UNDERWRITING AGREEMENT between INDUSTRIAL SERVICES ACQUISITION CORP. and WEDBUSH MORGAN SECURITIES INC. Dated: _____________, 2005
EXHIBIT
1.1
between
and
WEDBUSH
▇▇▇▇▇▇ SECURITIES INC.
Dated:
_____________, 2005
__________,
2005
Wedbush
▇▇▇▇▇▇ Securities Inc.
As
Representative of the several Underwriters
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Dear
Sirs:
The
undersigned, Industrial Services Acquisition Corp., a Delaware corporation
(“Company”),
hereby confirms its agreement with Wedbush ▇▇▇▇▇▇ Securities Inc. (being
referred to herein variously as “you,”“Wedbush”
or the
“Representative”)
and
with the other underwriters named on Schedule I hereto for which Wedbush
is
acting as Representative (the Representative and the other Underwriters being
collectively called the “Underwriters”
or,
individually, an “Underwriter”)
as
follows:
1. Purchase
and Sale of Securities.
1.1 Firm
Securities.
1.1.1 Purchase
of Firm Units.
On the
basis of the representations and warranties herein contained, but subject
to the
terms and conditions herein set forth, the Company agrees to issue and sell,
severally and not jointly, to the several Underwriters, an aggregate of
6,250,000 units (“Firm
Units”)
of the
Company, at a purchase price (net of discounts and commissions) of $7.52
per
Firm Unit. The Underwriters, severally and not jointly, agree to purchase
from
the Company the number of Firm Units set forth opposite their respective
names
on Schedule I attached hereto and made a part hereof at a purchase price
(net of
discounts and commissions) of $7.52 per Firm Unit. The Firm Units are to
be
offered initially to the public (“Offering”)
at the
offering price of $8.00 per Firm Unit. Each Firm Unit consists of one share
of
the Company’s common stock, par value $.0001 per share (“Common
Stock”),
and
one warrant (“Warrant(s)”).
The
shares of Common Stock and the Warrants included in the Firm Units will not
be
separately transferable until the 20th
trading
day after the earlier to occur of (i) the expiration of the Underwriter’s
Over-allotment Option (as defined in Section 1.2.1 hereof) or (ii) the exercise
in full or in part by the Underwriters of the Over-allotment Option, but
in no
event will separate trading occur before an audited balance sheet has been
prepared reflecting receipt by the Company of the proceeds of the Offering
and
filed with the Securities and Exchange Commission (the “Commission”)
with a
Current Report on Form 8-K. Each Warrant entitles its holder to exercise
it 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 (“Effective
Date”)
of the
Registration Statement (as defined in Section 2.1.1
hereof)
and terminating on the five-year anniversary of the Effective Date.
“Business
Combination”
shall
mean the acquisition by the Company, whether by merger, capital stock exchange,
asset or stock acquisition or other similar type of transaction or a combination
of the foregoing, of one or more operating businesses in the business services
sector (as described more fully in the Registration Statement).
1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 1:00 P.M., New York
time, on the third business day following the effective date of the Registration
Statement (or the fourth business day following the effective date, if the
Registration Statement is declared effective after 4:30 p.m.) or at such
earlier
time as shall be agreed upon by the Representative and the Company at the
offices of the Representative or at such other place as shall be agreed upon
by
the Representative and the Company. The hour and date of delivery and payment
for the Firm Units is called the “Closing
Date.”
Payment for the Firm Units shall be made on the Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $44,800,000 of
the
proceeds received by the Company for the Firm Units shall be deposited in
the
trust fund established by the Company for the benefit of the public stockholders
as described in the Registration Statement (“Trust
Fund”)
pursuant to the terms of an Investment Management Trust Agreement (“Trust
Agreement”)
and
the remaining proceeds (less any amounts deducted therefrom pursuant to Section
3.9) shall be paid to the order of the Company upon delivery to you of
certificates (in form and substance satisfactory to the Underwriters)
representing the Firm Units (or through the facilities of the Depository
Trust
Company (“DTC”))
for
the account of the Underwriters. The Firm Units shall be registered in such
name
or names and in such authorized denominations as the Representative may request
in writing at least two full business days prior to the Closing Date. The
Company will permit the Representative to examine and package the Firm Units
for
delivery, at least one full business day prior to the Closing Date. The Company
shall not be obligated to sell or deliver any of the Firm Units except upon
tender of payment by the Representative for all the Firm Units.
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1.2 Over-Allotment
Option.
1.2.1 Option
Units.
For the
purposes of covering any over-allotments in connection with the distribution
and
sale of the Firm Units, the Underwriters are hereby granted, severally and
not
jointly, an option to purchase up to an additional 937,500 units
from the Company (“Over-allotment
Option”).
Such
additional 937,500 units
are
hereinafter referred to as “Option
Units.”
The
Firm Units and the Option Units are hereinafter collectively referred to
as the
“Units,”
and
the Units, the shares of Common Stock and the Warrants included in the Units
and
the shares of Common Stock issuable upon exercise of the Warrants are
hereinafter referred to collectively as the “Public
Securities.”
The
purchase price to be paid for the Option Units will be the same price per
Option
Unit as the price per Firm Unit set forth in Section 1.1.1
hereof.
1.2.2 Exercise
of Option.
The
Over-allotment Option granted pursuant to Section 1.2.1
hereof
may be exercised by the Representative as to all (at any time) or any part
(from
time to time) of the Option Units within 45 days after the Effective Date.
The
Underwriters will not be under any obligation to purchase any Option Units
prior
to the exercise of the Over-allotment Option. The Over-allotment Option granted
hereby may be exercised by the giving of oral notice to the Company by the
Representative, which must be confirmed in writing by overnight mail or
facsimile transmission setting forth the number of Option Units to be purchased
and the date and time for delivery of and payment for the Option Units (the
“Option
Closing Date”),
which
will not be later than five full business days after the date of the notice
or
such other time as shall be agreed upon by the Company and the Representative,
at the offices of the Representative or at such other place as shall be agreed
upon by the Company and the Representative. Upon exercise of the Over-allotment
Option, the Company will become obligated to convey to the Underwriters,
and,
subject to the terms and conditions set forth herein, the Underwriters will
become obligated to purchase, the number of Option Units specified in such
notice.
1.2.3 Payment
and Delivery.
Payment
for the Option Units shall be made on the Option Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
at $7.52 per Option Unit to the Trust Fund at the offices of the Representative
or at such other place as shall be agreed upon by the Representative and
the
Company upon delivery to you of certificates representing such securities
(or
through the facilities of DTC) for the account of the Underwriters. The
certificates representing the Option Units to be delivered will be in such
denominations and registered in such names as the Representative requests
not
less than two full business days prior to the Closing Date or the Option
Closing
Date, as the case may be, and will be made available to the Representative
for
inspection, checking and packaging at the aforesaid office of the Company’s
transfer agent or correspondent not less than one full business day prior
to
such Closing Date.
1.3 Representative’s
Purchase Option.
1.3.1 Purchase
Option.
The
Company hereby agrees to issue and sell to the Representative (and/or its
designees) on the Effective Date an option (“Representative’s
Purchase Option”)
for
the purchase of up to an aggregate of 312,500 units (“Representative’s
Units”)
for an
aggregate purchase price of $100. Each of the Representative’s Units is
identical to the Firm Units except that the Warrants included in the
Representative’s Units (“Representative’s
Warrants”)
have
an exercise price of $7.98 (133% of the exercise price of the Warrants included
in the Units sold to the public). The Representative’s Purchase Option shall be
exercisable, in whole or in part, commencing on the later of (i) one year
from
the Effective Date and (ii) the consummation of a Business Combination, and
expiring on the five-year anniversary of the Effective Date at an initial
exercise price per Representative’s Unit of $10.00, which is equal to one
hundred twenty five percent (125%) of
the
initial public offering price of a Unit. The Representative’s Purchase Option,
the Representative’s Units, the Representative’s Warrants and the shares of
Common Stock issuable upon exercise of the Representative’s Warrants are
hereinafter referred to collectively as the “Representative’s
Securities.”
The
Public Securities and the Representative’s Securities are hereinafter referred
to collectively as the “Securities.”
2
1.3.2 Payment
and Delivery.
Delivery and payment for the Representative’s Purchase Option shall be made on
the Closing Date. The Company shall deliver to the Underwriters, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the Representative may
request.
2. Representations
and Warranties of the Company.
The
Company represents and warrants to the Underwriters as follows:
2.1 Filing
of Registration Statement.
2.1.1 Pursuant
to the Act.
The
Company has filed with the Commission a registration statement and an amendment
or amendments thereto, on Form S-1 (File No.
333- ),
including any related preliminary prospectus (“Preliminary
Prospectus”),
for
the registration of the Public Securities under the Securities Act of 1933,
as
amended (“Act”),
which
registration statement and amendment or amendments have been prepared by
the
Company in conformity with the requirements of the Act, and the rules and
regulations (“Regulations”)
of the
Commission under the Act. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time
the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof
or incorporated therein and all information deemed to be a part thereof as
of
such time pursuant to paragraph (b) of Rule 430A of the Regulations), is
hereinafter called the “Registration Statement,” and the form of the final
prospectus dated the Effective Date included in the Registration Statement
(or,
if applicable, the form of final prospectus filed with the Commission pursuant
to Rule 424 of the Regulations), is hereinafter called the “Prospectus.”
The
Registration Statement has been declared effective by the Commission on the
date
hereof.
2.1.2 Pursuant
to the Exchange Act.
The
Company has filed with the Commission a Form 8-A (File Number
000- ) providing
for the registration
under the Securities Exchange Act of 1934, as amended (“Exchange
Act”),
of
the Units, the Common Stock and the Warrants. The registration of the Units,
Common Stock and Warrants under the Exchange Act has been declared effective
by
the Commission on the date hereof.
2.2 No
Stop Orders, Etc.
Neither
the Commission nor, to the best of the Company’s knowledge, any state regulatory
authority has issued any order or threatened to issue any order preventing
or
suspending the use of any Preliminary Prospectus or has instituted or, to
the
best of the Company’s knowledge, threatened to institute any proceedings with
respect to such an order.
2.3 Disclosures
in Registration Statement.
2.3.1 10b-5
Representation.
At the
time the Registration Statement became effective and at all times subsequent
thereto up to the Closing Date and the Option Closing Date, if any, the
Registration Statement and the Prospectus will contain all material statements
that are required to be stated therein in accordance with the Act and the
Regulations, and will in all material respects conform to the requirements
of
the Act and the Regulations; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, on such dates, will
contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading. When
any
Preliminary Prospectus was first filed with the Commission (whether filed
as
part of the Registration Statement for the registration of the Securities
or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when
any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied or will comply in all material respects with the applicable provisions
of the Act and the Regulations and did not and will not contain an untrue
statement of a material fact or omit to state any material fact required
to be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. The representation
and warranty made in this Section 2.3.1 does not apply to statements made
or
statements omitted in reliance upon conformity with written information
furnished to the Company with respect to the Underwriters by the Representative
for use in the Registration Statement or Prospectus or any amendment thereof
or
supplement thereto. Nothing has come to the attention of the Company that
has
caused the Company to believe that the market-related data included in the
Registration Statement and the Prospectus is not based on or derived from
sources that are reliable and accurate (in accordance with the methodologies
used to derive such market-related data set forth in the underlying source
material) in all material respects.
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2.3.2 Disclosure
of Agreements.
The
agreements and documents described in the Registration Statement and the
Prospectus conform to the descriptions thereof contained therein and there
are
no agreements or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits
to
the Registration Statement, that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which
the
Company is a party or by which its property or business is or may be bound
or
affected and (i) that is referred to in the Prospectus, or (ii) is material
to
the Company’s business, has been duly and validly executed by the Company, is in
full force and effect in all material respects and is enforceable against
the
Company and, to the Company’s knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability may be limited
by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and
(z)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought, and none
of
such agreements or instruments has been assigned by the Company, and neither
the
Company nor, to the best of the Company’s knowledge, any other party is in
breach or default thereunder and, to the best of the Company’s knowledge, no
event has occurred that, with the lapse of time or the giving of notice,
or
both, would constitute a breach or default thereunder. To the best of the
Company’s knowledge, performance by the Company of the material provisions of
such agreements or instruments will not result in a violation of any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company
or
any of its assets or businesses, including, without limitation, those relating
to environmental laws and regulations.
2.3.3 Prior
Securities Transactions.
No
securities of the Company have been sold by the Company or by or on behalf
of,
or for the benefit of, any person or persons controlling, controlled by,
or
under common control with the Company since the formation of the Company,
except
as disclosed in the Registration Statement.
2.3.4 Regulations.
The
disclosures in the Registration Statement concerning the effects of Federal,
State and local regulation on the Company’s business as currently contemplated
are correct in all material respects and do not omit to state a material
fact
necessary to make the statements therein, in light of the circumstances in
which
they were made, not misleading.
2.4 Changes
After Dates in Registration Statement.
2.4.1 No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise specifically stated therein,
(i) there has been no material adverse change in the condition, financial
or
otherwise, or business prospects of the Company, (ii) there have been no
material transactions entered into by the Company, other than as contemplated
pursuant to this Agreement, and (iii) no member of the Company’s management has
resigned from any position with the Company.
2.4.2 Recent
Securities Transactions, Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (i) issued
any
securities or incurred any liability or obligation, direct or contingent,
for
borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its equity securities.
2.5 Independent
Accountants.
BDO
▇▇▇▇▇▇▇ LLP (“BDO
▇▇▇▇▇▇▇”),
whose
report is filed with the Commission as part of the Registration Statement,
is a
registered public accounting firm and an independent accountants as required
by
the Act and the Regulations. BDO ▇▇▇▇▇▇▇ has not, during the periods covered
by
the financial statements included in the Prospectus, provided to the Company
any
non-audit services, as such term is used in Section 10A(g) of the Exchange
Act.
4
2.6 Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement and Prospectus, fairly present the
financial position, the results of operations and the cash flows of the Company
at the dates and for the periods to which they apply; and such financial
statements have been prepared in conformity with United States generally
accepted accounting principles (“GAAP”), consistently applied throughout the
periods involved. The Registration Statement discloses all material off-balance
sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of the Company with unconsolidated
entities or other persons that may have a material current or future effect
on
the Company’s financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses.
2.7 Authorized
Capital; Options; Etc.
The
Company had at the date or dates indicated in the Prospectus duly authorized,
issued and outstanding capital stock as set forth in the Registration Statement
and the Prospectus. Based on the assumptions stated in the Registration
Statement and the Prospectus, the Company will have on the Closing Date the
adjusted stock capitalization set forth therein. Except as set forth in,
or
contemplated by, the Registration Statement and the Prospectus, on the Effective
Date and on the Closing Date, there will be no options, warrants, or other
rights to purchase or otherwise acquire any authorized but unissued shares
of
Common Stock of the Company or any security convertible into shares of Common
Stock of the Company, or any contracts or commitments to issue or sell shares
of
Common Stock or any such options, warrants, rights or convertible
securities.
2.8 Valid
Issuance of Securities; Etc.
2.8.1 Outstanding
Securities.
All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable; the holders thereof
have
no rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of any security
of
the Company or similar contractual rights granted by the Company. The authorized
Common Stock conforms in all material respects to all statements relating
thereto contained in the Registration Statement and the Prospectus. The offers
and sales of the outstanding Common Stock were at all relevant times either
registered under the Act and the applicable state securities or Blue Sky
laws
or, based in part on the representations and warranties of the purchasers
of
such shares of Common Stock, exempt from such registration
requirements.
2.8.2 Securities
Sold Pursuant to this Agreement.
The
Securities have been duly authorized and, when issued and paid for, will
be
validly issued, fully paid and non-assessable; the holders thereof are not
and
will not be subject to personal liability by reason of being such holders;
the
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual rights granted
by
the Company; and all corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly and validly
taken. The Securities conform in all material respects to all statements
with
respect thereto contained in the Registration Statement. When issued, the
Representative’s Purchase Option, the Representative’s Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and
sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representative’s Purchase Option, the
Representative’s Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except (i) as such enforceability
may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (ii) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and
other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
2.9 Registration
Rights of Third Parties.
Except
as set forth in the Prospectus, no holders of any securities of the Company
or
any rights exercisable for or convertible or exchangeable into securities
of the
Company have the right to require the Company to register any such securities
of
the Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
5
2.10 Validity
and Binding Effect of Agreements.
This
Agreement, the Warrant Agreement (as defined in Section 2.21
hereof),
the Trust Agreement (as defined in Section 2.22
hereof),
those certain letter agreements (each substantially in the forms filed as
Exhibits 10.5 and 10.6 to the Registration Statement), pursuant to which
each of
the Initial Stockholders agrees to certain matters, including but not limited
to, certain matters described as being agreed to by them under the “Proposed
Business” section of the Prospectus (“Insider Letters”), those certain letter
agreements (each substantially in the form filed as Exhibit 10.12 to the
Registration Statement), pursuant to which each of the Initial Stockholders
agrees to purchase a certain number of the Company’s warrants after the Offering
as described under the “Principal Stockholders” section of the Prospectus
(“Warrant
Purchase Commitment Letters”),
and
the Escrow Agreement, whereby the Common Stock owned by the Initial Stockholders
will be held in escrow until one year after the consummation of an initial
Business Combination (as defined in the Registration Statement), the
Representative’s Purchase Option and the Services Agreement (as defined in
Section 2.27
hereof)
have been duly and validly authorized by the Company and constitute, or will
constitute upon their respective execution and delivery, the valid and binding
agreements of the Company, enforceable against the Company in accordance
with
their respective terms, except (i) as such enforceability may be limited
by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and
(iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion
of
the court before which any proceeding therefor may be brought.
2.11 No
Conflicts, Etc.
The
execution, delivery, and performance by the Company of this Agreement, the
Warrant Agreement, the Representative’s Purchase Option, the Trust Agreement,
the Insider Letters, the Services Agreement and the Escrow Agreement, the
consummation by the Company of the transactions herein and therein contemplated
and the compliance by the Company with the terms hereof and thereof do not
and
will not, with or without the giving of notice or the lapse of time or both
(i)
result in a breach of, or conflict with any of the terms and provisions of,
or
constitute a default under, or result in the creation, modification, termination
or imposition of any lien, charge or encumbrance upon any property or assets
of
the Company pursuant to the terms of any agreement or instrument to which
the
Company is a party except pursuant to the Trust Agreement referred to in
Section
2.22
hereof;
(ii) result in any violation of the provisions of the Certificate of
Incorporation or the Bylaws of the Company, each as amended or restated from
time to time and as in effect as of the date hereof, the closing date and
the
option closing date (the"Certificate of Incorporation" and the "Bylaws",
respectively);
or
(iii)
violate any existing applicable law, rule, regulation, judgment, order or
decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or business.
2.12 No
Defaults; Violations.
No
material default exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its
Certificate of Incorporation or Bylaws or in violation of any material
franchise, license, permit, applicable law, rule, regulation, judgment or
decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or businesses.
2.13 Corporate
Power; Licenses; Ownership.
2.13.1 Conduct
of Business.
The
Company has all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and permits of
and
from all governmental regulatory officials and bodies that it needs as of
the
date hereof to conduct its business and to consummate a Business Combination
as
described in the Prospectus. The disclosures in the Registration Statement
concerning the effects of federal, state and local regulation on this offering
and the Company’s business purpose as currently contemplated are correct in all
material respects and do not omit to state a material fact required to be
stated
therein or necessary in order to make the statements therein, in light of
the
circumstances under which they were made, not misleading.
2.13.2 Transactions
Contemplated Herein.
The
Company has all requisite corporate power and authority to enter into this
Agreement and to carry out the provisions and conditions hereof, and all
consents, authorizations, approvals and orders required in connection therewith
have been obtained. No consent, authorization or order of, and no filing
with,
any court, government agency or other body is required for the valid issuance,
sale and delivery, of the Securities and the consummation of the transactions
and agreements contemplated by this Agreement, the Warrant Agreement, the
Representative’s Purchase Option, the Trust Agreement, the Insider Letters, the
Services Agreement, and the Escrow Agreement and as contemplated by the
Prospectus, except with respect to applicable federal and state securities
laws.
6
2.13.3 Ownership.
Except
as set forth in the Prospectus, the Company owns no real property, has no
leasehold interests in any real property, and has no personal property that
is,
in each case, material to the operations, financial condition or business
of the
Company.
2.14 D&O
Questionnaires.
To the
best of the Company’s knowledge, all information contained in the director and
officer questionnaires and NASD supplemental questionnaires (“Questionnaires”)
completed by each of the Company’s stockholders immediately prior to the
Offering (“Initial
Stockholders”)
and
provided to the Underwriters as an exhibit to his or her Insider Letter (as
defined in Section 2.10)
is true
and correct and the Company has not become aware of any information which
would
cause the information disclosed in the questionnaires completed by each Initial
Stockholder to become inaccurate and incorrect.
2.15 Litigation;
Governmental Proceedings.
There
is no action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or, to the best of the Company’s knowledge,
threatened against, or involving the Company or, to the best of the Company’s
knowledge, any Initial Stockholder, which has not been disclosed in the
Registration Statement or the Questionnaires, except, in the case of actions
against or involving an Initial Stockholder, for actions, suits, proceedings,
inquiries, arbitrations, investigations, litigation or government proceedings
pending against any Initial Stockholder that would not individually or in
the
aggregate have a material adverse effect on such Initial Stockholder, the
Company or the Offering.
2.16 Good
Standing.
The
Company has been duly organized and is validly existing as a corporation
and is
in good standing under the laws of its state of incorporation, and is duly
qualified to do business and is in good standing as a foreign corporation
in
each jurisdiction in which its ownership or lease of property or the conduct
of
business requires such qualification, except where the failure to qualify
would
not have a material adverse effect on the Company.
2.17 Stop
Orders.
The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus or any part thereof.
2.18 Transactions
Affecting Disclosure to NASD.
2.18.1 Finder’s
Fees.
Except
as described in the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a finder’s, consulting
or origination fee by the Company or any Initial Stockholder with respect
to the
sale of the Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the best of the Company’s knowledge, any
Initial Stockholder that may affect the Underwriters’ compensation, as
determined by the National Association of Securities Dealers, Inc.
(“NASD”).
2.18.2 Payments
Within Twelve Months.
The
Company has not made any direct or indirect payments (in cash, securities
or
otherwise) (i) to any person, as a finder’s fee, consulting fee or otherwise, in
consideration of such person raising capital for the Company or introducing
to
the Company persons who raised or provided capital to the Company, (ii) to
any
NASD member or (iii) to any person or entity that has any direct or indirect
affiliation or association with any NASD member, within the twelve months
prior
to the Effective Date other than payments to Wedbush.
2.18.3 Use
of
Proceeds.
None of
the net proceeds of the Offering will be paid by the Company to any
participating NASD member or its affiliates, except as specifically authorized
herein and except as may be paid in connection with a Business Combination
as
contemplated by the Prospectus.
2.18.4 Insiders’
NASD Affiliation.
Based
on the Questionnaires distributed to such persons, except as set forth on
Schedule 2.18.4, no officer, director or any beneficial owner of the Company’s
unregistered securities has any direct or indirect affiliation or association
with any NASD member. The Company will advise the Representative and its
counsel
if it learns that any officer, director or owner of at least 5% of the Company’s
outstanding Common Shares is or becomes an affiliate or associated person
of an
NASD member participating in the Offering.
7
2.19 Foreign
Corrupt Practices Act.
Neither
the Company nor, to the knowledge of the Company, any of the Initial
Stockholders or any other person acting on behalf of the Company has, directly
or indirectly, given or agreed to give any money, gift or similar benefit
(other
than legal price concessions to customers in the ordinary course of business)
to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or any political party or candidate for office (domestic or foreign)
or other person who was, is, or may be in a position to help or hinder the
business of the Company (or assist it in connection with any actual or proposed
transaction) that (i) might subject the Company to any damage or penalty
in any
civil, criminal or governmental litigation or proceeding, (ii) if not given
in
the past, might have had a material adverse effect on the assets, business
or
operations of the Company as reflected in any of the financial statements
contained in the Prospectus or (iii) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company.
The Company’s internal accounting controls and procedures are sufficient to
cause the Company to comply with the Foreign Corrupt Practices Act of 1977,
as
amended.
2.20 Officers’
Certificate.
Any
certificate signed by any duly authorized officer of the Company in connection
with the Offering and delivered to you or to your counsel shall be deemed
a
representation and warranty by the Company to the Underwriters as to the
matters
covered thereby.
2.21 Warrant
Agreement.
The
Company has entered into a warrant agreement with respect to the Warrants
and
the Representative’s Warrants with Continental Stock Transfer & Trust
Company substantially in the form filed as Exhibit ____ to the Registration
Statement (“Warrant
Agreement”).
2.22 Investment
Management Trust Agreement.
The
Company has entered into the Trust Agreement with respect to certain proceeds
of
the Offering substantially in the form filed as Exhibit ____ to the Registration
Statement (“Trust
Agreement”).
2.23 Covenants
Not to Compete.
No
Initial Stockholder, employee, officer or director of the Company is subject
to
any noncompetition agreement or non-solicitation agreement with any employer
or
prior employer which could materially affect his ability to be an Initial
Stockholder, employee, officer and/or director of the Company.
2.24 Investments.
No more
than 45% of the “value” (as defined in Section 2(a)(41) of the Investment
Company Act of 1940 (“Investment
Company Act”))
of
the Company’s total assets consist of, and no more than 45% of the Company’s net
income after taxes is derived from, securities other than “Government
securities” (as defined in Section 2(a)(16) of the Investment Company
Act).
2.25 Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.26 Related
Party Transactions.
There
are no business relationships or related party transactions involving the
Company or any other person required to be described in the Prospectus that
have
not been described as required.
2.27 Administrative
Services.
The
Company has entered into an agreement (the “Services Agreement”)
with
AMCO
Distribution Services,
Inc.
substantially in the form annexed as Exhibit __ to the Registration Statement
pursuant to which AMCO Distribution Services, Inc. will make available to
the
Company general and secretarial support for the Company’s use for $7,500 per
month.
8
3. Covenants
of the Company.
The
Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement.
The
Company will deliver to the Representative, prior to filing, any amendment
or
supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and not file any such amendment or supplement to
which
the Representative shall reasonably object in writing.
3.2 Federal
Securities Laws.
3.2.1 Compliance.
During
the time when a Prospectus is required to be delivered under the Act, the
Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary
to
permit the continuance of sales of or dealings in the Public Securities in
accordance with the provisions hereof and the Prospectus. If at any time
when a
Prospectus relating to the Public Securities is required to be delivered
under
the Act, any event shall have occurred as a result of which, in the opinion
of
counsel for the Company or counsel for the Underwriters, the Prospectus,
as then
amended or supplemented, includes an untrue statement of a material fact
or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Representative promptly
and
prepare and file with the Commission, subject to Section 3.1
hereof,
an appropriate amendment or supplement in accordance with Section 10 of the
Act.
3.2.2 Filing
of Final Prospectus.
The
Company will file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule
424 of
the Regulations.
3.2.3 Exchange
Act Registration.
Until
the earlier of five years from the Effective Date or the date that the Company
is liquidated, the Company will use its best efforts to maintain the
registration of the Units, Common Stock and Warrants under the provisions
of the
Exchange Act. The Company will not deregister the Units under the Exchange
Act
without the prior written consent of Wedbush.
3.3 Blue
Sky Filings.
The
Company will endeavor in good faith, in cooperation with the Representative,
at
or prior to the time the Registration Statement becomes effective, to qualify
the Public Securities for offering and sale under the securities laws of
such
jurisdictions as the Representative may reasonably designate, provided that
no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. Until
the
earliest of (i) the date on which all Underwriters shall have ceased to engage
in market making activities in respect of the Public Securities and the
Underwriters shall cease to own any Representative’s Securities, (ii) the date
on which the Public Securities are listed or quoted, as the case may be,
on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market (or any successor to such entities) and (iii) the date of the liquidation
of the Company (the period from the Effective Date to such earliest date,
the
“Blue Sky Compliance Period”), in each jurisdiction where such qualification
shall be effected, the Company will, unless the Representative agrees that
such
action is not at the time necessary or advisable, use all reasonable efforts
to
file and make such statements or reports at such times as are or may be required
by the laws of such jurisdiction.
3.4 Delivery
to Underwriters of Prospectuses.
The
Company will deliver to each of the several Underwriters, without charge,
from
time to time during the period when the Prospectus is required to be delivered
under the Act or the Exchange Act, such number of copies of each Preliminary
Prospectus and the Prospectus as such Underwriters may reasonably request
and,
as soon as the Registration Statement or any amendment or supplement thereto
becomes effective, deliver to you two original executed Registration Statements,
including exhibits, and all post-effective amendments thereto and copies
of all
exhibits filed therewith or incorporated therein by reference and all original
executed consents of certified experts.
3.5 Effectiveness
and Events Requiring Notice to the Representative.
The
Company will use its best efforts to cause the Registration Statement to
remain
effective until distribution of the Public Securities is complete and will
notify the Representative immediately and confirm the notice in writing (i)
of
the effectiveness of the Registration Statement and any amendment thereto,
(ii)
of the issuance by the Commission of any stop order or of the initiation,
or the
threatening, of any proceeding for that purpose, when the Company becomes
aware
of such, (iii) of the issuance by any state securities commission of any
proceedings for the suspension of the qualification of the Public Securities
for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that purpose, when the Company becomes aware of such,
(iv)
of the mailing and delivery to the Commission for filing of any amendment
or
supplement to the Registration Statement or Prospectus, (v) of the receipt
of
any comments or request for any additional information from the Commission,
and
(vi) of the happening of any event during the period described in Section
3.4
hereof
that, in the judgment of the Company, makes any statement of a material fact
made in the Registration Statement or the Prospectus untrue or that requires
the
making of any changes in the Registration Statement or the Prospectus in
order
to make the statements therein, in light of the circumstances under which
they
were made, not misleading. If the Commission or any state securities commission
shall enter a stop order or suspend such qualification during any such time,
the
Company will make every reasonable effort to obtain promptly the lifting
of such
order.
9
3.6 Affiliated
Transactions.
3.6.1 Business
Combinations.
The
Company will not consummate a Business Combination with any entity which
is
affiliated with any Initial Stockholder unless the Company obtains an opinion
from an independent investment banking firm that is a member of the NASD
that
the Business Combination is fair to the Company’s stockholders from a financial
perspective.
3.6.2 Compensation.
Except
for payments made to AMCO Distribution Services, Inc. as disclosed in the
Prospectus, the Company shall not pay any Initial Stockholder or any of their
affiliates any fees or compensation from the Company, for services rendered
to
the Company prior to, or in connection with, the consummation of a Business
Combination; provided that the Initial Stockholders and their affiliates
shall
be entitled to reimbursement from the Company for their reasonable out-of-pocket
expenses incurred in connection with seeking and consummating a Business
Combination.
3.7 Secondary
Market Trading and Standard & Poor’s.
During
the Blue Sky Compliance Period, the Company will apply to be included in
Standard & Poor’s Daily News and Corporation Records Corporate Descriptions
for a period of five years from the consummation of a Business Combination.
The
Company shall promptly take such action as may be reasonably requested by
the
Representative to maintain secondary market trading in such other states
as may
be requested by the Representative.
3.8 Reports
to the Representative.
3.8.1 Periodic
Reports, Etc.
For a
period of five years from the Effective Date, the Company will furnish to
the
Representative and its counsel copies of such financial statements and other
periodic and special reports as the Company from time to time furnishes
generally to holders of any class of its securities, and promptly furnish
to the
Representative (i) a copy of each periodic report the Company shall be required
to file with the Commission, (ii) a copy of every press release and every
news
item and article with respect to the Company or its affairs which was released
by the Company, (iii) a copy of each Current Report on Form 8-K and Schedules
13D, 13G, 14D-1 or 13E-4 received or prepared by the Company, (iv) five copies
of each registration statement filed by the Company with the Commission under
the Securities Act and (v) such additional documents and information with
respect to the Company and the affairs of any future subsidiaries of the
Company
as the Representative may from time to time reasonably request; provided
that
the Representative will sign, if requested by the Company, a Regulation FD
compliant confidentiality agreement which is reasonably acceptable to the
Company, the Representative and their respective counsel in connection with
the
Representative’s receipt of such information.
3.8.2 Transfer
Sheets.
During
the Blue Sky Compliance Period, the Company shall retain a transfer and warrant
agent reasonably acceptable to the Representative (“Transfer Agent”) and will
furnish to the Underwriters at the Company’s sole cost and expense such transfer
sheets of the Company’s securities as the Representative may request, including
the daily and monthly consolidated transfer sheets of the Transfer Agent
and
DTC. The Underwriters acknowledge that Continental Stock Transfer & Trust
Company is an acceptable Transfer Agent.
10
3.9 Payment
of Expenses.
3.9.1 General
Expenses Related to the Offering.
The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at Closing Date, all expenses incident
to
the performance of the obligations of the Company under this Agreement,
including, but not limited to: (i) the preparation, printing, filing and
mailing
(including the payment of postage with respect to such mailing) of the
Registration Statement, the Preliminary and final Prospectuses and the printing
and mailing of this Agreement and related documents, including the cost of
all
copies thereof and any amendments thereof or supplements thereto supplied
to the
Underwriters in quantities as may be required by the Underwriters; (ii) the
printing, engraving, issuance and delivery of the Units, the shares of Common
Stock and the Warrants included in the Units and the Representative’s Purchase
Option, including any transfer or other taxes payable thereon; (iii) the
qualification of the Public Securities under state or foreign securities
or Blue
Sky laws, including the costs of preparing, printing and mailing the
“Preliminary Blue Sky Memorandum,” and all amendments and supplements thereto,
fees and disbursements for the Representative’s counsel retained for such
purpose (such fees, but not disbursements, together with fees, but not
disbursements, of Representative’s counsel pursuant to clause (iv) below, shall
be capped at $40,000 in the aggregate), and a one-time fee of $5,000 payable
to
the Representative’s counsel for the preparation of the Secondary Market Trading
Survey; (iv) filing fees, costs and expenses (including fees and disbursements
of Representative’s counsel) incurred in registering the Offering with the NASD;
(v) costs of placing “tombstone” advertisements in The Wall Street Journal, The
New York Times and a third publication to be selected by the Representative;
(vi) fees and disbursements of the transfer and warrant agent; (vii) the
Company’s expenses associated with “due diligence” meetings arranged by the
Representative; (viii) the preparation, binding and delivery of transaction
“bibles,” in form and style reasonably satisfactory to the Representative and
transaction lucite cubes or similar commemorative items in a style and quantity
as reasonably requested by the Representative; and (ix) all other costs and
expenses customarily borne by an issuer incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in
this
Section 3.9.1. The Company also agrees that it will reimburse Representative
for
the cost of the investigative search firm of the Representative’s choice that
conducted an investigation of the principals of the Company. The Representative
may deduct from the net proceeds of the Offering payable to the Company on
the
Closing Date, or the Option Closing Date, if any, the expenses set forth
herein
to be paid by the Company to the Representative and others.
3.9.2 Nonaccountable
Expenses.
The
Company further agrees that, in addition to the expenses payable pursuant
to
Section 3.9.1,
on the
Closing Date, it will pay to the Representative a nonaccountable expense
allowance equal to one percent (1%) of the gross proceeds received by the
Company from the sale of the Firm Units, by deduction from the proceeds of
the
Offering contemplated herein.
3.10 Application
of Net Proceeds.
The
Company will apply the net proceeds from the Offering received by it in a
manner
consistent with the application described under the caption “Use Of Proceeds” in
the Prospectus.
3.11 Delivery
of Earnings Statements to Security Holders.
The
Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the sixteenth full calendar
month following the Effective Date, an earnings statement (which need not
be
certified by independent public or independent certified public accountants
unless required by the Act or the Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Act) covering a period
of
at least twelve consecutive months beginning after the Effective
Date.
3.12 Notice
to NASD.
In the
event any person or entity (regardless of any NASD affiliation or association)
is engaged to assist the Company in its search for a merger candidate or
to
provide any other merger and acquisition services, the Company will provide
the
following to the NASD and Wedbush 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.
11
3.13 Stabilization.
Except
with respect to the agreements between Wedbush and the Initial Stockholders
filed as Exhibits 10.• through 10.• to the Registration Statement, neither the
Company, nor, to its knowledge, any of its employees, directors or stockholders
(without the consent of Wedbush) has taken or will take, directly or indirectly,
any action designed to or that has constituted or that might reasonably be
expected to cause or result in, under the Exchange Act, or otherwise,
stabilization or manipulation of the price of any security of the Company
to
facilitate the sale or resale of the Units.
3.14 Internal
Controls.
During
the Blue Sky Compliance Period, 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 generally accepted
accounting principles 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.
3.15 Form
8-K.
The
Company shall, on the date hereof, retain its independent public accountants
to
audit the financial statements of the Company as of the Closing Date (“Audited
Financial Statements”) reflecting the receipt by the Company of the proceeds of
the initial public offering. As soon as the Audited Financial Statements
become
available, the Company shall immediately file a Current Report on Form 8-K
with
the Commission, which Report shall contain the Company’s Audited Financial
Statements.
3.16 NASD.
During
the period of the distribution of the Public Securities, the Company shall
advise the NASD if it is aware that any 5% or greater stockholder of the
Company
becomes an affiliate or associated person of an NASD member participating
in the
distribution of the Company’s Public Securities.
3.17 Corporate
Proceedings.
All
corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall
have
been done to the reasonable satisfaction to counsel for the
Underwriters.
3.18 Investment
Company.
The
Company shall cause the proceeds of the Offering to be held in the Trust
Fund to
be invested only in “government securities” with specific maturity dates as set
forth in the Trust Agreement and as more fully disclosed in the Prospectus.
The
Company will otherwise conduct its business in a manner so that it will not
become subject to the Investment Company Act. Furthermore, once the Company
consummates a Business Combination, it will be engaged in a business other
than
that of investing, reinvesting, owning, holding or trading
securities.
3.19 Colorado
Trust Filing.
In the
event the Securities are registered in the State of Colorado, the Company
will
cause a Colorado Form ES to be filed with the Commissioner of the State of
Colorado no less than 10 days prior to the distribution of the Trust Fund
in
connection with a Business Combination and will do all things reasonably
necessary to comply with Section ▇▇-▇▇-▇▇▇ and Rule 51-3.4 of the Colorado
Securities Act.
4. Conditions
of Underwriters’ Obligations.
The
obligations of the several Underwriters to purchase and pay for the Units,
as
provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company as of the date hereof and as
of
each of the Closing Date and the Option Closing Date, if any, to the accuracy
of
the statements of officers of the Company made pursuant to the provisions
hereof
and to the performance by the Company of its obligations hereunder and to
the
following conditions:
4.1 Regulatory
Matters.
4.1.1 Effectiveness
of Registration Statement.
The
Registration Statement shall have become effective not later than 5:00 P.M.,
New
York time, on the date of this Agreement or such later date and time as shall
be
consented to in writing by you, and, at each of the Closing Date and the
Option
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for the purpose shall
have
been instituted or shall be pending or contemplated by the Commission and
any
request on the part of the Commission for additional information shall have
been
complied with to the reasonable satisfaction of Cooley.
12
4.1.2 NASD
Clearance.
By the
Effective Date, the Representative shall have received clearance from the
NASD
as to the amount of compensation allowable or payable to the Underwriters
as
described in the Registration Statement.
4.1.3 No
Blue Sky Stop Orders.
No
order suspending the sale of the Units in any jurisdiction designated by
you
pursuant to Section 3.3
hereof
shall have been issued on either on the Closing Date or the Option Closing
Date,
and no proceedings for that purpose shall have been instituted or shall be
contemplated.
4.2 Company
Counsel Matters.
4.2.1 Closing
Date and Option Closing Date Opinion of Counsel.
On each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received the favorable opinion of Mintz, Levin, Cohn, Ferris,
Glovsky
and Popeo, P.C. (“▇▇▇▇▇”),
counsel to the Company, dated the as of the Closing Date or the Option Closing
Date, as the case may be, addressed to the Representative and in form and
substance satisfactory to ▇▇▇▇▇▇ Godward llp,
counsel
to the Underwriters (“Cooley”),
and
attached hereto as Exhibit A.
4.2.2 Reliance.
In
rendering such opinion, such counsel may rely (i) as to matters involving
the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to
the
extent specified in such opinion, if at all, upon an opinion or opinions
(in
form and substance reasonably satisfactory to Cooley) of other counsel
reasonably acceptable to Cooley, familiar with the applicable laws, and (ii)
as
to matters of fact, to the extent they deem proper, on certificates or other
written statements of officers of the Company and officers of departments
of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company, provided that copies of any such
statements or certificates shall be delivered to Cooley if requested. The
opinion of counsel for the Company and any opinion relied upon by such counsel
for the Company shall include a statement to the effect that it may be relied
upon by counsel for the Underwriters in its opinion delivered to the
Underwriters.
4.3 Cold
Comfort Letter.
At the
time this Agreement is executed, and at each of the Closing Date and the
Option
Closing Date, if any, you shall have received a letter, addressed to the
Representative and in form and substance satisfactory in all respects (including
the non-material nature of the changes or decreases, if any, referred to
in
clause (iii) below) to you and to Cooley from BDO ▇▇▇▇▇▇▇ dated, respectively,
as of the date of this Agreement and as of the Closing Date and the Option
Closing Date, if any:
(i) Confirming
that they are independent accountants with respect to the Company within
the
meaning of the Act and the applicable Regulations and that they have not,
during
the periods covered by the financial statements included in the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act;
(ii) Stating
that in their opinion the financial statements of the Company included in
the
Registration Statement and Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and the published
Regulations thereunder;
(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders
and
board of directors and the various committees of the board of directors,
consultations with officers and other employees of the Company responsible
for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that
(a)
the unaudited financial statements of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting principles applied
on
a basis substantially consistent with that of the audited financial statements
of the Company included in the Registration Statement, (b) at a date not
later
than five days prior to the Effective Date, Closing Date or Option Closing
Date,
as the case may be, there was any change in the capital stock or long-term
debt
of the Company, or any decrease in the stockholders’ equity of the Company as
compared with amounts shown in the August •, 2005 balance sheet included in the
Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any decrease, setting forth the
amount
of such decrease, and (c) during the period from August •, 2005 to a specified
date not later than five days prior to the Effective Date, Closing Date or
Option Closing Date, as the case may be, there was any decrease in revenues,
net
earnings or net earnings per share of Common Stock, in each case as compared
with the corresponding period in the preceding year and as compared with
the
corresponding period in the preceding quarter, other than as set forth in
or
contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
13
(iv) Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a break-down of commercial
papers and notes payable to banks);
(v) Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the extent that
such
amounts, numbers, percentages, statements and information may be derived
from
the general accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal counsel, with
the
results obtained from the application of specified readings, inquiries and
other
appropriate procedures (which procedures do not constitute an examination
in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi) Stating
that they have not during the immediately preceding five year period brought
to
the attention of the Company’s management any reportable condition related to
internal structure, design or operation as defined in the Statement on Auditing
Standards No. 60 “Communication of Internal Control Structure Related Matters
Noted in an Audit,” in the Company’s internal controls; and
(vii) Statements
as to such other matters incident to the transaction contemplated hereby
as you
may reasonably request.
4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Chairman of
the
Board or the President and the Secretary or Assistant Secretary of the Company,
dated the Closing Date or the Option Closing Date, as the case may be,
respectively, to the effect that the Company has performed all covenants
and
complied with all conditions required by this Agreement to be performed or
complied with by the Company prior to and as of the Closing Date, or the
Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.5
hereof
have been satisfied as of such date and that, as of Closing Date and the
Option
Closing Date, as the case may be, the representations and warranties of the
Company set forth in Section 2
hereof
are true and correct. In addition, the Representative will have received
such
other and further certificates of officers of the Company as the Representative
may reasonably request.
4.4.2 Secretary’s
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Secretary
or
Assistant Secretary of the Company, dated the Closing Date or the Option
Date,
as the case may be, respectively, certifying (i) that the Bylaws and Certificate
of Incorporation of the Company are true and complete, have not been modified
and are in full force and effect, (ii) that the resolutions relating to the
public 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.
4.5 No
Material Changes.
Prior
to and on each of the Closing Date and the Option Closing Date, if any, (i)
there shall have been no material adverse change or development involving
a
prospective material adverse change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Registration Statement
and
Prospectus, (ii) no action suit or proceeding, at law or in equity, shall
have
been pending or, to the knowledge of the Company, threatened against the
Company
or any Initial Stockholder before or by any court or federal or state
commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may materially adversely affect the business,
operations, prospects or financial condition or income of the Company, except
as
set forth in the Registration Statement and Prospectus, (iii) no stop order
shall have been issued under the Act and no proceedings therefor shall have
been
initiated or threatened by the Commission, and (iv) the Registration Statement
and the Prospectus and any amendments or supplements thereto shall contain
all
material statements which are required to be stated therein in accordance
with
the Act and the Regulations and shall conform in all material respects to
the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
14
4.6 Delivery
of Agreements.
4.6.1 Effective
Date Deliveries.
On the
Effective Date, the Company shall have delivered to the Representative executed
copies of the Escrow Agreement, the Trust Agreement, the Warrant Agreement,
the
Insider Letters and the Warrant Commitment Purchase Letters.
4.6.2 Closing
Date Deliveries.
On the
Closing Date, the Company shall have delivered to the Representative the
Representative’s Purchase Option.
4.7 Opinion
of Counsel for the Underwriters.
All
proceedings taken in connection with the authorization, issuance or sale
of the
Securities as herein contemplated shall be reasonably satisfactory in form
and
substance to you and to ▇▇▇▇▇▇ and you shall have received from such counsel
a
favorable opinion, dated the Closing Date and the Option Closing Date, if
any,
with respect to such of these proceedings as you may reasonably require.
On or
prior to the Effective Date, the Closing Date and the Option Closing Date,
as
the case may be, ▇▇▇▇▇▇ shall have been furnished such documents, certificates
and opinions as they may reasonably require for the purpose of enabling them
to
review or pass upon the matters referred to in this Section 4.7,
or in
order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
4.8 Secondary
Market Trading Survey.
On the
Closing Date, the Representative shall have received a written report detailing
those states in which the Public Securities may be traded in non-issuer
transactions under the Blue Sky laws of the fifty states from
▇▇▇▇▇▇.
5. Indemnification.
5.1 Indemnification
of Underwriters.
5.1.1 General.
Subject
to the conditions set forth below, the Company agrees to indemnify and hold
harmless each of the Underwriters, and each dealer selected by you that
participates in the offer and sale of the Units (each a “Selected
Dealer”)
and
each of their respective directors, officers and employees and each person,
if
any, who controls any such Underwriter (“controlling
person”)
within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever
(including but not limited to any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising out of
any
action between any of the Underwriters and the Company or between any of
the
Underwriters and any third party or otherwise) to which they or any of them
may
become subject under the Act, the Exchange Act or any other statute or at
common
law or otherwise or under the laws of foreign countries, arising out of or
based
upon any untrue statement or alleged untrue statement of a material fact
contained in (i) any Preliminary Prospectus, the Registration Statement or
the
Prospectus (as from time to time each may be amended and supplemented); (ii)
in
any post effective amendment or amendments or any new registration statement
and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Representative’s Purchase Option; or (iii) any application
or other document or written communication (in this Section 5
collectively called “application”) executed by the Company or based upon written
information furnished by the Company in any jurisdiction in order to qualify
the
Units under the securities laws thereof or filed with the Commission, any
state
securities commission or agency, Nasdaq or any securities exchange; or the
omission or alleged omission therefrom of a material fact required to be
stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to an Underwriter by or on behalf of
such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in any
application, as the case may be. With respect to any untrue statement or
omission or alleged untrue statement or omission made in the Preliminary
Prospectus, the indemnity agreement contained in this paragraph shall not
inure
to the benefit of any Underwriter to the extent that any loss, liability,
claim,
damage or expense of such Underwriter results from the fact that a copy of
the
Prospectus was not given or sent to the person asserting any such loss,
liability, claim or damage at or prior to the written confirmation of sale
of
the Units to such person as required by the Act and the Regulations, and
if the
untrue statement or omission has been corrected in the Prospectus, unless
such
failure to deliver the Prospectus was a result of non-compliance by the Company
with its obligations under Section 3.4
hereof.
The Company agrees promptly to notify the Representative of the commencement
of
any litigation or proceedings against the Company or any of its officers,
directors or controlling persons in connection with the issue and sale of
the
Securities or in connection with the Registration Statement or
Prospectus.
15
5.1.2 Procedure.
If any
action is brought against an Underwriter, a Selected Dealer or a controlling
person in respect of which indemnity may be sought against the Company pursuant
to Section 5.1.1,
such
Underwriter or Selected Dealer shall promptly notify the Company in writing
of
the institution of such action and the Company shall assume the defense of
such
action, including the employment and fees of counsel (subject to the reasonable
approval of such Underwriter or Selected Dealer, as the case may be) and
payment
of actual expenses; provided,
that
the failure to give such notice shall not relieve the Company from any liability
it may have under Sections 5.1.1
or
5.1.2
hereof,
except to the extent the Company has been materially prejudiced (through
forfeiture of substantive rights or defenses) by such failure. Such Underwriter,
Selected Dealer or controlling person shall have the right to employ its
or
their own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of such Underwriter, Selected Dealer or controlling
person unless (i) the employment of such counsel at the expense of the Company
shall have been authorized in writing by the Company in connection with the
defense of such action, or (ii) the Company shall not have employed counsel
to
take charge of the defense of such action, or (iii) such indemnified party
or
parties shall have reasonably concluded that there may be defenses available
to
it or them which are different from or additional to those available to the
Company (in which case the Company shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in
any of
which events the reasonable fees and expenses of not more than one additional
firm of attorneys selected by the Underwriter, Selected Dealer and/or
controlling person shall be borne by the Company. Notwithstanding anything
to
the contrary contained herein, if the Underwriter, Selected Dealer or
controlling person shall assume the defense of such action as provided above,
the Company shall have the right to approve the terms of any settlement of
such
action which approval shall not be unreasonably withheld.
5.2 Indemnification
of the Company.
Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, officers and employees, agents and each other
person
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act against any and all loss, liability, claim, damage
and
expense described in the foregoing indemnity from the Company to the several
Underwriters, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment or
supplement thereto or in any application, in reliance upon, and in strict
conformity with, written information furnished to the Company with respect
to
such Underwriter by or on behalf of the Underwriter expressly for use in
such
Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based
on
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have
the
rights and duties given to the Company, and the Company and each other person
so
indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2.
16
5.3 Contribution.
5.3.1 Contribution
Rights.
In
order to provide for just and equitable contribution under the Act in any
case
in which (i) any person entitled to indemnification under this Section
5
makes
claim for indemnification pursuant hereto but it is judicially determined
(by
the entry of a final judgment or decree by a court of competent jurisdiction
and
the expiration of time to appeal or the denial of the last right of appeal)
that
such indemnification may not be enforced in such case notwithstanding the
fact
that this Section 5
provides
for indemnification in such case, or (ii) contribution under the Act, the
Exchange Act or otherwise may be required on the part of any such person
in
circumstances for which indemnification is provided under this Section
5,
then,
and in each such case, the Company and the Underwriters shall contribute
to the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company and the
Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance;
provided, that, no person guilty of a fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any
person who was not guilty of such fraudulent misrepresentation. Notwithstanding
the provisions of this Section 5.3.1,
no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Public Securities underwritten by it
and
distributed to the public were offered to the public exceeds the amount of
any
damages that such Underwriter has otherwise been required to pay in respect
of
such losses, liabilities, claims, damages and expenses. For purposes of this
Section 5,
each
director, officer and employee of an Underwriter or the Company, as applicable,
and each person, if any, who controls an Underwriter or the Company, as
applicable, within the meaning of Section 15 of the Act shall have the same
rights to contribution as the Underwriters or the Company, as
applicable.
5.3.2 Contribution
Procedure.
Within
fifteen days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is to be
made
against another party (“contributing party”), notify the contributing party of
the commencement thereof, but the omission to so notify the contributing
party
will not relieve it from any liability which it may have to any other party
other than for contribution hereunder. In case any such action, suit or
proceeding is brought against any party, and such party notifies a contributing
party or its representative of the commencement thereof within the aforesaid
fifteen days, the contributing party will be entitled to participate therein
with the notifying party and any other contributing party similarly notified.
Any such contributing party shall not be liable to any party seeking
contribution on account of any settlement of any claim, action or proceeding
effected by such party seeking contribution on account of any settlement
of any
claim, action or proceeding effected by such party seeking contribution without
the written consent of such contributing party. The contribution provisions
contained in this Section 5
are
intended to supersede, to the extent permitted by law, any right to contribution
under the Act, the Exchange Act or otherwise available. The Underwriters’
obligations to contribute pursuant to this Section 5.3
are
several and not joint.
6. Default
by an Underwriter.
6.1 Default
Not Exceeding 10% of Firm Units or Option Units.
If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the over-allotment option
is
exercised, hereunder, and if the number of the Firm Units or Option Units
with
respect to which such default relates does not exceed in the aggregate 10%
of
the number of Firm Units or Option Units that all Underwriters have agreed
to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion
to
their respective commitments hereunder.
6.2 Default
Exceeding 10% of Firm Units or Option Units.
In the
event that the default addressed in Section 6.1
above
relates to more than 10% of the Firm Units or Option Units, you may in your
discretion arrange for yourself or for another party or parties to purchase
such
Firm Units or Option Units to which such default relates on the terms contained
herein. If within one business day after such default relating to more than
10%
of the Firm Units or Option Units you do not arrange for the purchase of
such
Firm Units or Option Units, then the Company shall be entitled to a further
period of one business day within which to procure another party or parties
reasonably satisfactory to you to purchase said Firm Units or Option Units
on
such terms. In the event that neither you nor the Company arrange for the
purchase of the Firm Units or Option Units to which a default relates as
provided in this Section 6,
this
Agreement will be terminated without liability on the part of the Company
(except as provided in Sections 3.11
and
5
hereof)
or the several Underwriters (except as provided in Section 5
hereof);
provided, however, that if such default occurs with respect to the Option
Units,
this Agreement will not terminate as to the Firm Units; and provided further
that nothing herein shall relieve a defaulting Underwriter of its liability,
if
any, to the other several Underwriters and to the Company for damages occasioned
by its default hereunder.
17
6.3 Postponement
of Closing Date.
In the
event that the Firm Units or Option Units to which the default relates are
to be
purchased by the non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, you or the Company shall have the right to
postpone the Closing Date or Option Closing Date for a reasonable period,
but
not in any event exceeding five business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company agrees
to
file promptly any amendment to the Registration Statement or the Prospectus
that
in the opinion of counsel for the Underwriters may thereby be made necessary.
The term “Underwriter” as used in this Agreement shall include any party
substituted under this Section 6
with
like effect as if it had originally been a party to this Agreement with respect
to such Securities.
7. Additional
Covenants.
7.1 Additional
Shares or Options.
The
Company hereby agrees that until the earlier of the consummation of a Business
Combination or the distribution of the Trust Fund referred to in Section
7.7
hereof,
it shall not issue any shares of Common Stock or any options or other securities
convertible into Common Stock, or any shares of Preferred Stock which
participate in any manner in the Trust Fund or which vote as a class with
the
Common Stock on a Business Combination.
7.2 Trust
Fund Waiver Acknowledgment.
The
Company hereby agrees that it will not commence its due diligence investigation
of any operating business which the Company seeks to acquire (each a
“Target
Business”)
or
obtain the services of any vendor or other third party unless and until such
Target Business, vendor, or other third party acknowledges in writing, whether
through a letter of intent, memorandum of understanding or other similar
document (and subsequently acknowledges the same in any definitive document
replacing any of the foregoing), that (a) it understands that the Company
has
established the Trust Fund, initially in an amount of $44,800,000 (without
giving effect to any exercise of the Over-allotment Option) for the benefit
of
the Public Stockholders and that the Company may disburse monies from the
Trust
Fund only (i) to the Public Stockholders in the event they elect to convert
their IPO Shares (described below in Section 7.7),
(ii)
to the Public Stockholders 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 6-month period, as described in the
Prospectus) or (iii) to the Company after it consummates a Business Combination
and (b) for and in consideration of the Company (1) agreeing to evaluate
such
Target Business for purposes of consummating a Business Combination with
it or
(2) agreeing to engage the services of the vendor or other third party, as
the
case may be, such Target Business, vendor or other third party agrees that
it
does not have any right, title, interest or claim of any kind in or to any
monies in the Trust Fund (“Claim”) and waives any Claim it may have in the
future as a result of, or arising out of, any negotiations, contracts or
agreements with the Company and will not seek recourse against the Trust
Fund
for any reason whatsoever. Notwithstanding the foregoing, in the event any
Target Business, vendor or other third party refuses to acknowledge in writing
that it does not have any rights, title, interest or claims of any kind in
or to
any monies in the Trust Fund, the Board of Directors will perform an analysis
of
the alternatives available to the Company if it chooses not to engage any
such
party and evaluate whether such engagement would be in the best interests
of the
Company’s stockholders if any such third party refuses to waive in writing any
such rights and the Company may enter into an agreement with such third party
if
the Board of Directors believes that such third party’s engagement will be more
beneficial to the Company’s stockholders than any alternative.
7.3 Insider
Letters.
The
Company shall not take any action or omit to take any action that would cause
a
breach of any of the Insider Letters executed between each Initial Stockholder
and Wedbush and will not allow any amendments to, or waivers of any provisions
of, such Insider Letters without the prior written consent of
Wedbush.
7.4 Warrant
Purchase Commitment Letters.
The
Company shall not take any action or omit to take any action that would cause
a
breach of any of the Warrant Purchase Commitment Letters executed between
each
Initial Stockholder and Wedbush and will not allow any amendments to, or
waivers
of any provisions of, such Warrant Purchase Commitment Letters without the
prior
written consent of Wedbush.
18
7.5 Certificate
of Incorporation and Bylaws.
The
Company shall not take any action or omit to take any action that would cause
the Company to be in breach or violation of its Certificate of Incorporation
or
Bylaws. Prior to the consummation of a Business Combination or until the
distribution of the Trust Fund referred to in Section 7.7
hereof,
the Company will not amend its Amended and Restated Certificate of Incorporation
without the prior written consent of Wedbush.
7.6 Blue
Sky Requirements.
The
Company shall provide counsel to the Representative with ten copies of all
proxy
information and all related material filed with the Commission in connection
with a Business Combination concurrently with such filing with the Commission.
In addition, the Company shall furnish any other state in which its initial
public offering was registered, such information as may be requested by such
state.
7.7 Acquisition/Distribution
Procedure.
The
Company agrees: (i) that, prior to the consummation of the initial Business
Combination, it will submit such transaction to the Company’s stockholders for
their approval (“Business
Combination Vote”)
even
if the nature of the acquisition is such as would not ordinarily require
stockholder approval under applicable state law; and (ii) that, in the event
that the Company does not effect a Business Combination within 18 months
from
the consummation of this Offering (subject to extension for an additional
six-month period, as described in the Prospectus), the Company will be
liquidated and will distribute to all holders of IPO Shares (as defined below)
an aggregate sum equal to the Company’s “Liquidation Value.” The Company’s
“Liquidation Value” shall mean the Company’s book value, as determined by the
Company and approved by BDO ▇▇▇▇▇▇▇. In no event, however, will the Company’s
Liquidation Value be less than the Trust Fund, inclusive of any net interest
income thereon. Only holders of IPO Shares shall be entitled to receive
liquidating distributions and the Company shall pay no liquidating distributions
with respect to any other shares of capital stock of the Company. With respect
to the initial Business Combination Vote, the Company shall cause all of
the
Initial Stockholders to vote the shares of Common Stock owned by them
immediately prior to this Offering in accordance with the vote of the holders
of
a majority of the IPO Shares. At the time the Company seeks approval of the
initial Business Combination, the Company will offer each holder of the
Company’s Common Stock issued in this Offering (the “IPO
Shares”)
the
right to convert their IPO Shares at a per share conversion price (the
“Conversion
Price”)
equal
to the amount in the Trust Fund (inclusive of any interest income therein)
calculated as of two business days prior to the consummation of such proposed
Business Combination divided by the total number of IPO Shares. If holders
of
less than 20% in interest of the Company’s IPO Shares vote against such approval
of a Business Combination and elect to convert their IPO Shares, the Company
may, but will not be required to, proceed with such Business Combination.
If the
Company elects to so proceed, it will convert shares, based upon the Conversion
Price, from those holders of IPO Shares who affirmatively requested such
conversion and who voted against the Business Combination. Only holders of
IPO
Shares shall be entitled to receive distributions from the Trust Fund and
the
Company shall pay no distributions with respect to any other shares of capital
stock of the Company. If holders of 20% or more in interest of the IPO Shares
vote against approval of any 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.
7.8 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.
7.9 Presentation
of Potential Target Businesses.
The
Company shall cause each of the Initial Stockholders to agree that, in order
to
minimize potential conflicts of interest which may arise from multiple
affiliations, the Initial Stockholders will present to the Company for its
consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire a Target Business, until the earlier of the
consummation by the Company of a Business Combination, the distribution of
the
Trust Fund or until such time as the Initial Stockholders cease to be an
officer
or director of the Company, subject to any pre-existing fiduciary obligations
the Initial Stockholders might have.
19
7.10 Target
Net Assets.
The
Company agrees that the initial Target Business(es) in a Business Combination
must have a fair market value equal to at least 80% of the Company’s net assets
at the time of such Business Combination. The fair market value of such
business(es) 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(es) has a fair market value of at least 80% of the Company’s net assets
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 if the Company’s Board of Directors independently determines that
the Target Business does have sufficient fair market value.
8. Representations
and Agreements to Survive Delivery.
Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
`warranties and agreements at the Closing Dates and such representations,
warranties and agreements of the Underwriters and Company, including the
indemnity agreements contained in Section 5
hereof,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter, the Company or any
controlling person, and shall survive termination of this Agreement or the
issuance and delivery of the Securities to the several Underwriters until
the
earlier of the expiration of any applicable statute of limitations and the
seventh anniversary of the later of the Closing Date or the Option Closing
Date,
if any, at which time the representations, warranties and agreements shall
terminate and be of no further force or effect..
9. Effective
Date of This Agreement and Termination Thereof.
9.1 Effective
Date.
This
Agreement shall become effective on the Effective Date at the time the
Registration Statement is declared effective by the Commission.
9.2 Termination.
You
shall have the right to terminate this Agreement at any time prior to any
Closing Date, (i) if any domestic or international event or act or occurrence
has materially disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United States; or (ii)
if
trading on the New York Stock Exchange, the American Stock Exchange, the
Boston
Stock Exchange or on the NASD OTC Bulletin Board (or successor trading market)
shall have been suspended, or minimum or maximum prices for trading shall
have
been fixed, or maximum ranges for prices for securities shall have been fixed,
or maximum ranges for prices for securities shall have been required on the
NASD
OTC Bulletin Board or by order of the Commission or any other government
authority having jurisdiction, or (iii) if the United States shall have become
involved in a new war or an increase in major hostilities, or (iv) if a banking
moratorium has been declared by a New York State or federal authority, or
(v) if
a moratorium on foreign exchange trading has been declared which materially
adversely impacts the United States securities market, or (vi) if the Company
shall have sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether
or
not such loss shall have been insured, will, in your opinion, make it
inadvisable to proceed with the delivery of the Units, (vii) if any of the
Company’s representations, warranties or covenants hereunder are breached, or
(viii) if the Representative shall have become aware after the date hereof
of
such a material adverse change in the conditions or prospects of the Company,
or
such adverse material change in general market conditions, including without
limitation as a result of terrorist activities after the date hereof, as
in the
Representative’s judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Units or to enforce contracts made
by the
Underwriters for the sale of the Units.
9.3 Expenses.
In the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the
terms
herein, the obligations of the Company to pay the out of pocket expenses
related
to the transactions contemplated herein shall be governed by Section
3.9.1
hereof.
9.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 5
shall
not be in any way effected by, such election or termination or failure to
carry
out the terms of this Agreement or any part hereof.
20
10. Miscellaneous.
10.1 Notices.
All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered or telecopied and confirmed
and shall be deemed given when so delivered or telecopied and confirmed or
if
mailed, two days after such mailing
If
to the
Representative:
Wedbush
▇▇▇▇▇▇ Securities Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Vice President
Copy
to:
▇▇▇▇▇▇
Godward llp
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇-▇▇▇▇▇▇▇
aMarca, Esq.
If
to the
Company:
▇▇▇▇
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Chief Executive Officer
Copy
to:
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇ PC
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇, Esq.
10.2 Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of
any of
the terms or provisions of this Agreement.
10.3 Amendment.
This
Agreement may only be amended by a written instrument executed by each of
the
parties hereto.
10.4 Entire
Agreement.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof
and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
10.5 Binding
Effect.
This
Agreement shall inure solely to the benefit of and shall be binding upon
the
Representative, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5
hereof,
and their respective successors, legal representatives and assigns, and no
other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provisions
herein contained.
10.6 Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of California, without giving effect to conflict of laws.
The
Company hereby agrees that any action, proceeding or claim against it arising
out of, relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of
[California]
of the
United States of America located in the [City
and County of Los Angeles],
and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company hereby waives any objection to such exclusive jurisdiction and
that
such courts represent an inconvenient forum. Any such process or summons
to be
served upon the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in this Section 10.
Such
mailing shall be deemed personal service and shall be legal and binding upon
the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from
the
other party(ies) all of its reasonable attorneys’ fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
21
10.7 No
Fiduciary Duty.
The
Company acknowledges and agrees that the Representative, the Underwriters
and
the controlling persons of any of them are acting in the capacity of an arm’s
length contractual counterparty to the Company with respect to the Offering
(including, but not limited to, in connection with determining the terms
of the
Offering) and not as a financial advisor or agent of the Company. The Company
further acknowledges and agrees that neither the Representatives, the
Underwriters nor the controlling persons of any of them shall have any fiduciary
or advisory duty to the Company or any of its controlling persons arising
out
of, or in connection with, this Agreement or the Offering.
10.8 Execution
in Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to
be an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto.
10.9 Waiver,
Etc.
The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
[Signatures
on following page.]
22
If
the
foregoing correctly sets forth the understanding between the Underwriters
and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
|
Very
truly yours,
|
||
| |
|
|
| By: | /s/ | |
|
Name: |
||
| Title: | ||
|
Accepted
on the date first
above
written
WEDBUSH
▇▇▇▇▇▇ SECURITIES INC.
|
|||
| By: /s/ | |||
|
Name: Title: |
23
EXHIBIT
A
Form
of Opinion
1. The
Company has been duly incorporated and is validly existing as a corporation
in
good standing under the laws of the state of its incorporation with the
requisite corporate power to own or lease, as the case may be, and to operate
its properties and conduct its business as described in the Prospectus. The
Company is duly qualified and licensed to do business as a foreign corporation
and is in good standing in each jurisdiction in which its ownership or leasing
of any properties or the character of its operations requires such qualification
or licensing, except where the failure to qualify would not have a material
adverse effect on the Company.
2. The
authorized, issued and outstanding capital stock of the Company was as set
forth
in the Prospectus under the caption “Capitalization” as of the date stated
therein; the issued and outstanding shares of capital stock set forth in
the
Prospectus under the caption “Capitalization” as of the date stated therein have
been duly and validly authorized and issued and are fully paid and
nonassessable.
3. The
Common Stock included in the Firm Units has been duly authorized and, when
issued and paid for by the Underwriters pursuant to the Agreement, will be
validly issued, fully paid and nonassessable. The Common Stock included in
the
Representative’s Units has been duly authorized and, when issued and paid for
pursuant to the Representative’s Purchase Option, will be validly issued, fully
paid and nonassessable. The shares of Common Stock issuable upon exercise
of the
Warrants and the Representative’s Warrants have been duly authorized and, when
issued and paid for pursuant to the Warrants or the Representative’s Warrants,
as the case may be, will be validly issued, fully paid and
nonassessable.
4. The
Warrants, when issued and paid for by the Underwriters pursuant to the
Agreement, will constitute valid and binding agreements of the Company to
issue
and sell, upon exercise thereof and payment therefor, the number and type
of
securities of the Company called for thereby and will be enforceable against
the
Company in accordance with their terms, except as enforcement may be limited
by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar
laws affecting creditors’ rights and subject to general equity principles and to
limitations on availability of equitable relief, including specific performance.
The Representative’s Purchase Option, when issued and paid for pursuant to the
Agreement, will constitute a valid and binding agreement of the Company to
issue
and sell, upon exercise thereof and payment therefor, the number and type
of
securities of the Company called for thereby and will be enforceable against
the
Company in accordance with their terms, except as rights to indemnity thereunder
may be limited by applicable laws and except as enforcement may be limited
by
bankruptcy, insolvency, reorganization, arrangement, moratorium or other
similar
laws affecting creditors’ rights and subject to general equity principles and to
limitations on availability of equitable relief, including specific performance.
The Representative’s Warrants, when issued and paid for pursuant to the
Representative’s Purchase Option, will constitute a valid and binding agreement
of the Company to issue and sell, upon exercise thereof and payment therefor,
the number and type of securities of the Company called for thereby and will
be
enforceable against the Company in accordance with their terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors’ rights and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance. The certificates representing
the Common Stock are in due and proper form.
5. The
execution, delivery and performance of the Agreement, the Warrant Agreement,
the
Warrants included in the Firm Units, the Representative’s Warrants, the Trust
Agreement, the Escrow Agreement and the Representative’s Purchase Option have
been duly authorized by all necessary corporate action on the part of the
Company. The Agreement, the Warrant Agreement, the Warrants included in the
Firm
Units, the Representative’s Warrants, the Trust Agreement, the Escrow Agreement
and the Representative’s Purchase Option have been duly executed and delivered
by the Company.
6. Each
of
the Warrant Agreement, the Trust Agreement and the Escrow Agreement constitute
a
valid and binding agreement of the Company enforceable against the Company
in
accordance with its terms, except as rights to indemnity under the Warrant
Agreement and the Trust Agreement may be limited by applicable laws and except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
arrangement, moratorium or other similar laws affecting creditors’ rights and
subject to general equity principles and to limitations on availability of
equitable relief, including specific performance.
24
7. The
holders of outstanding shares of capital stock of the Company are not entitled
to preemptive rights to subscribe for the Securities. Except as set forth
in the
section captioned “Principal Stockholders” in the Prospectus as of the date
stated therein, to our knowledge, there were no options, warrants or other
rights to purchase or acquire any shares of capital stock of the
Company.
8. To
our
knowledge, there is (i) no action, suit or proceeding by or before any court
or
other governmental agency, authority or body or any arbitrator pending or
overtly threatened against the Company or its properties by a third party
of a
character required to be disclosed in the Prospectus that is not disclosed
in
the Prospectus as required by the Act and the rules thereunder, and (ii)
no
indenture, contract, lease, mortgage, deed of trust, note agreement, loan
or
other agreement or instrument of a character required to be filed as an exhibit
to the Registration Statement, which is not filed as required by the Act
and the
rules thereunder.
9. The
Registration Statement has become effective under the Act; no stop order
suspending the effectiveness of the Registration Statement has been issued
and
no proceedings for that purpose have been instituted or overtly threatened.
Any
required filing of the Prospectus, and any supplement thereto, pursuant to
Rule
424(b) under the Act has been made in the manner and within the time period
required by Rule 424(b).
10. The
Registration Statement and the Prospectus (other than the financial statements
and notes thereto or other financial or statistical data derived therefrom,
as
to which we express no opinion) comply as to form in all material respects
with
the requirements of the Act and the rules thereunder. The statements in the
Prospectus under the heading “Description of Capital Stock,” insofar as such
statements purport to summarize legal matters, agreement or documents discussed
therein, fairly present, to the extent required by the Act and the rules
thereunder, in all material respects, such legal matters, agreements or
documents.
11. No
consent, approval, authorization, registration or filing with or order of
any
court or governmental agency or body in the United States having jurisdiction
over the Company is required for the consummation by the Company of the
transactions contemplated by the Agreement, the Warrant Agreement, the Warrants
included in the Firm Units, the Representative’s Warrants, the Trust Agreement,
the Escrow Agreement and the Representative’s Purchase Option, except such as
have been obtained under the Act and except such as may be required (i) under
the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Firm Units by the Underwriters in the manner contemplated
in
the Agreement and in the Prospectus, or under the bylaws, rules and regulations
of the NASD, (ii) in connection with the exercise of the Warrants included
in
the Firm Units, Representative’s Warrants and the Representative’s Purchase
Option and the issuance of the securities issuable upon exercise thereof
or
(iii) in connection with a Business Combination.
12. The
execution and delivery by the Company of the Agreement, the Warrant Agreement,
the Warrants included in the Firm Units, the Trust Agreement, the Escrow
Agreement and the Representative’s Purchase Option, and the performance by the
Company as of the date hereof of its obligations under the Agreement, the
Warrant Agreement, the Warrants included in the Firm Units, the Representative’s
Warrants, the Trust Agreement, the Escrow Agreement and the Representative’s
Purchase Option, do not, and the issue and sale of the Securities pursuant
to
the Agreement, the Representative’s Purchase Option, the Warrants included in
the Firm Units and the Representative’s Warrants will not, with or without the
giving of notice or the lapse of time or both, (i) result in a breach or
violation of the
Certificate of Incorporation of the Company or Bylaws of the Company, (ii)
constitute a material default under the terms of any instrument or agreement
filed as an exhibit to the Registration Statement; or (iii) to our knowledge,
violate any statute, law, rule, or regulation that in our experience is
typically applicable to transactions of the nature contemplated by the Agreement
(other than the indemnification obligations of the Company under the Agreement,
the Warrant Agreement, the Trust Agreement and the Escrow Agreement) and
is
presently applicable to the Company, or any order, writ, judgment, injunction,
decree, or award that has been entered against the Company and of which we
are
aware, in each case the breach or violation of which would materially and
adversely affect the Company.
25
***********************
In
connection with the preparation of the Registration Statement and the
Prospectus, we have participated in conferences with officers and other
representatives of the Company and with its certified public accountants,
as
well as with representatives of the Underwriters and their counsel. At such
conferences, the contents of the Registration Statement and the Prospectus
and
related matters were discussed. We have not independently verified, and
accordingly are not confirming and assume no responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or the Prospectus (except as otherwise set forth in paragraph 9
of
this opinion). On the basis of the foregoing, no facts have come to our
attention that have caused us to believe (i) that the Registration Statement
(except as to the financial statements and schedules, related notes and other
financial data and statistical data derived therefrom, as to which we express
no
comment), at the
date and
time that the Registration Statement became effective,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) that the Prospectus (except as to the financial
statements and schedules, related notes and other financial and statistical
data
derived therefrom, as to which we express no comment) as of its date and
the
date hereof contained or contains any untrue statement of a material fact
or
omitted or omits 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.
26
SCHEDULE
I
10,000,000
Units
|
Underwriter
|
Number
of Firm Units
to
be Purchased
|
|
|
Wedbush
▇▇▇▇▇▇ Securities Inc.
|
[__________]
|
SCHEDULE
2.18.4
[
List
all Company directors, officers and beneficial owners of Company stock that
have
NASD affiliations ]