchange Act. The Commission maintains a web site that contains reports and other information regarding registrants (including us) that file electronically with the Commission which can be assessed at http://www.sec.gov.
| I. | Subsidiary Information |
Not required.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The disclosure under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations of NCF Wealth Group - Quantitative and Qualitative Disclosures about Market Risk” beginning on page 116 of the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
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| ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES. |
Not required.
| ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
Not required.
| ITEM 15. | CONTROLS AND PROCEDURES. |
Not required.
| ITEM 16. | [RESERVED] |
| ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT. |
Not required.
| ITEM 16B. | CODE OF ETHICS. |
Not required.
| ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Not required.
| ITEM 16D. | EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES. |
Not required.
| ITEM 16E | PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
None.
| ITEM 16F. | CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
The disclosure in the Company’s Form 6-K filed with the SEC on December 6, 2018 is incorporated by reference herein.
| ITEM 16G. | CORPORATE GOVERNANCE |
Not required.
| ITEM 16H. | MINE SAFETY DISCLOSURE |
Not applicable.
| 26 |
| ITEM 17. | FINANCIAL STATEMENTS |
See Item 18.
| ITEM 18. | FINANCIAL STATEMENTS |
The disclosure on pages F-1 to F-73 the Company’s offer to purchase dated February 12, 2019 included as exhibit (a)(1)(A) to the Company’s Schedule TO dated February 12, 2019 is incorporated by reference herein.
The Financial Statements of Hunter Maritime Acquisition Corp. are attached to this Shell Company Report on Form 20-F as Exhibit 99.1 and are incorporated herein by reference.
Unaudited Condensed Combined Pro Forma Financial Statements of the Company are included as Exhibit 99.2 hereto.
| 101.INS | XBRL Instance Document |
| 101.SCH | XBRL Taxonomy Extension Schema Document |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |
| 27 |
| (1) | Incorporated by reference to the Company's Registration Statement on Form F-1, which was declared effective by the SEC on November 18, 2016. |
| (2) | Incorporated by reference to the Company's Report of Foreign Private Issuer on Form 6-K, filed with the SEC on November 23, 2016. |
| (3) | Incorporated by reference to the Company's Annual Report on Form 20-F, filed with the SEC on April 27, 2017. |
| (4) | Incorporated by reference to Exhibit 99.2 to the Form 6-K filed by Hunter Maritime Acquisition Corp. on October 5, 2018 |
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The Registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this shell company report on its behalf.
| HUNTER MARITIME GROUP CO. LTD. | ||
| By: | /s/ Jia Sheng | |
| Name: Jia Sheng | ||
| Title: Chief Executive Officer | ||
|
Date: March 27, 2019 |
||
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Exhibit 4.5
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of Mrach 21, 2019, is made and entered into by and among Hunter Maritime Acquisition Corp., a Marshall Islands corporation (the “Company”) and Zhenxin Zhang, as the representative of and attorney-in-fact for (the “NCF Stockholders’ Representative”) each of the parties listed on Schedule __ hereto (each an “NCF Stockholder” and a “Holder”).
RECITALS
WHEREAS, on October 5, 2018, NCF Wealth Holdings Limited, a British Virgin Islands company (“NCF”), the Stockholders’ Representative, the Company and Hunter Maritime (BVI) Limited, a British Virgin Islands company, entered into that certain merger agreement dated such date (the “Merger Agreement”) pursuant to which the NCF Stockholders will receive as consideration for the transaction contemplated by the Merger Agreement, in the aggregate, 200,000,000 (two hundred million) Class A common shares, par value $0.0001 per share, of the Company (the “Common Shares”); and
WHEREAS, it is a condition to the obligation of all parties to the Merger Agreement that this Agreement shall have been entered into and be in full force and effect; and
WHEREAS, the parties desire to enter into this Agreement, pursuant to which the Company shall grant each NCF Stockholder certain registration rights with respect to such Common Shares, in accordance with the terms and provisions of this Agreement.
NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE
1
DEFINITIONS
1.1 Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the reasonable good faith judgment of the Chief Executive Officer or the Chief Financial Officer of the Company, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) the Company has a bona fide business purpose for not making such information public.
“Agreement” shall have the meaning given in the Preamble.
“Board” shall mean the Board of Directors of the Company.
“Business Combination” shall mean the transaction contemplated by the Merger Agreement.
“Commission” shall mean the U.S. Securities and Exchange Commission.
“Common Shares” shall have the meaning given in the Recitals hereto.
“Company” shall have the meaning given in the Preamble.
“Demand Registration” shall have the meaning given in subsection 2.1.1.
“Demanding Holder” shall have the meaning given in subsection 2.1.1.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.
“Form F-1” shall have the meaning given in subsection 2.1.1.
“Form F-3” shall have the meaning given in subsection 2.3.
“Holders” shall have the meaning given in the Preamble.
“IPO Registration Rights Agreement” shall mean the Registration Rights Agreement dated as of November 18, 2016 between the Company and CMB NV, as successor to the rights and obligations of Bocimar Hunter NV thereunder.
“Maximum Number of Securities” shall have the meaning given in subsection 2.1.4.
“Merger Agreement” shall have the meaning given in the Recitals hereto.
“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus in the light of the circumstances under which they were made) not misleading.
“NCF Stockholder” shall have the meaning given in the Recitals hereto.
NCF Stockholders’ Representative shall have the meaning given in the Recitals hereto.
“Permitted Transferees” shall mean a person or entity to whom a Holder of Registrable Securities is permitted, pursuant to applicable law, to transfer such Registrable Securities prior to the effectiveness of a Registration Statement covering the resale of such Registrable Securities pursuant hereto.
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“Piggyback Registration” shall have the meaning given in subsection 2.2.1.
“Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Security” shall mean the Common Shares issued to a Holder in connection with the closing of the Business Combination, and any other equity security of the Company issued or issuable with respect to any such Common Share by way of a share dividend or share split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities when: (A) a Registration Statement with respect to the sale of such securities shall be effective under the Securities Act; (B) such securities shall have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 promulgated under the Securities Act (but with no volume or other restrictions or limitations); or (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.
“Registration” shall mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
“Registration Expenses” shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any securities exchange on which the Common Shares are then listed;
(B) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
(C) printing, messenger, telephone and delivery expenses;
(D) reasonable fees and disbursements of counsel for the Company;
(E) reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and
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(F) reasonable fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders initiating a Demand Registration to be registered for offer and sale in the applicable Registration.
“Registration Statement” shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holder” shall have the meaning given in subsection 2.1.1.
“Securities Act” shall mean the Securities Act of 1933, as amended from time to time.
“Sponsor Registration Statement” shall mean a registration statement on Form F-3 covering only the resale by CMB NV of up to 200,000 Common Shares, and any amendment thereto.
“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Registration” or “Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
ARTICLE
2
REGISTRATIONS
2.1 Demand Registration.
2.1.1 Request for Registration. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, at any time and from time to time on or after the date the Company consummates the Business Combination, the Holders of at least a majority in interest of the then outstanding number of Registrable Securities (the “Demanding Holders”) may make a written demand for Registration under the Securities Act of all or part of their Registrable Securities, which written demand shall describe the amount and type of securities to be included in such Registration and the intended method(s) of distribution thereof (such written demand a “Demand Registration”). The Company shall, within ten (10) days of the Company’s receipt of the Demand Registration, notify, in writing, all other Holders of Registrable Securities of such demand, and each Holder of Registrable Securities who thereafter wishes to include all or a portion of such Holder’s Registrable Securities in a Registration pursuant to a Demand Registration (each such Holder that includes all or a portion of such Holder’s Registrable Securities in such Registration, a “Requesting Holder”) shall so notify the Company, in writing, within five (5) days after the receipt by the Holder of the notice from the Company. Upon receipt by the Company of any such written notification from a Requesting Holder(s) to the Company, such Requesting Holder(s) shall be entitled to have their Registrable Securities included in a Registration pursuant to a Demand Registration and the Company shall, as soon thereafter as practicable, but not more than twenty (20) days immediately after the Company’s receipt of the Demand Registration, prepare and file with the Commission a Registration Statement covering of all Registrable Securities requested by the Demanding Holders and Requesting Holders pursuant to such Demand Registration and the Company shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter. Under no circumstances shall the Company be obligated to effect more than an aggregate of three (3) Registrations pursuant to a Demand Registration under this subsection 2.1.1 with respect to any or all Registrable Securities; provided, however, that a Registration shall not be counted for such purposes unless a Form F-1 or any similar long-form registration statement that may be available at such time (“Form F-1”) has become effective and all of the Registrable Securities requested by the Requesting Holders to be registered on behalf of the Requesting Holders in such Form F-1 Registration have been sold, in accordance with Section 3.1 of this Agreement.
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2.1.2 Effective Registration. Notwithstanding the provisions of subsection 2.1.1 above or any other part of this Agreement, a Registration pursuant to a Demand Registration shall not count as a Registration unless and until (i) the Registration Statement filed with the Commission with respect to a Registration pursuant to a Demand Registration has been declared effective by the Commission and (ii) the Company has complied with all of its obligations under this Agreement with respect thereto; provided, further, that if, after such Registration Statement has been declared effective, an offering of Registrable Securities in a Registration pursuant to a Demand Registration is subsequently interfered with by any stop order or injunction of the Commission, federal or state court or any other governmental agency the Registration Statement with respect to such Registration shall be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of the Demanding Holders initiating such Demand Registration thereafter affirmatively elect to continue with such Registration and accordingly notify the Company in writing, but in no event later than five (5) days, of such election; provided, further, that the Company shall not be obligated or required to file another Registration Statement until the Registration Statement that has been previously filed with respect to a Registration pursuant to a Demand Registration becomes effective or is subsequently terminated.
2.1.3 Underwritten Offering. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, if a majority-in-interest of the Demanding Holders so advise the Company as part of their Demand Registration that the offering of the Registrable Securities pursuant to such Demand Registration shall be in the form of an Underwritten Offering, then the right of such Demanding Holder or Requesting Holder (if any) to include its Registrable Securities in such Registration shall be conditioned upon such Holder’s participation in such Underwritten Offering and the inclusion of such Holder’s Registrable Securities in such Underwritten Offering to the extent provided herein. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.1.3 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the majority-in-interest of the Demanding Holders initiating the Demand Registration, which Underwriter(s) shall be reasonably acceptable to the Company.
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2.1.4 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Registration pursuant to a Demand Registration, in good faith, advises the Company, the Demanding Holders and the Requesting Holders (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other Common Shares or other equity securities that the Company desires to sell and the Common Shares, if any, as to which a Registration has been requested pursuant to separate written contractual piggy-back registration rights held by any other shareholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, as follows: (i) first, the Registrable Securities subject to registration rights under the IPO Registration Rights Agreement, (ii) second, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Registration and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Registration (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Common Shares or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Common Shares or other equity securities of other persons or entities that the Company is obligated to register in a Registration pursuant to separate written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Securities.
2.1.5 Demand Registration Withdrawal. A majority-in-interest of the Demanding Holders initiating a Demand Registration or any of the Requesting Holders (if any), pursuant to a Registration under subsection 2.1.1 shall have the right to withdraw from a Registration pursuant to such Demand Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to the Registration of their Registrable Securities pursuant to such Demand Registration. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Registration pursuant to a Demand Registration prior to its withdrawal under this subsection 2.1.5.
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2.2 Piggyback Registration.
2.2.1 Piggyback Rights. If, at any time on or after the date the Company consummates the Business Combination, the Company proposes to file a Registration Statement, except for the Sponsor Registration Statement, under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of shareholders of the Company (or by the Company and by the shareholders of the Company including, without limitation, pursuant to Section 2.1 hereof), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing shareholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall give written notice of such proposed filing to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated filing date of such Registration Statement, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such Registration a “Piggyback Registration”). The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use its reasonable best efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by the Holders pursuant to this subsection 2.2.1 to be included in a Piggyback Registration on the same terms and conditions as any similar securities of the Company included in such Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.2.1 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.
2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Registration that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of the Common Shares that the Company desires to sell, taken together with (i) the Common Shares, if any, as to which Registration has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2.2 hereof, and (iii) the Common Shares, if any, as to which Registration has been requested pursuant to separate written contractual piggy-back registration rights of other shareholders of the Company, exceeds the Maximum Number of Securities, then:
(a) If the Registration is undertaken for the Company’s account, the Company shall include in any such Registration (A) first, the Common Shares or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 hereof, Pro Rata, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the Common Shares, if any, as to which Registration has been requested pursuant to written contractual piggy-back registration rights of other shareholders of the Company, which can be sold without exceeding the Maximum Number of Securities;
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(b) If the Registration is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration (A) first, the Common Shares or other equity securities, if any, of such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1, pro rata based on the number of Registrable Securities that each Holder has requested be included in such Underwritten Registration and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Registration, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the Common Shares or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the Common Shares or other equity securities for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities, which can be sold without exceeding the Maximum Number of Securities.
2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this subsection 2.2.3.
2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, any Registration effected pursuant to Section 2.2 hereof shall not be counted as a Registration pursuant to a Demand Registration effected under Section 2.1 hereof.
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2.3 Registrations on Form F-3. Any Holder of Registrable Securities may at any time, and from time to time, request in writing that the Company, pursuant to Rule 415 under the Securities Act (or any successor rule promulgated thereafter by the Commission), register the resale of any or all of their Registrable Securities on Form F-3 or similar short-form registration statement that may be available at such time (“Form F-3”); provided, however, that the Company shall not be obligated to effect such request through an Underwritten Offering. Within five (5) days of the Company’s receipt of a written request from a Holder or Holders of Registrable Securities for a Registration on Form F-3, the Company shall promptly give written notice of the proposed Registration on Form F-3 to all other Holders of Registrable Securities, and each Holder of Registrable Securities who thereafter wishes to include all or a portion of such Holder’s Registrable Securities in such Registration on Form F-3 shall so notify the Company, in writing, within ten (10) days after the receipt by the Holder of the notice from the Company. As soon as practicable thereafter, but not more than twelve (12) days after the Company’s initial receipt of such written request for a Registration on Form F-3, the Company shall file a registration statement relating to all or such portion of such Holder’s Registrable Securities as are specified in such written request, together with all or such portion of Registrable Securities of any other Holder or Holders joining in such request as are specified in the written notification given by such Holder or Holders; provided, however, that the Company shall not be obligated to effect any such Registration pursuant to Section 2.3 hereof if (i) Form F-3 is not available for such offering; or (ii) the Holders of Registrable Securities, together with the Holders of any other equity securities of the Company entitled to inclusion in such Registration, propose to sell the Registrable Securities and such other equity securities (if any) at an aggregate price to the public of less than $5,000,000. Notwithstanding the foregoing provisions of this Section 2.3, if, in response to comments received from the staff of the Commission, the Company would be unable to cause the Commission to declare the Registration Statement effective without limiting the number of Registrable Securities included therein, such Registration Statement shall register the resale of a number of Registrable Securities which is equal to the maximum number of shares as is permitted by the Commission, and, subject to the provisions of this section, the Company shall continue to use its reasonable best efforts to register all remaining Registrable Securities as set forth herein. In such event, the number of Registrable Shares to be registered for each Holder in the applicable Registration Statement shall be reduced pro rata among all Holders. The provisions of the second and third sentences of this Section 2.3 shall not apply with respect to the Sponsor Registration Statement.
2.4 Restrictions on Registration Rights. If (A) during the period starting with the date thirty (30) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date ninety (90) days after the effective date of, a Company initiated Registration and provided that the Company has delivered written notice to the Holders prior to receipt of a Demand Registration pursuant to subsection 2.1.1 and it continues to actively employ, in good faith, all reasonable efforts to cause the applicable Registration Statement to become effective; (B) the Holders have requested an Underwritten Registration and the Company and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer; or (C) in the good faith judgment of the Board such Registration would be materially detrimental to the Company and the Board concludes as a result that it is essential to defer the filing of such Registration Statement at such time, then in each case the Company shall furnish to such Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board it would be materially detrimental to the Company for such Registration Statement to be filed in the near future and that it is therefore essential to defer the filing of such Registration Statement. In such event, the Company shall have the right to defer such filing for a period of not more than thirty (30) days; provided, however, that the Company shall not defer its obligation in this manner more than once in any 12-month period. Notwithstanding anything to the contrary contained in this Agreement, no Registration except for the Sponsor Registration Statement shall be effected or permitted and no Registration Statement except for the Sponsor Registration Statement shall become effective, with respect to any Registrable Securities held by any Holder, until after the expiration of ninety (90) days following the effectuation of the Business Combination.
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ARTICLE
3
COMPANY PROCEDURES
3.1 General Procedures. If at any time on or after the date the Company consummates the Business Combination the Company is required to effect the Registration of Registrable Securities, the Company shall use its best efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall use commercially reasonable efforts to, as expeditiously as possible:
3.1.1 prepare and file with the Commission as soon as practicable a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such Registration Statement have been sold;
3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be requested by the Holders or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus;
3.1.3 prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities owned by such Holders;
3.1.4 prior to any public offering of Registrable Securities, use its best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;
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3.1.5 cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;
3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
3.1.8 at least five (5) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus furnish a copy thereof to each seller of such Registrable Securities or its counsel;
3.1.9 notify the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 permit a representative of the Holders, the Underwriters, if any, and any attorney or accountant retained by such Holders or Underwriter to participate, at each such person’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with the Registration; provided, however, that such representatives or Underwriters enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;
3.1.11 obtain a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Registration, in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating Holders;
3.1.12 on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as any such placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions;
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3.1.13 in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing Underwriter of such offering;
3.1.14 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
3.1.15 if the Registration involves the Registration of Registrable Securities involving gross proceeds in excess of $50,000,000, use its reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in any Underwritten Offering; and
3.1.16 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders, in connection with such Registration.
3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.
3.3 Requirements for Participation in Underwritten Offerings. No person may participate in any Underwritten Offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements.
3.4 Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than thirty (30) days, determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities. The Company shall immediately notify the Holders of the expiration of any period during which it exercised its rights under this Section 3.4.
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3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act. The Company further covenants that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Common Shares held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act, including providing any legal opinions. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
ARTICLE
4
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers and directors and each person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses (including reasonable attorneys’ fees) caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.
4.1.2 In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including without limitation reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.
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4.1.3 Any person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
4.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason.
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4.1.5 If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder under this subsection 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in subsections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this subsection 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this subsection 4.1.5. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this subsection 4.1.5 from any person who was not guilty of such fraudulent misrepresentation.
ARTICLE
5
MISCELLANEOUS
5.1 Notices. Any notice or communication under this Agreement must be in writing and given by (i) delivery in person or by courier service providing evidence of delivery, or (ii) transmission by hand delivery, electronic mail, or facsimile. Each notice or communication that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery, electronic mail, or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger, if any) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must be addressed, if to the Company to: [__________________] or by email to [_______________], and, if to any Holder, at such Holder’s address or facsimile number as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.
5.2 Assignment; No Third Party Beneficiaries.
5.2.1 This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
5.2.2 No Holder may assign or delegate such Holder’s rights, duties or obligations under this Agreement, in whole or in part, except in connection with a transfer of Registrable Securities by such Holder to a Permitted Transferee.
5.2.3 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.
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5.2.4 This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2 hereof.
5.2.5 No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.
5.3 Counterparts. This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.
5.4 Governing Law; Venue. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION.
5.5 Amendments and Modifications. Upon the written consent of the Company and the Holders of at least a majority in interest of the Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
5.6 Other Registration Rights. The Company represents and warrants that other than the beneficiaries of the IPO Registration Rights Agreement, no person, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration filed by the Company for the sale of securities for its own account or for the account of any other person. Further, the Company represents and warrants that this Agreement supersedes any other registration rights agreement or agreement with similar terms and conditions and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.
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5.7 Term. This Agreement shall terminate upon the earlier of the date as of which (i) all of the Registrable Securities have been sold pursuant to a Registration Statement (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder) and (ii) the Holders of all Registrable Securities are permitted to sell the Registrable Securities under Rule 144 (or any similar provision) under the Securities Act without limitation on the amount of securities sold or the manner of sale. The provisions of Section 3.5 and Article IV shall survive any termination.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
| COMPANY: | |||
| HUNTER MARITIME ACQUISITION CORP. | |||
| By: | /s/ Ludovic Saverys | ||
| Name: | Ludovic Saverys | ||
| Title: | Chief Financial Officer | ||
| HOLDERS: | |||
| Zhengxin Zhang, as Stockholders’ Representative | |||
| By: | /s/ Zhengxin Zhang | ||
| Name: | Zhengxin Zhang | ||
| Title: | Stockholders’ Representative | ||
[Signature Page to Registration Rights Agreement]
Exhibit 4.6
Execution Version
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of March 20, 2019, is made and entered into by and among Hunter Maritime Acquisition Corp., a Marshall Islands corporation (the “Company”) and CMB NV, a company incorporated under the laws of Belgium (the "Sponsor", and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, a "Holder" and collectively the "Holders").
RECITALS
WHEREAS, as of the date hereof, the Sponsor holds an aggregate of 3,793,275 of the Company's Class B common shares, par value $0.0001 per share (the "Founder Shares");
WHEREAS, the Founder Shares are convertible into the Company's Class A common shares, par value $0.0001 per share (the "Common Shares"), on the terms provided in the Company's amended and restated articles of incorporation and the Conversion Agreement entered into by and among the Company and the Sponsor;
WHEREAS, on November 18, 2016, the Company and the Sponsor entered into that certain Sponsor Warrants Purchase Agreement, pursuant to which the Sponsor agreed to purchase 3,333,333 warrants (or up to 3,633,333 warrants if the over-allotment option in connection with the Company's initial public offering is exercised in full), in a private placement transaction occurring simultaneously with the closing of the Company's initial public offering, and the Company has agreed to issue an additional 933,333 warrants on the same terms on or around the date of closing of the Company’s initial business combination (together, the "Private Placement Warrants"); and
WHEREAS, the Company and the Bocimar Hunter NV, a Belgian corporation, entered into a Registration Rights Agreement, dated as of November 18, 2016 (the “Original Agreement”), and the Sponsor, the Company and Bocimar Hunter NV subsequently entered into a Joinder Agreement dated as of September 27, 2018, pursuant to which the Sponsor succeeded to the rights of Bocimar Hunter NV under the Original Agreement.
WHEREAS, pursuant to Section 5.5 of the Original Agreement, the Company and the Holder desire to amend and restate the Original Agreement to, among other things, reflect the Company’s waiver of the Sponsor’s contractual restriction on selling its Common Shares for a period of one year after the consummation of the Company’s initial business combination.
NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:
“Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the reasonable good faith judgment of the Chief Executive Officer or the Chief Financial Officer of the Company, after consultation with counsel to the Company, (i) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (ii) would not be required to be made at such time if the Registration Statement were not being filed, and (iii) the Company has a bona fide business purpose for not making such information public.
“Agreement” shall have the meaning given in the Preamble.
“Board” shall mean the Board of Directors of the Company.
“Business Combination” shall mean the transaction contemplated by the Merger Agreement.
“Commission” shall mean the U.S. Securities and Exchange Commission.
“Common Shares” shall have the meaning given in the Recitals hereto.
“Company” shall have the meaning given in the Preamble.
“Demand Registration” shall have the meaning given in subsection 2.1.1.
“Demanding Holder” shall have the meaning given in subsection 2.1.1.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.
“Form F-1” shall have the meaning given in subsection 2.1.1.
“Form F-3” shall have the meaning given in subsection 2.3.
“Holders” shall have the meaning given in the Preamble.
“Maximum Number of Securities” shall have the meaning given in subsection 2.1.4.
“Merger Agreement” shall have the meaning given in the Recitals hereto.
“Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus or necessary to make the statements in a Registration Statement or Prospectus (in the case of a Prospectus in the light of the circumstances under which they were made) not misleading.
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“NCF Registration Rights Agreement” shall mean the Registration Rights Agreement that shall be entered into on or around March 21, 2019 between the Company and Zhenxin Zhang, as the representative of and attorney-in-fact for the parties named therein.
“Permitted Transferees” shall mean a person or entity to whom a Holder of Registrable Securities is permitted, pursuant to applicable law, to transfer such Registrable Securities prior to the effectiveness of a Registration Statement covering the resale of such Registrable Securities pursuant hereto.
“Piggyback Registration” shall have the meaning given in subsection 2.2.1.
“Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.
“Registrable Security” shall mean (a) the Common Shares issued or issuable upon the conversion of any Founder Shares, (b) the Private Placement Warrants (including any Common Shares issued or issuable upon the exercise of any such Private Placement Warrants), (c) any outstanding Common Shares or any other equity security (including the Common Shares issued or issuable upon the exercise of any other equity security) of the Company held by a Holder as of the date of this Agreement, (d) any equity securities (including the Common Shares issued or issuable upon the exercise of any such equity security) of the Company issuable upon conversion of any working capital loans in an amount up to $2,000,000 made to the Company by a Holder, and (e) any other equity security of the Company issued or issuable with respect to any such Common Share by way of a share dividend or share split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization; provided, however, that, as to any particular Registrable Security, such securities shall cease to be Registrable Securities when: (A) a Registration Statement with respect to the sale of such securities shall be effective under the Securities Act; (B) such securities shall have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (C) such securities shall have ceased to be outstanding; (D) such securities may be sold without registration pursuant to Rule 144 promulgated under the Securities Act (but with no volume or other restrictions or limitations); or (E) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.
“Registration” shall mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.
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“Registration Expenses” shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:
(A) all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority, Inc.) and any securities exchange on which the Common Shares are then listed;
(B) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);
(C) printing, messenger, telephone and delivery expenses;
(D) reasonable fees and disbursements of counsel for the Company;
(E) reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and
(F) reasonable fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders initiating a Demand Registration to be registered for offer and sale in the applicable Registration.
“Registration Statement” shall mean any registration statement that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.
“Requesting Holder” shall have the meaning given in subsection 2.1.1.
“Securities Act” shall mean the Securities Act of 1933, as amended from time to time.
“Sponsor Registration Statement” shall mean a registration statement on Form F-3 covering only the resale by the Sponsor of up to 200,000 Common Shares, and any amendment thereto.
“Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.
“Underwritten Registration” or “Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.
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ARTICLE 2
REGISTRATIONS
2.1 Demand Registration.
2.1.1 Request for Registration. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, at any time and from time to time on or after the date the Company consummates the Business Combination, the Holders of at least a majority in interest of the then outstanding number of Registrable Securities (the “Demanding Holders”) may make a written demand for Registration under the Securities Act of all or part of their Registrable Securities, which written demand shall describe the amount and type of securities to be included in such Registration and the intended method(s) of distribution thereof (such written demand a “Demand Registration”). The Company shall, within ten (10) days of the Company’s receipt of the Demand Registration, notify, in writing, all other Holders of Registrable Securities of such demand, and each Holder of Registrable Securities who thereafter wishes to include all or a portion of such Holder’s Registrable Securities in a Registration pursuant to a Demand Registration (each such Holder that includes all or a portion of such Holder’s Registrable Securities in such Registration, a “Requesting Holder”) shall so notify the Company, in writing, within five (5) days after the receipt by the Holder of the notice from the Company. Upon receipt by the Company of any such written notification from a Requesting Holder(s) to the Company, such Requesting Holder(s) shall be entitled to have their Registrable Securities included in a Registration pursuant to a Demand Registration and the Company shall, as soon thereafter as practicable, but not more than twenty (20) days immediately after the Company’s receipt of the Demand Registration, prepare and file with the Commission a Registration Statement covering of all Registrable Securities requested by the Demanding Holders and Requesting Holders pursuant to such Demand Registration and the Company shall use its reasonable best efforts to cause such Registration Statement to be declared effective by the Commission as soon as practicable thereafter. Under no circumstances shall the Company be obligated to effect more than an aggregate of three (3) Registrations pursuant to a Demand Registration under this subsection 2.1.1 with respect to any or all Registrable Securities; provided, however, that a Registration shall not be counted for such purposes unless a Form F-1 or any similar long-form registration statement that may be available at such time (“Form F-1”) has become effective and all of the Registrable Securities requested by the Requesting Holders to be registered on behalf of the Requesting Holders in such Form F-1 Registration have been sold, in accordance with Section 3.1 of this Agreement.
2.1.2 Effective Registration. Notwithstanding the provisions of subsection 2.1.1 above or any other part of this Agreement, a Registration pursuant to a Demand Registration shall not count as a Registration unless and until (i) the Registration Statement filed with the Commission with respect to a Registration pursuant to a Demand Registration has been declared effective by the Commission and (ii) the Company has complied with all of its obligations under this Agreement with respect thereto; provided, further, that if, after such Registration Statement has been declared effective, an offering of Registrable Securities in a Registration pursuant to a Demand Registration is subsequently interfered with by any stop order or injunction of the Commission, federal or state court or any other governmental agency the Registration Statement with respect to such Registration shall be deemed not to have been declared effective, unless and until, (i) such stop order or injunction is removed, rescinded or otherwise terminated, and (ii) a majority-in-interest of the Demanding Holders initiating such Demand Registration thereafter affirmatively elect to continue with such Registration and accordingly notify the Company in writing, but in no event later than five (5) days, of such election; provided, further, that the Company shall not be obligated or required to file another Registration Statement until the Registration Statement that has been previously filed with respect to a Registration pursuant to a Demand Registration becomes effective or is subsequently terminated.
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2.1.3 Underwritten Offering. Subject to the provisions of subsection 2.1.4 and Section 2.4 hereof, if a majority-in-interest of the Demanding Holders so advise the Company as part of their Demand Registration that the offering of the Registrable Securities pursuant to such Demand Registration shall be in the form of an Underwritten Offering, then the right of such Demanding Holder or Requesting Holder (if any) to include its Registrable Securities in such Registration shall be conditioned upon such Holder’s participation in such Underwritten Offering and the inclusion of such Holder’s Registrable Securities in such Underwritten Offering to the extent provided herein. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.1.3 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the majority-in-interest of the Demanding Holders initiating the Demand Registration, which Underwriter(s) shall be reasonably acceptable to the Company.
2.1.4 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Registration pursuant to a Demand Registration, in good faith, advises the Company, the Demanding Holders and the Requesting Holders (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other Common Shares or other equity securities that the Company desires to sell and the Common Shares, if any, as to which a Registration has been requested pursuant to separate written contractual piggy-back registration rights held by any other shareholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, as follows: (i) first, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Registration and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Registration (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the securities subject to registration rights under the NCF Registration Rights Agreement, (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), the Common Shares or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), the Common Shares or other equity securities of other persons or entities that the Company is obligated to register in a Registration pursuant to separate written contractual arrangements with such persons and that can be sold without exceeding the Maximum Number of Securities.
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2.1.5 Demand Registration Withdrawal. A majority-in-interest of the Demanding Holders initiating a Demand Registration or any of the Requesting Holders (if any), pursuant to a Registration under subsection 2.1.1 shall have the right to withdraw from a Registration pursuant to such Demand Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of their intention to withdraw from such Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to the Registration of their Registrable Securities pursuant to such Demand Registration. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with a Registration pursuant to a Demand Registration prior to its withdrawal under this subsection 2.1.5.
2.2 Piggyback Registration.
2.2.1 Piggyback Rights. If, at any time on or after the date the Company consummates the Business Combination, the Company proposes to file a Registration Statement, except for the Sponsor Registration Statement, under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of shareholders of the Company (or by the Company and by the shareholders of the Company including, without limitation, pursuant to Section 2.1 hereof), other than a Registration Statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing shareholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall give written notice of such proposed filing to all of the Holders of Registrable Securities as soon as practicable but not less than ten (10) days before the anticipated filing date of such Registration Statement, which notice shall (A) describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, in such offering, and (B) offer to all of the Holders of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such Holders may request in writing within five (5) days after receipt of such written notice (such Registration a “Piggyback Registration”). The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use its reasonable best efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by the Holders pursuant to this subsection 2.2.1 to be included in a Piggyback Registration on the same terms and conditions as any similar securities of the Company included in such Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.2.1 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.
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2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Registration that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of the Common Shares that the Company desires to sell, taken together with (i) the Common Shares, if any, as to which Registration has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder (ii) the Registrable Securities as to which registration has been requested pursuant to Section 2.2 hereof, and (iii) the Common Shares, if any, as to which Registration has been requested pursuant to separate written contractual piggy-back registration rights of other shareholders of the Company, exceeds the Maximum Number of Securities, then:
(a) If the Registration is undertaken for the Company’s account, the Company shall include in any such Registration (A) first, the Common Shares or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1 hereof, Pro Rata, which can be sold without exceeding the Maximum Number of Securities; and (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the Common Shares, if any, as to which Registration has been requested pursuant to written contractual piggy-back registration rights of other shareholders of the Company, which can be sold without exceeding the Maximum Number of Securities;
(b) If the Registration is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Registration (A) first, the Common Shares or other equity securities, if any, of such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (B) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (A), the Registrable Securities of Holders exercising their rights to register their Registrable Securities pursuant to subsection 2.2.1, pro rata based on the number of Registrable Securities that each Holder has requested be included in such Underwritten Registration and the aggregate number of Registrable Securities that the Holders have requested to be included in such Underwritten Registration, which can be sold without exceeding the Maximum Number of Securities; (C) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A) and (B), the Common Shares or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (D) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (A), (B) and (C), the Common Shares or other equity securities for the account of other persons or entities that the Company is obligated to register pursuant to separate written contractual arrangements with such persons or entities, which can be sold without exceeding the Maximum Number of Securities.
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2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this subsection 2.2.3.
2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, any Registration effected pursuant to Section 2.2 hereof shall not be counted as a Registration pursuant to a Demand Registration effected under Section 2.1 hereof.
2.3 Registrations on Form F-3. Any Holder of Registrable Securities may at any time, and from time to time, request in writing that the Company, pursuant to Rule 415 under the Securities Act (or any successor rule promulgated thereafter by the Commission), register the resale of any or all of their Registrable Securities on Form F-3 or similar short-form registration statement that may be available at such time (“Form F-3”); provided, however, that the Company shall not be obligated to effect such request through an Underwritten Offering. Within five (5) days of the Company’s receipt of a written request from a Holder or Holders of Registrable Securities for a Registration on Form F-3, the Company shall promptly give written notice of the proposed Registration on Form F-3 to all other Holders of Registrable Securities, and each Holder of Registrable Securities who thereafter wishes to include all or a portion of such Holder’s Registrable Securities in such Registration on Form F-3 shall so notify the Company, in writing, within ten (10) days after the receipt by the Holder of the notice from the Company. As soon as practicable thereafter, but not more than twelve (12) days after the Company’s initial receipt of such written request for a Registration on Form F-3, the Company shall file a registration statement relating to all or such portion of such Holder’s Registrable Securities as are specified in such written request, together with all or such portion of Registrable Securities of any other Holder or Holders joining in such request as are specified in the written notification given by such Holder or Holders; provided, however, that the Company shall not be obligated to effect any such Registration pursuant to Section 2.3 hereof if (i) Form F-3 is not available for such offering; or (ii) the Holders of Registrable Securities, together with the Holders of any other equity securities of the Company entitled to inclusion in such Registration, propose to sell the Registrable Securities and such other equity securities (if any) at an aggregate price to the public of less than $5,000,000. Notwithstanding the foregoing provisions of this Section 2.3, if, in response to comments received from the staff of the Commission, the Company would be unable to cause the Commission to declare the Registration Statement effective without limiting the number of Registrable Securities included therein, such Registration Statement shall register the resale of a number of Registrable Securities which is equal to the maximum number of shares as is permitted by the Commission, and, subject to the provisions of this section, the Company shall continue to use its reasonable best efforts to register all remaining Registrable Securities as set forth herein. In such event, the number of Registrable Shares to be registered for each Holder in the applicable Registration Statement shall be reduced pro rata among all Holders. The provisions of the second and third sentences of this Section 2.3 shall not apply with respect to the Sponsor Registration Statement.
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2.4 Restrictions on Registration Rights. If (A) during the period starting with the date thirty (30) days prior to the Company’s good faith estimate of the date of the filing of, and ending on a date ninety (90) days after the effective date of, a Company initiated Registration and provided that the Company has delivered written notice to the Holders prior to receipt of a Demand Registration pursuant to subsection 2.1.1 and it continues to actively employ, in good faith, all reasonable efforts to cause the applicable Registration Statement to become effective; (B) the Holders have requested an Underwritten Registration and the Company and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offer; or (C) in the good faith judgment of the Board such Registration would be materially detrimental to the Company and the Board concludes as a result that it is essential to defer the filing of such Registration Statement at such time, then in each case the Company shall furnish to such Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board it would be materially detrimental to the Company for such Registration Statement to be filed in the near future and that it is therefore essential to defer the filing of such Registration Statement. In such event, the Company shall have the right to defer such filing for a period of not more than thirty (30) days; provided, however, that the Company shall not defer its obligation in this manner more than once in any 12-month period. Notwithstanding anything to the contrary contained in this Agreement, no Registration except for the Sponsor Registration Statement shall be effected or permitted and no Registration Statement except for the Sponsor Registration Statement shall become effective, with respect to any Registrable Securities held by any Holder, until after the expiration of ninety (90) days following the effectuation of the Business Combination.
ARTICLE 3
COMPANY PROCEDURES
3.1 General Procedures. If at any time on or after the date the Company consummates the Business Combination the Company is required to effect the Registration of Registrable Securities, the Company shall use its best efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall use commercially reasonable efforts to, as expeditiously as possible:
3.1.1 prepare and file with the Commission as soon as practicable a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective and remain effective until all Registrable Securities covered by such Registration Statement have been sold;
3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be requested by the Holders or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus;
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3.1.3 prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may request in order to facilitate the disposition of the Registrable Securities owned by such Holders;
3.1.4 prior to any public offering of Registrable Securities, use its best efforts to (i) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request and (ii) take such action necessary to cause such Registrable Securities covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;
3.1.5 cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;
3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;
3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;
3.1.8 at least five (5) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus furnish a copy thereof to each seller of such Registrable Securities or its counsel;
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3.1.9 notify the Holders at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;
3.1.10 permit a representative of the Holders, the Underwriters, if any, and any attorney or accountant retained by such Holders or Underwriter to participate, at each such person’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with the Registration; provided, however, that such representatives or Underwriters enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;
3.1.11 obtain a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Registration, in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating Holders;
3.1.12 on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as any such placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions;
3.1.13 in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing Underwriter of such offering;
3.1.14 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
3.1.15 if the Registration involves the Registration of Registrable Securities involving gross proceeds in excess of $50,000,000, use its reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in any Underwritten Offering; and
3.1.16 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders, in connection with such Registration.
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3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.
3.3 Requirements for Participation in Underwritten Offerings. No person may participate in any Underwritten Offering for equity securities of the Company pursuant to a Registration initiated by the Company hereunder unless such person (i) agrees to sell such person’s securities on the basis provided in any underwriting arrangements approved by the Company and (ii) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements.
3.4 Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until it is advised in writing by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than thirty (30) days, determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities. The Company shall immediately notify the Holders of the expiration of any period during which it exercised its rights under this Section 3.4.
3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Sections 13(a) or 15(d) of the Exchange Act. The Company further covenants that it shall take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Common Shares held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act, including providing any legal opinions. Upon the request of any Holder, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.
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ARTICLE 4
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification.
4.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers and directors and each person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses (including reasonable attorneys’ fees) caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.
4.1.2 In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish to the Company in writing such information as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall indemnify the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including without limitation reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.
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4.1.3 Any person entitled to indemnification herein shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.
4.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason.
4.1.5 If the indemnification provided under Section 4.1 hereof from the indemnifying party is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder under this subsection 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in subsections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this subsection 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this subsection 4.1.5. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this subsection 4.1.5 from any person who was not guilty of such fraudulent misrepresentation.
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ARTICLE 5
MISCELLANEOUS
5.1 Notices. Any notice or communication under this Agreement must be in writing and given by (i) delivery in person or by courier service providing evidence of delivery, or (ii) transmission by hand delivery, electronic mail, or facsimile. Each notice or communication that is mailed, delivered, or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery, electronic mail, or facsimile, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger, if any) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must be addressed, if to the Company to: c/o MI Management Company, Trust Company Complex, Suite 206, Ajeltake Road, P.O. Box 3055, Majuro, Marshall Islands MH 96960 or by email to ludovic.saverys@cmb.be, and, if to any Holder, at such Holder’s address or facsimile number as set forth in the Company’s books and records. Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.
5.2 Assignment; No Third Party Beneficiaries.
5.2.1 This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part.
5.2.2 No Holder may assign or delegate such Holder’s rights, duties or obligations under this Agreement, in whole or in part, except in connection with a transfer of Registrable Securities by such Holder to a Permitted Transferee.
5.2.3 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors and the permitted assigns of the Holders, which shall include Permitted Transferees.
5.2.4 This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2 hereof.
5.2.5 No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment as provided in Section 5.1 hereof and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.
5.3 Counterparts. This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.
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5.4 Governing Law; Venue. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION.
5.5 Amendments and Modifications. Upon the written consent of the Company and the Holders of at least a majority in interest of the Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in its capacity as a holder of the shares of capital stock of the Company, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.
5.6 Other Registration Rights. The Company represents and warrants that other than the beneficiaries of the NCF Registration Rights Agreement, no person, other than a Holder of Registrable Securities, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration filed by the Company for the sale of securities for its own account or for the account of any other person. Further, the Company represents and warrants that this Agreement supersedes any other registration rights agreement or agreement with similar terms and conditions and in the event of a conflict between the NCF Registration Rights Agreement or any other such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.
5.7 Term. This Agreement shall terminate upon the earlier of the date as of which (i) all of the Registrable Securities have been sold pursuant to a Registration Statement (but in no event prior to the applicable period referred to in Section 4(a)(3) of the Securities Act and Rule 174 thereunder) and (ii) the Holders of all Registrable Securities are permitted to sell the Registrable Securities under Rule 144 (or any similar provision) under the Securities Act without limitation on the amount of securities sold or the manner of sale. The provisions of Section 3.5 and Article IV shall survive any termination.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first written above.
| COMPANY: | |||
| HUNTER MARITIME ACQUISITION CORP. | |||
| By: | /s/ Ludovic Saverys | ||
| Name: | Ludovic Saverys | ||
| Title: | Chief Financial Officer | ||
| HOLDERS: | |||
| CMB NV | |||
| By: | /s/ Alexander Saverys | ||
| Name: | Alexander Saverys | ||
| Title: | Chief Executive Officer | ||
[Signature Page to Registration Rights Agreement]
Exhibit 8.1
The following is a diagram of Hunter Maritime’s subsidiaries. NCF Wealth Holdings Limited is a wholly owned subsidiary of Hunter Maritime.
Exhibit 99.1
HUNTER MARITIME ACQUISITION CORP.
AND SUBSIDIARIES
Consolidated Financial Statements
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
HUNTER MARITIME ACQUISITION CORP. AND SUBSIDIARIES
Consolidated Financial Statements
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
Table of Contents
| Page | |
| Report of Independent Registered Public Accounting Firm | 3 |
| Consolidated Balance Sheets | 4 |
| Consolidated Statements of Operations | 5 |
| Consolidated Statements of Changes in Stockholders’ Equity | 6 |
| Consolidated Statements of Cash Flows | 7 |
| Notes to Consolidated Financial Statements | 8 |
HUNTER MARITIME ACQUISITION CORP. AND SUBSIDIARIES
Consolidated Financial Statements
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders
of Hunter Maritime Acquisition Corp.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Hunter Maritime Acquisition Corp. and Subsidiaries (a Republic of Marshall Islands corporation) (the Company) as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive income (loss), changes in stockholders’ equity, and cash flows for each of the years in the two-year period ended December 31, 2018 and for the period from June 24, 2016 to December 31, 2016, and the related notes to the consolidated financial statements (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of their operations and their cash flows for each of the years in the two-year period ended December 31, 2018 and for the period from June 24, 2016 to December 31, 2016, in conformity with accounting principles generally accepted in the United States of America.
Substantial Doubt about the Company’s Ability to Continue as a Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company will only have until April 23, 2019, to consummate an Initial Business Combination. If the Company does not complete the Initial Business Combination by the April 23, 2019, it will cease operations and liquidate the Company’s assets. Management’s evaluation of the events and conditions and plans regarding those matters also are described in Notes 2 and 12. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to that matter.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
We have served as the Company’s auditor since 2018.
New York, New York
March 27, 2019
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HUNTER MARITIME ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in USD except for share data)
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash | $ | 140,517 | $ | 447,616 | ||||
| Cash and Investments held in the Trust Account | 22,074,404 | 152,102,400 | ||||||
| Prepaid expenses and other current assets | 3,320 | 181,502 | ||||||
| Total current assets | 22,218,241 | 152,731,518 | ||||||
| Total assets | $ | 22,218,241 | $ | 152,731,518 | ||||
| December 31, | December 31, | |||||||
| 2018 | 2017 | |||||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 37,749 | $ | 279,382 | ||||
| Accrued expenses | 139,793 | 4,516 | ||||||
| Deferred underwriting fee | 5,310,585 | - | ||||||
| Unsecured promissory notes | 800,000 | - | ||||||
| Total current liabilities | 6,288,127 | 283,898 | ||||||
| Non-current liabilities: | ||||||||
| Deferred underwriting fee | - | 5,310,585 | ||||||
| Total non-current liabilities | - | 5,310,585 | ||||||
| Total liabilities | 6,288,127 | 5,594,483 | ||||||
| Common stock subject to possible redemption | 10,930,113 | 142,137,034 | ||||||
| Stockholders' equity: | ||||||||
| Common stock, $0.0001 par value; 500,000,000 shares authorized; 4,890,697 and 4,752,672 shares issued and outstanding as of December 31, 2018, and 2017, respectively (excluding 1,076,328 and 14,213,703 shares subject to possible redemption) | 489 | 475 | ||||||
| Additional paid-in capital | 7,331,343 | 5,781,005 | ||||||
| Retained earnings | (2,331,831 | ) | (781,479 | ) | ||||
| Total stockholders' equity | 5,000,001 | 5,000,001 | ||||||
| Total liabilities and stockholders' equity | $ | 22,218,241 | $ | 152,731,518 | ||||
The accompanying notes are an integral part of the consolidated financial statements
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HUNTER MARITIME ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in USD except for share data)
| Year ended December 31, 2018 | Year ended December 31, 2017 | Period from June 24, 2016 to December 31, 2016 | ||||||||||
| Revenues | $ | - | $ | - | $ | - | ||||||
| Operating expenses | ||||||||||||
| General and administrative expenses | (949,114 | ) | (1,324,088 | ) | (397,367 | ) | ||||||
| Loss from operations | (949,114 | ) | (1,324,088 | ) | (397,367 | ) | ||||||
| Other income (expenses) | ||||||||||||
| Interest and other income | 1,482,889 | 1,084,213 | 31,808 | |||||||||
| Interest and other expenses | (2,084,127 | ) | (103,531 | ) | (33,315 | ) | ||||||
| Loss before provision of income tax | (1,550,352 | ) | (343,406 | ) | (398,874 | ) | ||||||
| Income tax expense | - | (39,199 | ) | |||||||||
| Net loss | $ | (1,550,352 | ) | $ | (382,605 | ) | $ | (398,874 | ) | |||
| Net loss attributable to Hunter Maritime Acquisition Corp. and subsidiaries | (1,550,352 | ) | (382,605 | ) | (398,874 | ) | ||||||
| Weighted average number of basic and diluted common shares outstanding (excluding shares subject to possible redemption) | 3,793,275 | 3,793,275 | 3,793,275 | |||||||||
| Basic and diluted net loss per share (excluding shares subject to possible redemption) | $ | (0.41 | ) | $ | (0.10 | ) | $ | (0.11 | ) | |||
The accompanying notes are an integral part of the consolidated financial statements
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HUNTER MARITIME ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in USD except for share data)
| Common Stock | ||||||||||||||||||||||||||||
| Class A | Class B | Additional | Retained | Total | ||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | paid-in capital | earnings | stockholders' equity | ||||||||||||||||||||||
| Balance as at June 24, 2016 (inception) | - | $ | - | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||
| Issuance of class B shares to Sponsor | - | - | 4,312,500 | 431 | 24,569 | - | 25,000 | |||||||||||||||||||||
| Sale of units in initial public offering | 15,000,000 | 1,500 | - | - | 149,998,500 | - | 150,000,000 | |||||||||||||||||||||
| Sale of over-allotment units | 173,100 | 17 | - | - | 1,730,983 | - | 1,731,000 | |||||||||||||||||||||
| Offering costs charged to stockholders' equity | - | - | - | - | (8,872,106 | ) | - | (8,872,106 | ) | |||||||||||||||||||
| Sale of private placement warrants to Sponsor | - | - | - | - | 5,034,620 | - | 5,034,620 | |||||||||||||||||||||
| Net loss | - | - | - | - | - | (398,874 | ) | (398,874 | ) | |||||||||||||||||||
| Common stock subject to possible redemption | (14,251,964 | ) | (1,425 | ) | - | - | (142,518,214 | ) | - | (142,519,639 | ) | |||||||||||||||||
| Balance at December 31, 2016 | 921,136 | 92 | 4,312,500 | 431 | 5,398,352 | (398,874 | ) | 5,000,001 | ||||||||||||||||||||
| Forfeiture of shares (class B) | - | - | (519,225 | ) | (52 | ) | - | (52 | ) | |||||||||||||||||||
| Net loss | - | - | - | - | - | (382,605 | ) | (382,605 | ) | |||||||||||||||||||
| Contribution from common stock subject to possible redemption (class A) | 38,261 | 4 | - | - | 382,653 | 382,657 | ||||||||||||||||||||||
| Balance at December 31, 2017 | 959,397 | 96 | 3,793,275 | 379 | 5,781,005 | (781,479 | ) | 5,000,001 | ||||||||||||||||||||
| Net loss | - | - | - | - | - | (1,550,352 | ) | (1,550,352 | ) | |||||||||||||||||||
| Contribution from common stock subject to possible redemption (class A) | 138,025 | 14 | - | - | 1,550,338 | - | 1,550,352 | |||||||||||||||||||||
| Balance at December 31, 2018 | 1,097,422 | $ | 110 | 3,793,275 | $ | 379 | $ | 7,331,343 | $ | (2,331,831 | ) | $ | 5,000,001 | |||||||||||||||
The accompanying notes are an integral part of the consolidated financial statements
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HUNTER MARITIME ACQUISITION CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in USD)
| Year ended December 31, 2018 | Year ended December 31, 2017 | Period from June 24, 2016 to December 31, 2016 | ||||||||||
| Cash flows from Operating activities: | ||||||||||||
| Net loss | $ | (1,550,352 | ) | $ | (382,605 | ) | $ | (398,874 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Interest earned on investments held in Trust Account | (1,482,889 | ) | (1,084,213 | ) | (31,808 | ) | ||||||
| Changes in current assets and current liabilities: | ||||||||||||
| Prepaid expenses and other current assets | 178,181 | (181,502 | ) | - | ||||||||
| Accounts payable | (241,633 | ) | 191,328 | 284,496 | ||||||||
| Accrued expenses | 135,277 | (667,952 | ) | - | ||||||||
| Net cash used in operating activities | (2,961,416 | ) | (2,124,944 | ) | (146,186 | ) | ||||||
| Cash Flows from Investing Activities: | ||||||||||||
| Purchases of Investments held in Trust Account | (1,365,575,723 | ) | (1,517,612,646 | ) | (151,735,618 | ) | ||||||
| Proceeds from sale of Investments held in Trust Account | 1,497,086,626 | 1,518,361,885 | - | |||||||||
| Cash deposited to Trust Account | 1,961,833 | - | - | |||||||||
| Net cash provided by (used in) investing activities | 133,472,736 | 749,239 | (151,735,618 | ) | ||||||||
| Cash Flows from Financing Activities: | ||||||||||||
| Proceeds from issue of Class B common stock | - | - | 25,000 | |||||||||
| Proceeds from initial public offering (held in trust account) | - | - | 151,731,000 | |||||||||
| Proceeds from issuance of warrants | - | - | 5,034,620 | |||||||||
| Transaction costs recognized as a deduction from retained earnings | - | - | (3,085,495 | ) | ||||||||
| Redemption of Class A common stock | (131,618,419 | ) | - | - | ||||||||
| Proceeds from promissory notes | 800,000 | - | 150,000 | |||||||||
| Repayment of loans from related parties | - | - | (150,000 | ) | ||||||||
| Net cash provided by financing activities | (130,818,419 | ) | - | 153,705,125 | ||||||||
| Net change in cash | (307,099 | ) | (1,375,705 | ) | 1,823,321 | |||||||
| Cash at the beginning of the year | 447,616 | 1,823,321 | - | |||||||||
| Cash at end of year | $ | 140,517 | $ | 447,616 | $ | 1,823,321 | ||||||
The accompanying notes are an integral part of the consolidated financial statements
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HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
| (1) | Organization and Business Operations |
| a) | Description of Business |
Hunter Maritime Acquisition Corp. (the "Company" or “HMAC”) was incorporated in the Republic of the Marshall Islands on June 24, 2016. The Company’s registered address is Trust Company Complex, Ajeltake Road, Ajeltake Island, Majuro, Marshall Islands MH96960.
The Company was formed for the purpose of acquiring, through a merger, capital stock exchange, asset acquisition, debt acquisition, stock purchase, reorganization or other similar business combination, vessels, vessel contracts (including contracts for the purchase and charter-in by the Company of vessels) or one or more operating businesses in the international maritime shipping industry, or one or more different sectors that may be unrelated to the shipping industry, that it has not yet identified ("Initial Business Combination"). As of December 31, 2018, the Company had not commenced any operations. The Company will not generate any operating revenues until after completion of its Initial Business Combination, at the earliest. Following the completion of a tender offer the Company has until April 23, 2019 (further discussed below) to complete its Initial Business Combination.
The Company has selected December 31 as its fiscal year end.
| b) | Financing and Initial Business Combination |
On July 11, 2016, Bocimar Hunter NV, the Company’s sponsor (the "Sponsor") purchased 4,312,500 Class B Common Shares of the Company (the "Founder Shares") for $25,000, or $0.006 per share.
On November 23, 2016, HMAC consummated its initial public offering of 15,000,000 Units. Each Unit (“Unit”) issued in the Initial Public Offering (‘IPO’) consists of one Class A common share and one-half of one Warrant (“Warrant”). Each whole Warrant entitles the holder to purchase one Class A common share at a price of $11.50. Simultaneously with the consummation of the IPO, HMAC completed a private placement of 3,333,333 Warrants (“private placement Warrants”) at a purchase price of $1.50 per Warrant to its Sponsor, generating gross proceeds of $5,000,000. On November 18, 2016, the Units commenced trading on the NASDAQ under the symbol “HUNTU.”
On December 16, 2016, the underwriters of the IPO exercised their overallotment option in part, for a total of an additional 173,100 Units. As a result of the partial exercise of the overallotment option, as of January 3, 2017, the Sponsor forfeited 519,225 Class B common shares in order to maintain its ownership, on an as-converted basis, at 20% of HMAC’s issued and outstanding common shares. In addition, HMAC completed the private sale of an additional 23,080 private placement Warrants to the Sponsor at a purchase price of $1.50 per Warrant, generating gross proceeds of $34,620, in accordance with the terms of the private placement agreement entered into concurrently with the IPO.
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HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
The 15,173,100 Units sold in the IPO, including the 173,100 Units sold pursuant to the overallotment option, were sold at an offering price of $10.00 per Unit, generating gross proceeds of $151,731,000, which been placed in the Trust Account pending HMAC’s completion of an initial business combination.
On January 9, 2017, the Class A common shares and Warrants underlying the Units sold in the IPO began to trade separately.
On September 27, 2018, pursuant to the terms of a Securities Purchase Agreement, Bocimar Hunter transferred ownership of its (i) 3,793,275 Class B common shares and (ii) 3,356,413 private placement Warrants of the Company to CMB NV (“CMB”) which we now consider the Sponsor. See also Note 9 Related Party Transactions.
On November 6, 2018, we completed a tender offer, funded with the proceeds then held in the Trust Account, in connection with an amendment to our Amended and Restated Articles of Incorporation to extend the deadline (the “Extension Amendment”) by which a business combination must be consummated to April 23, 2019 (the “Extended Date” or “Business Combination Deadline”), pursuant to which we purchased 12,999,350 Class A common shares at $10.125 per share, for an aggregate purchase price of approximately $131.6 million (the “Extension Tender Offer”). In connection with the Extension Tender Offer, we deposited into the Trust Account an additional $1,896,638 to make the total amount on deposit in the Trust Account equal to $10.125 per Class A common share (the “First Tender Contribution”). As a result, approximately $22.1 million remained in the Trust Account.
In connection with the Extension Amendment, the Sponsor, or persons on its behalf, has agreed to contribute to us $0.03 for each Public Share that was not purchased in the Extension Tender Offer for each calendar month commencing on November 23, 2018 (the day by which were initially required to complete our initial business combination) until April 23, 2019, or such earlier date that we complete our initial business combination (the “Monthly Extension Contribution”). The aggregate amount of the Monthly Extension Contribution will be repayable by us to the Sponsor if we complete an initial business combination. On each of December 27, 2018 and January 30, 2019, $65,213 was contributed to the Trust Account for the Monthly Extension Contribution. As a result, following the Extension Tender Offer, First Tender Contribution, and Monthly Extension Contributions, approximately $22.1 million remains in the Trust Account.
At November 6, 2018, the per public share redemption or conversion price increased to $10.125 per share as a result of the $1,896,638 deposit into the Trust Account relating to the other expenses to extend the time to complete the initial business combination. At November 23, 2018, the per public share redemption or conversion price increased to $10.155 per share as a result of the $65,213 deposit into the Trust Account relating to the other expenses to extend the time to complete the initial business combination.
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HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
On November 6, 2018, December 19, 2018 and January 30, 2019, HMAC has drawn an amount of $500,000, $300,000 and $200,000 respectively under a promissory note with its sponsor CMB. These loans are unsecured and bear interest at a rate per annum of LIBOR plus 0.60%.
The Company has neither engaged in any operations nor generated significant revenue to date. HMAC’s only activities between inception and the closing of its Public Offering were organizational activities and those necessary to prepare for and close the Public Offering. Since the consummation of the Public Offering, HMAC’s activity has been limited to evaluating candidates for its initial business combination.
If we do not consummate our initial business combination by the Business Combination Deadline, we must liquidate the Trust Account to the holders of the public shares and dissolve.
| c) | Trust Account |
The Trust Account is a segregated account at KBC Bank located in Belgium into which the net proceeds from the Public Offering and the sale of the Private Placement Warrants were deposited in accordance with an Investment Management Trust Agreement by and among the Company, KBC Bank and Continental Stock Transfer & Trust Company ("Continental") and pursuant to which Continental is acting as trustee. The Trust Account can only be invested in permitted United States "government securities" within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended (the "Investment Company Act"), having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act. At December 31, 2017, the Trust Account consisted of investments in US Treasury bills with maturity date January 10, 2018. At December 31, 2018, the Trust Account consists of cash available on the bank account only.
The Company’s amended and restated articles of incorporation provide that, other than the withdrawal of investment earnings earned on the Trust Account to pay taxes or to fund working capital requirements, none of the funds held in the trust account will be released until the earlier of (i) the completion of the Company’s Initial Business Combination, or (ii) the redemption of the Public Shares properly submitted in connection with a shareholder vote to approve an amendment to the Company’s amended and restated articles of incorporation that would affect the substance or timing of its obligation to redeem 100% of the Public Shares if the Company has not consummated an Initial Business Combination by the Business Combination Deadline.
| d) | Significant Risks and Uncertainties Including Business and Credit Concentration |
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be generally applied toward completing the Initial Business Combination. There is no assurance that the Company will be able to successfully complete the Initial Business Combination.
| 10 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
The Company will provide its public shareholders with the opportunity to redeem all or a portion of their Public Shares, (i) if the Company is a foreign private issuer (“FPI”), upon the completion of the Initial Business Combination, by means of a tender offer in accordance with the U.S. tender offer rules or, (ii) if the Company is not an FPI, either, (A) in connection with a shareholder meeting called to approve the Initial Business Combination, in conjunction with a proxy solicitation for such meeting pursuant to the U.S. proxy rules or, (B) by means of a tender offer, in each case, for cash equal to their pro rata share of the aggregate amount then on deposit in the Trust Account as of two business days prior to the consummation of the Initial Business Combination, less taxes payable and any amounts released to the Company to fund working capital requirements. However, in no event will the Company redeem its Public Shares in an amount that would cause its net tangible assets to be less than $5,000,001. In such case, the Company would not proceed with the redemption of its Public Shares and the related Initial Business Combination, and instead may search for an alternate business combination.
The Company will only have until April 23, 2019, to consummate an Initial Business Combination. If the Company does not complete the Initial Business Combination by the Business Combination Deadline, it shall, (i) cease all operations except for the purposes of winding up, (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the Public Shares for a per-share pro rata portion of the Trust Account, less taxes payable (less up to $100,000 of such net interest to pay dissolution expenses) and, (iii) as promptly as possible following such redemption, subject to the approval of the Company’s remaining shareholders and Board of Directors, dissolve and liquidate the balance of the Company’s net assets to its remaining shareholders, as part of its plan of dissolution and liquidation, subject to applicable law.
The Sponsor entered into a letter agreement with the Company, pursuant to which it has waived its rights to participate in any redemption with respect to the Founder Shares (as defined below); however, if the Sponsor or any of the Company’s officers, directors or affiliates acquire Class A Common Shares in or after the Public Offering, they will be entitled to a pro rata share of the Trust Account upon the Company’s redemption or liquidation in the event the Company does not complete the Initial Business Combination within the required time period.
| (2) | Significant Accounting Policies |
| a) | Basis for preparation |
The accompanying Consolidated Financial Statements in this Annual Report have been presented in U.S. dollars and prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). These consolidated financial statements include the consolidated balance sheet, consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows of the Company, including its subsidiaries, all of which are wholly-owned. All inter-company accounts and transactions have been eliminated in consolidation.
| 11 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
| b) | Going Concern |
The Company has the intention to complete an Initial Business Combination before the Business Combination Deadline of April 23, 2019, the Consolidated Financial Statements of the Company as of December 31, 2018, have been prepared on a going concern basis. The funds available to us by means of the amounts drawn under promissory notes with our sponsor CMB will allow us to operate at least until April 23, 2019. See also Notes 9 and 11. These financial statements do not include any adjustments that might result from these uncertainties.
| c) | Use of Estimates |
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include contingencies.
| d) | Principles of Consolidation |
The accompanying consolidated financial statements include the accounts of Hunter Maritime Acquisition Corp. and its wholly owned subsidiaries Hunter Maritime (BVI) Limited, incorporated under BVI law on October 1, 2018, with its registered address on Wickhams Cay 1, Road Town, Tortola, Hamburg Maritime N.V., incorporated under Belgian law on May 15, 2017, with its registered address on De Gerlachekaai 20, 2000 Antwerpen, and Maritime Partner BVBA, incorporated under Belgian law on May 9, 2017, with registered address on De Gerlachekaai 20, 2000 Antwerpen (collectively, the Company). All inter-company accounts and transactions have been eliminated in consolidation.
Hamburg Maritime NV and Maritime Partner BVBA were sold to the Sponsor on October 5, 2018 and have been included in the financial statements through that date. Both entities were sold at their respective equity values and hence no profit or loss was recognized.
| e) | Cash and Cash Equivalents |
The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company did not have any cash equivalents as of December 31, 2018 and 2017.
| 12 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
| f) | Cash and Investments held in the Trust Account |
Investments consist of cash in United States Money Market and United States Treasury securities. The Company classifies its United States Treasury securities as held-to-maturity in accordance with FASB ASC Topic 320 “Investments - Debt and Equity Securities.” Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost and adjusted for the amortization or accretion of premiums or discounts.
A decline in the market value of held-to-maturity securities below cost that is deemed to be other than temporary, results in an impairment that reduces the carrying costs to such securities' fair value. The impairment is charged to earnings and a new cost basis for the security is established. To determine whether an impairment is other than temporary, the Company considers whether it has the ability and intent to hold the investment until a market price recovery and considers whether evidence indicating the cost of the investment is recoverable outweighs evidence to the contrary. Evidence considered in this assessment includes the reasons for the impairment, the severity and the duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.
Premiums and discounts are amortized or accreted over the life of the related held-to-maturity security as an adjustment to yield using the effective-interest method. Such amortization and accretion is included in the “interest income” line item in the statements of operations. Interest income is recognized when earned.
Cash and Investments held in the Trust account of $22,074,404 (2017: 152,102,400) includes an amount of $0 (2017: $151,856,355) of investments in United States Treasury Bills (see also Note 3).
| g) | Income Taxes |
The Company complies with the accounting and reporting requirements of ASC Topic 740, “Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. (See also Note 5)
| 13 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
| h) | General and Administrative Expenses |
General and administrative expenses include all corporate and administrative functions such as legal, human resource management, finance, investor and public relations, information technology, management, accounting and auditing. These functions serve to support the Company’s current and future operations and provide an infrastructure to support future growth.
| i) | Commitments and Contingencies |
Liabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
| h) | Fair Value Measurement |
FASB ASC Topic 820 “Fair Value Measurements and Disclosures” defines fair value, the methods used to measure fair value and the expanded disclosures about fair value measurements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between the buyer and the seller at the measurement date. In determining fair value, the valuation techniques consistent with the market approach, income approach and cost approach shall be used to measure fair value. FASB ASC Topic 820 establishes a fair value hierarchy for inputs, which represent the assumptions used by the buyer and seller in pricing the asset or liability. These inputs are further defined as observable and unobservable inputs. Observable inputs are those that buyer and seller would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumptions about the inputs that the buyer and seller would use in pricing the asset or liability developed based on the best information available in the circumstances.
The fair value hierarchy is categorized into three levels based on the inputs as follows:
Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not being applied. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these securities does not entail a significant degree of judgment.
Level 2 — Valuations based on (i) quoted prices in active markets for similar assets and liabilities, (ii) quoted prices in markets that are not active for identical or similar assets, (iii) inputs other than quoted prices for the assets or liabilities, or (iv) inputs that are derived principally from or corroborated by market through correlation or other means.
Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.
| 14 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
The fair value of the Company’s certain assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts represented in the balance sheet. The fair values of cash and cash equivalents, prepaid assets, accounts payable and accrued expenses, due to related parties are estimated to approximate the carrying values due to the short maturities of such instruments.
| k) | Concentration of Credit Risk |
Financial instruments that potentially subject the Company to concentration of credit risk currently consist of cash accounts in a financial institution only. The Company has not experienced losses on these accounts. The proceeds held in the Trust Account do not carry a significant credit risk as these proceeds can be invested only in permitted United States “government securities” within the meaning of Section 2(a)(16) of the Investment Company Act of 1940, as amended, having a maturity of 180 days or less or in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act. Management is of the opinion that the Company is not exposed to significant risks on such accounts.
| l) | Common stock subject to possible redemption |
The Company accounts for its common stock subject to possible redemption in accordance with the guidance in Accounting Standards Codification (“ASC”) Topic 480 “Distinguishing Liabilities from Equity”. Common stock subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock are classified as stockholders’ equity. The Company’s common stock features certain redemption rights that are considered to be outside of the Company’s control and subject to occurrence of uncertain future events. Accordingly, at December 31, 2018, and December 31, 2017, 1,076,328 and 14,213,703 respectively shares of common stock subject to possible redemption at the redemption amount are presented as temporary equity, outside of the stockholders’ equity section of the Company’s balance sheet.
| m) | Warrants |
Since the Company is not required to net cash settle the Warrants and the Warrants are exercisable upon the consummation of an initial Business Combination, the management determined that the Warrants will be classified within shareholders’ equity as “Additional paid-in capital” upon their issuance in accordance with ASC 815-40. The proceeds from the sale will be allocated to Public Shares and Warrants based on the relative fair value of the securities in accordance with 470-20-30. The value of the Public Shares and Warrants will be based on the closing price paid by investors.
| 15 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
| n) | Net Income per Ordinary Share |
The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net income per ordinary share is computed by dividing net income by the weighted average number of ordinary shares issued and outstanding for the year. For the years ended December 31, 2018 and 2017 and the period ended December 31, 2016, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into ordinary shares and then share in the income of the Company. As a result, diluted income per ordinary share is the same as basic income per ordinary shares for the periods.
| o) | Emerging Growth Company |
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a registration statement under the Securities Act of 1933, as amended (the “Securities Act”), declared effective or do not have a class of securities registered under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.
| p) | Recently Issued Accounting Standards |
Management does not believe that any recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements.
| 16 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
| (3) | Cash and Investments held in the Trust Account |
| December 31, 2018 | December 31, 2017 | |||||||
| Cash | $ | 22,074,404 | $ | 246,045 | ||||
| Held-to-maturity investments | - | 151,856,355 | ||||||
| Cash and investments held in the Trust Account | $ | 22,074,404 | $ | 152,102,400 | ||||
As per December 31, 2018, Cash and Investments held in the Trust Account consists of cash held on a bank account only. The Held-to-maturity investments as of December 31, 2017, represents the redemption value of 151,903,000 units of US Treasury bills that matured on January 10, 2018.
The decrease in Cash and Investments held in the Trust account is mainly due to the payment of $131.6 million to investors who validly tendered 12,999,350 Class A common shares as part of the Tender Offer to extend the time for completing a business combination.
| (4) | Fair Value Measurement |
The fair values of the financial instruments as of December 31, 2018 and 2017 represent the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, including expected cash flows and appropriately risk-adjusted discount rates, available observable and unobservable inputs.
The following methods and assumptions were used to estimate the fair value of each class of financial instruments:
United States Treasury Bills: The Company classifies its Treasury Instruments and equivalent securities as held to- maturity in accordance with FASB ASC 320 "Investments - Debt and Equity Securities". Held-to-maturity securities are those securities which the Company has the ability and intent to hold until maturity. Held-to-maturity treasury securities are recorded at amortized cost on the accompanying balance sheets and adjusted for amortization or accretion of premiums or discounts.
The table below presents the carrying value under ASC 320, excluding accrued interest income and gross unrealized holding gain. Since all of the Company’s permitted investments consist of U.S. government treasury bills and cash, fair values of its investments are determined by Level 2 inputs utilizing quoted prices (unadjusted) in active markets for identical assets as follows:
| 17 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
| Carrying Value | Fair Value (Level 2) | |||||||
| Asset: | ||||||||
| US Treasury Bills held in Trust Account as of December 31, 2018 | $ | - | $ | - | ||||
| US Treasury Bills held in Trust Account as of December 31, 2017 | $ | 151,856,355 | $ | 151,725,991 | ||||
| (5) | Income Taxes |
The Company is incorporated in the Republic of the Marshall Islands, and in accordance with the income tax laws of the Marshall Islands, is not subject to Marshall Islands’ income tax. Dividends paid by the Company are not subject to any withholding tax under the laws of the Marshall Islands. As the Company proceeds with making investments in various jurisdictions, tax considerations outside the Marshall Islands may arise. Although the Company intends to pursue tax-efficient investments, it may be subject to income tax, withholding tax, capital gains tax, and other taxes imposed by tax authorities in other jurisdictions. The Company does not expect to be subject to direct taxation based on net income in the United States as long as it is not engaged in a trade or business in the United States for U.S. federal income tax purposes. The Company does not expect to invest in any U.S. obligation that will be subject to U.S. withholding taxes.
The Company follows the provisions of ASC 740-10 which prescribes a recognition threshold and measurement attribute for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the Company has taken or expects to take on its tax return. ASC 740-10 requires that the financial statements reflect expected future tax consequences of such positions presuming the taxing authorities’ full knowledge of the position and all relevant facts, but without considering time values. There were no adjustments related to uncertain tax positions recognized during the years ended December 31, 2018 and 2017.
Based on the Company’s evaluation, it has been concluded that there are no significant uncertain tax positions requiring recognition in the Company’s financial statements. Since the Company was incorporated on June 24, 2016, the evaluation was performed for 2018, 2017 and 2016 tax years which are the periods subject to examination. The Company believes that its income tax positions and deductions would be sustained on audit and does not anticipate any adjustments that would result in a material changes to its financial position.
The amount of $39,199 included as Income tax expense for the year ended December 31, 2017, represents withholding taxes payable on interest received on the Trust Account investments.
| 18 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
| (6) | Stockholder’s Equity |
Common Stock
The Company is authorized to issue up to 500,000,000 shares of common stock, consisting of (i) 400,000,000 Class A Shares and (ii) 100,000,000 shares of Class B common stock, par value $0.0001 per share (the “Class B Shares”). At December 31, 2018, there were issued and outstanding 2,173,750 Class A Shares and 3,793,275 Class B Shares, compared to 15,173,100 Class A shares and 3,793,275 Class B Shares as of December 31, 2017.
The Class B Shares will automatically convert into Class A Shares on the first business day following the consummation of the Initial Business Combination on a one-for-one basis, subject to adjustment pursuant to the Company’s Amended and Restated Articles of Incorporation.
At December 31, 2018, 1,076,328 (2017: 14,213,703) shares were subject to redemption in connection with the Initial Business Combination (at an anticipated redemption value of $10.155 per share (2017: $10.00)). A total amount of $10,930,113 (2017: $142,137,034) has been accounted for as a temporary equity.
Our articles of incorporation do not provide a specified maximum redemption threshold, except that in no event will we redeem our public shares in an amount that would cause our net tangible assets to be less than $5,000,001 (such that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our Initial Business Combination.
Preferred Stock
The Company is authorized to issue up to 50,000,000 shares of preferred stock, par value $0.0001 per share (the “Preferred Shares”), with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors. At December 31, 2018 and December 31, 2017, there were no Preferred Shares issued and outstanding.
Offering Costs
The Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (SAB) Topic 5A — “Expenses of Offering”. Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to the Public Offering and that were charged to stockholders’ equity upon the completion of the Initial Public Offering. Offering costs of approximately $8,872,106 have been charged to additional paid-in capital upon completion of the Initial Public Offering in 2016.
Offering expenses comprise all expenses related to the initial public offering of 15,000,000 shares in the Company and the sale of 173,100 shares following the partial exercise of the Over-allotment Option, and include amongst others $3,034,620 of upfront underwriting fees and $5,310,585 of deferred underwriting fees. For the accounting years 2018 and 2017, there were no offering costs related to the issuance of shares.
| 19 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
| (7) | Commitment and Contingencies |
The Company paid an underwriting fee of $3,034,620, equal to a 2.00% underwriting fee on the per Unit offering price, to the underwriters based on a sale of 15,000,000 Units, at the closing of the Public Offering and 173,100 Units following the partial exercise of the Over-allotment Option. The Company will pay an additional fee of $5,310,585, equal to a 3.50% underwriting fee on the per Unit offering price, to underwriters upon the Company’s completion of the Initial Business Combination (the “Deferred Fee”). The Deferred Fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event the Company completes the Initial Business Combination. If the Company fails to complete its Initial Business Combination within 24 months from the closing of the Public Offering, the underwriters have agreed to waive their right to the Deferred Fee.
The Company has agreed to pay $10,000 a month for office space, administrative services and secretarial support to CMB. Services commenced on November 18, 2016, and will terminate upon the earlier of the consummation by the Company of its Initial Business Combination or the liquidation of the Company, which has been extended to April 23, 2019.
| (8) | General and administrative expenses |
| Year ended December 31, 2018 | Year ended December 31, 2017 | Period from June 24, 2016 to December 31, 2016 | ||||||||||
| Directors and Officers Liability Insurance | $ | 285,307 | $ | 393,537 | $ | 49,694 | ||||||
| Advisory fees | 211,762 | 209,306 | 7,937 | |||||||||
| Legal fees | 191,344 | 394,819 | - | |||||||||
| Administrative Services fee payable to CMB | 120,000 | 119,516 | 15,000 | |||||||||
| Audit fees | 110,000 | 50,000 | 225,000 | |||||||||
| Registration and listing fees | - | 90,000 | 88,364 | |||||||||
| Other expenses | 30,701 | 66,910 | 11,372 | |||||||||
| Total general and administrative expenses | $ | 949,114 | $ | 1,324,088 | $ | 397,367 | ||||||
| 20 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
Advisory fees mainly relate to fees incurred in relation to the 2018 and 2017 Tender Offers and various annual fees payable to amongst others NASDAQ and Continental Stock Transfer and Trust Company.
Legal fees for the year ended December 31, 2018, consist mainly of fees incurred for the legal work done in relation to the Tender Offer for the Extension Amendment and the Merger Agreement. For the year ended December 31, 2017, they mainly relate to fees incurred in relation to the incorporation of Maritime Partner BVBA and Hamburg Maritime NV and fees for the legal work done in relation to the 2017 Tender Offer.
The General and administrative expenses for the period ended December 31, 2016, mainly represent expenses for the audit of the financial statements and fees related to the registration statement.
| (9) | Related Party Transactions |
Founder Shares
On July 11, 2016, the Sponsor purchased 4,312,500 Class B Common Shares of the Company (which are the Founder Shares) for $25,000, or $0.006 per share. The Founder Shares are identical to the Public Shares included in the Units sold in the Public Offering except that, (i) only holders of the Founder Shares will be entitled to vote on the election of directors prior to the Company’s initial Business Combination and, (ii) the Founder Shares are subject to certain transfer restrictions, as described in more detail below. The Sponsor agreed to forfeit up to 562,500 Founder Shares to the extent that the Over-allotment Option was not exercised in full by the underwriters so that the Sponsor will own 20% of the Company’s issued and outstanding common shares after the Public Offering. On January 3, 2017, the Sponsor forfeited 519,225 Class B Common Shares pursuant to the partial exercise on December 16, 2016 of the underwriters’ Over-allotment Option. Subsequently the number of outstanding Founder Shares amounts to 3,793,275.
The Sponsor has agreed not to transfer, assign or sell any of their Founder Shares until the earlier of, (i) one year after the completion of the Company’s Initial Business Combination, or earlier if, subsequent to the Company’s Initial Business Combination, the last sale price of the Company’s common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s Initial Business Combination or, (ii) the Company consummates a liquidation, merger, stock exchange or other similar transaction that results in all of the Company’s shareholders having the right to exchange their Class A Common Shares for cash, securities, or other property.
| 21 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
Private Placement Warrants
Upon the closing of the Public Offering on November 23, 2016, the Sponsor purchased from the Company an aggregate of 3,333,333 Private Placement Warrants at a price of $1.50 per Private Placement Warrant (an aggregate purchase price of $5,000,000). On December 16, 2016, following the partial exercise of the Over-allotment Option the Sponsor purchased a further 23,080 Additional Private Placement Warrants at a price of $1.50 per Private Placement Warrant (an aggregate purchase price of $34,620). A portion of the proceeds from the sale of the Private Placement Warrants and the full proceeds from the sale of the Additional Private Placement Warrants were placed into the Trust Account.
The Private Placement Warrants (including the Class A Common Shares issuable upon exercise of the Private Placement Warrants) are not transferable, assignable or salable until 30 days after the completion of the Initial Business Combination and they are non-redeemable and exercisable on a cashless basis, provided that such cashless exercise is permitted under the laws of the Company’s corporate jurisdiction, so long as they are held by the initial purchasers of the Private Placement Warrants or their permitted transferees, subject to certain exceptions. If the Private Placement Warrants are held by someone other than the initial purchasers of the Private Placement Warrants or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Warrants included in the Units sold in the Public Offering. Otherwise, the Private Placement Warrants have terms and provisions that are identical to those of the Warrants sold as part of the Units in the Public Offering and have no net cash settlement provisions.
If the Company does not complete the Initial Business Combination, then the proceeds will be part of the liquidating distribution to the public shareholders and the Private Placement Warrants issued to the Sponsor will expire worthless.
Units purchased in the Public Offering
CMB purchased 200,000 Units in the Public Offering at the public offering price, for an aggregate purchase price of $2,000,000.
Registration Rights
The holders of the Founder Shares and Private Placement Warrants (and any Class A Common Shares issuable upon the exercise of the Private Placement Warrants) are entitled to registration rights pursuant to a registration rights agreement executed on November 18, 2016. The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of the Company’s Initial Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the Founder Shares, one year after the date of the consummation of the Company’s Initial Business Combination or earlier if, subsequent to the Company’s Initial Business Combination, (a) the last sale price of the Company’s Class A Common Shares equals or exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations and recapitalizations) for any 20 trading days within any 30-trading day period commencing at least 150 days after the Company’s Initial Business Combination or (b) the Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their Class A Common Shares for cash, securities or other property and (ii) in the case of the Private Placement Warrants and the respective Class A Common Shares underlying such Warrants, 30 days after the completion of the Company’s Initial Business Combination. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
| 22 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
Sale of Founder Shares and Private Placement Warrants
On September 27, 2018, pursuant to the terms of a Securities Purchase Agreement, Bocimar Hunter transferred ownership of its (i) 3,793,275 Class B common shares and (ii) 3,356,413 private placement Warrants of the Company to CMB, an affiliated entity under common control, which we now consider the Sponsor. CMB acquired the Class B common shares and the private placement Warrants for a purchase price of $25,000 and $5,034,620, respectively, which were the original value of the securities at the time they were acquired by Bocimar Hunter. Pursuant to the terms of a Joinder Agreement with respect to the Letter Agreement, dated September 27, 2018, CMB became party to the Letter Agreement, to assume all of the rights and obligations of Bocimar Hunter thereunder, and to be bound by the restrictions thereunder. Pursuant to the terms of an Assignment Agreement and a Joinder Agreement with respect to the registration rights agreement (discussed below), each dated September 27, 2018, Bocimar Hunter assigned all of its rights and interests under the registration rights agreement to CMB, and CMB became party to the registration rights agreement and agreed to assume all of the rights and obligations of Bocimar Hunter thereunder and to be bound by the terms and provisions thereof. Pursuant to the terms of an agreement with respect to our Warrant Agreement and a related Warrant assignment agreement, each dated September 27, 2018, Bocimar Hunter assigned all of its rights and interests under the Warrant Agreement to CMB and CMB agreed to assume all of the rights and obligations of Bocimar Hunter thereunder and to be bound by the terms and provisions thereof.
Related Party Loans
No promissory notes have been granted throughout the financial year 2017.
On November 6, 2018, and December 19, 2018, the Company has drawn an amount of $500,000 and $300,000 respectively, under a promissory note with its Sponsor. These loans are unsecured and bear interest at a rate per annum of LIBOR plus 0.60%.
| 23 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
Administrative Services Agreement
The Company has agreed to pay $10,000 a month for office space, administrative services and secretarial support to CMB. Services commenced on November 18, 2016, and will terminate upon the earlier of the consummation by the Company of its Initial Business Combination or the liquidation of the Company.
For the period from January 1, 2018, through December 31, 2018, $120,000 (2017: $119,516) was expensed for services rendered by CMB during that period.
| (10) | Loss per share |
The Company complies with accounting and disclosure requirements ASC Topic 260, “Earnings Per Share.” Net loss per share is computed by dividing net loss attributable to owners of the Company by the weighted average number of shares of common stock outstanding for the period. Shares of common stock subject to possible redemption have been excluded from the calculation of basic loss per share and diluted loss per share since such shares, if redeemed, only participate in their pro rata share of the Trust Account earnings. The Company has not considered the effect of (1) Warrants sold in the Initial Public Offering and Private Placement to purchase shares of common stock, and (2) 15,000,000 Units sold in the Public Offering and the 173,100 Units sold pursuant to the partial exercise of the Over-allotment Option (Class A common stocks), since the exercise of the Warrants and the voting rights of Class A shares of common stock is contingent upon the occurrence of future events. In addition, in calculation of the net loss per share the Company has also considered the effect of the forfeiture of common shares in January 2017 by excluding them from all calculations.
| (11) | Subsequent Events |
On January 24, 2019, we received a letter from NASDAQ stating that the Company had failed to demonstrate compliance with the Minimum Public Holders Rule within the required time period and that, accordingly, the NASDAQ staff had initiated procedures to delist our Class A common shares, Units and Warrants from NASDAQ. In addition, NASDAQ advised us that our failure to comply with Listing Rule 5620(a), which requires that we hold an annual meeting of shareholders within one year of the end of each fiscal year, serves as an additional basis for delisting. We have requested a hearing to appeal the staff’s determination, which will stay the suspension of its securities and the delisting procedures while the appeal is pending.
On January 30, 2019, HMAC has drawn an amount of $200,000, under a promissory note with its Sponsor. The loan is unsecured and bears interest at a rate per annum of LIBOR plus 0.60%.
| 24 |
HUNTER MARITME ACQUISITION CORP. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended December 31, 2018 and 2017
and the Period from June 24, 2016 to December 31, 2016
On February 19, 2019 HMAC announced the commencement of a tender offer pursuant to the terms of the Merger Agreement by and among HMAC, and NCF Wealth Holdings Limited.
On February 22, 2019, HMAC has drawn an amount of $400,000, under a promissory note with its Sponsor. The loan is unsecured and bears interest at a rate per annum of LIBOR plus 0.60%.
On March 20, 2019, HMAC announced the final results of its previously announced tender offer. A total of 1,926,021 Class A common shares were validly tendered and accepted for purchase for a total cost of approximately $19.7 million, excluding fees and expenses related to the Tender Offer, which will be released from the Company’s trust account.
On March 21, 2019, HMAC closed the previously announced merger with NCF Wealth Holdings.
| 25 |
Exhibit 99.2
PRO FORMA CONDENSED COMBINED BALANCE SHEET (UNAUDITED)
as of December 31, 2018
| in USD | NCF Wealth Holdings Limited |
Hunter Maritime Acquisition Corp. |
Pro Forma Adjustment |
Pro Forma Adjustment |
Pro Forma Adjustment |
Pro Forma Adjustment |
Pro Forma Adjustment |
Pro Forma Balance Sheet |
||||||||||||||||||||||||
| A | B | C | D | E | F | G | ||||||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||||||||||
| NON-CURRENT ASSETS | 14,854,924 | - | - | - | - | - | - | 14,854,924 | ||||||||||||||||||||||||
| Deferred tax assets | 5,874,935 | - | - | - | - | - | - | 5,874,935 | ||||||||||||||||||||||||
| Equipment and software, net | 1,960,673 | - | - | - | - | - | - | 1,960,673 | ||||||||||||||||||||||||
| Long-term equity investment | 6,345,216 | - | - | - | - | - | - | 6,345,216 | ||||||||||||||||||||||||
| Long-term other receivable | 570,539 | - | - | - | - | - | - | 570,539 | ||||||||||||||||||||||||
| Goodwill | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| Other non-current assets | 103,561 | - | - | - | - | - | - | 103,561 | ||||||||||||||||||||||||
| CURRENT ASSETS | 194,111,513 | 22,218,241 | 600,000 | - | - | - | - | 216,929,754 | ||||||||||||||||||||||||
| Cash | 4,750,734 | 140,517 | 600,000 | 22,074,404 | - | - | - | 27,565,655 | ||||||||||||||||||||||||
| Cash and Investments held in the Trust Account | - | 22,074,404 | - | (22,074,404 | ) | - | - | - | - | |||||||||||||||||||||||
| Restricted cash | 13,959,012 | - | - | - | - | - | - | 13,959,012 | ||||||||||||||||||||||||
| Accounts receivable | 18,463,450 | - | - | - | - | - | - | 18,463,450 | ||||||||||||||||||||||||
| Accounts receivable – related parties | 221,394 | - | - | - | - | - | - | 221,394 | ||||||||||||||||||||||||
| Advances to suppliers | 8,802,673 | - | - | - | - | - | - | 8,802,673 | ||||||||||||||||||||||||
| Other receivables | 1,531,282 | - | - | - | - | - | - | 1,531,282 | ||||||||||||||||||||||||
| Advances to Suppliers & Other receivables - related parties | 3,353,455 | - | - | - | - | - | - | 3,353,455 | ||||||||||||||||||||||||
| Loan receivable – related parties | 139,033,485 | - | - | - | - | - | - | 139,033,485 | ||||||||||||||||||||||||
| Prepaid expenses and other current assets | - | 3,320 | - | - | - | - | - | 3,320 | ||||||||||||||||||||||||
| Other current assets | 3,996,028 | - | - | - | - | - | - | 3,996,028 | ||||||||||||||||||||||||
| TOTAL ASSETS | 208,966,437 | 22,218,241 | 600,000 | - | - | - | - | 231,784,678 | ||||||||||||||||||||||||
| EQUITY and LIABILITIES | ||||||||||||||||||||||||||||||||
| EQUITY | 132,104,400 | 5,000,001 | (5,162 | ) | 10,930,113 | - | (2,044,000 | ) | (4,250,000 | ) | 141,735,352 | |||||||||||||||||||||
| Series B preferred shares | 294 | - | - | - | (294 | ) | - | - | - | |||||||||||||||||||||||
| Series C-1 preferred shares | 247 | - | - | - | (247 | ) | - | - | - | |||||||||||||||||||||||
| Ordinary shares | 10,916 | 489 | - | 10,930,113 | 541 | - | - | 10,942,059 | ||||||||||||||||||||||||
| Shares in employee benefit trust | (4,077,600 | ) | - | - | - | - | - | - | (4,077,600 | ) | ||||||||||||||||||||||
| Additional paid-in capital | 139,879,319 | 7,331,343 | - | - | - | - | - | 147,210,662 | ||||||||||||||||||||||||
| Statutory reserve | 721,818 | - | - | - | - | - | - | 721,818 | ||||||||||||||||||||||||
| Accumulated deficit | (3,992,000 | ) | (2,331,831 | ) | (5,162 | ) | - | - | (2,044,000 | ) | (4,250,000 | ) | (12,622,993 | ) | ||||||||||||||||||
| Accumulated other comprehensive income | (715,921 | ) | - | - | - | - | - | - | (715,921 | ) | ||||||||||||||||||||||
| Non-controlling interest | 277,327 | - | - | - | - | - | - | 277,327 | ||||||||||||||||||||||||
| NON-CURRENT LIABILITIES | 4,077,000 | - | - | - | - | - | - | 4,077,000 | ||||||||||||||||||||||||
| Long-term loan - related parties | 4,077,000 | - | - | - | - | - | - | 4,077,000 | ||||||||||||||||||||||||
| Other long-term liabilities | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||
| CURRENT LIABILITIES | 72,785,037 | 17,218,240 | 605,162 | (10,930,113 | ) | - | 2,044,000 | 4,250,000 | 85,972,326 | |||||||||||||||||||||||
| Common stock subject to possible redemption | - | 10,930,113 | - | (10,930,113 | ) | - | - | - | - | |||||||||||||||||||||||
| Accounts payable | - | 37,749 | - | - | - | - | - | 37,749 | ||||||||||||||||||||||||
| Accrued expenses | - | 139,793 | 5,162 | - | - | - | - | 144,955 | ||||||||||||||||||||||||
| Deferred underwriting fees | - | 5,310,585 | - | - | - | - | - | 5,310,585 | ||||||||||||||||||||||||
| Unsecured promissory notes | - | 800,000 | 600,000 | - | - | - | - | 1,400,000 | ||||||||||||||||||||||||
| Bank borrowings | 13,536,894 | - | - | - | - | - | - | 13,536,894 | ||||||||||||||||||||||||
| Accrued marketing and channel fees | 12,203,906 | - | - | - | - | - | - | 12,203,906 | ||||||||||||||||||||||||
| Accrued marketing and channel fees – related parties | 442,787 | - | - | - | - | - | - | 442,787 | ||||||||||||||||||||||||
| Accruals and other liabilities | 6,444,042 | - | - | - | - | 2,044,000 | 4,250,000 | 12,738,042 | ||||||||||||||||||||||||
| Accruals and other liabilities - related parties | 24,606,596 | - | - | - | - | - | - | 24,606,596 | ||||||||||||||||||||||||
| Taxes payable | 15,100,313 | - | - | - | - | - | - | 15,100,313 | ||||||||||||||||||||||||
| Amount due to related parties | 450,499 | - | - | - | - | - | - | 450,499 | ||||||||||||||||||||||||
| TOTAL EQUITY and LIABILITIES | 208,966,437 | 22,218,241 | 600,000 | - | - | - | - | 231,784,678 | ||||||||||||||||||||||||
NOTES TO THE PRO FORMA CONDENSED COMBINED BALANCE SHEET
as of December 31, 2018
Pro Forma Adjustments to the Unaudited Condensed Combined Balance Sheet
| A | Derived from the unaudited consolidated balance sheet of NCF as of September 30, 2018. |
| B | Derived from the audited consolidated balance sheet of HMAC as of December 31, 2018. |
Financing transactions occurring subsequent to the respective balance sheet dates but prior to the consummation of the Merger, including:
| C | To reflect the loans from CMB to HMAC as per January 29, 2019 and February 25, 2019 for an amount of $200,000 and $400,000 respectively and the related notes issued as unsecured promissory notes. |
Pro forma adjustments relating to the consummation of the Merger, including:
| D | To reflect the release of cash from investments held in the Trust Account. The assumption is made that there are no redemptions upon completion of the Initial Business Combination ("IBC"). |
| E | To reflect the conversion of preferred shares to ordinary shares upon the occurrence of a succesful Initial Business Combination ("IBC"), i.e. Initial Public Offering ("IPO") of NCF. |
| F | To reflect the payment of $2,044,000 made by HMAC, including legal fees and other professional fees related to the merger. |
| G | To reflect the payment of $1,250,000 made by NCF, including legal fees and other professional fees related to the merger. In addition $3,000,000 of financial advisory fees of NCF to the financial advisor EarlyBirdCapital. |
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
For the year ended December 31, 2018
| in USD | NCF Wealth Holdings Limited |
Hunter Maritime Acquisition Corp. |
Pro Forma Adjustment |
Pro Forma Adjustment |
Pro Forma Adjustment |
Pro Forma Income Statement |
||||||||||||||||||
| A | B | C | D | E | ||||||||||||||||||||
| Net revenue | 260,584,708 | - | - | - | - | 260,584,708 | ||||||||||||||||||
| Transaction and service fee | 232,275,488 | - | - | - | - | 232,275,488 | ||||||||||||||||||
| Transaction and service fee - related parties | 5,287,115 | - | - | - | - | 5,287,115 | ||||||||||||||||||
| Commission fee | 9,211,023 | - | - | - | - | 9,211,023 | ||||||||||||||||||
| Commission fee - related parties | 1,226,550 | - | - | - | - | 1,226,550 | ||||||||||||||||||
| Other revenue | 12,466,568 | - | - | - | - | 12,466,568 | ||||||||||||||||||
| Other revenue - related parties | 117,964 | - | - | - | - | 117,964 | ||||||||||||||||||
| Sales and marketing expenses | (165,055,283 | ) | - | - | - | - | (165,055,283 | ) | ||||||||||||||||
| Product development expenses | (17,894,492 | ) | - | - | - | - | (17,894,492 | ) | ||||||||||||||||
| Loan facilitation and servicing expenses | (3,937,858 | ) | - | - | - | - | (3,937,858 | ) | ||||||||||||||||
| General and administrative expenses | (13,802,873 | ) | (949,114 | ) | - | (2,044,000 | ) | (4,250,000 | ) | (21,045,987 | ) | |||||||||||||
| Result from operating activities | 59,894,202 | (949,114 | ) | - | (2,044,000 | ) | (4,250,000 | ) | 52,651,088 | |||||||||||||||
| Interest and other income | 7,765,052 | 1,482,889 | - | - | - | 9,247,941 | ||||||||||||||||||
| Interest and other expenses | (65,987 | ) | (2,084,127 | ) | (5,162 | ) | - | - | (2,155,276 | ) | ||||||||||||||
| Foreign currency transaction (loss) gain | (1,065,074 | ) | - | - | - | - | (1,065,074 | ) | ||||||||||||||||
| Loss in equity method investment | (215,380 | ) | - | - | - | - | (215,380 | ) | ||||||||||||||||
| Gain on sale of equity interest in a subsidiary | 172,531 | - | - | - | - | 172,531 | ||||||||||||||||||
| Loss on sale of equity interest in a subsidiary | (72,995 | ) | - | - | - | - | (72,995 | ) | ||||||||||||||||
| Income from available-for-sale financial assets | 302,316 | - | - | - | - | 302,316 | ||||||||||||||||||
| Other miscellaneous income (expenses) | 58,647 | - | - | - | - | 58,647 | ||||||||||||||||||
| Profit/(loss) before tax | 66,773,312 | (1,550,352 | ) | (5,162 | ) | (2,044,000 | ) | (4,250,000 | ) | 58,923,798 | ||||||||||||||
| Income tax benefit/(expense) | (15,376,947 | ) | - | - | - | - | (15,376,947 | ) | ||||||||||||||||
| Net profit/(loss) | 51,396,365 | (1,550,352 | ) | (5,162 | ) | (2,044,000 | ) | (4,250,000 | ) | 43,546,851 | ||||||||||||||
| Other comprehensive income/(loss) | ||||||||||||||||||||||||
| Foreign currency translation adjustment | (2,802,408 | ) | - | - | - | - | (2,802,408 | ) | ||||||||||||||||
| Total comprehensive income/(loss) | 48,593,957 | (1,550,352 | ) | (5,162 | ) | (2,044,000 | ) | (4,250,000 | ) | 40,744,443 | ||||||||||||||
| Net (loss)/profit | ||||||||||||||||||||||||
| - Attributable to equity shareholders of the Company | 51,468,035 | (1,550,352 | ) | (5,162 | ) | (2,044,000 | ) | (4,250,000 | ) | 43,618,521 | ||||||||||||||
| - Attributable to non-controlling interests | (71,670 | ) | - | - | - | - | (71,670 | ) | ||||||||||||||||
| Total comprehensive (loss)/income | ||||||||||||||||||||||||
| - Attributable to equity shareholders of the Company | 48,519,061 | (1,550,352 | ) | (5,162 | ) | (2,044,000 | ) | (4,250,000 | ) | 40,669,547 | ||||||||||||||
| - Attributable to non-controlling interests | 74,896 | - | - | - | - | 74,896 | ||||||||||||||||||
| Weighted average shares outstanding, basic | 3,793,275 | 205,967,025 | ||||||||||||||||||||||
| Net (loss)/income per common share, basic | (0.41 | ) | 0.21 | |||||||||||||||||||||
NOTES TO THE PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the year ended December 31, 2018
Pro Forma Adjustments to the Unaudited Condensed Statement of Operations
| A | LTM unaudited consolidated income statement of NCF for the 12 months ended September 30, 2018. |
| B | Derived from the audited consolidated income statement of HMAC for the year ended December 31, 2018. |
| C | Represents interest payments on the loans from CMB to HMAC as per November 6, 2018, December 19, 2018, January 29, 2019 and February 25, 2019 for an amount of $500,000, $300,000, $200,000 and $400,000 respectively and the related notes issued. Interest rate is set at 3 months USD Libor + 0.60%. |
| D | To reflect the payment of $2,044,000 made by HMAC, including legal fees and other professional fees related to the merger. |
| E | To reflect the payment of $1,250,000 made by NCF, including legal fees and other professional fees related to the merger. In addition $3,000,000 of financial advisory fees of NCF to the financial advisor EarlyBirdCapital. |