UNDERWRITING AGREEMENT between EVEREST ACQUISITION CORPORATION and JESUP & LAMONT SECURITIES CORPORATION Dated: _____________, 2005
EXHIBIT
1.1
between
EVEREST
ACQUISITION CORPORATION
and
JESUP
& ▇▇▇▇▇▇ SECURITIES CORPORATION
Dated:
_____________, 2005
EVEREST
ACQUISITION CORPORATION
_______________,
2005
Jesup
& ▇▇▇▇▇▇ Securities Corporation
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear
Sirs:
The
undersigned, Everest Acquisition Corporation, a Delaware corporation
(“Company”),
hereby confirms its agreement with Jesup & ▇▇▇▇▇▇ Securities Corporation
(being referred to herein variously as “you,”“Jesup
& ▇▇▇▇▇▇”
or the
“Representative”)
and
with the other underwriters named on Schedule I hereto for which Jesup &
▇▇▇▇▇▇ 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
16,000,000 units (“Firm
Units”)
of the
Company, at a purchase price (net of discounts and commissions and net of an
expense allowance of 1% of the gross proceeds from the sale of the Firm Units)
of $5.52 per Firm Unit. The Underwriters, severally and not jointly, agree
to
purchase from the Company the number of Firm Units set forth opposite their
respective names on Schedule I attached hereto and made a part hereof at a
purchase price (net of discounts and commissions) of $5.52 per Firm Unit. The
Firm Units are to be offered initially to the public (“Offering”)
at the
offering price of $6.00 per Firm Unit. Each Firm Unit consists of one share
of
the Company’s common stock, par value $.0001 per share (“Common
Stock”),
and
two warrants (“Warrant(s)”).
The
shares of Common Stock and the Warrants included in the Firm Units will not
be
separately transferable until 90 days after the Effective Date (as defined
below) unless Jesup & ▇▇▇▇▇▇ informs the Company of its decision to allow
earlier separate trading, but in no event will Jesup & ▇▇▇▇▇▇ allow separate
trading until the preparation of
an
audited balance sheet of the Company reflecting receipt by the Company of the
proceeds of the Offering and the filing of a Form 8-K by the Company which
includes such balance sheet. Each Warrant entitles its holder to exercise it
to
purchase one share of Common Stock for $5.00 during the period commencing on
the
later of the consummation by the Company of its “Business Combination” or one
year from the effective date of the Registration Statement (as defined in
Section 2.1.1 hereof) ("Effective
Date")
and
terminating on the four-year anniversary of the Effective Date, and shall
otherwise have the terms set forth in the Warrant [certificate]. "Business
Combination"
shall
mean any merger, capital stock exchange, asset acquisition or other similar
business combination consummated by the Company with an operating business
(as
described more fully in the Registration Statement). The Company may call the
Warrants, for a redemption price of $.01 per Warrant at any time if notice
of
not less than 30 days is given and the last sale price of the Common Stock
has
been at least $8.50 for any 20 trading days within a 30 trading day period
ending on the third day prior to the day on which notice is given.
1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 10:00 A.M., New York
City local time, on the third business day following the effective date of
the
Registration Statement (or the fourth business day following the effective
date,
if the Registration Statement is declared effective after 4:30 p.m.) or at
such
earlier time as shall be agreed upon by the Representative and the Company
at
the offices of counsel for the Representative or at such other place as shall
be
agreed upon by the Representative and the Company. The hour and date of delivery
and payment for the Firm Units are called “Closing
Date.”
Payment for the Firm Units shall be made on the Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $85,600,000 of the proceeds received by the Company for the Firm
Units shall be deposited in the trust fund established by the Company for the
benefit of the public stockholders as described in the Registration Statement
(“Trust
Fund”)
pursuant to the terms of an Investment Management Trust Agreement (“Trust
Agreement”)
and
the remaining proceeds shall be paid to the order of the Company upon delivery
to you of certificates (in form and substance satisfactory to the Underwriters)
representing the Firm Units (or through the facilities of the Depository Trust
Company (“DTC”))
for
the account of the Underwriters. The Firm Units shall be registered in such
name
or names and in such authorized denominations as the Representative may request
in writing at least two full business days prior to the Closing Date. The
Company will permit the Representative to examine and package the Firm Units
for
delivery, at least one full business day prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Units except upon tender
of
payment by the Representative for all the Firm Units.
1.2 Over-Allotment
Option.
1.2.1 Option
Units.
For the
purposes of covering any over-allotments in connection with the distribution
and
sale of the Firm Units, the Underwriters are hereby granted, severally and
not
jointly, an option to purchase up to an additional 2,400,000 units from the
Company (“Over-allotment
Option”).
Such
additional 2,400,000 units are hereinafter referred to as “Option
Units.”
The
Firm Units and the Option Units are hereinafter collectively referred to as
the
“Units,”
and
the Units, the shares of Common Stock and the Warrants included in the Units
and
the shares of Common Stock issuable upon exercise of the Warrants are
hereinafter referred to collectively as the “Public
Securities.”
The
purchase price and all other terms of the Option Units will be the same as
set
forth in Section 1.1.1 hereof.
1.2.2 Exercise
of Option.
The
Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised
by the Representative as to all (at any time) or any part (from time to time)
of
the Option Units within 45 days after the Effective Date. The Underwriters
will
not be under any obligation to purchase any Option Units prior to the exercise
of the Over-allotment Option. The Over-allotment Option granted hereby may
be
exercised by the giving of oral notice to the Company by the Representative,
which must be confirmed in writing by overnight mail or facsimile transmission
setting forth the number of Option Units to be purchased and the date and time
for delivery of and payment for the Option Units (the “Option
Closing Date”),
which
will not be later than five full business days after the date of the notice
or
such other time as shall be agreed upon by the Company and the Representative,
at the offices of counsel for the Representative or at such other place as
shall
be agreed upon by the Company and the Representative. Upon exercise of the
Over-allotment Option, the Company will become obligated to convey to the
Underwriters, and, subject to the terms and conditions set forth herein, the
Underwriters will become obligated to purchase, the number of Option Units
specified in such notice.
-2-
1.2.3 Payment
and Delivery.
Payment
for the Option Units shall be made on the Option Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $5.58 per Option Unit shall be deposited in the Trust Fund pursuant
to the Trust Agreement upon delivery to you of certificates (in form and
substance satisfactory to the Underwriters) representing the Option Units (or
through the facilities of DTC) for the account of the Underwriters. The
certificates representing the Option Units to be delivered will be in such
denominations and registered in such names as the Representative requests not
less than two full business days prior to the Closing Date or the Option Closing
Date, as the case may be, and will be made available to the Representative
for
inspection, checking and packaging at the aforesaid office of the Company’s
transfer agent or correspondent not less than one full business day prior to
such Closing Date.
1.3 Representative’s
Purchase Option.
1.3.1 Purchase
Option.
The
Company hereby agrees to issue and sell to the Representative (and/or their
designees) on the Effective Date an option (“Representative's
Purchase Option”)
for
the purchase of an aggregate of up to 800,000 units or such lesser amount as
shall be allowed by the NASD (as defined below) (“Representative's
Units”)
for an
aggregate purchase price of $100. Each of the Representative's Units is
identical to the Firm Units, except that the exercise price of the Warrant
shall
be $6.25, which is equal to one hundred twenty-five percent (125%) of the
exercise price of the warrants included in the Firm Units (“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 or 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 $7.50,
which is equal to one hundred twenty-five percent (125%) of the initial public
offering price of a Unit. The Representative's Purchase Option, the
Representative's Units, the Representative's Warrants and the shares of Common
Stock issuable upon exercise of the Representative's Warrants are hereinafter
referred to collectively as the “Representative's
Securities.”
The
Public Securities and the Representative's Securities are hereinafter referred
to collectively as the “Securities.”
The
Representative understands and agrees that there are significant restrictions
against transferring the Representative's Purchase Option during the first
year
after the Effective Date, as set forth in Section 3 of the Representative's
Purchase Option.
-3-
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 (“Commission”)
a
registration statement and an amendment or amendments thereto, on Form S-1
(File
No. 333-[____]), including any related preliminary prospectus (“Preliminary
Prospectus”),
for
the registration of the Securities under the Securities Act of 1933, as amended
(“Act”),
which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the rules and
regulations (“Regulations”)
of the
Commission under the Act. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time
the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof
or incorporated therein and all information deemed to be a part thereof as
of
such time pursuant to paragraph (b) of Rule 430A of the Regulations), is
hereinafter called the “Registration
Statement,”
and
the form of the final prospectus dated the Effective Date included in the
Registration Statement (or, if applicable, the form of final prospectus filed
with the Commission pursuant to Rule 424 of the Regulations), is hereinafter
called the “Prospectus.”
The
Registration Statement has been declared effective by the Commission on the
date
hereof.
2.1.2 Pursuant
to the Exchange Act.
The
Company has filed with the Commission a Form 8-A (File Number 000-______)
providing for the registration under the Securities Exchange Act of 1934, as
amended (“Exchange
Act”),
of
the Units, the Common Stock and the Warrants. The registration of the Units,
Common Stock and Warrants under the Exchange Act has been declared effective
by
the Commission on the date hereof.
-4-
2.2 No
Stop Orders, Etc.
Neither
the Commission nor, to the best of the Company’s knowledge, any state regulatory
authority has issued any order or threatened to issue any order preventing
or
suspending the use of any Preliminary Prospectus or has instituted or, to the
best of the Company’s knowledge, threatened to institute any proceedings with
respect to such an order.
2.3 Disclosures
in Registration Statement.
2.3.1 10b-5
Representation.
At the
time the Registration Statement became effective and at all times subsequent
thereto up to the Closing Date and the Option Closing Date, if any, the
Registration Statement and the Prospectus will contain all material statements
that are required to be stated therein in accordance with the Act and the
Regulations, and will conform in all material respects to the requirements
of
the Act and the Regulations; and neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, on such dates, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading. When
any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Securities or
any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied or will comply in all material respects with the applicable provisions
of the Act and the Regulations and did not and will not contain an untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. The representation
and warranty made in this Section 2.3.1 does not apply to statements made or
statements omitted in reliance upon 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 or Prospectus or any amendment
thereof or supplement thereto.
2.3.2 Disclosure
of Agreements.
The
agreements and documents described in the Registration Statement and the
Prospectus conform to the descriptions thereof contained therein and there
are
no agreements or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits
to
the Registration Statement, that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which
the
Company is a party or by which its property or business is or may be bound
or
affected and (i) that is referred to in the 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,
-5-
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 material violation of any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its assets or
businesses, including, without limitation, those relating to environmental
laws
and regulations.
2.3.3 Prior
Securities Transactions.
No
securities of the Company have been sold by the Company or by or on behalf
of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company within the three years prior to the date
hereof, except as disclosed in the Registration Statement.
2.3.4 Regulations.
The
disclosures in the Registration Statement concerning the effects of Federal,
State and local regulation on the Company’s business purpose as currently
contemplated are correct in all material respects and do not omit to state
a
material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
2.4 Changes
After Dates in Registration Statement.
2.4.1 No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise specifically stated therein,
(i) there has been no material adverse change in the condition, financial or
otherwise, or business prospects of the Company, (ii) there have been no
material transactions entered into by the Company, other than as contemplated
pursuant to this Agreement, and (iii) no member of the Company’s management has
resigned from any position with the Company.
2.4.2 Recent
Securities Transactions, Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (i) issued
any
securities or incurred any material 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.
▇▇▇▇▇▇
LLP (“▇▇▇▇▇▇”),
whose
report is filed with the Commission as part of the Registration Statement,
are
independent accountants as required by the Act and the Regulations. ▇▇▇▇▇▇
has
not,
during the periods covered by the financial statements included in the
Prospectus, provided to the Company any non-audit services, as such term is
used
in Section 10A(g) of the Exchange Act.
-6-
2.6 Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement and Prospectus fairly present the
financial position, the results of operations and the cash flows of the Company
at the dates and for the periods to which they apply; 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 present fairly the information
required to be stated therein. The Registration Statement discloses all material
off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of the Company with unconsolidated
entities or other persons that may have a material current or future effect
on
the Company’s financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses.
2.7 Authorized
Capital; Options; Etc.
The
Company had at the date or dates indicated in the Prospectus duly authorized,
issued and outstanding capitalization as set forth in the Registration Statement
and the Prospectus. Based on the assumptions stated in the Registration
Statement and the Prospectus, the Company will have on the Closing Date the
adjusted stock capitalization set forth therein. Except as set forth in, or
contemplated by, the Registration Statement and the Prospectus, on the Effective
Date and on the Closing Date, there will be no options, warrants, or other
rights to purchase or otherwise acquire any authorized but unissued shares
of
Common Stock of the Company or any security convertible into shares of Common
Stock of the Company, or any contracts or commitments to issue or sell shares
of
Common Stock or any such options, warrants, rights or convertible
securities.
2.8 Valid
Issuance of Securities; Etc.
2.8.1 Outstanding
Securities.
All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of any security
of
the Company or similar contractual rights granted by the Company. The authorized
Common Stock conforms to all statements relating thereto contained in the
Registration Statement and the Prospectus. The offers and sales of the
outstanding Common Stock were at all relevant times either registered under
the
Act and (to the extent described in the Registration Statement and Prospectus)
the applicable state securities or Blue Sky laws or, based in part on the
representations and warranties of the purchasers of such shares of Common Stock,
exempt from such registration requirements.
2.8.2 Securities
Sold Pursuant to this Agreement.
The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not
and
will not be subject to personal liability by reason of being such holders;
the
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or
-7-
similar
contractual rights granted by the Company; and all corporate action required
to
be taken for the authorization, issuance and sale of the Securities has been
duly and validly taken. The Securities conform in all material respects to
all
statements with respect thereto contained in the Registration Statement. When
issued, the Representative’s Purchase Option, the Representative’s Warrant, and
the Warrants will constitute valid and binding obligations of the Company to
issue and sell, upon exercise thereof and payment of the respective exercise
prices therefor, the number and type of securities of the Company called for
thereby in accordance with the terms thereof and such Representative’s Purchase
Option, the Representative’s Warrants, and Warrants are enforceable against the
Company in accordance with their respective terms, except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally, (ii) as enforceability of
any indemnification or contribution provision may be limited under the federal
and state securities laws, and (iii) that the remedy of specific performance
and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.9 Registration
Rights of Third Parties.
Except
as set forth in the Prospectus, no holders of any securities of the Company
or
any rights exercisable for or convertible or exchangeable into securities of
the
Company have the right to require the Company to register any such securities
of
the Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity
and Binding Effect of Agreements.
This
Agreement, the Investment Management Trust Agreement (as defined in Section
2.22
hereof), the Administrative Services Agreement (as defined in Section 3.7.2
hereof) and the Escrow Agreement (as defined in Section 2.21.2 hereof) have
been
duly and validly authorized by the Company and constitute, and the
Representative’s Purchase Option has been duly and validly authorized by the
Company and, when executed and delivered, will constitute, the valid and binding
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.
2.11 No
Conflicts, Etc.
The
execution, delivery, and performance by the Company of this Agreement, the
Representative’s Purchase Option, the Warrant Agreement, the Investment
Management Trust Agreement, the Administrative Services Agreement and the Escrow
Agreement, the consummation by the Company of the transactions herein and
therein contemplated and the compliance by the Company with the terms hereof
and
thereof do not and will not, with or without the giving of notice or the lapse
of time or both (i) result in a breach of, or conflict with any of the terms
and
provisions of, or constitute a default under, or result in the creation,
modification, termination or imposition of any lien, charge or encumbrance
upon
any property or assets of the Company pursuant to the terms of any agreement
or
instrument to which the Company is a party except pursuant to the Trust
Agreement referred to in Section 2.22 hereof; (ii) result in any violation
of
the provisions of the Certificate of Incorporation or the Bylaws of the Company;
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.
-8-
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 material agreement
or instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its
Certificate of Incorporation or Bylaws or in violation of any material
franchise, license, permit, applicable law, rule, regulation, judgment or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or businesses.
2.13 Corporate
Power; Licenses; Consents.
2.13.1 Conduct
of Business.
The
Company has all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies that it needs as of the
date hereof to conduct its business purpose as described in the Prospectus.
The
disclosures in the Registration Statement concerning the effects of federal,
state and local regulation on this offering and the Company’s business purpose
as currently contemplated are correct in all material respects and do not omit
to state a material fact required
to be stated therein or necessary in order to make the statements therein,
in
light of the circumstances under which they
were
made, not misleading.
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 and the Escrow Agreement
and as contemplated by the Prospectus, except with respect to applicable federal
and state securities and blue sky laws and NASD regulations.
2.14 D&O
Questionnaires.
To the
best of the Company’s knowledge, all information contained in the questionnaires
(“Questionnaires”)
completed by each of the Company’s stockholders immediately prior to the
Offering (“Initial
Stockholders”)
and
provided to the Underwriters as an exhibit to his or her Insider Letter (as
defined in Section 2.21.1) is true and correct and the Company has not become
aware of any information which would cause the information disclosed in the
questionnaires completed by each Initial Stockholder to become inaccurate and
incorrect.
-9-
2.15 Litigation;
Governmental Proceedings.
There
is no action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or, to the best of the Company’s knowledge,
threatened against, or involving the Company or, to the best of the Company’s
knowledge, any Initial Stockholder which has not been disclosed in the
Registration Statement or the Questionnaires.
2.16 Good
Standing.
The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of its state of incorporation, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct
of
business requires such qualification, except where the failure to qualify would
not have a material adverse effect on the Company.
2.17 Transactions
Affecting Disclosure to NASD.
2.17.1 Finder’s
Fees.
Except
as described in the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a finder’s, consulting
or origination fee by the Company or any Initial Stockholder with respect to
the
sale of the Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the best of the Company’s knowledge, any
Initial Stockholder that may affect the Underwriters’ compensation, as
determined by the National Association of Securities Dealers, Inc.
(“NASD”).
2.17.2 Payments
Within Twelve Months.
The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) (i) to any person, as a finder’s fee, consulting fee or otherwise, in
consideration of such person raising capital for the Company or introducing
to
the Company persons who raised or provided capital to the Company, (ii) to
any
NASD member or (iii) to any person or entity that has any direct or indirect
affiliation or association with any NASD member, within the twelve months prior
to the Effective Date, other than payments to Jesup & ▇▇▇▇▇▇.
2.17.3 Use
of
Proceeds.
None of
the net proceeds of the Offering will be paid by the Company to any
participating NASD member or its affiliates, except as specifically authorized
herein and except as may be paid in connection with a Business Combination
as
contemplated by the Prospectus.
2.17.4 Insiders’
NASD Affiliation.
Based
on questionnaires distributed to such persons, except as set forth on Schedule
2.17.4, no officer, director or any beneficial owner of the Company’s
unregistered securities has any direct or indirect affiliation or association
with any NASD member. The Company will advise the Representative and its counsel
if it learns that any officer, director or owner of at least 5% of the Company’s
outstanding Common Shares is or becomes an affiliate or associated person of
an
NASD member participating in the offering.
-10-
2.18 Foreign
Corrupt Practices Act.
Neither
the Company nor any of the Initial Stockholders or any other person acting
on
behalf of the Company has, directly or indirectly, given or agreed to give
any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or
agent
of a customer or supplier, or official or employee of any governmental agency
or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist it
in
connection with any actual or proposed transaction) that (i) might subject
the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company
as
reflected in any of the financial statements contained in the Prospectus or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company’s internal
accounting controls and procedures are sufficient to cause the Company to comply
with the Foreign Corrupt Practices Act of 1977, as amended.
2.19 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.
2.20 Warrant
Agreement.
The
Company has entered into a warrant agreement with respect to the Warrants and
the Representative’s Warrants with Continental Stock Transfer & Trust
Company substantially in the form filed as an exhibit to the Registration
Statement (“Warrant
Agreement”).
2.21 Agreements
With Initial Stockholders.
2.21.1 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)
a
form of which is annexed as Exhibit 10.1 to the Registration Statement
(“Insider
Letter”),
pursuant to which each of the Initial 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
Prospectus.
2.21.2 Escrow
Agreement.
The
Company has caused the Initial Stockholders to enter into an escrow agreement
(“Escrow
Agreement”)
with
Continental Stock Transfer & Trust Company (“Escrow
Agent”),
substantially in the form annexed as Exhibit 10.4 to the Registration Statement,
whereby the Common Stock owned by the Initial Stockholders will be held in
escrow by the Escrow Agent, until the
-11-
first
anniversary of the Business Combination. During such escrow period, the Initial
Stockholders shall be prohibited from selling or otherwise transferring such
shares (except to spouses and children of Initial Stockholders and trusts
established for their benefit and as otherwise set forth in the Escrow
Agreement) but will retain the right to vote such shares. To the Company’s
knowledge, the Escrow Agreement is enforceable against each of the Initial
Stockholders and will not, with or without the giving of notice or the lapse
of
time or both, result in a breach of, or conflict with any of the terms and
provisions of, or constitute a default under, any agreement or instrument to
which any of the Initial Stockholders is a party. The Escrow Agreement shall
not
be amended, modified or otherwise changed without the prior written consent
of
Jesup & ▇▇▇▇▇▇.
2.22 Investment
Management Trust Agreement.
The
Company has entered into the Trust Agreement with respect to certain proceeds
of
the Offering substantially in the form annexed as Exhibit 10.3 to the
Registration Statement.
2.23 Covenants
Not to Compete.
No
Initial Stockholder, employee, officer or director of the Company is subject
to
any noncompetition agreement or non-solicitation agreement with any employer
or
prior employer which could materially affect his ability to be an Initial
Stockholder, employee, officer and/or director of the Company.
2.24 Investments.
No more
than 45% of the “value” (as defined in Section 2(a)(41) of the Investment
Company Act of 1940 (“Investment
Company Act”))
of
the Company’s total assets consist of, and no more than 45% of the Company’s net
income after taxes is derived from, securities other than “Government
securities” (as defined in Section 2(a)(16) of the Investment Company
Act).
2.25 Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.26 Related
Party Transactions.
There
are no business relationships or related party transactions involving the
Company or any other person required to be described in the Prospectus that
have
not been described as required.
3. Covenants
of the Company.
The
Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement.
The
Company will deliver to the Representative, prior to filing, any amendment
or
supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and not file any such amendment or supplement to which
the Representative shall reasonably object in writing.
3.2 Federal
Securities Laws.
3.2.1 Compliance.
During
the time when a Prospectus is required to be delivered under the Act, the
Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary
to
permit the continuance of sales of or dealings in the Securities in
-12-
accordance
with the provisions hereof and the Prospectus. If at any time when a Prospectus
relating to the Securities is required to be delivered under the Act, any event
shall have occurred as a result of which, in the opinion of counsel for the
Company or counsel for the Underwriters, the Prospectus, as then amended or
supplemented, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend the Prospectus to
comply with the Act, the Company will notify the Representative promptly and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment or supplement in accordance with Section 10 of the
Act.
3.2.2 Filing
of Final Prospectus.
The
Company will file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule 424
of
the Regulations.
3.2.3 Exchange
Act Registration.
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 use its best
efforts to maintain the registration of the Units, Common Stock and Warrants
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, the
Company will not deregister the Units, Common Stock and Warrants under the
Exchange Act without the prior written consent of Jesup &
▇▇▇▇▇▇.
3.3 Blue
Sky Filing.
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 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.
3.4 Delivery
to Underwriters of Prospectuses.
The
Company will deliver to each of the several Underwriters, without charge, from
time to time during the period when the Prospectus is required to be delivered
under the Act or the Exchange Act such number of copies of each Preliminary
Prospectus and the Prospectus as such Underwriters may reasonably request and,
as soon as the Registration Statement or any amendment or supplement thereto
becomes effective, deliver to you two original executed Registration Statements,
including exhibits, and all post-effective amendments thereto and copies of
all
exhibits filed therewith or incorporated therein by reference and all original
executed consents of certified experts.
-13-
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 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, makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or that requires the making of any changes in the Registration
Statement or the Prospectus in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. If the Commission
or any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review
of Financial Statements.
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, at its expense,
shall cause its regularly engaged independent certified public accountants
to
review (but not audit) the Company’s financial statements for each of the first
three fiscal quarters prior to the announcement of quarterly financial
information, the filing of the Company’s Form 10-Q quarterly report and the
mailing of quarterly financial information to stockholders.
3.7 Affiliated
Transactions.
3.7.1 Business
Combinations.
The
Company will not consummate a Business Combination with any entity which is
affiliated with any Initial Stockholder unless the Company obtains an opinion
from an independent investment banking firm that the Business Combination is
fair to the Company’s stockholders from a financial point of view.
3.7.2 Administrative
Services.
The
Company has entered into an agreement (“Services
Agreement”)
with
Asia
Pacific Capital (HK) Ltd.
(“Asia
Pacific”)
substantially in the form annexed as Exhibit 10.5 to the Registration Statement
pursuant to which Asia Pacific will make available to the Company
administrative, technology and secretarial services, as well as the use of
certain limited office space, in 15/F, The Hong ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ for $7,500 per month.
3.7.3 Compensation.
Except
as set forth above in this Section 3.7, the Company shall not pay any Initial
Stockholder or any of their affiliates any fees or compensation from the
Company, for services rendered to the Company prior to, or in connection with,
the consummation of a Business Combination; provided that the Initial
Stockholders shall be entitled to reimbursement from the Company for their
reasonable out-of-pocket expenses incident to the offering and incurred in
connection with seeking and consummating a Business Combination.
-14-
3.8 Secondary
Market Trading and Standard & Poor’s.
The
Company will apply to be included in Standard & Poor’s Daily News and
Corporation Records Corporate Descriptions for a period of five years from
the
consummation of a Business Combination unless earlier liquidated. Promptly
after
the consummation of the Offering, the Company shall take such steps as may
be
necessary to obtain a secondary market trading exemption for the Company’s
securities in as many states as commercially reasonable. The Company shall
also
take such other action as may be reasonably requested by the Representative
to
obtain a secondary market trading exemption in such other states as may be
requested by the Representative.
3.9 Intentionally
Omitted.
3.10 Financial
Public Relations Firm.
Promptly after the execution of a definitive agreement for a Business
Combination, the Company shall retain a financial relations firm.
3.11 Reports
to the Representative.
3.11.1 Periodic
Reports, Etc.
For a
period of five years following the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company will furnish
to
the Representative and its counsel, as reasonably requested from time to time,
(i) 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, (ii) 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 (iii) such additional documents and information with respect to
the
Company and the affairs of any future subsidiaries of the Company as the
Representative may reasonably request; provided
that the
Representative shall sign, if requested by the Company, a
Regulation FD-compliant confidentiality agreement which is reasonably
acceptable to the Representative and its counsel in connection with the
Representative's receipt of such information.
3.11.2 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 a
transfer and warrant agent reasonably acceptable to the Representative
(“Transfer
Agent”)
and
will furnish to the Underwriters at the Company’s sole cost and expense, 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.
-15-
3.11.3 Secondary
Market Trading Survey.
Until
such time as the Securities are listed or quoted, as the case may be, on the
New
York Stock Exchange, the American Stock Exchange or on the Nasdaq National
Market, or until such earlier time upon which the Company is required to be
liquidated, the Company shall engage ▇▇▇▇▇▇ ▇▇▇▇ & Priest LLP, counsel to
the Underwriters (“▇▇▇▇▇▇”),
for a
one-time fee of $5,000 payable on the Closing Date, to deliver and update to
the
Underwriters on a timely basis, but in any event on the Effective Date and
at
the beginning of each fiscal quarter, a written report detailing those states
in
which the Securities may be traded in non-issuer transactions under the Blue
Sky
laws of the fifty States (“Secondary
Market Trading Survey”).
3.11.4 Trading
Reports.
During
such time as 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.
3.12 Disqualification
of Form S-3.
For a
period equal to four years from the date hereof, unless earlier liquidated,
the
Company will not knowingly take any action or actions which may prevent or
disqualify the Company’s use of Form S-3 (or other appropriate form) for the
registration of the Warrants under the Act (except in connection with a
going-private transaction).
3.13 Payment
of Expenses.
3.13.1 General
Expenses Related to the Offering.
The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at the Closing Date, all expenses incident
to the performance of the obligations of the Company under this Agreement,
including but not limited to (i) the preparation, printing, filing and mailing
(including the payment of postage with respect to such mailing) of the
Registration Statement, the Preliminary and Final Prospectuses and the printing
and mailing of this Agreement and related documents, including the cost of
all
copies thereof and any amendments thereof or supplements thereto supplied to
the
Underwriters in quantities as may be required by the Underwriters, (ii) the
printing, engraving, issuance and delivery of the Units, the shares of Common
Stock and the Warrants included in the Units, including any transfer or other
taxes payable thereon, (iii) the qualification of the Securities under state
or
foreign securities or Blue Sky laws, including the costs of printing and mailing
the “Preliminary Blue Sky Memorandum,” and all amendments and supplements
thereto, fees and disbursements of ▇▇▇▇▇▇ retained for such purpose (such fees
shall be $35,000 in the aggregate (of which $15,000 has previously been paid)),
and a one-time fee of $5,000 payable to ▇▇▇▇▇▇ for the preparation of the
Secondary Market Trading Survey, (iv) filing fees, costs and expenses (including
disbursements for the Representative’s counsel) incurred in registering the
Offering with the NASD, (v) fees and disbursements of the Transfer Agent, (vi)
the Company’s expenses associated with “due diligence” meetings arranged by the
Representative, and (vii) all other costs and expenses customarily borne by
an
-16-
issuer
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 3.13. The Company also agrees that,
if
requested by the Representative, it will engage and pay up to $5,000 or such
greater amount as may be mutually agreed to by the Representative and the
Company 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. If the
Offering contemplated by this Agreement is not consummated for any reason
whatsoever then the Company shall reimburse the Underwriters in full for their
out of pocket expenses, including, without limitation, its legal fees and
disbursements and “road show” and due diligence expenses of which not more than
$50,000 may be for expenses relating to the “road show”.
3.13.2 Expenses
Related to Business Combination.
The
Company further agrees that, in the event the Representative assists the Company
in trying to obtain stockholder approval of a proposed Business Combination,
the
Company will reimburse the Representative for all out-of-pocket expenses,
including, but not limited to, "road-show" and due diligence expenses in an
amount not to exceed $100,000.
3.14 Application
of Net Proceeds.
The
Company will apply the net proceeds from the Offering received by it in a manner
consistent with the application described under the caption “Use Of Proceeds” in
the Prospectus.
3.15 Delivery
of Earnings Statements to Security Holders.
The
Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the 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.
3.16 Notice
to NASD.
In the
event any person or entity (regardless of any NASD affiliation or association)
is engaged to assist the Company in its search for a merger candidate or to
provide any other merger and acquisition services, the Company will provide
the
following to the NASD and to Jesup & ▇▇▇▇▇▇ 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.
-17-
3.17 Stabilization.
Except
with respect to the letter by Jesup & ▇▇▇▇▇▇ to the Company annexed as
Exhibit 10.7 to the Registration Statement, neither the Company, nor, to its
knowledge, any of its employees, directors or stockholders (without the consent
of Jesup & ▇▇▇▇▇▇) has taken or will take or agreed to take, directly or
indirectly, any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Units.
3.18 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.
3.19 Accountants.
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 shall retain ▇▇▇▇▇▇,
one of the “Big Four” accounting firms or other independent public accountants
reasonably acceptable to Jesup & ▇▇▇▇▇▇.
3.20 Form
8-K.
The
Company shall, on the date hereof, retain its independent public accountants
to
audit the financial statements of the Company as of the Closing Date
(“Audited
Financial Statements”)
that
reflect the receipt by the Company of the proceeds of the initial public
offering. As soon as the Audited Financial Statements become available, the
Company shall immediately file a Current Report on Form 8-K with the Commission,
which Report shall contain the Company’s Audited Financial
Statements.
3.21 NASD.
The
Company shall advise the NASD if it is aware that any 5% or greater stockholder
of the Company becomes an affiliate or associated person of an NASD member
participating in the distribution of the Company’s Securities.
3.22 Corporate
Proceedings.
All
corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall
have
been done to the reasonable satisfaction to counsel for the
Underwriters.
3.23 Investment
Company.
The
Company shall cause the proceeds of the Offering to be held in the Trust Fund
to
be invested only in “government securities” with specific maturity dates as set
forth in the Trust Agreement and disclosed in the Prospectus. The Company will
otherwise conduct its business in a manner so that it will not become subject
to
the Investment Company Act. Furthermore, once the Company consummates a Business
Combination, it shall be engaged in a business other than that of investing,
reinvesting, owning, holding or trading securities.
-18-
3.24 Business
Combination Announcement.
Within
five 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. Such announcement shall
describe the consummation of the Business Combination and indicate 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.
3.25 Colorado
Trust Filing.
In the
event the Securities are registered in the State of Colorado, the Company will
cause a Colorado Form ES to be filed with the Commissioner of the State of
Colorado no less than 10 days prior to the distribution of the Trust Fund in
connection with a Business Combination and will do all things necessary to
comply with Section ▇▇-▇▇-▇▇▇ and Rule 51-3.4 of the Colorado Securities
Act.
4. Conditions
of Underwriters’ Obligations.
The
obligations of the several Underwriters to purchase and pay for the Units,
as
provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company as of the date hereof and as
of
each of the Closing Date and the Option Closing Date, if any, to the accuracy
of
the statements of officers of the Company made pursuant to the provisions hereof
and to the performance by the Company of its obligations hereunder and to the
following conditions:
4.1 Regulatory
Matters.
4.1.1 Effectiveness
of Registration Statement.
The
Registration Statement shall have become effective not later than 5:00 P.M.,
New
York City local 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 that
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
▇▇▇▇▇▇).
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.
-19-
4.2 Company
Counsel Matters.
4.2.1 Effective
Date Opinion of Counsel.
On the
Effective Date, the Representative shall have received the favorable opinion
of
▇▇▇▇▇▇▇▇▇ Traurig LLP, counsel to the Company (“GT”),
dated
the Effective Date, addressed to the Representative and in form and substance
satisfactory to ▇▇▇▇▇▇ to the effect that:
(i) The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of its state of incorporation. The Company
is
duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing, except
where the failure to qualify would not have a material adverse effect on the
Company.
(ii) All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable;
the
holders thereof are not subject to personal liability by reason of being such
holders
and none
of such securities were issued in violation of the preemptive rights of any
stockholder of the Company arising by operation of law or under the Certificate
of Incorporation or
Bylaws
of the Company. The offers and sales of the outstanding Common Stock were at
all
relevant times either
registered under the Act and the applicable state securities or Blue Sky Laws
or
exempt
from such
registration.
The
authorized and outstanding capital stock of the Company is as set forth in
the
Prospectus.
(iii) The
Securities have been duly authorized
and, when issued and paid for, will be validly issued, fully paid and
non-assessable;
the
holders thereof are not and will not be subject to personal liability by reason
of being such holders.
The
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company arising by operation of law or under
the
Certificate of Incorporation,
as
amended, or
Bylaws
of the Company. When issued, the Warrants, the Representative’s Purchase Option
and the Representative’s 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.
(iv) This
Agreement, the Warrant Agreement, the Representative’s Purchase Option, the
Services Agreement, the Trust Agreement and the Escrow Agreement have each
been
duly and validly authorized and, when executed and delivered by the Company,
constitute the valid and binding obligations of the Company, enforceable against
the Company in accordance with their respective terms,
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except
(a) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, (b) as
enforceability of any indemnification or contribution provisions may be limited
under the federal and state securities laws, and (c) that the remedy of specific
performance and 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.
(v) The
execution, delivery and performance of this Agreement, the Warrant Agreement,
the Representative’s Purchase Option, the Escrow Agreement, the Trust Agreement
and the Services Agreement, the issuance and sale of the Securities, the
consummation of the transactions contemplated hereby and thereby, and compliance
by the Company with the terms and provisions hereof and thereof, 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
statute or any judgment, order or decree, rule or regulation applicable to
the
Company of any court, domestic or foreign, or of any federal, state or other
regulatory authority or other governmental body having jurisdiction over the
Company, its properties or assets.
(vi) The
Registration Statement, each Preliminary Prospectus and the Prospectus and
any
post-effective amendments or supplements thereto (other than the financial
statements included therein, as to which no opinion need be rendered) each
as of
their respective dates complied as to form in all material respects with the
requirements of the Act and Regulations. The Securities and each agreement
filed
as an exhibit to the Registration Statement conform in all material respects
to
the description thereof contained in the Registration Statement and the
Prospectus. No statute or regulation required to be described in the Prospectus
is not described as required, nor are any contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or
to
be filed as exhibits to the Registration Statement not so described or filed
as
required.
(vii) Counsel
has participated in conferences with officers and other representatives of
the
Company, representatives of the independent public accountants for the Company
and representatives of the Underwriters at which the contents of the
Registration Statement, the Prospectus and related matters were discussed and
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus (except as otherwise set forth in this
opinion), no facts have come to the attention of such counsel which should
lead
them to believe that either the Registration Statement or the Prospectus or
any
amendment or supplement thereto, as of the date of such opinion contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial and statistical data
included in the Registration Statement or Prospectus).
-21-
(viii) 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.
(ix) 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.
4.2.2 Closing
Date and Option Closing Date Opinion of Counsel.
On each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received the favorable opinion of GT, 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 ▇▇▇▇▇▇, confirming as of the
Closing Date and, if applicable, the Option Closing Date, the statements made
by
GT in their opinion delivered on the Effective Date.
4.2.3 Reliance.
In
rendering such opinion, such counsel may rely (i) as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to
the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to ▇▇▇▇▇▇) 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 ▇▇▇▇▇▇ dated, respectively, as
of
the date of this Agreement and as of the Closing Date and the Option Closing
Date, if any:
-22-
(i) Confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations
and that
they have not, during the periods covered by the financial statements included
in the Prospectus, provided to the Company any non-audit services, as such
term
is used in Section 10A(g) of the Exchange Act;
(ii) Stating
that in their opinion the financial statements of the Company included in the
Registration Statement and Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and the published
Regulations thereunder;
(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders
and
board of directors and the various committees of the board of directors,
consultations with officers and other employees of the Company responsible
for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that (a)
the unaudited financial statements of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting principles applied
on
a basis substantially consistent with that of the audited financial statements
of the Company included in the Registration Statement, (b) at a date not later
than five days prior to the Effective Date, Closing Date or Option Closing
Date,
as the case may be, there was any change in the capital stock or long-term
debt
of the Company, or any decrease in the stockholders’ equity of the Company as
compared with amounts shown in the May 31, 2005 balance sheet included in the
Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any decrease, setting forth the amount
of such decrease, and (c) during the period from May 31, 2005 to a specified
date not later than five days prior to the Effective Date, Closing Date or
Option Closing Date, as the case may be, there was any decrease in revenues,
net
earnings or net earnings per share of Common Stock, in each case as compared
with the corresponding period in the preceding year and as compared with the
corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a break-down of commercial
papers and notes payable to banks);
(v) Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the extent that
such
amounts, numbers, percentages, statements and information may be derived from
the general accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal counsel, with
the
results obtained from the application of specified readings, inquiries and
other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
-23-
(vi) Stating
that they have not during the immediately preceding five year period brought
to
the attention of the Company’s management any reportable condition related to
internal structure, design or operation as defined in the Statement on Auditing
Standards No. 60 “Communication of Internal Control Structure Related Matters
Noted in an Audit,” in the Company’s internal controls; and
(vii) Statements
as to such other matters incident to the transaction contemplated hereby as
you
may reasonably request.
4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Chairman of
the
Board or the President and the Secretary or Assistant Secretary of the Company,
dated the Closing Date or the Option Closing Date, as the case may be,
respectively, to the effect that the Company has performed all covenants and
complied with all conditions required by this Agreement to be performed or
complied with by the Company prior to and as of the Closing Date, or the Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.5 hereof have been satisfied as of such date and that, as of the Closing
Date
and the Option Closing Date, as the case may be, the representations and
warranties of the Company set forth in Section 2 hereof are true and correct.
In
addition, the Representative will have received such other and further
certificates of officers of the Company as the Representative may reasonably
request.
4.4.2 Secretary’s
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Secretary or
Assistant Secretary of the Company, dated the Closing Date or the Option Closing
Date, as the case may be, respectively, certifying (i) that the Bylaws and
Certificate of Incorporation of the Company are true and complete, have not
been
modified and are in full force and effect, (ii) that the resolutions relating
to
the public offering contemplated by this Agreement are in full force and effect
and have not been modified, (iii) all correspondence between the Company or
its
counsel and the Commission, and (iv) as to the incumbency of the officers of
the
Company. The documents referred to in such certificate shall be attached to
such
certificate.
4.5 No
Material Changes.
Prior
to and on each of the Closing Date and the Option Closing Date, if any, (i)
there shall have been no material adverse change or development involving a
prospective material adverse change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Registration Statement
and
Prospectus, (ii) no action suit or proceeding, at law or in equity, shall have
been pending or threatened against the Company
-24-
or
any
Initial Stockholder before or by any court or federal or state commission,
board
or other administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations, prospects
or
financial condition or income of the Company, except as set forth in the
Registration Statement and Prospectus, (iii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated
or
threatened by the Commission, and (iv) the Registration Statement and the
Prospectus and any amendments or supplements thereto shall contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and shall conform in all material respects to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
4.6 Delivery
of Agreements.
On the
Effective Date, the Company shall have delivered to the Representative executed
copies of the Escrow Agreement, the Investment Management Trust Agreement,
the
Warrant Agreement, the Administrative Services Agreement and all of the Insider
Letters. 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 of these proceedings as you may reasonably require. On
or
prior to the Effective Date, the Closing Date and the Option Closing Date,
as
the case may be, counsel for the Underwriters shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this
Section 4.7, or in order to evidence the accuracy, completeness or satisfaction
of any of the representations, warranties or conditions herein
contained.
4.8 Secondary
Market Trading Survey.
On the
Closing Date, the Representative shall have received the Secondary Market
Trading Survey from ▇▇▇▇▇▇.
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
-25-
whatsoever
(including but not limited to any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising out of any
action between any of the Underwriters and the Company or between any of the
Underwriters and any third party or otherwise) to which they or any of them
may
become subject under the Act, the Exchange Act or any other statute or at common
law or otherwise or under the laws of foreign countries, arising out of or
based
upon any untrue statement or alleged untrue statement of a material fact
contained in (i) any Preliminary Prospectus, the Registration Statement or
the
Prospectus (as from time to time each may be amended and supplemented); (ii)
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); or (iii) any application or
other
document or written communication (in this Section 5, collectively called
“application”) executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Units
under
the securities laws thereof or filed with the Commission, any state securities
commission or agency, Nasdaq or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein
or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, unless such statement or omission
was made in reliance upon and in conformity with written information furnished
to the Company with respect to an Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in any
application, as the case may be. With respect to any untrue statement or
omission or alleged untrue statement or omission made in the Preliminary
Prospectus, the indemnity agreement contained in this paragraph shall not inure
to the benefit of any Underwriter to the extent that any loss, liability, claim,
damage or expense of such Underwriter results from the fact that a copy of
the
Prospectus was not given or sent to the person asserting any such loss,
liability, claim or damage at or prior to the written confirmation of sale
of
the Securities to such person as required by the Act and the Regulations, and
if
the untrue statement or omission has been corrected in the Prospectus, unless
such failure to deliver the Prospectus was a result of non-compliance by the
Company with its obligations under Section 3.4 hereof. The Company agrees
promptly to notify the Representative of the commencement of any litigation
or
proceedings against the Company or any of its officers, directors or controlling
persons in connection with the issue and sale of the Securities or in connection
with the Registration Statement or Prospectus.
5.1.2 Procedure.
If any
action is brought against an Underwriter, a Selected Dealer or a controlling
person in respect of which indemnity may be sought against the Company pursuant
to Section 5.1.1, such Underwriter or Selected Dealer shall promptly notify
the
Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the reasonable approval of such Underwriter or Selected Dealer,
as
the case may be) and payment of actual expenses. Such Underwriter, Selected
Dealer or controlling person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be
at
the expense of such Underwriter, Selected Dealer or controlling person unless
(i) the employment of such counsel at the expense of the Company shall have
been
authorized in writing by the Company in
-26-
connection
with the defense of such action, or (ii) the Company shall not have employed
counsel to have charge of the defense of such action, or (iii) such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to those
available to the Company (in which case the Company shall not have the right
to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses of not more
than one additional firm of attorneys selected by the Underwriter, Selected
Dealer and/or controlling person shall be borne by the Company. Notwithstanding
anything to the contrary contained herein, if the Underwriter, Selected Dealer
or controlling person shall assume the defense of such action as provided above,
the Company shall have the right to approve the terms of any settlement of
such
action which approval shall not be unreasonably withheld.
5.2 Indemnification
of the Company.
Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, officers and employees and agents and each person
who controls the Company 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 in the same and to the same extent described in the foregoing
indemnity from the Company to the several Underwriters, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements
or
omissions made in any Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment or supplement thereto or in any application, in
reliance upon, and in strict conformity with, written information furnished
to
the Company with respect to such Underwriter by or on behalf of the Underwriter
expressly for use in such Preliminary Prospectus, the Registration Statement
or
Prospectus or any amendment or supplement thereto or in any such application.
In
case any action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration Statement
or
Prospectus or any amendment or supplement thereto or any application, and in
respect of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the several Underwriters by the provisions of Section
5.1.2.
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
-27-
incurred
by the Company and the Underwriters, as incurred, in such proportions that
the
Underwriters are responsible for that portion represented by the percentage
that
the underwriting discount appearing on the cover page of the Prospectus bears
to
the initial offering price appearing thereon and the Company is responsible
for
the balance; provided, that, no person guilty of a fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 5.3.1, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the 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.
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.
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6.2 Default
Exceeding 10% of Firm Units or Option Units.
In the
event that the default addressed in Section 6.1 above relates to more than
10%
of the Firm Units or Option Units, you may in your discretion arrange for
yourself or for another party or parties to purchase such Firm Units or Option
Units to which such default relates on the terms contained herein. If within
one
business day after such default relating to more than 10% of the Firm Units
or
Option Units you do not arrange for the purchase of such Firm Units or Option
Units, then the Company shall be entitled to a further period of one business
day within which to procure another party or parties reasonably satisfactory
to
you to purchase said Firm Units or Option Units on such terms. In the event
that
neither you nor the Company arrange for the purchase of the Firm Units or Option
Units to which a default relates as provided in this Section 6, this Agreement
will be terminated by you or the Company without liability on the part of the
Company (except as provided in Sections 3.13 and 5 hereof) or the several
Underwriters (except as provided in Section 5 hereof); provided, however, that
if such default occurs with respect to the Option Units, this Agreement will
not
terminate as to the Firm Units; and provided further that nothing herein shall
relieve a defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for damages occasioned by its default
hereunder.
6.3 Postponement
of Closing Date.
In the
event that the Firm Units or Option Units to which the default relates are
to be
purchased by the non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, you or the Company shall have the right to
postpone the Closing Date or Option Closing Date for a reasonable period, but
not in any event exceeding five business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company agrees
to
file promptly any amendment to the Registration Statement or the Prospectus
that
in the opinion of counsel for the Underwriters may thereby be made necessary.
The term “Underwriter”
as used
in this Agreement shall include any party substituted under this Section 6
with
like effect as if it had originally been a party to this Agreement with respect
to such Securities.
7. Right
to Appoint Observer.
Until
the consummation of a Business Combination, upon notice from Jesup & ▇▇▇▇▇▇
to the Company, Jesup & ▇▇▇▇▇▇ shall have the right to send a representative
(who need not be the same individual from meeting to meeting) to observe each
meeting of the Board of Directors of the Company; provided that such
representative shall sign a Regulation FD compliant confidentiality agreement
which is reasonably acceptable to Jesup & ▇▇▇▇▇▇ and its counsel in
connection with such representative’s attendance at meetings of the Board of
Directors; and provided further that upon written notice to Jesup & ▇▇▇▇▇▇,
the Company may exclude the representative from meetings where, in the written
opinion of counsel for the Company, the representative’s presence would destroy
the attorney-client privilege. The Company agrees to give Jesup & ▇▇▇▇▇▇
written notice of each such meeting and to provide Jesup & ▇▇▇▇▇▇ with an
agenda and minutes of the meeting no later than it gives such notice and
provides such items to the other directors and to reimburse the representative
of Jesup & ▇▇▇▇▇▇ for its reasonable out-of-pocket expenses incurred in
connection with its attendance at the meeting, including but not limited to,
food, lodging and transportation.
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8. Additional
Covenants.
8.1 No
Dividends; Additional
Shares or Options.
The
Company hereby agrees that until the Company consummates a Business Combination,
it has not paid any dividends on the Common Stock and it shall not (a) pay
any
dividends on the Common Stock or (b) issue any shares of Common Stock or any
options or other securities convertible into Common Stock, or any shares of
Preferred Stock which participate in any manner in the Trust Fund or which
vote
as a class with the Common Stock on a Business Combination.
8.2 Trust
Fund Waiver Acknowledgment.
Prior
to the commencement by the Company of its due diligence investigation of any
operating business which the Company seeks to acquire (“Target
Business”)
or the
obtaining of the services of any vendor, the Company shall seek to have such
Target Business or vendor acknowledge in writing, whether through a letter
of
intent, memorandum of understanding or other similar document (and subsequently
acknowledge the same in any definitive document replacing any of the foregoing),
that (a) it has read the Prospectus and understands that the Company has
established the Trust Fund, initially in an amount of $85,600,000 for the
benefit of the Public Stockholders and that the Company may disburse monies
from
the Trust Fund only (i) to the Public Stockholders in the event of the
conversion of their shares or the liquidation of the Company 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 in the Trust Fund (“Claim”)
and
waives any Claim it may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever.
8.3 Insider
Letters.
The
Company shall not take any action or omit to take any action which would cause
a
breach of any of the Insider Letters executed between each Initial Stockholder,
officer and director and Jesup & ▇▇▇▇▇▇ and will not allow any amendments
to, or waivers of, such Insider Letters without the prior written consent of
Jesup & ▇▇▇▇▇▇.
8.4 Certificate
of Incorporation and Bylaws.
The
Company shall not take any action or omit to take any action that would cause
the Company to be in breach or violation of its Certificate of Incorporation
or
Bylaws. Prior to the consummation of a Business Combination, the Company will
not amend its Certificate of Incorporation without the prior written consent
of
Jesup & ▇▇▇▇▇▇.
8.5 Blue
Sky Requirements.
The
Company shall provide counsel to the Representative with ten copies of all
proxy
information and all related material filed with the Commission in connection
with a Business Combination concurrently with such filing with the Commission.
In addition, the Company shall furnish any other state in which its initial
public offering was registered, such information as may be requested by such
state.
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8.6 Acquisition/Liquidation
Procedure.
The
Company agrees: (i) that, prior to the consummation of any Business Combination,
it will submit such transaction to the Company’s stockholders for their approval
(“Business
Combination Vote”)
even
if the nature of the acquisition is such as would not ordinarily require
stockholder approval under applicable state law; and (ii) that, in the event
that the Company does not effect a Business Combination within 18 months from
the consummation of this Offering (subject to extension for an additional
six-month period, as described in the Prospectus), the Company will be
liquidated and will distribute to all holders of IPO Shares (defined below)
an
aggregate sum equal to the Company’s “Liquidation Value.” The Company’s
“Liquidation
Value”
shall
mean the Company’s book value, as determined by the Company and approved by
▇▇▇▇▇▇. In no event, however, will the Company’s Liquidation Value be less than
the Trust Fund, inclusive of any net interest income thereon (net of taxes).
Only holders of IPO Shares shall be entitled to receive liquidating
distributions and the Company shall pay no liquidating distributions with
respect to any other shares of capital stock of the Company. With respect to
the
Business Combination Vote, the Company shall cause all of the Initial
Stockholders to vote the shares of Common Stock owned by them immediately prior
to this Offering in accordance with the vote of the holders of a majority of
the
IPO Shares present, in person or by proxy, at a meeting of the Company’s
stockholders called for such purpose. At the time the Company seeks approval
of
any potential Business Combination, the Company will offer each holder of the
Company’s Common Stock issued in this Offering (“IPO
Shares”)
the
right to convert their IPO Shares at a per share price (“Conversion
Price”)
equal
to the amount in the Trust Fund (inclusive of any interest income therein)
calculated as of two business days prior to the consummation of the proposed
Business Combination divided by the total number of IPO Shares. If holders
of
less than 20% in interest of the Company’s IPO Shares elect to convert their IPO
Shares, the Company may, but will not be required to, proceed with such Business
Combination. If the Company elects to so proceed, it will convert shares, based
upon the Conversion Price, from those holders of IPO Shares who affirmatively
requested such conversion and who voted against the Business Combination. If
holders of 20% or more in interest of the IPO Shares, who vote against approval
of any potential Business Combination, elect to convert their IPO Shares, the
Company will not proceed with such Business Combination and will not convert
such shares.
8.7 Rule
419.
The
Company agrees that it will use its best efforts to prevent itself 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.
8.8 Affiliated
Transactions.
The
Company shall cause each of the officers to agree that, in order to minimize
potential conflicts of interest which may arise from multiple affiliations,
the
officers 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
officers cease to be an officer of the Company, subject to any pre-existing
fiduciary obligations the officers might have.
-31-
8.9 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 at the time
of such acquisition. The fair market value of such business must be determined
by the Board of Directors of the Company based upon standards generally accepted
by the financial community, such as actual and potential sales, earnings and
cash flow and book value. If the Board of Directors of the Company is not able
to independently determine that the target business has a fair market value
of
at least 80% of the Company’s fair market value at the time of such acquisition,
the Company will obtain an opinion from an unaffiliated, independent investment
banking firm which is a member of the NASD with respect to the satisfaction
of
such criteria. The Company is not required to obtain an opinion from an
investment banking firm as to the fair market value if the Company’s Board of
Directors independently determines that the Target Business does have sufficient
fair market value.
9. Representations
and Agreements to Survive Delivery.
Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements as of the Closing Date or the Option Closing Date,
if
any, and such representations, warranties and agreements of the Underwriters
and
Company, including the indemnity agreements contained in Section 5 hereof,
shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any Underwriter, the Company or any controlling person,
and shall survive termination of this Agreement or the issuance and delivery
of
the Securities to the several Underwriters until the earlier of the expiration
of any applicable statute of limitations and the seventh anniversary of the
later of the Closing Date or the Option Closing Date, if any, at which time
the
representations, warranties and agreements shall terminate and be of no further
force 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
NASD
OTC Bulletin Board or by order of the Commission or any other government
authority having jurisdiction, or (iii) if the United States shall have become
involved in a new war or an increase in major hostilities, or (iv) if a banking
-32-
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 and
adversely impacts the United States securities market, or (vi) if the Company
shall have sustained a material loss by fire, explosion, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act which,
whether or not such loss shall have been insured, will, in your opinion, make
it
inadvisable to proceed with the delivery of the Units, or (vii) if any of the
Company’s representations, warranties or covenants hereunder are breached, or
(viii) if the Representative shall have become aware after the date hereof
of
such a material adverse change in the conditions or prospects of the Company,
or
such adverse material change in general market conditions, including without
limitation as a result of terrorist activities after the date hereof, as in
the
Representative’s judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Units or to enforce contracts made by
the
Underwriters for the sale of the Securities.
10.3 Expenses.
In the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the
terms
herein, the obligations of the Company to pay the out of pocket expenses related
to the transactions contemplated herein shall be governed by Section 3.13
hereof.
10.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any 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 affected 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, delivered or telecopied and confirmed
and shall be deemed given when so delivered or telecopied and confirmed or
if
mailed, two days after such mailing
If
to the
Representative:
Jesup
& ▇▇▇▇▇▇ Securities Corporation
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Copy
to:
▇▇▇▇▇▇
▇▇▇▇ & Priest LLP
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇, Esq.
-33-
If
to the
Company:
Everest
Acquisition Corporation
15/F,
The
Hong Kong Club ▇▇▇▇▇▇▇▇
▇▇
▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇
Attn: ▇▇▇▇▇
▇.
▇▇▇▇▇▇▇, Chief Executive Officer
Copy
to:
▇▇▇▇▇▇▇▇▇
Traurig LLP
MetLife
Building
▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇.
Annex, Esq.
11.2 Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Agreement.
11.3 Amendment.
This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
11.4 Entire
Agreement.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
11.5 Binding
Effect.
This
Agreement shall inure solely to the benefit of and shall be binding upon the
Representative, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have
or
be construed to have any legal or equitable right, remedy or claim under or
in
respect of or by virtue of this Agreement or any provisions herein
contained.
11.6 Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to conflict of laws. The
Company hereby agrees that any action, proceeding or claim against it arising
out of, relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of 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.
-34-
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 affect 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.
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,
EVEREST
ACQUISITION CORPORATION
By:
___________________________________
Name:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Chief Executive Officer
Accepted
on the date first above written.
JESUP
& ▇▇▇▇▇▇ SECURITIES CORPORATION
By:
______________________________
Name:
Title:
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SCHEDULE
I
EVEREST
ACQUISITION CORPORATION
16,000,000
Units
|
Underwriter
|
Number
of Firm Units to be Purchased
|
|
Jesup
& ▇▇▇▇▇▇ Securities Corporation
|
16,000,000
|
-36-