UNDERWRITING AGREEMENT between FMG ACQUISITION CORP. and PALI CAPITAL, INC. Dated: ___________, 2007
EXHIBIT
1.1
between
and
PALI
CAPITAL, INC.
__________,
2007
Pali
Capital, Inc.
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As
Representative of the
Several
Underwriters named in Schedule I hereto
Re:
Public Offering of Securities
Ladies
and Gentlemen:
The
undersigned, FMG Acquisition Corp., a Delaware corporation ("Company"), hereby
confirms its agreement with Pali Capital, Inc. ("Pali Capital" and also referred
to herein variously as "you," or the "Representative") and with the other
Underwriters named on Schedule I hereto for which Pali Capital 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
4,500,000 units ("Firm Units") of the Company, at a purchase price (net of
discounts and commissions) of $7.44 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 $7.44
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"). The Common Stock and the Warrants included
in the Firm Units will not be separately transferable until 90 days after the
effective date ("Effective Date") of the Registration Statement (as defined
in
Section 2.1.1 hereof) unless the Representative informs the Company, in writing,
of its decision to allow earlier separate trading based on its assessment of
the
relative strengths of the securities markets and small capitalization companies
in general, and the trading pattern of, and demand for, the Company's securities
in particular, but in no event will the Representative allow separate trading
until the Company has filed with the Securities and Exchange Commission a
Current Report on Form 8-K that includes an audited balance sheet reflecting
the
Company's receipt of the proceeds of the Offering, including any proceeds the
Company receives from the exercise of the Over-allotment Option (as defined
in
Section 1.2.1), if such option is exercised prior to the filing of the 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
of
the Registration Statement and terminating on the four-year anniversary of
the
Effective Date. "Business Combination" shall mean any merger, capital stock
exchange, asset acquisition, other contractual arrangement resulting in a
business combination or other similar business combination consummated by the
Company with an operating business (as described more fully in the Registration
Statement (as defined in Section 2.1.1 below)).
-2-
1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 10:00 a.m., New York
time, on the fourth Business Day (as defined below) following the effective
date
of the Registration Statement or at such earlier time as shall be agreed upon
by
the Representative and the Company at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
&
▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇ ▇▇▇▇▇") or at such other place as shall be agreed upon
by
the Representative and the Company. The hour and date of delivery and payment
for the Firm Units are called "Closing Date." Payment for the Firm Units shall
be made on the Closing Date at the Representative's election by wire transfer
in
federal (same day) funds or by certified or bank cashier's check(s) in New
York
Clearing House funds, payable as follows: $35,280,000 of the proceeds received
by the Company for the Firm Units and the Placement Warrants (as defined in
Section 2.22.3 below), including $1,080,000 of the Deferred Fees (as defined
in
Section 1.1.3 below) shall be deposited (or with respect to the $1,250,000
of
proceeds from the sale of the Placement Warrants shall have been deposited
on or
prior to the Closing Date) in the Trust Account established by the Company
for
the benefit of the public stockholders as described in the Registration
Statement ("Trust Account") pursuant to the terms of an Investment Management
Trust Agreement ("Trust Agreement") between the Company and Continental Stock
Transfer & Trust Company ("CST") and the remaining proceeds shall be paid
(subject to Section 3.12 hereof) to the order of the Company upon delivery
to
you of certificates (in form and substance satisfactory to the Underwriters)
representing the Firm Units (or through the facilities of the Depository Trust
Company ("DTC")) for the account of the Underwriters. The Firm Units shall
be
registered in such name or names and in such authorized denominations as the
Representative may request in writing at least two full Business Days prior
to
the Closing Date. The Company will permit the Representative to examine and
package the Firm Units for delivery, at least one full Business Day prior to
the
Closing Date. The Company shall not be obligated to sell or deliver the Firm
Units except upon tender of payment by the Representative for all the Firm
Units. "Business Day" shall mean any day other than a Saturday, a Sunday or
a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
1.1.3 Deferral
of a Portion of Underwriters' Discount.
On the
Closing Date and, if applicable, on the Option Closing Date (as defined below),
Pali Capital agrees to deposit into the Trust Account a portion of the
Underwriters' discount equal to $0.24 per Unit in the Offering and, if
applicable, a portion of the discount equal to $0.24 per Option Unit (as defined
below) (the "Deferred Fees") until the earlier of the completion of a Business
Combination or the liquidation of the Trust Account. Upon the consummation
of a
Business Combination, Pali Capital shall promptly receive the Deferred Fees,
but
only with respect to those units as to which the component shares have not
been
converted to cash by those stockholders who voted against the Business
Combination and exercised their conversion rights.
In the
event that the Company is unable to consummate a Business Combination and
Continental Stock Transfer & Trust Company, the trustee of the Trust
Account, commences liquidation of the Trust Account, Pali Capital hereby agrees
to the following: (i) to forfeit any rights or claims to the Deferred Fees;
and
(ii) that the Deferred Fees shall be distributed on a pro-rata basis among
the
holders of the Common Stock included in the Units sold in the Offering along
with any interest accrued thereon, net of taxes.
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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 675,000 units from the
Company ("Over-allotment Option"). Such additional 675,000 units, the net
proceeds of which will be deposited in the Trust Account, 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 Common
Stock and the Warrants included in the Units and the Common Stock issuable
upon
exercise of the Warrants are hereinafter referred to collectively as the "Public
Securities." The purchase price to be paid for each Option Unit 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 and in such other manner as shall be agreed upon
by
the Company and the Representative, at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ or at such
other place as shall be agreed upon by the Company and the Representative.
Upon
exercise of the Over-allotment Option, the Company will become obligated to
convey to the Underwriters, and, subject to the terms and conditions set forth
herein, the Underwriters will become obligated to purchase, the number of Option
Units specified in such notice.
1.2.3 Payment
and Delivery.
Payment
for the Option Units shall be made on the Option Closing Date at the
Representative's election by wire transfer in federal (same day) funds or by
certified or bank cashier's check(s) in New York Clearing House funds, payable
as follows: $7.44 per Option Unit shall be deposited in the Trust Account
pursuant to the Trust Agreement upon delivery to you of certificates (in form
and substance satisfactory to the Underwriters) representing the Option Units
(or through the facilities of DTC) for the account of the Underwriters. The
certificates representing the Option Units to be delivered will be in such
denominations and registered in such names as the Representative requests not
less than two full 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.
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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 an aggregate of 450,000 units ("Representative's Units")
for
an aggregate purchase price of $100. Each of the Representative's Units is
identical to the Firm Units, including the warrants constituting the Units
to
purchase Common Stock (sometimes referred to as the "Representative's
Warrants"). The Representative's Purchase Option shall be exercisable, in whole
or in part, commencing on the later of the consummation of a Business
Combination and one year from the Effective Date and expiring on the five-year
anniversary of the Effective Date at an initial exercise price per
Representative's Unit of $10.00 (125% of the initial public offering price
of a
Unit), and may be exercised on a cashless basis. The Representative's Purchase
Option, the Representative's Units, the Common Stock contained within the
Representative's Units, the Representative's Warrants and the Common Stock
issuable upon exercise of the Representative's Warrants are hereinafter referred
to collectively as the "Representative's Securities." The Public Securities
and
the Representative's Securities are hereinafter referred to collectively as
the
"Securities." The Representative understands and agrees that there are
significant restrictions against transferring
the Representative's Securities during the first year after the Effective Date,
as set forth in Section 3 of the Representative's Purchase
Option.
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 Securities and Exchange Commission (the "Commission")
a Registration Statement and an amendment or amendments thereto, on Form S-1
(File No. 333-143466), including any related preliminary Prospectus (the
"Preliminary Prospectus"), for the registration of the 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 (the "Regulations")
of
the Commission under the Act. The conditions for use of Form S-1 to register
the
Offering under the Act, as set forth in the General Instructions to such Form,
have been satisfied. 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 any 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 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 by the Company with the Commission pursuant
to
Rule 424(b) at or after the time of effectiveness as allowed under Rule 430A
of
the Regulations), is hereinafter called the "Prospectus." For purposes of this
Agreement, "Time of Sale", as used in the Act, means 4:30 p.m. New York City
time, on the date of this Agreement. Prior to the Time of Sale, the Company
prepared a preliminary Prospectus, dated __________, 2007, for distribution
by
the Underwriters (the "Sale Preliminary Prospectus"). If the Company has filed,
or is required pursuant to the terms hereof to file, a Registration Statement
pursuant to Rule 462(b) under the Act registering additional Securities of
any
type (a "Rule 462(b) Registration Statement"), then, unless otherwise specified,
any reference herein to the term "Registration Statement" shall be deemed to
include such Rule 462(b) Registration Statement. Other than a Rule 462(b)
Registration Statement, which, if filed, becomes effective upon filing, no
other
document with respect to the Registration Statement has heretofore been filed
with the Commission. All of the Public Securities have been registered for
public sale under the Act pursuant to the Registration Statement or, if any
Rule
462(b) Registration Statement is filed, will be duly registered for public
sale
under the Act with the filing of such Rule 462(b) Registration Statement. The
Registration Statement has been declared effective by the Commission on the
date
hereof. If, subsequent to the date of this Agreement, the Company or the
Representative has determined that at the Time of Sale the Sale Preliminary
Prospectus includes an untrue statement of a material fact or omitted a
statement of material fact necessary to make the statements therein not
misleading and have agreed to provide an opportunity to purchasers of the Firm
Units to terminate their old purchase contracts and enter into new purchase
contracts, then the Sale Preliminary Prospectus will be deemed to include any
additional information available to purchasers at the time of entry into the
first such new purchase contract.
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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 Sale Preliminary Prospectus or 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 Representation
as to Section 10b-5 of the Act.
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, the Sale Preliminary Prospectus and the Prospectus
contains or 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; and neither
the Registration Statement, the Sale Preliminary Prospectus nor the Prospectus,
nor any amendment or supplement thereto, on their respective dates, nor the
Sale
Preliminary Prospectus as of the Time of Sale (or such subsequent Time of Sale
pursuant to Section 2.1.1) does or 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 or Sale
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 or Sale Preliminary Prospectus and any amendments
thereof and supplements thereto complied or will comply in all material respects
with the applicable provisions of the Act and the Regulations and did not and
will not contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The representation and warranty made in this Section 2.3.1
does
not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to
the
Underwriters by the Representative expressly for use in the Registration
Statement, Sale Preliminary Prospectus or Prospectus or any amendment thereof
or
supplement thereto.
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2.3.2 Disclosure
of Agreements.
The
agreements and documents described in the Registration Statement, the Sale
Preliminary Prospectus 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, the Sale Preliminary Prospectus 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 Sale Preliminary Prospectus or 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 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.
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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 Company's formation, except as
disclosed in the Registration Statement.
2.3.4 Regulations.
The
disclosures in the Registration Statement and Sale Preliminary Prospectus
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, the Sale Preliminary Prospectus 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, the Sale Preliminary Prospectus 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.
▇▇▇▇▇▇▇▇▇, Kass & Company, P.C. ("RK&C"), whose report is filed with the
Commission as part of the Registration Statement, the Sale Preliminary
Prospectus and Prospectus and included in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus, are independent registered public
accountants as required by the Act and the Regulations. RK&C has not, during
the periods covered by the financial statements included in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, provided to
the
Company any non-audit services, as such term is used in Section 10a(g) of the
Exchange Act.
2.6 Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement, the Sale Preliminary Prospectus 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; such financial statements have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
involved; and the supporting schedules included in the Registration Statement,
the Sale Preliminary Prospectus and Prospectus present fairly the information
required to be stated therein. The Registration Statement, the Sale Preliminary
Prospectus and Prospectus 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.
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2.7 Authorized
Capital; Options; Etc.
The
Company had at the date or dates indicated in the Sale Preliminary Prospectus
and Prospectus duly authorized, issued and outstanding capitalization as set
forth in the Registration Statement, the Sale Preliminary Prospectus, and the
Prospectus. Based on the assumptions stated in the Registration Statement,
the
Sale Preliminary Prospectus 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, the Sale Preliminary
Prospectus 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
Common Stock of the Company, or any contracts or commitments to issue or sell
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 (including, without limitation,
the Placement Warrants) 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 shares of Common
Stock
and Warrants conform in all material respects to the description thereof
contained in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus. All offers and sales of any outstanding securities of the Company
were at all relevant times either registered under the Act or exempt from such
registration requirements and the registration requirements of applicable blue
sky laws and regulations.
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 the descriptions
thereof contained in the Registration Statement, the Sale Preliminary Prospectus
and the Prospectus. When issued, the Representative's Securities 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' Securities 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 the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
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2.8.3 Placement
Warrants.
The
Placement Warrants 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 Placement 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 federal and state securities laws; and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The Common Stock issuable upon exercise
of
the Placement Warrants have been reserved for issuance upon the exercise of
the
Placement Warrants and, when issued in accordance with the terms of the
Placement Warrants, will be duly and validly authorized, validly issued, fully
paid and non-assessable, and the holders thereof are not and will not be subject
to personal liability by reason of being such holders.
2.8.4 No
Integration.
Other
than with respect to the Placement Warrants, neither the Company nor any of
its
affiliates has, prior to the date hereof, made any offer or sale of any
securities which
are
required to be or may be "integrated" pursuant to the Act or the Regulations
with the offer and sale of the Securities pursuant to the Registration
Statement.
2.9 Registration
Rights of Third Parties.
Except
as set forth in the Sale Preliminary Prospectus and the Prospectus, no holders
of any securities of the Company or any rights exercisable for or convertible
or
exchangeable into securities of the Company have the right to require the
Company to register any such securities of the Company under the Act or to
include any such securities in a Registration Statement to be filed by the
Company.
2.10 Validity
and Binding Effect of Agreements.
This
Agreement, the Warrant Agreement (as defined in Section 2.21 hereof), the Trust
Agreement, the Services Agreement (as defined in Section 3.7.2 hereof), the
Escrow Agreement (as defined in Section 2.22.2 hereof) and the Subscription
Agreement (as defined in Section 2.22.3 hereof) have been duly and validly
authorized by the Company and constitute, and the Representative's Purchase
Option, has been duly validly authorized by the Company and, when executed
and
delivered, will constitute the valid and binding agreements of the Company,
enforceable against the Company in accordance with their respective terms,
except (i) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, (ii)
as
enforceability of any indemnification or contribution provision may be limited
under the federal and state securities laws, and (iii) that the remedy of
specific performance and injunctive and other forms of equitable relief may
be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
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2.11 No
Conflicts, Etc.
The
execution, delivery, and performance by the Company of this Agreement, the
Warrant Agreement, the Representative's Purchase Option, the Trust Agreement,
the Services Agreement, the Escrow Agreement and the Subscription 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; (ii) result in any
violation of the provisions of the Company’s Bylaws and Amended and Restated
Certificate of Incorporation (the "Certificate of Incorporation"); 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 the
Certificate of Incorporation or in violation of any material franchise, license,
permit, applicable law, rule, regulation, judgment or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company
or
any of its properties or businesses.
2.13 Corporate
Power; Licenses; Consents.
2.13.1 Conduct
of Business.
The
Company has all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies that it needs as of the
date hereof to conduct its business as described in the Registration Statement,
Sale Preliminary Prospectus and the Prospectus. The disclosures in the
Registration Statement, the Sale Preliminary Prospectus and Prospectus
concerning the effects of federal, state and local regulation on this Offering
and the Company's business 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 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 Escrow Agreement
and
the Subscription Agreement and as contemplated by the Registration Statement,
Sale Preliminary Prospectus and Prospectus, except with respect to applicable
federal and state securities laws and the rules and regulations promulgated
by
the National Association of Securities Dealers, Inc. ("NASD").
-11-
2.14 D&O
Questionnaires.
To the
best of the Company's knowledge, all information contained in the questionnaires
("Questionnaires") completed by each of the Company's stockholders prior to
the
Offering ("Existing Stockholders") and previously provided to the Representative
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 Existing Stockholder to become inaccurate or 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 Existing Stockholder which has not been disclosed, that is
required to be disclosed, in the Registration Statement, the Sale Preliminary
Prospectus or the Prospectus.
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 place of incorporation, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct
of
business requires such qualification, except where the failure to qualify would
not have a material adverse effect on the assets, business or operations of
the
Company.
2.17 Stop
Orders.
The
Commission has not issued any order preventing or suspending the use of the
Registration Statement, any Preliminary Prospectus, the Sale Preliminary
Prospectus or Prospectus or any part thereof and has not threatened to issue
any
such order.
2.18 Transactions
Affecting Disclosure to NASD.
2.18.1 Finder's
Fees.
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
Existing Stockholder with respect to the sale of the Securities hereunder or
any
other arrangements, agreements or understandings of the Company or any Existing
Stockholder that may affect the Underwriters' compensation, as determined by
the
NASD.
2.18.2 Payments
Within Six 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 six months prior
to
the Effective Date, other than payments to the Representative in connection
with
this Offering.
-12-
2.18.3 Use
of
Proceeds.
None of
the net proceeds of the Offering and Private Placement 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 Sale Preliminary Prospectus.
2.18.4 Existing
Stockholders' NASD Affiliation.
Based
on questionnaires distributed to the Existing Stockholders, 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, as determined
in
accordance with the rules and regulations of the NASD. The Company will advise
the Representative and its counsel if it learns that any officer, director
or
beneficial owner (direct or indirect) of 5% or more of the Company's outstanding
Common Stock is or becomes an affiliate or associated person of an NASD member
participating in the Offering.
2.19 Foreign
Corrupt Practices Act; Patriot Act.
2.19.1 Neither
the Company nor any of the Existing 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.
2.19.2 Patriot
Act.
Neither
the Company nor any Company Affiliate has violated: (i) the Bank Secrecy Act,
as
amended, (ii) the Money Laundering Control Act of 1986, as amended, or (iii)
the
Uniting and Strengthening of America by Providing Appropriate Tools Required
to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and/or the
rules
and regulations promulgated under any such law, or any successor
law.
2.20 Officers'
Certificate.
Any
certificate signed by any duly authorized officer of the Company and delivered
to you or to your counsel shall be deemed a representation and warranty by
the
Company to the Underwriters as to the matters covered thereby.
2.21 Warrant
Agreement.
The
Company has entered into a warrant agreement with respect to the Warrants and
the Representative's Warrants with CST substantially in the form annexed as
Exhibit 4.5 to the Registration Statement ("Warrant Agreement").
-13-
2.22 Agreements
With Existing Stockholders.
2.22.1 Insider
Letters.
The
Company has caused to be duly executed legally binding and enforceable
agreements (except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (ii) as enforceability of any indemnification, contribution or
noncompete provision may be limited under the federal and state securities
laws,
and (iii) that the remedy of specific performance and injunctive and other
forms
of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought),
the forms of which are annexed as Exhibits 10.4 through 10.10 to the
Registration Statement ("Insider Letters"), pursuant to which each of the
Existing Stockholders of the Company agree to certain matters, including but
not
limited to, certain matters described as being agreed to by them under the
"Proposed Business" Section of the Sale Preliminary Prospectus and Prospectus.
2.22.2 Escrow
Agreement.
The
Company has caused the Existing Stockholders to enter into an escrow agreement
("Escrow Agreement") with CST ("Escrow Agent"), substantially in the form
annexed as Exhibit 10.2 to the Registration Statement, whereby (i) the Common
Stock owned by the Existing Stockholders (the "Existing Stockholders Shares")
will be held in escrow by the Escrow Agent, until one (1) year from the date
of
consummation of a Business Combination and (ii) the Placement Warrants will
be
held in escrow by the Escrow Agent until ninety (90) days from the date of
consummation of a Business Combination; provided, however, that if the Escrow
Agent is notified by the Company that the Company is being liquidated at any
time during the applicable Escrow Period (as that term is defined in the Escrow
Agreement), then immediately prior to the effectiveness of such liquidation,
the
Escrow Agent shall promptly destroy the certificates representing the Existing
Stockholders Shares and the Placement Warrants. During such escrow period,
the
Existing Stockholders shall be prohibited from selling or otherwise transferring
such shares (except to spouses and children of Existing Stockholders and trusts
established for their benefit and as otherwise set forth in the Escrow Agreement
but will retain the right to vote such shares. To the Company's knowledge,
the
Escrow Agreement is enforceable against each of the Existing Stockholders and
will not, with or without the giving of notice or the lapse of time or both,
result in a breach of, or conflict with any of the terms and provisions of,
or
constitute a default under, any agreement or instrument to which any of the
Existing Stockholders is a party. The Escrow Agreement shall not be amended,
modified or otherwise changed without the prior written consent of the
Representative.
2.22.3 Existing
Stockholders Subscription Agreement.
FMG
Investors LLC (“FMGI”), an entity affiliated with the Company's executive
officers and directors, has executed and delivered an agreement, annexed as
Exhibit 10.12 of the Registration Statement (the "Subscription Agreement"),
pursuant to which such entity has purchased an aggregate of 1,250,000 warrants
in a private placement intended to be exempt from registration under the Act
under Section 4(2) of the Act ("Private Placement") at a purchase price of
$1.00
per warrant ("Placement Warrants"). FMGI and the Company have delivered executed
copies of the Subscription Agreement and FMGI has delivered the purchase price
on or before the Closing Date. Pursuant to the Subscription Agreement, (i)
the
$1,250,000 of proceeds from the sale of the Placement Warrants has been
deposited by the Company in the Trust Account in accordance with the terms
of
the Trust Agreement on or prior to the Closing Date, and (ii) the purchasers
of
the Placement Warrants have waived any and all rights and claims that they
may
have to any proceeds, and any interest thereon, held in the Trust in respect
of
the Placement Warrants in the event that a Business Combination is not
consummated and the Trust Account is liquidated in accordance with the terms
of
the Trust Agreement.
-14-
2.23 Investment
Management Trust Agreement.
The
Company has entered into the Trust Agreement with CST with respect to certain
proceeds of the Offering substantially in the form annexed as Exhibit 10.1
to
the Registration Statement.
2.24 No
Existing Non-Competition Agreements.
No
Existing Stockholder, employee, officer or director of the Company is subject
to
any non competition agreement or non-solicitation agreement with any employer
or
prior employer which could materially affect his ability to be an Existing
Stockholder, employee, officer and/or director of the Company.
2.25 Investments.
No more
than 45% of the "value" (as defined in Section 2(a)(41) of the Investment
Company Act of 1940, as amended ("Investment Company Act")) of the Company's
total assets (exclusive of "Government Securities" (as defined in Section
2(a)(16) of the Investment Company Act)) consist of, and no more than 45% of
the
Company's net income after taxes is derived from, securities other than the
Government Securities.
2.26 Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability Company, joint venture, trust or other business entity.
2.27 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 Registration
Statement, Sale Preliminary Prospectus and the Prospectus that have not been
described as required.
2.28 Standard
& Poor's Application.
Unless
the Securities are listed or quoted, as the case may be, on the New York Stock
Exchange, the American Stock Exchange or quoted on the NASDAQ Global Market
on
the effective date, prior to the date hereof the Company has made application
with Standard and Poor's to have information regarding the Company and the
Securities included in the Standard & Poor's Daily News and Corporation
Records Description so as to allow for secondary trading of the Public
Securities in the state jurisdictions which allow for an exemption for
non-issuer secondary trading.
2.29 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
Solely
to the extent that the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended, and the rules
and
regulations promulgated by the Commission thereunder (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”)
has been applicable to the Company, there is and has been no failure on the
part
of the Company to comply in all material respects with any provision of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company has taken all necessary actions to ensure that
it is in compliance in all material respects with all provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act that are in effect and with which the Company is required
to
comply and is actively taking steps to ensure that it will be in compliance
in
all material respects with other provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act not
currently in effect or which will become applicable to the Company.
-15-
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 the Company shall 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
Sale Preliminary Prospectus or 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 Sale Preliminary Prospectus or 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 Sale Preliminary
Prospectus or 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 following the Effective Date pursuant to
the
requirements of Rule 424 of the Regulations.
3.2.3 Exchange
Act Registration.
The
Company will use its best efforts to maintain the registration of the Public
Securities under the provisions of the Exchange Act (except in connection with
a
going-private transaction) for a period of five years from the Effective Date,
or until the Company is required to be liquidated if earlier, or, in the case
of
the Warrants, until the Warrants expire and are no longer exercisable. The
Company will not deregister the Public Securities under the Exchange Act without
the prior written consent of the Representative.
3.2.4 Ineligible
Issuer.
At the
time of filing the Registration Statement and at the date hereof, the Company
was and is an "ineligible issuer," as defined in Rule 405 under the Securities
Act. The Company has not made and will not make any offer relating to the Public
Securities that would constitute an "issuer free writing Prospectus," as defined
in Rule 433, or that would otherwise constitute a "free writing Prospectus,"
as
defined in Rule 405.
-16-
3.3 Blue
Sky Filing.
Unless
the Securities are listed or quoted, as the case may be, on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ Global Market, 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. 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. The Company shall pay all filings fees in
connection with the qualification of the securities under the securities laws
of
such jurisdictions as the Representative may reasonably
designate.
3.4 Delivery
to Underwriters of Preliminary Prospectus, Sale Preliminary Prospectus And
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, Sale 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 a copy of all original executed consents of certified
experts.
3.5 Effectiveness
and Events Requiring Notice to the Representative.
The
Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representative immediately and confirm the notice
in writing (i) of the effectiveness of the Registration Statement and any
amendment thereto, (ii) of the issuance by the Commission of any stop order
or
of the initiation, or the threatening, of any proceeding for that purpose,
(iii)
of the issuance by any state securities 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, (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 3.2.3 hereof that, in the judgment of the Company or its counsel,
makes any statement of a material fact made in the Registration Statement,
the
Sale Preliminary Prospectus or the Prospectus untrue or that requires the making
of any changes in the Registration Statement, the Sale Preliminary Prospectus
or
the Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission
or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review
of Quarterly Financial Statements.
Until
the earlier of five years from the Effective Date, or until such earlier time
upon which the Company is required to be liquidated, the Company, at its
expense, shall cause its regularly engaged independent registered public
accounting firm to review (but not audit) the Company's financial statements
for
each of the first three fiscal quarters prior to the announcement of quarterly
financial information, the filing of the Company's Form 10-Q quarterly report
and the mailing of quarterly financial information to stockholders.
-17-
3.7 Affiliated
Transactions.
3.7.1 Business
Combinations.
The
Company will not consummate a Business Combination with any entity which is
affiliated with any Existing 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. No Existing Stockholder or any affiliate of such person shall
receive any fees of any type (other than reimbursement of ordinary and customary
expenses incurred on behalf of the Company) in connection with any Business
Combination
3.7.2 Administrative
Services.
The
Company has entered into an office services agreement ("Services Agreement")
with Fund Management Group LLC ("Affiliate") substantially in the form annexed
as Exhibit 10.11 to the Registration Statement pursuant to which the Affiliate
will make available to the Company general and administrative services,
including office space, utilities, administrative, technology and secretarial
services for the Company's use for up to $7,500 per month.
3.7.3 Compensation
to Existing Stockholders.
Except
as set forth above in this Section 3.7, the Company shall not pay any Existing
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 Existing
Stockholders shall be entitled to reimbursement from the Company for their
reasonable out-of-pocket expenses incurred in connection with seeking and
consummating a Business Combination.
3.8 Financial
Public Relations Firm.
Promptly after the execution of a definitive agreement for a Business
Combination, the Company shall consider, in good faith, retaining at its expense
a financial public relations firm reasonably acceptable to Pali Capital for
a
term to be agreed on by the Company and Pali Capital.
3.9 Reports
to the Representative.
3.9.1 Periodic
Reports, Etc.
For a
period of five years from the Effective Date or until such earlier time upon
which the Company is required to be liquidated, the Company will furnish to
the
Representative (Pali Capital, Inc., Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇) and its counsel copies
of such financial statements and other periodic and special reports as the
Company from time to time furnishes generally to holders of any class of its
securities, and promptly furnish to the Representative (i) a copy of each
periodic report the Company shall be required to file with the Commission,
(ii)
a copy of every press release and every news item and article with respect
to
the Company or its affairs which was released by the Company, (iii) a copy
of
each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by
the
Company, (iv) two (2) copies of each Registration Statement filed by the Company
with the Commission under the Securities Act, (v) a copy of monthly statements,
if any, setting forth such information regarding the Company's results of
operations and financial position (including balance sheet, profit and loss
statements and data regarding outstanding purchase orders) as is regularly
prepared by management of the Company and (vi) such additional documents and
information with respect to the Company and the affairs of any future
subsidiaries of the Company as the Representative may from time to time
reasonably request. Documents filed with the Commission pursuant to its ▇▇▇▇▇
system shall be deemed to have been delivered to the Representative pursuant
to
this Section.
-18-
3.9.2 Transfer
Sheets.
For a
period of two years following the Effective Date or until such earlier time
upon
which the Company is required to be liquidated, the Company shall retain CST
or
another transfer and warrant agent acceptable to the Representative ("Transfer
Agent") and will furnish to the Underwriters at the Company's sole cost and
expense, for a period of one year following the Effective Date, 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.
3.9.3 Secondary
Market Trading Maintenance.
Unless
the Securities are listed or quoted, as the case may be, on the New York Stock
Exchange, the American Stock Exchange or quoted on the NASDAQ Global Market,
until such earlier time upon which the Company is required to be liquidated
or
five (5) years from the date hereof, the Company shall maintain its listing
in
Standards & Poors' Daily News and Corporation Records Corporate Descriptions
at its cost and expense and at the beginning of each fiscal quarter, shall
provide the Representative with a written report of counsel detailing those
states in which the Securities may be traded in non-issuer transactions under
the Blue Sky laws of the fifty States ("Secondary Market Trading
Survey").
3.9.4 Trading
Reports.
During
such time as any of the Securities are quoted on the NASD OTC Bulletin Board
(or
any successor trading market such as the Bulletin Board Exchange) or the Pink
Sheets, LLC (or similar publisher of quotations) and no other automated
quotation system, the Company shall provide to the Representative, at its
expense, such reports published by the NASD or the Pink
Sheets, LLC relating to price trading of the Securities, as the Representative
shall reasonably request.
3.10 Disqualification
of Form S-1.
Until
the earlier of seven years from the date hereof or until the Warrants have
expired and are no longer exercisable, the Company will not take any action
or
actions which may prevent or disqualify the Company's use of Form S-1 (or other
appropriate form) for the registration of the Warrants and the Representative's
Warrants under the Act (except in connection with a going-private
transaction).
-19-
3.11 Payment
of Expenses.
3.11.1 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, the Preliminary Sale 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 Common Stock and the Warrants included in the Units
and the Representative's Purchase Option, including any transfer or other taxes
payable thereon, (iii) filing fees, costs and expenses (including disbursements
for the Representative's counsel) incurred in registering the Offering with
the
NASD and qualifying the Public Securities under state or foreign securities
or
Blue Sky laws (such fees shall be $25,000 in the aggregate), (iv) fees, costs
and expenses incurred in listing the Company on the NASD OTC Bulletin Board,
(v)
fees and disbursements of the transfer, escrow and warrant agent, (vi) the
Company's expenses associated with "due diligence" and "road show" meetings
arranged by the Representative, (vii) 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 (viii)
all
other costs and expenses customarily borne by an issuer incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 3.11.1. The Company also agrees that, if requested
by the Representative, it will engage and pay up to $10,000 for an investigative
search firm of the Representative's choice to conduct an investigation of the
principals of the Company as shall be mutually selected by the Representative
and the Company. The Representative may deduct from the net proceeds of the
Offering payable to the Company on the Closing Date, or the Option Closing
Date,
if any, the expenses set forth in this Agreement to be paid by the Company
to
the Representative and others.
3.11.2 Expenses
Related to Business Combination.
The
Company further agrees that, in the event the Representative, at the request
of
the Company, assists the Company in trying to obtain stockholder approval of
a
proposed Business Combination, the Company agrees to reimburse the
Representative for all reasonable out-of-pocket expenses, including, but not
limited to, "road-show" and due diligence expenses.
3.12 Application
of Net Proceeds.
The
Company will apply the net proceeds from the Offering and Private Placement
received by it in a manner consistent with the application described under
the
caption "Use of Proceeds" in the Registration Statement, Sale Preliminary
Prospectus and Prospectus.
3.13 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 fifteenth 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.
-20-
3.14 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 to Pali Capital prior to the consummation of the
Business Combination: (i) complete details of all services and copies of
agreements governing such services; and (ii) justification as to why the person
or entity providing the merger and acquisition services should not be considered
an "Underwriter and related person" with respect to the Company's initial public
offering, as such term is defined in Rule 2710 of the NASD's Conduct Rules.
The
Company also agrees that proper disclosure of such arrangement or potential
arrangement will be made in the proxy statement which the Company will file
for
purposes of soliciting stockholder approval for the Business
Combination.
3.15 Stabilization.
Neither
the Company, nor, to its knowledge, any of its employees, directors or
stockholders (without the consent of the Representative), 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 Public Securities.
3.16 Internal
Controls.
The
Company will maintain a system of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management's general or specific authorization, (ii) transactions are
recorded as necessary in order to permit preparation of financial statements
in
accordance with 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.
3.17 Accountants.
Until
the earlier of five years from the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company shall retain
RK&C or another independent registered public accounting firm reasonably
acceptable to the Representative.
3.18 Form
8-K.
The
Company shall, on the date hereof, retain its independent registered public
accounting firm 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 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.
Upon
the
earlier to occur of (i) the expiration or termination of the Over-allotment
Option and (ii) the exercise in full of the Over-allotment Option, the Company
shall, subject to having filed the Current Report(s) on Form 8-K pursuant to
the
previous paragraph, promptly issue a press release announcing that separate
trading of the Warrants and Common Stock will begin on the NASD OTC Bulletin
Board.
-21-
3.19 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.
3.20 Investment
Company.
The
Company shall cause the proceeds of the Offering to be held in the Trust Account
to be invested only in "Government Securities" (as defined in the Trust
Agreement) and disclosed in the Registration Statement, Sale, Preliminary
Prospectus or 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.
3.21 Business
Combination Announcement.
Within
four (4) business days following the consummation by the Company of a Business
Combination, the Company shall cause an announcement ("Business Combination
Announcement") to be placed, at its cost, in the Wall Street Journal, the New
York Times and a third publication to be selected by the Representative
announcing the consummation of the Business Combination and indicating that
the
Representative was the managing Underwriter in the Offering. The Company shall
supply the Representative with a draft of the Business Combination Announcement
and provide the Representative with a reasonable opportunity to comment thereon.
The Company will not place the Business Combination Announcement without the
final approval of the Representative, which such approval will not be
unreasonably withheld.
3.22 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 Account
in
connection with a Business Combination and will do all things necessary to
comply with Section ▇▇-▇▇-▇▇▇ and Rule 51-3.4 of the Colorado Securities
Act.
3.23 Amendments
to Certificate of Incorporation.
(i) The
Company covenants and agrees, that prior to its initial Business Combination
it
will not seek to amend or modify any of provisions (A) - (F) of
Article Sixth of its Certificate of Incorporation.
(ii)
The
Company acknowledges that the purchasers of the Public Securities in the
Offering shall be deemed to be third party beneficiaries of this Agreement
and
specifically this Section 3.23.
(iii)
The
Representative specifically advises the Company that it will not waive this
Section 3.23 under any circumstances.
-22-
3.24 Private
Placement Proceeds.
Prior
to the Closing Date, the Company shall deposit $1,250,000 of the proceeds from
the Private Placement in the Trust Account and shall provide Pali Capital with
evidence of the same.
3.25 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
The
Company will take all necessary actions to ensure that, upon and at all times
after the effectiveness of the Registration Statement, it will be in compliance
in all material respects with all provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act that
are
then in effect and applicable to it and shall take such steps as are necessary
to ensure that it will be in compliance in all material respects with other
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act not currently in effect upon the
effectiveness of such provisions to the extent they are applicable to the
Company.
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 4:30 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 ▇▇▇▇▇▇ ▇▇▇▇▇, counsel to the
Underwriters.
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.
4.1.4 The
NASD OTC Bulletin Board.
The
Securities shall have been admitted and approved for quotation on the NASD
OTC
Bulletin Board.
4.2 Company
Counsel Matters.
4.2.1 Closing
Date and Option Closing Date Opinion of Counsel.
On the
Closing Date and the Option Closing Date, if any, the Representative shall
have
received the favorable opinion of Ellenoff ▇▇▇▇▇▇▇▇ & Schole LLP, dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Representative and in form and substance reasonably satisfactory to ▇▇▇▇▇▇
▇▇▇▇▇, covering the matters set forth on Appendix
A
hereto.
-23-
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 ▇▇▇▇▇▇ ▇▇▇▇▇) of other counsel
reasonably acceptable to ▇▇▇▇▇▇ ▇▇▇▇▇, familiar with the applicable laws, and
(ii) as to matters of fact, to the extent they deem proper, on certificates
or
other written statements of officers of the Company and officers of departments
of various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company, provided that copies of any such
statements or certificates shall be delivered to the Underwriters' counsel
if
requested. The opinion of counsel for the Company and any opinion relied upon
by
such counsel for the Company shall include a statement to the effect that it
may
be relied upon by counsel for the Underwriters in its opinion delivered to
the
Underwriters.
4.3 Cold
Comfort Letter.
At the
time this Agreement is executed, and at each of the Closing Date and the Option
Closing Date, if any, you shall have received a letter, addressed to the
Representative and in form and substance satisfactory in all respects (including
the non-material nature of the changes or decreases, if any, referred to in
clause (iii) below) to you and to ▇▇▇▇▇▇ ▇▇▇▇▇ from RK&C 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
Preliminary Prospectus, Sale Preliminary Prospectus and the Prospectus, provided
to the Company any non-audit services, as such term is used in Section 10A(g)
of
the Exchange Act;
(ii)
Stating that in their opinion the financial statements of the Company included
in the Registration Statement, the Sale Preliminary Prospectus 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 their 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, the Sale Preliminary Prospectus and Prospectus 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, the Sale Preliminary Prospectus and Prospectus, or
(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 stockholder's
equity of the Company as compared with amounts shown in the _____________,
2007
balance sheet included in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus, other than as set forth in or contemplated by
the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus,
or,
if there was any decrease, setting forth the amount of such decrease and (c)
during the period from ___________, 2007 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, the Sale Preliminary Prospectus and Prospectus or,
if
there was any such decrease, setting forth the amount of such
decrease;
-24-
(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 Registration Statement and the Sale
Preliminary Prospectus and 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, since the Company's incorporation, provided the
Company's management with any written communication in accordance with Statement
on Auditing Standards No. 60 "Communication of Internal Control Structure
Related Matters Noted in an Audit"; 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 Chief Executive Officer and the Secretary or Assistant Secretary
of
the Company (in their capacities as such), dated the Closing Date or the Option
Closing Date, as the case may be, respectively, to the effect that the Company
has performed all covenants and complied with all conditions required by this
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 (in their capacities
as such) as the Representative may reasonably request.
-25-
4.4.2 Secretary's
Certificate.
At each
of the Closing Date and the Option 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 Certificate of Incorporation
is
true and complete, has not been modified and is 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,
the
Sale Preliminary Prospectus and Prospectus, (ii) no action suit or proceeding,
at law or in equity, shall have been pending or threatened against the Company
or any Existing 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, the Sale Preliminary Prospectus 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, the Sale Preliminary Prospectus 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, the Sale Preliminary Prospectus nor the Prospectus nor any amendment
or supplement thereto shall contain any untrue statement of a material fact
or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
4.6 Delivery
of Agreements.
4.6.1 Effective
Date Deliveries.
On the
Effective Date, the Company shall have delivered to the Representative executed
copies of the Escrow Agreement, the Trust Agreement, the Warrant Agreement,
the
Services Agreement, the Subscription Agreement and all of the Insider Letters.
-26-
4.6.2 Closing
Date Deliveries.
On the
Closing Date, the Company shall have delivered to the Representative executed
copies of the Representative's Purchase Option.
4.7 Opinion
of Counsel for the Underwriters.
All
proceedings taken in connection with the authorization, issuance or sale of
the
Securities as herein contemplated shall be reasonably satisfactory in form
and
substance to you and to ▇▇▇▇▇▇ ▇▇▇▇▇ 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 matters as you and ▇▇▇▇▇▇ ▇▇▇▇▇ may reasonably
require. On or prior to the Effective Date, the Closing Date and the Option
Closing Date, as the case may be, counsel for the Underwriters shall have been
furnished such documents, certificates and opinions as they may reasonably
require for the purpose of enabling them to review or pass upon the matters
referred to in this Section 4.7, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
4.8 Secondary
Market Trading and Standard & Poor's.
Unless
the Securities are listed or quoted, as the case may be, on the New York Stock
Exchange, the American Stock Exchange or the NASDAQ Global Market, the Company
(a) 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, (b) shall take such steps as may be
necessary to obtain a secondary market trading exemption for the Company's
securities in the State of California and (c) shall also take such other action
as
may be
reasonably requested by the Representative to obtain a secondary market trading
exemption in such other states as may be requested by the
Representative.
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 Securities (each a "Selected Dealer")
and each of their respective directors, officers and employees and each person,
if any, who controls any such Underwriter ("Controlling Person") within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all loss, liability, claim, damage and expense whatsoever (including
but
not limited to any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, whether arising out of any action between
any of the Underwriters and the Company or between any of the Underwriters
and
any third party or otherwise) to which they or any of them may become subject
under the Act, the Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
in
(i) any Preliminary Prospectus, the Registration Statement, Sale Preliminary
Prospectus or the Prospectus (as from time to time each may be amended and
supplemented); (ii) any materials or information provided to investors by,
or
with the approval of, the Company in connection with the marketing of the
offering of the Securities, including any "road show" or investor presentations
made to investors by the Company (whether in person or electronically); (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 (iv)
any
post effective amendments to the Registration Statement or Prospectus or new
Registration Statement or Prospectus filed by the Company with the Commission
any state securities commission or agency, NASDAQ or any securities exchange
in
which is included any of the Representative's Securities, or the omission or
alleged omission from any Preliminary Prospectus, the Registration Statement,
Sale Preliminary Prospectus or the Prospectus or subsequent filing by the
Company under clause (iv) above 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, Sale Preliminary Prospectus or Prospectus, or any amendment or
supplement thereof, or in any application, as the case may be. With respect
to
any untrue statement or omission or alleged untrue statement or omission made
in
the Preliminary Prospectus, the indemnity agreement contained in this paragraph
shall not inure to the benefit of any Underwriter to the extent that any loss,
liability, claim, damage or expense of such Underwriter results from the fact
that a copy of the Prospectus was not given or sent to the person asserting
any
such loss, liability, claim or damage at or prior to the written confirmation
of
sale of the Securities to such person as required by the Act and the
Regulations, and if the untrue statement or omission has been corrected in
the
Prospectus, unless such failure to deliver the Prospectus was a result of
non-compliance by the Company with its obligations under Section 3.4 hereof.
The
Company agrees promptly to notify the Representative of the commencement of
any
litigation or proceedings against the Company or any of its officers, directors
or controlling persons in connection with the issue and sale of the Securities
or in connection with the Registration Statement, Sale Preliminary Prospectus
or
Prospectus.
-27-
5.1.2 Procedure.
If any
action is brought against an Underwriter, a Selected Dealer or a controlling
person in respect of which indemnity may be sought against the Company pursuant
to Section 5.1.1, such Underwriter or Selected Dealer shall promptly notify
the
Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the reasonable approval of such Underwriter or Selected Dealer,
as
the case may be) and payment of actual expenses. Such Underwriter, Selected
Dealer or controlling person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be
at
the expense of such Underwriter, Selected Dealer or controlling person unless
(i) the employment of such counsel at the expense of the Company shall have
been
authorized in writing by the Company in connection with the defense of such
action, or (ii) the Company shall not have employed counsel to have charge
of
the defense of such action, or (iii) such indemnified party or parties shall
have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to the Company (in which case the Company
shall not have the right to direct the defense of such action on behalf of
the
indemnified party or parties), in any of which events the reasonable fees and
expenses of not more than one additional firm of attorneys selected by the
Underwriter, Selected Dealer and/or controlling person shall be borne by the
Company. Notwithstanding anything to the contrary contained herein, if the
Underwriter, Selected Dealer or controlling person shall assume the defense
of
such action as provided above, the Company shall have the right to approve
the
terms of any settlement of such action which approval shall not be unreasonably
withheld.
-28-
5.2 Indemnification
of the Company.
Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, officers and employees and agents who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage and expense
described in the foregoing indemnity from the Company to the several
Underwriters, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in any Preliminary
Prospectus, the Registration Statement, Sale Preliminary Prospectus 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,
Sale Preliminary Prospectus 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, Sale Preliminary Prospectus 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.
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. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Underwriters shall
contribute in such proportion as is appropriate to reflect the relative fault
of
the Company and the Underwriters in connection with the actions or omissions
which resulted in such loss, claim, damage, liability or action, as well as
any
other relevant equitable considerations. The relative fault of the Company
and
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. 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, 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.
-29-
5.3.2 Contribution
Procedure.
Within
fifteen days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is to be made
against another party ("contributing party"), notify the contributing party
of
the commencement thereof, but the omission to so notify the contributing party
will not relieve it from any liability which it may have to any other party
other than for contribution hereunder. In case any such action, suit or
proceeding is brought against any party, and such party notifies a contributing
party or its representative of the commencement thereof within the aforesaid
fifteen days, the contributing party will be entitled to participate therein
with the notifying party and any other contributing party similarly notified.
Any such contributing party shall not be liable to any party seeking
contribution on account of any settlement of any claim, action or proceeding
effected by such party seeking contribution on account of any settlement of
any
claim, action or proceeding effected by such party seeking contribution without
the written consent of such contributing party. The contribution provisions
contained in this Section are intended to supersede, to the extent permitted
by
law, any right to contribution under the Act, the Exchange Act or otherwise
available. The Underwriters' obligations to contribute pursuant to this Section
5.3 are several and not joint.
6. Default
by an Underwriter.
6.1 Default
Not Exceeding 10% of Firm Units or Option Units.
If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the Over-Allotment Option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10%
of
the number of Firm Units or Option Units that all Underwriters have agreed
to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion
to
their respective commitments hereunder.
6.2 Default
Exceeding 10% of Firm Units or Option Units.
In the
event that the default addressed in Section 6.1 above relates to more than
10%
of the Firm Units or Option Units, you may in your discretion arrange for
yourself or for another party or parties to purchase such Firm Units or Option
Units to which such default relates on the terms contained herein. If within
one
Business Day after such default relating to more than 10% of the Firm Units
or
Option Units you do not arrange for the purchase of such Firm Units or Option
Units, then the Company shall be entitled to a further period of one Business
Day within which to procure another party or parties satisfactory to you to
purchase said Firm Units or Option Units on such terms. In the event that
neither you nor the Company arrange for the purchase of the Firm Units or Option
Units to which a default relates as provided in this Section 6, this Agreement
will be terminated by you or the Company without liability on the part of the
Company (except as provided in Sections 3.11.1 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.
-30-
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 (5) business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Sale
Preliminary Prospectus or Prospectus or in any other documents and arrangements,
and the Company agrees to file promptly any amendment to the Registration
Statement or the Prospectus that in the opinion of counsel for the Underwriters
may thereby be made necessary. The term "Underwriter" as used in this Agreement
shall include any party substituted under this Section 6 with like effect as
if
it had originally been a party to this Agreement with respect to such
securities.
7. Intentionally
Omitted.
8. Additional
Covenants.
8.1 Additional
Shares or Options.
The
Company hereby agrees that until the consummation of a Business Combination,
it
shall not issue any Common Stock (except with respect to any exercise of
Warrants) or any options or other securities convertible into Common Stock,
or
any shares of preferred stock or other securities of the Company which
participate or may participate in any manner in the Trust Account or which
vote
as a class with the Common Stock on a Business Combination.
8.2 Amendments
to Insider Letters, Subscription Agreement and Trust Account.
The
Company shall not take any action or omit to take any action which would cause
a
breach of any of the Insider Letters executed between each existing stockholder
and Pali Capital or the Subscription Agreement executed between FMGI and the
Company and will not allow any amendments to, or waivers of, such Insider
Letters, Subscription Agreement or the Trust Account without the prior written
consent of the representative.
8.3 Prohibition
on Amendment of Certificate of Incorporation.
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.
Except as set forth in Section 3.23, prior to the consummation of a Business
Combination, the Company will not amend its Certificate of Incorporation without
the prior written consent of the Representative.
-31-
8.4 Acquisition/Liquidation
Procedure.
The
Company agrees: (i) prior to the consummation of any Business Combination,
it
will submit such transaction to the Company's stockholders for their approval
("Business Combination Vote") even if the nature of the acquisition is such
as
would not ordinarily require stockholder approval under the laws of the state
of
Delaware; and (ii) in the event that the Company does not effect a Business
Combination within twenty-four (24) months from the consummation of the offering
(the "Termination Date"), this shall trigger an automatic winding-up of the
Company and the trust account will be liquidated to holders of IPO shares in
the
manner described in the Sale Preliminary Prospectus and the Prospectus as soon
as reasonably practicable, and subject to the requirements of the laws of the
state of Delaware. For purposes of this Section 8.4, the term "IPO shares"
means
the Common Stock contained in the public securities.
8.4.1 Upon
liquidation of the Trust Account, subject to the requirements of the laws of
the
State of Delaware, the Company will distribute only to the holders of IPO Shares
an aggregate sum equal to the Company's Liquidation Value, which sum shall
be
distributed Pro Rata among the holders of the IPO Shares. The Company's
"Liquidation Value" means: (i) all of the all principal and accrued interest
contained within the Trust Account, less any amounts previously distributed
to
the Company out of the interest earned on the Trust Account pursuant to the
terms of the Trust Agreement (after payment of, or provision for, applicable
taxes and claims of creditors) PLUS (ii) all cash and other liquid assets (which
shall be reduced to cash as part of the Company's winding up) then held by
the
Company outside of the Trust Account, all as distributed in amounts to the
holders as determined by CST, as trustee of the Trust Account. Only holders
of
IPO Shares as of the record date for the distribution shall be entitled to
receive liquidating distributions with respect to the IPO Shares they
beneficially own and the Company shall pay no liquidating distributions with
respect to any other shares of capital stock of the Company, including the
shares of Common Stock held by the Existing Stockholders prior to the Offering
(but shall include Common Stock underlying the Placement Warrants and Common
Stock purchased by Existing Stockholders after the Offering).
8.4.2 With
respect to the Business Combination Vote, the Existing Stockholders shall vote
all Common Stock owned by them as of the record date of the vote in accordance
with the vote of holders of a majority of the IPO Shares present, in person
or
by proxy, at a meeting of the Company's stockholders in connection with the
Business Combination Vote.
8.4.3 At
the
time the Company seeks approval of any potential Business Combination (prior
to
the confirmation of its initial Business Combination), the Company will offer
each of the holders of the IPO Shares the right to convert their IPO Shares
into
a pro rata share of the Trust Account (the "Conversion Price"). If holders
of
less than 30% in interest of the Common Stock vote against such approval of
a
Business Combination, 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 of Common Stock, based upon the Conversion Price, from those holders
of
Common Stock who affirmatively requested such conversion and who voted against
the Business Combination as provided under the laws of the State of Delaware.
If
holders of 30% or more in interest of the Common Stock vote against approval
of
any potential Business Combination, the Company will not proceed with such
Business Combination and will liquidate.
-32-
8.5 Rule
419.
The
Company agrees that it will use its best efforts to prevent the Company from
becoming subject to Rule 419 under the Act prior to the consummation of any
Business Combination, including but not limited to using its best efforts to
prevent any of the Company's outstanding securities from being deemed to be
a
"▇▇▇▇▇ Stock" as defined in Rule 3a-51-1 under the Exchange Act during such
period.
8.6 Affiliated
Transactions.
Except
as disclosed on the Registration Statement, the Company shall cause each of
the
existing stockholders to agree that, in order to minimize potential conflicts
of
interest which may arise from multiple affiliations, the existing stockholders
will present to the Company for its consideration, prior to presentation to
any
other person or Company, any suitable opportunity to acquire an operating
business, until the earlier of the consummation by the Company of a Business
Combination, the liquidation of the Company or until such time
as
the existing stockholders cease to be an officer or director of the Company,
subject to any pre-existing fiduciary or contractual obligations the existing
stockholders might have.
8.7 Target
Net Assets.
The
Company agrees that the initial target business that it acquires must have
a
fair market value equal to at least 80% of the Company's net assets held in
trust, net of taxes (all of the Company's assets, including the funds held
in
the Trust Account, less the Company's liabilities and deferred fees) at the
time
of such Business Combination. The fair market value of such business must be
determined by the board of directors of the Company based upon standards
generally accepted by the financial community, such as actual and potential
sales, earnings and cash flow and book value. If the board of directors of
the
Company is not able to independently determine that the target business has
a
fair market value of at least 80% of the Company's net assets held in trust,
net
of taxes, at the time of such acquisition, or if the target business is
affiliated with any of the existing stockholders, 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.
8.8 Trust
Account Waiver Acknowledgments.
The
Company hereby agrees that it will not commence its due diligence investigation
of any operating business or businesses which the Company seeks to acquire
(each, a "Target Business") or obtain the services of any vendor unless and
until such Target Business or vendor acknowledges in writing, whether through
a
letter of intent, memorandum of understanding or other similar document (and
subsequently acknowledges the same in any definitive document replacing any
of
the foregoing), that (a) it has read the Prospectus and understands that the
Company has established the Trust Account, initially in an amount of
$35,280,000 (without
giving effect to any exercise of the Over-allotment Option) for the benefit
of
the public stockholders and that, except for a portion of the interest earned
on
the amounts held in the Trust Account, the Company may disburse monies from
the
Trust Account only: (i) to the public stockholders in the event of the
conversion of their shares or the dissolution and liquidation of the Trust
Account as part of the Company's plan of dissolution and liquidation or (ii)
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, as the case may be, such target business
or
vendor agrees that it does not have any right, title, interest or claim of
any
kind in or to any monies of the Trust Account ("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 Account for any reason whatsoever. The foregoing letters shall
substantially be in the form attached hereto as Exhibits
A and B,
respectively.
-33-
8.9 Proxy
and Other Information.
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.
9. Representations
and Agreements to Survive Delivery.
Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements as of the Closing Dates and such representations,
warranties and agreements of the Underwriters and the 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 and effect.
10. Effective
Date of This Agreement and Termination Thereof.
10.1 Effective
Date.
This
Agreement shall become effective on the effective date at the time the
Registration Statement is declared effective by the Commission.
10.2 Termination.
You
shall have the right to terminate this Agreement at any time prior to the
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 NASDAQ
Stock Market 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
New
York Stock Exchange, the American Stock Exchange, NASDAQ Stock Market or on
the
NASD OTC Bulletin Board (or successor trading market) 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 public securities, or (vii) the suspension of trading of the Company’s
securities by the NASD OTC Bulletin Board, the Commission, or any other
governmental authority, or (viii) if any of the Company's representations,
warranties or covenants hereunder are breached, or (ix) 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 public securities or to enforce contracts made by the Underwriters for
the sale of the public securities.
-34-
10.3 Expenses.
In the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the
terms
herein, the obligations of the Company to pay the out of pocket expenses related
to the transactions contemplated herein shall be governed by Section 3.11
hereof.
10.4 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.
11. Miscellaneous.
11.1 Notices.
All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed by us first class mail or delivered
by
courier and shall be deemed given five business days after deposited in the
mail
or when delivered if sent by courier to the following addresses:
If
to the
Representative:
Pali
Capital, Inc.
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Copy
to:
▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
-35-
If
to the
Company:
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Chairman, President and Chief Executive Officer
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
Copy
to:
Ellenoff
▇▇▇▇▇▇▇▇ & Schole LLP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile:
(▇▇▇) ▇▇▇-▇▇▇▇
11.2 Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Agreement.
11.3 Amendment.
This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
11.4 Entire
Agreement.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
11.5 Binding
Effect.
This
Agreement shall inure solely to the benefit of and shall be binding upon the
representative, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have
or
be construed to have any legal or equitable right, remedy or claim under or
in
respect of or by virtue of this Agreement or any provisions herein contained.
This agreement and all conditions and provisions hereof are intended to be
for
the sole and exclusive benefit of the parties hereto and said controlling
persons and their respective successors, officers, directors, heirs and legal
representatives, and it is not for the benefit of any other person. The term
"successors and assigns" shall not include a purchaser, in its capacity as
such,
of securities from any of the Underwriters. The Company acknowledges and agrees
that: (i) the sale and issuance of the securities pursuant to this Agreement
is
an arm's-length commercial transaction between the Company and the Underwriters;
(ii) in connection therewith and with the process leading to the offering,
the
Underwriters are acting solely as a principal and not the agent or fiduciary
of
the Company; (iii) no Underwriter has assumed an advisory or fiduciary
responsibility in favor of the Company with respect to the offering contemplated
hereby or the process leading thereto, including any negotiation related to
the
pricing of the securities; and (iv) the Company has
consulted its own legal and financial advisors to the extent it has deemed
appropriate in connection with this Agreement and the offering.
-36-
11.6 Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of
another jurisdiction. The Company hereby agrees that any action, proceeding
or
claim against it arising out of, or relating in any way to this Agreement shall
be brought and enforced in the courts of the State of New York of the United
States of America for the Southern District of New York, and irrevocably submits
to such jurisdiction, which jurisdiction shall be 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 Section 11.1 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action,
proceeding or claim. The Company agrees that the 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.
11.7 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.
11.8 Waiver,
Etc.
The
Failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
11.9 No
Fiduciary Relationship.
The
Company hereby acknowledges that the Underwriters are acting solely as
Underwriters in connection with the offering of the Company's securities. The
Company further acknowledges that the Underwriters are acting pursuant to a
contractual relationship created solely by this Agreement entered into on an
arm's length basis and in no event do the parties intend that the Underwriters
act or be responsible as a fiduciary to the Company, its management,
stockholders, creditors or any other person in connection with any activity
that
the Underwriters may undertake or have undertaken in furtherance of the offering
of the Company's securities, either before or after the date hereof. The
Underwriters hereby expressly disclaim any fiduciary or similar obligations
to
the Company, either in connection with the transactions contemplated by this
Agreement or any matters leading up to such transactions, and the Company hereby
confirms its understanding and agreement to that effect. The Company and the
Underwriters agree that they are each responsible for making their own
independent judgments with respect to any such transactions, and that any
opinions or views expressed by the Underwriters to the Company regarding such
transactions, including but not limited to any opinions or views with respect
to
the price or market for the Company's securities, do not constitute advice
or
recommendations to the Company. The Company hereby waives and releases, to
the
fullest extent permitted by law, any claims that the Company may have against
the Underwriters with respect to any breach or alleged breach of any fiduciary
or similar duty to the Company in connection with the transactions contemplated
by this Agreement or any matters leading up to such transactions.
[signature
page follows]
-37-
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, | |||
| FMG ACQUISITION CORP. | |||
| By: | |||
|
|
|||
| Name: | |||
| Title: | |||
| Accepted on the date first | |||
| above written. | |||
| PALI CAPITAL, INC. | |||
| By: | |||
|
|
|||
| Name: | |||
| Title: | |||
| For themselves and the other several | |||
| Underwriters named in Schedule I | |||
| to the foregoing Agreement |
-38-
4,500,000
UNITS
|
Underwriter
|
Number
of Firm Units
To
be Purchased
|
|
|
---------------
|
-------------------
|
|
|
Pali
Capital, Inc.
|
||
|
Total
|
|
|
|
4,500,000
|
-39-
APPENDIX
A
|
1.
|
The
Company has been duly organized and is validly existing as a corporation
and is in good standing under the laws of its place of incorporation.
The
Company is duly qualified and licensed and in good standing as a
foreign
corporation in each jurisdiction in which its ownership or leasing
of any
properties or the character of its operations requires such qualification
or licensing, except where the failure to qualify would not have
a
material adverse effect on the assets, business or operations of
the
Company.
|
|
2.
|
All
issued and outstanding securities of the Company (including, without
limitation, the Placement Warrants) have been duly authorized and
validly
issued and are fully paid and non-assessable; the holders thereof
are not
subject to personal liability by reason of being such holders; and
none of
such securities were issued in violation of the preemptive rights
of any
stockholder of the Company arising by operation of law or under the
Amended and Restated Certificate of Incorporation ("Certificate")
or
Bylaws of the Company. The offers and sales of the outstanding Common
Stock prior to the Offering were at all relevant times either registered
under the Act or exempt from such registration requirements. The
authorized and, to such counsel's knowledge, outstanding capital
stock of
the Company is as set forth in the
Prospectus.
|
|
3.
|
The
Securities have been duly authorized and, when issued and paid for,
will
be validly issued, fully paid and non-assessable; the holders thereof
are
not and will not be subject to personal liability by reason of being
such
holders. The Securities are not and will not be subject to the preemptive
rights of any holders of any security of the Company arising by operation
of law or under the Articles of the Company. When issued, the
Representative's Purchase Option, the Representative's Warrants and
the
Warrants will constitute valid and binding obligations of the Company
to
issue and sell, upon exercise thereof and payment therefor, the number
and
type of securities of the Company called for thereby and such Warrants,
the Representative's Purchase Option, and the Representative's Warrants,
when issued, in each case, are enforceable against the Company in
accordance with their respective terms, except (a) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar
laws
affecting creditors' rights generally, (b) as enforceability of any
indemnification or contribution provision may be limited under the
federal
and state securities laws, and (c) that the remedy of specific performance
and injunctive and other forms of equitable relief may be subject
to the
equitable defenses and to the discretion of the court before which
any
proceeding therefor may be brought. The certificates representing
the
Securities are in due and proper
form.
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4.
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The
Placement Warrants constitute valid and binding obligations of the
Company
to issue and sell, upon exercise thereof and payment therefor, the
number
and type of securities of the Company called for thereby, and such
Placement 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 federal and state
securities laws; and (iii) that the remedy of specific performance
and
injunctive and other forms of equitable relief may be subject to
the
equitable defenses and to the discretion of the court before which
any
proceeding therefor may be brought. A sufficient number of shares
of
Common Stock have been reserved for issuance upon exercise of the
Placement Warrants. The Common Stock underlying the Placement Warrants
will, upon exercise of the Warrants and payment of the exercise price
thereof, be duly and validly issued, fully paid and non-assessable
and
will not have been issued in violation of or subject to preemptive
or, to
such counsel's knowledge, similar rights that entitle or will entitle
any
person to acquire any securities from the Company upon issuance
thereof.
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6.
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The
execution, delivery and performance of this Agreement, the Warrant
Agreement, the Representative's Purchase Option, the Escrow Agreement,
the
Trust Agreement, the Services Agreement and the Subscription Agreement
and
compliance by the Company with the terms and provisions thereof and
the
consummation of the transactions contemplated thereby, and the issuance
and sale of the Securities, do not and will not, with or without
the
giving of notice or the lapse of time, or both, (a) to such counsel's
knowledge, conflict with, or result in a breach of, any of the terms
or
provisions of, or constitute a default under, or result in the creation
or
modification of any lien, security interest, charge or encumbrance
upon
any of the properties or assets of the Company pursuant to the terms
of,
any mortgage, deed of trust, note, indenture, loan, contract, commitment
or other agreement or instrument filed as an exhibit to the Registration
Statement, (b) result in any violation of the provisions of the
Certificate of Incorporation or the Bylaws of the Company, or (c)
to such
counsel's knowledge, violate any United States statute or any judgment,
order or decree, rule or regulation applicable to the Company of
any
court, United States federal, state or other regulatory authority
or other
governmental body having jurisdiction over the Company, its properties
or
assets.
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7.
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The
Registration Statement, the Sale Preliminary Prospectus and the Prospectus
and any post-effective amendments or supplements thereto (other than
the
financial statements included therein, as to which no opinion need
be
rendered) each as of their respective dates appeared on their face
to
comply as to form in all material respects with the requirements
of the
Act and Regulations. The Securities and all other securities issued
or
issuable by the Company conform in all material respects to the
description thereof contained in the Registration Statement and the
Prospectus. The descriptions in the Registration Statement, the Sale
Preliminary Prospectus and in the Prospectus, insofar as such statements
constitute a summary of statutes, legal matters, contracts, documents
or
proceedings referred to therein, fairly present in all material respects
the information required to be shown with respect to such statutes,
legal
matters, contracts, documents and proceedings, and such counsel does
not
know of any statutes or legal or governmental proceedings required
to be
described in the Sale Preliminary Prospectus and the Prospectus that
are
not described in the Registration Statement, the Sale Preliminary
Prospectus or the Prospectus or included as exhibits to the Registration
Statement that are not described or included as
required.
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-41-
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8.
|
The
Registration Statement is effective under the Act. To such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have
been
instituted or are pending or threatened under the Act or applicable
state
securities laws.
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9.
|
To
such counsel's knowledge, there is no action, suit or proceeding
before or
by any court of governmental agency or body, domestic or foreign,
now
pending, or threatened against the Company that is required to be
described in the Registration
Statement.
|
The
opinion of counsel shall further include a statement to the effect that such
counsel has participated in conferences with officers and other representatives
of the Company, the Underwriters and the independent registered public
accounting firm of the Company, at which conferences the contents of
the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus
contained therein and related matters were discussed and, although such counsel
is not passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus contained therein
(except as otherwise set forth in the foregoing opinion), solely on the basis
of
the foregoing without independent check and verification, no facts have come
to
the attention of such counsel which lead them to believe that the Registration
Statement or any amendment thereto, at the time the Registration Statement
or
amendment became effective, contained an untrue statement of a material fact
or
omitted to state a material fact required to be stated therein or necessary
to
make the statements therein not misleading or the Prospectus or any amendment
or
supplement thereto, at the time they were filed pursuant to Rule 424(b) or
at
the date of such counsel's opinion, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading (except that such counsel need express
no
opinion with respect to the financial information and statistical data and
information included in the Registration Statement, the Sale Preliminary
Prospectus or the Prospectus).
-42-
EXHIBIT
A
FORM
OF TARGET BUSINESS LETTER
Gentlemen:
Reference
is made to the Final Prospectus of FMG Acquisition Corp. (the "COMPANY"), dated
__________, 2007 (the "PROSPECTUS"). Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in
Prospectus.
We
have
read the Prospectus and understand that the Company has established the Trust
Account, initially in an amount of at least $____________ for the benefit of
the
Public Stockholders and the Underwriters of the Company's initial public
offering (the "UNDERWRITERS") and that, except for a portion of the interest
earned on the amounts held in the Trust Account, the Company may disburse monies
from the Trust Account only: (i) to the Public Stockholders in the event of
the
conversion of their shares or the dissolution and liquidation of the Company
or
(ii) to the Company and the Underwriters after it consummates a Business
Combination.
For
and
in consideration of the Company agreeing to evaluate the undersigned for
purposes of consummating a Business Combination with it, the undersigned hereby
agrees that it does not have any right, title, interest or claim of any kind
in
or to any monies in the Trust Account (each, a "CLAIM") and hereby 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 Account for any reason whatsoever.
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Print Name of Target Business |
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Authorized Signature of Target Business |
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-43-
EXHIBIT
B
FORM
OF VENDOR LETTER
Gentlemen:
Reference
is made to the Final Prospectus of FMG Acquisition Corp. (the "COMPANY"), dated
___________, 2007 (the "PROSPECTUS"). Capitalized terms used and not otherwise
defined herein shall have the meanings assigned to them in
Prospectus.
We
have
read the Prospectus and understand that the Company has established the Trust
Account, initially in an amount of at least $____________ for the benefit of
the
Public Stockholders and the Underwriters of the Company's initial public
offering (the "UNDERWRITERS") and that, except for a portion of the interest
earned on the amounts held in the Trust Account, the Company may disburse monies
from the Trust Account only: (i) to the Public Stockholders in the event of
the
conversion of their shares or the dissolution and liquidation of the Company
or
(ii) to the Company and the Underwriters after it consummates a Business
Combination.
For
and
in consideration of the Company agreeing to use the services of the undersigned,
the undersigned hereby agrees that it does not have any right, title, interest
or claim of any kind in or to any monies in the Trust Account (each, a "CLAIM")
and hereby waives any Claim it may have in the future as a result of, or arising
out of, any services provided to the Company and will not seek recourse against
the Trust Account for any reason whatsoever.
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Print Name of Vendor |
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Authorized Signature of Vendor |
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-44-