UNDERWRITING AGREEMENT between QUADRAPOINT ACQUISITION CORP. and LADENBURG THALMANN & CO. INC. Dated: _____________________, 2005
EXHIBIT
1.1
between
and
LADENBURG
▇▇▇▇▇▇▇▇ & CO. INC.
Dated:
_____________________, 2005
1
_________,
▇▇▇▇
▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear
Sirs:
The
undersigned, QuadraPoint Acquisition Corp., a Delaware corporation (“Company”),
hereby confirms its agreement with Ladenburg ▇▇▇▇▇▇▇▇ & Co. Inc. (being
referred to herein variously as “you,” “Ladenburg” or the “Representative”) and
with the other underwriters named on Schedule I hereto for which Ladenburg is
acting as Representative (the Representative and the other Underwriters being
collectively called the “Underwriters” or, individually, an “Underwriter”) as
follows:
1. Purchase
and Sale of Securities.
1.1 Firm
Securities.
1.1.1 Purchase
of Firm Units. On the
basis of the representations and warranties herein contained, but subject to the
terms and conditions herein set forth, the Company agrees to issue and sell,
severally and not jointly, to the several Underwriters, an aggregate of
12,500,000 units (“Firm Units”) of the Company, at a purchase price (net of
discounts and commissions) of $5.58 per Firm Unit. The Underwriters, severally
and not jointly, agree to purchase from the Company the number of Firm Units set
forth opposite their respective names on Schedule I attached hereto and made a
part hereof at a purchase price (net of discounts and commissions) of $5.58 per
Firm Unit. The Firm Units are to be offered initially to the public (“Offering”)
at the offering price of $6.00 per Firm Unit. Each Firm Unit consists of one
share of the Company’s common stock, par value $.0001 per share (“Common
Stock”), and two warrants (“Warrant(s)”). The shares of Common Stock and the
Warrants included in the Firm Units will not be separately transferable until 90
days after the effective date (“Effective Date”) of the Registration Statement
(as defined in Section 2.1.1 hereof) unless Ladenburg informs the Company of its
decision to allow earlier separate trading, but in no event will Ladenburg allow
separate trading until the preparation of an audited balance sheet of the
Company reflecting receipt by the Company of the proceeds of the Offering and
the filing of a Current Report on Form 8-K with the Securities and Exchange
Commission (the “Commission”) by the Company which includes such balance sheet.
Each Warrant entitles its holder to exercise it to purchase one share of Common
Stock for $5.00 during the period commencing on the later of the consummation by
the Company of its “Business Combination” or one year from the Effective Date
and terminating on the four-year anniversary of the Effective Date. “Business
Combination” shall mean any merger, capital stock exchange, asset acquisition or
other similar business combination consummated by the Company with an operating
business (as
described more fully in the Registration Statement).
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1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 10:00 A.M., New York
time, on the fourth business day following the effective date or at such earlier
time as shall be agreed upon by the Representative and the Company at the
offices of the Representative or at such other place as shall be agreed upon by
the Representative and the Company. The hour and date of delivery and payment
for the Firm Units are called “Closing Date.” Payment for the Firm Units shall
be made on the Closing Date at the Representative’s election by wire transfer in
Federal (same day) funds or by certified or bank cashier’s check(s) in New York
Clearing House funds, payable as follows: $67,250,000 of the proceeds received
by the Company for the Firm Units shall be deposited in the trust fund
established by the Company for the benefit of the public stockholders as
described in the Registration Statement (“Trust Fund”) pursuant to the terms of
an Investment Management Trust Agreement (“Trust Agreement”) and the remaining
proceeds shall be paid (subject to Section 3.13 hereof) to the order of the
Company upon delivery to you of certificates (in form and substance satisfactory
to the Underwriters) representing the Firm Units (or through the facilities of
the Depository Trust Company (“DTC”)) for the account of the Underwriters. The
Firm Units shall be registered in such name or names and in such authorized
denominations as the Representative may request in writing at least two full
business days prior to the Closing Date. The Company will permit the
Representative to examine and package the Firm Units for delivery, at least one
full business day prior to the Closing Date. The Company shall not be obligated
to sell or deliver the Firm Units except upon tender of payment by the
Representative for all the Firm Units.
1.2 Over-Allotment
Option.
1.2.1 Option
Units. For the
purposes of covering any over-allotments in connection with the distribution and
sale of the Firm Units, the Underwriters are hereby granted, severally and not
jointly, an option to purchase up to an additional 1,875,000 units from the
Company (“Over-allotment Option”). Such additional 1,875,000 units are
hereinafter referred to as “Option Units.” The Firm Units and the Option Units
are hereinafter collectively referred to as the “Units,” and the Units, the
shares of Common Stock and the Warrants included in the Units and the shares of
Common Stock issuable upon exercise of the Warrants are hereinafter referred to
collectively as the “Public Securities.” The purchase price to be paid for the
Option Units will be the same price per Option Unit as the price per Firm Unit
set forth in Section 1.1.1 hereof.
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1.2.2 Exercise
of Option. The
Over-allotment Option granted pursuant to Section 1.2.1 hereof may be
exercised by the Representative as to all (at any time) or any part (from time
to time) of the Option Units within 45 days after the Effective Date. The
Underwriters will not be under any obligation to purchase any Option Units prior
to the exercise of the Over-allotment Option. The Over-allotment Option granted
hereby may be exercised by the giving of oral notice to the Company by the
Representative, which must be confirmed in writing by overnight mail or
facsimile transmission setting forth the number of Option Units to be purchased
and the date and time for delivery of and payment for the Option Units (the
“Option Closing Date”), which will not be later than five full business days
after the date of the notice or such other time as shall be agreed upon by the
Company and the Representative, at the offices of the Representative or at such
other place as shall be agreed upon by the Company and the Representative. Upon
exercise of the Over-allotment Option, the Company will become obligated to
convey to the Underwriters, and, subject to the terms and conditions set forth
herein, the Underwriters will become obligated to purchase, the number of Option
Units specified in such notice.
1.2.3 Payment
and Delivery. Payment
for the Option Units shall be made on the Option Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $5.58 per Option Unit shall be deposited in the Trust Fund pursuant
to the Trust Agreement upon delivery to you of certificates (in form and
substance satisfactory to the Underwriters) representing the Option Units (or
through the facilities of DTC) for the account of the Underwriters. The
certificates representing the Option Units to be delivered will be in such
denominations and registered in such names as the Representative requests not
less than two full busi-ness days prior to the Closing Date or the Option
Closing Date, as the case may be, and will be made available to the
Representative for inspection, checking and packaging at the aforesaid office of
the Company’s transfer agent or correspondent not less than one full business
day prior to such Closing Date.
1.3 Representative’s
Purchase Option.
1.3.1 Purchase
Option. The
Company hereby agrees to issue and sell to the Representative (and/or their
designees) on the Effective Date an option (“Representative’s Purchase Option”)
for the purchase of an aggregate of _______ units (“Representative’s Units”) for
an aggregate purchase price of $100. Each of the Representative’s Units is
identical to the Firm Units except that the Warrants included in the
Representative’s Units (“Representative’s Warrants”) have an exercise price of
$____ (___% of the exercise price of the Warrants included in the Units sold to
the public). The Representative’s Purchase Option shall be exercisable, in whole
or in part, commencing on the later of the consummation of a Business
Combination and one year from the Effective Date and expiring on the five-year
anniversary of the Effective Date at an initial exercise price per
Representative’s Unit of $___ (___% of the initial public offering price of a
Unit). The Representative’s Purchase Option, the Representative’s Units, the
Representative’s Warrants and the shares of Common Stock issuable upon exercise
of the Representative’s Warrants are hereinafter referred to collectively as the
“Representative’s Securities.” The Public Securities and the Representative’s
Securities are hereinafter referred to collectively as the “Securities.” The
Representative understands and agrees that there are significant restrictions
against transferring the Representative’s Purchase Option during the first year
after the Effective Date, as set forth in Section 3 of the Representative’s
Purchase Option.
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1.3.2 Payment
and Delivery.
Delivery and payment for the Representative’s Purchase Option shall be made on
the Closing Date. The Company shall deliver to the Underwriters, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the Representative may request.
2. Representations
and Warranties of the Company. The
Company represents and warrants to the Underwriters as follows:
2.1 Filing
of Registration Statement.
2.1.1 Pursuant
to the Act. The
Company has filed with the Commission a regis-tration statement and an amendment
or amendments thereto, on Form S-1 (File No. 333-_________), including any
related preliminary prospectus (“Preliminary Prospectus”), for the registration
of the Public Securities under the Securities Act of 1933, as amended (“Act”),
which registration statement and amendment or amendments have been prepared by
the Company in conformity with the requirements of the Act, and the rules and
regulations (“Regulations”) of the Commission under the Act. Except as the
context may other-wise require, such registration statement, as amended, on file
with the Commission at the time the registration statement becomes effective
(including the prospectus, financial statements, schedules, exhibits and all
other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to paragraph
(b) of Rule 430A of the Regulations), is hereinafter called the “Registration
State-ment,” and the form of the final prospectus dated the Effective Date
included in the Registration Statement (or, if applicable, the form of final
prospectus filed with the Commission pursuant to Rule 424 of the Regulations),
is here-inafter called the “Prospectus.” The Registration Statement has been
declared effective by the Commission on the date hereof.
2.1.2 Pursuant
to the Exchange Act. The
Company has filed with the Commission a Form 8-A (File Number 000-_____)
providing for the registration under the Securities Exchange Act of 1934, as
amended (“Exchange Act”), of the Units, the Common Stock and the Warrants. The
registration of the Units, Common Stock and Warrants under the Exchange Act has
been declared effective by the Commission on the date hereof.
2.2 No
Stop Orders, Etc. Neither
the Commission nor, to the best of the Company’s knowledge, any state regulatory
authority has issued any order or threatened to issue any order preventing or
suspending the use of any Prelimi-nary Prospectus or has instituted or, to the
best of the Company’s knowledge, threatened to institute any proceedings with
respect to such an order.
2.3 Disclosures
in Registration Statement.
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2.3.1 10b-5
Representation. At the
time the Regis-tration Statement became effective and at all times subsequent
thereto up to the Closing Date and the Option Closing Date, if any, the
Registration Statement and the Prospectus does and will contain all material
statements that are required to be stated therein in accordance with the Act and
the Regulations, and will in all material respects conform to the requirements
of the Act and the Regulations; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, on such dates, does or will
con-tain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. When
any Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Securities or any
amendment thereto or pursuant to Rule 424(a) of the Regula-tions) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied or will comply in all material respects with the applicable provisions
of the Act and the Regulations and did not and will not contain an 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 were made, not misleading. The representation
and warranty made in this Section 2.3.1 does not apply to statements made or
statements omitted in reliance upon and in conformity with written information
furnished to the Company with respect to the Under-writers by the Representative
expressly for use in the Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
2.3.2 Disclosure
of Agreements. The
agreements and documents described in the Registration Statement and the
Prospectus conform to the descriptions thereof contained therein and there are
no agreements or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits to
the Registration Statement, that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which the
Company is a party or by which its property or business is or may be bound or
affected and (i) that is referred to in the Pro-spectus, or (ii) is material to
the Company’s business, has been duly and validly executed by the Company, is in
full force and effect and is enforceable against the Company and, to the
Company’s knowledge, the other parties thereto, in accordance with its terms,
except (x) as such enforce-ability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, (y) as
enforceability of any indemnification or contribution provision may be limited
under the federal and state securities laws, and (z) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and none of such agreements or instru-ments
has been assigned by the Company, and neither the Company nor, to the best of
the Company’s knowledge, any other party is in breach or default thereunder and,
to the best of the Company’s knowledge, no event has occurred that, with the
lapse of time or the giving of notice, or both, would constitute a breach or
default thereunder. To the best of the Company’s knowledge, performance by the
Company of the material provisions of such agreements or instruments will not
result in a violation of any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its assets or
businesses, including, without limitation, those relating to environmental laws
and regulations.
2.3.3 Prior
Securities Transactions. No
securities of the Company have been sold by the Company or by or on behalf of,
or for the benefit of, any person or persons controlling, con-trolled by, or
under common control with the Company since the Company’s formation, except as
disclosed in the Registration Statement.
2.3.4
Regulations. The
disclosures in the Registration Statement concerning the effects of Federal,
State and local regulation on the Company's business as currently contemplated
are correct in all material respects and do not omit to state a material
fact.
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2.4 Changes
After Dates in Registration Statement.
2.4.1 No
Material Adverse Change. Since
the respective dates as of which information is given in the Regis-tration
Statement and the Prospectus, except as otherwise spe-cifically stated therein,
(i) there has been no material adverse change in the condition, financial or
otherwise, or business prospects of the Company, (ii) there have been no
material transactions entered into by the Company, other than as contemplated
pursuant to this Agreement, and (iii) no member of the Company’s management has
resigned from any position with the Company.
2.4.2 Recent
Securities Transactions, Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its equity securities.
2.5 Independent
Accountants. BDO
▇▇▇▇▇▇▇, LLP (“BDO”), whose report is filed with the Commission as part of the
Registra-tion Statement, are independent accountants as required by the Act and
the Regulations. BDO has not, during the periods covered by the financial
statements included in the Prospectus, provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange
Act.
2.6 Financial
Statements. The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement and Prospectus fairly present the
▇▇▇▇▇-cial position, the results of operations and the cash flows of the Company
at the dates and for the periods to which they apply; and such financial
statements have been prepared in conformity with United States generally
accepted accounting principles, consistently applied throughout the periods
involved; and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein. The Registration
Statement discloses all material off-balance sheet transactions, arrangements,
obligations (including contingent obligations), and other relationships of the
Company with unconsolidated entities or other persons that may have a material
current or future effect on the Company’s financial condition, changes in
financial condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or
expenses.
2.7 Authorized
Capital; Options; Etc. The
Company had at the date or dates indicated in the Prospectus duly authorized,
issued and outstanding capitalization as set forth in the Registration Statement
and the Prospectus. Based on the assumptions stated in the Registration
Statement and the Prospectus, the Company will have on the Closing Date the
adjusted stock capitalization set forth therein. Except as set forth in, or
contemplated by, the Registration Statement and the Prospectus, on the Effective
Date and on the Closing Date, there will be no options, warrants, or other
rights to purchase or otherwise acquire any authorized but unissued shares of
Common Stock of the Company or any security convertible into shares of Common
Stock of the Company, or any contracts or commitments to issue or sell shares of
Common Stock or any such options, warrants, rights or convertible
securities.
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2.8 Valid
Issuance of Securities; Etc.
2.8.1 Outstanding
Securities. All
issued and outstanding securities of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the pre-emptive rights of any holders of any security of
the Company or similar contractual rights granted by the Company. The authorized
Common Stock conforms to all statements relating thereto contained in the
Regis-tration Statement and the Prospectus. The offers and sales of the
outstanding Common Stock were at all relevant times either registered under the
Act and the applicable state securities or Blue Sky laws or are exempt from such
registration requirements.
2.8.2 Securities
Sold Pursuant to this Agreement. The
Securities have been duly authorized and, when issued and paid for in accordance
with this Agreement, will be validly issued, fully paid and non-assessable; the
holders thereof are not and will not be subject to personal lia-bility by reason
of being such holders; the Securities are not and will not be subject to the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company; and all corporate action required to
be taken for the authorization, issuance and sale of the Securities has been
duly and validly taken. The Securities conform in all material respects to all
statements with respect thereto contained in the Registration Statement. When
issued, the Representative’s Purchase Option, the Representative’s Warrants and
the Warrants will con-stitute valid and binding obligations of the Company to
issue and sell, upon exercise thereof and payment of the respective exercise
prices therefor, the number and type of securities of the Company called for
thereby in accordance with the terms thereof and such Representative’s Purchase
Option, the Representative’s Warrants and the Warrants are enforceable against
the Company in accordance with their respective terms, except (i) as such
enforce-ability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally, (ii) as enforceability of
any indemnification or contribution provision may be limited under the federal
and state securities laws, and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.9 Registration
Rights of Third Parties. Except
as set forth in the Prospectus, no holders of any securities of the Company or
any rights exercisable for or convertible or exchangeable into securities of the
Company have the right to require the Company to register any such securities of
the Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
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2.10 Validity
and Binding Effect of Agreements. This
Agreement, the Warrant Agreement (as defined in Section 2.21 hereof), the Trust
Agreement, the Services Agreement (as defined in Section 3.7.2 hereof), the
Escrow Agreement (as defined in Section 2.22.2 hereof), the Registration
Rights Agreement (as defined in Section 2.22.3 hereof) and the Representative’s
Purchase Option have been duly and validly authorized by the Company and, when
executed and delivered, will constitute, the valid and binding agreements of the
Company, enforceable against the Company in accordance with their respective
terms, except (i) as such enforceability may be limited by bank-ruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally, (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
2.11 No
Conflicts, Etc. The
execution, delivery, and performance by the Company of this Agreement, the
Warrant Agreement, the Representative’s Purchase Option, the Trust Agreement,
the Services Agreement and the Escrow Agreement, the consummation by the Company
of the transactions herein and therein contemplated and the compliance by the
Company with the terms hereof and thereof do not and will not, with or without
the giving of notice or the lapse of time or both (i) result in a breach of, or
conflict with any of the terms and provisions of, or constitute a default under,
or result in the creation, modification, termination or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to the
terms of any agreement or instrument to which the Company is a party except
pursuant to the Trust Agreement referred to in Section 2.24 hereof; (ii)
result in any violation of the pro-visions of the Certificate of Incorporation
or the Bylaws of the Company; or (iii) violate any existing applicable law,
rule, regu-lation, judgment, order or decree of any governmental agency or
court, domestic or foreign, having jurisdiction over the Company or any of its
properties or business.
2.12 No
Defaults; Violations. No
material default exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its
Certificate of Incorporation or Bylaws or in violation of any material
franchise, license, permit, applicable law, rule, regulation, judgment or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or businesses.
2.13 Corporate
Power; Licenses; Consents.
2.13.1 Conduct
of Business. The
Company has all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies that it needs as of the
date hereof to conduct its business purpose as described in the Prospectus. The
disclosures in the Registration Statement concerning the effects of federal,
state and local regulation on this offering and the Company’s business purpose
as currently contemplated are correct in all material respects and do not omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
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2.13.2 Transactions
Contemplated Herein. The
Company has all corporate power and authority to enter into this Agreement and
to carry out the provisions and conditions hereof, and all con-sents,
authorizations, approvals and orders required in connection therewith have been
obtained. No consent, authorization or order of, and no filing with, any court,
government agency or other body is required for the valid issuance, sale and
delivery, of the Securities and the consummation of the transactions and
agreements contemplated by this Agreement, the Warrant Agreement, the
Representative’s Purchase Option, the Trust Agreement and the Escrow Agreement
and as contemplated by the Prospectus, except with respect to applicable federal
and state securities laws.
2.14 D&O
Questionnaires. To the
best of the Company’s knowledge, all information contained in the questionnaires
(“Questionnaires”) completed by each of the Company’s stockholders immediately
prior to the Offering (“Initial Stockholders”) and
provided to the Underwriters as an exhibit to his or her Insider Letter (as
defined in Section 2.22.1) is true and correct and the Company has not become
aware of any information which would cause the information disclosed in the
questionnaires completed by each Initial Stockholder to become inaccurate and
incorrect.
2.15 Litigation;
Governmental Proceedings. There
is no action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or, to the best of the Company’s knowledge,
threatened against, or involving the Company or, to the best of the Company’s
knowledge, any Initial Stockholder, which has not been disclosed, that is
required to be disclosed, in the Registration Statement or the
Questionnaires.
2.16 Good
Standing. The
Company has been duly organized and is validly existing as a corporation and is
in good standing under the laws of its state of incorporation, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct of
business requires such qualification, except where the failure to qualify would
not have a material adverse effect on the assets, business or operations of the
Company.
2.17 Stop
Orders. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus or any part thereof and has not threatened
to issue any such order.
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2.18 Transactions
Affecting Disclosure to NASD.
2.18.1 Finder’s
Fees. Except
as described in the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a finder’s, consulting
or origina-tion fee by the Company or any Initial Stockholder with respect to
the sale of the Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the best of the Company’s knowledge, any
Initial Stockholder that may affect the Under-writers’ compensation, as
determined by the National Association of Securities Dealers, Inc.
(“NASD”).
2.18.2 Payments
Within Twelve Months. The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) (i) to any person, as a finder’s fee, consulting fee or otherwise, in
consideration of such person raising capital for the Company or introducing to
the Company persons who raised or provided capital to the Company, (ii) to any
NASD member or (iii) to any person or entity that has any direct or
indirect affiliation or association with any NASD member, within the twelve
months prior to the Effective Date, other than payments to
Ladenburg.
2.18.3 Use of
Proceeds. None of
the net proceeds of the Offering will be paid by the Company to any
participating NASD member or its affiliates, except as specifically authorized
herein and except as may be paid in connection with a Business Combination as
contemplated by the Prospectus.
2.18.4 Insiders’
NASD Affiliation. Based
on the Questionnaires, except as set forth on Schedule 2.18.4, no officer,
director or any beneficial owner of the Company’s unregistered securities has
any direct or indirect affiliation or association with any NASD member. The
Company will advise the Representative and its counsel if it learns that any
officer, director or owner of at least 5% of the Company’s outstanding Common
Stock is or becomes an affiliate or associated person of an NASD member
participating in the offering.
2.19 Foreign
Corrupt Practices Act. Neither
the Company nor any of the Initial Stockholders or any other person acting on
behalf of the Company has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or agent
of a customer or supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or may
be in a position to help or hinder the business of the Company (or assist it in
connection with any actual or proposed transaction) that (i) might subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company as
reflected in any of the financial statements contained in the Prospectus or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company’s internal
accounting controls and procedures are sufficient to cause the Company to comply
with the Foreign Corrupt Practices Act of 1977, as amended.
2.20. Officers’
Certificate. Any
certificate signed by any duly authorized officer of the Company and delivered
to you or to your counsel shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
2.21 Warrant
Agreement. The
Company has entered into a warrant agreement with respect to the Warrants and
the Representative’s Warrants with Continental Stock Transfer & Trust
Company substantially in the form annexed as Exhibit 4.5 to the Registration
Statement (“Warrant Agreement”).
11
2.22 Agreements
With Initial Stockholders.
2.22.1 Insider
Letters. The
Company has caused to be duly executed legally binding and enforceable
agreements (except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally, (ii) as enforceability of any indemnification, contribution or
noncompete provision may be limited under the federal and state securities laws,
and (iii) that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought)
annexed as Exhibits 10.1, 10.2, 10.3, 10.4 and 10.5 to the Registration
Statement (“Insider Letters”), pursuant to which each of the Initial
Stockholders of the Company agrees to certain matters, including but not limited
to, certain matters described as being agreed to by them under the “Proposed
Business” section of the Prospectus.
2.22.2 Escrow
Agreement. The
Company and the Initial Stockholders have entered into an escrow agreement
(“Escrow Agreement”) with Continental Stock Transfer & Trust Company
(“Escrow Agent”) substantially in the form annexed as Exhibit 10.7 to the
Registration Statement, whereby the Common Stock owned by the Initial
Stockholders will be held in escrow by the Escrow Agent, until the third
anniversary of the Effective Date. During such escrow period, the Initial
Stockholders shall be prohibited from selling or otherwise transferring such
shares (except to spouses and children of Initial Stockholders and trusts
established for their benefit and as otherwise set forth in the Escrow
Agreement) but will retain the right to vote such shares. To the Company’s
knowledge, the Escrow Agreement is enforceable against each of the Initial
Stockholders and will not, with or without the giving of notice or the lapse of
time or both, result in a breach of, or conflict with any of the terms and
provisions of, or constitute a default under, any agreement or instrument to
which any of the Initial Stockholders is a party. The Escrow Agreement shall not
be amended, modified or otherwise changed without the prior written consent of
Ladenburg.
2.22.3 Registration
Rights Agreement. The Company and the Initial Stockholders have entered into a
registration rights agreement (“Registration Rights Agreement”) substantially in
the form annexed as Exhibit 10.10 to the Registration Statement, whereby the
Initial Stockholders will be entitled to certain registration rights as set
forth in such Registration Rights Agreement and described more fully in the
Registration Statement.
2.23 Intentionally
Omitted.
2.24 Investment
Management Trust Agreement. The
Company has entered into the Trust Agreement with respect to certain proceeds of
the Offering substantially in the form annexed as Exhibit 10.6 to the
Registration Statement.
12
2.25 Covenants
Not to Compete. No
Initial Stockholder, employee, officer or director of the Company is subject to
any noncompetition agreement or non-solicitation agreement with any employer or
prior employer which could materially affect his ability to be an Initial
Stockholder, employee, officer and/or director of the Company.
2.26 Investment
Company Act; Investments. The
Company has been advised concerning the Investment Company Act of 1940, as
amended (the “Investment Company Act”), and the rules and regulations thereunder
and has in the past conducted, and intends in the future to conduct, its affairs
in such a manner as to ensure that it will not become an “investment company” or
a company “controlled” by an “investment company” within the meaning of the
Investment Company Act and such rules and regulations. The Company is not, nor
will the Company become upon the sale of the Units and the application of the
proceeds therefore as described in the Prospectus under the caption “Use of
Proceeds”, an “investment company” or a person controlled by an “investment
company” within the meaning of the Investment Company Act. No more
than 45% of the “value” (as defined in Section 2(a)(41) of the Investment
Company Act of 1940 (“Investment Company Act”)) of the Company’s total assets
(exclusive of cash items and “Government Securities” (as defined in Section
2(a)(16) of the Investment Company Act) consist of, and no more than 45% of the
Company’s net income after taxes is derived from, securities other than the
Government Securities.
2.27
Subsidiaries. The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.28
Related
Party Transactions. There
are no business relationships or related party transactions involving the
Company or any other person required to be described in the Prospectus that have
not been described as required.
2.29 Administrative
Services.
The
Company has entered into an agreement (“Services Agreement”) with Gordian
Investment Partners, LLC (“Affiliate”) substantially
in the form annexed as Exhibit 10.8 to the Registration Statement pursuant
to which the Affiliate will make available to the Company general
and administrative services including office space, utilities and secretarial
support for the
Company’s use for $3,750 per month
2.30 Loans. ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Gordian Investment Partners, LLC have made loans
to the Company in the aggregate amount of $130,000 (the “Insider Loans”
substantially in the form annexed as Exhibit 10.9 to the Registration Statement.
The Insider Loans do not bear any interest and are repayable by the Company on
the earlier to occur of (i) July 1, 2006 or (ii) the date on which the Company
consummates an initial public offering of its securities.
3. Covenants
of the Company. The
Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement. The
Company will deliver to the Representative, prior to filing, any amendment or
supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and not file any such amendment or supplement to which
the Representative shall reasonably object in writing.
13
3.2 Federal
Securities Laws.
3.2.1 Compliance. During
the time when a Prospectus is required to be delivered under the Act, the
Company will use all reasonable efforts to comply with all require-ments imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Public Securities in
accordance with the provisions hereof and the Prospectus. If at any time when a
Prospectus relating to the Public Securities is required to be delivered under
the Act, any event shall have occurred as a result of which, in the opinion of
counsel for the Company or counsel for the Underwriters, the Prospectus, as then
amended or supple-mented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Representative promptly and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment or supplement in accordance with Section 10 of the
Act.
3.2.2 Filing
of Final Prospectus. The
Company will file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule 424 of
the Regulations.
3.2.3 Exchange
Act Registration. The
Company will use its best efforts to maintain the registration of the Units,
Common Stock and Warrants under the provisions of the Exchange Act for a period
of five years from the Effective Date, or until the Company is required to be
liquidated if earlier, or, in the case of the Warrants, until the Warrants
expire and are no longer exercisable. The Company will not deregister the Units
under the Exchange Act without the prior written consent of
Ladenburg.
3.3 Blue
Sky Filings. The
Company will endeavor in good faith, in cooperation with the Representative, at
or prior to the time the Registration Statement becomes effective, to qualify
the Public Securities for offering and sale under the securities laws of such
jurisdictions as the Representative may reasonably desig-nate, provided that no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be sub-ject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. In each
juris-diction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
14
3.4 Delivery
to Underwriters of Prospectuses. The
Company will deliver to each of the several Underwriters, without charge, from
time to time during the period when the Prospectus is required to be delivered
under the Act or the Exchange Act, such number of copies of each Preliminary
Prospectus and the Prospectus as such Underwriters may reasonably request and,
as soon as the Registra-tion Statement or any amendment or supplement thereto
becomes effective, deliver to you two original executed Registration Statements,
including exhibits, and all post-effective amendments thereto and copies of all
exhibits filed therewith or incorporated therein by reference and all original
executed consents of certified experts.
3.5 Effectiveness
and Events Requiring Notice to the Representative. The
Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representative immediately and confirm the notice
in writing (i) of the effectiveness of the Registration Statement and any
amendment thereto, (ii) of the issuance by the Commission of any stop order or
of the initiation, or the threatening, of any proceeding for that purpose, (iii)
of the issuance by any state securities commis-sion of any proceedings for the
suspension of the qualification of the Public Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the mailing and delivery to the Commission for filing of
any amendment or supplement to the Registration Statement or Prospectus, (v) of
the receipt of any comments or request for any additional information from the
Commission, and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review
of Financial Statements. Until
the earlier of five years from the Effective Date, or until such earlier time
upon which the Company is required to be liquidated, the Company, at its
expense, shall cause its regularly engaged independent certified public
accountants to review (but not audit) the Company’s financial statements for
each of the first three fiscal quarters prior to the announcement of quarterly
financial information, the filing of the Company’s Form 10-Q quarterly report
and the mailing of quarterly financial information to stockholders.
15
3.7 Affiliated
Transactions.
3.7.1 Business
Combinations. The
Company will not consummate a Business Combination with any entity which is
affiliated with any Initial Stockholder unless
the Company obtains an opinion from an independent investment banking firm that
the Business Combination is fair to the Company’s stockholders from a financial
perspective.
3.7.2 Intentionally
Omitted.
3.7.3 Compensation. Except
for payments made pursuant to the Services Agreement and the repayment of the
Insider Loans, the Company shall not pay any Initial Stockholder or any of their
affiliates any fees or compensation, prior to, or in connection with, the
consummation of a Business Combination; provided further that the Initial
Stockholders shall be entitled to reimbursement from the Company for their
reasonable out-of-pocket expenses incurred in connection with seeking and
consummating a Business Combination.
3.8 Secondary
Market Trading and Standard & Poor’s. The
Company will apply to be included in Standard & Poor’s Daily News and
Corporation Records Corporate Descriptions for a period of five years from the
consummation of a Business Combination. Promptly after the consummation of the
Offering, the Company shall take such commercially reasonable steps as may be
necessary to obtain a secondary market trading exemption for the Company’s
securities in the State of California. The Company shall also take such other
action as may be reasonably requested by the Representative to obtain a
secondary market trading exemption in such other states as may be requested by
the Representative.
3.9 Warrant
Solicitation Fees. The
Company hereby engages Ladenburg, on a non-exclusive basis, as its agent for the
solicitation of the exercise of the Warrants. The Company will (i) assist
Ladenburg with respect to such solicitation, if requested by Ladenburg, and
(ii) at Ladenburg’s request, provide Ladenburg, and direct the Company’s
transfer and warrant agent to provide to Ladenburg, at the Company’s cost, lists
of the record and, to the extent known, beneficial owners of, the Warrants.
Commencing one year from the Effective Date, the Company will pay Ladenburg a
commission of five percent of the exercise price of the Warrants for each
Warrant exercised, payable on the date of such exercise, on the terms provided
for in the Warrant Agreement, only if permitted under the rules and regulations
of the NASD and only to the extent that an investor who exercises his Warrants
specifically designates, in writing, that Ladenburg solicited his exercise.
Ladenburg may engage sub-agents in its solicitation efforts. The Company agrees
to disclose the arrangement to pay such solicitation fees to Ladenburg in any
prospectus used by the Company in connection with the registration of the shares
of Common Stock underlying the Warrants.
3.10 Financial
Public Relations Firm.
Promptly after the execution of a definitive agreement for a Business
Combination, the Company shall retain a financial public relations firm
reasonably acceptable to the Representative for a term to be agreed upon by the
Company and the Representative.
3.11 Reports
to the Representative.
3.11.1 Periodic
Reports, Etc. For a
period of five years from the Effective Date or until such earlier time upon
which the Company is required to be liquidated, the Company will furnish to the
Representative (Attn: ______________) and its counsel copies of such financial
statements and other periodic and special reports as the Company from time to
time furnishes generally to holders of any class of its securities, and promptly
furnish to the Representative (i) a copy of each periodic report the Company
shall be required to file with the Commission, (ii) a copy of every press
release and every news item and article with respect to the Company or its
affairs which was released by the Company, (iii) a copy of each Form 8-K
or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the Company, (iv)
five copies of each registration statement filed by the Company with the
Commission under the Securities Act, (v) a copy of monthly statements, if any,
setting forth such information regarding the Company’s results of operations and
financial position (including balance sheet, profit and loss statements and data
regarding outstanding purchase orders) as is regularly prepared by management of
the Company and (vi) such additional documents and information with respect
to the Company and the affairs of any future subsidiaries of the Company as the
Representative may from time to time reasonably request.
16
3.11.2 Transfer
Sheets. For a
period of four years following the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company shall retain a
transfer and warrant agent acceptable to the Representative (“Transfer Agent”)
and will furnish to the Underwriters at the Company’s sole cost and expense such
transfer sheets of the Company’s securities as the Representative may request,
including the daily and monthly consolidated transfer sheets of the Transfer
Agent and DTC. Continental Stock Transfer & Trust Company is acceptable to
the Underwriters.
3.11.3 Secondary
Market Trading Survey. Until
such time as the Public Securities are listed or quoted, as the case may be, on
the New York Stock Exchange, the American Stock Exchange or quoted on the Nasdaq
National Market, or until such earlier time upon which the Company is required
to be liquidated, the Company shall engage ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (“GM”), for a
one-time fee of $5,000 payable on the Closing Date , to deliver and update to
the Underwriters on a timely basis, but in any event on the Effective Date and
at the beginning of each fiscal quarter, a written report detailing those states
in which the Public Securities may be traded in non-issuer transactions under
the Blue Sky laws of the fifty States (“Secondary Market Trading Survey”).
3.11.4 Trading
Reports. During
such time as the Public Securities are quoted on the NASD OTC Bulletin Board (or
any successor trading market) or the Pink Sheets, LLC (or similar publisher of
quotations) and no other automated quotation system, the Company shall provide
to the Representative, at its expense, such reports published by the NASD or the
Pink Sheets, LLC relating to price trading of the Public Securities, as the
Representative shall reasonably request.
3.12 Disqualification
of Form S-1. Until
the earlier of seven years from the date hereof or until the Warrants have
expired and are no longer exercisable, the Company will not take any action or
actions which may prevent or disqualify the Company’s use of Form S-1 (or other
appropriate form) for the registration of the Warrants and the Representative’s
Warrants under the Act.
3.13 Payment
of Expenses.
3.13.1 General
Expenses Related to the Offering. The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at Closing Date, all expenses incident to
the performance of the obligations of the Company under this Agreement,
including but not limited to (i) the preparation, print-ing, filing and mailing
(including the payment of postage with respect to such mailing) of the
Registration Statement, the Preliminary and Final Prospectuses and the printing
and mailing of this Agreement and related documents, including the cost of all
copies thereof and any amendments thereof or supplements thereto supplied to the
Underwriters in quantities as may be required by the Underwriters, (ii) the
printing, engraving, issuance and delivery of the Units, the shares of Common
Stock and the Warrants included in the Units and the Representative’s Purchase
Option, including any transfer or other taxes payable thereon, (iii) the
qualification of the Public Securities under state or foreign securities or Blue
Sky laws, including the costs of preparing, printing and mailing the
“Preliminary Blue Sky Memorandum,” and all amendments and supplements thereto,
fees and disbursements of GM (such fees shall be $35,000 in the aggregate (of
which $15,000 has previously been paid)), and a one-time fee of $5,000 payable
to GM for the preparation of the Secondary Market Trading Survey,
(iv) filing fees, costs and expenses (including disbursements) incurred in
registering the Offering with the NASD, (v) fees and disbursements of the
transfer and warrant agent, (vi) the Company’s expenses associated with “due
diligence” meetings arranged by the Representative, (vii) the preparation,
binding and delivery of transaction “bibles,” in form and style reasonably
satis-factory to the Representative and transaction lucite cubes or similar
commemorative items in a style and quantity as reasonably requested by the
Representative and (viii) all other costs and expenses customarily borne by an
issuer incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 3.13.1. The Company also
agrees that, if requested by the Representative, it will engage and pay up to
$15,000 for an investigative search firm of the Representative’s choice to
conduct an investigation of the principals of the Company as shall be mutually
selected by the Representative and the Company. If the Offering is successfully
consummated, any such amounts paid to the search firm by the Company pursuant to
the immediately preceding sentence shall be credited against the
Representative’s nonaccountable expense allowance (described below in Section
3.13.2). The Representative may deduct from the net proceeds of the Offering
payable to the Company on the Closing Date, or the Option Closing Date, if any,
the expenses set forth in this Agreement to be paid by the Company to the
Representative and others. If the Offering contemplated by this Agreement is not
consummated for any reason whatsoever then the Company shall reimburse the
Underwriters in full for their out of pocket expenses, including, without
limitation, its legal fees (up to a maximum of $50,000) and disbursements
and “road
show” and due diligence expenses.
The
Representative shall retain such part of the nonaccountable expense allowance
previously paid as shall equal its actual out-of-pocket expenses and refund the
balance. If the amount previously paid is insufficient to cover such actual
out-of-pocket expenses, subject to the preceding sentences, the Company shall
remain liable for and promptly pay any other actual out-of-pocket
expenses.
17
3.13.2 Nonaccountable
Expenses. The
Company further agrees that, in addition to the expenses payable pursuant to
Section 3.13.1, on the Closing Date, it will pay to the Representative a
nonaccountable expense allowance equal to one percent (1%) of the gross proceeds
received by the Company from the sale of the Firm Units (of which $________ has
previously been paid), by deduction from the proceeds of the Offering
contemplated herein.
3.13.3 Expenses
Related to Business Combination. The
Company further agrees that, in the event the Company requests that the
Representative assist the Company in trying to obtain stockholder approval of a
proposed Business Combination, the Company agrees to reimburse the
Representative for all reasonable out-of-pocket expenses, including, but not
limited to, “road-show” and due diligence expenses.
3.14 Application
of Net Proceeds. The
Company will apply the net proceeds from the Offering received by it in a manner
con-sistent with the application described under the caption “Use Of Proceeds”
in the Prospectus.
3.15 Delivery
of Earnings Statements to Security Holders. The
Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the fif-teenth full calendar
month following the Effective Date, an earn-ings statement (which need not be
certified by independent public or independent certified public accountants
unless required by the Act or the Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Act) covering a period of
at least twelve consecutive months beginning after the Effective
Date.
3.16 Notice
to NASD. In the
event any person or entity (regardless of any NASD affiliation or association)
is engaged to assist the Company in its search for a merger candidate or to
provide any other merger and acquisition services, the Company will provide the
following to the NASD and Ladenburg prior to the consummation of the Business
Combination: (i) complete details of all services and copies of agreements
governing such services; and (ii) justification as to why the person or
entity providing the merger and acquisition services should not be considered an
“underwriter and related person” with respect to the Company’s initial public
offering, as such term is defined in Rule 2710 of the NASD’s Conduct Rules. The
Company also agrees that proper disclosure of such arrangement or potential
arrangement will be made in the proxy statement which the Company will file for
purposes of soliciting stockholder approval for the Business
Combination.
3.17 Stabilization. Neither
the Company, nor, to its knowl-edge, any of its employees, directors or
stockholders (without the consent of Ladenburg) has taken or will take, directly
or indirectly, any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Units. Notwithstanding
the foregoing, the Company and the Underwriters acknowledge that Ladenburg has
entered into agreements with each of ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and Gordian Investment Partners, LLC (“Company Warrant
Purchasers”), the
form of which is annexed as Exhibit 10.11 to the Registration Statement
(“Warrant Purchase Letters”), pursuant to which such individuals have agreed to
purchase Warrants in the after market once such Warrants become separately
transferable in accordance with the terms set forth therein.
18
3.18 Internal
Controls. The
Company will maintain a system of internal accounting controls suffi-cient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management’s general or specific authorization, (ii) transactions are
recorded as necessary in order to permit preparation of financial statements in
accordance with generally accepted accounting principles and to maintain
account-ability for assets, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.19 Accountants. Until
the earlier of five years from the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company shall retain
BDO or another independent public accountant.
3.20 Form
8-K. The
Company shall, on the date hereof, retain its independent public accountants to
audit the financial statements of the Company as of the Closing Date (“Audited
Financial Statements”) reflecting the receipt by the Company of the proceeds of
the initial public offering. As soon as the Audited Financial Statements become
available, the Company shall immediately file a Current Report on Form 8-K
with the Commission, which Report shall contain the Company’s Audited Financial
Statements.
3.21 NASD. The
Company shall advise the NASD if it is aware that any 5% or greater stockholder
of the Company becomes an affiliate or associated person of an NASD member
participating in the distribution of the Company’s Public
Securities.
3.22 Corporate
Proceedings. All
corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall have
been done to the reasonable satisfaction to counsel for the Underwriters.
3.23 Investment
Company. The
Company shall cause a portion of the proceeds of the Offering to be held in the
Trust Fund to be invested as set forth in the Trust Agreement and as more
fully described in the
Prospectus. The Company will otherwise conduct its business in a manner so that
it will not become subject to the Investment Company Act. Furthermore, once the
Company consummates a Business Combination, it will be engaged in a business
other than that of investing, reinvesting, owning, holding or trading
securities.
3.24 Intentionally
Omitted.
19
3.25 Colorado
Trust Filing. In the
event the Securities are registered in the State of Colorado, the Company will
cause a Colorado Form ES to be filed with the Commissioner of the State of
Colorado no less than 10 days prior to the distribution of the Trust Fund in
connection with a Business Combination and will do all things necessary to
comply with Section ▇▇-▇▇-▇▇▇ and Rule 51-3.4 of the Colorado Securities
Act.
3.26 Insider
Warrants. The
Company hereby acknowledges and agrees that, in the event the Company calls the
Warrants for redemption pursuant to the Warrant Agreement, the up to 1,150,000
Warrants that may be purchased by the Company Warrant Purchasers within
the three month period following separate trading of the Warrants at a purchase
price not more than $0.70 per Warrant pursuant to the Warrant Purchase Letters
shall not be redeemable by the Company as long as such Warrants continue to be
held by such individuals or their affiliates.
4 Conditions
of Underwriters’ Obligations. The
obligations of the several Underwriters to purchase and pay for the Units, as
provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company as of the date hereof and as of
each of the Closing Date and the Option Closing Date, if any, to the accuracy of
the statements of officers of the Company made pursuant to the provisions hereof
and to the performance by the Company of its obligations hereunder and to the
following conditions:
4.1 Regulatory
Matters.
4.1.1 Effectiveness
of Registration Statement. The
Registration Statement shall have become effective not later than 5:00 P.M., New
York time, on the date of this Agreement or such later date and time as shall be
consented to in writing by you, and, at each of the Closing Date and the Option
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for the purpose shall have
been instituted or shall be pending or contemplated by the Commission and any
request on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel
for the Underwriters (“BM”).
4.1.2 NASD
Clearance. By the
Effective Date, the Representative shall have received clearance from the NASD
as to the amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
4.1.3 No
Blue Sky Stop Orders. No
order suspending the sale of the Units in any jurisdiction designated by you
pursuant to Section 3.3 hereof shall have been issued on either on the Closing
Date or the Option Closing Date, and no proceedings for that purpose shall have
been instituted or shall be contemplated.
4.2 Company
Counsel Matters.
4.2.1 Effective
Date Opinion of Counsel. On the
Effective Date, the Representative shall have received the favor-able opinion of
GM, dated the Effective Date, addressed to the Representative and in form and
substance satisfactory to BM to the effect that:
20
(i) The
Company has been duly organized and is validly existing as a corporation and is
in good standing under the laws of its state of incorporation. The Company is
duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing, except
where the failure to qualify would not have a material adverse effect on the
assets, business or operations of the Company.
(ii) All
issued and outstanding securities of the Company have been duly authorized and
validly issued and are fully paid and non-assessable; the holders thereof are
not subject to personal liability by reason of being such holders; and none of
such securities were issued in violation of the preemptive rights of any
stockholder of the Company arising by operation of law or under the Certificate
of Incorporation or Bylaws of the Company. The offers and sales of the
out-standing Common Stock were at all relevant times either registered under the
Act or exempt from such registration requirements. The authorized and, to such
counsel’s knowledge, outstanding capital stock of the Company is as set forth in
the Prospectus.
(iii) The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not and
will not be subject to personal liability by reason of being such holders. The
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company arising by operation of law or under the
Certificate of Incorporation or Bylaws of the Company. When issued, the
Representative’s Purchase Option, the Representative’s Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment therefor, the number and type of securities of
the Company called for thereby and such Warrants, the Representative’s Purchase
Option, and the Representative’s Warrants, when issued, in each case, are
enforceable against the Company in accordance with their respective terms,
except (a) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, (b) as
enforceability of any indemni-fication or contribution provision may be limited
under the federal and state securities laws, and (c) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The certificates representing the Securities
are in due and proper form.
(iv) This
Agreement, the Warrant Agreement, the Services Agreement, the Trust Agreement,
the Escrow Agreement and the Registration Rights Agreement have each been duly
and validly authorized, executed and delivered by the Company, and constitute,
and the Representative’s Purchase Option has been duly and validly authorized by
the Company and, when executed and delivered, will constitute, the valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except (a) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (b) as enforceability of any indemnification or
contribution provisions may be limited under the federal and state securities
laws, and (c) that the remedy of specific performance and injunc-tive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
21
(v) The
execution, delivery and performance of this Agreement, the Warrant Agreement,
the Representative’s Purchase Option, the Escrow Agreement, the Trust Agreement,
the Services Agreement and the Registration Rights Agreement and compliance by
the Company with the terms and provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby, and the
issuance and sale of the Securities, do not and will not, with or without the
giving of notice or the lapse of time, or both, (a) to such counsel’s knowledge,
conflict with, or result in a breach of, any of the terms or provisions of, or
constitute a default under, or result in the creation or modification of any
lien, security interest, charge or encumbrance upon any of the properties or
assets of the Company pursuant to the terms of, any mortgage, deed of trust,
note, indenture, loan, contract, commitment or other agreement or instrument
filed as an exhibit to the Registration Statement, (b) result in any violation
of the provisions of the Certificate of Incorporation or the Bylaws of the
Company, or (c) to such counsel’s knowledge, violate any United States sta-tute
or any judgment, order or decree, rule or regulation applica-ble to the Company
of any court, United States federal, state or other regulatory authority or
other governmental body having jurisdiction over the Company, its properties or
assets.
(vi) The
Registration Statement, the Preliminary Prospectus and the Prospectus and any
post-effective amendments or supplements thereto (other than the financial
statements included therein, as to which no opinion need be rendered) each as of
their respective dates complied as to form in all material respects with
the requirements of the Act and Regulations. The Securities and all other
securities issued or issuable by the Company conform in all material respects to
the description thereof contained in the Registration Statement and the
Prospectus. The descriptions in the Registration Statement and in the
Prospectus, insofar as such statements constitute a summary of statutes, legal
matters, contracts, documents or proceedings referred to therein, fairly present
in all material respects the information required to be shown with respect to
such statutes, legal matters, contracts, documents and proceedings, and such
counsel does not know of any statutes or legal or governmental proceedings
required to be described in the Prospectus that are not described in the
Registration Statement or the Prospectus or included as exhibits to the
Registration Statement that are not described or included as required.
(vii) The
Registration Statement is effective under the Act. To such counsel’s knowledge,
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been insti-tuted or are
pending or threatened under the Act or applicable state securities
laws.
(viii) To such
counsel’s knowledge, there is no action, suit or proceeding before or by any
court of governmental agency or body, domestic or foreign, now pending, or
threatened against the Company that is required to be described in the
Registration Statement.
The
opinion of counsel shall further include a statement to the effect that such
counsel
has participated in conferences with officers and other representatives of the
Company, the Underwriters and the independent public accountants of the Company,
at which conferences the contents of the Registra-tion Statement and the
Prospectus contained therein and related matters were discussed and, although
such counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Pro-spectus contained therein (except as
otherwise set forth in the foregoing opinion), solely on the basis of the
foregoing without independent check and verification, no facts have come to the
attention of such counsel which lead them to believe that the Registration
Statement or any amendment thereto, at the time the Registration Statement or
amendment became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or the Prospectus or any amendment or
supplement thereto, at the time they were filed pursuant to Rule 424(b) or at
the date of such counsel’s opinion, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading (except that such counsel need express no
opinion with respect to the financial information and statistical data and
information included in the Registration Statement or the
Prospectus).
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4.2.2 Closing
Date and Option Closing Date Opinion of Counsel. On each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received the favorable opin-ion of GM, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Representative and in
form and substance reasonably satisfactory to BM, confirming as of the Closing
Date and, if applicable, the Option Closing Date, the statements made by GM in
its opinion delivered on the Effective Date.
4.2.3 Reliance. In
rendering such opinion, such counsel may rely (i) as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to BM) of other counsel reasonably
acceptable to BM, familiar with the applicable laws, and (ii) as to matters
of fact, to the extent they deem proper, on certificates or other written
statements of officers of the Company and officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to the Underwriters’ counsel if requested. The
opinion of counsel for the Company and any opinion relied upon by such counsel
for the Company shall include a statement to the effect that it may be relied
upon by counsel for the Underwriters in its opinion delivered to the
Underwriters.
4.3 Cold
Comfort Letter. At the
time this Agreement is executed, and at each of the Closing Date and the Option
Closing Date, if any, you shall have received a letter, addressed to the
Representative and in form and substance satisfactory in all respects (including
the non-material nature of the changes or decreases, if any, referred to in
clause (iii) below) to you and to BM from BDO dated, respectively, as of the
date of this Agreement and as of the Closing Date and the Option Closing Date,
if any:
(i) Confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations and that they have not, during
the periods covered by the financial statements included in the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act;
(ii) Stating
that in their opinion the financial state-ments of the Company included in the
Registration Statement and Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and the published
Regulations thereunder;
23
(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders and
board of directors and the various committees of the board of directors,
consultations with officers and other employees of the Company responsible for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that (a)
the unaudited financial statements of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting principles applied on
a basis substantially consistent with that of the audited financial statements
of the Company included in the Registration Statement, (b) at a date not later
than five days prior to the Effective Date, Closing Date or Option Closing Date,
as the case may be, there was any change in the capital stock or long-term debt
of the Company, or any decrease in the stockholders’ equity of the Company as
compared with amounts shown in the June 24, 2005 balance sheet included in the
Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any decrease, setting forth the amount
of such decrease, and (c) during the period from June 24, 2005 to a specified
date not later than five days prior to the Effective Date, Closing Date or
Option Closing Date, as the case may be, there was any decrease in revenues, net
earnings or net earnings per share of Common Stock, in each case as compared
with the corresponding period in the preceding year and as compared with the
corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a break-down of commercial
papers and notes payable to banks);
(v) Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the extent that such
amounts, numbers, percentages, statements and information may be derived from
the general accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal counsel, with the
results obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi) Stating
that they have not during the immediately preceding five year period brought to
the attention of the Company’s management any reportable condition related to
internal structure, design or operation as defined in the Statement on Auditing
Standards No. 60 “Communication of Internal Control Structure Related Matters
Noted in an Audit,” in the Company’s internal controls; and
(vii) Statements
as to such other matters incident to the transaction contemplated hereby as you
may reasonably request.
24
4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate. At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Chairman of the
Board or the President and the Secretary or Assistant Secretary of the Company
(in their capacities as such), dated the Closing Date or the Option Closing
Date, as the case may be, respectively, to the effect that the Company has
performed all covenants and complied with all conditions required by this
Agree-ment to be performed or complied with by the Company prior to and as of
the Closing Date, or the Option Closing Date, as the case may be, and that the
conditions set forth in Section 4.5 hereof have been satisfied as of such date
and that, as of Closing Date and the Option Closing Date, as the case may be,
the representations and warranties of the Company set forth in Section 2 hereof
are true and correct. In addition, the Representative will have received such
other and further certificates of officers (in their capacities as such) of the
Company as the Representative may reasonably request.
4.4.2 Secretary’s
Certificate. At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Secretary or
Assistant Secretary of the Company, dated the Closing Date or the Option Date,
as the case may be, respectively, certifying (i) that the Bylaws and Certificate
of Incorporation of the Company are true and complete, have not been modified
and are in full force and effect, (ii) that the resolutions relating to the
public offer-ing contemplated by this Agreement are in full force and effect and
have not been modified, (iii) all correspondence between the Company or its
counsel and the Commission, and (iv) as to the incumbency of the officers of the
Company. The documents referred to in such certificate shall be attached to such
certificate.
4.5 No
Material Changes. Prior
to and on each of the Closing Date and the Option Closing Date, if any, (i)
there shall have been no material adverse change or development involving a
pro-spective material adverse change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Registration Statement and
Prospectus, (ii) no action suit or proceeding, at law or in equity, shall have
been pending or threatened against the Company or any Initial Stockholder before
or by any court or federal or state commission, board or other admin-istrative
agency wherein an unfavorable decision, ruling or finding may materially
adversely affect the business, operations, prospects or financial condition or
income of the Company, except as set forth in the Registration Statement and
Prospectus, (iii) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or threatened by the Commission,
and (iv) the Registration Statement and the Prospectus and any amendments or
supplements thereto shall contain all material statements which are required to
be stated therein in accordance with the Act and the Regulations and shall
conform in all material respects to the requirements of the Act and the
Regulations, and neither the Registration Statement nor the Prospectus nor any
amendment or supplement thereto shall contain any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.6 Delivery
of Agreements.
4.6.1 Effective
Date Deliveries. On the
Effective Date, the Company shall have delivered to the Representative executed
copies of the Escrow Agreement, the Trust Agreement, the Warrant Agreement, the
Services Agreement and all of the Insider Letters.
4.6.2 Closing
Date Deliveries. On the
Closing Date, the Company shall have delivered to the Representative executed
copies of the Representative’s Purchase Option.
4.7 Opinion
of Counsel for the Underwriters. All
proceedings taken in connection with the authorization, issuance or sale of the
Securities as herein contemplated shall be reasonably satisfactory in form and
substance to you and to BM and you shall have received from such counsel a
favorable opinion, dated the Closing Date and the Option Closing Date, if any,
with respect to such of these proceedings as you may reasonably require. On or
prior to the Effective Date, the Closing Date and the Option Closing Date, as
the case may be, counsel for the Underwriters shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in this
Section 4.7, or in order to evidence the accuracy, completeness or satisfaction
of any of the representations, warranties or conditions herein
contained.
4.8 Secondary
Market Trading Survey. On the
Closing Date, the Representative shall have received the Secondary Market
Trading Survey from GM.
5 Indemnification.
5.1 Indemnification
of Underwriters.
25
5.1.1 General. Subject
to the conditions set forth below, the Company agrees to indemnify and hold
harmless each of the Underwriters, and each dealer selected by you that
participates in the offer and sale of the Securities (each a “Selected Dealer”)
and each of their respective directors, officers and employees and each person,
if any, who controls any such Underwriter (“controlling person”) within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all loss, liability, claim, damage and expense whatsoever (including but
not limited to any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, whether arising out of any action between
any of the Underwriters and the Company or between any of the Underwriters and
any third party or otherwise) to which they or any of them may become subject
under the Act, the Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained in
(i) any Preliminary Prospectus, the Registration Statement or the Pro-spectus
(as from time to time each may be amended and supple-mented); (ii) in any
post-effective amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Representative’s Purchase Option; or (iii) any application
or other document or written communication (in this Section 5 collec-tively
called “application”) executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Securities
under the securities laws thereof or filed with the Commission, any state
securities commission or agency, Nasdaq or any securities exchange; or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to an Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in any
application, as the case may be. With respect to any untrue statement or
omission or alleged untrue statement or omission made in the Preliminary
Prospectus, the indemnity agreement contained in this paragraph shall not inure
to the benefit of any Underwriter to the extent that any loss, liability, claim,
damage or expense of such Underwriter results from the fact that a copy of the
Prospectus was not given or sent to the person asserting any such loss,
liability, claim or damage at or prior to the written confirmation of sale of
the Securities to such person as required by the Act and the Regulations, and if
the untrue statement or omission has been corrected in the Prospectus, unless
such failure to deliver the Prospectus was a result of non-compliance by the
Company with its obligations under Section 3.4 hereof. The Company agrees
promptly to notify the Representative of the commencement of any litigation or
proceedings against the Company or any of its officers, directors or controlling
persons in connection with the issue and sale of the Securities or in connection
with the Registration Statement or Prospectus.
5.1.2 Procedure. If any
action is brought against an Underwriter, a Selected Dealer or a controlling
person in respect of which indemnity may be sought against the Company pursuant
to Section 5.1.1, such Underwriter or Selected Dealer shall promptly notify
the Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the reasonable approval of such Underwriter or Selected Dealer, as
the case may be) and payment of actual expenses. Such Underwriter, Selected
Dealer or controlling person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such Underwriter, Selected Dealer or controlling person unless
(i) the employment of such counsel at the expense of the Company shall have been
authorized in writing by the Company in connection with the defense of such
action, or (ii) the Company shall not have employed counsel to have charge of
the defense of such action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to the Company (in
which case the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
the reasonable fees and expenses of not more than one additional firm of
attorneys selected by the Underwriter, Selected Dealer and/or controlling person
shall be borne by the Company. Notwithstanding anything to the contrary
contained herein, if the Underwriter, Selected Dealer or controlling person
shall assume the defense of such action as provided above, the Company shall
have the right to approve the terms of any settlement of such action which
approval shall not be unreasonably withheld.
5.2 Indemnification
of the Company. Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, officers and employees and agents who control the
Company within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act against any and all loss, liability, claim, damage and expense
described in the foregoing indemnity from the Company to the several
Underwriters, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in any Prelimi-nary
Prospectus, the Registration Statement or Prospectus or any amendment or
supplement thereto or in any application, in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
such Underwriter by or on behalf of the Underwriter expressly for use in such
Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2.
26
5.3 Contribution.
5.3.1 Contribution
Rights. In
order to provide for just and equitable contribution under the Act in any case
in which (i) any person entitled to indemnification under this Section 5
makes claim for indemnification pursuant hereto but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indem-nification may not be enforced in such case notwithstanding the
fact that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Act, the Exchange Act or otherwise may be required on the
part of any such person in circumstances for which indemnification is provided
under this Section 5, then, and in each such case, the Company and the
Underwriters shall contri-bute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred, in such proportions
that the Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
Prospectus bears to the initial offering price appearing thereon and the Company
is responsible for the balance; provided, that, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Underwriters shall
contribute in such proportion as is appropriate to reflect the relative fault of
the Company and the Underwriters in connection with the actions or omissions
which resulted in such loss, claim, damage, liability or action, as well as any
other relevant equitable considerations. The relative fault of the Company and
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwith-standing the provisions of this Section 5.3.1, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Public Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay in respect of
such losses, lia-bilities, claims, damages and expenses. For purposes of this
Section, each director, officer and employee of an Underwriter or the Company,
as applicable, and each person, if any, who controls an Underwriter or the
Company, as applicable, within the meaning of Section 15 of the Act shall have
the same rights to contribution as the Underwriters or the Company, as
applicable.
5.3.2 Contribution
Procedure. Within
fifteen days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is to be made
against another party (“contributing party”), notify the contributing party of
the commencement thereof, but the omission to so notify the contributing party
will not relieve it from any liability which it may have to any other party
other than for contribution hereunder. In case any such action, suit or
proceeding is brought against any party, and such party notifies a contributing
party or its representative of the commencement thereof within the aforesaid
fifteen days, the contributing party will be entitled to participate therein
with the notifying party and any other contributing party similarly notified.
Any such contributing party shall not be liable to any party seeking
contribution on account of any settlement of any claim, action or proceeding
effected by such party seeking contribution on account of any settlement of any
claim, action or proceeding effected by such party seeking contribution without
the written consent of such contributing party. The contribution provisions
contained in this Section are intended to supersede, to the extent permitted by
law, any right to contribution under the Act, the Exchange Act or otherwise
available. The Underwriters’ obligations to contribute pursuant to this Section
5.3 are several and not joint.
6 Default
by an Underwriter.
6.1 Default
Not Exceeding 10% of Firm Units or Option Units. If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the over-allotment option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10% of
the number of Firm Units or Option Units that all Underwriters have agreed to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
their respective commitments hereunder.
6.2 Default
Exceeding 10% of Firm Units or Option Units. In the
event that the default addressed in Section 6.1 above relates to more than 10%
of the Firm Units or Option Units, you may in your discretion arrange for
yourself or for another party or parties to purchase such Firm Units or Option
Units to which such default relates on the terms contained herein. If within one
business day after such default relating to more than 10% of the Firm Units or
Option Units you do not arrange for the purchase of such Firm Units or Option
Units, then the Company shall be entitled to a further period of one business
day within which to procure another party or parties satisfactory to you to
purchase said Firm Units or Option Units on such terms. In the event that
neither you nor the Company arrange for the purchase of the Firm Units or Option
Units to which a default relates as provided in this Section 6, this Agreement
will be terminated without liability on the part of the Company (except as
provided in Sections 3.13 and 5 hereof) or the several Underwriters (except as
provided in Section 5 hereof); provided, however, that if such default occurs
with respect to the Option Units, this Agreement will not terminate as to the
Firm Units; and provided further that nothing herein shall relieve a defaulting
Underwriter of its liability, if any, to the other several Underwriters and to
the Company for damages occasioned by its default hereunder.
27
6.3 Postponement
of Closing Date. In the
event that the Firm Units or Option Units to which the default relates are to be
purchased by the non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, you or the Company shall have the right to
postpone the Closing Date or Option Closing Date for a reasonable period, but
not in any event exceeding five business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company agrees to
file promptly any amendment to the Registration Statement or the Prospectus that
in the opinion of counsel for the Underwriters may thereby be made necessary.
The term “Underwriter” as used in this Agreement shall include any party
substituted under this Section 6 with like effect as if it had originally been a
party to this Agreement with respect to such Securities.
7 Intentionally
Omitted.
8 Additional
Covenants.
8.1 Intentionally
Omitted.
8.2 Additional
Shares or Options. The
Company hereby agrees that until the consummation of a Business Combination, it
shall not issue any shares of Common Stock or any options or other securities
convertible into Common Stock, or any shares of Preferred Stock which
participate in any manner in the Trust Fund or which vote as a class with the
Common Stock on a Business Combination.
8.3 Trust
Fund Waiver Acknowledgment. The
Company hereby agrees that it will not commence its due diligence investigation
of any operating business which the Company seeks to acquire (each a “Target
Business”) or obtain the services of any vendor unless and until such Target
Business or vendor acknowledges in writing, whether through a letter of intent,
memorandum of understanding or other similar document (and subsequently
acknowledges the same in any definitive document replacing any of the
foregoing), that (a) it has read the Prospectus and understands that the Company
has established the Trust Fund, initially in an amount of $67,250,000 for the
benefit of the public stockholders and that the Company may disburse monies from
the Trust Fund only (i) to the public stockholders in the event they elect to
convert their IPO Shares (as defined below in Section 8.8), (ii) to the public
stockholders upon the liquidation of the Company if the Company fails to
consummate a Business Combination or (iii) to the Company after, or concurrently
with, the consummation of a Business Combination and (b) for and in
consideration of the Company (1) agreeing to evaluate such Target Business for
purposes of consummating a Business Combination with it or (2) agreeing to
engage the services of the vendor, as the case may be, such Target Business or
vendor agrees that it does not have any right, title, interest or claim of any
kind in or to any monies in the Trust Fund (“Claim”) and waives any Claim it may
have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with the Company and will not seek recourse against the
Trust Fund for any reason whatsoever.
8.4 Insider
Letters. The
Company shall not take any action or omit to take any action which would cause a
breach of any of the Insider Letters and will not allow any amendments to, or
waivers of, such Insider Letters without the prior written consent of
Ladenburg.
8.5 Certificate
of Incorporation and Bylaws. The
Company shall not take any action or omit to take any action that would cause
the Company to be in breach or violation of its Certificate of Incorporation or
Bylaws. Prior to the consummation of a Business Combination, the Company will
not amend its Certificate of Incorporation without the prior written consent of
Ladenburg.
8.6 Blue
Sky Requirements. The
Company shall provide counsel to the Representative with ten copies of all proxy
information and all related material filed with the Commission in connection
with a Business Combination concurrently with such filing with the Commission.
In addition, the Company shall furnish any other state in which its initial
public offering was registered, such information as may be requested by such
state.
28
8.7 Intentionally
Omitted.
8.8 Acquisition/Liquidation
Procedure. The
Company agrees: (i) that, prior to the consummation of any Business Combination,
it will submit such transaction to the Company's stockholders for their approval
(“Business Combination Vote”) even if the nature of the acquisition is such as
would not ordinarily require stockholder approval under applicable state law;
and (ii) that, in the event that the Company does not effect a Business
Combination within 18 months from the consummation of this Offering (subject to
extension for an additional six-month period, as described in the Prospectus),
the Company will be liquidated and will distribute to all holders of IPO Shares
(defined below) an aggregate sum equal to the Company’s “Liquidation Value.” The
Company’s “Liquidation Value” shall mean the Company’s book value, as determined
by the Company and approved by BDO. In no event, however, will the Company’s
Liquidation Value be less than the Trust Fund, inclusive of any net interest
income thereon. Only holders of IPO Shares shall be entitled to receive
liquidating distributions and the Company shall pay no liquidating distributions
with respect to any other shares of capital stock of the Company. With respect
to the Business Combination Vote, the Company shall cause all of the Initial
Stockholders to vote the shares of Common Stock owned by them immediately prior
to this Offering in accordance with the vote of the holders of a majority of the
IPO Shares present, in person or by proxy, at a meeting of the Company’s
stockholders called for such purpose. At the time the Company seeks approval of
any potential Business Combination, the Company will offer each holder of Common
Stock issued in this Offering (“IPO Shares”) the right to convert their IPO
Shares at a per share price (“Conversion Price”) equal to the amount in the
Trust Fund (inclusive of any interest income therein) calculated as of two
business days prior to the consummation of the proposed Business Combination
divided by the total number of IPO Shares. If holders of less than 20% in
interest of the Company’s IPO Shares elect to convert their IPO Shares, the
Company may, but will not be required to, proceed with such Business
Combination. If the Company elects to so proceed, it will convert shares, based
upon the Conversion Price, from those holders of IPO Shares who affirmatively
requested such conversion and who voted against the Business Combination. If
holders of 20% or more in interest of the IPO Shares, who vote against approval
of any potential Business Combination, elect to convert their IPO Shares, the
Company will not proceed with such Business Combination and will not convert
such shares.
8.9 Rule
419. The
Company agrees that it will use its best efforts to prevent the Company from
becoming subject to Rule 419 under the Act prior to the consummation of any
Business Combination, including but not limited to using its best efforts to
prevent any of the Company’s outstanding securities from being deemed to be a
“▇▇▇▇▇ stock” as defined in Rule 3a-51-1 under the Exchange Act during such
period.
8.10 Affiliated
Transactions. The
Company shall cause each of the Initial Stockholders to agree that, in order to
minimize potential conflicts of inter-est which may arise from multiple
affiliations, the Initial Stockholders will present to the Company for its
consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire an operating business, until the earlier of the
consummation by the Company of a Business Combination, the liquidation of the
Company or until such time as the Initial Stockholders cease to be an officer or
director of the Company, subject to any pre-existing fiduciary or contractual
obligations the Initial Stockholders might have. To
further minimize potential conflicts of interest, the Company has agreed not to
consummate a business combination with an entity which is affiliated with any of
its existing stockholders unless the Company obtains an opinion from an
independent investment banking firm that the business combination is fair to its
unaffiliated stockholders from a financial point of view.
8.11 Target
Net Assets. The
Company agrees that the initial Target Business that it acquires must have a
fair market value equal to at least 80% of the Company’s net assets (all of the
Company’s assets, including the funds held in the Trust Fund, less the Company’s
liabilities) at the time of such acquisition. The fair market value of such
business must be determined by the Board of Directors of the Company based upon
standards generally accepted by the financial community, such as actual and
potential sales, earnings and cash flow and book value. If the Board of
Directors of the Company is not able to independently determine that the target
business has a fair market value of at least 80% of the Company’s net assets at
the time of such acquisition, the Company will obtain an opinion from an
unaffiliated, independent investment banking firm which is a member of the NASD
reasonably acceptable to Ladenburg with respect to the satisfaction of such
criteria. The Company is not required to obtain an opinion from an investment
banking firm as to the fair market value if the Company’s Board of Directors
independently determines that the Target Business does have sufficient fair
market value.
9 Representations
and Agreements to Survive Delivery. Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be repre-sentations,
warranties and agreements at the Closing Dates and such representations,
warranties and agreements of the Underwriters and Company, including the
indemnity agreements contained in Section 5 hereof, shall remain operative and
in full force and effect regard-less of any investigation made by or on behalf
of any Underwriter, the Company or any controlling person, and shall survive
termina-tion of this Agreement or the issuance and delivery of the Securities to
the several Underwriters until the earlier of the expiration of any applicable
statute of limitations and the seventh anniversary of the later of the Closing
Date or the Option Closing Date, if any, at which time the representations,
warranties and agreements shall terminate and be of no further force and
effect.
10 Effective
Date of This Agreement and Termination Thereof.
10.1 Effective
Date. This
Agreement shall become effective on the Effective Date at the time the
Registration Statement is declared effective by the Commission.
29
10.2 Termination. You
shall have the right to terminate this Agreement at any time prior to any
Closing Date, (i) if any domes-tic or international event or act or occurrence
has materially disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United States; or (ii) if
trading on the New York Stock Exchange, the American Stock Exchange, the Boston
Stock Exchange or on the NASD OTC Bulletin Board (or successor trading market)
shall have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been fixed,
or maximum ranges for prices for securities shall have been required on the NASD
OTC Bulletin Board or by order of the Commission or any other government
authority having jurisdiction, or (iii) if the United States shall have become
involved in a new war or an increase in major hostilities, or (iv) if a banking
moratorium has been declared by a New York State or federal authority, or (v) if
a moratorium on foreign exchange trading has been declared which materially
adversely impacts the United States securities market, or (vi) if the Company
shall have sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether or
not such loss shall have been insured, will, in your opinion, make it
inadvisable to proceed with the delivery of the Units, or (vii) if any of the
Company’s representations, warranties or covenants hereunder are breached, or
(viii) if the Representative shall have become aware after the date hereof of
such a material adverse change in the conditions or prospects of the Company, or
such adverse material change in general market conditions, including without
limitation as a result of terrorist activities after the date hereof, as in the
Representative’s judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Units or to enforce contracts made by the
Underwriters for the sale of the Securities.
10.3 Expenses. In the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the terms
herein, the obligations of the Company to pay the out of pocket expenses related
to the transactions contemplated herein shall be governed by Section 3.13
hereof.
10.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termina-tion of this Agreement, and whether or not this
Agreement is other-wise carried out, the provisions of Section 5 shall not be in
any way effected by, such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
30
11 Miscellaneous.
11.1 Notices. All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered or telecopied and confirmed
and shall be deemed given when so delivered or telecopied and confirmed or if
mailed, two days after such mailing
If to the
Representative:
Ladenburg
▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇ ▇. ▇▇▇▇
Copy
to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Esq.
If to the
Company:
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Chairman
Copy
to:
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
The
Chrysler Building
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, Esq.
11.2 Headings. The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of this Agreement.
11.3 Amendment. This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
31
11.4 Entire
Agreement. This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
11.5 Binding
Effect. This
Agreement shall inure solely to the benefit of and shall be binding upon the
Representative, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein
contained.
11.6 Governing
Law. This
Agreement shall be governed by and construed and enforced in accor-dance with
the laws of the State of New York, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of
another jurisdiction. The Company hereby agrees that any action, proceeding or
claim against it arising out of, or relating in any way to, this Agreement shall
be brought and enforced in the courts of the State of New York of the United
States of America for the Southern District of New York, and irrevocably submits
to such jurisdiction, which jurisdiction shall be exclu-sive. The Company hereby
waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it at
the address set forth in Section 11.1 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action,
proceeding or claim. The Company agrees that the pre-vailing party(ies) in any
such action shall be entitled to recover from the other party(ies) all of its
reasonable attor-neys’ fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor.
11.7 Execution
in Counterparts. This
Agreement may be executed in one or more original or facsimile counterparts, and
by the different parties hereto in separate counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute one
and the same agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each of the other
parties hereto.
11.8 Waiver,
Etc. The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver of
any such provision, nor to in any way effect the validity of this Agreement or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought; and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
11.9 No
Fiduciary Duty. The
Company acknowledges and agrees that neither the Representative, the
Underwriters nor the controlling persons of any of them shall have any fiduciary
or advisory duty to the Company or any of its controlling persons arising out
of, or in connection with, this Agreement or the offer and sale of the
Securities.
32
If the
foregoing correctly sets forth the understanding between the Underwriters and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
| Very truly yours, | ||
| QUADRAPOINT ACQUISITION CORP. | ||
| |
|
|
| Date: | By: | |
|
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||
| Chairman | ||
Accepted
on the date first
above
written.
LADENBURG
▇▇▇▇▇▇▇▇ & CO. INC.
By:
______________________________
Name:
Title:
33
SCHEDULE
I
12,500,000
Units
|
Underwriter |
Number
of Firm Units
to
be Purchased | |
|
Ladenburg
▇▇▇▇▇▇▇▇ & Co. Inc. |
||
|
12,500,000 |