EX-99.2 3 f8k1219ex99-2_tkksymphony.htm PROXY STATEMENT WITH RESPECT TO THE SPECIAL MEETING

Exhibit 99.2

 

TKK Symphony Acquisition Corporation

c/o Texas Kang Kai Capital Management (Hong Kong) Limited

2039, 2/F United Center
95 Queensway Admiralty, Hong Kong

 

NOTICE OF AN EXTRAORDINARY GENERAL MEETING
OF TKK SYMPHONY ACQUISITION CORPORATION
To Be Held On December 23, 2019

 

To the Shareholders of TKK Symphony Acquisition Corporation:

 

NOTICE IS HEREBY GIVEN that an extraordinary general meeting in lieu of the 2019 annual general meeting (the “meeting”) of TKK Symphony Acquisition Corporation, a Cayman Islands exempted company (“TKK” or the “Company”), will be held on December 23, 2019, at 10:00 a.m., Eastern time, at the offices of Ellenoff Grossman & Schole LLP, located at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105. You are cordially invited to attend the meeting for the following purposes:

 

(1)To consider and vote upon a proposal to approve and adopt the Share Exchange Agreement, dated as of September 6, 2019 (as it may be amended, the “Share Exchange Agreement”), by and among the Company, TKK Symphony Sponsor 1, Glory Star New Media Group Limited (“Glory Star”), Glory Star New Media (Beijing) Technology Co., Ltd.; Xing Cui Can International Media (Beijing) Co., Ltd.; Horgos Glory Star Media Co., Ltd. and each of the shareholders of the Glory Star named on Annex I thereto, a copy of which is attached to this proxy statement as Annex A (the “Business Combination Proposal”);

 

(2)To consider and vote upon separate proposals to amend and restate our existing memorandum and articles of association to, among other things:

 

change our name from “TKK Symphony Acquisition Corporation” to “Glory Star New Media Group Holdings Limited”;

 

remove and change certain provisions related to our status as a blank check company; and

 

provide for certain additional non-substantive changes,

 

all of which are reflected in the proposed amended and restated memorandum and articles of association, a copy of which is attached to this proxy statement as Annex B (each, a “Charter Proposal” and collectively, the “Charter Proposals”);

 

(3)To appoint three directors to serve on our board of directors (the “Director Election Proposal”);

 

(4)a proposal to approve, for purposes of complying with applicable Nasdaq Capital Market listing rules, the issuance of more than 20% of the Company’s issued and outstanding ordinary shares (the “Share Issuance Proposal”);

 

(5)To consider and vote upon a proposal to approve and adopt the Glory Star New Media Group Holdings Limited 2019 Equity Incentive Plan, a copy of which is attached to this proxy statement as Annex C (the “Incentive Plan Proposal”); and

 

(6)To approve and adopt a proposal to adjourn the meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the meeting, there are not sufficient votes to approve one or more proposals presented to shareholders for vote (the “Adjournment Proposal”).

 

Only holders of record of our ordinary shares at the close of business on November 29, 2019 are entitled to notice of the meeting and to vote at the meeting and any adjournments of the meeting. A complete list of our shareholders of record entitled to vote at the meeting will be available for ten days before the meeting at our principal executive offices for inspection by shareholders during ordinary business hours for any purpose germane to the meeting.

 

 

 

 

Pursuant to our existing memorandum and articles of association, we are providing our public shareholders with the opportunity to tender their ordinary shares of the Company cash equal to their pro rata share of the aggregate amount on deposit in the trust account, which holds the proceeds of our initial public offering and the concurrent private placement, as of two business days prior to the consummation of the Business Combination, including interest earned on the funds held in the trust account and not previously released to us to pay our taxes, upon the consummation of the Business Combination. For a more detailed description of the Offer, you should read the offer to purchase accompanying this proxy statement (the “Offer to Purchase”). Regardless of whether your vote your shares and how you vote your shares, you will have the choice to tender your ordinary shares in the Offer.

 

The approval of the Business Combination Proposal, the Director Election Proposal, the Share Issuance Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law which requires the affirmative vote of the holders of a majority of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting.

 

The approval of each Charter Proposal requires a special resolution under Cayman Islands law which requires the affirmative vote of the holders of at least two-thirds of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting.

 

Accordingly, abstentions and broker non-votes will have no effect on these proposals.

 

Your attention is directed to the proxy statement accompanying this notice (including the annexes thereto) for a more complete description of the proposed Business Combination and related transactions and each of our proposals. We encourage you to read this proxy statement carefully. If you have any questions or need assistance voting your shares, please call our proxy solicitor, Morrow Sodali LLC, at (800) 662-5200.

 

  By Order of the Board of Directors,
   
December 12, 2019 /s/ Sing Wang
  Sing Wang
Chief Executive Officer

 

 

 

 

Table of Contents

 

    Page
SUMMARY OF THE PROXY STATEMENT AND BUSINESS COMBINATION 1
FREQUENTLY USED TERMS 9
QUESTIONS AND ANSWERS ABOUT THE PROPOSALS 12
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 24
MEETING IN LIEU OF 2019 ANNUAL GENERAL MEETING 26
PROPOSAL NO. 1 — APPROVAL OF THE BUSINESS COMBINATION 30
PROPOSAL NO. 2 — APPROVAL OF AMENDMENT TO TKK’S AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION TO CHANGE TKK’S NAME 34
PROPOSAL NO. 3 — APPROVAL OF AMENDMENT TO TKK’S AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION TO REMOVE CERTAIN PROVISIONS RELATING TO OUR STATUS AS A BLANK CHECK COMPANY 35
PROPOSAL NO. 4 — APPROVAL OF CERTAIN ADDITIONAL NON-SUBSTANTIVE CHANGES TO TKK’S AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION 36
PROPOSAL NO. 5 — ELECTION OF DIRECTORS TO THE BOARD 37
PROPOSAL NO. 6 — APPROVAL OF ISSUANCE OF MORE THAN 20% OF THE COMPANY’S ISSUED AND ISSUED AND OUTSTANDING ORDINARY SHARES 38
PROPOSAL NO. 7 — APPROVAL AND ADOPTION OF THE EQUITY INCENTIVE PLAN 39
PROPOSAL NO. 8 — THE ADJOURNMENT PROPOSAL 44
APPRAISAL RIGHTS 45
DELIVERY OF DOCUMENTS TO SHAREHOLDERS 45
SUBMISSION OF SHAREHOLDER PROPOSALS 45
FUTURE SHAREHOLDER PROPOSALS 45
WHERE YOU CAN FIND MORE INFORMATION 46
ANNEX A — Share Exchange Agreement A-1
ANNEX B — Form of Amended and Restated Memorandum and Articles of Association B-1
ANNEX C — Form of Glory Star New Media Group Holdings Limited 2019 Equity Incentive Plan C-1

 

 

 

 

SUMMARY OF THE PROXY STATEMENT AND BUSINESS COMBINATION

 

This summary highlights selected information from this proxy statement and the Business Combination and may not contain all of the information that is important to you. To better understand the Business Combination and the proposals to be considered at the meeting, you should read this entire proxy statement carefully, including the annexes. See also the section entitled “Where You Can Find More Information.”

 

Parties to the Business Combination

 

Information about TKK Symphony Acquisition Corporation

 

TKK Symphony Acquisition Corporation is an exempted company structured as a blank check company incorporated under the laws of the Cayman Islands on February 5, 2018. TKK was incorporated for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities. TKK is not limited to a particular industry or geographic region for purposes of consummating a business combination. However, TKK believes it is particularly well-positioned to capitalize on growing opportunities created by consumer/lifestyle assets that may have particular application for the PRC market.

 

In August 2018, TKK consummated its IPO of an aggregate of 25,000,000 Units, including 30,000,000 Units pursuant to the partial exercise of the over-allotment option by the underwriters of the IPO. Each Unit issued in the IPO consists of one ordinary share, one warrant and one right. Each warrant entitles the holder to purchase one-half of an ordinary share at a price of $11.50 per whole share. Simultaneously with the consummation of the IPO, TKK completed a private placement of 13,000,000 warrants, which we refer to as the “private placement warrants,” at a purchase price of $0.50 per warrant to Symphony Holdings Limited, or Symphony, generating gross proceeds of $6,500,000. On August 16, 2018, the Units commenced trading on the Nasdaq under the symbol “TKKSU.” As a result of the partial exercise of the over-allotment option, the Sponsor forfeited 75,000 ordinary shares so that the initial shareholders, including the Sponsor, maintain aggregate ownership, on an as-converted basis, at 20% of TKK’s issued and outstanding ordinary shares.

 

The 25,000,000 Units sold in the IPO were sold at an offering price of $10.00 per Unit, generating gross proceeds of $250,000,000, which was placed in the Trust Account pending TKK’s completion of an initial business combination.

 

On September 12, 2018, the ordinary shares, warrants and rights underlying the Units sold in the IPO began to trade separately.

 

If TKK does not consummate our initial business combination by February 20, 2020 (or until June 20, 2020 if we extend the period of time to consummate a business combination through the issuance of 25,000,000 warrants, each to purchase one-half of an ordinary share, as a dividend to our public shareholders) (the “Business Combination Deadline”), TKK must liquidate the Trust Account to the holders of the public shares and dissolve.

 

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Information about Glory Star New Media Group Limited

 

Glory Star Group provides advertisement and content production services and operates a leading mobile and online advertising, digital media and entertainment business in China. After launching its CHEERS App in 2018, it is fast becoming one of the leading e-commerce platforms in China by allowing its users to access its online store (e-Mall), video content, live streaming, and online games. By leveraging Glory Star Group’s rich library of original professionally-produced content to drive user engagement, Glory Star Group has created an ecosystem that attracts and retains a large and growing viewing audience base for its platform. As of June 30, 2019, Glory Star Group had distributed nearly 70,000 minutes of proprietary video content to its users, including short videos, online variety shows, online dramas, live streaming, and its lifestyle video series, which achieved more than 4.2 billion views cumulatively.

 

Business Combination

 

Pursuant to the Share Exchange Agreement, we will acquire Glory Star through our acquisition of all of the outstanding shares of Glory Star. The shareholders of Glory Star will receive, in exchange for their Glory Star shares, ordinary shares of the Company, and, following the closing, Glory Star will be a wholly owned subsidiary of the Company. For more information about the transactions contemplated by the Share Exchange Agreement, which is referred to herein as the “Business Combination,” see the section entitled “Proposal No. 1 — Approval of the Business Combination.” A copy of the Share Exchange Agreement is attached to this proxy statement as Annex A.

 

Consideration to Glory Star Shareholders in the Business Combination and Related Transactions

 

Upon the closing of the Business Combination, the shareholders of Glory Star (the “Sellers”) will receive an aggregate number of ordinary shares equal to $425,000,000 divided by the purchase price (or 41,342,412 ordinary shares assuming a purchase price of $10.28 per share), 5% of which (or 2,067,121 ordinary shares (“Escrow Shares”) assuming a purchase price of $10.28 per share) will be deposited into escrow to secure certain indemnification obligations. The Sellers will also be entitled to receive up to 10 million additional ordinary shares if we meet certain financial performance targets for the 2019 and 2020 fiscal years. The Share Exchange Agreement is based on an equity valuation of Glory Star of $425,000,000 with the right to earn up to 10,000,000 Earnout Shares. TKK has entered into a Registration Rights Agreement with the Sponsor and the Sellers pursuant to which TKK will grant certain registration rights to the Sellers with respect to the registration of the Closing Payment Shares and Earnout Shares. TKK expects that the Sellers will seek to have their shares in TKK registered for resale under the Registration Rights Agreement promptly following the closing of the Business Combination.

 

Ownership of TKK

 

After the Business Combination, assuming no public shares are tendered in the Offer and a $10.28 purchase price, TKK’s current public shareholders will own approximately 36.52% of the combined company, while TKK’s current directors, officers and initial shareholders, including the Sponsor, and EarlyBirdCapital, will collectively own approximately 8.57% of the combined company, and the Sellers will own approximately 54.91% of the combined company. Assuming all of the outstanding public shares are tendered in the Offer and a $10.28 purchase price, TKK’s current public shareholders will own 4.97% of TKK, TKK’s current directors, officers and initial shareholders, including the Sponsor, and EarlyBirdCapital, will own approximately 12.83% of TKK, and the Sellers will own approximately 82.20% of TKK.

 

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The following table illustrates three scenarios of varying ownership levels on a fully diluted basis based on the assumptions described above but assuming varying levels of shares tendered by TKK shareholders:

 

Assumptions

 

   No ordinary shares
Purchased in Tender Offer
   Percentage of
Outstanding
Shares
   12.5 million
ordinary shares Purchased in the Tender Offer
   Percentage of
Outstanding
Shares
   Maximum
Amount of
ordinary shares Purchased in the Tender Offer (other than Founder
Shares)
   Percentage of
Outstanding
Shares
 
TKK public shareholders   27,500,000    36.52%   26,250,000    23.86%   2,500,000    4.97%
TKK’s current directors, officers and initial shareholders, including the Sponsor   6,250,000    8.29%   6,250,000    9.94%   6,250,000    12.41%

 

See “Summary of the Proxy Statement and Business Combination” and the “Unaudited Pro Forma Condensed Combined Financial Information” in the Offer to Purchase accompanying this proxy statement.

 

Ownership of Glory Star

 

Immediately following the consummation of the Business Combination, TKK will own 100% of the shares of Glory Star.

 

Source of Funds for the Business Combination

 

The consideration in the Business Combination will consists of the ordinary shares of TKK. We intend to pay for the purchase of ordinary shares pursuant to the Offer and transaction expenses of the Business Combination approximately $257 million primarily with the proceeds from the Trust Account remaining following the Offer, as described herein.

 

Included in the Business Combination transaction fees, costs and expenses are $8.75 million fees payable to EarlyBirdCapital pursuant to a Business Combination Marketing Agreement dated August 15, 2018 by and between the Company and EarlyBirdCapital, subject to availability of cash post business combination and further negotiations by the parties. We will also pay financial advisors fees, regulatory fees, legal fees, accounting fees, printer fees and other professional fees incurred by TKK, our Sponsor or Glory Star in connection with the identification, investigation, negotiation and consummation of the Business Combination. In particular, we will reimburse loans made to us by our Sponsor to fund the Business Combination costs and expenses prior to the completion of the Business Combination, which amount is expected to be approximately $10.25 million upon the consummation of the Business Combination. Up to $1,000,000 of such loans may be convertible into warrants at a price of $0.50 per warrant at the option of the Sponsor.

 

If not all of the funds released from the Trust Account are used for payment of the Business Combination transaction expenses and pursuant to our Offer, we may apply the balance of the cash released to us from the Trust Account for general corporate purposes, including for maintenance or expansion of operations post-Business Combination, the payment of principal or interest due on indebtedness assumed in connection with the Business Combination, to fund the purchase of other companies or for working capital.

 

If the aggregate cash payments we would be required to pay for all ordinary shares that are validly tendered pursuant to the Offer plus the transaction expenses pursuant to the terms of the proposed Business Combination exceed the aggregate amount of cash available to us, including pursuant to any additional equity or debt financing we may procure, we will not complete the Business Combination or purchase any shares, and all ordinary shares tendered will be returned to the holders thereof. As further required by the terms of the Share Exchange Agreement, we cannot consummate the Business Combination unless we retain an amount of net tangible assets of no less than $5,000,001 upon consummation of a Business Combination, after giving effect to the completion of the Offer and any private placement financing and including the consolidated net tangible assets of Glory Star.

 

Reasons for the Business Combination

 

We were incorporated for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities.

 

In considering the proposed Business Combination, TKK’s board and management team reviewed due diligence findings of advisors as well as publicly available industry-specific research published by third parties while simultaneously analyzing data and material provided by Glory Star, including but not limited to, Glory Star’s existing business model, historical and projected financial statements, valuation analyses, material agreements and other due diligence material.

 

3

 

 

Since TKK’s IPO in August of 2018, our management team and board of directors have been conducting a search for potential business combination partners. TKK’s management and board of directors considered a wide variety of factors in connection with its evaluation but did not find it appropriate to quantify or assign weights to specific factors in reaching its final decision. In considering the Business Combination with Glory Star, our management and board determined that Glory Star met, in some fashion, all of the criteria we set for our target company screening:

 

High-growth market poised to benefit from the launch of 5g technology
  
Innovative business model with leading market position
  
Strong core team of industry veterans
  
Solid financial performance

 

In making its consideration, the TKK Board also considered, amongst other things, the following potential concerns of the Business Combination:

 

The risks associated with the e-commerce and media content industry in general;
  
The risks associated with the relatively short operating history of Glory Star;
  
The risk of competition in the industry, including strong multinational incumbents as well as the potential for new entrants;
  
The risk that the announcement of the transaction and potential diversion of Glory Star’s management and employee attention may adversely affect Glory Star’s operations;
  
The risk that certain key employees of Glory Star might not choose to remain with the company post-closing;
  
The risk that the Business Combination might not be consummated in a timely manner or that the closing of the Business Combination might not occur despite the companies’ efforts;
  
Foreign exchange risk given that the Company’s operating currency was in RMB; and
  
The other risks described in the section entitled “Risk Factors” in the Offer to Purchase accompanying this proxy statement.

 

The TKK board concluded that these risk factors did not diminish or outweigh the benefits of pursuing the Business Combination.

 

TKK’s board of directors did not assign relative weights to the specific factors it considered, but instead evaluated the transaction as a whole and found it to be overall favorable to its shareholders. TKK’s board of directors approved the Business Combination. TKK’s board did not, and was not required to, obtain a fairness opinion in connection with the proposed Business Combination and did not independently verify (or cause such verification of) the source of all information received from Glory Star.

 

No Opinion of Financial Advisor

 

Our board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Our officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and have concluded that their experience and backgrounds, together with the experience and sector expertise of our financial advisors enabled them to make the necessary analyses and determinations regarding the business combination with Glory Star. In addition, our officers and directors and our advisors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of our board of directors in valuing Glory Star’s business, and assuming the risk that the board of directors may not have properly valued such business.

 

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Tender Offer

 

Pursuant to our existing memorandum and articles of association, in connection with the Business Combination, holders of our public shares may elect to have their shares purchased for cash pursuant to the Offer. If a holder determines to tender ordinary shares, then such holder will be transferring its ordinary shares for cash and will no longer own shares of the Company. Such a holder will be entitled to receive cash for its public shares only if it follows the procedures set forth in the Offer to Purchase. Regardless of whether your vote your shares and how you vote your shares, you will have the choice to tender your ordinary shares in the Offer.

 

Other Shareholder Proposals

 

The shareholders of TKK will also be asked to vote on proposals to approve the proposed amended and restated memorandum and articles of association, to appoint three directors to serve on the board pending the closing of the Business Combination, to approve the issuance of more than 20% of the Company’s issued and outstanding ordinary shares for Nasdaq Capital Market listing rules purposes, to adopt a share incentive plan, and if necessary, to adjourn the meeting.

 

Approval of Amendment to TKK’s Amended and Restated Memorandum and Articles of Association to change TKK’s name

 

Upon the closing of the Business Combination, our existing memorandum and articles of association will be amended and restated to change our name to “Glory Star New Media Group Holdings Limited”. See the section entitled “Proposal No. 2 — Approval of Amendment to TKK’s Amended and Restated Memorandum and Articles of Association to Change TKK’s Name” for additional information.

 

Approval of Amendment to TKK’s Amended and Restated Memorandum and Articles of Association Remove Certain Provisions Relating to our Status as a Blank Check Company

 

Upon the closing of the Business Combination, our existing memorandum and articles of association will be amended and restated promptly to remove certain provisions relating to our status as a blank check company, including to establish TKK’s perpetual existence and remove certain corporate opportunity waivers. See the section entitled “Proposal No. 3 — Approval of Amendment to TKK’s Amended and Restated Memorandum and Articles of Association To Remove Certain Provisions Relating to our Status as a Blank Check Company” for additional information.

 

Board of Directors of the Company Pending the Business Combination

 

Until the closing of the Business Combination, our board of directors will consist of seven directors, three of whom will serve until the meeting, and four of whom will serve until the next annual general meeting, and until their respective successors are duly elected and qualified. The directors who have been nominated for re-election at the meeting are Messrs. James Heimowitz, Stephen Markscheid and Dr. Zhe Zhang.

 

Upon the closing of the Business Combination, our board of directors will consist of Messrs. Bing Zhang, Jian Lu, Ming Shu Leung, and Yong Li and Ms. Joanne Ng.

 

Approval of the Issuance of More than 20% of the Company’s issued and outstanding ordinary shares for Nasdaq Capital Market Listing Rules Purposes

 

The Nasdaq Capital Market listing rules require that we obtain shareholder approval for issuances of securities in excess of 20% of our issued and outstanding ordinary shares prior to the issuance. Although we are not required to obtain the approval of our shareholders under Nasdaq Listing Rule 5635(a), our board of directors deems it advisable to seek shareholder approval for the issuance of ordinary shares pursuant to the Share Exchange Agreement. As such, in connection with the approval of the Business Combination Proposal, you will be asked to consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq Capital Market listing rules, the issuance of more than 20% of the Company’s issued and outstanding ordinary shares. See the section entitled “Proposal No. 6 — Approval of Issuance of More than 20% of the Company’s issued and outstanding ordinary shares” for additional information.

 

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Adoption of the Incentive Plan

 

Our board of directors has unanimously approved and adopted the Glory Star New Media Group Holdings Limited 2019 Equity Incentive Plan, or the Equity Incentive Plan, and recommended that TKK’s shareholders approve and adopt such plan. The purpose of this plan will be to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors and consultants, and to promote the success of the Company’s business.

 

The Equity Incentive Plan provides for grants of incentive share options, nonstatutory share options, restricted shares, share appreciation rights, restricted share units, performance units, performance shares, and other share based awards.

 

Employees, including Officers and Directors, of the Company or any parent or subsidiary of the Company, or any person engaged by the Company or a parent or subsidiary to render services to such entity will be eligible for grants under the Equity Incentive Plan.

 

The aggregate number of ordinary shares which may be issued or used for reference purposes under the Equity Incentive Plan or with respect to which awards may be granted may not exceed 5,652,975, which is approximately 7.5% of our ordinary shares following the completion of the Business Combination, assuming there are no shares are tendered in the Offer and no new equity awards, or 3,777,975, which is approximately 7.5% of our ordinary shares following the completion of the Business Combination, assuming all public shares are tendered in the Offer and no new equity awards.

 

See the section entitled “Proposal No. 7 — Approval and Adoption of the Equity Incentive Plan” for additional information.

 

Adjournment Proposal

 

TKK proposes that the shareholders approve and adopt a proposal to adjourn the meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the meeting, there are not sufficient votes to approve one or more proposals presented to shareholders for vote. See the section entitled “Proposal No. 8 — Adjournment Proposal” for additional information.

 

Closing Conditions to the Business Combination

 

The closing of the Business Combination is subject to a number of conditions set forth in the Share Exchange Agreement. For more information about the closing conditions to the Business Combination, see the section entitled “The Share Exchange Agreement” in the Offer to Purchase accompanying this proxy statement.

 

Termination of the Share Exchange Agreement

 

The Share Exchange Agreement may be terminated at any time prior to the consummation of the Business Combination in specified circumstances. For more information about the termination rights under the Share Exchange Agreement, see the section entitled “The Share Exchange Agreement” in the Offer to Purchase accompanying this proxy statement.

 

Accounting Treatment of the Business Combination

 

The Business Combination will be accounted for as a reverse merger, accompanied by a recapitalization, in accordance with U.S. GAAP. Under this method of accounting, TKK will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Glory Star controlling the majority of the relative voting rights, Glory Star being expected to have the largest interest of the combined company, Glory Star’s senior management comprising the senior management of the combined company, the relative size of Glory Star compared to TKK, and Glory Star’s operations comprising the ongoing operations of the combined company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Glory Star issuing share for the net assets of TKK, accompanied by a recapitalization. The net assets of TKK will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Glory Star.

 

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Appraisal Rights

 

Appraisal rights are not available to our shareholders in connection with matters to be voted upon at the meeting, or in connection with the Business Combination.

 

Recommendations to TKK Shareholders

 

In considering the recommendation of TKK’s board of directors to vote for the proposals presented at the meeting, you should be aware that our Sponsor, officers and directors have interests in the Business Combination that are different from, or in addition to, the interests of our shareholders generally. The members of our board of directors were aware of these differing interests and considered them, among other matters, in evaluating and negotiating the transaction agreements and in recommending to our shareholders that they vote in favor of the proposals presented at the meeting. These interests include, among other things:

 

If the proposed Business Combination is not completed by the Business Combination Deadline, TKK will be required to liquidate. In such event, Founder Shares and the private placement warrants held by Symphony will expire worthless. Such ordinary shares and private placement warrants had an aggregate market value of approximately $64.475 million based on the closing price of the ordinary shares of $10.16 and warrants of $0.075, on Nasdaq as of October 12, 2019. The Sponsor purchased the Founder Share for an aggregate purchase price of $25,000, and Symphony purchased 13,000,000 private placement warrants for an aggregate purchase price of $6,500,000, or $0.50 per private placement warrant.
  
Unless TKK consummates the Business Combination, TKK’s Sponsor will not receive repayment of loans provided to TKK. As of September 30, 2019, TKK had $850,000 in aggregate outstanding indebtedness to the Sponsor. In addition, unless TKK consummates the Business Combination, its officers and directors will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent such expenses exceeded the amount of its working capital. As a result, the financial interest of TKK’s Sponsor, certain of TKK’s officers and directors or their affiliates who are affiliated with the Sponsor could have a conflict of interest when the directors and officers determine whether the Business Combination is in the best interests of TKK.
  
An affiliate of the Sponsor has contractually agreed that, if TKK liquidates prior to the consummation of a business combination, it will be liable to ensure that the proceeds in the Trust Account are not reduced below $10.00 per share by the claims of target businesses or claims of vendors or other entities that are owed money by TKK for services rendered or contracted for or products sold to it. Therefore, such affiliate has a financial interest in consummating any business combination, thereby resulting in a potential conflict of interest. Certain of TKK’s officers and directors are affiliated with the Sponsor. Accordingly, the Sponsor and certain of TKK’s officers and directors could have a conflict of interest when the directors and officers determine whether the Business Combination is in the TKK’s shareholders’ best interests.
  
The exercise of TKK’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in the best interests of TKK’s shareholders.

 

As a result, our Sponsor, officers and directors have financial incentives to see a business combination consummated. These interests may influence our directors in making their recommendation that you vote in favor of the Business Combination Proposal and the transactions contemplated thereby.

 

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Quorum and Required Vote for Proposals for the Meeting

 

A quorum of TKK shareholders is necessary to hold a valid meeting. A quorum will be present at the meeting if the holders of at least one-third of the ordinary shares issued and outstanding and entitled to vote at the meeting is represented in person or by proxy. Abstentions (but not broker non-votes) will count as present for the purposes of establishing a quorum.

 

The approval of the Business Combination Proposal, the Director Election Proposal, the Share Issuance Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law which requires the affirmative vote of the holders of a majority of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting.

 

The approval of each Charter Proposal requires a special resolution under Cayman Islands law which requires the affirmative vote of the holders of at least two-thirds of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting.

 

Accordingly, abstentions and broker non-votes will have no effect on these proposals.

 

As of the record date, our Sponsor, officers and directors have agreed to vote their Founder Shares and all ordinary shares acquired by our Sponsor during or after our initial public offering in favor of the Business Combination. Currently, our Sponsor, officers and directors and other initial shareholders collectively own approximately 19.9% of our issued and outstanding ordinary shares (excluding warrant shares).

 

Risk Factors

 

In evaluating the proposals set forth in this proxy statement, you should carefully read this proxy statement, including the annexes, and especially consider the factors discussed in the section entitled “Risk Factors” in the Offer to Purchase accompanying this proxy statement.

 

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FREQUENTLY USED TERMS

 

In this document, unless otherwise stated or unless the context otherwise requires,

 

“we,” “us,” “our,” the “Company” and “TKK” refer to TKK Symphony Acquisition Corporation and, following the consummation of the Business Combination and our acquisition of Glory Star, the combined company;
  
“combined company” refers to TKK following the consummation of the Business Combination and our acquisition of Glory Star;
  
“Additional Agreements” means the Registration Rights Agreement, Escrow Agreement, Non-Compete Agreements and Lock-Up Agreement, as contemplated by the Share Exchange Agreement;
  
Adjournment Proposal” means a proposal to adjourn the meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the meeting, there are not sufficient votes to approve one or more proposals presented to shareholders for vote at such meeting;
  
“broker non-vote” means the inability of a broker or nominee, under applicable stock exchange rules, to vote shares with respect to a matter by reason of the failure of a TKK shareholder, who holds his or her shares in “street name” through a broker or other nominee, to give voting instructions to such broker or other nominee;
  
“Business Combination” means the acquisition of Glory Star by TKK pursuant to the terms of the Share Exchange Agreement;
  
“Business Combination Deadline” means February 20, 2020 (or until June 20, 2020 if we extend the period of time to consummate a business combination through the issuance of 25,000,000 warrants, each to purchase one-half of an ordinary share, as a dividend to our public shareholders (“potential extension warrants”)), the deadline for consummating TKK’s initial business combination;
  
“Business Combination Proposal” means the proposal to approve and adopt the Share Exchange Agreement and the transactions contemplated thereby;
  
“Cayman Islands Companies Law” means the Cayman Islands Companies Law (2018 Revision), as amended;
  
“Charter Proposals” means the proposals to approve and adopt the proposed amended and restated memorandum and articles of association, a copy of which is attached as Annex B to this proxy statement, to (i) change our name from “TKK Symphony Acquisition Corporation” to “Glory Star New Media Group Holdings Limited,” (ii) remove and change certain provisions related to our status as a blank check company and (iii) provide for certain additional non-substantive changes;
  
“Closing Payment Shares” means the ordinary shares of TKK in an aggregate number equal to $425,000,000 divided by the purchase price, that are to be issued to the Sellers upon the consummation of the Business Combination as consideration therefor;
  
“combined company” means TKK (to be renamed “Glory Star New Media Group Holdings Limited”) and its subsidiaries following the consummation of the Business Combination;
  
“Director Election Proposal” means the proposal to elect Messrs. James Heimowitz, Stephen Markscheid and Dr. Zhe Zhang to serve as directors on the Company’s board of directors;
  
“Earnout Shares” means a maximum of 10,000,000 ordinary shares that may be issued to the Sellers if, after the Business Consummation, the combined company meets certain financial performance targets for the 2019 fiscal year and 2020 fiscal year;
  
“Equity Incentive Plan” means the Glory Star New Media Group Holdings Limited 2019 Equity Incentive Plan, a copy of which is attached as Annex C to this proxy statement;

 

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“Escrow Shares” means 5% of the Closing Payment Shares that are to be deposited into escrow to secure certain indemnification obligations of Glory Star and the Sellers;
  
“Exchange Act” means the United States Securities Exchange Act of 1934, as amended;
  
“existing memorandum and articles of association” means TKK’s Amended and Restated Memorandum and Articles of Association, as further amended and in effect on the date hereof;
  
“founder shares” means the ordinary shares held by the Sponsor and other initial shareholders;
  
“FPI” or “FPI status” means a foreign private issuer as defined by and determined pursuant to Rule 3b-4 under the Exchange Act;
  
“Glory Star” means Glory Star New Media Group Limited, a Cayman Islands exempted company;
  
“Glory Star Group” means Glory Star together with its consolidated subsidiaries and VIEs.
  
“Glory Star Parties” are the VIEs, the WFOE and Glory Star, collectively;
  
“Horgos” means Horgos Glory Star Media Co., Ltd., a limited liability company incorporated in the PRC;
  
“initial public offering” or “IPO” means TKK’s initial public offering of Units at $10.00 per Unit which closed in August 2018;
  
“Nasdaq” means the Nasdaq Capital Market;
  
“Offer” means the tender offer for up to 25,000,000 ordinary shares of TKK;
  
“PRC” means the People’s Republic of China;
  
“private placement warrants” means the warrants issued to an affiliate of the Sponsor in a private placement in connection with the IPO;
  
“proposed amended and restated memorandum and articles of association” means the amended and restated memorandum and articles of association of TKK being proposed for approval by TKK’s shareholders, a copy of which is attached as Annex B to this proxy statement;
  
“public rights” and “rights” means the rights sold as part of the units in the IPO (whether they were purchased in the offering or thereafter in the open market); one right entitles the holder thereof to receive one-tenth (1/10) of an ordinary share upon the consummation of an initial business combination
  
“public shareholders” means holders of public shares;
  
“public shares” means the ordinary shares sold as part of the units in the IPO (whether they were purchased in the offering or thereafter in the open market);
  
“public warrants” or “warrants” are to the redeemable warrants sold as part of the units in the IPO (whether they were purchased in the offering or thereafter in the open market); each warrant entitles the holder thereof to purchase one-half of one ordinary share at a price of $5.75 per half share, subject to adjustment;
  
“Purchase Price” means $10.28 per ordinary share or $257,000,000 in aggregate;
  
“Purchaser Representative” means TKK Symphony Sponsor 1, a Cayman Islands exempted company, as representative of the Purchaser;
  
“RMB” refers to Renminbi, the lawful currency of China;
  
“SEC” means the United States Securities and Exchange Commission;
  
“Securities Act” means the United States Securities Act of 1933, as amended;

 

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“Seller Representative” means Bing Zhang, as representative of the Sellers;
  
“Sellers” means the shareholders of Glory Star;
  
“Share Exchange” means the acquisition of the shares of Glory Star from the Sellers pursuant to the terms of the Share Exchange Agreement;
  
“Share Exchange Agreement” means the Share Exchange Agreement, dated as of September 6, 2019, as may be amended from time to time, by and among by and among TKK, Glory Star, WFOE, Xing Cui Can, Horgos, each of the Sellers, the Purchaser Representative, and the Seller Representative.
  
“Share Issuance Proposal” means the proposal to approve the issuance of more than 20% of the Company’s issued and outstanding ordinary shares in connection with the Business Combination.
  
“Sponsor” means TKK Symphony Sponsor 1, a Cayman Islands exempted company;
  
“Transfer Agent” means Continental Stock Transfer & Trust Company acting as transfer agent for the ordinary shares;
  
“Trust Account” means the segregated account at Continental Stock Transfer and Trust Company, where certain of the proceeds from our IPO and the sale of the private placement warrants were deposited pursuant to an Investment Management Trust Agreement by and between TKK and Continental Stock Transfer & Trust Company, as trustee;
  
“underwriters” means the underwriters of TKK’s IPO;
  
“Units” means the units issued in TKK’s IPO; each Unit comprised of one ordinary share, one warrant and one right (whether they were purchased in the IPO or thereafter in the open market);
  
“VIE Contracts” means certain documents executed by the VIEs, the WFOE, the shareholders of the VIEs and certain other parties thereto as necessary to implement certain contractual arrangements in the PRC, which allow the WFOE to (i) exercise effective control over the VIEs and their subsidiaries, (ii) receive substantially all of the economic benefits of the VIEs and their subsidiaries; and (iii) have an exclusive option to purchase all or part of the equity interests in the VIEs when and to the extent permitted by PRC law;
  
“VIEs” means Xing Cui Can and Horgos, the variable interest entities of Glory Star;
  
“WFOE” means Glory Star New Media (Beijing) Technology Co., Ltd., a wholly foreign-owned enterprise limited liability company and indirectly wholly-owned by Glory Star; and
  
“Xing Cui Can” means Xing Cui Can International Media (Beijing) Co., Ltd., a limited liability company incorporated in the PRC.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS

 

The following questions and answers briefly address some commonly asked questions about the proposals to be presented at the meeting, including with respect to the proposed Business Combination. The following questions and answers may not include all the information that is important to our shareholders. We urge shareholders to carefully read this entire proxy statement, including the annexes and the other documents referred to herein.

 

Q:Why am I receiving this proxy statement?

 

A:We have entered into the Share Exchange Agreement pursuant to which, through a series of transactions, TKK will acquire from the Sellers all of the outstanding shares of Glory Star. A copy of the Share Exchange Agreement is attached to this proxy statement as Annex A. Our shareholders are being asked to consider and vote upon a proposal to approve and adopt the Business Combination, including the Share Exchange Agreement, among other proposals, described below. This proxy statement and its annexes contain important information about the proposed Business Combination and the other matters to be acted upon at the meeting. You should read this proxy statement and its annexes carefully and in their entirety.

 

Your vote is important. You are encouraged to submit your proxy as soon as possible after carefully reviewing this proxy statement and its annexes.

 

Q:What is being voted on at the meeting?

 

A:Below are proposals on which our shareholders are being asked to vote:

 

1.an ordinary resolution to approve and adopt the Share Exchange Agreement (this proposal is referred to herein as the “Business Combination Proposal”);

 

2.a special resolution to approve a proposal to change our name to “Glory Star New Media Group Holdings Limited”;

 

3.a special resolution to approve the amendment of our existing memorandum and articles of association to remove certain provisions related to our status as a blank check company;

 

4.a special resolution to approve certain additional non-substantive changes to our existing memorandum and articles of association;

 

(Proposals 2 through 4 are collectively referred to herein as the “Charter Proposals”)

 

5.an ordinary resolution to elect Messrs. James Heimowitz, Stephen Markscheid and Dr. Zhe Zhang to serve as directors on our board of directors (this proposal is referred to herein as the “Director Election Proposal”);

 

6.an ordinary resolution to approve the issuance of more than 20% of the Company’s issued and outstanding ordinary shares in connection with the Business Combination (this proposal is referred to herein as the “Share Issuance Proposal”); and

 

7.an ordinary resolution to approve and adopt the Glory Star New Media Group Holdings Limited 2019 Equity Incentive Plan (this proposal is referred to herein as the “Incentive Plan Proposal”);

 

8.an ordinary resolution to approve the adjournment of the meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that, based upon the tabulated vote at the time of the meeting, there are not sufficient votes to approve one or more proposals presented at the meeting (this proposal is referred to herein as the “Adjournment Proposal”). This proposal will only be presented at the meeting if there are not sufficient votes to approve one or more of the other proposals presented to shareholders for vote.

 

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Q:Are the proposals conditioned on one another?

 

A:No. None of the proposals require the approval of any other proposal to be effective and will only be presented at the meeting if there are not sufficient votes to approve one or more of the other proposals.

 

Q:Why is TKK proposing the Business Combination Proposal?

 

A:We incorporated for the purpose of entering into a merger, share exchange, asset acquisition, share purchase, recapitalization, reorganization or similar business combination with one or more businesses or entities.

 

In considering the proposed Business Combination, TKK’s board and management team reviewed due diligence findings of advisors as well as publicly available industry-specific research published by third parties while simultaneously analyzing data and material provided by Glory Star, including but not limited to, Glory Star’s existing business model, historical and projected financial statements, valuation analyses, material agreements and other due diligence material.

 

Since TKK’s IPO in August of 2018, our management team and board of directors have been conducting a search for potential business combination partners. TKK’s management and board of directors considered a wide variety of factors in connection with its evaluation but did not find it appropriate to quantify or assign weights to specific factors in reaching its final decision. In considering the Business Combination with Glory Star, our management and board determined that Glory Star met, in some fashion, all of the criteria we set for our target company screening:

 

High-Growth Market Poised to Benefit from the Launch of 5G Technology;
  
Innovative Business Model with Leading Market Position;
  
Strong Core Team of Industry Veterans; and
  
Solid financial performance.

 

In making its consideration, the TKK Board also considered, amongst other things, the following potential concerns of the Business Combination:

 

The risks associated with the e-commerce and media content industry in general;
  
The risks associated with the relatively short operating history of Glory Star;
  
The risk of competition in the industry, including strong multinational incumbents as well as the potential for new entrants;
  
The risk that the announcement of the transaction and potential diversion of Glory Star’s management and employee attention may adversely affect Glory Star’s operations;
  
The risk that certain key employees of Glory Star might not choose to remain with the company post-closing;
  
The risk that the Business Combination might not be consummated in a timely manner or that the closing of the Business Combination might not occur despite the companies’ efforts;
  
Foreign exchange risk given that the Company’s operating currency was in RMB; and
  
The other risks described in the section entitled “Risk Factors” in the Offer to Purchase accompanying this proxy statement.

 

The TKK board concluded that these risk factors did not diminish or outweigh the benefits of pursuing the Business Combination.

 

TKK’s board of directors did not assign relative weights to the specific factors it considered, but instead evaluated the transaction as a whole and found it to be overall favorable to its shareholders. TKK’s board of directors approved the Business Combination. TKK’s board did not, and was not required to, obtain a fairness opinion in connection with the proposed Business Combination and did not independently verify (or cause such verification of) the source of all information received from Glory Star.

 

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Q:What is the structure of the Business Combination and the Exchange Consideration?

 

A:Upon the closing of the Business Combination, TKK will acquire from the Sellers all of the outstanding shares of Glory Star. The Sellers will receive an aggregate number of ordinary shares equal to $425,000,000 divided by the purchase price (or 41,342,412 ordinary shares assuming a purchase price of $10.28 per share), 5% of which (or 2,067,121 Escrow Shares assuming a purchase price of $10.28 per share) will be deposited into escrow to secure certain indemnification obligations. The Sellers will also be entitled to receive up to 10 million additional ordinary shares if we meet certain financial performance targets for the 2019 and 2020 fiscal years. The Share Exchange Agreement is based on an equity valuation of Glory Star of $425,000,000 with the right to earn up to 10,000,000 Earnout Shares. TKK has entered into a Registration Rights Agreement with the Sponsor and the Sellers pursuant to which TKK will grant certain registration rights to the Sellers with respect to the registration of the Closing Payment Shares and Earnout Shares. TKK expects that the Sellers will seek to have their shares in TKK registered for resale under the Registration Rights Agreement promptly following the closing of the Business Combination.

 

Approximately $257.2 million was held in the Trust Account as of November 26, 2019. As further required by the terms of the Share Exchange Agreement, we cannot consummate the Business Combination unless we retain an amount of net tangible assets of no less than $5,000,001 upon consummation of a Business Combination, after giving effect to the completion of the Offer and any private placement financing and including the consolidated net tangible assets of Glory Star Group.

 

Q:What will be the ownership and organizational structure of TKK after consummation of the Business Combination?

 

A:After the Business Combination, assuming no public shares are tendered in the Offer and a $10.28 purchase price, TKK’s current public shareholders will own approximately 36.52% of TKK, while TKK’s current directors, officers and initial shareholders, including the Sponsor, and EarlyBirdCapital, will collectively own approximately 8.57% of TKK, and the pre-Business Combination Sellers will own approximately 54.91% of the combined company. Assuming all of the outstanding public shares are tendered in the Offer and a $10.28 purchase price, TKK’s current public shareholders will own 4.97% of TKK, TKK’s current directors, officers and initial shareholders, including the Sponsor, and EarlyBirdCapital, will own approximately 12.83% of TKK, and the Sellers will own approximately 82.20% of TKK.

 

Additionally, immediately following the consummation of the Business Combination, the board of directors of TKK is expected to be composed of five directors. Glory Star will have the right to designate four directors, at least two of whom must satisfy applicable independent director requirements and TKK will have the right to designate one director who must satisfy applicable independent director requirements. Upon closing of the Business Combination, it is anticipated that Mr. Bing Zhang will be appointed as Chairman and Ms. Joanne Ng will be the TKK’s representative to the board and will serve as one of the independent directors along with Jian Lu, Ming Shu Leung (independent director), and Yong Li (independent director).

 

See “Summary of the Proxy Statement and Business Combination — Consideration to Glory Star Shareholders in the Business Combination and Related Transactions” and “Unaudited Pro Forma Condensed Combined Financial Information” in the Offer to Purchase accompanying this proxy statement.

 

Q:Will there be a single controlling shareholder following the completion of the Business Combination?

 

A:Yes. The ownership of ordinary shares following the consummation of the Business Combination will depend on the number of ordinary shares that are validly tendered, not validly withdrawn and accepted for payment pursuant to the Offer. Assuming that 75,292,412 ordinary shares are outstanding upon consummation of the Business Combination and that no ordinary shares have been tendered in the Offer and a $10.28 purchase price, Bing Zhang will beneficially own in the aggregate approximately 20.28% of the issued and outstanding ordinary shares. See “Principal Shareholders” for more information regarding the beneficial ownership of TKK following the Business Combination.

 

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Q. What assumptions have we made when disclosing ownership information?

 

A. We have made several assumptions with respect to ownership of ordinary shares following the consummation of the Business Combination. These assumptions impact certain calculations of post-transaction ownership and voting rights throughout this proxy statement. Unless otherwise expressly stated, all such calculations relating to beneficial ownership and voting rights post-Business Combination assume: (i) that no ordinary shares are validly tendered pursuant to the Offer; and (ii) the issuance of 41,342,412 ordinary shares as consideration to the Sellers in connection with the Business Combination assuming a purchase price of $10.28 per share (excluding any Earnout Shares) and treating the Escrow Shares as fully owned by the Sellers.

 

Q:Did TKK’s board of directors obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?

 

A:Our board of directors did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. Our officers and directors have substantial experience in evaluating the operating and financial merits of companies from a wide range of industries and concluded that their experience and backgrounds, together with the experience and sector expertise of our financial advisors enabled them to make the necessary analyses and determinations regarding the business combination with Glory Star. In addition, our officers and directors have substantial experience with mergers and acquisitions. Accordingly, investors will be relying solely on the judgment of our board of directors in valuing Glory Star’s business, and assuming the risk that the board of directors may not have properly valued such business.

 

Q:Following the Business Combination, will the TKK securities continue to trade on a stock exchange?

 

A:Yes, our ordinary shares and warrants will continue to be listed on The Nasdaq Capital Market. At the closing, our units will separate into their component ordinary shares and warrants, and each outstanding right will be automatically converted into one-tenth (1/10) of an ordinary share, so that the units will no longer trade separately under “TKKSU” and the rights will cease to be traded under “TKKSR.” We intend to apply for the continued listing of our ordinary shares and warrants on The Nasdaq Capital Market under the ticker symbols “GSMG” and “GSMGW,” respectively, following consummation of the Business Combination.

 

Q:How has the announcement of the Business Combination affected the trading price of the ordinary shares?

 

A:On September 6, 2019 immediately prior to the announcement of the Business Combination, the closing trading price of the ordinary shares on The Nasdaq Capital Market was $10.17 per share. On December 10, 2019, the closing trading price of the ordinary shares on The Nasdaq Capital Market was $10.19 per share.

 

Q:Is the Business Combination the first step in a “going-private” transaction?

 

A:The Company does not intend for the Business Combination to be the first step in a “going-private” transaction. One of the primary purposes of the Business Combination is to provide a platform for Glory Star to access the U.S. public markets.

 

Q:What are the most significant conditions to the Business Combination?

 

A:General Conditions

 

Consummation of the Business Combination is conditioned on the satisfaction of each of the following conditions, among others:

 

the election or appointment of members to TKK’s board of directors as described above;

 

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TKK (together with the Glory Star Group) having at least $5,000,001 in net tangible assets upon consummation of a Business Combination, after giving effect to the completion of the Offer and any private placement financing; and
  
TKK’s ordinary shares continue to be listed on Nasdaq immediately following the Closing and TKK has at least 300 round-lot shareholders.

 

Conditions to Obligations of TKK

 

The obligations of TKK to consummate the Business Combination are subject to the satisfaction or waiver of certain conditions, including the following conditions, among others:

 

TKK shall have received employment agreements in form and substance reasonably acceptable to TKK and Glory Star between certain individuals and either TKK or a Glory Star Group company, executed by the parties thereto;
  
TKK shall have received the Escrow Agreement, the duly executed VIE Contracts and evidence that certain contracts involving Glory Star Group companies and/or any of the Sellers or other related persons have been terminated with no further liability of Glory Star Group thereunder; and
  
each of the Non-Competition Agreement, the Lock-Up Agreement and the Registration Rights Agreement being in full force and effect in accordance with its terms as of the Closing.

 

Conditions to Obligations of the Sellers

 

The obligations of the Sellers to consummate the Business Combination are subject to the satisfaction or waiver of certain conditions, including the following conditions, among others:

 

Glory Star shall have received the Escrow Agreement, duly executed by TKK, the Purchaser Representative and the Escrow Agent; and
  
each of the Non-Competition Agreement, the Lock-Up Agreement and the Registration Rights Agreement being in full force and effect in accordance with its terms as of the Closing.

 

Additionally, Glory Star has a termination right if TKK does not have sufficient funds available at the Closing, after giving effect to the Offer, but excluding Glory Star Group’s cash to pay certain amounts owed to the underwriters of its initial public offering.

 

If any of the conditions to the Business Combination are not satisfied, TKK or the Sellers, as applicable, may choose to exercise any applicable right to terminate the Share Exchange Agreement. See “Risk Factors — Risks Relating to the Consummation of the Business Combination” and “The Share Exchange Agreement — Conditions to Closing of the Business Combination.” We refer to the conditions to the Offer and the Business Combination, as the “offer conditions.” See “The Share Exchange Agreement — Conditions to Closing of the Business Combination” and “The Offer — Conditions of the Offer.”

 

Q. What interests do our directors, executive officers, and Sponsor have in the Business Combination?

 

A. Our Sponsor and certain of TKK’s directors and officers have interests in the Business Combination that may be different from, or in addition to, the interests of TKK’s shareholders. If the Business Combination is not completed by the Business Combination Deadline, TKK will be required to liquidate following distribution of the amounts in the Trust Account. In such event, there will be no distribution from the Trust Account with respect to the 6,250,000 ordinary shares held by the Sponsor and other initial shareholders or the 13,000,000 private placement warrants held by Symphony, which would expire worthless. Certain of TKK’s directors and executive officers are affiliated with the Sponsor.

 

Unless TKK consummates the Business Combination, its officers, directors and their respective affiliates will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent that such expenses exceeded the amount of its working capital. As a result, the financial interest of TKK’s officers, directors and their respective affiliates could influence their motivation in pursuing Glory Star as a target and therefore there may be a conflict of interest when determining whether the Business Combination is in TKK’s shareholders’ best interests.

 

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In addition, an affiliate of the Sponsor has contractually agreed that, if TKK liquidates prior to the consummation of a business combination, it will be liable to ensure that the proceeds in the Trust Account are not reduced below $10.00 per share by the claims of target businesses or claims of vendors or other entities that are owed money by TKK for services rendered or contracted for or products sold to it. In addition, the Sponsor has provided loans to us in the aggregate amount of $850,000 as of September 30, 2019, and we expect that the Sponsor will provide additional loans to us prior to the Business Combination Deadline, which loans are repayable only upon the consummation of a business combination. Therefore, the Sponsor has a financial interest in consummating any business combination, thereby resulting in a potential conflict of interest. The Sponsor or its affiliates could influence TKK’s officers’ and directors’ motivation in pursuing Glory Star as a target and therefore there may be a conflict of interest when the directors and officers determine whether the Business Combination is in TKK’s shareholders’ best interests.

 

If the Business Combination with Glory Star is completed, the board of directors of TKK is expected to be composed of five directors. The Sellers will have the right to designate four directors and TKK will have the right to designate one director. Three of the directors must satisfy applicable independent director requirements.

 

The exercise of TKK’s directors’ and officers’ discretion in agreeing to changes or waivers in the terms of the transaction may result in a conflict of interest when determining whether such changes or waivers are appropriate and in best interests of TKK’s shareholders.

 

Q:Why is TKK proposing the Charter Proposals?

 

A:The Charter Proposals that we are asking our shareholders to approve in connection with the Business Combination consist of:

 

Proposal No. 2 - Amendment to our existing memorandum and articles of association to change TKK’s name to Glory Star New Media Group Holdings Limited;

 

Proposal No. 3 - Amendment to our existing memorandum and articles of association to remove provisions related to our status as a blank check company; and

 

Proposal No. 4 - Amendment to our existing memorandum and articles of association to provide for certain additional non-substantive changes.

 

Our board of directors believes those amendments are necessary to adequately address our post-Business Combination needs.

 

Q:Why is TKK proposing the Director Election Proposal?

 

A:TKK proposes that Messrs. James Heimowitz, Stephen Markscheid and Dr. Zhe Zhang be elected to the Company’s board of directors. At the time of the Business Combination, all of TKK’s current directors will resign from the board. See the sections entitled “Proposal No. 5 — Director Election Proposal” and “Management After the Business Combination.”

 

Q:Why is TKK proposing the Incentive Plan Proposal?

 

A:The purpose of the Equity Incentive Plan is to enhance the profitability and value of TKK for the benefit of its shareholders by enabling us to offer eligible employees, directors and consultants equity-based incentive awards to attract, retain and reward these individuals for better performance and strengthen the mutuality of interests between them and our shareholders.

 

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Q:Why is TKK proposing the Share Issuance Proposal?

 

A:Nasdaq Listing Rule 5635(a) requires shareholder approval where, among other things, the issuance of securities in a transaction exceeds 20% of the number of ordinary shares or the voting power outstanding before the transaction. We currently have 31,450,000 ordinary shares issued and outstanding. Assuming a purchase price of $10.28, we intend to issue approximately 41,342,412 ordinary shares, or approximately 131.5% of our currently issued and outstanding ordinary shares, in the Business Combination.

 

Although we are not required to obtain the approval of our shareholders under Nasdaq Listing Rule 5635(a), our board of directors deems it advisable to seek shareholder approval for the issuance of ordinary shares pursuant to the Share Exchange Agreement.

 

Q:What happens if I sell my ordinary shares before the meeting?

 

A:The record date for the meeting will be earlier than the date that the Business Combination is expected to be completed. If you transfer your ordinary shares after the record date, but before the meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the meeting.

 

Q:What happens if I tender my ordinary shares before the meeting?

 

A:Because any purchase of ordinary shares pursuant to the Offer will not be effected until after the expiration of the Offer, if you hold your ordinary shares on the record date, you will be entitled to vote your ordinary shares at the meeting, even if you have previously accepted the Offer.

 

Q:What vote is required to approve the proposals presented at the meeting?

 

A:The approval of the Business Combination Proposal, the Director Election Proposal, the Share Issuance Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law which requires the affirmative vote of the holders of a majority of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting.

 

The approval of each Charter Proposal requires a special resolution under Cayman Islands law which requires the affirmative vote of the holders of at least two-thirds of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting.

 

Accordingly, abstentions and broker non-votes will have no effect on these proposals.

 

Q:How many votes do I have at the meeting?

 

A:Our shareholders are entitled to one vote at the meeting for each share of ordinary shares held of record as of the record date. As of the close of business on the record date, there were 31,450,000 issued and outstanding ordinary shares.

 

Q:What constitutes a quorum at the meeting?

 

A:Holders of at least one-third of our ordinary shares issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, constitute a quorum.

 

As of the record date for the meeting, 10,483,334 ordinary shares would be required to achieve a quorum.

 

Q:How will TKK’s Sponsor, directors and officers and other initial shareholders vote?

 

A:Our Sponsor, our directors and our officers and other initial shareholders have entered into agreements pursuant to which each agreed to vote his, her or its Founder Shares and all ordinary shares they acquired during or after our initial public offering in favor of the Business Combination Proposal and each agreed to waive its redemption rights for the Founder Shares in connection with the completion of the Business Combination. Currently, our Sponsor, directors and officers collectively own approximately 19.9% of our issued and outstanding ordinary shares.

 

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Q:What happens if the Business Combination is not consummated and we are not able to consummate another business combination transaction?

 

A:There are certain circumstances under which the Share Exchange Agreement may be terminated. For information regarding the parties’ specific termination rights, see the section entitled “The Share Exchange Agreement” in the Offer to Purchase accompanying this proxy statement.

 

If, as a result of the termination of the Share Exchange Agreement or otherwise, we are unable to complete the Business Combination or another business combination transaction by the Business Combination Deadline, our existing memorandum and articles of association provides that we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to us to pay our taxes, divided by the number of then outstanding public shares, which redemption will completely extinguish public shareholders’ rights as shareholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining shareholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Cayman Islands law to provide for claims of creditors and the requirements of other applicable law. See the section entitled “Risk Factors — If we are unable to effect a business combination by February 20, 2020 (or until June 20, 2020 if we extend the period of time to consummate a business combination through the issuance of 25,000,000 potential extension warrants), we will be forced to liquidate and the warrants will expire worthless and — If we are forced to liquidate, our shareholders may be held liable for claims by third parties against the Company to the extent of distributions received by them” in the Offer to Purchase accompanying this proxy statement.

 

Our initial shareholders have entered into letter agreements with us, pursuant to which each waived his, her or its rights to liquidating distributions from the Trust Account with respect to his, her or its Founder Shares if we fail to complete our initial business combination by the Business Combination Deadline. However, if our Sponsor or any of our officers, directors or other initial shareholders acquire public shares in or after our initial public offering, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if we fail to complete our initial business combination by the Business Combination Deadline.

 

In the event of liquidation, there will be no distribution with respect to TKK’s outstanding warrants. Accordingly, the warrants will expire worthless.

 

Q:Can public shareholders redeem their ordinary shares?

 

A.Pursuant to our existing memorandum and articles of association, we are required, in connection with the Business Combination, to provide all holders of our ordinary shares with the opportunity to redeem their ordinary shares for their pro rata share of our Trust Account (net of taxes payable). The Offer is being made to provide our shareholders with such opportunity to redeem their ordinary shares. Our Sponsor and the initial shareholders have agreed to waive such redemption rights with respect to any ordinary shares they have acquired. See “The Offer — Purpose of the Offer; Certain Effects of the Offer” in the Offer to Purchase accompanying this proxy statement. Public shareholders may elect to tender their shares even if they vote for the Business Combination Proposal.

 

Q.Can the Sponsor redeem its ordinary shares?

 

A:Our Sponsor, officers and directors and other initial shareholders have agreed to waive their redemption rights with respect to their Founder Shares in connection with the completion of our Business Combination. However, they will be entitled to redemption rights with respect to any shares they acquired during or after our initial public offering if we fail to consummate a business combination on or prior to the Business Combination Deadline. The Founder Shares amount to 19.9% of our issued and outstanding ordinary shares as of the record date.

 

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Q:As long as I vote on the Business Combination Proposal, will how I vote affect my ability to tender my ordinary shares?

 

A:No. You may exercise your accept the Offer whether you vote your ordinary shares on the Business Combination Proposal or not and whether you vote for or against the Business Combination Proposal. As a result, the Business Combination Proposal can be approved by shareholders who will tender their shares and no longer remain shareholders, leaving shareholders who choose not to tender their shares holding shares in a company with a less liquid trading market, fewer shareholders, less cash and the potential inability to meet the listing standards of The Nasdaq Capital Market.

 

Q:How do I tender my ordinary shares?

 

A:If you hold your ordinary shares in your own name as a holder of record and decide to tender your ordinary shares, you must deliver your ordinary shares by mail or physical delivery and deliver a completed and signed Letter of Transmittal or an Agent’s Message (as defined in “The Offer — Procedures for Tendering ordinary shares”) to Continental Stock Transfer & Trust Company (the “Depositary”) before 5:00 p.m., New York City time, on December 16, 2019 or such later time and date to which we may extend the Offer.

 

If you hold your ordinary shares in a brokerage account or otherwise through a broker, dealer, commercial bank, trust company or other nominee (i.e., in “street name”), you must contact your broker or other nominee if you wish to tender your ordinary shares. See “The Offer — Procedures for Tendering ordinary shares” in the Offer to Purchase accompanying this proxy statement. and the instructions to the Letter of Transmittal accompanying the Offer to Purchase.

 

If you are a participant institution of The Depository Trust Company (“DTC”), you must tender your ordinary shares, according to the procedure for book-entry transfer described in “The Offer — Procedures for Tendering ordinary shares” in the Offer to Purchase accompanying this proxy statement.

 

You may contact Morrow Sodali LLC (the “Information Agent”) or your broker for assistance. The telephone numbers and e-mail address for the Information Agent are set forth on the back cover of the Offer to Purchase. See “The Offer — Procedures for Tendering ordinary shares” in the Offer to Purchase accompanying this proxy statement and the instructions to the Letter of Transmittal accompanying the Offer to Purchase.

 

Q:Do I have appraisal rights if I object to the proposed Business Combination?

 

A:No. There are no appraisal rights available to holders of ordinary shares in connection with the Business Combination.

 

Q:What happens to the funds held in the Trust Account upon consummation of the Business Combination?

 

A:If the Business Combination is consummated, the funds held in the Trust Account will be released to pay:

 

unpaid taxes of TKK;

 

TKK shareholders who properly tendered their shares; and

 

an estimated $10.25 million in fees, costs and expenses (including $8.75 million fees payable for services provided by EarlyBirdCapital pursuant to a business combination marketing agreement dated August 15, 2018, subject to availability of cash post business combination and further negotiations by the parties, and financial advisors fees, regulatory fees, legal fees, accounting fees, printer fees, and other professional fees) incurred by TKK, our Sponsor or Glory Star in connection with the transactions contemplated by the Business Combination. In particular, we will reimburse loans made to us by our Sponsor to fund the Business Combination costs and expenses prior to the completion of the Business Combination, which amount is expected to be approximately $1.5 million upon the consummation of the Business Combination.

 

Any additional funds available for release from the Trust Account will be used for general corporate purposes of TKK following the Business Combination.

 

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Q:When is the Business Combination expected to be completed?

 

A:It is currently anticipated that the Business Combination will be consummated promptly following the meeting on December 23, 2019, provided that all other conditions to the consummation of the Business Combination have been satisfied or waived.

 

For a description of the conditions to the completion of the Business Combination, see the section entitled “Proposal No. 1 — Approval of the Business Combination.”

 

Q:What do I need to do now?

 

A:You are urged to carefully read and consider the information contained in this proxy statement, including the annexes, and to consider how the Business Combination will affect you as a shareholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or other nominee.

 

Q:How do I vote?

 

A:If you were a holder of record of our ordinary shares on November 29, 2019, the record date for the meeting, you may vote with respect to the applicable proposals:

 

in person at the meeting; or

 

by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name,” which means your shares are held of record by a broker, bank or other nominee, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. In this regard, you must provide the record holder of your shares with instructions on how to vote your shares or, if you wish to attend the meeting and vote in person, obtain a proxy from your broker, bank or other nominee.

 

Q:What will happen if I sign and return my proxy card without indicating how I wish to vote?

 

A:Signed and dated proxies received by us without an indication of how the shareholder intends to vote on a proposal will be voted in favor of each proposal presented to the shareholders.

 

Q:If I am not going to attend the meeting in person, should I return my proxy card instead?

 

A:Yes. Whether you plan to attend the meeting or not, please read the enclosed proxy statement carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.

 

Q:If my shares are held in “street name,” will my broker, bank or other nominee automatically vote my shares for me?

 

A:No. Under the rules of various national and regional securities exchanges, your broker, bank or other nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or other nominee. We believe the proposals presented to the shareholders will be considered non-discretionary and therefore your broker, bank or other nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker, or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a bank, broker or other nominee is not voting your shares is referred to as a “broker non-vote.” Broker non-votes will not be counted for the purpose of determining the existence of a quorum or for purposes of determining the number of votes cast at the meeting. Your bank, broker, or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your broker to vote your shares in accordance with directions you provide.

 

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Q:May I change my vote after I have mailed my signed proxy card?

 

A:Yes. You may change your vote by sending a later-dated, signed proxy card to our secretary at the address listed below so that it is received by our secretary prior to the meeting, or attending the meeting in person and vote. You also may revoke your proxy by sending a notice of revocation to our secretary, which must be received by our secretary prior to the meeting.

 

Q:What should I do if I receive more than one set of voting materials?

 

A:You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.

 

Q:Will the Management of TKK or Glory Star change in the Business Combination?

 

A:We anticipate that all of the executive officers of Glory Star will become executive officers of the Company post-Business Combination and that the current officers of TKK will resign.

 

Q:Will the Board of Directors of TKK change in the Business Combination?

 

A.Yes. Messrs. Sing Wang, Ian Lee, James Heimowitz, Stephen Markscheid and Zhe Zhang will resign as directors of TKK at the time of the closing of the Business Combination. Glory Star and TKK have designated Messrs. Bing Zhang, Jian Lu, Ming Shu Leung, and Yong Li and Ms. Joanne Ng as nominees to serve as new directors of the Company following the Business Combination.

 

Q:Who will solicit and pay the cost of soliciting proxies?

 

A:TKK will pay the cost of soliciting proxies for the meeting. TKK has engaged Morrow Sodali LLC to assist in the solicitation of proxies for the meeting. TKK has agreed to pay Morrow Sodali LLC a fee of $25,000. TKK will reimburse Morrow Sodali LLC for its reasonable associated out-of-pocket expenses and will indemnify Morrow Sodali LLC and its affiliates against certain claims, liabilities, losses, damages and expenses. TKK also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of TKK’s ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of TKK’s ordinary shares and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

Q:Who can help answer my questions?

 

A:If you have questions about the proposals or if you need additional copies of the proxy statement or the enclosed proxy card, you should contact:

 

Sing Wang, Chief Financial Officer
c/o Texas Kang Kai Capital Management (Hong Kong) Limited

2039, 2/F United Center,

95 Queensway Admiralty, Hong Kong
Telephone: +852 6212 8493

 

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You may also contact our proxy solicitor at:

 

Morrow Sodali LLC
470 West Avenue
Stamford, CT 06902
Telephone: (800) 662-5200 or banks and brokers can call collect at (203) 658-9400
Email: TKKS.info@morrowsodali.com

 

To obtain timely delivery, our shareholders must request the materials no later than five business days prior to the meeting.

 

You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find More Information.”

 

If you have questions regarding the certification of your position or delivery of your shares, please contact:

 

Continental Stock Transfer & Trust Company
One State Street, 30th Floor
New York, New York 10004
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com

 

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

We make forward-looking statements in this proxy statement. These forward-looking statements relate to expectations for future financial performance, business strategies or expectations for TKK and Glory Star, and the timing and ability for us to complete the Business Combination. Specifically, forward-looking statements may include statements relating to:

 

the benefits of the Business Combination;

 

the future financial performance of the Company following the Business Combination;

 

changes in the markets in which Glory Star competes;

 

expansion plans and opportunities, including restaurant openings; and
   
 other statements preceded by, followed by or that include the words “estimate,” “plan,” “project,”
continue,” “may,” “ongoing,” “potential,” “predict,” “will,” “forecast,” “intend,” “expect,” “anticipate,”
“believe,” “seek,” “target” or similar expressions.

 

These forward-looking statements are based on information available as of the date of this proxy statement, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

Forward-looking statements appear in a number of places in this proxy statement. You should not place undue reliance on these forward-looking statements in deciding how to grant your proxy or instruct how your vote should be cast or vote your shares on the proposals set forth in this proxy statement. The risks and uncertainties include, but are not limited to:

 

the occurrence of any event, change or other circumstances that could give rise to the termination of the Share Exchange Agreement;

 

the outcome of any legal proceedings that may be instituted against Glory Star or TKK following the announcement of the proposed Business Combination and the transactions contemplated thereby;

 

the inability to complete the proposed Business Combination due to the failure to obtain approval of the shareholders of TKK, or other conditions to closing in the Share Exchange Agreement;

 

the inability to maintain the listing of the Ordinary Shares and warrants on The Nasdaq Capital Market or any other stock exchange following the proposed Business Combination;

 

the risk that governmental and regulatory review of the Offer documents may result in the inability of Glory Star to complete the Offer by the Expiration Date

 

the fact that upon the consummation of the Business Combination, we will be considered a “controlled company” and exempt from certain corporate governance rules primarily relating to board independence and committees, and we intend to rely on certain of these exemptions;

 

the risk that the proposed Business Combination may disrupt current plans and operations as a result of the announcement and consummation of the transactions described herein;

 

the inability to recognize the anticipated benefits of the proposed Business Combination, which may be affected by, among other things, competition and the inability of the combined business to grow and manage growth profitably;

 

costs related to the proposed Business Combination;

 

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the ability of Glory Star to consummate the Business Combination and any initial business combination;

 

future payments of dividends and the availability of cash for payment of dividends;

 

future acquisitions, business strategy and expected capital spending;

 

assumptions regarding interest rates and inflation;

 

the risk of legal complaints and proceedings and government investigations;

 

the inability to comply with licensing or other regulatory requirements, laws and regulations;

 

the intense competition in the industry;

 

the inability to profitably expand into new markets;

 

the ability to manage our growth;

 

the fluctuations in general economic and business conditions;

 

the financial condition and liquidity, including its ability to obtain additional financing in the future (from warrant exercises or outside services) to fund capital expenditures, acquisitions and other general corporate activities;

 

the estimated future capital expenditures needed to preserve our capital base;

 

cybersecurity risks and the failure to protect customer information;

 

the possibility that Glory Star or TKK may be adversely affected by other economic, business, and/or competitive factors;

 

the risk of loss of key personnel or inability to recruit talent;

 

potential changes in the legislative and regulatory environments;

 

a lower return on investment;

 

the potential volatility in the market price of our securities; and

 

other risks and uncertainties indicated in this proxy statement, including those under “Risk Factors” in the Offer to Purchase accompanying this proxy statement.

 

Forward-looking statements are subject to known and unknown risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Our actual results could differ materially from those anticipated in forward-looking statements for many reasons, including the factors described in “Risk Factors” in the Offer to Purchase. Accordingly, you should not unduly rely on these forward-looking statements, which speak only as of the date of this proxy statement. Except as required by law, we undertake no obligation to publicly revise any forward-looking statement to reflect circumstances or events after the date of this proxy statement or to reflect the occurrence of unanticipated events.

 

You should carefully consider these risks, in addition to the risks factors set forth in the section titled “Risk Factors” and other information in the Offer to Purchase and in our other filings with the SEC, including the final prospectus related to our IPO dated August 15, 2018 (Registration No. 333-226423) and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, or our 2018 Annual Report, which is incorporated herein by reference. The documents we file with the SEC, including those referred to above, also discuss some of the risks that could cause actual results to differ from those contained or implied in the forward-looking statements. See “Where You Can Find More Information.”

 

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extraordinary general meeting of tkk symphony acquisition corporation

 

General

 

We are furnishing this proxy statement to our shareholders as part of the solicitation of proxies by our board of directors for use at the Meeting to be held on December 23, 2019, and at any adjournment thereof. This proxy statement is first being furnished to our shareholders on or about December 12, 2019. This proxy statement provides you with information you need to know to be able to vote or instruct your vote to be cast at the meeting.

 

Date, Time and Place of Meeting

 

The meeting will be held at 10:00 a.m. on December 23, 2019, at the offices of Ellenoff Grossman & Schole LLP, located at 1345 Avenue of the Americas, 11th Floor, New York, New York 10105, or such other date, time and place to which such meeting may be adjourned, to consider and vote upon the proposals.

 

Voting Power; Record Date

 

You will be entitled to vote or direct votes to be cast at the meeting if you owned ordinary shares, respectively, at the close of business on November 29, 2019, which is the record date for the meeting. You are entitled to one vote for each share of our ordinary shares that you owned as of the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 31,450,000 ordinary shares issued and outstanding, of which 25,000,000 are public shares, 6,250,000 are Founder Shares held by our Sponsor, officers and directors and 200,000 shares are held by EarlyBirdCapital.

 

Vote of TKK Sponsor, Officers and Directors and Other Initial Shareholders

 

Our Sponsor, officers and directors and other initial shareholders have entered into agreements pursuant to which they have agreed to vote their Founder Shares and all ordinary shares acquired by them during or after our initial public offering in favor of the Business Combination Proposal. Currently, our Sponsor, directors and officers and other initial shareholders collectively own approximately 19.9% of our issued and outstanding ordinary shares.

 

Our Sponsor, officers and directors and other initial shareholders have agreed to waive their redemption rights with respect to their Founder Shares in connection with the completion of our Business Combination. Our Sponsor, directors and officers and other initial shareholders have entered into letter agreements with us, pursuant to which they waived their rights to liquidating distributions from the Trust Account with respect to their respective Founder Shares if we fail to complete our initial business combination by the Business Combination Deadline. However, if our Sponsor (or any of our officers, directors, initial shareholders or affiliates) acquired public shares in or after our initial public offering, they will be entitled to liquidating distributions from the Trust Account with respect to such public shares if we fail to complete our initial business combination the Business Combination Deadline. The warrants held by Symphony have no redemption rights upon our liquidation and will be worthless if no business combination is effected by us prior to the Business Combination Deadline.

 

Quorum and Required Vote for Proposals for the Meeting

 

A quorum of our shareholders is necessary to hold a valid meeting. A quorum will be present at the meeting if the holders of at least one-third of the ordinary shares issued and outstanding and entitled to vote at the meeting is represented in person or by proxy. Abstentions (but not broker non-votes) will count as present for the purposes of establishing a quorum.

 

The approval of the Business Combination Proposal, the Director Election Proposal, the Share Issuance Proposal, the Incentive Plan Proposal and the Adjournment Proposal requires an ordinary resolution under Cayman Islands law which requires the affirmative vote of the holders of a majority of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting.

 

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The approval of each Charter Proposal requires a special resolution under Cayman Islands law which requires the affirmative vote of the holders of at least two-thirds of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting.

 

Accordingly, abstentions and broker non-votes will have no effect on these proposals.

 

Recommendation to TKK Shareholders

 

In considering the recommendation of TKK’s board of directors to vote for the proposals presented at the meeting, you should be aware that our Sponsor, officers and directors have interests in the Business Combination that are different from, or in addition to, the interests of our shareholders generally. The members of our board of directors were aware of these differing interests and considered them, among other matters, in evaluating and negotiating the transaction agreements and in recommending to our shareholders that they vote in favor of the proposals presented at the meeting. These interests include, among other things:

 

the 6,250,000 Founder Shares that our Sponsor, officers and directors and initial shareholders hold (either directly, through affiliates or through interests in the Sponsor) following the Business Combination, which would have a total value at November 26, 2019 of approximately $63.75 million based on the closing price of our ordinary shares as reported by The Nasdaq Capital Market on November 26, 2019 (the “November 26, 2019 Share Price”), which is significantly higher than the aggregate purchase price of $25,000 at which these shares were originally purchased;

 

the fact that the Founder Shares have no redemption rights in the Business Combination but that our Sponsor, officers and directors and initial shareholders will be entitled to redemption rights with respect to any public shares they hold if we fail to consummate a business combination on or prior to the Business Combination Deadline;

 

the fact that under our registration rights agreement with certain securityholders, our securityholders will be entitled to make up to three demands, excluding short form registration demands, that we register their Founder Shares, private placement warrants and other securities that may be issued in repayment of the Sponsor loans for sale under the Securities Act and will have “piggy-back” registration rights;

 

the fact that following the consummation of the Business Combination, we intend to file a registration statement to register for resale the ordinary shares issuable upon exercise of the Public Warrants and the Founder Shares, which will permit the public resale of such securities;

 

the fact that following the expiration of the applicable lock-up periods, all ordinary shares owned by the Sponsor, our officers and directors and initial shareholders will be freely tradable once registered as described above;

 

the fact that the Administrative Services Agreement with our Sponsor will terminate if the Business Combination is consummated;

 

the fact that we will reimburse loans made to us by our Sponsor to fund the Business Combination costs and expenses prior to the completion of the Business Combination, which amount is expected to be approximately $1.5 million upon the consummation of the Business Combination. As of September 30, 2019, we had $850,000 in aggregate outstanding indebtedness to the Sponsor;

 

the fact that in order to protect the amounts held in the Trust Account, TKK Capital Holding, an affiliate of our Chief Executive Officer, has agreed to be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that we complete the Business Combination, TKK Capital Holding’s indemnity obligations will cease;

 

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the continuation of certain of our officers and directors as officers of the Company post-Business Combination, which will entitle them to compensation as non-employee directors post-Business Combination as described under “Management After the Business Combination — Director Compensation;” and

 

the continued indemnification of current directors and officers of TKK and the continuation of directors’ and officers’ liability insurance after the Business Combination.

 

As a result, our Sponsor, officers and directors have financial incentives to see a business combination consummated. These interests may influence our directors in making their recommendation that you vote in favor of the Business Combination Proposal and the transactions contemplated thereby.

 

Broker Non-Votes and Abstentions

 

Under the rules of various national and regional securities exchanges, your broker, bank or other nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or other nominee. We believe the proposals presented to our shareholders will be considered non-discretionary and therefore your broker, bank or other nominee cannot vote your shares without your instruction. If you do not provide instructions with your proxy, your bank, broker or other nominee may deliver a proxy card expressly indicating that it is NOT voting your shares; this indication that a broker, bank or other nominee is not voting your shares is referred to as a “broker non-vote.”

 

With respect to the meeting, abstentions (but not broker non-votes) will be considered present for the purposes of establishing a quorum, will have no effect on the Business Combination Proposal, the Share Issuance Proposal, the Incentive Plan Proposal, the Director Election Proposal and the Adjournment Proposal, and will have the same effect as a vote “AGAINST” the Charter Proposals.

 

Voting Your Shares

 

Each share of our ordinary shares that you own in your name entitles you to one vote on each of the proposals for the meeting. Your one or more proxy cards show the number of our ordinary shares that you own in your name.

 

There are several ways to vote your shares:

 

You can vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the applicable meeting. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your ordinary shares will be voted, as recommended by our board of directors. With respect to proposals for the meeting, that means: “FOR” the Business Combination Proposal, “FOR” each Charter Proposal, “FOR” the Share Issuance Proposal, “FOR” the Director Election Proposal, “FOR” the Incentive Plan Proposal and “FOR” the Adjournment Proposal.

 

You can attend the meeting and vote in person. You will be given a ballot when you arrive. However, if your ordinary shares are held in the name of your broker, bank or other nominee, you must get a proxy from the broker, bank or other nominee. That is the only way we can be sure that the broker, bank or other nominee has not already voted your ordinary shares.

 

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Revoking Your Proxy

 

If you give a proxy, you may revoke it at any time before the meeting by doing any one of the following:

 

you may send another proxy card with a later date; or

 

you may notify Andrew Cook, the Company’s Secretary, in writing before the meeting that you have revoked your proxy.

 

You may attend the meeting, revoke your proxy, and vote in person, as indicated above.

 

No Additional Matters May Be Presented at the Meeting

 

The meeting has been called only to consider the approval of the Business Combination Proposal, the Share Issuance Proposal, the Charter Proposals, the Incentive Plan Proposal, the Director Election Proposal and the Adjournment Proposal. Under our existing memorandum and articles of association, other than procedural matters incident to the conduct of the meeting, no other matters may be considered at the meeting if they are not included in the notice of the meeting.

 

Who Can Answer Your Questions About Voting

 

If you have any questions about how to vote or direct a vote in respect of your ordinary shares, you may call Morrow Sodali LLC, our proxy solicitor, at (800) 662-5200.

 

Redemption Rights

 

Pursuant to our existing memorandum and articles of association, in connection with the Business Combination, holders of our public shares may elect to have their shares purchased for cash pursuant to the Offer. If a holder determines to tender ordinary shares, then such holder will be transferring its ordinary shares for cash and will no longer own shares of the Company. Such a holder will be entitled to receive cash for its public shares only if it follows the procedures set forth in the Offer to Purchase.

 

In conjunction with the Business Combination, and pursuant to our existing memorandum and articles of association, we have commenced the Offer to acquire ordinary shares from our public shareholders. Each of our shareholders as of October 17, 2019 will receive our offer to purchase (the “Offer to Purchase”) describing the Offer.

 

If the Business Combination is not approved and we do not consummate an initial business combination by the Business Combination Deadline, we will be required to dissolve and liquidate and our warrants will expire worthless.

 

Appraisal Rights

 

Appraisal rights are not available to holders of our ordinary shares or warrants in connection with the Business Combination.

 

Proxy Solicitation Costs

 

TKK will pay the cost of soliciting proxies for the meeting. TKK has engaged Morrow Sodali LLC to assist in the solicitation of proxies for the meeting. TKK has agreed to pay Morrow Sodali LLC a fee of $25,000. TKK will also reimburse Morrow Sodali LLC for reasonable associated out-of-pocket expenses and will indemnify Morrow Sodali LLC and its affiliates against certain claims, liabilities, losses, damages and expenses. TKK also will reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of ordinary shares for their expenses in forwarding soliciting materials to beneficial owners of its ordinary shares and in obtaining voting instructions from those owners. Our directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.

 

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PROPOSAL NO. 1 — APPROVAL OF THE BUSINESS COMBINATION

 

We are asking our shareholders to approve and adopt the Share Exchange Agreement. Our shareholders should read carefully this proxy statement in its entirety for more detailed information concerning the Share Exchange Agreement, which is attached as Annex A to this proxy statement. Please see the subsections entitled “The Share Exchange Agreement” and “Related Agreements” in the Offer to Purchase accompanying this proxy statement, for additional information and a summary of certain terms of the Share Exchange Agreement and related agreements. You are urged to read carefully the Share Exchange Agreement and related agreements in their entirety before voting on this proposal.

 

Certain Benefits of TKK’s Sponsor, Directors and Officers in the Business Combination

 

In considering the recommendation of TKK’s board of directors to vote for the proposals presented at the meeting, you should be aware that our Sponsor, officers and directors have interests in the Business Combination that are different from, or in addition to, the interests of our shareholders generally. The members of our board of directors were aware of these differing interests and considered them, among other matters, in evaluating and negotiating the transaction agreements and in recommending to our shareholders that they vote in favor of the proposals presented at the meeting. These interests include, among other things:

 

the 6,250,000 Founder Shares that our Sponsor, officers and directors and initial shareholders hold (either directly, through affiliates or through interests in the Sponsor) following the Business Combination, which would have a total value at November 26, 2019 of approximately $63.75 million based on the closing price of our ordinary shares as reported by The Nasdaq Capital Market on November 26, 2019 (the “November 26, 2019 Share Price”), which is significantly higher than the aggregate purchase price of $25,000 at which these shares were originally purchased;

 

the fact that the Founder Shares have no redemption rights in the Business Combination but that our Sponsor, officers and directors and initial shareholders will be entitled to redemption rights with respect to any public shares they hold if we fail to consummate a business combination on or prior to the Business Combination Deadline;

 

the fact that under our registration rights agreement with certain securityholders, our securityholders will be entitled to make up to three demands, excluding short form registration demands, that we register their Founder Shares, private placement warrants and other securities that may be issued in repayment of the Sponsor loans for sale under the Securities Act and will have “piggy-back” registration rights;

 

the fact that following the consummation of the Business Combination, we intend to file a registration statement to register for resale the ordinary shares issuable upon exercise of the Public Warrants and the Founder Shares, which will permit the public resale of such securities;

 

the fact that following the expiration of the applicable lock-up periods, all ordinary shares owned by the Sponsor, our officers and directors and initial shareholders will be freely tradable once registered as described above;

 

the fact that the Administrative Services Agreement with our Sponsor will terminate if the Business Combination is consummated;

 

the fact that that unless we consummate the Business Combination, our Sponsor will not receive repayment of loans provided to our company. As of September 30, 2019, we had $850,000 in aggregate outstanding indebtedness to the Sponsor. In addition, unless we consummates the Business Combination, our officers and directors will not receive reimbursement for any out-of-pocket expenses incurred by them to the extent such expenses exceeded the amount of our working capital;

 

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the fact that in order to protect the amounts held in the Trust Account, TKK Capital Holding, an affiliate of our Chief Executive Officer, has agreed to be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per public share or (ii) such lesser amount per public share held in the Trust Account as of the date of the liquidation of the Trust Account, due to reductions in value of the trust assets other than due to the failure to obtain such waiver, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of our initial public offering against certain liabilities, including liabilities under the Securities Act. In the event that we complete the Business Combination, TKK Capital Holding’s indemnity obligations will cease;

 

the continuation of certain of our officers and directors as officers of the Company post-Business Combination, which will entitle them to compensation as non-employee directors post-Business Combination as described under “Management After the Business Combination — Director Compensation;” and

 

the continued indemnification of current directors and officers of TKK and the continuation of directors’ and officers’ liability insurance after the Business Combination.

 

As a result, our Sponsor, officers and directors have financial incentives to see a business combination consummated. These interests may influence our directors in making their recommendation that you vote in favor of the Business Combination Proposal and the transactions contemplated thereby.

 

Total TKK Shares to be Issued in Connection With the Business Combination

 

Immediately after the Business Combination, assuming a purchase price of $10.28 per share and that no ordinary shares were tendered in the Offer, the amount of ordinary shares issued and outstanding will be 75,292,412. Assuming a purchase price of $10.28 per share and that all 25,000,000 public shares were tendered in the Offer, the amount of ordinary shares issued and outstanding will be 50,292,412 ordinary shares.

 

Up to 24,646,931 additional ordinary shares (assuming no ordinary shares are tendered in the Offer) or 22,771,931 additional ordinary shares (assuming all 25,000,000 ordinary shares are tendered in the Offer) may be issuable in the future as a result of: (i) the 38,000,000 warrants to purchase 19,000,000 ordinary shares owned by TKK’s existing warrant holders that will remain issued and outstanding following the Business Combination and (ii) the 5,646,931 ordinary shares that may be issued under the proposed Equity Incentive Plan (assuming no ordinary shares are tendered in the Offer), or the 3,771,931 ordinary shares that may be issued under the proposed Equity Incentive Plan (assuming all 25,000,000 ordinary shares are tendered in the Offer).

 

Assuming (i) no public shares are tendered in the Offer, (ii) a $10.28 purchase price and (iii) that no equity awards are issued under the proposed equity incentive plan described below:

 

TKK’s public shareholders will retain an ownership interest of approximately 36.52%;

 

the pre-Business Combination Sellers will own approximately 54.91%; and

 

TKK’s current directors, officers and initial shareholders, including the Sponsor, and EarlyBirdCapital will own approximately 8.57%.

 

Assuming (i) maximum amount of 25,000,000 public shares are tendered in the Offer, (ii) a $10.28 purchase price and (iii) that no equity awards are issued under the proposed equity incentive plan described below:

 

TKK’s public shareholders will retain an ownership interest of approximately 4.97%;

 

the pre-Business Combination Sellers will own approximately 82.20%; and

 

TKK’s current directors, officers and initial shareholders, including the Sponsor, and EarlyBirdCapital will own approximately 12.83%.

 

You should read “Summary of the Proxy Statement and Business Combination — Consideration in the Business Combination and Related Transactions” and “Unaudited Pro Forma Condensed Combined Financial Information” for further information.

 

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Board of Directors of TKK Following the Merger

 

At the time of the Business Combination, all of TKK’s current directors, Messrs. Sing Wang, Ian Lee, James Heimowitz, Stephen Markscheid, will resign from the board and we expect that the following director nominees will be elected: Messrs. Bing Zhang, Jian Lu, Ming Shu Leung, and Yong Li and Ms. Joanne Ng. See the section entitled “Management After the Business Combination” for additional information.

 

Proposed Amended and Restates Memorandum and Articles of Association

 

Immediately prior to the closing of the Business Combination, our existing memorandum and articles of association will be amended and restated promptly to:

 

change our name to “Glory Star New Media Group Holdings Limited”;

 

remove certain provisions related to our status as a blank check company; and

 

provide for additional non-substantive changes; and

 

Name; Headquarters

 

The name of the Company after the Business Combination will be Glory Star New Media Group Holdings Limited and our headquarters will be located in 22nd Floor, Block B, Xinhua Technology Building, No.8 Tuofangying South Road, Chaoyang District, Beijing, China 100016.

 

Business Combination Expenses

 

We estimate that the fees, costs and expenses related to the identification, investigation, negotiation, execution and completion of the Business Combination will be approximately $10.25 million.

 

Those fees, costs and expenses include fees to the underwriters of our initial public offering pursuant to the business combination marketing agreement, and the financial advisors fees, regulatory fees, legal fees, accounting fees, printer fees and other professional fees incurred by TKK, our Sponsor or Glory Star. In particular, we will reimburse loans made to us by our Sponsor to fund the Business Combination costs and expenses prior to the completion of the Business Combination, which amount is expected to be approximately $1.5 million upon the consummation of the Business Combination.

 

We intend to pay all such fees, costs and expenses with proceeds from the Trust Account.

 

Appraisal Rights

 

There are no appraisal rights available to our shareholders in connection with the Business Combination.

 

Material U.S. Federal Income Tax Considerations

 

The receipt of cash for your tendered ordinary shares will generally be treated for U.S. federal income tax purposes either as a sale or exchange transaction or as a distribution. See the section entitled “Material U.S. Federal Income Tax Consequences” in the Offer to Purchase, a copy of which is attached to this proxy statement as Exhibit A.

 

Vote Required for Approval

 

This proposal requires the approval of an ordinary resolution under Cayman Islands law which requires the affirmative vote of the holders of a majority of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting. Accordingly, abstentions and broker non-votes will have no effect on this proposal.

 

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As of the record date, our Sponsor, officers and directors and other initial shareholders have agreed to vote their Founder Shares and all ordinary shares acquired by our Sponsor during or after our initial public offering in favor of this proposal. Currently, our Sponsor, officers and directors and other initial shareholders collectively own approximately 19.9% of our issued and outstanding ordinary shares.

 

Because the Closing under the Share Exchange Agreement is not conditioned on shareholder approval of the Business Combination, the vote on the Business Combination Proposal is advisory and is therefore not binding on TKK or our Board.

 

Full Text of the Resolution

 

“RESOLVED, as an ordinary resolution, that the entry by the Company into the Share Exchange Agreement, dated as of September 6, 2019 (as it may be amended, the “Share Exchange Agreement”), by and among the Company, TKK Symphony Sponsor 1, Glory Star New Media Group Limited (“Glory Star”), Glory Star New Media (Beijing) Technology Co., Ltd.; Xing Cui Can International Media (Beijing) Co., Ltd.; Horgos Glory Star Media Co., Ltd. and each of the shareholders of the Glory Star named on Annex I thereto, a copy of which is attached to the proxy statement as Annex A be confirmed, ratified, approved and adopted in all respects.”

 

Recommendation of the Board

 

TKK’S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR
SHAREHOLDERS VOTE “FOR” THE BUSINESS COMBINATION PROPOSAL.

 

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PROPOSAL NO. 2 — APPROVAL OF AMENDMENT TO TKK’S AMENDED AND
RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION TO CHANGE TKK’S NAME

 

Our shareholders are being asked to vote upon and approve an amendment to the proposed amended and restated memorandum and articles of association to change TKK’s name to “Glory Star New Media Group Holdings Limited”.

 

We are required to change TKK’s name pursuant to the terms of the Share Exchange Agreement. We have agreed to change TKK’s name under the Share Exchange Agreement to reflect TKK’s new business and operations following completion of the Business Combination and use the same name as the one with which its business is known to customers, suppliers and the industry.

 

Vote Required for Approval

 

This proposal requires the approval of a special resolution under Cayman Islands law which requires the affirmative vote of the holders of at least two-thirds our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting. Accordingly, abstentions and broker non-votes will have no effect on this proposal.

 

As of the record date, our Sponsor, officers and directors and other initial shareholders have agreed to vote their Founder Shares and all ordinary shares acquired by our Sponsor during or after our initial public offering in favor of this proposal. Currently, our Sponsor, officers and directors and other initial shareholders collectively own approximately 19.9% of our issued and outstanding ordinary shares (excluding warrant shares).

 

Full Text of the Resolution

 

“RESOLVED, as a special resolution, that the name of the Company is changed from “TKK Symphony Acquisition Corp.” to “Glory Star New Media Group Holdings Limited” with immediate effect.”

 

Recommendation of the Board

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF PROPOSAL 2.

 

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PROPOSAL NO. 3 — APPROVAL OF AMENDMENT TO TKK’S AMENDED AND
RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION TO REMOVE CERTAIN PROVISIONS
RELATING TO TKK’S STATUS AS A BLANK CHECK COMPANY

 

Our shareholders are being asked to approve an amendment to our existing memorandum and articles of association to remove certain provisions related to TKK’s status as a blank check company. Upon consummation of the Business Combination, we will cease to be a blank check company and the provisions in our existing memorandum and articles of association related to our status and obligations as a blank check company, including provisions relative to consummating a business combination prior to the Business Combination Deadline and provisions relative to the release and use of funds in the Trust Account, will become inapplicable by their terms and of no further force and effect. We are also proposing the removal of the provisions related to the waiver of the corporate opportunity doctrine.

 

The following table sets forth a summary of the material differences between our existing memorandum and articles of association and the proposed amended and restated memorandum and articles of association as amended by this Proposal 3:

 

Proposed Changes to Amended and Restated Memorandum and Articles of Association Pursuant to Proposal 3.

 

   Existing Memorandum and Articles of Association  Proposed Amended and Restated Memorandum and Articles of Association
Provisions Specific to a Blank Check Company  Under our existing memorandum and articles of association, Article 48 sets forth various provisions related to our operations as a blank check company prior to the consummation of an initial business combination.  The proposed amended and restated memorandum and articles of association does not include these blank check company provisions because, upon consummation of the Business Combination, we will cease to be a blank check company. In addition, the provisions requiring that the proceeds from our initial public offering be held in a trust account until a business combination or liquidation of the Company and the terms governing the Company’s consummation of a proposed business combination will not be applicable following consummation of the Business Combination.

 

Vote Required for Approval

 

This proposal requires the approval of a special resolution under Cayman Islands law which requires the affirmative vote of the holders of at least two-thirds our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting. Accordingly, abstentions and broker non-votes will have no effect on this proposal.

 

As of the record date, our Sponsor, officers and directors and other initial shareholders have agreed to vote their Founder Shares and all ordinary shares acquired by our Sponsor during or after our initial public offering in favor of this proposal. Currently, our Sponsor, officers and directors and other initial shareholders collectively own approximately 19.9% of our issued and outstanding ordinary shares.

 

Full Text of the Resolution

 

“RESOLVED, as a special resolution, that the Amended and Restated Memorandum and Articles of Association of the Company currently in effect be amended by removing and changing certain provisions related to the Company’s status as a blank check company.”

 

Recommendation of the Board

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR
SHAREHOLDERS
VOTE “FOR” THE APPROVAL OF PROPOSAL 3.

 

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PROPOSAL NO. 4 — APPROVAL OF CERTAIN ADDITIONAL NON-SUBSTANTIVE CHANGES TO TKK’S AMENDED AND RESTATED MEMORANDUM AND ARTICLES OF ASSOCIATION

 

Our shareholders are being asked to approve certain other non-substantive changes to existing memorandum and articles of association. These changes include modification of the defined terms used in the proposed amended and restated memorandum and articles of association and the increase of the classes of the board of directors from two classes to three classes.

 

Vote Required for Approval

 

This proposal requires the approval of a special resolution under Cayman Islands law which requires the affirmative vote of the holders of at least two-thirds our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting. Accordingly, abstentions and broker non-votes will have no effect on this proposal.

 

As of the record date, our Sponsor, officers and directors and other initial shareholders have agreed to vote their Founder Shares and all ordinary shares acquired by our Sponsor during or after our initial public offering in favor of this proposal. Currently, our Sponsor, officers and directors and other initial shareholders collectively own approximately 19.9% of our issued and outstanding ordinary shares.

 

Full Text of the Resolution

 

“RESOLVED, as a special resolution, that the Amended and Restated Memorandum and Articles of Association of the Company currently in effect be amended and restated by their deletion in their entirety and the substitution in their place of the Amended and Restated Memorandum and Articles of Association in the form attached to the proxy statement as Annex B.”

 

Recommendation of the Board

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF PROPOSAL 4.

 

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PROPOSAL NO. 5 — ELECTION OF DIRECTORS TO THE BOARD

 

TKK’s board of directors is currently divided into two classes, Classes I and II. We expect to conduct our next annual general meeting during the fourth calendar quarter of 2020.

 

Our board of directors has nominated Messrs. James Heimowitz, Stephen Markscheid and Dr. Zhe Zhang for re-election. We anticipate that all of them will resign from their positions as directors, effective upon the closing of the Business Combination.

 

For information regarding the additional director nominees to our board of directors, see “Information About Glory Star — Management — Directors and Executive Officers,” and for information regarding Mr. Ian Lee, see “Management After the Business Combination” in the Offer to Purchase accompanying this proxy statement.

 

Vote Required for Approval

 

This proposal requires the approval of an ordinary resolution under Cayman Islands law which requires the affirmative vote of the holders of a majority of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting. Accordingly, abstentions and broker non-votes will have no effect on this proposal.

 

As of the record date, our Sponsor, officers and directors and other initial shareholders have agreed to vote their Founder Shares and all ordinary shares acquired by our Sponsor during or after our initial public offering in favor of this proposal. Currently, our Sponsor, officers and directors and other initial shareholders collectively own approximately 19.9% of our issued and outstanding ordinary shares.

 

Full Text of the Resolution

 

“RESOLVED, as an ordinary resolution, that the following persons be appointed as directors of the Company with immediate effect, each to hold office in accordance with the amended and restated articles of association of the Company:

 

James Heimowitz;

 

Stephen Markscheid; and

 

Dr. Zhe Zhang.”

 

Recommendation of the Board

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR
SHAREHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE PROPOSED
NOMINEES TO THE BOARD OF DIRECTORS.

 

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PROPOSAL NO. 6 — APPROVAL OF ISSUANCE OF MORE THAN 20% OF THE COMPANY’S ISSUED AND ISSUED AND OUTSTANDING ORDINARY SHARES

 

Our shareholders are being asked to vote upon and approve, for purposes of complying with applicable Nasdaq Capital Market Listing rules, the issuance of more than 20% of the Company’s issued and outstanding ordinary shares.

 

Nasdaq Listing Rule 5635(a) requires shareholder approval where, among other things, the issuance of securities in a transaction exceeds 20% of the number of ordinary shares or the voting power outstanding before the transaction. We currently have 31,450,000 ordinary shares issued and outstanding. Assuming a purchase price of $10.28, we intend to issue approximately 41,342,412 ordinary shares, or approximately 131.5% of our currently issued and outstanding ordinary shares, in the Business Combination. Although we are not required to obtain the approval of our shareholders under Nasdaq Listing Rule 5635(a) because we are a foreign private issuer and have elected to follow our home country practice, our Board of Directors deems it advisable to seek shareholder approval of the issuance of the ordinary shares pursuant to the Share Exchange Agreement.

 

Vote Required for Approval

 

This proposal requires the approval of an ordinary resolution under Cayman Islands law which requires the affirmative vote of the holders of a majority of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting. Accordingly, abstentions and broker non-votes will have no effect on this proposal.

 

As of the record date, our Sponsor, officers and directors and other initial shareholders have agreed to vote their Founder Shares and all ordinary shares acquired by our Sponsor during or after our initial public offering in favor of this proposal. Currently, our Sponsor, officers and directors and other initial shareholders collectively own approximately 19.9% of our issued and outstanding ordinary shares.

 

Full Text of the Resolution

 

“RESOLVED, as an ordinary resolution, that, for purposes of complying with applicable Nasdaq Capital Market listing rules, the issuance of more than 20% of the Company’s issued and outstanding ordinary shares be approved and adopted in all respects.”

 

Recommendation of the Board

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR
SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE SHARE ISSUANCE PROPOSAL.

 

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PROPOSAL NO. 7 — APPROVAL AND ADOPTION OF THE EQUITY INCENTIVE PLAN

 

Our board of directors has unanimously approved and adopted the Glory Star New Media Group Holdings Limited 2019 Equity Incentive Plan (the “Equity Incentive Plan”), and our board has unanimously approved and recommended that our shareholders approve and adopt the Equity Incentive Plan.

 

Shareholders are being asked to approve the Equity Incentive Plan. Shareholder approval by ordinary resolution of the Equity Incentive Plan is necessary for certain purposes. If our shareholders do not approve the Equity Incentive Plan, the Equity Incentive Plan will not go into effect.

 

The principal features of the Equity Incentive Plan are summarized below, but the summary is qualified in its entirety by reference to the complete text of the Equity Incentive Plan document, which is attached as Annex C to this proxy statement.

 

Highlights of the Equity Incentive Plan

 

We believe that in order to attract, hire, and retain the caliber of executives and employees that will be required to help us position ourselves for growth, we will need to have the flexibility to grant restricted shares, share options, and other equity instruments. We believe that equity incentive compensation is also an important component of our overall compensation and incentive strategy for employees, directors, officers and consultants. Without a broad based equity plan, we believe that we will be impaired in our efforts to hire new executives of the caliber that we believe is required, and will not be able to offer competitive packages to retain such executives.

 

Upon consummation of the Business Combination, the Company will reserved such number of ordinary shares authorized for issuance as will be sufficient to satisfy the requirements of the 2019 Equity Incentive Plan, or the Plan. Currently there are no shares or options granted under the Plan.

 

The following is a brief summary of the Plan. This summary is qualified in its entirety by reference to the text of the Plan, a copy of which is attached as Annex C to this Information Statement.

 

Summary of the 2019 Equity Incentive Plan

 

The principal provisions of the Plan are summarized below. This summary is not a complete description of all of the Plan’s provisions, and is qualified in its entirety by reference to the Plan which is attached as Annex C to this Information Statement. Capitalized terms in this summary not defined in this Information Statement have the meanings set forth in the Plan.

 

Structure. The Plan allows for the grant of options, share appreciation rights (SARs), restricted shares, restricted share units, performance units, performance shares or other share based awards (“awards”) at the discretion of the Administrator.

 

Number of shares. Subject to adjustment as provided in the Plan, the maximum aggregate number of Ordinary Shares that may be issued under the Plan shall not exceed a number equal to 7.5% of the number of issued and outstanding ordinary shares immediately after the consummation of the transactions contemplated by that certain Share Exchange Agreement. Any ordinary shares delivered under the Plan shall consist of authorized and issued or unissued ordinary shares. Subject to the adjustments provided in Section 15 of the Plan, no contraction of the number of ordinary shares outstanding will affect the validity or enforceability of any awards then outstanding.

 

Administration. Authority to control and manage the operation and administration of the Plan will be vested with the compensation committee of the Board of Directors (“Committee”), or if none, in the Board of Directors. It is intended that the Committee members will be “non-employee directors” (within the meaning of Rule 16b-3 promulgated under the Exchange Act) to the extent required under Rule 16b-3. The Committee will serve as the Administrator with respect to the Plan. The Administrator has the authority to interpret the Plan and the rights underlying any grants or awards made subject to the Plan. Any decision or action of the Administrator in connection with the Plan is final and binding.

 

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Term. The Administrator may grant awards pursuant to the Plan until it is discontinued or terminated; provided, however, that no Award may be granted under the Plan ten (10) years after its adoption.

 

Eligibility. Employees, directors, officers and consultants in the service of the Company or any subsidiary corporation (whether now existing or subsequently established) are eligible to participate in the Plan. Determinations as to which eligible persons shall be granted awards shall be made by the Administrator.

 

Annual Non-Employee Director Compensation Limitation. Any individual director who is not an employee in any fiscal year be granted compensation for service having an aggregate maximum value (computed as of the date of grant in accordance with applicable financial accounting rules) exceeding $1,000,000.

 

Stock options. Non-qualified and incentive stock options may be granted to eligible participants to purchase ordinary shares from the Company. The Plan confers on the Administrator the discretion, with respect to any such stock option, to determine the term of each option, the time or times during its term when the option becomes exercisable and the number and purchase price of the shares subject to the option, provided that the purchase price shall be not less than the fair market value of the ordinary shares subject to the option on the date of grant. The administrator will determine the methods of payment of the exercise price of an option, which may include (i) cash, (ii) check; (iii) promissory note; (iv) other ordinary shares which meet the conditions established by the Administrator to avoid adverse accounting consequences (as determined by the Administrator); (v) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan; (vi) a reduction in the amount of any Company liability to the participant; (vii) any combination of the foregoing methods of payment; or (viii) such other consideration and method of payment for the issuance of ordinary shares to the extent permitted by applicable laws. After the termination of service of an employee, director, officer, or consultant, the participant may exercise his or her option, to the extent vested as of such date of termination, for the period of time stated in his or her option agreement. In the absence of a period stated in the option agreement, the Plan provides that the option will remain exercisable for 12 months if termination is due to death or disability. In all other cases, in the absence of a period stated in the option agreement, the Plan provides that the option will generally remain exercisable for three months following the termination of service. However, in no event may an option be exercised later than the expiration of its term.

 

Limitation on incentive stock options. The aggregate fair market value of shares of our ordinary shares with respect to which incentive stock options granted to any participant may first become exercisable during any calendar year may not exceed $100,000. Any incentive stock options that become exercisable in excess of this amount will be treated as nonqualified stock options.

 

Share appreciation rights. A share appreciation right, or SAR, is a right to receive, without payment to the Company, a number of shares, cash or any combination thereof, the amount of which is equal to the aggregate amount of the appreciation in the ordinary shares as to which the SAR is exercised. For this purpose, the “appreciation” in the shares consists of the amount by which the fair market value of the ordinary shares on the exercise date exceeds (a) in the case of an SAR related to a stock option, the purchase price of the shares under the option or (b) in the case of an SAR granted alone, without reference to a related stock option, an amount determined by the Administrator at the time of grant. The Administrator has the discretion to determine the number of shares as to which an SAR will relate as well as the duration and exercisability of an SAR.

 

Restricted shares and restricted share units. Restricted shares consist of the sale or transfer by the Company to an eligible participant of one or more ordinary shares that are subject to restrictions on their sale or other transfer by the participant which restrictions will lapse after a period of time not less than three years as determined by Administrator. The price at which restricted shares will be sold will be determined by the Administrator, and it may vary from time to time and among participants and may be less than the fair market value of the shares at the date of sale. Subject to these restrictions and the other requirements of the Plan, a participant receiving restricted shares shall have all of the rights of a shareholder as to those shares. The Plan also permits grants of restricted share units, which are units that evidence the right to receive ordinary shares at a future date, subject to restrictions that may be imposed by the Administrator.

 

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Performance units/performance shares. Performance units and performance shares may be granted under the Plan. Performance units and performance shares are awards that will result in a payment to a participant if performance goals or other criteria established by the administrator are achieved or the awards otherwise vest. Each award of performance units or performance shares will be evidenced by an award agreement specifying the number of units or ordinary shares (as applicable), any vesting conditions, the performance period, and other terms and conditions of the award, as determined by the Administrator, subject to the terms and conditions of the Plan. The extent to which the performance goals or other vesting criteria (which may include continued service) as determined by the Administrator are achieved will determine the number and/or the value of performance units and performance shares to be paid out to participants. After the grant of a performance unit or performance share, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such performance units or performance shares. Performance units shall have an initial dollar value established by the Administrator prior to the grant date. Performance shares shall have an initial value equal to the fair market value of a ordinary share on or before the grant date. The administrator, in its sole discretion, may pay earned performance units or performance shares in the form of cash, in ordinary shares or in some combination of both.

 

Other share base awards. Other share base awards consist of other awards that are valued in whole or in parts by reference to, or are otherwise based on, ordinary shares of the Company and are created by the Administrator that may be granted to participants in the Plan either alone, in addition to, or in tandem with, other Awards granted under the Plan and/or cash awards made outside the Plan.

 

Transferability of awards. Unless the Administrator provides otherwise, the Plan generally does not allow for the transfer of awards other than by will or by the laws of descent and distribution, and only the recipient of an award may exercise such an award during his or her lifetime.

 

Certain adjustments. In the event of any dividend or other distribution (whether in the form of cash, shares, other securities, or other property), recapitalization, share split, reverse share split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of ordinary shares or our other securities, or other change in our corporate structure affecting the shares, to prevent diminution or enlargement of the benefits or potential benefits available under the Plan, the Administrator will make adjustments, in order to prevent the reduction or enlargement of the benefits or potential benefits to be made available under the Plan, to the number and class of shares that may be delivered under the 2009 Plan and/or the number, class and price of shares covered by each outstanding award, and the numerical share limits contained in the Plan. In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable before the proposed transaction, and all awards will terminate immediately prior to the completion of such proposed transaction.

 

Merger or change in control. The Plan provides that in the event of a merger or change in control, as defined under the Plan, each outstanding award will be treated as the administrator determines, including, without limitation, that each award be assumed or an equivalent option or right substituted by the successor corporation or a parent or subsidiary of the successor corporation, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any outstanding award, then such award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at the target levels and all other terms and conditions met, and such award will become fully exercisable, if applicable, for a specified period prior to the transaction. The Administrator will notify participants regarding the exercisability of their awards over such period. Awards that become exercisable for such period will then terminate upon the expiration of such period. If the service of an outside director is terminated on or following a change in control, other than pursuant to a voluntary resignation, then his or her awards will fully vest, all restrictions on such awards will lapse, all performance goals or other vesting criteria applicable to such awards will be deemed achieved at the target levels and all other terms and conditions met, and such awards will become fully exercisable (if applicable).

 

Plan amendment, termination. Our Board of Directors has the authority to amend, alter, suspend or terminate the Plan at any time, provided that any action that impairs the existing rights of any participant will require the participant’s consent.

 

41

 

 

U.S. Federal Income Tax Matters

 

The following paragraphs are a summary of the general U.S. federal income tax consequences to U.S. taxpayers of equity awards granted under the Plan. Tax consequences for any particular individual may be different.

 

Nonqualified stock options. A participant generally will not have taxable income when a nonqualified stock option with a per share exercise price equal to the fair market value of an underlying share on the date of grant is granted to the participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the excess of the fair market value (on the exercise date) of the shares purchased over the exercise price of the exercised shares subject to the option. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss to the participant.

 

Incentive stock options. A participant generally will not have taxable income when an incentive stock option is granted or exercised (except for purposes of the alternative minimum tax, in which case the exercise of the award may subject the participant to, or affect the determination of, the alternative minimum tax). If the participant exercises the option and then later sells or otherwise disposes of the shares more than two years after the grant date and more than one year after the exercise date, the difference between the sale price and the exercise price will be taxed as capital gain or loss. If the participant exercises the option and then later sells or otherwise disposes of the shares before the end of the two- or one-year holding periods described above, he or she generally will have ordinary income at the time of the sale equal to the fair market value of the shares on the exercise date (or the sale price, if less) minus the exercise price of the option. Any additional gain would be taxable as capital gain.

 

Share appreciation rights. A participant generally will not have taxable income when a share appreciation right with a base price per share equal to the fair market value of an underlying share on the date of grant is granted to the participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

 

Other awards. A participant generally will not have taxable income at the time an award of restricted shares, restricted share units, performance units, or performance shares are granted. Instead, he or she generally will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the award becomes either (i) freely transferable, or (ii) no longer subject to substantial risk of forfeiture. However, the recipient of a restricted share award may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the award (less any cash paid for the shares) on the date the award is granted.

 

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF U.S. FEDERAL INCOME TAXATION WITH RESPECT TO THE GRANT AND EXERCISE OF AWARDS UNDER THE PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OF AN INDIVIDUAL’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH ANY ELIGIBLE INDIVIDUAL MAY RESIDE.

 

Plan Benefits

 

The awards that may be granted under the Plan to any participant or group of participants are indeterminable at the date of this information statement because participation and the types of awards that may be granted under the Plan are subject to the discretion of the Administrator. No awards will be granted under the Plan before the meeting and unless the Business Combination has been consummated.

 

Interest of Certain Persons in the Equity Incentive Plan

 

Shareholders should understand that our executive officers and non-employee directors may be considered to have an interest in the approval of the Equity Incentive Plan because they may in the future receive Awards under it. Nevertheless, our board of directors believes that it is important to provide incentives and rewards for superior performance and the retention of experienced directors by implementing the Equity Incentive Plan.

 

42

 

 

Equity Awards

 

The grant of Options and other equity or cash awards under the Equity Incentive Plan is discretionary and we cannot determine now the specific number or type of equity or cash awards to be granted in the future to any particular person or group. Any such grants of Awards will be made in the sole discretion of our Compensation Committee, in such amounts and to such persons, as our Compensation Committee deems appropriate.

 

Vote Required for Approval

 

This proposal requires the approval of an ordinary resolution under Cayman Islands law which requires the affirmative vote of the holders of a majority of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting. Accordingly, abstentions and broker non-votes will have no effect on this proposal.

 

As of the record date, our Sponsor, officers and directors and other initial shareholders have agreed to vote their Founder Shares and all ordinary shares acquired by our Sponsor during or after our initial public offering in favor of this proposal. Currently, our Sponsor, officers and directors and other initial shareholders collectively own approximately 19.9% of our issued and outstanding ordinary shares.

 

Full Text of the Resolution

 

“RESOLVED, as an ordinary resolution, that the Glory Star New Media Group Holdings Limited 2019 Equity Incentive Plan, a copy of which is attached to the proxy statement as Annex C be approved and adopted in all respects.”

 

Recommendation of the Board

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR
SHAREHOLDERS VOTE “FOR” THE APPROVAL AND ADOPTION OF THE GLORY STAR NEW

MEDIA GROUP HOLDINGS LIMITED 2019 EQUITY INCENTIVE PLAN.

 

43

 

 

PROPOSAL NO. 8 — THE ADJOURNMENT PROPOSAL

 

The Adjournment Proposal, if adopted, will allow our board of directors to adjourn the meeting to a later date or dates to permit further solicitation of proxies. The Adjournment Proposal will only be presented to our shareholders in the event that, based on the tabulated votes, there are not sufficient votes at the time of the meeting to approve one or more of the proposals presented at the meeting. In no event will our board of directors adjourn the meeting or consummate the Business Combination beyond the date by which it may properly do so under our existing memorandum and articles of association and Cayman Islands Law.

 

If the Adjournment Proposal is not approved by our shareholders, our board of directors may not be able to adjourn the meeting to a later date in the event that, based on the tabulated votes, there are not sufficient votes at the time of the meeting to approve the Business Combination Proposal or the Incentive Plan Proposal.

 

Vote Required for Approval

 

This proposal requires the approval of an ordinary resolution under Cayman Islands law which requires the affirmative vote of the holders of a majority of our ordinary shares that are represented in person or by proxy and entitled to vote thereon and actually cast at the meeting. Accordingly, abstentions and broker non-votes will have no effect on this proposal.

 

The Adjournment Proposal does not require the approval of any other proposal to be effective and will only be presented at the meeting if there are not sufficient votes to approve one or more of the other proposals.

 

Full Text of the Resolution

 

“RESOLVED, as an ordinary resolution, that the adjournment of the meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the meeting, there are not sufficient votes to approve one or more proposals presented to shareholders for vote be approved and adopted in all respects.”

 

Recommendation of the Board

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS
VOTE “FOR” THE APPROVAL OF THE ADJOURNMENT PROPOSAL.

 

44

 

 

APPRAISAL RIGHTS

 

Our shareholders do not have appraisal rights in connection with the Business Combination under Cayman Islands Law.

 

DELIVERY OF DOCUMENTS TO SHAREHOLDERS

 

Pursuant to the rules of the SEC, we and servicers that we employ to deliver communications to our shareholders are permitted to deliver to two or more shareholders sharing the same address a single copy of the proxy statement. Upon written or oral request, we will deliver a separate copy of the proxy statement to any shareholder at a shared address to which a single copy of the proxy statement was delivered and who wishes to receive separate copies in the future. Shareholders receiving multiple copies of the proxy statement may likewise request that we deliver single copies of the proxy statement in the future. Shareholders may notify us of their requests by calling or writing us at our principal executive offices at 2039, 2/F United Center, 95 Queensway Admiralty, Hong Kong, telephone: +852 3643 1693.

 

SUBMISSION OF SHAREHOLDER PROPOSALS

 

Our board of directors is aware of no other matter that may be brought before the meeting. Under Delaware law, only business that is specified in the notice of meeting to shareholders may be transacted at the meeting.

 

FUTURE SHAREHOLDER PROPOSALS

 

Our proposed amended and restated memorandum and articles of association also establish an advance notice procedure for shareholders who wish to present a proposal before an annual general meeting but do not intend for the proposal to be included in our proxy statement. Our proposed amended and restated memorandum and articles of association provide that members seeking to bring business before the annual general meeting or to nominate candidates for election as directors at the annual general meeting must deliver notice to the principal executive offices of the Company not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the scheduled date of the annual general meeting.

 

Shareholder proposals for the 2020 annual general meeting must be received at our principal executive offices by August 13, 2020 and must otherwise comply with the SEC’s rules, to be considered for inclusion in our proxy materials relating to our 2020 annual general meeting. If, however, the 2020 annual general meeting is more than 30 days from the anniversary of the meeting, then shareholder proposals for the 2020 annual general meeting must be received at our principal executive offices a reasonable time before the Company begins to print and mail its annual general meeting proxy materials, to be considered for inclusion in our proxy materials relating to our 2020 annual general meeting.

 

If you intend to present a proposal at the 2020 annual general meeting, or if you want to nominate one or more directors, you must give timely notice thereof in writing to the Company. The Company must receive this notice no earlier than August 13, 2020 and no later than September 12, 2020; provided, however, that in the event that the 2020 annual general meeting is called for a date that is not within 45 days before or after the anniversary of the meeting, notice by the shareholder to be timely must be so received not earlier than the opening of business on the 120th day before the 2019 annual general meeting and not later than the later of (x) the close of business on the 90th day before the 2019 annual general meeting or (y) the close of business on the 10th day following the day on which public announcement of the date of the 2019 annual general meeting is first made by the Company.

 

If you intend to present a proposal at the 2020 annual general meeting, or if you want to nominate one or more directors at the 2020 annual general meeting, you must comply with the advance notice provisions of our proposed amended and restated memorandum and articles of association. You may contact our Secretary at our principal executive offices for a copy of the relevant provisions regarding the requirements for making shareholder proposals and nominating director candidates.

 

45

 

 

WHERE YOU CAN FIND MORE INFORMATION

 

We file reports, proxy statements and other information with the SEC as required by the Exchange Act. You can read TKK’s SEC filings, including this proxy statement, over the Internet at the SEC’s website at http://www.sec.gov. We also have filed, pursuant to Rule 13e-4(c)(2), an Issuer Tender Offer Statement on Schedule TO as may be amended from time to time (the “Schedule TO”) with the SEC that includes additional information relating to the Offer. The SEC also maintains a website at http://www.sec.gov that contains reports and other information that we file with or furnish electronically with the SEC, including the Schedule TO.

 

If you would like additional copies of this proxy statement or if you have questions about the Business Combination or the proposals to be presented at the meeting, you should contact us by telephone or in writing:

 

TKK Symphony Acquisition Corporation

c/o Texas Kang Kai Capital Management (Hong Kong) Limited

2039, 2/F United Center
95 Queensway Admiralty, Hong Kong

Telephone: +852 6212 8493

 

You may also obtain these documents, including a copy of the Schedule TO, by requesting them in writing or by telephone from TKK’s proxy solicitation agent at the following address and telephone number:

 

Morrow Sodali LLC
470 West Avenue
Stamford, CT 06902
Telephone: (800) 662-5200 or banks and brokers can call collect at (203) 658-9400
Email: TKKS.info@morrowsodali.com

 

If you are a shareholder of TKK and would like to request documents, please do so by December 20 2019 to receive them before the TKK meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt means.

 

All information contained or incorporated by reference in this proxy statement relating to TKK has been supplied by TKK, and all such information relating to Glory Star has been supplied by Glory Star. Information provided by either TKK or Glory Star does not constitute any representation, estimate or projection of any other party.

 

This document is a proxy statement of TKK for the extraordinary general meeting of TKK. We have not authorized anyone to give any information or make any representation about the Business Combination, the Company or Glory Star that is different from, or in addition to, that contained in this proxy statement. Therefore, if anyone does give you information of this sort, you should not rely on it. The information contained in this document speaks only as of the date of this document unless the information specifically indicates that another date applies.

 

46

 

  

Annex A

 

 

 

SHARE EXCHANGE AGREEMENT

 

by and among

 

TKK SYMPHONY ACQUISITION CORPORATION,
as the Purchaser,

 

TKK SYMPHONY SPONSOR 1,
as the Purchaser Representative,

 

GLORY STAR NEW MEDIA GROUP LIMITED,
as the Company,

 

GLORY STAR NEW MEDIA (BEIJING) TECHNOLOGY CO., LTD

(耀世星辉 新文娱(北京 ) 科技有限公司),

as the WFOE

 

XING CUI CAN INTERNATIONAL MEDIA (BEIJING) CO., LTD.

(星璀璨国际传媒(北京)有限公司)

 

and

 

HORGOS GLORY STAR MEDIA CO., LTD.

(霍尔果斯耀世星辉文化传媒有限公司),

as the VIEs,

 

THE SHAREHOLDERS OF THE COMPANY NAMED HEREIN,
as the Sellers

 

and

 

ZHANG BING,
as the Seller Representative

 

Dated as of September 6, 2019

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
I. the share exchange A-2
1.1. Purchase and Sale of Shares A-2
1.2. Consideration A-2
1.3. Escrow A-2
1.4. Earnout A-3
1.5. Company Shareholder Consent A-5
   
II. CLOSING A-5
2.1. Closing A-5
   
III. representations and warranties of THE purchaser A-6
3.1. Organization and Standing A-6
3.2. Authorization; Binding Agreement A-6
3.3. Governmental Approvals A-6
3.4. Non-Contravention A-6
3.5. Capitalization A-7
3.6. SEC Filings and Purchaser Financials A-8
3.7. Absence of Certain Changes A-8
3.8. Compliance with Laws A-8
3.9. Actions; Orders; Permits A-8
3.10. Taxes and Returns A-9
3.11. Employees and Employee Benefit Plans A-9
3.12. Properties A-9
3.13. Material Contracts A-9
3.14. Transactions with Affiliates A-9
3.15. Investment Company Act A-10
3.16. Finders and Brokers A-10
3.17. Ownership of Exchange Shares A-10
3.18. Certain Business Practices A-10
3.19. Insurance A-10
3.20. Independent Investigation A-10
   
Iv. representations and warranties of THE COMPANY PARTIES A-11
4.1. Organization and Standing A-11
4.2. Authorization; Binding Agreement A-11
4.3. Capitalization A-11
4.4. Subsidiaries A-12
4.5. Governmental Approvals A-13
4.6. Non-Contravention A-13
4.7. Financial Statements A-13
4.8. Absence of Certain Changes A-14
4.9. Compliance with Laws A-14
4.10. Company Permits A-15
4.11. Litigation A-15
4.12. Material Contracts A-15
4.13. Intellectual Property A-17
4.14. Taxes and Returns A-18
4.15. Real Property A-19
4.16. Personal Property A-20
4.17. Title to and Sufficiency of Assets A-20

 

A-i

 

 

  Page
4.18. Employee Matters A-20
4.19. Benefit Plans A-21
4.20. Environmental Matters A-22
4.21. Transactions with Related Persons A-23
4.22. Insurance A-23
4.23. Top Customers and Vendors A-23
4.24. Books and Records A-24
4.25. Accounts Receivable A-24
4.26. Certain Business Practices A-24
4.27. PRC Compliance A-24
4.28. Investment Company Act A-25
4.29. Finders and Brokers A-25
4.30. Independent Investigation A-25
4.31. VIE Contracts A-25
4.32. Information Supplied A-26
4.33. Disclosure A-26
   
v. representations and warranties of THE SELLERS A-26
5.1. Organization and Standing A-26
5.2. Authorization; Binding Agreement A-26
5.3. Ownership A-27
5.4. Governmental Approvals A-27
5.5. Information Supplied A-27
5.6. No Litigation A-27
5.7. Investment Representations A-28
5.8. Finders and Brokers A-28
5.9. Independent Investigation A-28
5.10. Information Supplied A-28
   
vI. COVENANTS A-29
6.1. Access and Information A-29
6.2. Conduct of Business of the Company Parties and the Sellers A-29
6.3. Conduct of Business of the Purchaser A-32
6.4. Annual and Interim Financial Statements A-33
6.5. Purchaser Public Filings A-33
6.6. No Solicitation A-34
6.7. No Trading A-34
6.8. Notification of Certain Matters A-35
6.9. Efforts A-35
6.10. Further Assurances A-36
6.11. Proxy Statement/Tender Offer A-37
6.12. Public Announcements A-38
6.13. Confidential Information A-39
6.14. Litigation Support A-39
6.15. Documents and Information A-40
6.16. Post-Closing Board of Directors and Executive Officers A-40
6.17. Use of Trust Account Proceeds A-40
6.18. Purchaser Policies A-40
6.19. Tax Matters A-40
6.20. PIPE Investment A-41
6.21. Execution of VIE Contracts A-41

 

A-ii

 

 

  Page
vII. survival and indemnification A-42
7.1. Survival A-42
7.2. Indemnification by the Sellers A-42
7.3. Limitations and General Indemnification Provisions A-43
7.4. Indemnification Procedures A-43
7.5. Timing of Payment; Right to Set-Off; Recovery of Shares A-45
7.6. Exclusive Remedy A-45
   
VIII. Closing conditions A-45
8.1. Conditions of Each Party’s Obligations A-45
8.2. Conditions to Obligations of the Company and the Sellers A-46
8.3. Conditions to Obligations of the Purchaser A-47
8.4. Frustration of Conditions A-49
   
Ix. TERMINATION AND EXPENSES A-49
9.1. Termination A-49
9.2. Effect of Termination A-50
9.3. Fees and Expenses A-50
9.4. Termination Fee A-51
   
x. WAIVERS and releases A-51
10.1. Waiver of Claims Against Trust A-51
10.2. Release and Covenant Not to Sue A-52
   
xI. MISCELLANEOUS A-52
11.1. Notices A-52
11.2. Binding Effect; Assignment A-54
11.3. Third Parties A-54
11.4. Arbitration A-55
11.5. Governing Law; Jurisdiction A-55
11.6. Waiver of Jury Trial A-55
11.7. Specific Performance A-55
11.8. Severability A-56
11.9. Amendment A-56
11.10. Waiver A-56
11.11. Entire Agreement A-56
11.12. Interpretation A-56
11.13. Counterparts A-57
11.14. Purchaser Representative A-57
11.15. Seller Representative A-58
11.16. Legal Representation A-60
   
xII. DEFINITIONS A-60
12.1. Certain Definitions A-60
12.2. Section References A-68

 

A-iii

 

 

INDEX OF ANNEXES, SCHEDULE AND EXHIBITS

 

Annex   Description
Annex I   List of Sellers
Annex II   Calculation of Purchaser Adjusted Net Income
Annex III   List of VIE Shareholders

 

Exhibit   Description
Exhibit A   Form of Non-Competition Agreement
Exhibit B   Form of Lock-Up Agreement
Exhibit C   Form of Registration Rights Agreement
Exhibit D   Form of VIE Contracts

 

A-iv

 

 

SHARE EXCHANGE AGREEMENT

 

This Share Exchange Agreement (this “Agreement”) is made and entered into as of September 6, 2019 by and among: (i) TKK Symphony Acquisition Corporation, a Cayman Islands exempted company (the “Purchaser”); (ii) TKK Symphony Sponsor 1, a Cayman Islands exempted company, in the capacity as the representative from and after the Closing (as defined below) for the shareholders of the Purchaser other than the Sellers and their successors and assigns in accordance with the terms and conditions of this Agreement (the “Purchaser Representative”); (iii) Glory Star New Media Group Limited, a Cayman Islands exempted company (the “Company”); (iv) Glory Star New Media (Beijing) Technology Co., Ltd. (耀世星辉新文娱(北京)科技有限公司), a Wholly Foreign-Owned Enterprise limited liability company incorporated in the People’s Republic of China (“PRC”) and indirectly wholly-owned by the Company (the “WFOE”); (v) Xing Cui Can International Media (Beijing) Co., Ltd. (星璀璨国际传媒(北京)有限公司), a limited liability company incorporated in the PRC (“Xing Cui Can”); (vi) Horgos Glory Star Media Co., Ltd. (霍尔果斯耀世星辉文化传媒有限公司), a limited liability company incorporated in the PRC (“Horgos”, and together with Xing Cui Can, the “VIEs” and, collectively with the Company and the WFOE, the “Company Parties”); (vii) each of the shareholders of the Company named on Annex I hereto (collectively, the “Sellers”); and (viii) Zhang Bing, in the capacity as the representative for the Sellers in accordance with the terms and conditions of this Agreement (the “Seller Representative”). The Purchaser, Purchaser Representative, the Company Parties, the Sellers and the Seller Representative are sometimes referred to herein individually as a “Party” and, collectively, as the “Parties”.

 

RECITALS:

 

WHEREAS, certain capitalized terms used herein are defined in Article XII hereof;

 

WHEREAS, the Sellers collectively own 100% of the issued and outstanding shares of the Company;

 

WHEREAS, the Company is a holding company for Glory Star New Media Group HK Limited, a Hong Kong company (“Glory Star HK”), which owns 100% of the issued and outstanding equity interests of the WFOE;

 

WHEREAS, the VIEs, directly and indirectly through respective Subsidiaries, are engaged in the business of online media and entertainment services in the PRC;

 

WHEREAS, shortly after the execution and delivery of this Agreement, the WFOE, the VIEs and the VIE Shareholders are entering into the VIE Contracts, pursuant to which the Company will, through the WFOE, exercise full control over the VIEs and enjoy all of the economic benefit from the operation of the VIEs and their Subsidiaries;

 

WHEREAS, the Sellers desire to sell to the Purchaser, and the Purchaser desires to purchase from the Sellers, all of the issued and outstanding shares and any other equity interests in or of the Company in exchange for newly issued ordinary shares of the Purchaser, subject to the terms and conditions set forth herein; and

 

WHEREAS, simultaneously with the execution and delivery of this Agreement, certain Parties are entering into the following agreements, each to be effective and contingent upon the Closing: (i) Non-Competition and Non-Solicitation Agreements by certain Sellers (including Zhang Bing and each other Seller that directly or indirectly owns in excess of 30% of the Company’s equity prior to the Closing (each, a “Non-Competition Seller”)) in favor of and for the benefit of the Purchaser, the Company and each of the other Covered Parties (as defined therein) (each, a “Non-Competition Agreement”), the form of which is attached as Exhibit A hereto; (ii) Lock-Up Agreements to be entered into by certain Sellers (that directly or indirectly owns in excess of 10% of the Company’s equity prior to the Closing (each, a “Lock-Up Seller”), the Purchaser and the Purchaser Representative (each a “Lock-Up Agreement”), the form of which is attached as Exhibit B hereto; and (iii) the Registration Rights Agreement to be entered into by the Sellers, the Purchaser and the Purchaser Representative (the “Registration Rights Agreement”), the form of which is attached as Exhibit C hereto.

 

A-1

 

 

NOW, THEREFORE, in consideration of the premises set forth above, which are incorporated in this Agreement as if fully set forth below, and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, the Parties hereto agree as follows:

 

Article I
THE SHARE EXCHANGE

 

1.1 Purchase and Sale of Shares. At the Closing and subject to and upon the terms and conditions of this Agreement, the Sellers shall sell, transfer, convey, assign and deliver to the Purchaser, and the Purchaser shall purchase, acquire and accept from the Sellers, all of the issued and outstanding shares of the Company (collectively, the “Purchased Shares”), free and clear of all Liens (other than potential restrictions on resale under applicable securities Laws).

 

1.2 Consideration. At the Closing, subject to and upon the terms and conditions of this Agreement, in full payment for the Purchased Shares, the Purchaser shall issue and deliver to the Sellers an aggregate number of Purchaser Ordinary Shares (the “Exchange Shares”) equal to (a) Four Hundred Twenty Five Million U.S. Dollars (US$425,000,000) (the “Company Equity Valuation”), divided by (b) the Redemption Price, subject to the withholding of the Escrow Shares deposited in the Escrow Account in accordance with Section 1.3. Each Seller shall receive its pro rata share of the Exchange Shares based on the percentage of Purchased Shares owned by such Seller as compared to the total number of Purchased Shares owned by all Sellers (such percentage being each such Seller’s “Pro Rata Share”). Notwithstanding anything to the contrary contained herein, no fraction of a Purchaser Ordinary Share will be issued by the Purchaser by virtue of this Agreement or the transactions contemplated hereby, and each Person who would otherwise be entitled to a fraction of a Purchaser Ordinary Share (after aggregating all fractional Purchaser Ordinary Shares that would otherwise be received by such Person) shall instead have the number of Purchaser Ordinary Shares issued to such Person rounded down in the aggregate to the nearest whole Purchaser Ordinary Share. Additionally, after the Closing, the Sellers shall have the contingent right to receive the Earnout Shares from the Purchaser subject to and in accordance with the provisions of Section 1.4 hereof.

 

1.3 Escrow.

 

(a) At or prior to the Closing, the Purchaser, the Purchaser Representative, the Seller Representative and the Escrow Agent shall enter into an Escrow Agreement, effective as of the Closing, in form and substance consistent with the provisions of this Agreement and otherwise reasonably acceptable to the Purchaser and the Company (the “Escrow Agreement”), pursuant to which the Purchaser shall cause to be delivered to the Escrow Agent at the Closing five percent (5%) of the Exchange Shares otherwise deliverable to the Sellers at the Closing (including any equity securities paid as dividends or distributions with respect to such shares or into which such shares are exchanged or converted, the “Escrow Shares”), with the Escrow Shares, along with any dividends, distributions and other earnings thereon and other Escrow Property, to be held by the Escrow Agent in a segregated escrow account (“Escrow Account”) and disbursed therefrom in accordance with the terms and conditions of this Agreement and the Escrow Agreement. The Escrow Shares and other Escrow Property shall serve as a source of security for the Sellers’ indemnification obligations after the Closing under Article VII. The portion of the Exchange Shares that shall be withheld at the Closing for deposit in the Escrow Account shall be allocated among the Sellers pro rata based on each Seller’s Pro Rata Share. Each Seller shall have the right to vote its portion of such Escrow Shares (based on its Pro Rata Share, subject to adjustment for any Escrow Shares that are forfeited or earned in a manner other than pro rata among all Sellers based on their Pro Rata Share, as indicated in writing by the Seller Representative to the Purchaser, the Purchaser Representative and the Escrow Agent) during the time held in the Escrow Account as Escrow Shares. 

 

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(b) The Escrow Property shall no longer be subject to any indemnification claim after the date which is twelve (12) months after the Closing Date (the “Expiration Date”); provided, however, with respect to any indemnification claims made in accordance with Article VII hereof on or prior to the Expiration Date (including those that are revised or adjusted in accordance with Article VII after the Expiration Date) that remain unresolved as of the end of the Expiration Date (“Pending Claims”), all or a portion of the Escrow Property reasonably necessary to satisfy such Pending Claims (as determined based on the amount of the indemnification claim included in the Claim Notice provided by the Purchaser Representative under Article VII and the Purchaser Share Price as of the Expiration Date) shall remain in the Escrow Account until such time as such Pending Claim shall have been finally resolved pursuant to the provisions of Article VII. After the Expiration Date, any Escrow Property remaining in the Escrow Account that is not subject to Pending Claims, if any, and not subject to resolved but unpaid claims in favor of an Indemnitee, shall be disbursed by the Escrow Agent to the Sellers, with each Seller receiving its Pro Rata Share (subject to adjustment for any Escrow Property that is forfeited or earned in a manner other than pro rata among all Sellers based on their Pro Rata Share, as indicated in writing by the Seller Representative to the Purchaser, the Purchaser Representative and the Escrow Agent) of such Escrow Property. Promptly after the final resolution of all Pending Claims and the payment of all indemnification obligations in connection therewith, the Escrow Agent shall disburse any Escrow Property remaining in the Escrow Account to the Sellers, with each Seller receiving its Pro Rata Share (subject to adjustment for any Escrow Property that is forfeited or earned in a manner other than pro rata among all Sellers based on their Pro Rata Share, as indicated in writing by the Seller Representative to the Purchaser, the Purchaser Representative and the Escrow Agent) of such Escrow Property.

 

1.4 Earnout.

 

(a) After the Closing, subject to the terms and conditions set forth herein, the Sellers shall have the contingent right to receive additional consideration from Purchaser based on the performance of Purchaser and its Subsidiaries, including the Company, for the fiscal year ended December 31, 2019 (the “2019 Earnout Year”) and the fiscal year ended December 31, 2020 (the “2020 Earnout Year” and each such fiscal year, an “Earnout Year” and such two-year fiscal period, the “Earnout Period”) if the requirements as set forth in this Section 1.4 are met. In the event that the Purchaser Adjusted Net Income for the 2019 Earnout Year is equal to or greater than One Hundred and Eighty Million Renminbi (RMB180,000,000) (the “2019 Earnout Target”), then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive from the Purchaser, as additional consideration for the purchase of the Purchased Shares, an additional Five Million (5,000,000) Purchaser Ordinary Shares (subject to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the Closing, including to account for any equity securities into which such shares are exchanged or converted) (the “2019 Earnout Shares”). In the event that the Purchaser Adjusted Net Income for the 2020 Earnout Year is equal to or greater than Three Hundred and Fifteen Million Renminbi (RMB315,000,000) (the “2020 Earnout Target” and together with the 2019 Earnout Target, the “Earnout Targets”), then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive from the Purchaser, as additional consideration for the purchase of the Purchased Shares, an additional Five Million (5,000,000) Purchaser Ordinary Shares (subject to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the Closing, including to account for any equity securities into which such shares are exchanged or converted) (the “2020 Earnout Shares”, and collectively with the 2019 Earnout Shares, the “Earnout Shares”)). In the event that an Earnout Target is not met for any Earnout Year, the Sellers shall not be entitled to receive any Earnout Shares for such Earnout Year; provided, that in the event that the aggregate Purchaser Adjusted Net Income for both Earnout Years combined is at least Four Hundred and Ninety Five Million Renminbi (RMB495,000,000) (the “Aggregate Earnout Target”), the Sellers shall be entitled to receive any Earnout Shares that they otherwise did not receive (the “Alternative Earnout”). For the avoidance of doubt, any determination of the Purchaser Adjusted Net Income that is not otherwise in Renminbi will be expressed in Renminbi by converting the applicable currency to Renminbi using the applicable exchange rate as of the last day of the applicable Earnout Year.

 

(b) As soon as practicable (but in any event within ten (10) Business Days) after Purchaser’s filing of the annual audited consolidated financial statements for Purchaser and its Subsidiaries with the SEC on Form 20-F or 10-K (or other equivalent SEC form) for each Earnout Year, the Purchaser’s Chief Financial Officer (the “CFO”) will prepare and deliver to the Purchaser Representative and the Seller Representative (each, a “Representative Party”) a written statement (each, an “Earnout Statement”) that sets forth the CFO’s determination in accordance with the terms of this Section 1.4 of (i) the Purchaser Adjusted Net Income for such Earnout Year based on such audited financial statements, (ii) for the 2020 Earnout Year only, the aggregate Purchaser Adjusted Net Income for both Earnout Years combined based on such audited financial statements and the finally determined Earnout Statement for the 2019 Earnout Year, and (iii) whether the Sellers are entitled to receive Earnout Shares for such Earnout Year as a result of achieving the applicable Earnout Target or, with respect to the 2020 Earnout Year only, the Aggregate Earnout Target. Each Representative Party will have thirty (30) days after its receipt of an Earnout Statement to review it. The Seller Representative and the Purchaser Representative, and their respective Representatives on their behalves, may make inquiries of the CFO and related Purchaser and Company personnel and advisors regarding questions concerning or disagreements with the Earnout Statement arising in the course of their review thereof, and the Purchaser and the Company shall provide reasonable cooperation in connection therewith. If either Representative Party has any objections to the Earnout Statement, such Representative Party shall deliver to the Company (to the attention of the CFO) and the other Representative Party a statement setting forth its objections thereto (in reasonable detail) (an “Objection Statement”). If an Objection Statement is not delivered by a Representative Party within thirty (30) days following the date of delivery of the Earnout Statement, then such Representative Party will have waived its right to contest the Earnout Statement, and all determinations and calculations set forth therein, and whether the Sellers have earned the Earnout Shares for such Earnout Year (or have otherwise achieved the Alternative Earnout). If an Objection Statement is delivered within such thirty (30) day period, then the Seller Representative and the Purchaser Representative shall negotiate in good faith to resolve any such objections for a period of twenty (20) days thereafter. If the Seller Representative and the Purchaser Representative do not reach a final resolution within such twenty (20) day period, then upon the written request of either Representative Party (the date of receipt of such notice by the other Representative Party, the “Independent Expert Notice Date”), the Representative Parties will refer the dispute to the Independent Expert for final resolution of the dispute in accordance with Section 1.4(c). The Parties acknowledge that any information provided pursuant to this Section 1.4 will be subject to the confidentiality obligations of Section 6.13.

 

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(c) If a dispute with respect to an Earnout Statement is submitted in accordance with this Section 1.4 to the Independent Expert for final resolution, the Parties will follow the procedures set forth in this Section 1.4(c). Each of the Seller Representative and the Purchaser Representative agrees to execute, if requested by the Independent Expert, a reasonable engagement letter with respect to the determination to be made by the Independent Expert. All fees and expenses of the Independent Expert will be borne by the Purchaser. Except as provided in the preceding sentence, all other costs and expenses incurred by the Seller Representative in connection with resolving any dispute hereunder before the Independent Expert will be borne by the Sellers, and all other costs and expenses incurred by the Purchaser Representative in connection with resolving any dispute hereunder before the Independent Expert will be borne by the Purchaser. The Independent Expert will determine only those issues still in dispute as of the Independent Expert Notice Date and the Independent Expert’s determination will be based solely upon and consistent with the terms and conditions of this Agreement. The determination by the Independent Expert will be based solely on presentations with respect to such disputed items by the Purchaser Representative and the Seller Representative to the Independent Expert and not on the Independent Expert’s independent review; provided, that such presentations will be deemed to include any work papers, records, accounts or similar materials delivered to the Independent Expert by a Representative Party in connection with such presentations and any materials delivered to the Independent Expert in response to requests by the Independent Expert. Each of the Seller Representative and the Purchaser Representative will use their reasonable efforts to make their respective presentations as promptly as practicable following submission to the Independent Expert of the disputed items, and each such Representative Party will be entitled, as part of its presentation, to respond to the presentation of the other Representative Party and any questions and requests of the Independent Expert. In deciding any matter, the Independent Expert will be bound by the provisions of this Agreement, including this Section 1.4. It is the intent of the parties hereto that the Independent Expert Procedure and the activities of the Independent Expert in connection herewith are not (and should not be considered to be or treated as) an arbitration proceeding or similar arbitral process and that no formal arbitration rules should be followed (including rules with respect to procedures and discovery). The Seller Representative and the Purchaser Representative will request that the Independent Expert’s determination be made within forty-five (45) days after its engagement, or as soon thereafter as possible, will be set forth in a written statement delivered to the Purchaser Representative and the Seller Representative and will be final, conclusive, non-appealable and binding for all purposes hereunder (other than for fraud or manifest error).

 

(d) If for any Earnout Year there is a final determination in accordance with Section 1.4(b) that the Sellers are entitled to receive Earnout Shares for such Earnout Year (or have otherwise achieved the Alternative Earnout), then such Earnout Shares will be due upon such final determination and Purchaser will deliver such shares within ten (10) Business Days thereafter (subject to this Section 1.4(e))). Notwithstanding anything to the contrary contained herein, any obligation of the Purchaser to issue Earnout Shares under this Section 1.4 will be subject to offset against the indemnification obligations of the Indemnitors under Article VII, and the number of Earnout Shares to be issued will be reduced by (up to a maximum equal to the total maximum number of Earnout Shares) (i) the number of Earnout Shares used to satisfy indemnification claims that have been made and resolved in accordance with Article VII hereof on or prior to the issuance date of such Earnout Shares that have not been satisfied or sufficiently reserved using the Escrow Property in accordance with Section 1.3 and Article VII and (ii) a number of Earnout Shares necessary to satisfy indemnification claims that have been made in accordance with Article VII hereof and that remain unresolved on or prior to the issuance date of such Earnout Shares that have not been sufficiently reserved using the Escrow Property in accordance with Section 1.3 and Article VII (with such Earnout Shares under this clause (ii) determined based on the amount of the indemnification claim included in the Claim Notice provided by the Purchaser Representative under Article VII and the Purchaser Share Price as of the date of issuance of the Earnout Shares). Promptly after the final resolution of all such pending indemnification claims, the remaining Earnout Shares that have been reserved for pending indemnification claims, if any, after using the Earnout Shares to satisfy the indemnification obligations for the pending indemnification claims that have been resolved, shall be issued by Purchaser to the Sellers, with each such Seller receiving its Pro Rata Share of such Earnout Shares.

 

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(e) Following the Closing (including during the Earnout Period), Purchaser and its Subsidiaries, including the Target Companies, will be entitled to operate their respective businesses based upon the business requirements of Purchaser and its Subsidiaries. Each of Purchaser and its Subsidiaries, including the Target Companies will be permitted, following the Closing (including during the Earnout Period), to make changes at its sole discretion to its operations, organization, personnel, accounting practices and other aspects of its business, including actions that may have an impact on the Purchaser Adjusted Net Income and the ability of the Sellers to earn the Earnout Shares, and the Sellers will not have any right to claim the loss of all or any portion of any Earnout Shares or other damages as a result of such decisions.

 

1.5 Company Shareholder Consent. Each Seller, as a shareholder of the Company, hereby approves, authorizes and consents to the Company’s execution and delivery of this Agreement and the Ancillary Documents to which it is or is required to be a party or otherwise bound, the performance by the Company of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby. Each Seller acknowledges and agrees that the consents set forth herein are intended and shall constitute such consent of the Sellers as may be required (and shall, if applicable, operate as a written shareholder resolution of the Company) pursuant to the Company’s Organizational Documents, any other agreement in respect of the Company to which any Seller is a party and all applicable Laws.

 

Article II
CLOSING

 

2.1 Closing. Subject to the satisfaction or waiver of the conditions set forth in Article VIII, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Ellenoff Grossman & Schole, LLP (“EGS”), 1345 Avenue of the Americas, 11th Floor, New York, NY 10105, on the second (2nd) Business Day after all the Closing conditions to this Agreement have been satisfied or waived at 10:00 a.m. local time, or at such other date, time or place as the Purchaser and the Company may agree (the date and time at which the Closing is actually held being the “Closing Date”).

 

2.2 Termination of Certain Agreements. Without limiting the provisions of Section 10.2, the Company and the Sellers hereby agree that, effective at the Closing, any agreement containing pre-emptive and special rights conferred to shareholders, or shareholders, voting or similar agreement among the Company and any of the Sellers or among the Sellers with respect to the Company’s capital shares shall automatically, and without any further action by any of the Parties, terminate in full and become null and void and of no further force and effect. Further, each Seller and the Company hereby waive any obligations of the parties under any of the foregoing agreements or the Company’s Organizational Documents with respect to the transactions contemplated by this Agreement and the Ancillary Documents, and any failure of the parties to comply with the terms thereof in connection with the transactions contemplated by this Agreement and the Ancillary Documents.

 

2.3 Taking of Necessary Action; Further Action. If, at any time after the Closing, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Purchaser with full right, title and interest in, to and under, and/or possession of, all assets, property, rights, privileges, powers and franchises of the Company or any of its Subsidiaries, the officers and directors of the Purchaser are fully authorized in the name and on behalf of the Company or any of its Subsidiaries, to take all lawful action necessary or desirable to accomplish such purpose or acts, so long as such action is not inconsistent with this Agreement.

 

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Article III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

 

Except as set forth in (i) the disclosure schedules delivered by the Purchaser to the Company on the date hereof (the “Purchaser Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, or (ii) the SEC Reports that are available on the SEC’s website through EDGAR, the Purchaser represents and warrants to the Company, as of the date hereof and as of the Closing as follows:

 

3.1 Organization and Standing. The Purchaser is an exempted company duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands. The Purchaser has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Purchaser is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property owned, leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary, except where the failure to be so qualified or licensed or in good standing can be cured without material cost or expense. The Purchaser has heretofore made available to the Company accurate and complete copies of the Organizational Documents of the Purchaser, as currently in effect. The Purchaser is not in violation of any provision of its Organizational Documents in any material respect.

 

3.2 Authorization; Binding Agreement. The Purchaser has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform the Purchaser’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby, subject to obtaining the Required Shareholder Vote. The execution and delivery by the Purchaser of this Agreement and each Ancillary Document to which it is a party and the consummation of the transactions contemplated hereby and thereby (a) have been duly and validly authorized by the board of directors of the Purchaser, and (b) no other corporate proceedings, other than as set forth elsewhere in the Agreement (including the Required Shareholder Vote), on the part of the Purchaser are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which the Purchaser is a party shall be when delivered, duly and validly executed and delivered by the Purchaser and, assuming the due authorization, execution and delivery of this Agreement and such Ancillary Documents by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the valid and binding obligation of the Purchaser, enforceable against the Purchaser in accordance with its terms, except to the extent that enforceability thereof may be limited by applicable bankruptcy, insolvency, reorganization and moratorium laws and other laws of general application affecting the enforcement of creditors’ rights generally or by any applicable statute of limitation or by any valid defense of set-off or counterclaim, and the fact that equitable remedies or relief (including the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought (collectively, the “Enforceability Exceptions”).

 

3.3 Governmental Approvals. Except as otherwise described in Schedule 3.3, no Consent of or with any Governmental Authority, on the part of the Purchaser is required to be obtained or made in connection with the execution, delivery or performance by the Purchaser of this Agreement and each Ancillary Document to which it is a party or the consummation by the Purchaser of the transactions contemplated hereby and thereby, other than (a) pursuant to Antitrust Laws, (b) such filings as contemplated by this Agreement, (c) any filings required with Nasdaq or the SEC with respect to the transactions contemplated by this Agreement, (d) applicable requirements, if any, of the Securities Act, the Exchange Act, and/ or any state “blue sky” securities Laws, and the rules and regulations thereunder, and (e) where the failure to obtain or make such Consents or to make such filings or notifications, would not reasonably be expected to have a Material Adverse Effect on the Purchaser.

 

3.4 Non-Contravention. Except as otherwise described in Schedule 3.4, the execution and delivery by the Purchaser of this Agreement and each Ancillary Document to which it is a party, the consummation by the Purchaser of the transactions contemplated hereby and thereby, and compliance by the Purchaser with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of the Purchaser’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 3.3 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to the Purchaser or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by the Purchaser under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of the Purchaser under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any Purchaser Material Contract, except for any deviations from any of the foregoing clauses (a), (b) or (c) that would not reasonably be expected to have a Material Adverse Effect on the Purchaser.

 

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3.5 Capitalization.

 

(a) The Purchaser is authorized to issue 200,000,000 Purchaser Ordinary Shares and 2,000,000 preference shares, par value $0.0001 per share. The issued and outstanding Purchaser Securities as of the date of this Agreement are set forth on Schedule 3.5(a). All outstanding Purchaser Ordinary Shares are duly authorized, validly issued, fully paid and non-assessable and not subject to or issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of the Cayman Islands Act, the Purchaser Charter or any Contract to which the Purchaser is a party. None of the outstanding Purchaser Securities has been issued in violation of any applicable securities Laws. Prior to giving effect to the transactions contemplated by this Agreement, the Purchaser does not have any Subsidiaries or own any equity interests in any other Person.

 

(b) Except as set forth in Schedule 3.5(a) or Schedule 3.5(b), there are no (i) outstanding options, warrants, puts, calls, convertible securities, preemptive or similar rights, (ii) bonds, debentures, notes or other Indebtedness having general voting rights or that are convertible or exchangeable into securities having such rights or (iii) subscriptions or other rights, agreements, arrangements, Contracts or commitments of any character (other than this Agreement and the Ancillary Documents), (A) relating to the issued or unissued shares of the Purchaser or (B) obligating the Purchaser to issue, transfer, deliver or sell or cause to be issued, transferred, delivered, sold or repurchased any options or shares or securities convertible into or exchangeable for such shares, or (C) obligating the Purchaser to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment for such capital shares. Other than the Closing Redemption or any redemption or conversion of Purchaser Ordinary Shares in connection with an Extension, if any (each, a “Redemption”), or as expressly set forth in this Agreement, there are no outstanding obligations of the Purchaser to repurchase, redeem or otherwise acquire any shares of the Purchaser or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in any Person. Except as set forth in Schedule 3.5(b), there are no shareholders agreements, voting trusts or other agreements or understandings to which the Purchaser is a party with respect to the voting of any shares of the Purchaser.

 

(c) All Indebtedness of the Purchaser as of the date of this Agreement is disclosed on Schedule 3.5(c). No Indebtedness of the Purchaser contains any restriction upon: (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by the Purchaser or (iii) the ability of the Purchaser to grant any Lien on its properties or assets.

 

(d) Since the date of formation of the Purchaser, and except as contemplated by this Agreement, including any Redemption, the Purchaser has not declared or paid any distribution or dividend in respect of its shares and has not repurchased, redeemed or otherwise acquired any of its shares, and the Purchaser’s board of directors has not authorized any of the foregoing.

 

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3.6 SEC Filings and Purchaser Financials.

 

(a) The Purchaser, since the IPO, has filed all forms, reports, schedules, statements, registration statements, prospectuses and other documents required to be filed or furnished by the Purchaser with the SEC under the Securities Act and/or the Exchange Act, together with any amendments, restatements or supplements thereto, and will file all such forms, reports, schedules, statements and other documents required to be filed subsequent to the date of this Agreement. Except to the extent available on the SEC’s web site through EDGAR, the Purchaser has made available to the Company copies in the form filed with the SEC of all of the following: (i) the Purchaser’s Annual Reports on Form 10-K for each fiscal year of the Purchaser beginning with the first year the Purchaser was required to file such a form, (ii) the Purchaser’s Quarterly Reports on Form 10-Q for each fiscal quarter that the Purchaser filed such reports to disclose its quarterly financial results in each of the fiscal years of the Purchaser referred to in clause (i) above, (iii) all other forms, reports, registration statements, prospectuses and other documents (other than preliminary materials) filed by the Purchaser with the SEC since the beginning of the first fiscal year referred to in clause (i) above (the forms, reports, registration statements, prospectuses and other documents referred to in clauses (i), (ii) and (iii) above, whether or not available through EDGAR, are, collectively, the “SEC Reports”) and (iv) all certifications and statements required by (A) Rules 13a-14 or 15d-14 under the Exchange Act, and (B) 18 U.S.C. §1350 (Section 906 of the Sarbanes-Oxley Act of 2002, as amended) with respect to any report referred to in clause (i) above. The SEC Reports (x) were prepared in all material respects in accordance with the requirements of the Securities Act and the Exchange Act, as the case may be, and the rules and regulations thereunder and (y) did not, as of their respective effective dates (in the case of SEC Reports that are registration statements filed pursuant to the requirements of the Securities Act) and at the time they were filed with the SEC (in the case of all other SEC Reports) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. The certifications and statements referenced in clause (iv) above are each true as of their respective dates of filing. As used in this Section 3.6, the term “file” shall be broadly construed to include any manner permitted by SEC rules and regulations in which a document or information is furnished, supplied or otherwise made available to the SEC. As of the date of this Agreement, (A) the Purchaser Public Units, the Purchaser Ordinary Shares, the Purchaser Public Warrants and the Purchaser Public Rights are listed on Nasdaq, (B) the Purchaser has not received any written deficiency notice from Nasdaq relating to the continued listing requirements of such Purchaser Securities and (C) there are no Actions pending or, to the Knowledge of the Purchaser, threatened against the Purchaser by the Financial Industry Regulatory Authority with respect to any intention by such entity to suspend, prohibit or terminate the quoting of such Purchaser Securities on Nasdaq.

 

(b) The financial statements and notes of the Purchaser contained or incorporated by reference in the SEC Reports (the “Purchaser Financials”), fairly present in all material respects the financial position and the results of operations, changes in shareholders’ equity, and cash flows of the Purchaser at the respective dates of and for the periods referred to in such financial statements, all in accordance with (i) GAAP methodologies applied on a consistent basis throughout the periods involved and (ii) Regulation S-X or Regulation S-K, as applicable (except as may be indicated in the notes thereto and for the omission of notes and audit adjustments in the case of unaudited quarterly financial statements to the extent permitted by Regulation S-X or Regulation S-K, as applicable).

 

(c) Except as and to the extent reflected or reserved against in the Purchaser Financials, the Purchaser has not incurred any Liabilities or obligations of the type required to be reflected on a balance sheet in accordance with GAAP that is not adequately reflected or reserved on or provided for in the Purchaser Financials, other than Liabilities of the type required to be reflected on a balance sheet in accordance with GAAP that have been incurred since the Purchaser’s formation in the ordinary course of business.

 

3.7 Absence of Certain Changes. As of the date of this Agreement, except as set forth in Schedule 3.7, the Purchaser has, (a) since its formation, conducted no business other than its formation, the public offering of its securities (and the related private offerings), public reporting and its search for an initial Business Combination as described in the IPO Prospectus (including the investigation of the Target Companies and the negotiation and execution of this Agreement) and related activities and (b) since January 1, 2019, not been subject to a Material Adverse Effect.

 

3.8 Compliance with Laws. The Purchaser is, and has since its formation been, in compliance with all Laws applicable to it and the conduct of its business except for such noncompliance which would not reasonably be expected to have a Material Adverse Effect on the Purchaser, and the Purchaser has not received written notice alleging any violation of applicable Law in any material respect by the Purchaser.

 

3.9 Actions; Orders; Permits. There is no pending or, to the Knowledge of the Purchaser, threatened Action to which the Purchaser is subject which would reasonably be expected to have a Material Adverse Effect on the Purchaser. There is no material Action that the Purchaser has pending against any other Person. The Purchaser is not subject to any material Orders of any Governmental Authority, nor are any such Orders pending. The Purchaser holds all Permits necessary to lawfully conduct its business as presently conducted, and to own, lease and operate its assets and properties, all of which are in full force and effect, except where the failure to hold such Permit or for such Permit to be in full force and effect would not reasonably be expected to have a Material Adverse Effect on the Purchaser.

 

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3.10 Taxes and Returns.

 

(a) The Purchaser has or will have timely filed, or caused to be timely filed, all material Tax Returns required to be filed by it, which such Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all material Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP. Schedule 3.10(a) sets forth each jurisdiction where the Purchaser files or is required to file a Tax Return. There are no audits, examinations, investigations or other proceedings pending against the Purchaser in respect of any Tax, and the Purchaser has not been notified in writing of any proposed Tax claims or assessments against the Purchaser (other than, in each case, claims or assessments for which adequate reserves in the Purchaser Financials have been established in accordance with GAAP or are immaterial in amount). There are no Liens with respect to any Taxes upon any of the Purchaser’s assets, other than Permitted Liens. The Purchaser has no outstanding waivers or extensions of any applicable statute of limitations to assess any material amount of Taxes. There are no outstanding requests by the Purchaser for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.

 

(b) Since the date of its formation, the Purchaser has not (i) changed any Tax accounting methods, policies or procedures except as required by a change in Law, (ii) made, revoked, or amended any material Tax election, (iii) filed any amended Tax Returns or claim for refund or (iv) entered into any closing agreement affecting or otherwise settled or compromised any material Tax Liability or refund.

 

3.11 Employees and Employee Benefit Plans. The Purchaser does not (a) have any paid employees or (b) maintain, sponsor, contribute to or otherwise have any Liability under, any Benefit Plans.

 

3.12 Properties. The Purchaser does not own, license or otherwise have any right, title or interest in any material Intellectual Property. The Purchaser does not own or lease any material real property or Personal Property.

 

3.13 Material Contracts.

 

(a) Except as set forth on Schedule 3.13(a), other than this Agreement and the Ancillary Documents, there are no Contracts to which the Purchaser is a party or by which any of its properties or assets may be bound, subject or affected, which (i) creates or imposes a Liability greater than $100,000, (ii) may not be cancelled by the Purchaser on less than sixty (60) days’ prior notice without payment of a material penalty or termination fee or (iii) prohibits, prevents, restricts or impairs in any material respect any business practice of the Purchaser as its business is currently conducted, any acquisition of material property by the Purchaser, or restricts in any material respect the ability of the Purchaser from engaging in business as currently conducted by it or from competing with any other Person (each, a “Purchaser Material Contract”). All Purchaser Material Contracts have been made available to the Company other than those that are exhibits to the SEC Reports.

 

(b) With respect to each Purchaser Material Contract: (i) the Purchaser Material Contract was entered into at arms’ length and in the ordinary course of business; (ii) the Purchaser Material Contract is legal, valid, binding and enforceable in all material respects against the Purchaser and, to the Knowledge of the Purchaser, the other parties thereto, and is in full force and effect (except, in each case, as such enforcement may be limited by the Enforceability Exceptions); (iii) the Purchaser is not in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default in any material respect by the Purchaser, or permit termination or acceleration by the other party, under such Purchaser Material Contract; and (iv) to the Knowledge of the Purchaser, no other party to any Purchaser Material Contract is in breach or default in any material respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by the Purchaser under any Purchaser Material Contract.

 

3.14 Transactions with Affiliates. Schedule 3.14 sets forth a true, correct and complete list of the Contracts and arrangements that are in existence as of the date of this Agreement under which there are any existing or future Liabilities or obligations between the Purchaser and any (a) present or former director, officer or employee or Affiliate of the Purchaser, or any immediate family member of any of the foregoing, or (b) record or beneficial owner of more than five percent (5%) of the outstanding Purchaser Ordinary Shares as of the date hereof.

 

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3.15 Investment Company Act. The Purchaser is not an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.

 

3.16 Finders and Brokers. Except as set forth on Schedule 3.16, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission from the Purchaser, the Target Companies or any of their respective Affiliates in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of the Purchaser.

 

3.17 Ownership of Exchange Shares. All Exchange Shares to be issued and delivered in accordance with Article I to the Sellers and the Escrow Agent shall be, upon issuance and delivery of such Exchange Shares, fully paid and non-assessable, free and clear of all Liens, other than restrictions arising from applicable securities Laws, the Lock-Up Agreements (if applicable), the Registration Rights Agreement, the Escrow Agreement, the forfeiture provisions of this Agreement and any Liens incurred by a Seller, and the issuance and sale of such Exchange Shares pursuant hereto will not be subject to or give rise to any preemptive rights or rights of first refusal.

 

3.18 Certain Business Practices.

 

(a) Neither the Purchaser, nor any of its Representatives acting on its behalf, has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 or any other local or foreign anti-corruption or bribery Law, (iii) made any other unlawful payment or (iv) since the formation of the Purchaser, directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder the Purchaser or assist it in connection with any actual or proposed transaction.

 

(b) The operations of the Purchaser are and have been conducted at all times in compliance with money laundering statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving the Purchaser with respect to the any of the foregoing is pending or, to the Knowledge of the Purchaser, threatened.

 

3.19 Insurance. Schedule 3.19 lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by the Purchaser relating to the Purchaser or its business, properties, assets, directors, officers and employees, copies of which have been provided to the Company. All premiums due and payable under all such insurance policies have been timely paid and the Purchaser is otherwise in material compliance with the terms of such insurance policies. All such insurance policies are in full force and effect, and to the Knowledge of the Purchaser, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies. There have been no insurance claims made by the Purchaser. The Purchaser has each reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to have a Material Adverse Effect on the Purchaser.

 

3.20 Independent Investigation. The Company has provided to the Purchaser access to its personnel, properties, assets, premises, books and records, and other documents and data of the Target Companies for purpose of enabling the Purchaser to conduct its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Target Companies. Without limiting Section 7.3(d) hereof, the Purchaser acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied upon the express representations and warranties of the Company Parties the Sellers set forth in this Agreement (including the related portions of the Company Disclosure Schedules) and in any certificate delivered to Purchaser pursuant hereto; and (b) none of the Company Parties, the Sellers or their respective Representatives have made any representation or warranty as to the Target Companies, the Sellers or this Agreement, except as expressly set forth this Agreement (including the related portions of the Company Disclosure Schedules) or in any certificate delivered to Purchaser pursuant hereto.

 

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Article IV
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY PARTIES

 

Except as set forth in the disclosure schedules delivered by the Company to the Purchaser on the date hereof (the “Company Disclosure Schedules”), the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, the Company Parties and the Sellers, jointly and severally, hereby represent and warrant to the Purchaser, as of the date hereof and as of the Closing, as follows:

 

4.1 Organization and Standing. The Company is a business company duly incorporated, validly existing and in good standing under the Laws of the Cayman Islands and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary of the Company (including, but not limited to the VIEs and their Subsidiaries) is a corporation or other entity duly formed, validly existing and in good standing under the Laws of its jurisdiction of organization and has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each Target Company is duly qualified or licensed and in good standing in the jurisdiction in which it is incorporated or registered and in each other jurisdiction where it does business or operates to the extent that the character of the property owned, or leased or operated by it or the nature of the business conducted by it makes such qualification or licensing necessary. Schedule 4.1 lists all jurisdictions in which any Target Company is qualified to conduct business and all names other than its legal name under which any Target Company does business. The Company has provided to the Purchaser accurate and complete copies of its Organizational Documents and the Organizational Documents of each of the other Target Companies, each as amended to date and as currently in effect. No Target Company is in violation of any provision of its Organizational Documents.

 

4.2 Authorization; Binding Agreement. Each Company Party has all requisite corporate power and authority to execute and deliver this Agreement and each Ancillary Document to which it is or is required to be a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and each Ancillary Document to which a Company Party is or is required to be a party and the consummation of the transactions contemplated hereby and thereby, (a) have been duly and validly authorized by such Company Party’s board of directors and shareholders to the extent required by the Company’s Organizational Documents, the Cayman Islands Act and any other applicable Law or any Contract to which a Company Party or any of its shareholders is a party or by which it or its securities are bound and (b) no other corporate proceedings on the part of a Company Party are necessary to authorize the execution and delivery of this Agreement and each Ancillary Document to which it is a party or to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which a Company Party is or is required to be a party shall be when delivered, duly and validly executed and delivered by such Company Party and assuming the due authorization, execution and delivery of this Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of such Company Party, enforceable against such Company Party in accordance with its terms, subject to the Enforceability Exceptions.

 

4.3 Capitalization.

 

(a) The Company is authorized to issue 5,000,000 Company Ordinary Shares, of which 2,000,000 Company Ordinary Shares are issued and outstanding. No Company Ordinary Shares are held in its treasury. All of the issued and outstanding Company Ordinary Shares have been duly authorized and validly issued, are fully paid and non-assessable and have not been issued in violation of any purchase option, right of first refusal, preemptive right, subscription right or any similar right under any provision of Cayman Islands Act, any other applicable Law, the Company Charter or any Contract to which the Company is a party or by which it or its securities are bound. All of the issued and outstanding Company Ordinary Shares are owned of record and beneficially by the Persons set forth on Schedule 4.3(a), all of which Company Ordinary Shares are owned free and clear of any Liens other than those imposed under the Company Charter or applicable securities Laws. The Purchased Shares to be delivered by the Sellers to the Purchaser at the Closing constitute all of the issued and outstanding shares and other equity interests in or of the Company. No other class of shares or equity securities of the Company is authorized or outstanding will be outstanding immediately after the Closing. None of the outstanding shares or other equity interests in or of the Company were issued in violation of any applicable securities Laws.

 

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(b) There are no options, warrants or other rights to subscribe for or purchase any shares or other equity interests in or of the Company or securities convertible into or exchangeable for, or that otherwise confer on the holder any right to acquire any shares or other equity interests in or of the Company, or preemptive rights or rights of first refusal or first offer, nor are there any Contracts, commitments, arrangements or restrictions to which the Company or, to the Knowledge of the Company, any of its shareholders are a party or bound relating to any equity securities of the Company, whether or not outstanding. There are no outstanding or authorized equity appreciation, phantom equity or similar rights with respect to the Company. There are no voting trusts, proxies, shareholder agreements or any other agreements or understandings with respect to the voting of the Company’s shares or other equity interests. Except as set forth in the Company Charter, there are no outstanding contractual obligations of the Company to repurchase, redeem or otherwise acquire any shares or other equity interests or securities in or of the Company, nor has the Company granted any registration rights to any Person with respect to the Company’s shares or other equity securities. All of the Company’s securities have been granted, offered, sold and issued in compliance with all applicable securities Laws. As a result of the consummation of the transactions contemplated by this Agreement, no shares or other equity interests in or of the Company are issuable and no rights in connection with any interests, warrants, rights, options or other securities of the Company accelerate or otherwise become triggered (whether as to vesting, exercisability, convertibility or otherwise).

 

(c) Except as disclosed in the Company Financials or as set forth on Schedule 4.3(c), since January 1, 2017, the Company has not declared or paid any distribution or dividend in respect of its shares or other equity interests and has not repurchased, redeemed or otherwise acquired any shares or other equity interests in or of the Company, and the Company’s board of directors has not authorized any of the foregoing.

 

4.4 Subsidiaries.

 

(a) Schedule 4.4(a) sets forth the name of each Subsidiary of the Company, and with respect to each Subsidiary (a) its jurisdiction of organization, (b) its authorized shares or other equity interests (if applicable), and (c) the number of issued and outstanding equity interests and the record holders and beneficial owners thereof. All of the outstanding equity securities of each Subsidiary of the Company are duly authorized and validly issued, fully paid and non-assessable (if applicable), and were offered, sold and delivered in compliance with all applicable securities Laws, and owned by the Company or one of its Subsidiaries free and clear of all Liens (other than those, if any, imposed by such Subsidiary’s Organizational Documents). There are no Contracts to which the Company or any of its Affiliates is a party or bound with respect to the voting (including voting trusts or proxies) of the shares or other equity interests in or of any Subsidiary of the Company other than the Organizational Documents of any such Subsidiary. Except as set forth on Schedule 4.4(a), there are no outstanding or authorized options, warrants, rights, agreements, subscriptions, convertible securities or commitments to which any Subsidiary of the Company is a party or which are binding upon any Subsidiary of the Company providing for the issuance or redemption of any shares or other equity interests in or of any Subsidiary of the Company. There are no outstanding equity appreciation, phantom equity, profit participation or similar rights granted by any Subsidiary of the Company. Except as set forth on Schedule 4.4(a), no Subsidiary of the Company has any limitation, whether by Contract, Order or applicable Law, on its ability to make any distributions or dividends to its equity holders or pay any debt owed to another Target Company. Except for the equity interests of the Subsidiaries listed on Schedule 4.4(a), the Company does not own or have any rights to acquire, directly or indirectly, any shares or other equity interests in or of, or otherwise Control, any Person. No Target Company is a participant in any joint venture, partnership or similar arrangement. There are no outstanding contractual obligations of any Target Company to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any other Person.

 

(b) Glory Star HK is a wholly-owned Subsidiary of the Company, and is the legal and beneficial owner of one hundred percent (100%) of the issued and outstanding equity interests of the WFOE. Except for the pledge of the shares of the VIE Shareholders to be made to the VIEs pursuant to the VIE Contracts, there are no outstanding options, warrants, rights (including conversion rights, preemptive rights, rights of first refusal or similar rights) or agreements to purchase or acquire any equity interest, or any securities convertible into or exchangeable for an equity interest, of any VIE. Pursuant to the VIE Contracts, upon the execution thereof, substantially all of the profits of the VIEs are paid to the WFOE and the VIEs are contractually controlled by the WFOE.

 

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(c) The capital and organizational structure of each Target Company organized or registered in the PRC (each, a “PRC Target Company”) are valid and in full compliance with the applicable PRC Laws. Except as set forth on Schedule 4.4(c), the registered capital of each PRC Target Company has been fully paid up in accordance with the schedule of payment stipulated in its articles of association, approval documents, certificates of approval and legal person business license (collectively, the “PRC Establishment Documents”) and in compliance with applicable PRC Laws, and there is no outstanding capital contribution commitment. The Establishment Documents of each PRC Target Company has been duly approved and filed in accordance with the laws of the PRC and are valid and enforceable. The business scope specified in the PRC Establishment Documents of the PRC Target Companies complies in all material respects with the requirements of all applicable PRC Laws, and the operation and conduct of business by, and the term of operation of the PRC Target Companies in accordance with the PRC Establishment Documents is in compliance in all material respects with applicable PRC Laws.

 

4.5 Governmental Approvals. Except as otherwise described in Schedule 4.5, no Consent of or with any Governmental Authority on the part of any Target Company is required to be obtained or made in connection with the execution, delivery or performance by the Company of this Agreement or any Ancillary Documents or the consummation by the Company of the transactions contemplated hereby or thereby other than (a) such filings as expressly contemplated by this Agreement and (b) pursuant to Antitrust Laws in the PRC.

 

4.6 Non-Contravention. Except as otherwise described in Schedule 4.6, the execution and delivery by the Company (or any other Target Company, as applicable) of this Agreement and each Ancillary Document to which any Target Company is or is required to be a party or otherwise bound, and the consummation by any Target Company of the transactions contemplated hereby and thereby and compliance by any Target Company with any of the provisions hereof and thereof, will not (a) conflict with or violate any provision of any Target Company’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 4.5 hereof, the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to any Target Company or any of its properties or assets, or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by any Target Company under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of any Target Company under, (viii) give rise to any obligation to obtain any third party Consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any Company Material Contract.

 

4.7 Financial Statements.

 

(a) As used herein, the term “Company Financials” means (i) the final unsigned audited consolidated financial statements of the Target Companies (including, in each case, any related notes thereto), subject to auditor’s final review, consisting of the consolidated balance sheets of the Target Companies as of December 31, 2018 and December 31, 2017, and the related consolidated audited income statements, changes in shareholder equity and statements of cash flows for the years then ended, each audited in accordance with PCAOB auditing standards by a PCAOB qualified auditor (the “Draft Audited Financial Statements”), (ii) when delivered by the Company, the final audited consolidated financial statements of the Target Companies (including, in each case, any related notes thereto), consisting of the consolidated balance sheets of the Target Companies as of December 31, 2018 and December 31, 2017, and the related consolidated audited income statements, changes in shareholder equity and statements of cash flows for the years then ended, each audited in accordance with PCAOB auditing standards by a PCAOB qualified auditor (the “Final Audited Financial Statements”), (iii) the Company prepared financial statements of the Target Companies, consisting of the consolidated balance sheet of the Target Companies as of June 30, 2019 (the “Interim Balance Sheet Date”) and the related consolidated income statement, changes in shareholder equity and statement of cash flows for the six (6) months then ended, and (iv) the unaudited consolidated financial statements of the Target Companies, consisting of the consolidated balance sheet of the Target Companies as of July 31, 2019, and the related unaudited consolidated income statement for the seven (7) months then ended (the financial statements described in clauses (iii) and (iv), the “Management Reports”). True and correct copies of the Company Financials have been provided to the Purchaser. The Company Financials (i) accurately reflect the books and records of the Target Companies as of the times and for the periods referred to therein, (ii) except for the Management Reports, were prepared in accordance with GAAP, consistently applied throughout and among the periods involved (except that the unaudited statements exclude the footnote disclosures and other presentation items required for GAAP and exclude year-end adjustments which will not be material in amount), (iii) except for the Management Reports, comply with all applicable accounting requirements under the Securities Act and the rules and regulations of the SEC thereunder, and (iv) fairly present in all material respects the consolidated financial position of the Target Companies as of the respective dates thereof and the consolidated results of the operations and cash flows of the Target Companies for the periods indicated.

 

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(b) Each Target Company maintains accurate books and records reflecting its assets and Liabilities and maintains proper and adequate internal accounting controls that provide reasonable assurance that (i) such Target Company does not maintain any off-the-book accounts and that such Target Company’s assets are used only in accordance with such Target Company’s management directives, (ii) transactions are executed with management’s authorization, (iii) transactions are recorded as necessary to permit preparation of the financial statements of such Target Company and to maintain accountability for such Target Company’s assets, (iv) access to such Target Company’s assets is permitted only in accordance with management’s authorization, (v) the reporting of such Target Company’s assets is compared with existing assets at regular intervals and verified for actual amounts and (vi) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection of accounts, notes and other receivables on a current and timely basis. No Target Company has been subject to or involved in any material fraud that involves management or other employees who have a significant role in the internal controls over financial reporting of any Target Company. Since January 1, 2016, no Target Company or its Representatives has received any written complaint, allegation, assertion or claim regarding the accounting or auditing practices, procedures, methodologies or methods of any Target Company or its internal accounting controls, including any material written complaint, allegation, assertion or claim that any Target Company has engaged in questionable accounting or auditing practices.

 

(c) No Target Company has ever been subject to the reporting requirements of Sections 13(a) and 15(d) of the Exchange Act.

 

(d) The Target Companies do not have any Indebtedness other than the Indebtedness set forth on Schedule 4.7(d), and in such amounts (including principal and any accrued but unpaid interest or other obligations with respect to such Indebtedness), as set forth on Schedule 4.7(d). Except as disclosed on Schedule 4.7(d), no Indebtedness of any Target Company contains any restriction upon (i) the prepayment of any of such Indebtedness, (ii) the incurrence of Indebtedness by any Target Company, or (iii) the ability of the Target Companies to grant any Lien on their respective properties or assets.

 

(e) Except as set forth on Schedule 4.7(e), no Target Company is subject to any Liabilities or obligations (whether or not required to be reflected on a balance sheet prepared in accordance with GAAP), except for those that are either (i) adequately reflected or reserved on or provided for in the consolidated balance sheet of the Company and its Subsidiaries as of the Interim Balance Sheet Date contained in the Company Financials or (ii) not material and that were incurred after the Interim Balance Sheet Date in the ordinary course of business consistent with past practice (other than Liabilities for breach of any Contract or violation of any Law).

 

(f) All financial projections with respect to the Target Companies that were delivered by or on behalf of the Company to the Purchaser or its Representatives were prepared in good faith using assumptions that the Company believes to be reasonable.

 

4.8 Absence of Certain Changes. Except as set forth on Schedule 4.8, or for actions expressly contemplated by this Agreement, since January 1, 2019, each Target Company has (a) conducted its business only in the ordinary course of business consistent with past practice, (b) not been subject to a Material Adverse Effect and (c) has not taken any action or committed or agreed to take any action that would be prohibited by Section 6.2(b) (without giving effect to Schedule 6.2) if such action were taken on or after the date hereof without the consent of the Purchaser.

 

4.9 Compliance with Laws. Except as set forth on Schedule 4.9, no Target Company is or has been in material conflict or non-compliance with, or in material default or violation of, nor has any Target Company received, since January 1, 2014, any written or, to the Knowledge of the Company, oral notice of any material conflict or non-compliance with, or material default or violation of, any applicable Laws by which it or any of its properties, assets, employees, business or operations are or were bound or affected.

 

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4.10 Company Permits. Each Target Company (and its employees who are legally required to be licensed by a Governmental Authority in order to perform his or her duties with respect to his or her employment with any Target Company), holds all Permits necessary to lawfully conduct in all material respects its business as presently conducted and as currently contemplated to be conducted, and to own, lease and operate its assets and properties, including relevant value-added telecommunication service permits, broadcast and television program production permit, internet cultural operation permits, food business permit and online food distribution third-party platform registration (collectively, the “Company Permits”). The Company has made available to the Purchaser true, correct and complete copies of all material Company Permits, all of which material Company Permits are listed on Schedule 4.10. All of the Company Permits are in full force and effect, and no suspension or cancellation of any of the Company Permits is pending or, to the Company’s Knowledge, threatened. No Target Company is in violation in any material respect of the terms of any Company Permit, and no Target Company has received any written or, to the Knowledge of the Company, oral notice of any Actions relating to the revocation or modification of any Company Permit. All filings and registrations with PRC Governmental Authorities required in respect of each of the PRC Target Companies and its operations, including the registrations with the Ministry of Commerce, the State Administration of Press, Publication, Radio, Film and Television, the Ministry of Culture and Tourism, the State Administration for Market Regulation, the Ministry of Industry and Information Technology, the China Food and Drug Administration, the State Administration for Foreign Exchange, tax bureau, customs authorities, product registration authorities and health regulatory authorities, as applicable, have been duly completed in accordance with applicable PRC Law.

 

4.11 Litigation. Except as described on Schedule 4.11, there is no (a) Action of any nature pending or, to the Company’s Knowledge, threatened, nor is there any reasonable basis for any Action to be made (and no such Action has been brought or, to the Company’s Knowledge, threatened since January 1, 2014), or (b) Order now pending or outstanding or that was rendered by a Governmental Authority since January 1, 2014, in either case of (a) or (b) by or against any Target Company, its current or former directors, officers or equity holders (provided, that any litigation involving the directors, officers or equity holders of a Target Company must be related to the Target Company’s business, equity securities or assets), its business, equity securities or assets. The items listed on Schedule 4.11, if finally determined adverse to the Target Companies, will not have, either individually or in the aggregate, a Material Adverse Effect upon any Target Company. Since January 1, 2014, none of the current or former officers, senior management or directors of any Target Company have been charged with, indicted for, arrested for, or convicted of any felony or any crime involving fraud.

 

4.12 Material Contracts.

 

(a) Schedule 4.12(a) sets forth a true, correct and complete list of, and the Company has made available to the Purchaser (including written summaries of oral Contracts), true, correct and complete copies of, each Contract to which any Target Company is a party or by which any Target Company, or any of its properties or assets are bound or affected (each Contract required to be set forth on Schedule 4.12(a), a “Company Material Contract”) that:

 

(i) contains covenants that limit the ability of any Target Company (A) to compete in any line of business or with any Person or in any geographic area or to sell, or provide any service or product or solicit any Person, including any non-competition covenants, employee and customer non-solicit covenants, exclusivity restrictions, rights of first refusal or most-favored pricing clauses or (B) to purchase or acquire an interest in any other Person;

 

(ii) involves any joint venture, profit-sharing, partnership, limited liability company or other similar agreement or arrangement relating to the formation, creation, operation, management or control of any partnership or joint venture;

 

(iii) involves any exchange traded, over the counter or other swap, cap, floor, collar, futures contract, forward contract, option or other derivative financial instrument or Contract, based on any commodity, security, instrument, asset, rate or index of any kind or nature whatsoever, whether tangible or intangible, including currencies, interest rates, foreign currency and indices;

 

(iv) evidences Indebtedness (whether incurred, assumed, guaranteed or secured by any asset) of any Target Company having an outstanding principal amount in excess of $100,000;

 

(v) involves the acquisition or disposition, directly or indirectly (by merger or otherwise), of assets with an aggregate value in excess of $100,000 (other than in the ordinary course of business consistent with past practice) or shares or other equity interests in or of any Target Company or another Person;

 

(vi) relates to any merger, consolidation or other business combination with any other Person or the acquisition or disposition of any other entity or its business or material assets or the sale of any Target Company, its business or material assets;

 

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(vii) by its terms, individually or with all related Contracts, calls for aggregate payments or receipts by the Target Companies under such Contract or Contracts of at least $100,000 per year or $250,000 in the aggregate;

 

(viii) obligates the Target Companies to provide continuing indemnification or a guarantee of obligations of a third party after the date hereof in excess of $100,000;

 

(ix) is between any Target Company and any Top Customer or Top Vendor;

 

(x) is between any Target Company and any directors, officers or employees of a Target Company (other than at-will employment arrangements with employees entered into in the ordinary course of business consistent with past practice), including all non-competition, severance and indemnification agreements, or any Related Person;

 

(xi) obligates the Target Companies to make any capital commitment or expenditure in excess of $100,000 (including pursuant to any joint venture);

 

(xii) relates to a material settlement entered into within three (3) years prior to the date of this Agreement or under which any Target Company has outstanding obligations (other than customary confidentiality obligations);

 

(xiii) provides another Person (other than another Target Company or any manager, director or officer of any Target Company) with a power of attorney;

 

(xiv) relates to the development, ownership, licensing or use of any Intellectual Property by, to or from any Target Company, other than Off-the-Shelf Software;

 

(xv) that would be required to be filed by the Company as an exhibit for a Form S-1 pursuant to Items 601(b)(1), (2), (4), (9) or (10) of Regulation S-K under the Securities Act as if the Company was the registrant; or

 

(xvi) is otherwise material to any Target Company or outside of the ordinary course of business of the Target Companies and not described in clauses (i) through (xv) above.

 

(b) Except as disclosed in Schedule 4.12(b), with respect to each Company Material Contract: (i) such Company Material Contract is valid and binding and enforceable in all respects against the Target Company party thereto (subject to the Enforceability Exceptions) and, to the Knowledge of the Company, each other party thereto, and is in full force and effect; (ii) the consummation of the transactions contemplated by this Agreement will not affect the validity or enforceability of any Company Material Contract; (iii) no Target Company is in breach or default in any respect, and no event has occurred that with the passage of time or giving of notice or both would constitute a breach or default by any Target Company, or permit termination or acceleration by the other party thereto, under such Company Material Contract; (iv) to the Knowledge of the Company, no other party to such Company Material Contract is in breach or default in any respect, and no event has occurred that with the passage of time or giving of notice or both would constitute such a breach or default by such other party, or permit termination or acceleration by any Target Company, under such Company Material Contract; (v) no Target Company has received written or, to the Knowledge of the Company, oral notice of an intention by any party to any such Company Material Contract that provides for a continuing obligation by any party thereto to terminate such Company Material Contract or amend the terms thereof, other than modifications in the ordinary course of business that do not adversely affect any Target Company; and (vi) no Target Company has waived any rights under any such Company Material Contract.

 

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4.13 Intellectual Property.

 

(a) Schedule 4.13(a)(i) sets forth: (i) all Patents and Patent applications, Trademarks and service mark registrations and applications, copyright registrations and applications and registered Internet Assets and applications owned or licensed by a Target Company or otherwise used or held for use by a Target Company in which a Target Company is the owner, applicant or assignee (“Company Registered IP”), specifying as to each item, as applicable: (A) the nature of the item, including the title, (B) the owner of the item, (C) the jurisdictions in which the item is issued or registered or in which an application for issuance or registration has been filed and (D) the issuance, registration or application numbers and dates; and (ii) all material unregistered Intellectual Property owned or purported to be owned by a Target Company. Schedule 4.13(a)(ii) sets forth all Intellectual Property licenses, sublicenses and other agreements or permissions (“Company IP Licenses”) (excluding “shrink wrap”, “click wrap” and “off the shelf” agreements for Software commercially available on reasonable terms to the public generally with license, maintenance, support and other fees of less than $10,000 per year (collectively, “Off-the-Shelf Software”), which are not required to be listed, although such licenses are “Company IP Licenses” as that term is used herein), under which a Target Company is a licensee or otherwise is authorized to use or practice any Intellectual Property, and describes (A) the applicable Intellectual Property licensed, sublicensed or used and (B) any royalties, license fees or other compensation due from a Target Company, if any. Each Target Company owns, free and clear of all Liens (other than Permitted Liens), has valid and enforceable rights in, and has the unrestricted right to use, sell, license, transfer or assign, all Intellectual Property currently used, licensed or held for use by such Target Company, and previously used or licensed by such Target Company, except for the Intellectual Property that is the subject of the Company IP Licenses. For each Patent and Patent application in the Company Registered IP, the Target Companies have obtained valid assignments of inventions from each inventor. Except as set forth on Schedule 4.13(a)(iii), all Company Registered IP is owned exclusively by the applicable Target Company without obligation to pay royalties, licensing fees or other fees, or otherwise account to any third party with respect to such Company Registered IP.

 

(b) Each Target Company has a valid and enforceable license to use all Intellectual Property that is the subject of the Company IP Licenses applicable to such Target Company. The Company IP Licenses include all of the licenses, sublicenses and other agreements or permissions necessary to operate the Target Companies as presently conducted. Each Target Company is and has been in compliance in all material respects with and has performed all obligations imposed on it in the Company IP Licenses, and such Target Company is not, nor, to the Knowledge of the Company, is any other party thereto, in material breach or default thereunder, nor to the Knowledge of the Company has any event occurred that with notice or lapse of time or both would constitute a default thereunder. The continued use by the Target Companies of the Intellectual Property that is the subject of the Company IP Licenses in the same manner that it is currently being used is not restricted by any applicable license of any Target Company. All registrations for Copyrights, Patents, Trademarks and Internet Assets that are owned by or exclusively licensed to any Target Company are valid and in force, and all applications to register any Copyrights, Patents and Trademarks are pending and in good standing, all without challenge of any kind. No Target Company is party to any Contract that requires a Target Company to assign to any Person all of its rights in any Intellectual Property developed by a Target Company under such Contract.

 

(c) Schedule 4.13(c) sets forth all licenses, sublicenses and other agreements or permissions under which a Target Company is the licensor (each, an “Outbound IP License”), and for each such Outbound IP License, describes (i) the applicable Intellectual Property licensed, (ii) the licensee under such Outbound IP License, and (iii) any royalties, license fees or other compensation due to a Target Company, if any. Each Target Company has performed all obligations imposed on it in the Outbound IP Licenses, and such Target Company is not, nor, to the Knowledge of the Company, is any other party thereto, in breach or default thereunder, nor has any event occurred that with notice or lapse of time or both would constitute a default thereunder.

 

(d) No Action is pending or, to the Company’s Knowledge, threatened against a Target Company that challenges the validity, enforceability, ownership, or right to use, sell, license or sublicense any Intellectual Property currently owned, licensed, used or held for use by the Target Companies in any material respect. No Target Company has received any written or, to the Knowledge of the Company, oral notice or claim asserting or suggesting that any infringement, misappropriation, violation, dilution or unauthorized use of the Intellectual Property of any other Person is or may be occurring or has or may have occurred, as a consequence of the business activities of any Target Company. There are no Orders to which any Target Company is a party or its otherwise bound that (i) restrict the rights of a Target Company to use, transfer, license or enforce any Intellectual Property owned by a Target Company, (ii) restrict the conduct of the business of a Target Company in order to accommodate a third Person’s Intellectual Property, or (iii) other than the Outbound IP Licenses, grant any third Person any right with respect to any Intellectual Property owned by a Target Company. No Target Company is currently infringing, or has, in the past, infringed, misappropriated or violated any Intellectual Property of any other Person in any material respect in connection with the ownership, use or license of any Intellectual Property owned or purported to be owned by a Target Company or, to the Knowledge of the Company, otherwise in connection with the conduct of the respective businesses of the Target Companies. To the Company’s Knowledge, no third party is infringing upon, has misappropriated or is otherwise violating any Intellectual Property owned, licensed by, licensed to, or otherwise used or held for use by any Target Company (“Company IP”) in any material respect.

 

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(e) All employees and independent contractors of a Target Company have assigned to the Target Companies all Intellectual Property arising from the services performed for a Target Company by such Persons. No current or former officers, employees or independent contractors of a Target Company have claimed any ownership interest in any Intellectual Property owned by a Target Company. To the Knowledge of the Company, there has been no violation of a Target Company’s policies or practices related to protection of Company IP or any confidentiality or nondisclosure Contract relating to the Intellectual Property owned by a Target Company. The Company has made available to the Purchaser true and complete copies of all written Contracts referenced in subsections under which employees and independent contractors assigned their Intellectual Property to a Target Company. To the Company’s Knowledge, none of the employees of any Target Company is obligated under any Contract, or subject to any Order, that would materially interfere with the use of such employee’s best efforts to promote the interests of the Target Companies, or that would materially conflict with the business of any Target Company as presently conducted or contemplated to be conducted. Each Target Company has taken reasonable security measures in order to protect the secrecy, confidentiality and value of the material Company IP.

 

(f) To the Knowledge of the Company, no Person has obtained unauthorized access to third party information and data in the possession of a Target Company, nor has there been any other material compromise of the security, confidentiality or integrity of such information or data. Each Target Company has complied with all applicable Laws relating to privacy, data protection and security, and the collection, processing and use of personal information (collectively, “Data Protection Laws”). Each of the Target Companies has in place and regularly monitors and fully enforces privacy policies and guidelines compliant with all applicable Data Protection Laws. The operation of the business of the Target Companies has not and does not violate any right to privacy or publicity of any third person, or constitute unfair competition or trade practices under applicable Law.

 

(g) The consummation of any of the transactions contemplated by this Agreement will not result in the material breach, material modification, cancellation, termination, suspension of, or acceleration of any payments with respect to, or release of source code because of (i) any Contract providing for the license or other use of Intellectual Property owned by a Target Company, or (ii) any Company IP License. Following the Closing, the Company shall be permitted to exercise, directly or indirectly through its Subsidiaries, all of the Target Companies’ rights under such Contracts or Company IP Licenses to the same extent that the Target Companies would have been able to exercise had the transactions contemplated by this Agreement not occurred, without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Target Companies would otherwise be required to pay in the absence of such transactions.

 

4.14 Taxes and Returns.

 

(a) Each Target Company has or will have timely filed, or caused to be timely filed, all Tax Returns required to be filed by it (taking into account all available extensions), which Tax Returns are true, accurate, correct and complete in all material respects, and has paid, collected or withheld, or caused to be paid, collected or withheld, all Taxes required to be paid, collected or withheld, other than such Taxes for which adequate reserves in the Company Financials have been established. Each Target Company has complied with all applicable Laws relating to Tax.

 

(b) There is no current pending or, to the Knowledge of the Company, threatened Action against a Target Company by a Governmental Authority in a jurisdiction where the Target Company does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

 

(c) No Target Company is being audited by any Tax authority or has been notified in writing or, to the Knowledge of the Company, orally by any Tax authority that any such audit is contemplated or pending. There are no claims, assessments, audits, examinations, investigations or other Actions pending against a Target Company in respect of any Tax, and no Target Company has been notified in writing of any proposed Tax claims or assessments against it (other than, in each case, claims or assessments for which adequate reserves in the Company Financials have been established).

 

(d) There are no Liens with respect to any Taxes upon any Target Company’s assets, other than Permitted Liens.

 

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(e) Each Target Company has collected or withheld all Taxes currently required to be collected or withheld by it, and all such Taxes have been paid to the appropriate Governmental Authorities or set aside in appropriate accounts for future payment when due.

 

(f) No Target Company has any outstanding waivers or extensions of any applicable statute of limitations to assess any amount of Taxes. There are no outstanding requests by a Target Company for any extension of time within which to file any Tax Return or within which to pay any Taxes shown to be due on any Tax Return.

 

(g) No Target Company has made any change in accounting method (except as required by a change in Law) or received a ruling from, or signed an agreement with, any taxing authority that would reasonably be expected to have a material impact on its Taxes following the Closing.

 

(h) No Target Company has participated in, or sold, distributed or otherwise promoted, any “reportable transaction,” as defined in U.S. Treasury Regulation section 1.6011-4.

 

(i) No Target Company has any Liability for the Taxes of another Person (other than another Target Company) (i) under any applicable Tax Law, (ii) as a transferee or successor, or (iii) by contract, indemnity or otherwise (excluding commercial agreements entered into in the ordinary course of business, the primary purpose of which is not the sharing of Taxes). No Target Company is a party to or bound by any Tax indemnity agreement, Tax sharing agreement or Tax allocation agreement or similar agreement, arrangement or practice (excluding commercial agreements entered into in the ordinary course of business, the primary purpose of which is not the sharing of Taxes) with respect to Taxes (including advance pricing agreement, closing agreement or other agreement relating to Taxes with any Governmental Authority) that will be binding on any Target Company with respect to any period following the Closing Date.

 

(j) No Target Company has requested, or is it the subject of or bound by any private letter ruling, technical advice memorandum, closing agreement or similar ruling, memorandum or agreement with any Governmental Authority with respect to any Taxes, nor is any such request outstanding.

 

(k) No Target Company: (i) has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of securities (to any Person or entity that is not a member of the consolidated group of which the Company is the common parent corporation) qualifying for, or intended to qualify for, Tax-free treatment under Section 355 of the Code (A) within the two-year period ending on the date hereof or (B) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement; or (ii) is or has ever been (A) a U.S. real property holding corporation within the meaning of Section 897(c)(2) of the Code, or (B) a member of any consolidated, combined, unitary or affiliated group of corporations for any Tax purposes other than a group of which the Company is or was the common parent corporation.

 

(l) No Target Company is treated as a domestic corporation under Section 7874(b) of the Code.

 

4.15 Real Property. Schedule 4.15 contains a complete and accurate list of all premises leased or subleased or otherwise used or occupied by a Target Company for the operation of the business of a Target Company, and of all leases, lease guarantees, agreements and documents related thereto, including all amendments, terminations and modifications thereof or waivers thereto (collectively, the “Company Real Property Leases”), as well as the current annual rent and term under each Company Real Property Lease. The Company has provided to the Purchaser a true and complete copy of each of the Company Real Property Leases, and in the case of any oral Company Real Property Lease, a written summary of the material terms of such Company Real Property Lease. The Company Real Property Leases are valid, binding and enforceable in accordance with their terms and are in full force and effect. To the Knowledge of the Company, no event has occurred which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default on the part of a Target Company or any other party under any of the Company Real Property Leases, and no Target Company has received notice of any such condition. No Target Company owns or has ever owned any real property or any interest in real property (other than the leasehold interests in the Company Real Property Leases).

 

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4.16 Personal Property. Each item of Personal Property which is currently owned, used or leased by a Target Company with a book value or fair market value of greater than Fifty Thousand Dollars ($50,000) is set forth on Schedule 4.16, along with, to the extent applicable, a list of lease agreements, lease guarantees, security agreements and other agreements related thereto, including all amendments, terminations and modifications thereof or waivers thereto (“Company Personal Property Leases”). Except as set forth in Schedule 4.16, all such items of Personal Property are in good operating condition and repair (ordinary wear and tear excepted consistent with the age of such items), and are suitable for their intended use in the business of the Target Companies. The operation of each Target Company’s business as it is now conducted or presently proposed to be conducted is not dependent upon the right to use the Personal Property of Persons other than a Target Company, except for such Personal Property that is owned by, or leased, licensed or otherwise contracted to, a Target Company. The Company has provided to the Purchaser a true and complete copy of each of the Company Personal Property Leases, and in the case of any oral Company Personal Property Lease, a written summary of the material terms of such Company Personal Property Lease. The Company Personal Property Leases are valid, binding and enforceable in accordance with their terms and are in full force and effect. To the Knowledge of the Company, no event has occurred which (whether with or without notice, lapse of time or both or the happening or occurrence of any other event) would constitute a default on the part of a Target Company or any other party under any of the Company Personal Property Leases, and no Target Company has received notice of any such condition.

 

4.17 Title to and Sufficiency of Assets. Each Target Company has good and marketable title to, or a valid leasehold interest in or right to use, all of its assets, free and clear of all Liens other than (a) Permitted Liens, (b) the rights of lessors under leasehold interests, (iii) Liens specifically identified in the last audited financial statements included in the Company Financials and (d) Liens set forth on Schedule 4.17. The assets (including Intellectual Property rights and contractual rights) of the Target Companies constitute all of the assets, rights and properties that are used in the operation of the businesses of the Target Companies as it is now conducted and presently proposed to be conducted or that are used or held by the Target Companies for use in the operation of the businesses of the Target Companies, and taken together, are adequate and sufficient for the operation of the businesses of the Target Companies as currently conducted and as presently proposed to be conducted.

 

4.18 Employee Matters.

 

(a) Except as set forth in Schedule 4.18(a), no Target Company is a party to any collective bargaining agreement or other Contract covering any group of employees, labor organization or other representative of any of the employees of any Target Company, and the Company has no Knowledge of any activities or proceedings of any labor union or other party to organize or represent such employees. There has not occurred or, to the Knowledge of the Company, been threatened any strike, slow-down, picketing, work-stoppage, or other similar labor activity with respect to any such employees. Schedule 4.18(a) sets forth all unresolved labor controversies (including unresolved grievances and age or other discrimination claims), if any, that are pending or, to the Knowledge of the Company, threatened between any Target Company and Persons employed by or providing services as independent contractors to a Target Company. No current officer or employee of a Target Company has provided any Target Company written or, to the Knowledge of the Company, oral notice of his or her plan to terminate his or her employment with any Target Company.

 

(b) Except as set forth in Schedule 4.18(b), each Target Company (i) is and has been in compliance in all material respects with all applicable Laws respecting employment and employment practices, terms and conditions of employment, health and safety and wages and hours, and other Laws relating to discrimination, disability, labor relations, hours of work, payment of wages and overtime wages, pay equity, immigration, workers compensation, working conditions, employee scheduling, occupational safety and health, family and medical leave, and employee terminations, and has not received written or, to the Knowledge of the Company, oral notice that there is any pending Action involving unfair labor practices against a Target Company, (ii) is not liable for any material past due arrears of wages or any material penalty for failure to comply with any of the foregoing, and (iii) is not liable for any material payment to any Governmental Authority with respect to unemployment compensation benefits, social security or other benefits or obligations for employees, independent contractors or consultants (other than routine payments to be made in the ordinary course of business and consistent with past practice). There are no Actions pending or, to the Knowledge of the Company, threatened against a Target Company brought by or on behalf of any applicant for employment, any current or former employee, any Person alleging to be a current or former employee, or any Governmental Authority, relating to any such Law or regulation, or alleging breach of any express or implied contract of employment, wrongful termination of employment, or alleging any other discriminatory, wrongful or tortious conduct in connection with the employment relationship.

 

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(c) Schedule 4.18(c) hereto sets forth a complete and accurate list, as of the date hereof, of all employees of the Target Companies showing for each as of such date (i) the employee’s name, job title or description, employer, location, salary level (including any bonus, commission, deferred compensation or other remuneration payable (other than any such arrangements under which payments are at the discretion of the Target Companies)), (ii) any bonus, commission or other remuneration other than salary paid during the calendar year ending December 31, 2018, and (iii) any wages, salary, bonus, commission or other compensation paid or due and owing to each employee during or for the calendar year ending December 31, 2019. Except as set forth on Schedule 4.18(c), (A) no employee is a party to a written employment Contract with a Target Company and each is employed “at will” or, with respect to employees located in China, with a “non-fixed term” in accordance with Chinese Labor Contract Law, and (B) the Target Companies have paid in full to all their employees all wages, salaries, commission, bonuses and other compensation due to such employees, including overtime compensation, and no Target Company has any obligation or Liability (whether or not contingent) with respect to severance payments to any such employees under the terms of any written or, to the Company’s Knowledge, oral agreement, or commitment or any applicable Law, custom, trade or practice. Except as set forth in Schedule 4.18(c), each employee of any Target Company has entered into the Company’s standard form of employee non-disclosure, inventions and restrictive covenants agreement with a Target Company (whether pursuant to a separate agreement or incorporated as part of such employee’s overall employment agreement), a copy of which has been made available to the Purchaser by the Company.

 

(d) Schedule 4.18(d) contains a list of all independent contractors (including consultants) currently engaged by any Target Company, along with the position, the entity engaging such Person, date of retention and rate of remuneration, most recent increase (or decrease) in remuneration and amount thereof, for each such Person. Except as set forth on Schedule 4.18(d), all of such independent contractors are a party to a written Contract with a Target Company, and each such independent contractor has entered into customary covenants regarding confidentiality, non-competition and assignment of inventions and copyrights in such Person’s agreement with a Target Company, a copy of which has been provided to the Purchaser by the Company. For the purposes of applicable Law, including the Code, all independent contractors who are currently, or within the last six (6) years have been, engaged by a Target Company are bona fide independent contractors and not employees of a Target Company. Each independent contractor is terminable on fewer than thirty (30) days’ notice, without any obligation of any Target Company to pay severance or a termination fee.

 

4.19 Benefit Plans.

 

(a) Set forth on Schedule 4.19(a) is a true and complete list of each Foreign Plan of a Target Company (each, a “Company Benefit Plan”). No Target Company has ever maintained or contributed to (or had an obligation to contribute to) any Benefit Plan, whether or not subject to ERISA, which is not a Foreign Plan.

 

(b) With respect to each Company Benefit Plan which covers any current or former officer, director, consultant or employee (or beneficiary thereof) of a Target Company, the Company has made available to the Purchaser accurate and complete copies, if applicable, of: (i) all plan documents and related trust agreements or annuity Contracts (including any amendments, modifications or supplements thereto), and written description of any Company Benefit Plans which are not in writing; (ii) the most recent annual and periodic accounting of plan assets; (iii) the most recent actuarial valuation; and (iv) all communications with any Governmental Authority concerning any matter that is still pending or for which a Target Company has any outstanding Liability or obligation.

 

(c) With respect to each Company Benefit Plan: (i) such Company Benefit Plan has been administered and enforced in all material respects in accordance with its terms and the requirements of all applicable Laws, and has been maintained, where required, in good standing with applicable regulatory authorities and Governmental Authorities; (ii) no breach of fiduciary duty has occurred; (iii) no Action is pending, or to the Company’s Knowledge, threatened (other than routine claims for benefits arising in the ordinary course of administration); (iv) all contributions, premiums and other payments (including any special contribution, interest or penalty) required to be made with respect to a Company Benefit Plan have been timely made; (v) all benefits accrued under any unfunded Company Benefit Plan have been paid, accrued, or otherwise adequately reserved in accordance with GAAP and are reflected on the Company Financials; and (vi) no Company Benefit Plan provides for retroactive increases in contributions, premiums or other payments in relation thereto. No Target Company has incurred any obligation in connection with the termination of, or withdrawal from, any Company Benefit Plan.

 

(d) To the extent applicable, the present value of the accrued benefit liabilities (whether or not vested) under each Company Benefit Plan, determined as of the end of the Company’s most recently ended fiscal year on the basis of reasonable actuarial assumptions, each of which is reasonable, did not exceed the current value of the assets of such Company Benefit Plan allocable to such benefit liabilities.

 

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(e) The consummation of the transactions contemplated by this Agreement and the Ancillary Documents will not: (i) entitle any individual to severance pay, unemployment compensation or other benefits or compensation under any Company Benefit Plan or under any applicable Law; or (ii) accelerate the time of payment or vesting, or increase the amount of any compensation due, or in respect of, any director, employee or independent contractor of a Target Company.

 

(f) Except to the extent required by applicable Law, no Target Company provides health or welfare benefits to any former or retired employee or is obligated to provide such benefits to any active employee following such employee’s retirement or other termination of employment or service.

 

(g) All Company Benefit Plans can be terminated at any time as of or after the Closing Date without resulting in any Liability to any Target Company, the Purchaser or their respective Affiliates for any additional contributions, penalties, premiums, fees, fines, excise taxes or any other charges or liabilities.

 

4.20 Environmental Matters. Except as set forth in Schedule 4.20:

 

(a) Each Target Company is and has been in compliance in all material respects with all applicable Environmental Laws, including obtaining, maintaining in good standing, and complying in all material respects with all Permits required for its business and operations by Environmental Laws (“Environmental Permits”), no Action is pending or, to the Company’s Knowledge, threatened to revoke, modify, or terminate any such Environmental Permit, and, to the Company’s Knowledge, no facts, circumstances, or conditions currently exist that could adversely affect such continued compliance with Environmental Laws and Environmental Permits or require capital expenditures to achieve or maintain such continued compliance with Environmental Laws and Environmental Permits.

 

(b) No Target Company is the subject of any outstanding Order or Contract with any Governmental Authority or other Person in respect of any (i) Environmental Laws, (ii) Remedial Action, or (iii) Release or threatened Release of a Hazardous Material. No Target Company has assumed, contractually or by operation of Law, any Liabilities or obligations under any Environmental Laws.

 

(c) No Action has been made or is pending, or to the Company’s Knowledge, threatened against any Target Company or any assets of a Target Company alleging either or both that a Target Company may be in material violation of any Environmental Law or Environmental Permit or may have any material Liability under any Environmental Law.

 

(d) No Target Company has manufactured, treated, stored, disposed of, arranged for or permitted the disposal of, generated, handled or Released any Hazardous Material, or owned or operated any property or facility, in a manner that has given or would reasonably be expected to give rise to any material Liability or obligation under applicable Environmental Laws. No fact, circumstance, or condition exists in respect of any Target Company or any property currently or formerly owned, operated, or leased by any Target Company or any property to which a Target Company arranged for the disposal or treatment of Hazardous Materials that could reasonably be expected to result in a Target Company incurring any material Environmental Liabilities.

 

(e) There is no investigation of the business, operations, or currently owned, operated, or leased property of a Target Company or, to the Company’s Knowledge, previously owned, operated, or leased property of a Target Company pending or, to the Company’s Knowledge, threatened that could lead to the imposition of any Liens under any Environmental Law or material Environmental Liabilities.

 

(f) To the Knowledge of the Company, there is not located at any of the properties of a Target Company any (i) underground storage tanks, (ii) asbestos-containing material, or (iii) equipment containing polychlorinated biphenyls.

 

(g) The Company has provided to the Purchaser all environmentally related site assessments, audits, studies, reports, analysis and results of investigations that have been performed in respect of the currently or previously owned, leased, or operated properties of any Target Company.

 

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4.21 Transactions with Related Persons. Except as set forth on Schedule 4.21, no Target Company nor any of its Affiliates, nor any officer, director, manager, employee, trustee or beneficiary of a Target Company or any of its Affiliates, nor any immediate family member of any of the foregoing (whether directly or indirectly through an Affiliate of such Person) (each of the foregoing, a “Related Person”) is presently, or in the past three (3) years has been, a party to any transaction with a Target Company, including any Contract or other arrangement (a) providing for the furnishing of services by (other than as officers, directors or employees of the Target Company), (b) providing for the rental of real property or Personal Property from or (c) otherwise requiring payments to (other than for services or expenses as directors, officers or employees of the Target Company in the ordinary course of business consistent with past practice) any Related Person or any Person in which any Related Person has an interest as an owner, officer, manager, director, trustee or partner or in which any Related Person has any direct or indirect interest (other than the ownership of securities representing no more than two percent (2%) of the outstanding voting power or economic interest of a publicly traded company). Except as set forth on Schedule 4.21, no Target Company has outstanding any Contract or other arrangement or commitment with any Related Person, and no Related Person owns any real property or Personal Property, or right, tangible or intangible (including Intellectual Property) which is used in the business of any Target Company. The assets of the Target Companies do not include any receivable or other obligation from a Related Person, and the liabilities of the Target Companies do not include any payable or other obligation or commitment to any Related Person. Schedule 4.21 specifically identifies all Contracts, arrangements or commitments set forth on such Schedule 4.21 that cannot be terminated upon sixty (60) days’ notice by the Target Companies without cost or penalty.

 

4.22 Insurance.

 

(a) Schedule 4.22(a) lists all insurance policies (by policy number, insurer, coverage period, coverage amount, annual premium and type of policy) held by a Target Company relating to a Target Company or its business, properties, assets, directors, officers and employees, copies of which have been provided to the Purchaser. All premiums due and payable under all such insurance policies have been timely paid and the Target Companies are otherwise in material compliance with the terms of such insurance policies. Each such insurance policy (i) is legal, valid, binding, enforceable and in full force and effect and (ii) will continue to be legal, valid, binding, enforceable, and in full force and effect on identical terms following the Closing. To the Knowledge of the Company, there is no threatened termination of, or material premium increase with respect to, any of such insurance policies. No Target Company has any self-insurance or co-insurance programs. Since January 1, 2016, no Target Company has received any notice from, or on behalf of, any insurance carrier relating to or involving any adverse change or any change other than in the ordinary course of business, in the conditions of insurance, any refusal to issue an insurance policy or non-renewal of a policy, or requiring or suggesting material alteration of any of assets of a Target Company, purchase of additional equipment or material modification of any of methods of doing business by a Target Company.

 

(b) Schedule 4.22(b) identifies each individual insurance claim in excess of $50,000 made by a Target Company since January 1, 2016. Each Target Company has reported to its insurers all claims and pending circumstances that would reasonably be expected to result in a claim, except where such failure to report such a claim would not be reasonably likely to be material to the Target Companies. To the Knowledge of the Company, no event has occurred, and no condition or circumstance exists, that would reasonably be expected to (with or without notice or lapse of time) give rise to or serve as a basis for the denial of any such insurance claim. No Target Company has made any claim against an insurance policy as to which the insurer is denying coverage.

 

4.23 Top Customers and Vendors. Schedule 4.23 lists, by dollar volume received or paid, as applicable, for each of (a) the twelve (12) months ended on December 31, 2018 and (b) the period from January 1, 2019 through the Interim Balance Sheet Date, the ten (10) largest customers of the Target Companies (the “Top Customers”) and the ten largest vendors of goods or services to the Target Companies (the “Top Vendors”), along with the amounts of such dollar volumes. The relationships of each Target Company with such vendors and customers are good commercial working relationships and (i) no Top Vendor or Top Customer within the last twelve (12) months has cancelled or otherwise terminated, or, to the Company’s Knowledge, intends to cancel or otherwise terminate, any relationships of such Person with a Target Company, (ii) no Top Vendor or Top Customer has during the last twelve (12) months decreased materially or, to the Company’s Knowledge, threatened to stop, decrease or limit materially, or intends to modify materially its relationships with a Target Company or, to the Company’s Knowledge, intends to stop, decrease or limit materially its products or services to any Target Company or its usage or purchase of the products or services of any Target Company, (iii) to the Company’s Knowledge, no Top Vendor or Top Customer intends to refuse to pay any amount due to any Target Company or seek to exercise any remedy against any Target Company, (iv) no Target Company has within the past two (2) years been engaged in any material dispute with any Top Vendor or Top Customer, and (v) to the Company’s Knowledge, the consummation of the transactions contemplated in this Agreement and the Ancillary Documents will not adversely affect the relationship of any Target Company with any Top Vendor or Top Customer.

 

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4.24 Books and Records. All of the financial books and records of the Target Companies are complete and accurate in all material respects and have been maintained in the ordinary course consistent with past practice and in accordance with applicable Laws.

 

4.25 Accounts Receivable. All accounts, notes and other receivables, whether or not accrued, and whether or not billed, of the Target Companies (the Accounts Receivable”) arose from sales actually made or services actually performed in the ordinary course of business and represent valid obligations to a Target Company arising from its business. None of the Accounts Receivable are, to the Knowledge of the Company, subject to any right of recourse, defense, deduction, return of goods, counterclaim, offset, or set off on the part of the obligor in excess of any amounts reserved therefor on the Company Financials. All of the Accounts Receivable are, to the Knowledge of the Company, fully collectible according to their terms in amounts not less than the aggregate amounts thereof carried on the books of the Target Companies (net of reserves) within ninety (90) days.

 

4.26 Certain Business Practices. No Target Company, nor any of their respective Representatives acting on their behalf has (i) used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees, to foreign or domestic political parties or campaigns or violated any provision of the U.S. Foreign Corrupt Practices Act of 1977 or any comparable or similar Law of any other country or other jurisdiction, or (iii) made any other unlawful payment. No Target Company, nor any of their respective Representatives acting on their behalf has directly or indirectly, given or agreed to give any unlawful gift or similar benefit in any material amount to any customer, supplier, governmental employee or other Person who is or may be in a position to help or hinder any Target Company or assist any Target Company in connection with any actual or proposed transaction. The operations of each Target Company are and have been conducted at all times in compliance with laundering money statutes in all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any Governmental Authority, and no Action involving a Target Company with respect to the any of the foregoing is pending or, to the Knowledge of the Company, threatened. No Target Company or any of their respective directors or officers, or, to the Knowledge of the Company, any other Representative acting on behalf of a Target Company is currently identified on the specially designated nationals or other blocked person list or otherwise currently subject to any U.S. sanctions administered by OFAC, and no Target Company has, directly or indirectly, used any funds, or loaned, contributed or otherwise made available such funds to any Subsidiary, joint venture partner or other Person, in connection with any sales or operations in any country sanctioned by OFAC or for the purpose of financing the activities of any Person currently subject to, or otherwise in violation of, any U.S. sanctions administered by OFAC in the last five (5) fiscal years. None of the Target Companies has engaged in transactions with, or exported any of its products or associated technical data (i) into (or to a national or resident of) Cuba, Iran, Iraq, Libya, North Korea, Syria or any other country to which the United States has embargoed goods to or has proscribed economic transactions with or (ii) to the knowledge of the Company, to any Person included on the United States Treasury Department’s list of Specially Designated Nationals or the U.S. Commerce Department’s Denied Persons List.

 

4.27 PRC Compliance.

 

(a) Each of the Target Companies has complied, and has taken all steps to ensure compliance by each of its equity holders, option holders, directors, officers and employees that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen with any applicable rules and regulations of the relevant PRC Governmental Authorities currently in effect (including the Ministry of Commerce, the National Development and Reform Commission, the China Securities Regulatory Commission (“CSRC”) and the State Administration of Foreign Exchange) (the “SAFE”) relating to overseas investment by PRC residents and citizens or overseas listing by offshore special purpose vehicles controlled directly or indirectly by PRC companies and individuals, such as the Company (the “PRC Overseas Investment and Listing Regulations”), including requesting each such Person that is, or is directly or indirectly owned or controlled by, a PRC resident or citizen to complete any registration and other procedures required under applicable PRC Overseas Investment and Listing Regulations (including any applicable rules and regulations of the SAFE).

 

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(b) Each Company Party is aware of and has been advised as to the content of the Rules on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors and any official clarifications, guidance, interpretations or implementation rules in connection with or related thereto in effect on the applicable Closing Date (the “PRC Mergers and Acquisitions Rules”) jointly promulgated by the Ministry of Commerce, the State Assets Supervision and Administration Commission, the State Tax Administration, the State Administration of Industry and Commerce, the CSRC and the State Administration of Foreign Exchange on August 8, 2006, including the provisions thereof which purport to require offshore special purpose entities formed for listing purposes and controlled directly or indirectly by PRC companies or individuals to obtain the approval of the CSRC prior to the listing and trading of their securities on an overseas stock exchange. Each Company Party has received legal advice specifically with respect to the PRC Mergers and Acquisitions Rules from its PRC counsel, and such Company Party understands such legal advice. In addition, Each Company Party has communicated such legal advice in full to each of its directors and each such director has confirmed that he or she understands such legal advice. The consummation of the transactions contemplated by this Agreement and the Ancillary Documents (A) are not adversely affected by the PRC Mergers and Acquisitions Rules and (B) do not require the prior approval of the CSRC or any other Governmental Authority.

 

4.28 Investment Company Act. No Target Company is an “investment company” or a Person directly or indirectly “controlled” by or acting on behalf of an “investment company”, in each case within the meaning of the Investment Company Act of 1940, as amended.

 

4.29 Finders and Brokers. Except as set forth in Schedule 4.29, no Target Company has incurred or will incur any Liability for any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereby.

 

4.30 Independent Investigation. Each Company Party has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Purchaser, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Purchaser for such purpose. Each Company Party acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Purchaser set forth in this Agreement (including the related portions of the Purchaser Disclosure Schedules), and in any certificate delivered to the Company pursuant hereto; and (b) neither the Purchaser nor any of its Representatives have made any representation or warranty as to the Purchaser or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Purchaser Disclosure Schedules) or in any certificate delivered to the Company pursuant hereto.

 

4.31 VIE Contracts. Upon the due execution and delivery of the VIE Contracts by the parties thereto:

 

(a) the Company or any of its Subsidiaries, the VIEs and the VIE Shareholders have the legal right, power and authority (corporate and other) to enter into and perform its obligations under each applicable VIE Contract to which it is a party and has taken all necessary action (corporate and other) to authorize the execution, delivery and performance of, and has authorized, executed and delivered, each VIE Contract to which it is a party.

 

(b) to the extent permitted by applicable Laws, each VIE Contract constitutes a valid and legally binding obligation of the parties named therein and enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other Laws of general application relating to or affecting the enforcement of creditors’ rights generally, (ii) as limited by Laws relating to the availability of specific performance, injunctive relief, or other equitable remedies;

 

(c) the execution and delivery by each party named in each VIE Contract, and the performance by such party of its obligations thereunder and the consummation by it of the transactions contemplated therein shall not (i) result in any violation of, be in conflict with, or constitute a default under, any provision of its constitutional documents as in effect at the date hereof, or any Material Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound, (ii) accelerate, or constitute an event entitling any Person to accelerate, the maturity of any Indebtedness or other liability of the Company or any of its Subsidiaries or to increase the rate of interest presently in effect with respect to any Indebtedness of the Company or any of its Subsidiaries or (iii) result in the creation of any Lien, claim, charge or encumbrance upon any of the properties or assets of the Company or any of its Subsidiaries;

 

(d) all Consents required in connection with the VIE Contracts have been made or unconditionally obtained in writing, and no such Consent has been withdrawn or subject to any condition precedent which has not been fulfilled or performed.

 

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(e) each VIE Contract is in full force and effect and no party to any VIE Contract is in breach or default in the performance or observance of any of the terms or provisions of such VIE Contract. None of the parties to any VIE Contract has sent or received any communication regarding termination of or intention not to renew any VIE Contract, and no such termination or non-renewal has been threatened by any of the parties thereto; and

 

(f) (i) the WFOE has full control over each VIE and enjoys all of the economic benefits from the operation of the VIEs and their Subsidiaries; (ii) each VIE is a “variable interest entity” of the Company and its financial results are consolidated onto the Company’s consolidated financial statements as if it were a fully owned Subsidiary of the Company, under GAAP; and (iii) the control by the WFOE over the VIEs and the establishment of such captive structure does not violate any applicable Laws.

 

4.32 Information Supplied. None of the information supplied or to be supplied by the Company Parties expressly for inclusion or incorporation by reference: (a) in any Current Report on Form 8-K or 6-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority (including the SEC) or stock exchange (including Nasdaq) with respect to the transactions contemplated by this Agreement or any Ancillary Documents; (b) in the Solicitation Documents; or (c) in the mailings or other distributions to the Purchaser’s shareholders and/or prospective investors with respect to the consummation of the transactions contemplated by this Agreement or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by the Company Parties expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Press Release and the Closing Filing will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, the Company Parties make no representation, warranty or covenant with respect to any information supplied by or on behalf of the Purchaser or its Affiliates.

 

4.33 Disclosure. No representations or warranties by the Company Parties in this Agreement (as modified by the Company Disclosure Schedules) or the Ancillary Documents, (a) contains or will contain any untrue statement of a material fact, or (b) omits or will omit to state, when read in conjunction with all of the information contained in this Agreement, the Company Disclosure Schedules and the Ancillary Documents, any fact necessary to make the statements or facts contained therein not materially misleading.

 

Article V
REPRESENTATIONS AND WARRANTIES
OF THE SELLERS

 

Except as set forth in the Company Disclosure Schedules, the Section numbers of which are numbered to correspond to the Section numbers of this Agreement to which they refer, the Sellers hereby jointly and severally represent and warrant to the Purchaser, as of the date hereof and as of the Closing, as follows:

 

5.1 Organization and Standing. Each Seller, if not an individual person, is an entity duly organized, validly existing and in good standing under the Laws of the jurisdiction of its formation and has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted.

 

5.2 Authorization; Binding Agreement. Each Seller has all requisite power, authority and legal right and capacity to execute and deliver this Agreement and each Ancillary Document to which it is a party, to perform such Seller’s obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. This Agreement has been, and each Ancillary Document to which a Seller is or is required to be a party has been or shall be when delivered, duly and validly executed and delivered by such Seller and assuming the due authorization, execution and delivery of this Agreement and any such Ancillary Document by the other parties hereto and thereto, constitutes, or when delivered shall constitute, the legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its terms, subject to the Enforceability Exceptions.

 

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5.3 Ownership. Sellers own good, valid and marketable title to the Purchased Shares, free and clear of any and all Liens (other than those imposed by applicable securities Laws or the Company’s Organizational Documents), with each Seller owning the Purchased Shares set forth on Annex I. There are no proxies, voting rights, shareholders’ agreements or other agreements or understandings, to which a Seller is a party or by which a Seller is bound, with respect to the voting or transfer of any of such Seller’s Purchased Shares other than this Agreement. Upon delivery of the Purchased Shares to the Purchaser on the Closing Date in accordance with this Agreement, the entire legal and beneficial interest in the Purchased Shares and good, valid and marketable title to the Purchased Shares, free and clear of all Liens (other than those imposed by applicable securities Laws or those incurred by the Purchaser), will pass to the Purchaser.

 

5.4 Governmental Approvals. Except as otherwise described in Schedule 5.4, no Consent of or with any Governmental Authority on the part of any Seller is required to be obtained or made in connection with the execution, delivery or performance by such Seller of this Agreement or any Ancillary Documents or the consummation by a Seller of the transactions contemplated hereby or thereby other than (a) such filings as expressly contemplated by this Agreement and (b) pursuant to Antitrust Laws.

 

5.5 Non-Contravention. Except as otherwise described in Schedule 5.5, the execution and delivery by each Seller of this Agreement and each Ancillary Document to which it is a party or otherwise bound and the consummation by such Seller of the transactions contemplated hereby and thereby, and compliance by each Seller with any of the provisions hereof and thereof, will not, (a) conflict with or violate any provision of any Seller’s Organizational Documents, (b) subject to obtaining the Consents from Governmental Authorities referred to in Section 5.4 hereof, and the waiting periods referred to therein having expired, and any condition precedent to such Consent or waiver having been satisfied, conflict with or violate any Law, Order or Consent applicable to any Seller or any of its properties or assets or (c) (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination, withdrawal, suspension, cancellation or modification of, (iv) accelerate the performance required by any Seller under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of any Seller under, (viii) give rise to any obligation to obtain any third party consent or provide any notice to any Person or (ix) give any Person the right to declare a default, exercise any remedy, claim a rebate, chargeback, penalty or change in delivery schedule, accelerate the maturity or performance, cancel, terminate or modify any right, benefit, obligation or other term under, any of the terms, conditions or provisions of, any Contract to which a Seller is a party or a Seller or its properties or assets are otherwise bound, except for any deviations from any of the foregoing clauses (a), (b) or (c) that has not had and would not reasonably be expected to have a Material Adverse Effect on any Seller.

 

5.6 No Litigation. There is no Action pending or, to the Knowledge of such Seller, threatened, nor any Order is outstanding, against or involving any Seller or any of its officers, directors, managers, shareholders, properties, assets or businesses, whether at law or in equity, before or by any Governmental Authority, which would reasonably be expected to adversely affect the ability of such Seller to consummate the transactions contemplated by, and discharge its obligations under, this Agreement and the Ancillary Documents to which such Seller is or is required to be a party.

 

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5.7 Investment Representations. Each Seller: (a) is either (i) an “accredited investor” as such term is defined in Rule 501(a) of Regulation D under the Securities Act or (ii) not a “U.S. person” as that term is defined pursuant to Regulation S under the Securities Act; (b) is acquiring its portion of the Exchange Shares for itself for investment purposes only, and not with a view towards any resale or distribution of such Exchange Shares; (c) has been advised and understands that the Exchange Shares (i) are being issued in reliance upon one or more exemptions from the registration requirements of the Securities Act and any applicable state securities Laws, (ii) have not been and shall not be registered under the Securities Act or any applicable state securities Laws and, therefore, must be held indefinitely and cannot be resold unless such Exchange Shares are registered under the Securities Act and all applicable state securities Laws, unless exemptions from registration are available and (iii) are subject to additional restrictions on transfer pursuant to such Seller’s Lock-Up Agreement (if applicable); (d) is aware that an investment in the Purchaser is a speculative investment and is subject to the risk of complete loss; and (e) acknowledges that except as set forth in the Registration Rights Agreement, the Purchaser is under no obligation hereunder to register the Exchange Shares under the Securities Act. No Seller has any Contract with any Person to sell, transfer, or grant participations to such Person, or to any third Person, with respect to the Exchange Shares. By reason of such Seller’s business or financial experience, or by reason of the business or financial experience of such Seller’s “purchaser representatives” (as that term is defined in Rule 501(h) under the Securities Act), each Seller is capable of evaluating the risks and merits of an investment in the Purchaser and of protecting its interests in connection with this investment. Each Seller has carefully read and understands all materials provided by or on behalf of the Purchaser or its Representatives to such Seller or such Seller’s Representatives pertaining to an investment in the Purchaser and has consulted, as such Seller has deemed advisable, with its own attorneys, accountants or investment advisors with respect to the investment contemplated hereby and its suitability for such Seller. Each Seller acknowledges that the Exchange Shares are subject to dilution for events not under the control of such Seller. Each Seller has completed its independent inquiry and has relied fully upon the advice of its own legal counsel, accountant, financial and other Representatives in determining the legal, tax, financial and other consequences of this Agreement and the transactions contemplated hereby and the suitability of this Agreement and the transactions contemplated hereby for such Seller and its particular circumstances, and, except as set forth herein, has not relied upon any representations or advice by the Purchaser or its Representatives. Each Seller acknowledges and agrees that, except as set forth in Article III (including the related portions of the Purchaser Disclosure Schedules), no representations or warranties have been made by the Purchaser or any of its Representatives, and that such Seller has not been guaranteed or represented to by any Person, (i) any specific amount or the event of the distribution of any cash, property or other interest in the Purchaser or (ii) the profitability or value of the Exchange Shares in any manner whatsoever. Each Seller: (A) has been represented by independent counsel (or has had the opportunity to consult with independent counsel and has declined to do so); (B) has had the full right and opportunity to consult with such Seller’s attorneys and other advisors and has availed itself of this right and opportunity; (C) has carefully read and fully understands this Agreement in its entirety and has had it fully explained to it or him by such counsel; (D) is fully aware of the contents hereof and the meaning, intent and legal effect thereof; and (E) is competent to execute this Agreement and has executed this Agreement free from coercion, duress or undue influence.

 

5.8 Finders and Brokers. No Seller, nor any of their respective Representatives on their behalf, has employed any broker, finder or investment banker or incurred any liability for any brokerage fees, commissions, finders’ fees or similar fees in connection with the transactions contemplated by this Agreement.

 

5.9 Independent Investigation. Each Seller has conducted its own independent investigation, review and analysis of the business, results of operations, prospects, condition (financial or otherwise) or assets of the Purchaser, and acknowledges that it has been provided adequate access to the personnel, properties, assets, premises, books and records, and other documents and data of the Purchaser for such purpose. Each Seller acknowledges and agrees that: (a) in making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, it has relied solely upon its own investigation and the express representations and warranties of the Purchaser set forth in this Agreement (including the related portions of the Purchaser Disclosure Schedules) and in any certificate delivered to such Seller pursuant hereto; and (b) neither the Purchaser nor any of its Representatives have made any representation or warranty as to the Purchaser or this Agreement, except as expressly set forth in this Agreement (including the related portions of the Purchaser Disclosure Schedules) or in any certificate delivered to such Seller pursuant hereto.

 

5.10 Information Supplied. None of the information supplied or to be supplied by any Seller expressly for inclusion or incorporation by reference: (a) in any Current Report on Form 8-K or 6-K, and any exhibits thereto or any other report, form, registration or other filing made with any Governmental Authority (including the SEC) or stock exchange (including Nasdaq) with respect to the transactions contemplated by this Agreement or any Ancillary Documents; (b) in the Solicitation Documents; or (c) in the mailings or other distributions to the Purchaser’s shareholders and/or prospective investors with respect to the consummation of the transactions contemplated by this Agreement or in any amendment to any of documents identified in (a) through (c), will, when filed, made available, mailed or distributed, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. None of the information supplied or to be supplied by any Seller expressly for inclusion or incorporation by reference in any of the Signing Press Release, the Signing Filing, the Closing Filing and the Closing Press Release will, when filed or distributed, as applicable, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading. Notwithstanding the foregoing, no Seller makes any representation, warranty or covenant with respect to any information supplied by or on behalf of the Purchaser or its Affiliates.

 

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Article VI
COVENANTS

 

6.1 Access and Information.

 

(a) During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement in accordance with Section 9.1 or the Closing (the “Interim Period”), each Company Party shall give, and shall cause its Representatives to give, the Purchaser and its Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to the Target Companies, as the Purchaser or its Representatives may reasonably request regarding the Target Companies and their respective businesses, assets, Liabilities, financial condition, prospects, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any)) and cause each of the Company Parties’ respective Representatives to reasonably cooperate with the Purchaser and its Representatives in their investigation; provided, however, that the Purchaser and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Target Companies.

 

(b) During the Interim Period, the Purchaser shall give, and shall cause its Representatives to give, the Company and its Representatives, at reasonable times during normal business hours and upon reasonable intervals and notice, reasonable access to all offices and other facilities and to all employees, properties, Contracts, commitments, books and records, financial and operating data and other information (including Tax Returns, internal working papers, client files, client Contracts and director service agreements), of or pertaining to the Purchaser or its Subsidiaries, as the Company or its Representatives may reasonably request regarding the Purchaser, its Subsidiaries and their respective businesses, assets, Liabilities, financial condition, prospects, operations, management, employees and other aspects (including unaudited quarterly financial statements, including a consolidated quarterly balance sheet and income statement, a copy of each material report, schedule and other document filed with or received by a Governmental Authority pursuant to the requirements of applicable securities Laws, and independent public accountants’ work papers (subject to the consent or any other conditions required by such accountants, if any)) and cause each of the Purchaser’s Representatives to reasonably cooperate with the Company and its Representatives in their investigation; provided, however, that the Company and its Representatives shall conduct any such activities in such a manner as not to unreasonably interfere with the business or operations of the Purchaser or any of its Subsidiaries.

 

6.2 Conduct of Business of the Company Parties and the Sellers.

 

(a) Unless the Purchaser shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or as set forth on Schedule 6.2, each Company Party shall, and shall cause its Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course of business consistent with past practice, (ii) comply with all Laws applicable to the Target Companies and their respective businesses, assets and employees, and (iii) take all commercially reasonable measures necessary or appropriate to preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, to maintain, in all material respects, their existing relationships with all Top Customers and Top Vendors, and to preserve the possession, control and condition of their respective material assets, all as consistent with past practice.

 

(b) Without limiting the generality of Section 6.2(a) and except as contemplated by the terms of this Agreement or as set forth on Schedule 6.2, during the Interim Period, without the prior written consent of the Purchaser (such consent not to be unreasonably withheld, conditioned or delayed), each Company Party shall not, and shall cause its Subsidiaries to not:

 

(i) amend, waive or otherwise change, in any respect, its Organizational Documents;

 

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(ii) authorize, commit or actually issue, grant, sell, pledge or dispose of any of its shares or other equity interests or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its shares or other equity interests, or other securities, including any securities convertible into or exchangeable for any of its shares or other equity securities or securities of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities (other than the VIE Contracts);

 

(iii) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares or other equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;

 

(iv) incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $100,000 (individually or in the aggregate), make a loan or advance to or investment in any third party (other than advancement of expenses to employees in the ordinary course of business consistent with past practice), or guarantee or endorse any Indebtedness, Liability or obligation of any Person in excess of $100,000 (individually or in the aggregate);

 

(v) increase the wages, salaries or compensation of its employees other than in the ordinary course of business, consistent with past practice, and in any event not in the aggregate by more than five percent (5%), or make or commit to make any bonus payment (whether in cash, property or securities) to any employee outside of the ordinary course of business, or materially increase other benefits of employees generally, or enter into, establish, materially amend or terminate any Company Benefit Plan with, for or in respect of any current consultant, officer, manager director or employee, in each case other than as required by applicable Law, pursuant to the terms of any Company Benefit Plans or in the ordinary course of business consistent with past practice;

 

(vi) make or rescind any material election relating to Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP;

 

(vii) transfer or license (other than in the ordinary course of business) to any Person or otherwise extend, materially amend or modify, permit to lapse or fail to preserve any of the material Company Registered IP, Company IP Licenses or other Company IP, or disclose to any Person who has not entered into a confidentiality agreement any Trade Secrets;

 

(viii) terminate, or waive or assign any material right under, any Company Material Contract or VIE Contract or enter into any Contract that would be a Company Material Contract, in any case outside of the ordinary course of business course of business consistent with past practice;

 

(ix) fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;

 

(x) establish any Subsidiary or enter into any new line of business;

 

(xi) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage as are currently in effect;

 

(xii) revalue any of its material assets or make any change in accounting methods, principles or practices, except to the extent required to comply with GAAP and after consulting with the Company’s outside auditors;

 

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(xiii) waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation relating to this Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, a Company Party or its Affiliates) not in excess of $100,000 (individually or in the aggregate), or otherwise pay, discharge or satisfy any Actions, Liabilities or obligations, unless such amount has been reserved in the Company Financials;

 

(xiv) close or materially reduce its activities, or effect any layoff or other personnel reduction or change, at any of its facilities;

 

(xv) acquire, including by merger, consolidation, acquisition of shares or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business consistent with past practice;

 

(xvi) make capital expenditures in excess of $100,000 (individually for any project (or set of related projects) or $250,000 in the aggregate);

 

(xvii) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;

 

(xviii) voluntarily incur any Liability (whether absolute, accrued, contingent or otherwise) in excess of $100,000 individually or $250,000 in the aggregate other than pursuant to the terms of a Company Material Contract or Company Benefit Plan;

 

(xix) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights;

 

(xx) enter into any agreement, understanding or arrangement with respect to the voting of equity securities of a Company Party (other than the VIE Contracts);

 

(xxi) take any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement;

 

(xxii) accelerate the collection of any trade receivables or delay the payment of trade payables or any other liabilities other than in the ordinary course of business consistent with past practice;

 

(xxiii) enter into, amend, waive or terminate (other than terminations in accordance with their terms) any transaction with any Related Person (other than compensation and benefits and advancement of expenses, in each case, provided in the ordinary course of business consistent with past practice) (other than entering into the VIE Contracts); or

 

(xxiv) authorize or agree to do any of the foregoing actions.

 

(c) Without limiting Sections 6.2(a) and 6.2(b), during the Interim Period, without the prior written consent of Purchaser, (i) the Company shall not issue any Company Ordinary Shares or other equity securities of the Company or options, warrants or other rights to acquire, or that are exchangeable or convertible for any equity securities of the Company, and (ii) no Seller shall sell, transfer or dispose of any Company Ordinary Shares owned by such Seller, in either case of clauses (i) and (ii), unless the recipient or transferee of such Company securities (the “New Seller”) executes and delivers to Purchaser, the Company, the Purchaser Representative and the Seller Representative a joinder agreement in form and substance reasonably acceptable to the Purchaser and the Company to become bound by the terms and conditions of this Agreement as a Seller hereunder, as well as execute and deliver to the Purchaser, the Company, the Purchaser Representative and the Seller Representative any Ancillary Documents which such New Seller would have been required to be a party or bound if such New Seller were a Seller on the date of this Agreement. The Parties shall make any appropriate adjustments to Annex I and each Seller’s Pro Rata Share to account for such New Seller. Notwithstanding the foregoing, during the Interim Period each Seller is permitted to transfer its Company Ordinary Shares to another Seller with the prior written consent of the Purchaser, not to be unreasonably withheld, delayed or conditioned, and the Parties will make such adjustments to Annex I to reflect such changes to the Sellers’ Pro Rata Shares.

 

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6.3 Conduct of Business of the Purchaser.

 

(a) Unless the Company shall otherwise consent in writing (such consent not to be unreasonably withheld, conditioned or delayed), during the Interim Period, except as expressly contemplated by this Agreement or as set forth on Schedule 6.3, the Purchaser shall, and shall cause its Subsidiaries to, (i) conduct their respective businesses, in all material respects, in the ordinary course of business consistent with past practice, (ii) comply with all Laws applicable to the Purchaser and its Subsidiaries and their respective businesses, assets and employees, and (iii) take all commercially reasonable measures necessary or appropriate to preserve intact, in all material respects, their respective business organizations, to keep available the services of their respective managers, directors, officers, employees and consultants, and to preserve the possession, control and condition of their respective material assets, all as consistent with past practice. Notwithstanding anything to the contrary in this Section 6.3, nothing in this Agreement shall prohibit or restrict the Purchaser from extending, in accordance with the Purchaser Charter and IPO Prospectus, the deadline by which it much complete its Business Combination (an “Extension”), and no consent of any other Party shall be required in connection therewith.

 

(b) Without limiting the generality of Section 6.3(a) and except (x) as contemplated by the terms of this Agreement (including as contemplated by any PIPE Investment, if any), (y) to the extent reasonably necessary or appropriate by the Purchaser, the incurrence of Expenses by the Purchaser or the borrowing or financing of its Expenses or in connection with any PIPE Investment, if any, or (z) as set forth on Schedule 6.3, during the Interim Period, without the prior written consent of the Company (such consent not to be unreasonably withheld, conditioned or delayed), the Purchaser shall not, and shall cause its Subsidiaries to not:

 

(i) amend, waive or otherwise change, in any respect, its Organizational Documents;

 

(ii) authorize, commit or actually issue, grant, sell, pledge or dispose of any of its shares or other equity interests or any options, warrants, commitments, subscriptions or rights of any kind to acquire or sell any of its shares or other equity interests, or other securities, including any securities convertible into or exchangeable for any of its shares or other equity securities or securities of any class and any other equity-based awards, or engage in any hedging transaction with a third Person with respect to such securities (including any such issuances to pay or settle the IPO Underwriter’s fees);

 

(iii) split, combine, recapitalize or reclassify any of its shares or other equity interests or issue any other securities in respect thereof or pay or set aside any dividend or other distribution (whether in cash, equity or property or any combination thereof) in respect of its shares or other equity interests, or directly or indirectly redeem, purchase or otherwise acquire or offer to acquire any of its securities;

 

(iv) incur, create, assume, prepay or otherwise become liable for any Indebtedness (directly, contingently or otherwise) in excess of $100,000 (individually or in the aggregate), make a loan or advance to or investment in any third party, or guarantee or endorse any Indebtedness, Liability or obligation of any Person;

 

(v) make or rescind any material election relating to Taxes, settle any claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, file any amended Tax Return or claim for refund, or make any material change in its accounting or Tax policies or procedures, in each case except as required by applicable Law or in compliance with GAAP;

 

(vi) amend, waive or otherwise change the Trust Agreement in any manner adverse to the Purchaser;

 

(vii) terminate, waive or assign any material right under any Purchaser Material Contract or enter into any Contract that would be a Purchaser Material Contract;

 

(viii) fail to maintain its books, accounts and records in all material respects in the ordinary course of business consistent with past practice;

 

(ix) establish any Subsidiary or enter into any new line of business;

 

(x) fail to use commercially reasonable efforts to keep in force insurance policies or replacement or revised policies providing insurance coverage with respect to its assets, operations and activities in such amount and scope of coverage as are currently in effect;

 

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(xi) revalue any of its material assets or make any change in accounting methods, principles or practices, except to the extent required to comply with GAAP and after consulting the Purchaser’s outside auditors;

 

(xii) waive, release, assign, settle or compromise any claim, action or proceeding (including any suit, action, claim, proceeding or investigation relating to this Agreement or the transactions contemplated hereby), other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages (and not the imposition of equitable relief on, or the admission of wrongdoing by, the Purchaser or its Subsidiary) not in excess of $100,000 (individually or in the aggregate), or otherwise pay, discharge or satisfy any Actions, Liabilities or obligations, unless such amount has been reserved in the Purchaser Financials;

 

(xiii) acquire, including by merger, consolidation, acquisition of shares or assets, or any other form of business combination, any corporation, partnership, limited liability company, other business organization or any division thereof, or any material amount of assets outside the ordinary course of business;

 

(xiv) make capital expenditures in excess of $10,000 individually for any project (or set of related projects) or $250,000 in the aggregate (excluding for the avoidance of doubt, incurring any Expenses);

 

(xv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;

 

(xvi) voluntarily incur any Liability (whether absolute, accrued, contingent or otherwise) in excess of $100,000 individually or $250,000 in the aggregate (excluding the incurrence of any Expenses) other than pursuant to the terms of a Contract in existence as of the date of this Agreement or entered into in the ordinary course of business or in accordance with the terms of this Section 6.3 during the Interim Period;

 

(xvii) sell, lease, license, transfer, exchange or swap, mortgage or otherwise pledge or encumber (including securitizations), or otherwise dispose of any material portion of its properties, assets or rights;

 

(xviii) enter into any agreement, understanding or arrangement with respect to the voting of Purchaser Securities;

 

(xix) take any action that would reasonably be expected to significantly delay or impair the obtaining of any Consents of any Governmental Authority to be obtained in connection with this Agreement; or

 

(xx) authorize or agree to do any of the foregoing actions.

 

6.4 Annual and Interim Financial Statements.

 

(a) During the Interim Period, within thirty (30) calendar days following the end of each calendar month, each three-month quarterly period and each fiscal year, the Company shall deliver to the Purchaser an unaudited consolidated income statement and an unaudited consolidated balance sheet of the Target Companies for the period from the Interim Balance Sheet Date through the end of such calendar month, quarterly period or fiscal year and the applicable comparative period in the preceding fiscal year, in each case accompanied by a certificate of the Chief Financial Officer of the Company to the effect that all such financial statements fairly present the consolidated financial position and results of operations of the Target Companies as of the date or for the periods indicated, in accordance with GAAP, subject to year-end audit adjustments and excluding footnotes. During the Interim Period, the Company will also promptly deliver to the Purchaser copies of any audited financial statements of the Target Companies that a certified public accountant of any Target Company may issue.

 

(b) As promptly as practicable after the date of this Agreement, but in any event on or before September 16, 2019, the Company will provide to the Purchaser the Draft Audited Financial Statements.

 

6.5 Purchaser Public Filings. During the Interim Period, the Purchaser will keep current and timely file all of its public filings with the SEC and otherwise comply in all material respects with applicable securities Laws and shall use its commercially reasonable efforts to maintain the listing of the Purchaser Public Units, the Purchaser Ordinary Shares, the Purchaser Public Warrants and the Purchaser Public Rights on Nasdaq; provided, that the Parties acknowledge and agree that from and after the Closing, Purchaser intends to list on Nasdaq only the Purchaser Ordinary Shares and the Purchaser Public Warrants.

 

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6.6 No Solicitation.

 

(a) For purposes of this Agreement, (i) an “Acquisition Proposal” means any inquiry, proposal or offer, or any indication of interest in making an offer or proposal, from any Person or group at any time relating to an Alternative Transaction, and (ii) an “Alternative Transaction” means (A) with respect to any Company Party, the Sellers and their respective Affiliates, a transaction (other than the transactions contemplated by this Agreement) concerning the sale of (x) all or any material part of the business or assets of any Target Companies (other than in the ordinary course of business consistent with past practice) or (y) any of the shares or other equity interests or profits of any Target Companies, in any case, whether such transaction takes the form of a sale of shares or other equity interests, assets, merger, consolidation, issuance of debt securities, management Contract, joint venture or partnership, or otherwise and (B) with respect to the Purchaser and its Affiliates, a transaction (other than the transactions contemplated by this Agreement) concerning a Business Combination for Purchaser.

 

(b) During the Interim Period, in order to induce the other Parties to continue to commit to expend management time and financial resources in furtherance of the transactions contemplated hereby, each Party shall not, and shall cause its Representatives to not, without the prior written consent of the Company and the Purchaser, directly or indirectly, (i) solicit, assist, initiate or facilitate the making, submission or announcement of, or intentionally encourage, any Acquisition Proposal, (ii) furnish any non-public information regarding such Party or its Affiliates (or with respect to any Seller, any Target Company) or their respective businesses, operations, assets, Liabilities, financial condition, prospects or employees to any Person or group (other than a Party to this Agreement or their respective Representatives) in connection with or in response to an Acquisition Proposal, (iii) engage or participate in discussions or negotiations with any Person or group with respect to, or that could be expected to lead to, an Acquisition Proposal, (iv) approve, endorse or recommend, or publicly propose to approve, endorse or recommend, any Acquisition Proposal, (v) negotiate or enter into any letter of intent, agreement in principle, acquisition agreement or other similar agreement related to any Acquisition Proposal, or (vi) release any third Person from, or waive any provision of, any confidentiality agreement to which such Party is a party.

 

(c) Each Party shall notify the others as promptly as practicable (and in any event within 48 hours) orally and in writing of the receipt by such Party or any of its Representatives (or with respect to a Company Party, any Seller) of (i) any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations regarding or constituting any Acquisition Proposal or any bona fide inquiries, proposals or offers, requests for information or requests for discussions or negotiations that could be expected to result in an Acquisition Proposal, and (ii) any request for non-public information relating to such Party or its Affiliates (or with respect to any Seller, any Target Company), specifying in each case, the material terms and conditions thereof (including a copy thereof if in writing or a written summary thereof if oral) and the identity of the party making such inquiry, proposal, offer or request for information. Each Party shall keep the others promptly informed of the status of any such inquiries, proposals, offers or requests for information. During the Interim Period, each Party shall, and shall cause its Representatives to, immediately cease and cause to be terminated any solicitations, discussions or negotiations with any Person with respect to any Acquisition Proposal and shall, and shall direct its Representatives to, cease and terminate any such solicitations, discussions or negotiations.

 

6.7 No Trading. The Company Parties and the Sellers each acknowledge and agree that it is aware, and that their respective Affiliates are aware (and each of their respective Representatives is aware or, upon receipt of any material nonpublic information of the Purchaser, will be advised) of the restrictions imposed by the Federal Securities Laws and other applicable foreign and domestic Laws on a Person possessing material nonpublic information about a publicly traded company. The Company Parties and the Sellers each hereby agree that, while it is in possession of such material nonpublic information, it shall not purchase or sell any securities of the Purchaser (other than acquire the Exchange Shares and/or Earnout Shares in accordance with Article I), communicate such information to any third party, take any other action with respect to the Purchaser in violation of such Laws, or cause or encourage any third party to do any of the foregoing.

 

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6.8 Notification of Certain Matters. During the Interim Period, each of the Parties shall give prompt notice to the other Parties if such Party or its Affiliates (or, with respect to the Company Parties, any Seller): (a) fails to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it or its Affiliates (or, with respect to the Company Parties, any Seller) hereunder in any material respect; (b) receives any notice or other communication in writing from any third party (including any Governmental Authority) alleging (i) that the Consent of such third party is or may be required in connection with the transactions contemplated by this Agreement or (ii) any non-compliance with any Law by such Party or its Affiliates (or, with respect to the Company Parties, any Seller); (c) receives any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; (d) discovers any fact or circumstance that, or becomes aware of the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would reasonably be expected to cause or result in any of the conditions to set forth in Article VIII not being satisfied or the satisfaction of those conditions being materially delayed; or (e) becomes aware of the commencement or threat, in writing, of any Action against such Party or any of its Affiliates (or, with respect to the Company Parties, any Seller), or any of their respective properties or assets, or, to the Knowledge of such Party, any officer, director, partner, member or manager, in his, her or its capacity as such, of such Party or of its Affiliates (or, with respect to the Company Parties, any Seller) with respect to the consummation of the transactions contemplated by this Agreement. No such notice shall constitute an acknowledgement or admission by the Party providing the notice regarding whether or not any of the conditions to the Closing have been satisfied or in determining whether or not any of the representations, warranties or covenants contained in this Agreement have been breached.

 

6.9 Efforts.

 

(a) Subject to the terms and conditions of this Agreement, each Party shall use its commercially reasonable efforts, and shall cooperate fully with the other Parties, to take, or cause to be taken, all actions and to do, or cause to be done, all things reasonably necessary, proper or advisable under applicable Laws and regulations to consummate the transactions contemplated by this Agreement (including the receipt of all applicable Consents of Governmental Authorities), and to comply as promptly as practicable with all requirements of Governmental Authorities applicable to the transactions contemplated by this Agreement.

 

(b) In furtherance and not in limitation of Section 6.9(a), to the extent required under any Laws that are designed to prohibit, restrict or regulate actions having the purpose or effect of monopolization or restraint of trade (“Antitrust Laws”), each Party hereto agrees to make any required filing or application under Antitrust Laws, as applicable, at such Party’s sole cost and expense, with respect to the transactions contemplated hereby as promptly as practicable, to supply as promptly as reasonably practicable any additional information and documentary material that may be reasonably requested pursuant to Antitrust Laws and to take all other actions reasonably necessary, proper or advisable to cause the expiration or termination of the applicable waiting periods under Antitrust Laws as soon as practicable, including by requesting early termination of the waiting period provided for under the Antitrust Laws. Each Party shall, in connection with its efforts to obtain all requisite approvals and authorizations for the transactions contemplated by this Agreement under any Antitrust Law, use its commercially reasonable efforts to: (i) cooperate in all respects with each other Party or its Affiliates in connection with any filing or submission and in connection with any investigation or other inquiry, including any proceeding initiated by a private Person; (ii) keep the other Parties reasonably informed of any communication received by such Party or its Representatives from, or given by such Party or its Representatives to, any Governmental Authority and of any communication received or given in connection with any proceeding by a private Person, in each case regarding any of the transactions contemplated by this Agreement; (iii) permit a Representative of the other Parties and their respective outside counsel to review any communication given by it to, and consult with each other in advance of any meeting or conference with, any Governmental Authority or, in connection with any proceeding by a private Person, with any other Person, and to the extent permitted by such Governmental Authority or other Person, give a Representative or Representatives of the other Parties the opportunity to attend and participate in such meetings and conferences; (iv) in the event a Party’s Representative is prohibited from participating in or attending any meetings or conferences, the other Parties shall keep such Party promptly and reasonably apprised with respect thereto; and (v) use commercially reasonable efforts to cooperate in the filing of any memoranda, white papers, filings, correspondence or other written communications explaining or defending the transactions contemplated hereby, articulating any regulatory or competitive argument, and/or responding to requests or objections made by any Governmental Authority.

 

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(c) As soon as reasonably practicable following the date of this Agreement, the Parties shall reasonably cooperate with each other and use (and shall cause their respective Affiliates to use) their respective commercially reasonable efforts to prepare and file with Governmental Authorities requests for approval of the transactions contemplated by this Agreement and shall use all commercially reasonable efforts to have such Governmental Authorities approve the transactions contemplated by this Agreement. Each Party shall give prompt written notice to the other Parties if such Party or any of its Representatives (or with respect to the Company Parties, any Seller) receives any notice from such Governmental Authorities in connection with the transactions contemplated by this Agreement, and shall promptly furnish the other Parties with a copy of such Governmental Authority notice. If any Governmental Authority requires that a hearing or meeting be held in connection with its approval of the transactions contemplated hereby, whether prior to the Closing or after the Closing, each Party shall arrange for Representatives of such Party to be present for such hearing or meeting. If any objections are asserted with respect to the transactions contemplated by this Agreement under any applicable Law or if any Action is instituted (or threatened to be instituted) by any applicable Governmental Authority or any private Person challenging any of the transactions contemplated by this Agreement or any Ancillary Document as violative of any applicable Law or which would otherwise prevent, materially impede or materially delay the consummation of the transactions contemplated hereby or thereby, the Parties shall use their commercially reasonable efforts to resolve any such objections or Actions so as to timely permit consummation of the transactions contemplated by this Agreement and the Ancillary Documents, including in order to resolve such objections or Actions which, in any case if not resolved, could reasonably be expected to prevent, materially impede or materially delay the consummation of the transactions contemplated hereby or thereby. In the event any Action is instituted (or threatened to be instituted) by a Governmental Authority or private Person challenging the transactions contemplated by this Agreement, or any Ancillary Document, the Parties shall, and shall cause their respective Representatives to, reasonably cooperate with each other and use their respective commercially reasonable efforts to contest and resist any such Action and to have vacated, lifted, reversed or overturned any Order, whether temporary, preliminary or permanent, that is in effect and that prohibits, prevents or restricts consummation of the transactions contemplated by this Agreement or the Ancillary Documents.

 

(d) Prior to the Closing, each Party shall use its commercially reasonable efforts to obtain any Consents of Governmental Authorities or other third Persons as may be necessary for the consummation by such Party or its Affiliates of the transactions contemplated by this Agreement or required as a result of the execution or performance of, or consummation of the transactions contemplated by, this Agreement by such Party or its Affiliates, and the other Parties shall provide reasonable cooperation in connection with such efforts.

 

(e) Notwithstanding anything herein to the contrary, no Party shall be required to agree to any term, condition or modification with respect to obtaining any Consents in connection with the transactions contemplated by this Agreement that would result in, or would be reasonably likely to result in: (i) a Material Adverse Effect to such Party or its Affiliates, or (ii) such Party having to cease, sell or otherwise dispose of any material assets or businesses (including the requirement that any such assets or business be held separate).

 

6.10 Further Assurances. The Parties hereto shall further cooperate with each other and use their respective commercially reasonable efforts to take or cause to be taken all actions, and do or cause to be done all things, necessary, proper or advisable on their part under this Agreement and applicable Laws to consummate the transactions contemplated by this Agreement as soon as reasonably practicable, including preparing and filing as soon as practicable all documentation to effect all necessary notices, reports and other filings.

 

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6.11 Proxy Statement/Tender Offer.

 

(a) As promptly as practicable after the date hereof, the Purchaser shall prepare with the reasonable assistance of the Company Parties and the Sellers, and file with the SEC, (x) a proxy statement (as amended or supplemented from time to time, the “Proxy Statement”) calling a special meeting of the Purchaser’s shareholders (the “Shareholder Meeting”) or, in addition to or in lieu thereof, (y) an Offer to Purchase (the “Offer to Purchase”) to commence a tender offer, in either case, offering to redeem from its Public Shareholders their Purchaser Ordinary Shares in accordance with the Purchaser Charter and the IPO Prospectus (the “Closing Redemption”) (the Proxy Statement and/or the Offer to Purchase, together with the documents included or referred to therein pursuant to which the Closing Redemption will be made, with any additional soliciting materials, supplements, amendments and/or exhibits thereto, the “Solicitation Documents”), and each of the Purchaser and the Company Parties shall use its commercially reasonable efforts to obtain and furnish the information required by the Exchange Act to be included in the Solicitation Documents all in accordance with and as required by the Purchaser’s Organizational Documents, the IPO Prospectus, applicable Law and any applicable rules and regulations of the SEC and Nasdaq. In the Solicitation Documents, the Purchaser shall seek (i) if required, the adoption and approval of this Agreement and the transactions contemplated hereby or referred to herein by the holders of Purchaser Ordinary Shares in accordance with the Purchaser’s Organizational Documents, the Cayman Islands Act, and the rules and regulations of the SEC and Nasdaq, (ii) if required to be approved by the Purchaser’s shareholders, adoption and approval of a Second Amended and Restated Memorandum and Articles of Association of Purchaser in form and substance reasonably acceptable to the Purchaser and the Company (the “Amended Charter”), which Amended Charter will, among other things, change the name of the Purchaser effective as of the Closing to “Glory Star New Media Group Holdings Limited”, (iii) the adoption and approval of the new omnibus equity incentive plan for the Purchaser in form and substance reasonably acceptable to the Purchaser and the Company (the “Incentive Plan”), that provides for the grant of awards to employees and other certain Representatives of the Purchaser and its Subsidiaries in the form of options, restricted shares, restricted share units or other equity-based awards based on Purchaser Ordinary Shares, with the total awards under the Incentive Plan being equal to a percentage to be agreed upon by the Purchaser and the Company prior to the filing of the initial Solicitation Documents with the SEC (such percentage to be in the range from five percent (5%) to seven and one-half percent (7.5%)) of the aggregate number of Purchaser Ordinary Shares issued and outstanding immediately after the Closing, (iv) to appoint the members of the Post-Closing Purchaser Board in accordance with Section 6.16 hereof, (v) to obtain any and all other approvals necessary or desirable to effect the consummation of the transactions contemplated by this Agreement and the Ancillary Documents (the approvals described in the foregoing clauses (i) through (v), collectively, the “Shareholder Approval Matters”), and (vi) the adjournment of the Shareholder Meeting, if necessary or appropriate in the reasonable determination of the Purchaser. If on the date for which the Shareholder Meeting is scheduled, the Purchaser has not received proxies representing a sufficient number of shares to obtain the Required Shareholder Vote, whether or not a quorum is present, the Purchaser may make one or more successive postponements or adjournments of the Shareholder Meeting. In connection with the Solicitation Documents, the Purchaser will also file with the SEC financial and other information about the transactions contemplated by this Agreement in accordance with applicable Law and applicable proxy solicitation rules set forth in the Purchaser’s Organizational Documents, the Cayman Islands Act and the rules and regulations of the SEC and Nasdaq.

 

(b) Except with respect to the information provided by or on behalf of the Target Companies or the Sellers for inclusion in the Solicitation Documents, the Purchaser shall ensure that, when filed, the Solicitation Documents will comply in all material respects with the requirements of the Exchange Act and the rules and regulations thereunder. The Purchaser shall cause the Solicitation Documents to be disseminated as promptly as practicable after receiving clearance from the SEC to the Purchaser’s equity holders as and to the extent such dissemination is required by U.S. federal securities laws and the rules and regulations of the SEC and Nasdaq promulgated thereunder or otherwise (the “Federal Securities Laws”). The Company Parties and the Sellers shall promptly provide to the Purchaser such information concerning the Sellers, the Target Companies and their respective businesses, operations, condition (financial or otherwise), assets, Liabilities, properties, equity holders officers, directors and employees as is either required by Federal Securities Laws or reasonably requested by the Purchaser for inclusion in the Solicitation Documents, which information provided by the Company Parties and the Sellers shall be true and correct and not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not materially misleading. Subject to compliance by the Company Parties and the Sellers with the immediately preceding sentence with respect to the information provided or to be provided by or on behalf of them for inclusion in the Solicitation Documents, the Purchaser shall cause the Solicitation Documents to comply in all material respects with the Federal Securities Laws. The Purchaser shall provide copies of the proposed forms of the Solicitation Documents (including, in each case, any amendments or supplements thereto) to the Company such that the Company and its Representatives are afforded a reasonable amount of time prior to the dissemination or filing thereof to review such material and comment thereon prior to such dissemination or filing, and the Purchaser shall reasonably consider in good faith any comments of the Company and its Representatives. The Purchaser, the Company Parties, the Sellers and their respective Representatives shall respond promptly to any comments of the SEC or its staff with respect to the Closing Redemption or the Solicitation Documents and promptly correct any information provided by such Party for use in the Solicitation Documents if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by the Federal Securities Laws. The Purchaser shall amend or supplement the Solicitation Documents and cause the Solicitation Documents, as so amended or supplemented, to be filed with the SEC and to be disseminated to the holders of Purchaser Ordinary Shares, in each case as and to the extent required by the Federal Securities Laws and subject to the terms and conditions of this Agreement and the Purchaser Organizational Documents. The Purchaser shall provide the Company and its Representatives with copies of any written comments, and shall inform them of any material oral comments, that the Purchaser or any of its Representatives receive from the SEC or its staff with respect to the Closing Redemption or the Solicitation Documents promptly after the receipt of such comments and shall give the Company a reasonable opportunity under the circumstances to review and comment on any proposed written or material oral responses to such comments. The Company Parties and the Sellers shall, and shall cause each of the Target Companies to, make their respective directors, officers and employees, upon reasonable advance notice, available to the Purchaser and its Representatives in connection with the drafting of the public filings with respect to the transactions contemplated by this Agreement, including the Solicitation Documents, and responding in a timely manner to comments from the SEC. As promptly as reasonably practicable after the Solicitation Documents have “cleared” comments from the SEC, the Purchaser shall cause the definitive Solicitation Documents to be filed with the SEC and disseminated to the holders of Purchaser Ordinary Shares.

 

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(c) If at any time prior to the Closing, any information relating to the Purchaser, on the one hand, or any of the Target Companies or Sellers, on the other hand, or any of their respective Affiliates, businesses, operations, condition (financial or otherwise), assets, Liabilities, properties, officers, directors or employees, should be discovered by the Purchaser, on the one hand, or any of the Target Companies or Sellers, on the other hand, that should be set forth in an amendment or supplement to the Solicitation Documents, so that such documents would not include any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Party which discovers such information shall promptly notify each other Party and shall cooperate with the other Parties to ensure that an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and, to the extent required by law, disseminated to the Purchaser’s shareholders.

 

6.12 Public Announcements.

 

(a) The Parties agree that, during the Interim Period, no public release, filing or announcement concerning this Agreement or the Ancillary Documents or the transactions contemplated hereby or thereby shall be issued by any Party or any of their Affiliates without the prior written consent of the Purchaser, the Company and the Purchaser Representative and the Seller Representative (which consent shall not be unreasonably withheld, conditioned or delayed), except as such release or announcement may be required by applicable Law or the rules or regulations of any securities exchange, in which case the applicable Party shall use commercially reasonable efforts to allow the other Parties reasonable time to comment on, and arrange for any required filing with respect to, such release or announcement in advance of such issuance.

 

(b) The Parties shall mutually agree upon and, as promptly as practicable after the execution of this Agreement (but in any event within four (4) Business Days thereafter), issue a press release announcing the execution of this Agreement (the “Signing Press Release”). Promptly after the issuance of the Signing Press Release (but in any event within four (4) Business Days after the execution of this Agreement), the Purchaser shall file a Current Report on Form 8-K (the “Signing Filing”) with the Signing Press Release and a description of this Agreement as required by Federal Securities Laws, which the Company shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing. The Parties shall mutually agree upon and, as promptly as practicable after the Closing (but in any event within four (4) Business Days thereafter), issue a press release announcing the consummation of the transactions contemplated by this Agreement (the “Closing Press Release”). Promptly after the issuance of the Closing Press Release (but in any event within four (4) Business Days after the Closing), the Purchaser shall prepare and file a Current Report on Form 8-K (the “Closing Filing”) with the Closing Press Release and a description of the Closing as required by Federal Securities Laws which the Seller Representative and the Purchaser Representative shall review, comment upon and approve (which approval shall not be unreasonably withheld, conditioned or delayed) prior to filing. In connection with the preparation of the Signing Press Release, the Signing Filing, the Closing Filing, the Closing Press Release, or any other report, statement, filing notice or application made by or on behalf of a Party to any Governmental Authority or other third party in connection with the transactions contemplated hereby, each Party shall, upon request by any other Party, furnish the Parties with all information concerning themselves, their respective directors, officers and equity holders, and such other matters as may be reasonably necessary or advisable in connection with the transactions contemplated hereby, or any other report, statement, filing, notice or application made by or on behalf of a Party to any third party or any Governmental Authority in connection with the transactions contemplated hereby.

 

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6.13 Confidential Information.

 

(a) The Company Parties and the Sellers hereby agree that during the Interim Period and, in the event that this Agreement is terminated in accordance with Article IX, for a period of two (2) years after such termination, they shall, and shall cause their respective Representatives to: (i) treat and hold in strict confidence any Purchaser Confidential Information, and will not use for any purpose (except in connection with the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, performing their obligations hereunder or thereunder, enforcing their rights hereunder or thereunder, nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any of the Purchaser Confidential Information without the Purchaser’s prior written consent; and (ii) in the event that any Company Party, any Seller or any of their respective Representatives, during the Interim Period or, in the event that this Agreement is terminated in accordance with Article IX, for a period of two (2) years after such termination, becomes legally compelled to disclose any Purchaser Confidential Information, (A) provide the Purchaser to the extent legally permitted with prompt written notice of such requirement so that the Purchaser or an Affiliate thereof may seek, at the Purchaser’s cost, a protective Order or other remedy or waive compliance with this Section 6.13(a), and (B) in the event that such protective Order or other remedy is not obtained, or the Purchaser waives compliance with this Section 6.13(a), furnish only that portion of such Purchaser Confidential Information which is legally required to be provided as advised in writing by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such Purchaser Confidential Information. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, the Company Parties and the Sellers shall, and shall cause their respective Representatives to, promptly deliver to the Purchaser or destroy (at the Company’s election) any and all copies (in whatever form or medium) of Purchaser Confidential Information and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon.

 

(b) The Purchaser hereby agrees that during the Interim Period and, in the event that this Agreement is terminated in accordance with Article IX, for a period of two (2) years after such termination, it shall, and shall cause its Representatives to: (i) treat and hold in strict confidence any Company Confidential Information, and will not use for any purpose (except in connection with the consummation of the transactions contemplated by this Agreement or the Ancillary Documents, performing its obligations hereunder or thereunder or enforcing its rights hereunder or thereunder), nor directly or indirectly disclose, distribute, publish, disseminate or otherwise make available to any third party any of the Company Confidential Information without the Company’s prior written consent; and (ii) in the event that the Purchaser or any of its Representatives, during the Interim Period or, in the event that this Agreement is terminated in accordance with Article IX, for a period of two (2) years after such termination, becomes legally compelled to disclose any Company Confidential Information, (A) provide the Company to the extent legally permitted with prompt written notice of such requirement so that a Company Party, a Seller or an Affiliate of any of them may seek, at the Company’s sole expense, a protective Order or other remedy or waive compliance with this Section 6.13(a), and (B) in the event that such protective Order or other remedy is not obtained, or the Company waives compliance with this Section 6.13(a), furnish only that portion of such Company Confidential Information which is legally required to be provided as advised in writing by outside counsel and to exercise its commercially reasonable efforts to obtain assurances that confidential treatment will be accorded such Company Confidential Information. In the event that this Agreement is terminated and the transactions contemplated hereby are not consummated, the Purchaser shall, and shall cause its Representatives to, promptly deliver to the Company or destroy (at the Purchaser’s election) any and all copies (in whatever form or medium) of Company Confidential Information and destroy all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon. Notwithstanding the foregoing, the Purchaser and its Representatives shall be permitted to disclose any and all Company Confidential Information to the extent required by the Federal Securities Laws.

 

6.14 Litigation Support. Following the Closing, in the event that and for so long as any Party is actively contesting or defending against any third party or Governmental Authority Action in connection with any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure to act or transaction that existing on or prior to the Closing Date involving the Purchaser or any Target Company, each of the other Parties will (i) reasonably cooperate with the contesting or defending party and its counsel in the contest or defense, (ii) make available its personnel at reasonable times and upon reasonable notice and (iii) provide (A) such testimony and (B) access to its non-privileged books and records as may be reasonably requested in connection with the contest or defense, at the sole cost and expense of the contesting or defending party (unless such contesting or defending party is entitled to indemnification therefor under Article VII in which case, the costs and expense will be borne by the parties as set forth in Article VII).

 

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6.15 Documents and Information. After the Closing Date, the Purchaser shall, and shall cause its Subsidiaries (including the Target Companies) to, until the seventh (7th) anniversary of the Closing Date, retain all books, records and other documents pertaining to the business of the Company and its Subsidiaries in existence on the Closing Date and make the same available for inspection and copying by the Purchaser Representative during normal business hours of the Company and its Subsidiaries, as applicable, upon reasonable request and upon reasonable notice. No such books, records or documents shall be destroyed after the seventh (7th) anniversary of the Closing Date by the Purchaser or its Subsidiaries (including any Target Company) without first advising the Purchaser Representative in writing and giving the Purchaser Representative a reasonable opportunity to obtain possession thereof.

 

6.16 Post-Closing Board of Directors and Executive Officers.

 

(a) The Parties shall take all necessary action, including causing the directors of the Purchaser to resign, so that effective as of the Closing, the Purchaser’s board of directors (the “Post-Closing Purchaser Board”) will consist of five (5) individuals. Effective upon or immediately after the Closing, the Parties shall take all necessary action to designate and appoint to the Post-Closing Purchaser Board, (i) the four (4) persons who have been designated by the Company prior to the Closing (the “Company Directors”) and (ii) one (1) person who has been designated by the Purchaser prior to the Closing (the “Purchaser Director”). The Purchaser Director and at least two (2) of the Company Directors shall qualify as independent directors under applicable Nasdaq rules. At or prior to the Closing, the Purchaser will provide each Purchaser Director with a customary director indemnification agreement, in form and substance reasonably acceptable to such Purchaser Director.

 

(b) The Parties shall take all action necessary, including causing the executive officers of the Purchaser to resign, so that the individuals serving as executive officers of the Purchaser immediately after the Closing will be the same individuals (in the same offices) as those of the Company immediately prior to the Closing or such other individuals as designated by the Company prior to the Closing and reasonably acceptable to the Purchaser.

 

(c) The Parties agree that all rights to exculpation, indemnification and advancement of expenses existing in favor of the current or former directors and officers of the Purchaser and each Person who served as a director, officer, member, trustee or fiduciary of another corporation, partnership, joint venture, trust, pension or other employee benefit plan or enterprise at the request of the Purchaser (the “D&O Indemnified Persons”) as provided in the Purchaser’s Organizational Documents or under any indemnification, employment or other similar agreements between any D&O Indemnified Person and the Purchaser, in each case as in effect on the date of this Agreement, shall survive the Closing and continue in full force and effect in accordance with their respective terms to the extent permitted by applicable Law. For a period of six (6) years after the Closing, Purchaser shall cause its Organizational Documents to contain provisions no less favorable with respect to exculpation and indemnification of and advancement of expenses to D&O Indemnified Persons than are set forth as of the date of this Agreement in the Organizational Documents of Purchaser to the extent permitted by applicable Law. The provisions of this Section 6.16(c) shall survive the Closing and are intended to be for the benefit of, and shall be enforceable by, each of the D&O Indemnified Persons and their respective heirs and representatives.

 

6.17 Use of Trust Account Proceeds . The Parties agree that after the Closing, the funds in the Trust Account, after taking into account payments for the Closing Redemption, and any proceeds received by the Purchaser from any PIPE Investment, if any, shall first be used (i) to pay the Purchaser’s accrued Expenses, (ii) to pay the Purchaser’s deferred Expenses (including any legal fees) of the IPO and (iii) to pay for any loans or other outstanding obligations owed by the Purchaser to the Sponsor. Such amounts, as well as any Expenses that are required or permitted to be paid by delivery of the Purchaser’s securities, will be paid at the Closing. Any remaining cash will be used for general corporate purposes. In the event that at the Closing, the Purchaser does not have sufficient funds to pay in full any loans or other obligations owed to the Sponsor, the Company will pay such amounts at the Closing.

 

6.18 Purchaser Policies. During the Interim Period, the Purchaser will consult with the Company, and the Purchaser and the Company will adopt, effective as of the Closing, corporate and operational policies for the Purchaser, the Company and their respective Subsidiaries, including the Target Companies, appropriate for a company publicly traded in the United States with active business and operations in the industries and regions in which the Target Companies operate and contemplate operating as of the Closing.

 

6.19 Tax Matters.

 

(a) The Purchaser, the Company Parties, Sellers and their respective Affiliates will cooperate fully, as and to the extent reasonably requested by the other Parties, in connection with any Tax matters relating to the Target Companies (including by the provision of reasonably relevant records or information). The Party requesting such cooperation will pay the reasonable out-of-pocket expenses of the other Party in connection with such efforts.

 

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(b) PRC Tax Bulletin No. 7.

 

(i) The Parties hereby acknowledge, covenant and agree that (x) the Purchaser shall have no obligation to pay any Tax assessed by the applicable PRC Governmental Authority on the Sellers, or any other Tax of a nature that is required by applicable Law to be paid by the Sellers with respect to the sale of the Purchased Shares pursuant to this Agreement, and (y) the Sellers agree to bear and pay any Tax assessed by the applicable PRC Governmental Authority on any Target Company with respect to the sale of the Purchased Shares pursuant to this Agreement.

 

(ii) The Sellers shall (x) at their own expense, as soon as possible within thirty (30) days following the date of this Agreement and prior to the Closing Date, report the sale of the Purchased Shares to the applicable PRC Governmental Authority in accordance with the reporting provisions under the PRC State Administration of Taxation’s Bulletin on Several Issues of Enterprise Income Tax on Income Arising from Indirect Transfers of Property by Non-resident Enterprises (the PRC State Administration of Taxation Bulletin [2015] No. 7, dated February 3, 2015, as amended, supplemented, modified or interpreted from time to time by any implementing rules and regulations, and any successor rule or regulation thereof under the Laws of the PRC, the “PRC Tax Bulletin No. 7”) (and make such filings and disclosures in accordance therewith) and (y) timely pay any Tax assessed by the applicable PRC Governmental Authority (to the extent that such PRC Governmental Authority requires any Taxes to be paid) on any Target Company with respect to the transactions contemplated under this Agreement in accordance with applicable Law. After such Tax reporting, the Target Companies and Sellers agree to use their commercially reasonable efforts to promptly submit all documents lawfully requested by the applicable PRC Governmental Authority in connection with such Tax reporting and shall deliver to the Purchaser a duplicate of the PRC Tax Bulletin No. 7 filing documents as well as a copy of proof issued by the applicable PRC Governmental Authority with respect to any Tax payment made by the Sellers pursuant to this subsection (ii) (or written assessment notice issued by the PRC Governmental Authority if payment is not required).

 

(iii) The Purchaser shall have the right, but is under no obligation, to make applicable tax filings with a relevant PRC Governmental Authority, and the Sellers and the Target Companies shall cooperate in good faith in the Purchaser’s filing, if any, and provide all necessary assistance and information of the Sellers and the Target Companies to the Purchaser in a timely manner, provided that the Purchaser’s failure to so make the filings shall not relieve the Sellers from any obligation to indemnify, defend and hold harmless the Purchaser in this regard.

 

6.20 PIPE Investment. Without limiting anything to the contrary contained herein, during the Interim Period, Purchaser may, but shall not be required to, enter into and consummate subscription agreements with investors relating to a private equity investment in Purchaser to purchase shares of Purchaser (“PIPE Shares”) in connection with a private placement, and/or enter into backstop arrangements with potential investors, in either case on terms mutually agreeable to the Company and the Purchaser, acting reasonably (a “PIPE Investment”), and, if Purchaser elects to seek a PIPE Investment, the Purchaser and the Company shall, and shall cause their respective Representatives to, cooperate with each other and their respective Representatives in connection with such PIPE Investment and use their respective commercially reasonable efforts to cause such PIPE Investment to occur (including having the Company’s senior management participate in any investor meetings and roadshows as reasonably requested by the Purchaser).

 

6.21 Execution of VIE Contracts. As soon as practicable after the date of this Agreement (but in any event on or prior to September 16, 2019), the WFOE and the VIEs shall, and the Company Parties and the Sellers shall cause each of them, each VIE Shareholder and other relevant Person required to be a party thereto, to (i) duly execute and deliver the VIE Contracts, pursuant to which the WFOE shall have full control over each of the VIEs and enjoy all of the economic benefit from the operations of the VIEs and their Subsidiaries, (ii) file the registration of the pledge created on the equity interests of the VIEs to the extent permitted by applicable Law and in accordance with the VIE Contracts with the relevant PRC State Administration for Market Regulation, and (iii) provide copies and relevant documentation to Purchaser with respect to the items described in clauses (i) and (ii) above. For the avoidance of doubt, the evidence from the applicable Governmental Authorities that the registration described in clause (ii) above has been completed may be delivered by the Company Parties after September 16, 2019.

 

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Article VII

SURVIVAL AND INDEMNIFICATION

 

7.1 Survival.

 

(a) All representations and warranties of the Company Parties and the Sellers contained in this Agreement (including all schedules and exhibits hereto and all certificates, documents, instruments and undertakings furnished pursuant to this Agreement) shall survive the Closing through and until and including the Expiration Date; provided, however, that (i) the representations and warranties contained in Sections 4.14 (Taxes and Returns), 4.19 (Benefit Plans), 4.20 (Environmental Matters), 4.32 (Information Supplied) and 5.10 (Information Supplied) shall survive until sixty (60) days after the expiration of the applicable statute of limitations, and (ii) the representations and warranties contained in Sections 4.1 (Organization and Standing), 4.2 (Authorization; Binding Agreement), 4.3 (Capitalization), 4.4 (Subsidiaries), 4.29 (Finders and Brokers), 4.30 (Independent Investigation), 5.1 (Organization and Standing), 5.2 (Authorization; Binding Agreement), 5.3 (Ownership), 5.7 (Investment Representations), 5.8 (Finders and Brokers) and 5.9 (Independent Investigation) will survive indefinitely (such representations and warranties referenced in clauses (i) and (ii), collectively, the “Special Representations”). Additionally, Fraud Claims relating to any Target Company or any Seller shall survive indefinitely. If written notice of a claim for breach of any representation or warranty has been given before the applicable date when such representation or warranty no longer survives in accordance with this Section 7.1(a), then the relevant representations and warranties shall survive as to such claim, until the claim has been finally resolved. All covenants, obligations and agreements of the Company Parties and the Sellers contained in this Agreement (including all schedules and exhibits hereto and all certificates, documents, instruments and undertakings furnished by any Company Party, any Seller or the Seller Representative pursuant to this Agreement), including any indemnification obligations, shall survive the Closing and continue until fully performed in accordance with their terms. For the avoidance of doubt, a claim for indemnification under any subsection of Section 7.2 other than clauses (a) or (b) thereof may be made at any time.

 

(b) The representations and warranties of the Purchaser contained in this Agreement or in any certificate or instrument delivered by or on behalf of the Purchaser or the Purchaser Representative pursuant to this Agreement shall not survive the Closing, and from and after the Closing, the Purchaser, the Purchaser Representative and their respective Representatives shall not have any further obligations, nor shall any claim be asserted or action be brought against the Purchaser, the Purchaser Representative or their respective Representatives with respect thereto. The covenants and agreements made by the Purchaser and/or the Purchaser Representative in this Agreement or in any certificate or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such covenants or agreements, shall not survive the Closing, except for those covenants and agreements contained herein and therein that by their terms apply or are to be performed in whole or in part after the Closing (which such covenants shall survive the Closing and continue until fully performed in accordance with their terms).

 

7.2 Indemnification by the Sellers. Subject to the terms and conditions of this Article VII, from and after the Closing, the Sellers and their respective successors and assigns (each, with respect to any claim made pursuant to this Section 7.2, an “Indemnitor”) will jointly and severally indemnify, defend and hold harmless the Purchaser, the Purchaser Representative and their respective Affiliates and their respective officers, directors, managers, employees, successors and permitted assigns (each, with respect to any claim made pursuant to this Section 7.2, an “Indemnitee”) from and against any and all losses, Actions, Orders, Liabilities, damages (including consequential damages), diminution in value, Taxes, interest, penalties, Liens, amounts paid in settlement, costs and expenses (including reasonable expenses of investigation and court costs and reasonable attorneys’ fees and expenses) (any of the foregoing, a “Loss”) paid, suffered or incurred by, or imposed upon, any Indemnitee to the extent arising in whole or in part out of or resulting directly or indirectly from (whether or not involving a Third Party Claim): (a) the breach of any representation or warranty made by any Company Party or any Seller set forth in this Agreement or in any certificate delivered by any Company Party, any Seller or the Seller Representative pursuant to this Agreement; (b) the breach of any covenant or agreement on the part of any Seller, any Company Party or, with respect to covenants or agreements to be performed after the Closing, the Purchaser, set forth in this Agreement or in any certificate delivered by any Company Party, any Seller, the Seller Representative or the Purchaser pursuant to this Agreement; (c) any and all Liabilities for Taxes (i) in connection with or arising out of the Target Companies’ activities or business on or before the Closing Date, (ii) owing by any Person (other than a Target Company) for which a Target Company is liable where the Liability of the Target Company for such Taxes is attributable to an event or transaction occurring on or before the Closing Date, or (iii) attributable to or assessed on the proceeds of the sale of the Purchased Shares contemplated under this Agreement; or (d) any Action by Person(s) who were holders of equity securities of a Target Company, including options, warrants, convertible debt or other convertible securities or other rights to acquire equity securities of a Target Company, prior to the Closing arising out of the sale, purchase, termination, cancellation, expiration, redemption or conversion of any such securities.

 

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7.3 Limitations and General Indemnification Provisions.

 

(a) Except as otherwise expressly provided in this Article VII, the Indemnitees will not be entitled to receive any indemnification payments under clause (a) of Section 7.2 unless and until the aggregate amount of Losses incurred by the Indemnitees for which they are otherwise entitled to indemnification under this Article VII exceeds Two Million One Hundred Twenty-Five Thousand U.S. Dollars ($2,125,000) (the “Basket”), in which case the Indemnitors shall be obligated to the Indemnitees for the amount of all Losses of the Indemnitees from the first dollar of Losses of the Indemnitees required to reach the Basket; provided, however, that the Basket shall not apply to (i) indemnification claims for breaches of any Special Representation or (ii) Fraud Claims.

 

(b) The maximum aggregate amount of indemnification payments to which the Indemnitors will be obligated to pay in the aggregate (i) under clause (a) of Section 7.2 (other than claims for breach of any Special Representations or any Fraud Claims) shall not exceed an amount equal to the value of the Escrow Property in the Escrow Account in accordance with this Agreement, plus the value of the Earnout Shares (based on the then current Purchaser Share Price), or (ii) under Section 7.2 as a whole (other than Fraud Claims) shall not exceed an amount equal to the Company Equity Valuation.

 

(c) For all purposes of this Article VII, including for purposes of determining whether there has been a breach giving rise to the indemnification claim and the amount of Losses, all of the representations, warranties and covenants set forth in this Agreement (including the disclosure schedules hereto) or any Ancillary Document that are qualified by materiality, Material Adverse Effect or words of similar import or effect will be deemed to have been made without any such qualification.

 

(d) No investigation or knowledge by the Purchaser, the Purchaser Representative, any other Indemnitee or their respective Representatives of a breach of a representation, warranty, covenant or agreement of any Company Party, the Seller Representative, any Seller or any other Indemnitor shall affect the representations, warranties, covenants and agreements of any Company Party, the Seller Representative, any Seller or any other Indemnitor or the recourse available to any Indemnitee under any provision of this Agreement, including this Article VII, with respect thereto.

 

(e) The amount of any Losses suffered or incurred by any Indemnitee shall be reduced by the amount of any insurance proceeds paid to the Indemnitee or any Affiliate thereof as a reimbursement with respect to such Losses (and no right of subrogation shall accrue to any insurer hereunder, except to the extent that such waiver of subrogation would prejudice any applicable insurance coverage), net of the costs of collection and the increases in insurance premiums resulting from such Loss or insurance payment.

 

7.4 Indemnification Procedures.

 

(a) The Purchaser Representative shall have the sole right to act on behalf of the Indemnitees with respect to any indemnification claims made pursuant to this Article VII, including bringing and settling any indemnification claims hereunder and receiving any notices on behalf of the Indemnitees. The Seller Representative shall have the sole right to act on behalf of the Indemnitors with respect to any indemnification claims made pursuant to this Article VII, including defending and settling any indemnification claims hereunder and receiving any notices on behalf of the Indemnitors.

 

(b) In order to make a claim for indemnification hereunder, the Purchaser Representative on behalf of an Indemnitee must provide written notice (a “Claim Notice”) of such claim to the Seller Representative on behalf of the Indemnitors and, prior to the Expiration Date, the Escrow Agent, which Claim Notice shall include (i) a reasonable description of the facts and circumstances which relate to the subject matter of such indemnification claim to the extent then known and (ii) the amount of Losses suffered by the Indemnitee in connection with the claim to the extent known or reasonably estimable (provided, that the Purchaser Representative may thereafter in good faith adjust the amount of Losses with respect to the claim by providing a revised Claim Notice to the Seller Representative (and, so long as any Escrow Property remains in the Escrow Account, the Escrow Agent); provided, that the copy of any Claim Notice provided to the Escrow Agent shall be redacted for any confidential or proprietary information of the Indemnitor or the Indemnitee described in clause (i).

 

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(c) In the case of any claim for indemnification under this Article VII arising from a claim of a third party (including any Governmental Authority) (a “Third Party Claim”), the Purchaser Representative must give a Claim Notice with respect to such Third Party Claim to the Seller Representative promptly (but in no event later than thirty (30) days) after the Indemnitee’s receipt of notice of such Third Party Claim; provided, that the failure to give such notice will not relieve the Indemnitor of its indemnification obligations except to the extent that the defense of such Third Party Claim is materially and irrevocably prejudiced by the failure to give such notice. The Seller Representative will have the right to defend and to direct the defense against any such Third Party Claim in its name and at its expense, and with counsel selected by the Seller Representative unless (i) the Seller Representative fails to acknowledge fully to the Purchaser Representative the obligations of the Indemnitor to the Indemnitee within twenty (20) days after receiving notice of such Third Party Claim or contests, in whole or in part, its indemnification obligations therefor or (ii) at any time while such Third Party Claim is pending, (A) there is a conflict of interest between the Seller Representative on behalf of the Indemnitor and the Purchaser Representative on behalf of the Indemnitee in the conduct of such defense, (B) the applicable third party alleges a Fraud Claim, (C) such claim is criminal in nature, could reasonably be expected to lead to criminal proceedings, or seeks an injunction or other equitable relief against the Indemnitee or (D) the amount of the Third Party Claim exceeds or is reasonably expected to exceed the value of the remaining Escrow Property in the Escrow Account (after deducting any amounts for pending but unresolved indemnification claims and resolved but unpaid indemnification claims). If the Seller Representative on behalf of the Indemnitor elects, and is entitled, to compromise or defend such Third Party Claim, it will within twenty (20) days (or sooner, if the nature of the Third Party Claim so requires) notify the Purchaser Representative of its intent to do so, and the Purchaser Representative and the Indemnitee will, at the request and expense of the Seller Representative on behalf of the Indemnitor, cooperate in the defense of such Third Party Claim. If the Seller Representative on behalf of the Indemnitor elects not to, or at any time is not entitled under this Section 7.4 to, compromise or defend such Third Party Claim, fails to notify the Purchaser Representative of its election as herein provided or refuses to acknowledge or contests its obligation to indemnify under this Agreement, the Purchaser Representative on behalf of the Indemnitee may pay, compromise or defend such Third Party Claim. Notwithstanding anything to the contrary contained herein, the Indemnitor will have no indemnification obligations with respect to any such Third Party Claim which is settled by the Indemnitee or the Purchaser Representative without the prior written consent of the Seller Representative on behalf of the Indemnitor (which consent will not be unreasonably withheld, delayed or conditioned); provided, however, that notwithstanding the foregoing, the Indemnitee will not be required to refrain from paying any Third Party Claim which has matured by a final, non-appealable Order, nor will it be required to refrain from paying any Third Party Claim where the delay in paying such claim would result in the foreclosure of a Lien upon any of the property or assets then held by the Indemnitee or where any delay in payment would cause the Indemnitee material economic loss. The Seller Representative’s right on behalf of the Indemnitor to direct the defense will include the right to compromise or enter into an agreement settling any Third Party Claim; provided, that no such compromise or settlement will obligate the Indemnitee to agree to any settlement that that requires the taking or restriction of any action (including the payment of money and competition restrictions) by the Indemnitee other than the execution of a release for such Third Party Claim and/or agreeing to be subject to customary confidentiality obligations in connection therewith, except with the prior written consent of the Purchaser Representative on behalf of the Indemnitee (such consent to be withheld, conditioned or delayed only for a good faith reason). Notwithstanding the Seller Representative’s right on behalf of the Indemnitor to compromise or settle in accordance with the immediately preceding sentence, the Seller Representative on behalf of the Indemnitor may not settle or compromise any Third Party Claim over the objection of the Purchaser Representative on behalf of the Indemnitee; provided, however, that consent by the Purchaser Representative on behalf of the Indemnitee to settlement or compromise will not be unreasonably withheld, delayed or conditioned. The Purchaser Representative on behalf of the Indemnitee will have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Seller Representative’s right on behalf of the Indemnitor to direct the defense.

 

(d) With respect to any direct indemnification claim that is not a Third Party Claim, the Seller Representative on behalf of the Indemnitor will have a period of thirty (30) days after receipt of the Claim Notice to respond thereto. If the Seller Representative on behalf of the Indemnitor does not respond within such thirty (30) days, the Seller Representative on behalf of the Indemnitor will be deemed to have accepted responsibility for the Losses set forth in such Claim Notice subject to the limitations on indemnification set forth in this Article VII and will have no further right to contest the validity of such Claim Notice. If the Seller Representative on behalf of the Indemnitor responds within such thirty (30) days after the receipt of the Claim Notice and rejects such claim in whole or in part, the Purchaser Representative on behalf of the Indemnitee will be free to pursue such remedies as may be available under this Agreement (subject to Section 11.4), any Ancillary Documents or applicable Law.

 

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7.5 Timing of Payment; Right to Set-Off; Recovery of Shares.

 

(a) Any indemnification claims against the Indemnitors shall first be applied against the Escrow Shares and then against any other Escrow Property before any Indemnitor shall be required to make any out-of-pocket payment for indemnification. The sole source of recovery of the Indemnitees with respect to any indemnification claim made under clause (a) of Section 7.2 (other than claims for breach of any Special Representations or any Fraud Claims) shall be the Escrow Property in the Escrow Account and any Earnout Shares.

 

(b) Any indemnification obligation of an Indemnitor under this Article VII will be paid within five (5) Business Days after the determination of such obligation in accordance with Section 7.4 (and the Purchaser Representative and the Seller Representative will provide or cause to be provided to the Escrow Agent any written instructions or other information or documents required by the Escrow Agent to do so). Notwithstanding anything to the contrary contained herein, any indemnification payments will be made to the Purchaser or its successors. With respect to any indemnification payment, the value of each Escrow Share, Earnout Share or any other Purchaser Ordinary Shares for purposes of determining the indemnification payment shall be the Purchaser Share Price on the date that the indemnification claim is finally determined in accordance with this Article VII. Any Escrow Shares, Earnout Shares or other Purchaser Ordinary Shares received by the Purchaser as an indemnification payment shall be promptly cancelled by the Purchaser after its receipt thereof.

 

(c) The provisions of this Article VII notwithstanding, at the sole discretion of the Purchaser Representative and without limiting any other rights of the Purchaser or any other Indemnitee under this Agreement or any Ancillary Document or at law or equity, to the extent that it is established that the Purchaser or another Indemnitee is entitled to indemnification hereunder, if a Indemnitor fails or refuses to promptly indemnify the Purchaser or such other Indemnitee as provided herein then the Purchaser may, at the sole election of the Purchaser Representative, (i) offset the full amount to which the Purchaser or such other Indemnitee is entitled, in whole or in part, by reducing the amount of any payment or other obligation due to the Sellers or such other Indemnitor pursuant to this Agreement or any Ancillary Document, including by offsetting such indemnification obligations against any Earnout Shares otherwise required to be delivered to the Sellers under this Agreement and/or (ii) claim a portion of the Purchaser Ordinary Shares then owned by such Indemnitor up to an amount equal in value (based on the then current Purchaser Share Price) to the amount owed by such Indemnitor. In the event that such Indemnitor fails to promptly transfer any such Purchaser Ordinary Shares pursuant to this Section 7.5, the Purchaser Representative on behalf of the Purchaser shall be and hereby is authorized as the attorney-in-fact for such Indemnitor to transfer such Purchaser Ordinary Shares to the proper recipient thereof as required by this Section 7.5 and may transfer such Purchaser Ordinary Shares and cancel the share certificates for such Purchaser Ordinary Shares on the books and records of the Purchaser and issue new share certificates to such transferee and may instruct its agents and any exchanges on which Purchaser Ordinary Shares are listed or traded to do the same.

 

7.6 Exclusive Remedy. From and after the Closing, except with respect to Fraud Claims relating to any Target Company or any Seller or claims seeking injunctions, specific performance or other equitable relief (including pursuant to Section 11.7), or claims under the terms of the Ancillary Documents, indemnification pursuant to this Article VII shall be the sole and exclusive remedy for the Parties with respect to matters arising under this Agreement of any kind or nature, including for any misrepresentation or breach of any warranty, covenant, or other provision contained in this Agreement or in any certificate or instrument delivered pursuant to this Agreement or otherwise relating to the subject matter of this Agreement, including the negotiation and discussion thereof.

 

Article VIII

CLOSING CONDITIONS

 

8.1 Conditions to Each Party’s Obligations. The obligations of each Party to consummate the transactions described herein shall be subject to the satisfaction or written waiver (where permissible) by the Company and the Purchaser and the Seller Representative of the following conditions:

 

(a) Required Purchaser Shareholder Approval. This Shareholder Approval Matters that are submitted to the vote of the shareholders of the Purchaser at the Shareholder Meeting in accordance with the Solicitation Documents shall have been approved by the requisite vote of the shareholders of the Purchaser at the Shareholder Meeting in accordance with the Solicitation Documents (the “Required Shareholder Vote”).

 

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(b) Antitrust Laws. Any waiting period (and any extension thereof) applicable to the consummation of this Agreement under any Antitrust Laws shall have expired or been terminated.

 

(c) Requisite Regulatory Approvals. All Consents required to be obtained from or made with any Governmental Authority in order to consummate the transactions contemplated by this Agreement shall have been obtained or made.

 

(d) Requisite Consents. The Consents required to be obtained from or made with any third Person (other than a Governmental Authority) in order to consummate the transactions contemplated by this Agreement that are set forth in Schedule 8.1(d) shall have each been obtained or made.

 

(e) No Law or Order. No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law (whether temporary, preliminary or permanent) or Order that is then in effect and which has the effect of making the transactions or agreements contemplated by this Agreement illegal or which otherwise prevents or prohibits consummation of the transactions contemplated by this Agreement.

 

(f) No Litigation. There shall not be any pending Action brought by a third-party non-Affiliate to enjoin or otherwise restrict the consummation of the Closing.

 

(g) Appointment to the Board. The members of the Post-Closing Purchaser Board shall have been elected or appointed as of the Closing consistent with the requirements of Section 6.16.

 

(h) Net Tangible Assets Test. Upon the Closing and after giving effect to the completion of the Closing Redemption and any PIPE Investment, if any, the Purchaser (together with the Target Companies on a combined basis) shall have net tangible assets of at least $5,000,001.

 

(i) Nasdaq Listing. The Purchaser, immediately after the Closing and after giving effect to the conversion of the Purchaser Public Rights into Purchaser Ordinary Shares and the Closing Redemption, the issuance of the Exchange Shares and any PIPE Shares and any of the other transactions contemplated by this Agreement, shall have at least 300 round-lot shareholders, and the Purchaser and the Company shall have received reasonable evidence that the Purchaser Ordinary Shares shall remain listed on Nasdaq immediately following the Closing.

 

8.2 Conditions to Obligations of the Company and the Sellers. In addition to the conditions specified in Section 8.1, the obligations of the Company and the Sellers to consummate the transactions contemplated by this Agreement are subject to the satisfaction or written waiver (by the Company and the Seller Representative) of the following conditions:

 

(a) Representations and Warranties. All of the representations and warranties of the Purchaser set forth in this Agreement and in any certificate delivered by or on behalf of the Purchaser pursuant hereto shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, the Purchaser.

 

(b) Agreements and Covenants. The Purchaser shall have performed in all material respects all of the Purchaser’s obligations and complied in all material respects with all of the Purchaser’s agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date.

 

(c) No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to the Purchaser since the date of this Agreement which is continuing and uncured.

 

(d) Closing Deliveries.

 

(i) Officer Certificate. The Purchaser shall have delivered to the Company a certificate, dated the Closing Date, signed by an executive officer of the Purchaser in such capacity, certifying as to the satisfaction of the conditions specified in Sections 8.2(a), 8.2(b) and 8.2(c).

 

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(ii) Secretary Certificate. The Purchaser shall have delivered to the Company a certificate from its secretary or other executive officer certifying as to, and attaching, (A) copies of the Purchaser’s Organizational Documents as in effect as of the Closing Date (prior to giving effect to the Amended Charter), (B) the resolutions of the Purchaser’s board of directors authorizing and approving the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby and thereby, (C) evidence that the Required Shareholder Vote has been obtained and (D) the incumbency of officers of the Purchaser authorized to execute this Agreement or any Ancillary Document to which the Purchaser is or is required to be a party or otherwise bound.

 

(iii) Good Standing. The Purchaser shall have delivered to the Company a good standing certificate (or similar documents applicable for such jurisdictions) for the Purchaser certified as of a date no earlier than sixty (60) days prior to the Closing Date from the proper Governmental Authority of the Purchaser’s jurisdiction of organization and from each other jurisdiction in which the Purchaser is qualified to do business as a foreign entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions.

 

(iv) Escrow Agreement. The Company shall have received a copy of the Escrow Agreement, duly executed by the Purchaser, the Purchaser Representative and the Escrow Agent.

 

(e) Effectiveness of Certain Ancillary Documents. The Registration Rights Agreement shall be in full force and effect in accordance with the terms thereof as of the Closing.

 

8.3 Conditions to Obligations of the Purchaser. In addition to the conditions specified in Section 8.1, the obligations of the Purchaser to consummate the transactions contemplated by this Agreement are subject to the satisfaction or written waiver (by the Purchaser) of the following conditions:

 

(a) Representations and Warranties. All of the representations and warranties of the Company Parties and the Sellers set forth in this Agreement and in any certificate delivered by any Company Party or any Seller pursuant hereto shall be true and correct on and as of the date of this Agreement and on and as of the Closing Date as if made on the Closing Date, except for (i) those representations and warranties that address matters only as of a particular date (which representations and warranties shall have been accurate as of such date), and (ii) any failures to be true and correct that (without giving effect to any qualifications or limitations as to materiality or Material Adverse Effect), individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect on, or with respect to, any Target Company or any Seller.

 

(b) Agreements and Covenants. Each Company Party and each Seller shall have performed in all material respects all of such Party’s obligations and complied in all material respects with all of such Party’s agreements and covenants under this Agreement to be performed or complied with by it on or prior to the Closing Date.

 

(c) No Material Adverse Effect. No Material Adverse Effect shall have occurred with respect to any Target Company since the date of this Agreement which is continuing and uncured.

 

(d) Closing Deliveries.

 

(i) Officer Certificate. The Purchaser shall have received a certificate from the Company, dated as the Closing Date, signed by an executive officer of the Company in such capacity, certifying as to the satisfaction of the conditions specified in Sections 8.3(a), 8.3(b) and 8.3(c).

 

(ii) Seller Certificate. The Purchaser shall have received a certificate from each Seller, dated as of the Closing Date, signed by such Seller, certifying as to the satisfaction of the conditions specified in Sections 8.3(a) and 8.3(b) with respect to such Seller.

 

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(iii) Secretary Certificate. The Company shall have delivered to the Purchaser a certificate from its secretary or other executive officer certifying as to, and attaching, (A) copies of the Company’s Organizational Documents as in effect as of the Closing Date, (B) the resolutions of the Company’s board of directors and shareholders authorizing and approving the execution, delivery and performance of this Agreement and each of the Ancillary Documents to which it is a party or by which it is bound, and the consummation of the transactions contemplated hereby and thereby, and (C) the incumbency of officers of the Company authorized to execute this Agreement or any Ancillary Document to which the Company is or is required to be a party or otherwise bound.

 

(iv) Good Standing. The Company shall have delivered to the Purchaser good standing certificates (or similar documents applicable for such jurisdictions) for each Target Company certified as of a date no earlier than sixty (60) days prior to the Closing Date from the proper Governmental Authority of the Target Company’s jurisdiction of organization and from each other jurisdiction in which the Target Company is qualified to do business as a foreign corporation or other entity as of the Closing, in each case to the extent that good standing certificates or similar documents are generally available in such jurisdictions.

 

(v) Certified Company Charter. The Company shall have delivered to the Purchaser a copy of the Company Charter, as in effect as of the Closing, certified by the appropriate Governmental Authority of the Cayman Islands as of a date no earlier than thirty (30) days prior to the Closing Date.

 

(vi) Employment Agreements. The Purchaser shall have received employment agreements, in each case effective as of the Closing, in form and substance reasonably satisfactory to the Purchaser and the Company (the “Employment Agreements”), between each of the persons set forth on Schedule 8.3(d)(vi) hereto and the applicable Target Company or the Purchaser, as noted in Schedule 8.3(d)(vi) hereto, each such Employment Agreement duly executed by the parties thereto.

 

(vii) Escrow Agreement. The Purchaser shall have received a copy of the Escrow Agreement, duly executed by the Seller Representative and the Escrow Agent.

 

(viii) Legal Opinion. Purchaser shall have received (A) a duly executed opinion from the Company’s counsel with respect to Cayman Islands Laws, and (B) a duly executed opinion from the Company’s counsel with respect to PRC Laws, in form and substance reasonably satisfactory to the Purchaser, addressed to the Purchaser and dated as of the Closing Date.

 

(ix) Share Certificates and Transfer Instruments. The Purchaser shall have received from each Seller share certificates representing the Purchased Shares (or duly executed affidavits of lost share certificates in form and substance reasonably acceptable to the Purchaser and consistent with the Cayman Islands Act), if applicable, together with executed instruments of transfer in respect of the Purchased Shares in favor of the Purchaser (or its nominee) and in form reasonably acceptable for transfer on the books of the Company.

 

(x) Registered Agent Letter. The Purchaser shall receive a copy of a letter, executed by all parties thereto, in the reasonably agreed form, to the Cayman Islands registered agent of the Company from the client of record of such registered agent instructing it to take instruction from the Purchaser (or its nominees) from and after the Closing.

 

(xi) Termination of Certain Contracts. The Purchaser shall have received evidence reasonably acceptable to Purchaser that the Contracts set forth on Schedule 8.3(d)(xi) involving any of the Target Companies and/or Sellers or other Related Persons shall have been terminated with no further obligation or Liability of the Target Companies thereunder.

 

(xii) VIE Contracts. The Purchaser shall have received copies of the VIE Contracts duly executed by the WFOE, the VIEs, the VIE Shareholders and each other Person required to be party thereto, which VIE Contracts shall be in full force and effect in accordance with the terms thereof as of the Closing, and written record reasonably acceptable to Purchaser evidencing the completion of the registration of the pledge created on the equity interests of the VIEs to the extent permitted by applicable Law and in accordance with the VIE Contracts with the relevant PRC State Administration for Market Regulation.

 

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(e) Certain Ancillary Documents. Each (i) Non-Competition Seller that did not execute and deliver a Non-Competition Agreement on the date hereof shall have duly executed and delivered to the Purchaser a Non-Competition Agreement, (ii) Lock-Up Seller that did not execute and deliver a Lock-Up Agreement on the date hereof shall have duly executed and delivered to the Purchaser a Lock-Up Agreement, and (iii) Seller that did not execute and deliver the Registration Rights Agreement on the date hereof shall have duly executed and delivered to the Purchaser the Registration Rights Agreement. Each Non-Competition Agreement, each Lock-Up Agreement and the Registration Rights Agreement (whether executed and delivered on the date of this Agreement or any time at or prior to the Closing) shall be in full force and effect in accordance with the terms thereof as of the Closing.

 

8.4 Frustration of Conditions. Notwithstanding anything contained herein to the contrary, no Party may rely on the failure of any condition set forth in this Article VIII to be satisfied if such failure was caused by the failure of such Party or its Affiliates (or with respect to a Company Party, any Target Company or Seller) to comply with or perform any of its covenants or obligations set forth in this Agreement.

 

Article IX

TERMINATION AND EXPENSES

 

9.1 Termination. This Agreement may be terminated and the transactions contemplated hereby may be abandoned at any time prior to the Closing as follows:

 

(a) by mutual written consent of the Purchaser and the Company;

 

(b) by written notice by the Purchaser or the Company, if any of the conditions to the Closing set forth in Article VIII have not been satisfied or waived by December 31, 2019 (the “Outside Date”) provided, that if the Purchaser seeks and receives the approval of its shareholders for an Extension, the Purchaser shall have the right by providing written notice thereof to the Company to extent the Outside Date for an additional period equal to the shorter of (i) three additional months and (ii) the period ending on the last date for the Purchaser to consummate its initial Business Combination pursuant to such Extension); provided, however, the right to terminate this Agreement under this Section 9.1(b) shall not be available to a Party if the breach or violation by such Party or its Affiliates (or with respect to the Company, any other Company Party or any Seller) of any representation, warranty, covenant or obligation under this Agreement was the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Date;

 

(c) by written notice by either the Purchaser or the Company, if a Governmental Authority of competent jurisdiction shall have issued an Order or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such Order or other action has become final and non-appealable; provided, however, that the right to terminate this Agreement pursuant to this Section 9.1(c) shall not be available to a Party if the failure by such Party or its Affiliates (or with respect to the Company, any other Company Party or any Seller) to comply with any provision of this Agreement has been a substantial cause of, or substantially resulted in, such action by such Governmental Authority;

 

(d) by written notice by the Company to the Purchaser, if (i) there has been a breach by the Purchaser of any of its representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of the Purchaser shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 8.2(a) or Section 8.2(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach or inaccuracy is provided to the Purchaser by the Company or (B) the Outside Date; provided, that the Company shall not have the right to terminate this Agreement pursuant to this Section 9.1(d) if at such time any Company Party or any Seller is in material uncured breach of this Agreement;

 

(e) by written notice by the Purchaser to the Company, if (i) there has been a breach by any Company Party or any Seller of any of their respective representations, warranties, covenants or agreements contained in this Agreement, or if any representation or warranty of such Parties shall have become untrue or inaccurate, in any case, which would result in a failure of a condition set forth in Section 8.3(a) or Section 8.3(b) to be satisfied (treating the Closing Date for such purposes as the date of this Agreement or, if later, the date of such breach), and (ii) the breach or inaccuracy is incapable of being cured or is not cured within the earlier of (A) twenty (20) days after written notice of such breach or inaccuracy is provided to the Company by the Purchaser or (B) the Outside Date; provided, that the Purchaser shall not have the right to terminate this Agreement pursuant to this Section 9.1(e) if at such time the Purchaser is in material uncured breach of this Agreement;

 

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(f) by written notice by the Purchaser to the Company, if there shall have been a Material Adverse Effect on any Target Company following the date of this Agreement which is uncured and continuing;

 

(g) by written notice by either the Purchaser or the Company to the other, if the Shareholder Meeting (including any adjournment or postponement thereof) is held and has concluded, the shareholders of the Purchaser have duly voted, and the Required Shareholder Vote was not obtained;

 

(h) by written notice by the Company to the Purchaser, if the Purchaser does not have sufficient funds available at the Closing, either from the remaining cash and cash equivalents in the Trust Account after giving effect to the Closing Redemption or from the proceeds of any PIPE Investment (excluding any proceeds from a PIPE Investment by an investor sourced by the Company), if any, but for the avoidance of doubt excluding for purposes of this Section 9.1(h) any cash or cash equivalents of the Target Companies, to pay the IPO Underwriter’s fees under the Business Combination Marketing Agreement;

 

(i) by written notice by the Purchaser to the Company, if (i) the Company Parties have not fully satisfied all of the requirements of Section 6.21 on or prior to September 16, 2019 (provided, that upon the Company Parties delivering all of the requirements of Section 6.21 after September 16, 2019, the Purchaser shall not be permitted thereafter to terminate under this Section 9.1(i)(i)), or (ii) any of the VIE Contracts at any time thereafter are not in full force and effect in accordance with the terms thereof at such time of termination; or

 

(j) by written notice by the Purchaser to the Company if (i) the Company has not delivered the Draft Audited Financial Statements to the Purchaser on or prior to September 16, 2019 (provided, that upon the Company delivering the Draft Audited Financial Statements to the Purchaser after September 16, 2019, the Purchaser shall not be permitted thereafter to terminate under this Section 9.1(j)(i)), or (ii) if the Final Audited Financial Statements are materially different from the Draft Audited Financial Statements in an adverse manner, including any of the consolidated revenues, net income before taxes, or assets being more than five percent (5%) less than the amounts set forth in the Draft Audited Financial Statements or the consolidated liabilities being more than five percent (5%) greater than the amounts set forth in the Draft Audited Financial Statements.

 

9.2 Effect of Termination. This Agreement may only be terminated in the circumstances described in Section 9.1 and pursuant to a written notice delivered by the applicable Party to the other applicable Parties, which sets forth the basis for such termination, including the provision of Section 9.1 under which such termination is made. In the event of the valid termination of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become void, and there shall be no Liability on the part of any Party or any of their respective Representatives, and all rights and obligations of each Party shall cease, except: (i) Sections 6.12, 6.13, 9.3, 9.4, 10.1, Article XI and this Section 9.2 shall survive the termination of this Agreement, and (ii) nothing herein shall relieve any Party from Liability for any willful breach of any representation, warranty, covenant or obligation under this Agreement or any Fraud Claim against such Party, in either case, prior to termination of this Agreement (in each case of clauses (i) and (ii) above, subject to Section 10.1). Without limiting the foregoing, and except as provided in Sections 9.3 and 9.4 and this Section 9.2, but subject to Section 10.1, and subject to the right to seek injunctions, specific performance or other equitable relief in accordance with Section 11.7), the Parties’ sole right prior to the Closing with respect to any breach of any representation, warranty, covenant or other agreement contained in this Agreement by another Party or with respect to the transactions contemplated by this Agreement shall be the right, if applicable, to terminate this Agreement pursuant to Section 9.1.

 

9.3 Fees and Expenses. Subject to Sections 6.17, 9.4, 10.1, 11.14 and 11.15 all Expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses. As used in this Agreement, “Expenses” shall include all out-of-pocket expenses (including all fees and expenses of counsel, accountants, investment bankers, financial advisors, financing sources, experts and consultants to a Party hereto or any of its Affiliates) incurred by a Party or on its behalf in connection with or related to the authorization, preparation, negotiation, execution or performance of this Agreement or any Ancillary Document related hereto and all other matters related to the consummation of this Agreement. With respect to Purchaser, Expenses shall include any and all deferred expenses (including fees or commissions payable to the underwriters and any legal fees) of the IPO upon consummation of a Business Combination and any expenses incurred in connection with any Extension.

 

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9.4 Termination Fee. Notwithstanding Section 9.3 above, in the event that there is a valid and effective termination of this Agreement by the Purchaser pursuant to Section 9.1(e), then the Company Parties shall jointly and severally pay to the Purchaser a termination fee equal to Six Hundred Thirty-Nine Thousand U.S. Dollars ($639,000), plus the Expenses incurred by or on behalf of the Purchaser or any of its Affiliates in connection with the authorization, preparation, negotiation, execution or performance of this Agreement or the Ancillary Documents or the transactions contemplated hereby or thereby, including any related SEC filings, the Solicitation Documents, any Redemption and any PIPE Investment (such aggregate amount, the “Termination Fee”). The Termination Fee shall be paid by wire transfer of immediately available funds to an account designated in writing by the Purchaser within ten (10) Business Days after the Purchaser delivers to the Company the amount of such Expenses, along with reasonable documentation in connection therewith. Notwithstanding anything to the contrary in this Agreement, the Parties expressly acknowledge and agree that, with respect to any termination of this Agreement in circumstances where the Termination Fee is payable, the payment of the Termination Fee shall, in light of the difficulty of accurately determining actual damages, constitute liquidated damages with respect to any claim for damages or any other claim which the Purchaser would otherwise be entitled to assert against any Company Party or any Seller or any of their respective Affiliates or any of their respective assets, or against any of their respective directors, officers, employees or shareholders with respect to this Agreement and the transactions contemplated hereby and shall constitute the sole and exclusive remedy available to the Purchaser, provided, that the foregoing shall not limit (x) any Company Party or any Seller from Liability for any Fraud Claim relating to events occurring prior to termination of this Agreement or (y) the rights of the Purchaser to seek specific performance or other injunctive relief in lieu of terminating this Agreement.

 

Article X

WAIVERS AND RELEASES

 

10.1 Waiver of Claims Against Trust. Each Company Party and each Seller hereby acknowledges that it has read the IPO Prospectus and understands that the Purchaser has established the Trust Account containing the proceeds of the IPO and the overallotment shares acquired by the Purchaser’s underwriters and from certain private placements occurring simultaneously with the IPO (including interest accrued from time to time thereon) for the benefit of the Purchaser’s public shareholders (including overallotment shares acquired by the Purchaser’s underwriters) (the “Public Shareholders”) and that, except as otherwise described in the IPO Prospectus, the Purchaser may disburse monies from the Trust Account only: (a) to the Public Shareholders in the event they elect to redeem or convert their Purchaser Ordinary Shares in connection with the consummation of the Purchaser’s initial business combination (as such term is used in the IPO Prospectus) (“Business Combination”) or in connection with an amendment to the Purchaser’s Organizational Documents to extend the Purchaser’s deadline to consummate its Business Combination, (b) to the Public Shareholders if the Purchaser fails to consummate a Business Combination within eighteen (18) months after the closing of the IPO (or up to twenty-two (22) months from the closing of the IPO if the Purchaser extends such period by issuing additional Purchaser Public Warrants as contemplated by the IPO Prospectus and the Purchaser’s Organizational Documents), (c) with respect to any interest income earned on the amounts held in the Trust Account, amounts necessary to pay for franchise and income taxes or (d) to the Purchaser after or concurrently with the consummation of its Business Combination. For and in consideration of the Purchaser entering into this Agreement and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, each Company Party and each Seller hereby agrees on behalf of itself and its Affiliates that, notwithstanding anything to the contrary in this Agreement, none of the Company Parties or any Seller, nor any of their respective Affiliates, do now or shall at any time hereafter have any right, title, interest or claim of any kind in or to any monies in the Trust Account or distributions therefrom, or make any claim against the Trust Account (including any distributions therefrom), regardless of whether such claim arises as a result of, in connection with or relating in any way to, this Agreement, any other proposed or actual business relationship between the Purchaser or any of its Representatives, on the one hand, and any Company Party or any Seller or any of their respective Representatives, on the other hand, or any other matter, and regardless of whether such claim arises based on contract, tort, equity or any other theory of legal liability (collectively, the “Released Claims”). Each Company Party and each Seller on behalf of itself and its Affiliates hereby irrevocably waives any Released Claims that any such Party of any of its Affiliates may have against the Trust Account (including any distributions therefrom) now or in the future as a result of, or arising out of, any negotiations, contracts or agreements with Purchaser or its Representatives and will not seek recourse against the Trust Account (including any distributions therefrom) for any reason whatsoever (including for an alleged breach of this Agreement or any other agreement with Purchaser or its Affiliates). Each Company Party and each Seller agrees and acknowledges that such irrevocable waiver is material to this Agreement and specifically relied upon by the Purchaser and its Affiliates to induce the Purchaser to enter in this Agreement, and each Company Party and each Seller further intends and understands such waiver to be valid, binding and enforceable against such Party and each of its Affiliates under applicable Law. To the extent that any Company Party, any Seller or any of their respective Affiliates commences any Action based upon, in connection with, relating to or arising out of any matter relating to the Purchaser or its Representatives, which proceeding seeks, in whole or in part, monetary relief against the Purchaser or its Representatives, each Company Party and each Seller hereby acknowledges and agrees that its and its Affiliates’ sole remedy shall be against funds held outside of the Trust Account and that such claim shall not permit such Party or any of its Affiliates (or any other Person claiming on any of their behalves or in lieu of them) to have any claim against the Trust Account (including any distributions therefrom) or any amounts contained therein. In the event that any Company Party, any Seller or any of their respective Affiliates commences any Action based upon, in connection with, relating to or arising out of any matter relating to the Purchaser or its Representatives which proceeding seeks, in whole or in part, relief against the Trust Account (including any distributions therefrom) or the Public Shareholders, whether in the form of money damages or injunctive relief, the Purchaser and its Representatives, as applicable, shall be entitled to recover from the commencing Person and its Affiliates the associated legal fees and costs in connection with any such Action, in the event the Purchaser or its Representatives, as applicable, prevails in such Action. This Section 10.1 shall survive termination of this Agreement for any reason and continue indefinitely.

 

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10.2 Release and Covenant Not to Sue. Effective as of the Closing, to the fullest extent permitted by applicable Law, each Seller, on behalf of itself and its Affiliates that owns any share or other equity interest in or of such Seller (the “Releasing Persons”), hereby releases and discharges the Target Companies from and against any and all Actions, obligations, agreements, debts and Liabilities whatsoever, whether known or unknown, both at law and in equity, which such Releasing Person now has, has ever had or may hereafter have against the Target Companies arising on or prior to the Closing Date or on account of or arising out of any matter occurring on or prior to the Closing Date, including any rights to indemnification or reimbursement from a Target Company, whether pursuant to its Organizational Documents, Contract or otherwise, and whether or not relating to claims pending on, or asserted after, the Closing Date. From and after the Closing, each Releasing Person hereby irrevocably covenants to refrain from, directly or indirectly, asserting any Action, or commencing or causing to be commenced, any Action of any kind against the Target Companies or their respective Affiliates, based upon any matter purported to be released hereby. Notwithstanding anything herein to the contrary, the releases and restrictions set forth herein shall not apply to any claims a Releasing Person may have against any party pursuant to the terms and conditions of this Agreement or any Ancillary Document or any of the other matters set forth on Schedule 10.2.

 

Article XI

MISCELLANEOUS

 

11.1 Notices. All notices, consents, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given when delivered (i) in person, (ii) by facsimile or other electronic means, with affirmative confirmation of receipt, (iii) one Business Day after being sent, if sent by reputable, nationally recognized overnight courier service or (iv) three (3) Business Days after being mailed, if sent by registered or certified mail, pre-paid and return receipt requested, in each case to the applicable Party at the following addresses (or at such other address for a Party as shall be specified by like notice):

 

If to the Purchaser at or prior to the Closing, to:

 

TKK Symphony Acquisition Corporation
c/o Texas Kang Kai Capital Management (HongKong) Limited
2039, 2/F United Center, 95 Queensway Admiralty, Hong Kong
Attn: Sing Wang, Chairman and CEO
Telephone No.: +852 3643 1693
Email: sw@tkkcapital.com

 

with a copy (which will not constitute notice) to:

 

Ellenoff Grossman & Schole LLP
1345 Avenue of the Americas, 11th Floor New York, New York 10105
Attn:    Stuart Neuhauser, Esq.
              Matthew A. Gray, Esq.
Facsimile No.: (212) 370-7889
Telephone No.: (212) 370-1300
Email:  sneuhauser@egsllp.com
mgray@egsllp.com

 

and

  

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