Santa Monica Media Corporation 18,750,000 Units1 Common Stock Warrants UNDERWRITING AGREEMENT
Exhibit 1.1
Santa ▇▇▇▇▇▇ Media Corporation
18,750,000 Units1
Common Stock
Warrants
Citigroup Global Markets Inc.
As Representative of the several Underwriters,
c/o Citigroup Global Markets Inc.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the several Underwriters,
c/o Citigroup Global Markets Inc.
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Deutsche Bank Securities Inc.
As Representative of the Several Underwriters,
c/o Deutsche Bank Securities Inc.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters,
c/o Deutsche Bank Securities Inc.
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Santa ▇▇▇▇▇▇ Media Corporation, a corporation organized under the laws of Delaware (the
“Company”), proposes to sell to the several underwriters named in Schedule I hereto (the
“Underwriters”), for whom Citigroup Global Markets Inc. and Deutsche Bank Securities Inc. (the
“Representatives”) are acting as representatives, an aggregate of 18,750,000 units (the “Units”) of
the Company (said units to be issued and sold by the Company being hereinafter called the
“Underwritten Securities”). The Company also proposes to grant to the Underwriters an option to
purchase up to an additional 2,812,500 units to cover over-allotments (the “Option Securities”; the
Option Securities, together with the Underwritten Securities, being hereinafter called the
“Securities”). Certain terms used herein are defined in Section 20 hereof.
Each Unit consists of one share of the Company’s common stock, par value $.001 per share (the
“Common Stock”), and one warrant to purchase one share of Common Stock (the “Warrant(s)”). The
shares of Common Stock and the Warrants included in the Units will not be separately transferable
until five (5) business days following the earlier of the expiration or termination of the
Underwriters’ over-allotment option (as described below) or the exercise in full of such option,
subject to (a) 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 such audited balance sheet with the
Commission on a Form 8-K or similar form by the Company which includes such balance sheet and
| 1 | Plus an option to purchase from the Company, up to 2,812,500 additional Units to cover over-allotments. |
(b) the Company issuing a press release announcing when such separate trading will begin.
Each Warrant entitles its holder, upon exercise, to purchase one share of Common Stock for $6.00
during the period commencing on the later of the consummation by the Company of its “Business
Combination” or one year from the Effective Date of the Registration Statement and terminating on
the four-year anniversary of the Effective Date. As used herein, the term “Business Combination”
(as described more fully in the Registration Statement) shall mean any acquisition, through a
merger, capital stock exchange, asset acquisition, stock purchase or other business combination
with an operating businesses in the media, gaming and/or entertainment industries
The Company hereby agrees to issue and sell to the Underwriters on the Closing Date an option
(“Underwriters’ Purchase Option”) for the purchase of an aggregate of 937,500 units (the
“Underwriters’ Units”) for an aggregate purchase price of $100.00. Each of the Underwriters’ Units
is identical to the Underwritten Securities, except that the Warrants included in the Underwriters’
Units (“Underwriters’ Warrants”) have an exercise price of $7.50, which is equal to 125% of the
exercise price of Warrants sold to the public. The Underwriters’ Purchase Option shall be
exercisable, in whole or in part, commencing on and expiring on (or, if
earlier, the date on which the Warrants shall have been redeemed) at an initial exercise price per
Underwriters’ Unit of $9.60. The Underwriters’ Purchase Option, the Underwriters’ Units, the
Underwriters’ Warrants and the shares of Common Stock issuable upon exercise of the Underwriters’
Warrants are hereinafter referred to collectively as the “Underwriters’ Securities.” The
Representatives understand and agree that there are restrictions against transferring the
Underwriters’ Purchase Option. Delivery and payment for the Underwriters’ Purchase Option shall be
made on the Closing Date. The Company shall deliver to the Underwriters, upon payment therefor,
certificates for the Underwriters’ Purchase Option in the name or names and in such authorized
denominations as the Representatives may request.
The Company has entered into an Investment Management Trust Agreement, dated as of the date
hereof, with Continental Stock Transfer & Trust Company (the “Trustee”), as trustee, in
substantially the form filed as an exhibit to the Registration Statement (the “Trust Agreement”),
pursuant to which certain proceeds of the offering of the Securities will be deposited and held in
a trust account (the “Trust Account”) for the benefit of the Company and holders of Underwritten
Securities and the Option Securities, if and when issued.
The Company has entered into a Warrant Agreement, dated as of the date hereof, with respect to
the Warrants and the Underwriters’ Warrants with the Trustee, as warrant agent, in substantially
the form filed as an exhibit to the Registration Statement (the “Warrant Agreement”), pursuant to
which the Trustee will act as warrant agent in connection with the issuance, registration,
transfer, exchange, redemption and exercise of the Warrants and the Underwriters’ Warrants.
The Company has entered into a Securities Purchase Agreement, dated as of ___, 2006 (the
“Securities Purchase Agreement”), with Santa ▇▇▇▇▇▇ Capital Partners, LLC (“SMCP, LLC”), pursuant
to which SMCP, LLC has agreed to purchase an aggregate of 375,000 Units (the “Placement Units”) at
a price of $8.00 per Placement Unit in a private placement prior to the completion of the
Securities (the “Private Placement”). The Placement Units are identical to the Securities except
SMCP, LLC has agreed that it will not sell or otherwise transfer the Placement Units, the Common
Stock or Warrants comprising the Placement Units prior to the consummation by the Company of its
Business Combination, as more fully set forth in the Securities Purchase Agreement.
The Company has entered into a letter agreement (the “Services Agreement”) with SMCP, LLC
pursuant to which the Company will pay, subject to the terms of the Services Agreement, an
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aggregate monthly fee of $7,500 for general and administrative services, including office space,
utilities
and secretarial support for a period of up to twenty-four (24) months following the Effective
Date, terminating upon the completion of a Business Combination.
The Company has entered into a Registration Rights Agreement, dated as of the date hereof, in
substantially the form filed as an exhibit to the Registration Statement (the “Registration Rights
Agreement”), pursuant to which the Company has granted certain registration rights in respect of
the Securities, including the Placement Units, held by the holders of Common Stock prior to the
date hereof, including SMCP, LLC (collectively, the “Initial Stockholders”).
The Company has caused to be duly executed and delivered letters by each Initial Stockholder
and each of the Company’s officers, directors and special advisors, in substantially the form filed
as an exhibit to the Registration Statement (as the same may be amended or supplemented from time
to time, the “Insider Letters”), pursuant to which each of the Initial Stockholders and each of the
Company’s officers, directors and special advisors agrees to certain matters, including but not
limited to, certain matters relating to the voting of shares of Common Stock by them and certain
other matters described as being agreed to by them under the “Proposed Business” section of the
Statutory Prospectus and the Prospectus (as each such term is defined below).
The terms Representatives and Underwriters shall mean either the singular or plural as the
context requires.
1. Representations and Warranties. The Company represents and warrants to, and agrees
with, each Underwriter as set forth below in this Section 1.
(a) Compliance with Act. The Company has prepared and filed with the Commission a
registration statement (File Number 333-128384) on Form S-1, including a related preliminary
prospectus, for registration under the Act of the offering and sale of the Securities and the
Underwriters’ Securities. Such Registration Statement, including any amendments thereto filed
prior to the Execution Time, has become effective. The Company may have filed one or more
amendments thereto, including a related Preliminary Prospectus, each of which has previously been
furnished to the Representatives. The Company will file with the Commission a final prospectus in
accordance with Rule 424(b). As filed, such final prospectus shall contain all information
required by the Act and the rules thereunder and, except to the extent the Representatives shall
agree in writing to a modification, shall be in all substantive respects in the form furnished to
the Representatives prior to the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other changes (beyond that
contained in the latest Preliminary Prospectus) as the Company has advised the Representatives,
prior to the Execution Time, will be included or made therein.
The Statutory Prospectus and the Prospectus will, for purposes of distribution to Canadian
Persons, have a Canadian “wrap-around” (the “Canadian Offering Memorandum”).
Insofar as they relate to offers or sales of Securities in Canada, all references herein to
the Preliminary Prospectus, Statutory Prospectus and the Prospectus shall include the Canadian
Offering Memorandum.
(b) Accuracy of Registration Statement; Prospectus and Statutory Prospectus.
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(1) On the Effective Date, the Registration Statement did, and when the
Prospectus is first filed in accordance with Rule 424(b) and on the Closing Date (as
defined herein) and on any date on which Option Securities are purchased, if such
date is not the Closing Date (a “settlement date”), the Prospectus (and any
supplements thereto)
will, comply in all material respects with the applicable requirements of the
Act and the rules thereunder; on the Effective Date and at the Execution Time, the
Registration Statement did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and on the date of
any filing pursuant to Rule 424(b) and on the Closing Date and any settlement date,
the Prospectus (together with any supplement thereto) will not include any untrue
statement of a material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or omitted from the
Registration Statement, or the Prospectus (or any supplement thereto) in reliance
upon and in conformity with information furnished in writing to the Company by or on
behalf of any Underwriter through the Representatives specifically for inclusion in
the Registration Statement or the Prospectus (or any supplement thereto), it being
understood and agreed that the only such information furnished by any Underwriter
consists of the information described as such in Section 8 hereof.
(2) At the Execution Time, the Statutory Prospectus did not include any untrue
statement of a material fact or omit to state a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or omitted from the
Statutory Prospectus in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of any Underwriter through the
Representatives specifically for inclusion in the Statutory Prospectus, it being
understood and agreed that the only such information furnished by or on behalf of
any Underwriter consists of the information described as such in Section 8 hereof.
(c) Compliance with Exchange Act. The Company has filed with the Commission a Form
8-A (File Number ___) providing for the registration under the Exchange Act of the Securities and
the Underwriters’ Securities. The registration of the Securities and the Underwriters’ Securities
under the Exchange Act has been declared effective by the Commission on the date hereof.
(d) No Stop Orders, Etc. Neither the Commission nor, to the Company’s best knowledge,
any state regulatory authority has issued any order or threatened to issue any order preventing or
suspending the effectiveness of the Registration Statement or the use of any Preliminary
Prospectus, the Prospectus or any part thereof, or has instituted or, to the Company’s best
knowledge, threatened to institute any proceedings with respect to such an order.
(e) Disclosure of Agreements. The agreements and documents described in the Statutory
Prospectus, the Registration Statement and the Prospectus conform in all material respects to the
descriptions thereof contained therein. There is no franchise, contract or other document of a
character required to be described in the Registration Statement, Statutory Prospectus or
Prospectus, or to be filed as an exhibit thereto, which is not described or filed as required (and
the Statutory Prospectus contains in all material respects the same description of the foregoing
matters contained in the Prospectus); and the
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statements in the Statutory Prospectus and the
Prospectus under the headings “Principal Stockholders,” “Certain Transactions,” “Description of
Securities” and “Legal Matters” insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are accurate and fair summaries of such legal matters,
agreements, documents or proceedings.
(f) Capitalization. The Company’s authorized equity capitalization is as set forth in
the Statutory Prospectus, the Registration Statement and the Prospectus. The capital stock of the
Company conforms in all material respects to all statements relating thereto contained in the
Statutory Prospectus, the Registration Statement and the Prospectus.
(g) Outstanding Securities. All issued and outstanding securities of the Company have
been duly and validly authorized and issued and are fully paid and nonassessable; 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 preemptive rights of any holders of any security of the Company or similar contractual rights
granted by the Company. The offers and sales of the outstanding Common Stock were at all relevant
times either registered under the Act, the applicable state securities and Blue Sky laws or, based
in part on the representations and warranties of the purchasers of such shares of Common Stock,
exempt from such registration requirements. The holders of outstanding shares of capital stock of
the Company are not entitled to preemptive or other rights to subscribe for the Securities; and,
except as set forth in the Statutory Prospectus and the Prospectus, no options, warrants or other
rights to purchase, agreements or other obligations to issue, or rights to convert any obligations
into or exchange any securities for, shares of capital stock of or ownership interests in the
Company are outstanding.
(h) Securities Sold Pursuant to this Agreement.
(1) The Common Stock included in the Units has been duly authorized and, when
executed by the Company and countersigned, and issued and delivered against payment
therefor by the Underwriters pursuant to this Agreement, will be validly issued,
fully paid and non-assessable.
(2) The Warrants included in the Units, when executed, authenticated, issued
and delivered in the manner set forth in the Warrant Agreement against payment
therefor by the Underwriters pursuant to this Agreement, will be duly executed,
authenticated, issued and delivered, and will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with their
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally from time to time
in effect and by equitable principles of general applicability.
(3) The shares of Common Stock issuable upon exercise of the Warrants included
in the Units have been duly authorized and, when executed by the Company and
countersigned and issued and delivered against payment therefor pursuant to the
Warrants and the Warrant Agreement, will be validly issued, fully paid and
non-assessable. The holders of such Common Stock are not and will not be subject to
personal liability by reason of being such holders; such Common Stock is not and
will not be subject to any preemptive or other similar contractual rights granted by
the Company; and all corporate action required to be taken for the authorization,
issuance
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and sale of such Common Stock (other than such execution, countersignature
and delivery at the time of issuance) has been duly and validly taken.
(4) The certificates for the Securities are in valid and sufficient form. The
Securities are duly authorized for quotation on the OTC Bulletin Board
(i) Registration Rights of Third Parties. Except as set forth in the Statutory
Prospectus and 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.
(j) Prior Securities Transactions.
(1) 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, controlled by,
or under common control with the Company from its inception through and including
the date hereof, except as disclosed in the Registration Statement.
(2) Neither the Company nor any of its affiliates has, prior to the date
hereof, made any offer or sale of any securities which are required to be
“integrated” pursuant to the Act or the Regulations with the offer and sale of the
Underwritten Securities pursuant to the Registration Statement.
(k) Securities Sold Pursuant to the Securities Purchase Agreement.
(1) The Common Stock included in the Placement Units has been duly authorized
and, when executed by the Company and countersigned, and issued and delivered
against payment therefor by SMCP, LLC pursuant to the Securities Purchase Agreement,
will be validly issued, fully paid and non-assessable.
(2) The Warrants included in the Placement Units, when executed, authenticated,
issued and delivered in the manner set forth in the Warrant Agreement against
payment therefor by SMCP, LLC pursuant to the Securities Purchase Agreement, will be
duly executed, authenticated, issued and delivered, and will constitute valid and
binding obligations of the Company, enforceable against the Company in accordance
with their terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors’ rights generally from time to time
in effect and by equitable principles of general applicability.
(3) The shares of Common Stock issuable upon exercise of the Warrants included
in the Placement Units have been duly authorized and, when executed by the Company
and countersigned and issued and delivered against payment therefor pursuant to the
Warrants and the Warrant Agreement, will be validly issued, fully paid and
non-assessable. The holders of such Common Stock are not and will not be subject to
personal liability by reason of being such holders; such Common Stock is not and
will not be subject to any preemptive or other similar contractual rights granted by
the Company; and all corporate action required to be taken for the authorization,
issuance
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and sale of such Common Stock (other than such execution, countersignature
and delivery at the time of issuance) has been duly and validly taken.
(4) The entire $3,000,000 of proceeds from the sale of the Placement Units has
been deposited in the Trust Fund in accordance with the terms of the Securities
Purchase Agreement. SMCP, LLC waived any and all rights and claims it may have to
any proceeds, and any interest thereon, held in the Trust Fund in respect of the
shares of Common Stock included in the Placement Units in the event that a Business
Combination is not consummated and the Trust Fund is liquidated in accordance with
the terms of the Trust Agreement.
(l) Due Incorporation; Power and Authority, Etc. The Company has been duly
incorporated and is validly existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power and authority to own or lease, as the case may be, and to
operate its properties and conduct its business as described in the Statutory Prospectus and the
Prospectus, and is duly qualified to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction which requires such qualification.
(m) Validity and Binding Effect of Agreements.
(1) This Agreement has been duly authorized, executed and delivered by the
Company.
(2) The Trust Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms except as the enforceability thereof may be
limited by bankruptcy, insolvency, or similar laws affecting creditors’ rights
generally from time to time in effect and by equitable principles of general
applicability.
(3) The Warrant Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms except as the enforceability thereof may be
limited by bankruptcy, insolvency, or similar laws affecting creditors’ rights
generally from time to time in effect and by equitable principles of general
applicability.
(4) The Securities Purchase Agreement has been duly authorized, executed and
delivered by the Company and, to the Company’s knowledge, SMCP, LLC, and is a valid
and binding agreement of the Company and, to the Company’s knowledge, each of the
SMCP, LLC, enforceable against the Company and, to the Company’s knowledge, SMCP,
LLC in accordance with its terms except as the enforceability thereof may be limited
by bankruptcy, insolvency, or similar laws affecting creditors’ rights generally
from time to time in effect and by equitable principles of general applicability.
(5) The Services Agreement has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms except as the enforceability thereof may be
limited by bankruptcy, insolvency, or similar laws affecting
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creditors’ rights
generally from time to time in effect and by equitable principles of general
applicability.
(6) The Registration Rights Agreement has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, or similar laws
affecting creditors’ rights generally from time to time in effect and by equitable
principles of general applicability.
(7) The Underwriters’ Purchase Option has been duly authorized, executed and
delivered by the Company and is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, or similar laws
affecting
creditors’ rights generally from time to time in effect and by equitable
principles of general applicability.
(8) To the Company’s knowledge, each of the Insider Letters has been duly
authorized, executed and delivered by each of the Initial Stockholders and is a
valid and binding agreement of each of the Initial Stockholders, enforceable against
each of the Initial Stockholders in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, or similar laws
affecting creditors’ rights generally from time to time in effect and by equitable
principles of general applicability.
(n) Consents, Approvals, Etc. No consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in connection with the transactions
contemplated herein or in the Trust Agreement, the Warrant Agreement, the Securities Purchase
Agreement, the Services Agreement, the Underwriters’ Purchase Option, the Registration Rights
Agreement or the Insider Letters, except such as have been obtained under the Act, such as may be
required under the federal and provincial securities laws of Canada, and such as may be required
under the blue sky laws of any jurisdiction in connection with the purchase and distribution of the
Securities by the Underwriters in the manner contemplated herein and in the Statutory Prospectus
and the Prospectus.
(o) No Breach or Violation. Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the fulfillment of the terms
hereof or of the Trust Agreement, the Warrant Agreement, the Securities Purchase Agreement, the
Services Agreement, the Underwriters’ Purchase Option, the Registration Rights Agreement or the
Insider Letters will conflict with, result in a breach or violation of, or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to (i) the charter or
by-laws of the Company, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust,
note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to
which the Company is a party or bound or to which its property is subject, or (iii) any statute,
law, rule, or regulation, judgment, order or decree applicable to the Company of any court,
regulatory body, administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its properties.
(p) No Conflicts, Etc. The Company is not in violation or default of (i) any
provision of its charter or bylaws, (ii) the terms of any indenture, contract, lease, mortgage,
deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant
or instrument to which it is a party or bound or to which its property is subject, or (iii) any (x)
statute, law, rule, regulation,
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or (y) judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having jurisdiction over
the Company.
(q) Investment Company Act. The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof as described in the
Statutory Prospectus and the Prospectus, will not be an “investment company” as defined in the
Investment Company Act of 1940, as amended (the “Investment Company Act”) and the rules and
regulations of the Commission thereunder.
(r) Financial Statements. The financial statements, including the notes thereto and
the supporting schedules, if any, of the Company included in the Statutory Prospectus, the
Prospectus and the Registration Statement present fairly the financial condition, results of
operations and cash flows of the Company as of the dates and for the periods indicated, comply as
to form with the applicable accounting requirements of the Act and have been prepared in conformity
with generally accepted accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise noted therein). There are no pro forma or as adjusted financial
statements which are required to be
included in the Statutory Prospectus, the Registration Statement and the Prospectus in
accordance with Regulation S-X which have not been included as so required.
(s) Off-Balance Sheet Arrangements. The Company is not party to any off-balance sheet
transactions, arrangements, obligations (including contingent obligations), or other relationships
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.
(t) Other Data. The statistical, industry-related and market-related data included in
the Registration Statement, the Statutory Prospectus and the Prospectus are based on or derived
from sources which the Company reasonably and in good faith believes are reliable and accurate, and
such data agree with the sources from which they are derived.
(u) Independent Accountants. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. (“▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇”) are independent
public accountants with respect to the Company within the meaning of the Act and the applicable
published rules and regulations thereunder and the Public Company Accounting Oversight Board
(including the rules and regulations promulgated by such entity, the “PCAOB”). ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ is
duly registered and in good standing with the PCAOB. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ has not, during the periods
covered by the financial statements included in the Statutory Prospectus and the Prospectus,
provided to the Company any non-audit services, as such term is used in Section 10A(g) of the
Exchange Act.
(v) Disclosure Controls and Procedures. The Company maintains effective “disclosure
controls and procedures” (as defined under Rule 13a-15(e) under the Exchange Act).
(w) ▇▇▇▇▇▇▇▇-▇▇▇▇▇/AMEX Rules. Solely to the extent that the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002, as amended, and the rules and regulations promulgated by the Commission thereunder (the
“▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”) has been applicable to the Company, there is and has been no failure on the
part of the Company to comply with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company has taken
all necessary actions to ensure that it is in compliance with all provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act that are in effect and with which the Company is required to comply and is actively taking
steps to ensure that it will be in compliance with other provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act not
currently in effect or which will become applicable to the Company. There is and has been no
failure on the part of the Company or
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any of the Company’s officers or directors, in their
capacities as such, to comply with (as and when applicable), and immediately following the
Effective Date the Company will be in compliance with, Part 8 of the American Stock Exchange’s
“AMEX Company Guide,” as amended. Further, there is and has been no failure on the part of the
Company or any of the Company’s officers or directors, in their capacities as such, to comply with
(as and when applicable), and immediately following the Effective Date the Company will be in
compliance with, all other provisions of the American Stock Exchange corporate governance
requirements set forth in the AMEX Company Guide, as amended.
(x) Transfer Taxes. There are no transfer taxes or other similar fees or charges
under Federal law or the laws of any state, or any political subdivision thereof, required to be
paid in connection with the execution and delivery of this Agreement or the issuance or sale by the
Company of the Securities.
(y) Ownership. The Company owns or leases all such properties as are necessary to the
conduct of its operations as presently conducted.
(z) Litigation; Government Proceedings. No action, suit or proceeding by or before
any court or governmental agency, authority or body or any arbitrator involving the Company or to
the
best knowledge of the Company, any Initial Stockholder, or its or their property is pending
or, to the best knowledge of the Company, threatened that (i) could reasonably be expected to have
a material adverse effect on the performance of this Agreement or the consummation of any of the
transactions contemplated hereby or (ii) could reasonably be expected to have a material adverse
effect on the condition (financial or otherwise), prospects, earnings, business or properties of
the Company, whether or not arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Statutory Prospectus and the Prospectus (exclusive of any
supplement thereto).
(aa) Tax Returns. The Company has filed all foreign, federal, state and local tax
returns that are required to be filed by it or has requested extensions thereof (except in any case
in which the failure to so file would not have a material adverse effect on the condition
(financial or otherwise), prospects, earnings, business or properties of the Company, taken as a
whole, whether or not arising from transactions in the ordinary course of business) and has paid
all taxes required to be paid by it and any other assessment, fine or penalty levied against it, to
the extent that any of the foregoing is due and payable, except for any such assessment, fine or
penalty that is currently being contested in good faith or as would not have a material adverse
effect on the condition (financial or otherwise), prospects, earnings, business or properties of
the Company, whether or not arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Statutory Prospectus and the Prospectus (exclusive of any
supplement thereto).
(bb) Insurance Matters. The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent and customary in
the business in which it is engaged; all policies of insurance and fidelity or surety bonds
insuring the Company or its businesses, assets, employees, officers and directors are in full force
and effect; the Company is in compliance with the terms of any such policies and instruments in all
material respects; and there are no claims by the Company under any such policy or instrument as to
which any insurance company is denying liability or defending under a reservation of rights clause.
(cc) Licenses and Permits. The Company possesses all licenses, certificates, permits
and other authorizations issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct its business, and the Company has not received any notice of proceedings
relating to the
10
revocation or modification of any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a material adverse effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company, whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in the Statutory Prospectus and the
Prospectus (exclusive of any supplement thereto).
(dd) Environmental. The Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) is not required to obtain any permit, license or other approvals
pursuant to applicable Environmental Laws in order to conduct its business and (iii) has not
received notice of any actual or potential liability under any environmental law. The Company has
not been named as a “potentially responsible party” under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
(ee) ERISA. The Company has fulfilled its obligations, if any, under Section 515 of
the Employee Retirement Income Security Act of 1974, as amended, and the regulations and published
interpretations thereunder (“ERISA”); the Company does not maintain nor is it required to
contribute to a “welfare plan” (as defined in Section 3(1) of ERISA) which provides retiree or
other post-employment welfare benefits or insurance coverage (other than “continuation coverage”
(as defined in Section 602 of
ERISA)); and the Company has not incurred nor could it reasonably be expected to incur any
withdrawal liability under Section 4201 of ERISA, any liability under Section 4062, 4063, or 4064
of ERISA, or any other liability under Title IV of ERISA.
(ff) Stabilization. The Company has not taken, directly or indirectly, any action
designed to or that would constitute 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 Securities.
(gg) Certain Regulatory Matters.
(1) Foreign Corrupt Practices Act. Neither the Company nor, to the
knowledge of the Company, any Initial Stockholder, director, officer, agent,
employee or affiliate of the Company is aware of or has taken any action, directly
or indirectly, that would result in a violation by such Persons of the FCPA (as
defined below), including, without limitation, making use of the mails or any means
or instrumentality of interstate commerce corruptly in furtherance of an offer,
payment, promise to pay or authorization of the payment of any money, or other
property, gift, promise to give, or authorization of the giving of anything of value
to any “foreign official” (as such term is defined in the FCPA) or any foreign
political party or official thereof or any candidate for foreign political office,
in contravention of the FCPA and the Company and, to the knowledge of the Company,
its affiliates have conducted their businesses in compliance with the FCPA and have
instituted and maintain policies and procedures designed to ensure, and which are
reasonably expected to continue to ensure, continued compliance therewith.
“FCPA” means Foreign Corrupt Practices Act of 1977, as amended, and the
rules and regulations thereunder.
(2) Money Laundering Laws. The operations of the Company are and have
been conducted at all times in compliance with applicable financial recordkeeping
and
11
reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, including the
Money Laundering Control Act of 1986, as amended, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money
Laundering Laws”) and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company with
respect to the Money Laundering Laws is pending or, to the best knowledge of the
Company, threatened.
(3) OFAC. Neither the Company nor, to the knowledge of the Company,
any Initial Stockholder, director, officer, agent, employee or affiliate of the
Company is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company
(either directly or through the Trust) will not directly or indirectly use the
proceeds of the offering, or lend, contribute or otherwise make available such
proceeds to any subsidiary, joint venture partner or other person or entity, for the
purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
(4) Bank Secrecy Act; Money Laundering; Patriot Act. Neither the
Company nor any officer, director or Initial Stockholder has violated: (a) the Bank
Secrecy Act, as amended, (b) the Money Laundering Laws, or (c) the Uniting and
Strengthening of America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and/or the rules and
regulations promulgated under any such law, or any successor law.
(hh) D&O Questionnaires. All information contained in the questionnaires (the
“Questionnaires”) completed by each of the Initial Stockholders and the Company’s other officers,
directors and special advisors and provided to the Underwriters as an exhibit to his or her Insider
Letter 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 and the
Company’s other officers, directors and special advisors to become inaccurate and incorrect.
(ii) Business Combinations. Except as disclosed in the Statutory Prospectus and the
Prospectus, prior to the date hereof, none of the Company, its officers and directors nor, to the
knowledge of the Company, the Initial Stockholders or any affiliates thereof had, and as of the
Closing Date, the Company and such officers and directors and, to the knowledge of the Company, the
Initial Stockholders and their affiliates will not have had: (a) any specific Business Combination
under consideration or contemplation or (b) any interactions or discussions with any target
business relating to a possible Business Combination.
(jj) NASD Matters.
(1) Except as described in the Statutory Prospectus and the Prospectus, there
are no claims, payments, arrangements, contracts, agreements or understandings
relating to the payment of a brokerage commission or finder’s, consulting,
origination or similar 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 knowledge of the Company, any Initial
Stockholder that may affect the
12
Underwriters’ compensation, as determined by the
National Association of Securities Dealers, Inc. (the “NASD”).
(2) The Company has not made any direct or indirect payments (in cash,
securities or otherwise) to: (i) 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 the Underwriters.
(3) Except as set forth on Schedule II, no officer, director, or beneficial
owner of any class of the Company’s securities (whether debt or equity, registered
or unregistered, regardless of the time acquired or the source from which derived)
(any such individual or entity, a “Company Affiliate”) is a member, a person
associated, or affiliated with a member of the NASD.
(4) Except as set forth on Schedule II, no Company Affiliate is an owner of
stock or other securities of any member of the NASD (other than securities purchased
on the open market).
(5) No Company Affiliate has made a subordinated loan to any member of the
NASD.
(6) Except as set forth on Schedule II, no proceeds from the sale of the
Underwritten Securities (excluding underwriting compensation as disclosed in the
Statutory Prospectus and the Prospectus) will be paid to any NASD member, or any
persons associated or affiliated with a member of the NASD.
(7) The Company has not issued any warrants or other securities, or granted any
options, directly or indirectly to anyone who is a potential underwriter in the
offering or a related person (as defined by NASD rules) of such an underwriter
within the 180-day period prior to the initial filing date of the Registration
Statement.
(8) Except as set forth on Schedule II, no person to whom securities of the
Company have been privately issued within the 180-day period prior to the initial
filing date of the Registration Statement has any relationship or affiliation or
association with any member of the NASD.
(9) To the knowledge of the Company, no NASD member intending to participate in
the Offering has a conflict of interest with the Company. For this purpose, a
“conflict of interest” exists when a member of the NASD and/or its associated
persons, parent or affiliates in the aggregate beneficially own 10% or more of the
Company’s outstanding subordinated debt or common equity, or 10% or more of the
Company’s preferred equity. “NASD member participating in the Offering” includes
any associated person of an NASD member that is participating in the Offering, any
members of such associated person’s immediate family, and any affiliate of an NASD
member that is participating in the Offering.
13
(kk) Non-Competition Agreements. No Initial Stockholder or any of the Company’s other
officers, directors or special advisors is subject to any non-competition agreement or
non-solicitation agreement with any employer or prior employer which could materially affect his
ability to be and act in the capacity of an Initial Stockholder, employee, officer, director or
special advisor of the Company.
(ll) Subsidiaries. The Company does not own an interest in any corporation,
partnership, limited liability company, joint venture, trust or other entity.
(mm) Related Party Transactions. No relationship, direct or indirect, exists between
or among any of the Company or any affiliate of the Company, on the one hand, and any director,
officer, shareholder, special advisor, customer or supplier of the Company or any affiliate of the
Company, on the other hand, which is required by the Act or the Exchange Act to be described in the
Statutory Prospectus or the Prospectus which is not described as required. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary course of business)
or guarantees of indebtedness by the Company to or for the benefit of any of the officers or
directors of the Company or any of their respective family members, except as disclosed in the
Registration Statement, Statutory Prospectus and the Prospectus. The Company has not extended or
maintained credit, arranged for the extension of credit, or renewed an extension of credit, in the
form of a personal loan to or for any director or officer of the Company.
(nn) No Influence. The Company has not offered, or caused the Underwriters to offer,
the Underwritten Securities to any person or entity with the intention of unlawfully influencing:
(a) a customer or supplier of the Company or any affiliate of the Company to alter the customer’s
or supplier’s level or type of business with the Company or such affiliate or (b) a journalist or
publication to write or publish favorable information about the Company or any such affiliate.
(oo) Quotations for the Securities. The Company has complied with Rule 15c2-11 under
the Exchange Act, to the extent applicable, in connection with the publication of quotations for
the Securities.
(pp) Free Writing Prospectus. The Company has not prepared or used a Free Writing
Prospectus.
(qq) Rule 419. Upon delivery and payment for the Units on the Closing Date, the
Company will not be subject to Rule 419 under the Act and none of the Company’s outstanding
securities will be deemed to be a “▇▇▇▇▇ stock” as defined in Rule 3a51-1 under the Exchange Act.
Any certificate signed by any officer of the Company and delivered to the Representatives or
counsel for the Underwriters in connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company agrees to sell to
each Underwriter, and each Underwriter agrees, severally and not jointly, to purchase from the
Company, at a purchase price of $7.60 per Unit (subject to adjustment pursuant to Section 2(c)),
the amount of the Underwritten Securities set forth opposite such Underwriter’s name in Schedule I
hereto.
14
(b) Subject to the terms and conditions and in reliance upon the representations and
warranties herein set forth, the Company hereby grants an option to the several Underwriters to
purchase, severally and not jointly, up to 2,812,500 Option Securities at the same purchase price
per share as the Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten Securities by the
Underwriters. Said option may be exercised in whole or in part at any time on or before the 30th
day after the date of the Prospectus upon written or telegraphic notice by the Representatives to
the Company setting forth the number of Option Securities as to which the several Underwriters are
exercising the option and the settlement date. The number of Option Securities to be purchased by
each Underwriter shall be the same percentage of the total number of shares of the Option
Securities to be purchased by the several Underwriters as such Underwriter is purchasing of the
Underwritten Securities, subject to such adjustments as the Representatives in their absolute
discretion shall make to eliminate any fractional shares.
(c) The Company hereby agrees to pay to the Underwriters a deferred discount of $0.20 per Unit
(including both Underwritten Securities and Option Securities) purchased hereunder (the “Deferred
Discount”). The Deferred Discount will be payable from amounts on deposit in the trust fund
established by the Company for the benefit of the public stockholders as described in the
Registration Statement (the “Trust Fund”) if and when the Company consummates a Business
Combination. The Underwriters hereby agree that if no Business Combination is consummated within
the time period provided in the Trust Agreement and the funds held under the Trust Agreement are
distributed to the Company’s public stockholders, (i) the Underwriters will forfeit any rights or
claims to the Deferred Discount and (ii) the trustee under the Trust Agreement is authorized to
distribute the Deferred Discount to the public stockholders of the Company on a pro rata basis.
3. Delivery and Payment. (a) Delivery of and payment for the Underwritten
Securities and the Option Securities (if the option provided for in Section 2(b) hereof shall have
been exercised on or before the third Business Day prior to the Closing Date) shall be made at
10:00 AM, New York City time, on , 2006, or at such time on such later date not more than
three Business Days after the foregoing date as the Representatives shall designate, which date and
time may be postponed by agreement between the Representatives and the Company or as provided in
Section 9 hereof (such date and time of delivery and payment for the Securities being herein called
the “Closing Date”). Delivery of the Securities shall be made to the Representatives for the
respective accounts of the several Underwriters against payment by the several Underwriters through
the Representatives of the purchase price thereof to or upon the order of the Company by wire
transfer payable in same-day funds to an account specified by the Company.
(b) Payment for the Underwritten Securities shall be made as follows: $___ (or $___ per
Underwritten Security) shall be deposited in the Trust Fund pursuant to the terms of the Trust
Agreement and $___ shall be paid to the order of the Company upon delivery to the
Representatives of certificates (in form and substance satisfactory to the Representatives)
representing the Underwritten Securities (or through the facilities of the Depository Trust Company
(the “DTC”)) for the account of the Underwriters. The Underwritten Securities shall be registered
in such name or names and in such authorized denominations as the Representatives may request in
writing at least two (2) Business Days prior to the Closing Date. The Company will permit the
Representatives to examine and package the Underwritten Securities for delivery, at least one (1)
Business Day prior to the Closing Date. The Company shall not be obligated to sell or deliver the
Underwritten Securities except upon tender of payment by the Representatives for all the
Underwritten Securities.
15
(c) Payment for the Option Securities shall be made as follows: $7.40 per Option Security
shall be deposited in the Trust Fund pursuant to the Trust Agreement upon delivery to the
Representatives of certificates (in form and substance satisfactory to the Underwriters)
representing the Option Securities (or through the facilities of DTC) for the account of the
Underwriters. The certificates representing the Option Securities to be delivered will be in such
denominations and registered in such names as the Representatives request not less than two (2)
Business Days prior to the Closing Date and will be made available to the Representatives for
inspection, checking and packaging at the aforesaid office of the Company’s transfer agent or
correspondent not less than one (1) Business Day prior to such Closing Date. Delivery of the
Underwritten Securities and the Option Securities shall be made through the facilities of DTC
unless the Representatives shall otherwise instruct.
(d) If the option provided for in Section 2(b) hereof is exercised after the third Business
Day prior to the Closing Date, the Company will deliver the Option Securities (at the expense of
the Company) to Citigroup Global Markets Inc., at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ the
date specified by the Representatives (which shall be within three Business Days after exercise of
said option) for the respective accounts of the several Underwriters, against payment by the
several Underwriters through the Representatives of the purchase price thereof to or upon the order
of the Company by wire transfer payable in same-day funds to an account specified by the Company.
If settlement for the Option Securities occurs after the Closing Date, the Company will deliver to
the Representatives on the settlement date for the Option Securities, and the obligation of the
Underwriters to purchase the Option Securities shall be conditioned upon receipt of, supplemental
opinions, certificates and letters confirming as of such date the opinions, certificates and
letters delivered on the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several Underwriters propose
to offer the Securities for sale to the public as set forth in the Prospectus (the “Offering”).
5. Agreements. The Company agrees with the several Underwriters that:
(a) Filing of Prospectus; Notice to Representatives; Stop Orders. Prior to the
termination of the offering of the Securities, the Company will not file any amendment of the
Registration Statement or supplement to the Prospectus or any Rule 462(b) Registration Statement
unless the Company has furnished the Representatives a copy for their review prior to filing and
will not file any such proposed amendment or supplement to which any Representative objects. The
Company will cause the Prospectus, properly completed, and any supplement thereto to be filed in a
form approved by the Representatives with the Commission pursuant to the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence satisfactory to the
Representatives of such timely filing. The Company will promptly advise the Representatives (i)
when the Prospectus, and any supplement thereto, shall have been filed (if required) with the
Commission pursuant to Rule 424(b) or when any Rule 462(b) Registration Statement shall have been
filed with the Commission, (ii) when, prior to termination of the offering of the Securities, any
amendment to the Registration Statement shall have been filed or become effective, (iii) of any
request by the Commission or its staff for any amendment of the Registration Statement, or any Rule
462(b) Registration Statement, or for any supplement to the Prospectus or for any additional
information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or of any notice objecting to its use or the institution or
threatening of any proceeding for that purpose and (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the Securities for sale in any
jurisdiction or the institution or threatening of any proceeding for such purpose. The Company
will use its best efforts to prevent the issuance of any such stop order or the occurrence of any
such suspension or objection to the
16
use of the Registration Statement and, upon such issuance, occurrence or notice of objection,
to obtain as soon as possible the withdrawal of such stop order or relief from such occurrence or
objection, including, if necessary, by filing an amendment to the Registration Statement or a new
registration statement and using its best efforts to have such amendment or new registration
statement declared effective as soon as practicable.
(b) If, at any time prior to the filing of the Prospectus pursuant to Rule 424(b), any event
occurs as a result of which the Statutory Prospectus would include any untrue statement of a
material fact or omit to state any material fact necessary to make the statements therein in the
light of the circumstances under which they were made at such time not misleading, the Company will
(i) notify promptly the Representatives so that any use of the Statutory Prospectus may cease until
it is amended or supplemented; (ii) amend or supplement the Statutory Prospectus to correct such
statement or omission; and (iii) supply any amendment or supplement to the Representatives in such
quantities as may reasonably be requested.
(c) Amendment to Prospectus. If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act (including in circumstances where such
requirement may be satisfied pursuant to Rule 172), any event occurs as a result of which the
Prospectus as then supplemented would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein in the light of the circumstances
under which they were made at such time not misleading, or if it shall be necessary to amend the
Registration Statement or supplement the Prospectus to comply with the Act or the rules thereunder,
the Company promptly will (i) notify the Representatives of any such event; (ii) prepare and file
with the Commission, subject to the second sentence of paragraph (a) of this Section 5, an
amendment or supplement which will correct such statement or omission or effect such compliance;
and (iii) supply any supplemented Prospectus to the Representatives in such quantities as may
reasonably be requested.
(d) Delivery of Earnings Statements. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an earnings statement or
statements of the Company and its subsidiaries which will satisfy the provisions of Section 11(a)
of the Act and Rule 158.
(e) Delivery of Documents. The Company will furnish to the Representatives and
counsel for the Underwriters signed copies of the Registration Statement (including exhibits
thereto) and to each other Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or dealer may be required by
the Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172),
as many copies of each Preliminary Prospectus, the Prospectus and any supplement thereto as the
Representatives may reasonably request.
(f) Qualification of Securities. The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such jurisdictions as the
Representatives may designate and will maintain such qualifications in effect so long as required
for the distribution of the Securities; provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified or to take any action
that would subject it to service of process in suits, other than those arising out of the offering
or sale of the Securities, in any jurisdiction where it is not now so subject.
17
(g) Lock-Up. The Company will not, without the prior written consent of the
Representatives, offer, sell, contract to sell, pledge, or otherwise dispose of, (or enter into any
transaction which is designed to, or might reasonably be expected to, result in the disposition
(whether by actual disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in privity with the Company
or any affiliate of the Company) directly or indirectly, including the filing (or participation in
the filing) of a registration statement with the Commission in respect of, or establish or increase
a put equivalent position or liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act, any other Units, shares of Common Stock, Warrants or any other
securities convertible into, or exercisable, or exchangeable for, shares of Common Stock; or
publicly announce an intention to effect any such transaction, during the period commencing on the
date hereof and ending 180 days after the date of this Agreement, provided,
however, that if (1) during the last 17 days of the Restricted Period the Company issues an
earnings release or material news or a material event relating to the Company occurs or (2) prior
to the expiration of the Restricted Period the Company announces that it will release earnings
results during the 16 day period beginning on the last day of the Restricted Period, then the
foregoing restrictions shall continue to apply until the expiration of the 18 day period beginning
on the issuance of the earnings release or the occurrence of the material news or material event;
provided further, however, that the Company may issue and sell the Placement Units
and may issue and sell the Option Securities on exercise of the option provided for in Section 2(b)
hereof.
(h) No Stabilization or Manipulation. The Company will not take, directly or
indirectly, any action designed to or that would constitute 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 Securities.
(i) Payment of Expenses. The Company agrees to pay the costs and expenses relating to
the following matters: (i) the preparation, printing or reproduction and filing with the
Commission of the Registration Statement (including financial statements and exhibits thereto),
each Preliminary Prospectus, the Prospectus and each amendment or supplement to any of them; (ii)
the printing (or reproduction) and delivery (including postage, air freight charges and charges for
counting and packaging) of such copies of the Registration Statement, each Preliminary Prospectus,
the Prospectus, and all amendments or supplements to any of them, as may, in each case, be
reasonably requested for use in connection with the offering and sale of the Securities; (iii) the
preparation, printing, authentication, issuance and delivery of certificates for the Securities,
including any stamp or transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this Agreement and all other
agreements or documents printed (or reproduced) and delivered in connection with the offering of
the Securities; (v) the registration of the Securities under the Exchange Act; (vi) any filings
required to be made with the National Association of Securities Dealers, Inc. (including filing
fees and the reasonable fees and expenses of counsel for the Underwriters relating to such
filings); (vii) the Listing Fee of the American Stock Exchange, (viii) the transportation and other
expenses incurred by or on behalf of Company representatives in connection with presentations to
prospective purchasers of the Securities; (ix) the fees and expenses of the Company’s accountants
and the fees and expenses of counsel (including local and special counsel) for the Company; and (x)
all other costs and expenses incident to the performance by the Company of its obligations
hereunder.
(j) Maintenance of Registration. For a period of at least five (5) years from the
Effective Date, or until such earlier time upon which the Company is required to be liquidated or
the Underwriters no longer hold the Underwriters’ Purchase Option, the Company will use its best
efforts to maintain the registration of the Units, Common Stock and Warrants under the provisions
of the Exchange
18
Act. The Company will not deregister the Units under the Exchange Act without the prior
written consent of the Representatives.
(k) Form 8-K. The Company shall, on the date hereof, retain its registered
independent public accountants to audit the financial statements of the Company as of the Closing
Date (the “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. Additionally, upon the Company’s receipt of the
proceeds from the exercise of all or any portion of the over-allotment option, the Company shall
immediately file a Current Report on Form 8-K with the Commission, which report shall disclose the
Company’s sale of the Option Securities and its receipt of the proceeds therefrom.
(l) Accountants; Review of Financial Statements.
(1) For a period of five (5) years from the Effective Date or until such
earlier time upon which the Company is required to be liquidated, the Company shall
retain ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ or other registered independent public accountants reasonably
acceptable to the Underwriters.
(2) For a period of at least five (5) years from the Effective Date or until
such earlier time that the Company is required to be liquidated, the Company, at its
expense, shall cause its regularly engaged registered 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,
if any, of quarterly financial information to stockholders.
(m) Publicly Available Statements and Reports. For a period of five (5) years from
the Effective Date or until such earlier time that the Company is required to be liquidated, the
Company will furnish to the Representatives such copies of 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 such additional documents and information with respect to the Company as the
Representatives may from time to time reasonably request.
(n) Affiliate Transactions.
(1) In no event will the fees payable under the Services Agreement be more than
$7,500 per month in the aggregate.
(2) Except as set forth in this subsection (2), the Company shall not pay any
Initial Stockholder or any of the Company’s other officers, directors or special
advisors or any of their affiliates any fees or compensation for services rendered
to the Company prior to, or in connection with, the consummation of a Business
Combination; provided that the Initial Stockholders shall be entitled to
reimbursement from the Company for their out-of-pocket expenses incurred in
connection with seeking and consummating a Business Combination.
19
(o) [Amendment to the Trust Agreement. The Company warrants that the Trust Agreement
shall not be amended, modified or otherwise changed without the prior written consent of the
Representative.]
(p) Net Proceeds. The Company will apply the net proceeds from the offering received
by it in a manner consistent with the applications described under the caption “Use of Proceeds” in
the Statutory Prospectus and the Prospectus.
(q) Notice to NASD.
(1) 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 the Representatives 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.
(2) 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 Securities.
(r) Investment Company. The Company shall cause the proceeds of the offering to be
held in the Trust Fund to be invested only in United States “government securities,” within the
meaning of Section 2(a)(16) of the Investment Company Act, having maturity of 180 days or less, as
set forth in the Trust Agreement and disclosed in the Statutory Prospectus and 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.
(s) Operating Expenses. During the period prior to the Company’s initial Business
Combination, the Company may instruct the trustee under the Trust Agreement that up to an aggregate
of $2,000,000 of interest income (after appropriate reserve for payment of taxes) be released to
the Company solely for the purposes described in the “Use of Proceeds” section of the Registration
Statement under the caption “Use of Net Proceeds Not Held in Trust and Up to $2 million of the
Interest Earned on our Trust Account (Net of Taxes Payable) That May be Released to Us to Cover Our
Operating Expenses”. After an aggregate of $2,000,000 is released to the Company, any interest
income earned on the amounts held in the Trust Fund (net of taxes payable) will remain in the Trust
Fund until the earlier of the consummation of the Company’s initial Business Combination or its
liquidation.
(t) Reservation of Shares. The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon exercise of any of the
Securities outstanding from time to time.
20
(u) Issuance of Shares. Prior to the consummation of a Business Combination or the
liquidation of the Trust, the Company shall not issue any shares of Common Stock, Warrants 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.
(v) Audit Committee Review of Expenses. Prior to the consummation of a Business
Combination or the liquidation of the Trust, the Company shall cause its audit committee to review
and approve all expense reimbursements made to its officers, directors or senior advisors and any
expense reimbursements payable to members of the Company’s audit committee will be reviewed and
approved by the Company’s board of directors, with any interested directors abstaining from such
review and approval.
(w) 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.
(x) Internal Controls. The Company will maintain a system of internal accounting
controls sufficient 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 GAAP and to
maintain accountability 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.
(y) American Stock Exchange Listing. The Company will use its best efforts to effect
and maintain the listing of the Units, Common Stock and Warrants on the American Stock Exchange.
(z) ▇▇▇▇▇▇▇▇-▇▇▇▇▇/AMEX. As soon as it is legally required to do so, the Company and
any of the Company’s directors or officers, in their capacities as such, shall take all actions
necessary to (i) comply with any provision of the Sarbanes Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith (the “Sarbanes Oxley Act”), including
Section 402 related to loans and Sections 302 and 906 related to certifications and (ii) comply
with the requirements of the American Stock Exchange’s AMEX Company Guide. Solely to the extent
that the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act has been applicable to the Company, there is and has been no failure on
the part of the Company to comply in all material respects with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
(aa) 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 Amended
and Restated Certificate of Incorporation, as amended, or Bylaws, as amended. Prior to the
consummation of a Business Combination or until the distribution of the Trust Fund, the Company
will not amend its Amended and Restated Certificate of Incorporation without the prior written
consent of the Representatives, which consent shall not be unreasonably withheld.
21
(bb) Business Combination.
(1) Trust Fund Waiver Acknowledgment. The Company hereby agrees that
prior to commencing its due diligence investigation of any operating business which
the Company seeks to acquire for its initial Business Combination (“Target
Business”) or obtaining the services of any vendor, it will use its best efforts to
cause the Target Business or vendor to execute a waiver letter in the form attached
hereto as Exhibit A.
(2) Business Combination/Distribution Procedure. Prior to the
consummation of the initial Business Combination, the Company 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 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 Statutory Prospectus and the Prospectus), the Company will be liquidated and
will distribute to all holders of the Common Stock issued as part of the Units in
this offering (“IPO Shares”) an aggregate sum equal to the Company’s “Liquidation
Value.” The Company’s “Liquidation Value” shall mean the greater of (i) the
Company’s book value, as determined by the Company and approved by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
or the independent registered public accounting firm then engaged by the Company or
(ii) the amount of funds in the Trust Fund (including (a) the proceeds held in the
Trust Fund from this Offering and the Private Placement, (b) the amount held in the
Trust Fund representing the Deferred Discount and (c) any interest income earned on
the funds held in the Trust Fund, net of taxes payable, that are not released to the
Company to cover its operating expenses in accordance with Section 5(r)). 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 initial Business Combination
Vote, the Initial Stockholders have agreed to vote all their IPO Shares and any
other shares of Common Stock held by them, whenever and however acquired, in
accordance with the vote cast by a majority of the shares of Common Stock held by
the Public Stockholders (as defined below). At the time the Company seeks approval
of the initial Business Combination, the Company will offer to each holder of IPO
Shares (the “Public Stockholders”) the right to convert their IPO Shares at a per
share conversion price (the “Conversion Price”), calculated as of two business days
prior to the consummation of such proposed Business Combination, equal to (A) the
amount in the Trust Fund, inclusive of (x) the proceeds from this offering and the
Private Placement held in trust, (y) the amount held in the Trust Fund representing
the Deferred Discount and (z) any interest income earned on the funds held in the
Trust Fund, net of taxes payable, that are not released to the Company to cover its
operating expenses in accordance with Section 5(r), divided by (B) the total number
of IPO Shares. If a majority of the shares voted by the holders of IPO Shares are
voted to approve the initial Business Combination, and if holders of less than 20%
in interest of the IPO Shares vote against such approval of a Business Combination
and elect to convert their IPO Shares, the Company will 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. Only
Public Stockholders shall be entitled to receive
22
distributions from the Trust Fund in connection with the approval of an initial
Business Combination, and the Company shall pay no distributions with respect to any
other holders or shares of capital stock of the Company. If holders of 20% or more
in interest of the IPO Shares vote against approval of a potential Business
Combination and elect to convert their IPO Shares, the Company will not proceed with
such Business Combination and will not convert such shares.
(3) Value of Target Business. The Company agrees that the initial
Target Business that it acquires in a Business Combination must have a fair market
value equal to at least 80% of the amount in the Trust Fund 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
Trust Fund at the time of such Business Combination, the Company will obtain an
opinion from an unaffiliated, independent investment banking firm which is a member
of the NASD 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 of the target business if the Company’s Board of Directors independently
determines that the target business does have sufficient fair market value.
(4) Business Combination Announcement. Within five (5) Business Days
following the consummation by the Company of a Business Combination, the Company
shall cause an announcement (“Business Combination Announcement”) to be placed, at
its cost, in The Wall Street Journal, The New York Times and a third national
publication to be selected by the Representatives announcing the consummation of the
Business Combination and indicating that the Underwriters were the underwriters in
the offering. The Company shall supply the Representatives with a draft of the
Business Combination Announcement and provide the Representatives with a reasonable
advance opportunity to comment thereon. The Company will not place the Business
Combination Announcement without the final approval of the Representatives, which
approval will not be unreasonably withheld.
(cc) Deferred Compensation. Upon the consummation of the initial Business Combination,
the Company will pay to the Representatives, on behalf of the Underwriters, the Deferred Discount.
Payment of the Deferred Discount will be made out of the proceeds of this offering held in the
Trust Fund. The Underwriters shall have no claim to payment of any interest earned on the portion
of the proceeds held in the Trust Fund representing the Deferred Discount. If the Company fails to
consummate its initial Business Combination within the required time period set forth in the
Registration Statement, the Deferred Discount will not be paid to the Representatives and will,
instead, be included in the liquidation distribution of the proceeds held in the Trust Fund made to
the holders of the IPO Shares (as defined in Section (dd)(3) hereof). In connection with any such
liquidation distribution, the Underwriters will forfeit any rights or claims to the Deferred
Discount, including any accrued interest thereon.
6. Conditions to the Obligations of the Underwriters. The obligations of the
Underwriters to purchase the Underwritten Securities and the Option Securities, as the case may be,
shall be subject to the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, the Closing Date and any settlement date pursuant to
Section 3 hereof, to
23
the accuracy of the statements of the Company made in any certificates pursuant to the
provisions hereof, to the performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) Filing of Prospectus; No Stop Order. The Prospectus, and any supplement thereto,
have been filed in the manner and within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement or any notice objecting to its use shall
have been issued and no proceedings for that purpose shall have been instituted or threatened.
(b) Opinion of Company Counsel. The Company shall have requested and caused ▇▇▇▇ &
▇▇▇▇▇ Professional Corporation, counsel for the Company, to have furnished to the Representatives
their opinion, dated the Closing Date and addressed to the
Representatives, in form and substance reasonably satisfactory to the
Representatives and their counsel.
(c) Opinion of Counsel for the Representatives. The Representatives shall have
received from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date and addressed to the Representatives, with respect to the issuance and sale of the
Securities, the Registration Statement, the Statutory Prospectus and the Prospectus (together with
any
24
supplement thereto) and other related matters as the Representatives may reasonably require,
and the Company shall have furnished to such counsel such documents as they request for the purpose
of enabling them to pass upon such matters.
(d) Officer’s Certificate. The Company shall have furnished to the Representatives a
certificate of the Company, signed by the Chief Executive Officer and the principal financial or
accounting officer of the Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, each Preliminary Prospectus, the
Prospectus and any amendment or supplement thereto and this Agreement and that:
(i) the representations and warranties of the Company in this Agreement are
true and correct on and as of the Closing Date with the same effect as if made on
the Closing Date and the Company has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or prior to the
Closing Date;
(ii) no stop order suspending the effectiveness of the Registration Statement
or any notice objecting to its use has been issued and no proceedings for that
purpose have been instituted or, to the Company’s knowledge, threatened; and
(iii) since the date of the most recent financial statements included in the
Statutory Prospectus and the Prospectus (exclusive of any supplement thereto), there
has been no material adverse effect on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company, whether or not arising
from transactions in the ordinary course of business, except as set forth in or
contemplated in the Statutory Prospectus and the Prospectus (exclusive of any
supplement thereto).
(e) Secretary’s Certificate. The Company shall have furnished to the Representatives
a certificate signed by the Secretary or Assistant Secretary of the Company, dated the Closing
Date, 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 offering 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.
(f) Comfort Letter. The Company shall have requested and caused ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to
have furnished to the Representatives, at the Execution Time and at the Closing Date, letters,
dated respectively as of the Execution Time and as of the Closing Date, in form and substance
satisfactory to the Representatives, confirming that they are registered independent accountants
within the meaning of the Act and the applicable rules and regulations adopted by the Commission
thereunder and that they have not, during the periods covered by the financial statements included
in the Registration Statement, Statutory Prospectus and Prospectus, provided to the Company any
non-audit services, as such term is used in Section 10(A)(g) of the Exchange Act, and stating in
effect that:
(i) in their opinion the financial statements and financial statement schedules
included in the Registration Statement, the Statutory Prospectus and the Prospectus
and reported on by them comply as to form in all material respects with the
applicable accounting requirements of the Act and the related rules and regulations
adopted by the Commission;
25
(ii) on the basis of a reading of the latest unaudited financial statements
made available by the Company, if any; carrying out certain specified procedures
(but not an examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the meetings of the
stockholders, directors and various committees of the board of directors; and
inquiries of certain officials of the Company who have responsibility for financial
and accounting matters of the Company as to transactions and events subsequent to
March 31, 2006, nothing came to their attention which caused them to believe that:
with respect to the period subsequent to March 31, 2006, there were any
changes, at a specified date not more than five days prior to the date of
the letter, in the long-term debt or capital stock of the Company or
decreases in the stockholders’ equity of the Company as compared with the
amounts shown on the March 31, 2006 balance sheet included in the Statutory
Prospectus, Registration Statement and the Prospectus, or for the period
from April 1, 2006 to such specified date there were any increases in net
loss or loss before income taxes (benefit) or in total or per share amounts
of net loss of the Company, except in all instances for changes or increases
set forth in such letter, in which case the letter shall be accompanied by
an explanation by the Company as to the significance thereof unless said
explanation is not deemed necessary by the Representatives;
(iii) they have performed certain other specified procedures as a result of
which they determined that certain information of an accounting, financial or
statistical nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the Company) set forth in
the Statutory Prospectus, Registration Statement and the Prospectus, including the
information set forth under the captions “Dilution” and “Capitalization” in the
Statutory Prospectus and the Prospectus, agrees with the accounting records of the
Company, excluding any questions of legal interpretation; and
(iv) statements as to such other matters incident to the transaction
contemplated hereby as the Representatives may reasonably request.
References to the Prospectus in this paragraph (g) include any supplement thereto at the date
of the letter.
(g) Material Change. Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any amendment thereof), the
Statutory Prospectus and the Prospectus (exclusive of any supplement thereto), there shall not have
been (i) any change or decrease specified in the letter or letters referred to in paragraph (g) of
this Section 6 or (ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or properties of the Company,
whether or not arising from transactions in the ordinary course of business, except as set forth in
or contemplated in the Statutory Prospectus and the Prospectus (exclusive of any supplement
thereto) the effect of which, in any case referred to in clause (i) or (ii) above, is, in the sole
judgment of the Representatives, so material and adverse as to make it impractical or inadvisable
to proceed with the offering or delivery of the Securities
26
as contemplated by the Registration Statement (exclusive of any amendment thereof), the
Statutory Prospectus and the Prospectus (exclusive of any supplement thereto).
(h) Further Information. Prior to the Closing Date, the Company shall have furnished
to the Representatives such further information, certificates and documents as the Representatives
may reasonably request.
(i) NASD. The NASD shall not have raised any objection with respect to the fairness
or reasonableness of the underwriting or other arrangements of the transactions contemplated
hereby.
(j) Listing on the American Stock Exchange. The Securities shall be duly listed,
subject to notice of issuance, on the American Stock Exchange, satisfactory evidence of which shall
have been provided to the Representatives.
(k) Delivery of Agreements. On the Effective Date, the Company shall have delivered
to the Representatives executed copies of the Trust Agreement, the Warrant Agreement, the
Securities Purchase Agreement, the Services Agreement, the Escrow Agreement, the Underwriters’
Purchase Option and each of the Insider Letters.
(l) No Brokers. At the Execution Time, the Company shall have requested and caused
each of the Initial Stockholders and the Company’s other officers, directors and special advisors
to have executed and furnished to the Representatives a certificate, dated the Closing Date and
addressed to the Representatives, to the effect that, except as described in the Statutory
Prospectus and the Prospectus, there are no claims, payments, arrangements, contracts, agreements
or understandings relating to the payment of a brokerage commission or finder’s, consulting,
origination or similar fee by such Initial Stockholder, officer, director and special advisor with
respect to the sale of the Securities hereunder or any other arrangements, agreements or
understandings of such Initial Stockholder that may affect the Underwriters’ compensation, as
determined by the NASD.
(m) Further Information. Prior to the Closing Date, the Company shall have furnished
to the Representatives such further information, certificates and documents as the Representatives
may reasonably request.
If any of the conditions specified in this Section 6 shall not have been fulfilled when and as
provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere
in this Agreement shall not be reasonably satisfactory in form and substance to the Representatives
and counsel for the Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the Representatives. Notice of
such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed
in writing.
The documents required to be delivered by this Section 6 shall be delivered at the office of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
unless otherwise indicated herein, on the Closing Date.
7. Reimbursement of Underwriters’ Expenses. If the sale of the Securities provided
for herein is not consummated because any condition to the obligations of the Underwriters set
forth in Section 6 hereof is not satisfied, because of any termination pursuant to Section 10
hereof or because of any refusal, inability or failure on the part of the Company or the Initial
Stockholders to perform any
27
agreement herein or comply with any provision hereof other than by reason of a default by any
of the Underwriters, the Company will reimburse the Underwriters severally through the
Representatives on demand for all out-of-pocket expenses (including reasonable fees and
disbursements of counsel) that shall have been incurred by them in connection with the proposed
purchase and sale of the Securities.
8. Indemnification and Contribution. (a) The Company agrees to indemnify and
hold harmless each Underwriter, the directors, officers, employees and agents of each Underwriter
and each person who controls any Underwriter within the meaning of either the Act or the Exchange
Act against any and all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Act, the Exchange Act or other Federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the registration statement for the
registration of the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not misleading, and
agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information furnished to the Company
by or on behalf of any Underwriter through the Representatives specifically for inclusion therein.
This indemnity agreement will be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration Statement, and each
person who controls the Company within the meaning of either the Act or the Exchange Act, to the
same extent as the foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the Company by or on
behalf of such Underwriter through the Representatives specifically for inclusion in the documents
referred to in the foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company acknowledges that (i) the
statements set forth in the last paragraph of the cover page regarding delivery of the Securities
and, under the heading “Underwriting”, (ii) the list of Underwriters and their respective
participation in the sale of the Securities, (iii) the sentences related to concessions and
reallowances and (iv) the paragraph related to stabilization, syndicate covering transactions and
penalty bids in any Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion in any Preliminary
Prospectus and the Prospectus.
(c) Promptly after receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, notify the indemnifying party in writing
of the commencement thereof; but the failure so to notify the indemnifying party (i) will not
relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the indemnifying party
of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party
from any obligations to any indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the
indemnifying party’s choice at the indemnifying party’s
28
expense to represent the indemnified party in any action for which indemnification is sought
(in which case the indemnifying party shall not thereafter be responsible for the fees and expenses
of any separate counsel retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party’s election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall have the right to employ separate
counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of interest, (ii) the
actual or potential defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the indemnifying party shall
not have employed counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the expense of the
indemnifying party. An indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability arising out of such claim,
action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company
and the Underwriters severally agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection with investigating
or defending same) (collectively “Losses”) to which the Company and one or more of the Underwriters
may be subject in such proportion as is appropriate to reflect the relative benefits received by
the Company on the one hand and by the Underwriters on the other from the offering of the
Securities; provided, however, that in no case shall any Underwriter (except as may
be provided in any agreement among underwriters relating to the offering of the Securities) be
responsible for any amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the Underwriters severally shall
contribute in such proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to
the total net proceeds from the offering (before deducting expenses) received by it, and benefits
received by the Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Prospectus. Relative fault shall
be determined by reference to, among other things, whether any untrue or any alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact relates
to information provided by the Company on the one hand or the Underwriters on the other, the intent
of the parties and their relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The Company and the Underwriters agree that it would
not be just and equitable if contribution were determined by pro rata allocation or any other
method of allocation which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
29
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 8, each person who controls an Underwriter within
the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of
an Underwriter shall have the same rights to contribution as such Underwriter, and each person who
controls the Company within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of the Company shall
have the same rights to contribution as the Company, subject in each case to the applicable terms
and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters shall fail to purchase
and pay for any of the Securities agreed to be purchased by such Underwriter or Underwriters
hereunder and such failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining Underwriters shall be obligated severally to
take up and pay for (in the respective proportions which the amount of Securities set forth
opposite their names in Schedule I hereto bears to the aggregate amount of Securities set forth
opposite the names of all the remaining Underwriters) the Securities which the defaulting
Underwriter or Underwriters agreed but failed to purchase; provided, however, that
in the event that the aggregate amount of Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate amount of Securities
set forth in Schedule I hereto, the remaining Underwriters shall have the right to purchase all,
but shall not be under any obligation to purchase any, of the Securities, and if such nondefaulting
Underwriters do not purchase all the Securities, this Agreement will terminate without liability to
any nondefaulting Underwriter or the Company. In the event of a default by any Underwriter as set
forth in this Section 9, the Closing Date shall be postponed for such period, not exceeding five
Business Days, as the Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting Underwriter of its
liability, if any, to the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to termination in the absolute
discretion of the Representatives, by notice given to the Company prior to delivery of and payment
for the Securities, if at any time prior to such time (i) trading in the Company’s Units, Common
Stock or Warrants shall have been suspended by the Commission, trading of the Units by the American
Stock Exchange shall have been suspended, or trading in securities generally on the New York Stock
Exchange, American Stock Exchange or on the NASDAQ Stock Market (or successor trading market) shall
have been suspended or limited or minimum prices shall have been established on any such Exchange
or trading market, (ii) a banking moratorium shall have been declared either by Federal or New York
State authorities or (iii) there shall have occurred any outbreak or escalation of hostilities,
declaration by the United States of a national emergency or war, or other calamity or crisis the
effect of which on financial markets is such as to make it, in the sole judgment of the
Representatives, impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Statutory Prospectus and the Prospectus (exclusive of any
supplement thereto).
11. Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities and other statements of the Company or its officers and of
the Underwriters set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation made by or on behalf of any Underwriter or the Company or
any of the officers, directors, employees, agents or controlling persons referred to in Section 8
hereof, and will survive delivery of and payment for the Securities. The provisions of Sections 7
and 8 hereof shall survive the termination or cancellation of this Agreement.
30
12. Notices. All communications hereunder will be in writing and effective only on
receipt, and, if sent to the Representatives, will be mailed, delivered or telefaxed to (a) the
Citigroup Global Markets Inc. General Counsel (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to the
General Counsel, Citigroup Global Markets Inc., at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇,
Attention: General Counsel and (b) Deutsche Bank Securities Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Manager and confirmed to Deutsche Bank
Securities Inc., ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel; or, if sent
to the Company, will be mailed, delivered or telefaxed to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at Santa ▇▇▇▇▇▇ Media
Corporation, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (fax no.: (310)
___-___) and confirmed to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ at ▇▇▇▇ & ▇▇▇▇▇ Professional Corporation, ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇).
13. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto and their respective successors and the officers, directors, employees, agents and
controlling persons referred to in Section 8 hereof, and no other person will have any right or
obligation hereunder.
14. No Fiduciary Duty. The Company hereby acknowledges that (a) the purchase and sale
of the Securities pursuant to this Agreement is an arm’s-length commercial transaction between the
Company, on the one hand, and the Underwriters and any affiliate through which it may be acting, on
the other, (b) the Underwriters are acting as principal and not as an agent or fiduciary of the
Company and (c) the Company’s engagement of the Underwriters in connection with the offering and
the process leading up to the offering is as independent contractors and not in any other capacity.
Furthermore, the Company agrees that it is solely responsible for making its own judgments in
connection with the offering (irrespective of whether any of the Underwriters has advised or is
currently advising the Company on related or other matters). The Company agrees that it will not
claim that the Underwriters have rendered advisory services of any nature or respect, or owe an
agency, fiduciary or similar duty to the Company, in connection with such transaction or the
process leading thereto.
15. Integration. This Agreement supersedes all prior agreements and understandings
(whether written or oral) between the Company and the Underwriters, or any of them, with respect to
the subject matter hereof.
16. Applicable Law. This Agreement will be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be performed within the
State of New York.
17. Waiver of Jury Trial. The Company hereby irrevocably waives, to the fullest
extent permitted by applicable law, any and all right to trial by jury in any legal proceeding
arising out of or relating to this Agreement or the transactions contemplated hereby.
18. Counterparts. This Agreement may be signed in one or more counterparts, each of
which shall constitute an original and all of which together shall constitute one and the same
agreement.
19. Headings. The section headings used herein are for convenience only and shall not
affect the construction hereof.
31
20. Definitions. The terms which follow, when used in this Agreement, shall have the
meanings indicated.
“Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations of the
Commission promulgated thereunder.
“Business Day” shall mean any day other than a Saturday, a Sunday or a legal holiday or a day
on which banking institutions or trust companies are authorized or obligated by law to close in New
York City.
“Canadian Person” shall mean any person who is a national or resident of Canada, any
corporation, partnership, or other entity created or organized in or under the laws of Canada or of
any political subdivision thereof, or any estate or trust the income of which is subject to
Canadian Federal income taxation, regardless of its source (other than any non-Canadian branch of
any Canadian Person), and shall include any Canadian branch of a person other than a Canadian
Person.
“Commission” shall mean the Securities and Exchange Commission.
“Effective Date” shall mean each date and time that the Registration Statement, any
post-effective amendment or amendments thereto and any Rule 462(b) Registration Statement became or
become effective.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.
“Execution Time” shall mean the date and time that this Agreement is executed and delivered by
the parties hereto.
“Free Writing Prospectus” shall mean a free writing prospectus, as defined in Rule 405.
“Preliminary Prospectus” shall mean any preliminary prospectus referred to in paragraph 1(a)
above and any preliminary prospectus included in the Registration Statement at the Effective Date
that omits Rule 430A Information.
“Prospectus” shall mean the prospectus relating to the Securities that is first filed pursuant
to Rule 424(b) after the Execution Time.
“Registration Statement” shall mean the registration statement referred to in paragraph 1(a)
above, including exhibits and financial statements and any prospectus supplement relating to the
Securities that is filed with the Commission pursuant to Rule 424(b) and deemed part of such
registration statement pursuant to Rule 430A, as amended at the Execution Time and, in the event
any post-effective amendment thereto or any Rule 462(b) Registration Statement becomes effective
prior to the Closing Date, shall also mean such registration statement as so amended or such Rule
462(b) Registration Statement, as the case may be.
“Rule 158”, “Rule 163”, “Rule 164”, “Rule 172”, “Rule 415”, “Rule 424”, “Rule 430A” and “Rule
462” refer to such rules under the Act.
32
“Rule 430A Information” shall mean information with respect to the Securities and the offering
thereof permitted to be omitted from the Registration Statement when it becomes effective pursuant
to Rule 430A.
“Rule 462(b) Registration Statement” shall mean a registration statement and any amendments
thereto filed pursuant to Rule 462(b) relating to the offering covered by the registration
statement referred to in Section 1(a) hereof.
“Statutory Prospectus” shall mean the Preliminary Prospectus dated , 2006, relating
to the Securities that was first filed as part of Registration Statement with the Commission on
, 2006, including any document that is incorporated by reference therein.
21. Canada. Each of the Underwriters hereby covenants and agrees that it will not
distribute the Securities in such a manner as to require the filing of a prospectus or similar
document (excluding a private placement offering memorandum) with respect to the Securities under
the laws of any Province or Territory in Canada.
33
If the foregoing is in accordance with your understanding of our agreement, as the
Representatives, please sign and return to us the enclosed duplicate hereof, whereupon this letter
and your acceptance shall represent a binding agreement among the Company and the several
Underwriters.
| Very truly yours, SANTA ▇▇▇▇▇▇ MEDIA CORPORATION |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
34
The foregoing Agreement is hereby confirmed and accepted as of the date first above written.
| Citigroup Global Markets Inc. | ||||
By: |
||||
| Title: | ||||
| Deutsche Bank Securities Inc. | ||||
By: |
||||
| Title: | ||||
For themselves and the other several Underwriters named in Schedule I to the foregoing Agreement.
35
SCHEDULE I
| Number of Underwritten Securities | ||||
| Underwriters | to be Purchased | |||
Citigroup Global Markets Inc. |
||||
Deutsche Bank Securities Inc. |
||||
Ladenburg ▇▇▇▇▇▇▇ & Co. Inc. |
||||
Total |
100 | % | ||
SCHEDULE II
Compliance with NASD
EXHIBIT A
FORM OF TRUST CLAIM WAIVER LETTER
[Letterhead of prospective vendor or target business.]
Santa ▇▇▇▇▇▇ Media Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Prospectus of Santa ▇▇▇▇▇▇ Media Corporation (the “Company”), dated
___, 2006 (the “Prospectus”).
We acknowledge that we have read the Prospectus and understand that the Company has
established a trust account for the benefit of the Company’s public stockholders at Royal Bank of
Canada, maintained by Continental Stock Transfer & Trust Company acting as trustee (the “Trust
Account”) and that the Company may disburse monies from the Trust Account only:
(a) in the event the Company consummates a “business combination” (as such term is used in the
Prospectus), to any public stockholders who exercise their conversion rights, to the Underwriters
in respect of their deferred underwriting discount and to the Company in the amount remaining in
the Trust Account following such payments to the public stockholders and the Underwriters; or
(a) in the event of the Company’s liquidation, to the public stockholders.
For and in consideration of the Company [agreeing to evaluate us for purposes of consummating
an initial business combination][engaging our services], we hereby agree that we do not have any
right, title, interest or claim of any kind in or to any monies in the Trust Account (“Claim”) and
hereby waive any Claim we 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
Account for any reason whatsoever.
| Very truly yours, | ||||
| [NAME] | ||||
| By: | ||||
| Name: | ||||
| Title: | ||||
FORM OF LOCK-UP AGREEMENT
[Letterhead of officer, director or initial shareholder of or special advisor to Santa ▇▇▇▇▇▇ Media Corporation]
Santa ▇▇▇▇▇▇ Media Corporation
Public Offering of Units
Public Offering of Units
, 2006
Citigroup Global Markets Inc.
As Representative of the several Underwriters,
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the several Underwriters,
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Deutsche Bank Securities Inc.
As Representative of the Several Underwriters,
c/o Deutsche Bank Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the Several Underwriters,
c/o Deutsche Bank Securities Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the proposed Underwriting Agreement
(the “Underwriting Agreement”), between Santa ▇▇▇▇▇▇ Media Corporation, a Delaware corporation (the
“Company”), and you as the representatives of the group of Underwriters named therein, relating to
an underwritten public offering of Units consisting of one share of the Company’s common stock, par
value $0.001 per share (the “Common Stock”) and one warrant to purchase one share of Common Stock,
of the Company.
In order to induce you and the other Underwriters to enter into the Underwriting Agreement,
the undersigned will not, without the prior written consent of both Citigroup Global Markets Inc.
and Deutsche Bank Securities Inc., offer, sell, contract to sell, pledge or otherwise dispose of,
(or enter into any transaction which is designed to, or might reasonably be expected to, result in
the disposition (whether by actual disposition or effective economic disposition due to cash
settlement or otherwise) by the undersigned or any affiliate of the undersigned or any person in
privity with the undersigned or any affiliate of the undersigned), directly or indirectly,
including the filing (or participation in the filing) of a registration statement with the
Securities and Exchange Commission in respect of, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning of Section 16 of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations
of the Securities and Exchange Commission promulgated thereunder with respect to, any shares of
capital stock of the Company or any securities convertible into, or exercisable or exchangeable for
such capital stock, or publicly announce an intention to effect any such transaction, for a period
of 180 days after the date of the Underwriting Agreement; provided, however, that
if (1) during the last 17 days of the Restricted Period the Company issues an earnings release or
material news or a material event relating to the Company occurs or (2) prior to the expiration of
the
2
Restricted Period the Company announces that it will release earnings results during the 16
day period beginning on the last day of the Restricted Period, then the foregoing restrictions
shall continue to apply until the expiration of the 18 day period beginning on the issuance of the
earnings release or the occurrence of the material news or material event; provided
further, however, that the Company may issue and sell the Placement Units (as defined
in the Underwriting Agreement) and may issue and sell the Option Securities on exercise of the
option provided for in Section 2(b) of the Underwriting Agreement.
If for any reason the Underwriting Agreement shall be terminated prior to the Closing Date (as
defined in the Underwriting Agreement), the agreement set forth above shall likewise terminate and
be of no further force or effect.
Yours very truly,
[Signature of officer, director or major stockholder]
[Name and address of officer, director or major stockholder]
3