Item
1.01. Entry Into a Material Definitive Agreement
On
July 25, 2016, E-compass Acquisition Corp., a Cayman Islands company (“Parent,” or the “Company”), iFresh
Inc., a Delaware corporation and a wholly-owned subsidiary of E-compass (“iFresh”), iFresh Merger Sub Inc., a Delaware
corporation and wholly owned subsidiary of iFresh (“Merger Sub”), NYM Holding, Inc., a Delaware corporation (“NYM”)
the stockholders of NYM (the “Stockholders”), and Long Deng, as representative of the Stockholders, entered into a
Merger Agreement (the “Agreement”)
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Acquisition
of NYM; Acquisition Consideration
Upon
the closing of the transactions contemplated in the Agreement, iFresh will acquire (the “Acquisition”) 100% of the
issued and outstanding equity securities of NYM in exchange for an aggregate of 12 million shares of the common stock of iFresh
(the “iFresh Common Stock”) and $5 million in cash.
Pursuant
to the terms of a voting agreement to be entered into at closing, the parties agreed that immediately following the closing of
the Acquisition, iFresh’s board of directors will consist of five directors, four of whom will be designated by NYM and
one of whom will be designated by iFresh.
Redomestication
Merger
Immediately
prior to the Acquisition, Parent will be merged with and into iFresh, the separate corporate existence of Parent will cease and
iFresh will continue as the surviving corporation (the “Redomestication Merger”). In connection with the Redomestication
Merger, each shares of Parent’s issued and outstanding capital stock will be converted into an equivalent amount of iFresh’s
capital stock:
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Each
ordinary share of Parent will be converted automatically into one share of common stock of iFresh.
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Each
right to acquire one-tenth of one ordinary share of Parent will be converted into one right to acquire one-tenth of one share
of common stock of iFresh.
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Each
unit of Parent will be converted automatically into one iFresh unit.
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Shareholder
Approval
Prior
to the consummation of the transactions contemplated by the Agreement (i) a majority of the holders of Parent’s ordinary
shares must approve the transactions contemplated by the Agreement (the “Stockholder Approval”). In connection with
obtaining the Stockholder Approval, Parent must call a special meeting of its common Stockholders and must prepare and file with
the Securities and Exchange Commission a Registration Statement on Form S-4 (the “Registration Statement”) and proxy
statement and proxy card for the Redomestication Merger and Stockholder Approval.
Representations
and Warranties
In
the Agreement, NYM makes certain representations and warranties (with certain exceptions set forth in the disclosure schedule
to the Agreement) relating to, among other things: (a) proper corporate organization of NYM and its subsidiaries and similar corporate
matters; (b) authorization, execution, delivery and enforceability of the Agreement and other transaction documents; (c) absence
of conflicts; (d) capital structure; (e) accuracy of charter documents and corporate records; (f) related-party transactions;
(g) required consents and approvals; (h) financial information; (i) absence of certain changes or events; (j) title to assets
and properties; (k) material contracts; (l) insurance; (m) licenses and permits; (n) compliance with laws, including those relating
to foreign corrupt practices and money laundering; (o) ownership of intellectual property; (p) employment and labor matters; (q)
taxes and audits; (r) environmental matters; (s) brokers and finders; (t) that NYM is not an investment company; and (u) other
customary representations and warranties.
In
the Agreement, Parent makes certain representations and warranties relating to, among other things: (a) proper corporate organization
and similar corporate matters; (b) authorization, execution, delivery and enforceability of the Agreement and other transaction
documents; (c) brokers and finders; (d) capital structure; (e) validity of share issuance; (f) minimum trust fund amount; (g)
Nasdaq listing; and (h) SEC filing requirements.
Conduct
Prior to Closing; Covenants
NYM
has agreed to operate its business in the ordinary course, consistent with past practices, prior to the closing of the Acquisition
(with certain exceptions) and not to take certain specified actions without the prior written consent of Parent.
The
Agreement also contains covenants of the Company providing for:
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NYM
and its subsidiaries and portfolio companies to provide access to their books and records and providing information relating
to NYM’s business to Parent, its counsel and other representatives; and
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NYM
to deliver the financial statements required by the Company to make applicable filings with the SEC.
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Conditions
to Closing
General
Conditions
Consummation
of the Agreement and the acquisition is conditioned on (a) the absence of any order, stay, judgment or decree by any government
agency or any pending or threatened litigation seeking to enjoin, modify, amend or prohibit the Acquisition; (b) the consummation
of the Redomestication Merger, and (c) the SEC declaring the Registration Statement effective.
NYM’S
Conditions to Closing
The
obligations of NYM to consummate the transactions contemplated by the Agreement, in addition to the conditions described above,
are conditioned upon (i) Parent and iFresh complying with all of their respective obligations required to be performed by them
pursuant to the required covenants in the Agreement, (ii) the representations and warranties of Parent being true on and as of
the closing date of the Acquisition and (iii) Parent having obtained debt financing of at least $15 million on terms reasonably
acceptable to NYM.
Parent’s
and iFresh’s Conditions to Closing
The
obligations of Parent and iFresh to consummate the transactions contemplated by the Agreement, in addition to the conditions described
above in the first paragraph of this section, are conditioned upon each of the following, among other things:
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the
representations and warranties of the Company being true on and as of the closing date of the acquisition and NYM complying
with all required covenants in the Agreement;
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there
having been no material adverse effect to NYM’s business, regardless of whether it involved a known risk;
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receipt
by Parent of third party consents;
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Parent
receiving a legal opinion from NYM’s counsel; and
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a
majority of the holders of ordinary shares of Parent shall have approved the Agreement and the transactions contemplated by
the Agreement.
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Termination
The
Agreement may be terminated and/or abandoned at any time prior to the closing, whether before or after approval of the proposals
being presented to Parent’s shareholders, by:
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Either
Parent or iFresh if the closing has not occurred by February 18, 2017;
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Parent,
if NYM or any Stockholder has materially breached any representation, warranty, agreement or covenant contained in the Agreement
and such breach has not been cured within fifteen days following the receipt by NYM or any Stockholder, as applicable, of
Parent’s written notice to terminate the Agreement; or
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NYM,
if iFresh has materially breached any representation, warranty, agreement or covenant contained in the Agreement and such
breach has not been cured within fifteen days following the receipt by the iFresh of NYM’s written notice to terminate
the Agreement.
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Indemnification
Until
the first anniversary of the date of the closing of the Acquisition, NYM and the Stockholders have agreed, jointly and severally,
to indemnify the iFresh and its affiliates from any damages arising from (a) any breach of any representation, warranty or covenant
made by the Representing Parties, (b) any actions by any third parties with respect to NYM’s business for any period on
or prior to the closing date, (c) the violation of any laws in connection with or with respect to the operation of the business
on or prior to the closing date, (d) any claims by any employee of NYM or any of its subsidiaries or portfolio companies, (e)
any taxes attributable to the period prior to closing or (f) any sales, use, transfer or similar tax imposed on iFresh or its
affiliates as a result of the transactions contemplated by the Agreement. The indemnification obligations are capped at $24,000,000.
The Stockholders agreed to place 2.4 million of the consideration shares (valued at $10.00 per share) in escrow to satisfy any
indemnification obligations incurred under the Agreement.
The
foregoing summary of the Agreement does not purport to be complete and is qualified in its entirety by reference to the actual
Merger and Share Exchange Agreement, which is filed as Exhibit 10.1 hereto, which is incorporated by reference in this report.
