UNDERWRITING AGREEMENT between STACCATO ACQUISITION CORP. and EARLYBIRDCAPITAL, INC. Dated: [__________] 2008
EXHIBIT
1.1
between
and
EARLYBIRDCAPITAL,
INC.
Dated:
[__________] 2008
[___________],
2008
EarlyBirdCapital,
Inc.
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▇▇▇▇,
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Dear
Sirs:
The
undersigned, Staccato Acquisition Corp., a Delaware company (“Company”),
hereby
confirms its agreement with EarlyBirdCapital, Inc. (being referred to herein
variously as “you” or the “Representative”)
and
with the other underwriters named on Schedule I hereto for which
EarlyBirdCapital, Inc. is acting as Representative (the Representative and
the
other Underwriters being collectively called the “Underwriters”
or,
individually, an “Underwriter”)
as
follows:
1. Purchase
and Sale of Securities.
1.1 Firm
Securities.
1.1.1 Purchase
of Firm Units
.
On the
basis of the representations and warranties herein contained, but subject to
the
terms and conditions herein set forth, the Company agrees to issue and sell,
severally and not jointly, to the several Underwriters, an aggregate of
6,125,000 units (“Firm
Units”)
of the
Company at a purchase price (net of discounts and commissions) of $7.44 per
Firm
Unit (including discounts and commissions of $0.28 (referred to hereinafter
as
the “Deferred
Commissions”)
that
will be paid to the Underwriters only upon consummation of a Business
Combination (as defined below) by the Company). The Underwriters, severally
and
not jointly, agree that they will not seek payment of the Deferred
Commissions unless and until a Business Combination has been consummated by
the
Company, and the Company agrees that it shall pay such discounts and commissions
only upon consummation of such Business Combination. The Underwriters, severally
and not jointly, agree to purchase from the Company the number of Firm Units
set
forth opposite their respective names on Schedule I attached hereto and made
a
part hereof at a purchase price (net of discounts and commissions) of $7.44
per
Firm Unit (including the Deferred Commissions). The Firm Units are to be offered
initially to the public (“Offering”)
at the
offering price of $8.00 per Firm Unit. Each Firm Unit consists of one share
of
the Company’s Common Stock, par value $.0001 per share (“Shares”),
and
one warrant (“Warrant(s)”).
The
Shares and the Warrants included in the Firm Units will not be separately
transferable until 90 days after the effective date (“Effective
Date”)
of the
Registration Statement (as defined in Section 2.1.1 hereof) unless the
Representative informs the Company of its decision to allow earlier
separate trading, but in no event will the Representative allow
separate trading until the preparation of an audited balance sheet of the
Company reflecting receipt by the Company of the proceeds of the Offering and
the filing of a Current Report on Form 8-K (“Closing
8-K”)
with
the Securities and Exchange Commission (the “Commission”)
by the
Company which includes such balance sheet. Each Warrant entitles its holder
to
exercise it to purchase one Share for $6.00, on the later of ___________, 2009
[one year from the Effective Date] and the consummation by the Company of its
“Business Combination” and terminating on the four-year anniversary of the
Effective Date unless earlier redeemed as provided in the Warrant Agreement
(as
defined in Section 2.21 hereof). “Business
Combination”
shall
mean any merger, capital stock exchange, asset acquisition or other similar
business combination consummated by the Company with one or more operating
businesses or assets (“Target
Business”)
that
derives more than 50% of its gross revenues from any one or more segments of
the
construction, engineering, water, design, environmental, energy, recycling,
waste management, logistics or related industries (as described more fully
in
the Registration Statement).
1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 10:00 A.M., New York
time, on the third business day following commencement of trading of the Firm
Units or at such earlier time as shall be agreed upon by the Representative
and
the Company at the offices of the Representative or at such other place as
shall
be agreed upon by the Representative and the Company. The hour and date of
delivery and payment for the Firm Units are called “Closing
Date.”
Payment for the Firm Units shall be made on the Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $46,585,000 of the proceeds received by the Company for the Firm
Units shall be deposited in the trust fund established by the Company for the
benefit of the public stockholders as described in the Registration Statement
(“Trust
Fund”)
pursuant to the terms of an Investment Management Trust Agreement (“Trust
Agreement”)
and
the remaining proceeds shall be paid (subject to Section 3.13 hereof) to the
order of the Company upon delivery to you of certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Units (or through the
facilities of the Depository Trust Company (“DTC”))
for
the account of the Underwriters. The Firm Units shall be registered in such
name
or names and in such authorized denominations as the Representative may request
in writing at least two full business days prior to the Closing Date. The
Company will permit the Representative to examine and package the Firm Units
for
delivery, at least one full business day prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Units except upon tender
of
payment by the Representative for all the Firm Units.
2
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 918,750 units from the
Company (“Over-allotment
Option”).
Such
additional 918,750 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 and the Warrants included in the Units and the Shares
issuable upon exercise of the Warrants are hereinafter referred to collectively
as the “Public
Securities.”
The
purchase price to be paid for the Option Units will be the same price per Option
Unit as the price per Firm Unit set forth in Section 1.1.1 hereof.
1.2.2 Exercise
of Option.
The
Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised
by the Representative as to all (at any time) or any part (from time to time)
of
the Option Units within 45 days after the Effective Date. The Underwriters
will
not be under any obligation to purchase any Option Units prior to the exercise
of the Over-allotment Option. The Over-allotment Option granted hereby may
be
exercised by the giving of oral notice to the Company by the Representative,
which must be confirmed in writing by overnight mail or facsimile transmission
setting forth the number of Option Units to be purchased and the date and time
for delivery of and payment for the Option Units (the “Option
Closing Date”),
which
will not be later than five full business days after the date of the notice
or
such other time as shall be agreed upon by the Company and the Representative,
at the offices of the Representative or at such other place as shall be agreed
upon by the Company and the Representative. Upon exercise of the Over-allotment
Option, the Company will become obligated to convey to the Underwriters, and,
subject to the terms and conditions set forth herein, the Underwriters will
become obligated to purchase, the number of Option Units specified in such
notice.
1.2.3 Payment
and Delivery.
Payment
for the Option Units shall be made on the Option Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: approximately $7.72 per Option Unit shall be deposited in the Trust
Fund (including the Deferred Commissions that will be paid to the
Underwriters only upon consummation of a Business Combination by the Company)
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.
3
1.3 Representative’s
Purchase Option.
1.3.1 Purchase
Option.
The
Company hereby agrees to issue and sell to the Representative (and/or its
designees) on the Effective Date an option (“Representative’s
Purchase Option”)
for
the purchase of an aggregate of 475,000 units (“Representative’s
Units”)
for an
aggregate purchase price of $100. Each of the Representative’s Units is
identical to the Firm Units. The Representative’s Purchase Option shall be
exercisable, in whole or in part, commencing on the later of the consummation
of
a Business Combination and one year from the Effective Date and expiring on
the
five-year anniversary of the Effective Date at an initial exercise price per
Representative’s Unit of $10.00. The Representative’s Purchase Option, the
Representative’s Units, the Warrants included in the Representative’s Units
(“Representative’s
Warrants”)
and
Shares 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.
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 Representative, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the Representative may
request.
2. Representations
and Warranties of the Company.
The
Company represents and warrants to the Underwriters as follows:
2.1 Filing
of Registration Statement.
2.1.1 Pursuant
to the Act.
The
Company has filed with the Commission a registration statement and an amendment
or amendments thereto, on Form S-1 (File No. 333-151642), including any related
preliminary prospectus (“Preliminary
Prospectus”),
for
the registration of the Public Securities under the Securities Act of 1933,
as
amended (“Act”),
which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the rules and
regulations (“Regulations”)
of the
Commission under the Act. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time
the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof
or incorporated therein and all information deemed to be a part thereof as
of
such time pursuant to paragraph (b) of Rule 430A of the Regulations), is
hereinafter called the “Registration
Statement,”
and
the form of the final prospectus dated the Effective Date included in the
Registration Statement (or, if applicable, the form of final prospectus filed
with the Commission pursuant to Rule 424 of the Regulations), is hereinafter
called the “Prospectus.”
If
the
Company has filed an abbreviated registration statement to register additional
Public Securities pursuant to Rule 462(b) under the Rules (the “462(b)
Registration Statement”),
then
any reference herein to the Registration Statement shall also be deemed to
include such 462(b) Registration Statement. The Registration Statement has
been
declared effective by the Commission on the date hereof.
4
The
Company has delivered to the Representative a complete, manually signed copy
of
the Registration Statement and of each consent and certificate of experts filed
as a part thereof and has delivered to the Representative conformed copies
of
the Registration Statement (without exhibits) and Preliminary Prospectuses
and
the Prospectus, as amended or supplemented, in such quantities and at such
places as the Representative has reasonably requested. Each Preliminary
Prospectus used by the Underwriters pursuant to Rule 430A and the Prospectus,
as
filed by electronic transmission pursuant to ▇▇▇▇▇ (except as may be permitted
by Regulation S-T under the Act), was identical to the copy thereof delivered
to
the Representative for use in connection with the offer and sale of the Public
Securities.
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 Shares and the Warrants. The registration of the Units, Shares
and Warrants under the Exchange Act has been declared effective by the
Commission on the date hereof.
2.2 No
Stop Orders, Etc.
Neither
the Commission nor, to the best of the Company’s knowledge, any state regulatory
authority has issued any order or threatened to issue any order preventing
or
suspending the use of any Preliminary Prospectus or has instituted or, to the
best of the Company’s knowledge, threatened to institute any proceedings with
respect to such an order.
2.3 Disclosures
in Registration Statement.
2.3.1 10b-5
Representation.
At the
time the Registration Statement became effective and at all times subsequent
thereto up to the Closing Date and the Option Closing Date, if any, each of
the
Registration Statement and the Prospectus does and will contain all material
statements that are required to be stated therein in accordance with the Act
and
the Regulations, and does and will in all material respects conform to the
requirements of the Act and the Regulations; neither the Registration Statement
nor the Prospectus, nor any amendment or supplement thereto, on such dates,
does
or will 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 in all material respects with the
applicable provisions of the Act and the Regulations and did 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.
5
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, insolvency,
reorganization or similar laws affecting creditors’ rights generally, (y) as
enforceability of any indemnification or contribution provision may be limited
under the federal and state securities laws, and (z) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and none of such agreements or instruments
has been assigned by the Company, and neither the Company nor, to the best
of
the Company’s knowledge, any other party is in breach or default thereunder and,
to the best of the Company’s knowledge, no event has occurred that, with the
lapse of time or the giving of notice, or both, would constitute a breach or
default thereunder. To the best of the Company’s knowledge, performance by the
Company of the material provisions of such agreements or instruments will not
result in a violation of any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its assets or
properties, including, without limitation, those relating to environmental
laws
and regulations.
6
2.3.3 Prior
Securities Transactions.
No
securities of the Company have been sold by the Company or by or on behalf
of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company since the Company’s formation, except as
disclosed in the Registration Statement.
2.3.4 Regulations.
The
disclosures in the Registration Statement and the Prospectus concerning the
effects of foreign, Federal, State and local regulation on the Company’s
business as currently contemplated are correct in all material respects and
do
not omit to state a material fact necessary to make the statements therein,
in
light of the circumstances in which they were made, not misleading.
2.4 Changes
After Dates in Registration Statement.
2.4.1 No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise specifically stated therein,
(i) there has been no material adverse change in the condition, financial or
otherwise, or business prospects of the Company, (ii) there have been no
material transactions or agreements entered into by the Company, other than
as
contemplated pursuant to this Agreement, and (iii) no member of the Company’s
management has resigned from any position with the Company.
2.4.2 Recent
Securities Transactions, Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (i) issued
any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its equity securities.
2.5 Independent
Accountants.
BDO
▇▇▇▇▇▇▇, LLP (“BDO”), whose report is filed with the Commission as part of the
Registration Statement, are independent accountants as required by the Act
and
the Regulations. BDO has not, during the periods covered by the financial
statements included in the Prospectus, provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange Act. There
are
no material off-balance sheet transactions, arrangements, obligations (including
contingent obligations) or any other relationships with unconsolidated entities
or other persons, that may have a material current or, to the Company’s
knowledge, a material 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.
2.6 Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
(if
any) 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
comply with the applicable accounting requirements of the Act and the
Regulations; and 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
summary financial data included in the Registration Statement and the Prospectus
present fairly the information shown thereon and have been compiled on a basis
consistent with the audited financial statements presented therein. No other
financial statements or schedules are required to be included in the
Registration Statement or the Prospectus. 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.
7
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
the Company or any security convertible into Shares of the Company, or any
contracts or commitments to issue or sell Shares 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
Shares conform to all statements relating thereto contained in the Registration
Statement and the Prospectus. The offers and sales of the outstanding Shares
were at all relevant times either registered under the Act and the applicable
state securities or Blue Sky laws or, based in part on the representations
and
warranties of the purchasers of such Shares, exempt from such registration
requirements.
2.8.2 Securities
Sold Pursuant to this Agreement.
The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not
and
will not be subject to personal liability by reason of being such holders;
the
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual rights granted
by
the Company; and all corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly and validly
taken. The Securities conform in all material respects to all statements with
respect thereto contained in the Registration Statement. When issued, the
Representative’s Purchase Option, the Representative’s Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representative’s Purchase Option, the
Representative’s Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except (i) as such enforceability
may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (ii) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and
other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
8
2.8.3 Insider
Warrants.
▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (hereinafter
collectively referred to as the “Insider
Purchasers”),
have
committed, pursuant to written subscription agreements (“Subscription
Agreements”)
between the Insider Purchasers and the Company, to purchase an aggregate of
1,500,000 Warrants (the “Insider
Warrants”
and
together with the Shares underlying the Insider Warrants, collectively referred
to as the “Insider
Securities”)
at a
purchase price of $0.70 per Insider Warrant (for a total purchase price of
$1,050,000) from the Company upon consummation of the Offering. The Insider
Securities have been duly authorized and, when issued and paid for in accordance
with the Subscription Agreements and the Insider Warrants, 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 Insider
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual rights granted
by
the Company; and all corporate action required to be taken for the
authorization, issuance and sale of the Insider Securities has been duly and
validly taken.
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 Warrant Agreement (as defined in Section 2.21 hereof), the Trust
Agreement, the Subscription Agreements, the Services Agreement (as defined
in
Section 3.7.2 hereof), the Escrow Agreement (as defined in Section 2.22.2
hereof) and the Registration Rights Agreement (as defined in Section 2.22.4
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.
9
2.11 No
Conflicts, Etc.
The
execution, delivery, and performance by the Company of this Agreement, the
Warrant Agreement, Trust Agreement, the Subscription Agreements, the Services
Agreement, the Escrow Agreement, the Registration Rights Agreement and the
Representative’s Purchase Option, 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 2.23 hereof; (ii) result
in any violation of the provisions of the Certificate of Incorporation (as
amended, the “Certificate of Incorporation”) or 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 assets.
2.12 No
Defaults; Violations.
No
material default exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its
Certificate of Incorporation or Bylaws or in violation of any material
franchise, license, permit, applicable law, rule, regulation, judgment or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or assets.
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.
10
2.13.2 Transactions
Contemplated Herein.
The
Company has all corporate power and authority to enter into this Agreement,
the
Warrant Agreement, the Representative’s Purchase Option, the Trust Agreement,
the Subscription Agreements, the Services Agreement, the Escrow Agreement,
and
the Registration Rights Agreement and to carry out the provisions and conditions
hereof and thereof, and all consents, authorizations, approvals, licenses,
certifications, permits and orders required in connection therewith have been
obtained. No consent, authorization or order of, and no filing with, any court,
government agency or other body is required for the valid issuance, sale and
delivery, of the Securities and the consummation of the transactions and
agreements contemplated by this Agreement, the Warrant Agreement, the
Representative’s Purchase Option, the Trust Agreement, the Subscription
Agreements, the Services Agreement, the Escrow Agreement, and the Registration
Rights Agreements and as contemplated by the Prospectus, except with respect
to
applicable federal and state securities laws.
2.14 D&O
Questionnaires.
To the
best of the Company’s knowledge, all information contained in the questionnaires
(“Questionnaires”)
completed by each of the Company’s stockholders immediately prior to the
Offering (“Initial
Stockholders”)
and
provided to the Underwriters as an exhibit to his, her or its Insider Letter
(as
defined in Section 2.22.1) is true and correct and the Company has not become
aware of any information which would cause the information disclosed in the
questionnaires completed by each Initial Stockholder to become inaccurate and
incorrect.
2.15 Litigation;
Governmental Proceedings.
There
is no action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or, to the best of the Company’s knowledge,
threatened against, or involving the Company or, to the best of the Company’s
knowledge, any Initial Stockholder, which has not been disclosed in the
Registration Statement or the Questionnaires.
2.16 Good
Standing.
The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of its state of incorporation, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct
of
business requires such qualification, except where the failure to qualify would
not have a material adverse effect on the assets, business or operations of
the
Company.
2.17 Stop
Orders.
The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or Prospectus or any part thereof and has not threatened
to issue any such order.
11
2.18 Transactions
Affecting Disclosure to FINRA.
2.18.1 Finder’s
Fees.
Except
as described in the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a finder’s, consulting
or origination fee by the Company or any Initial Stockholder with respect to
the
sale of the Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the best of the Company’s knowledge, any
Initial Stockholder that may affect the Underwriters’ compensation, as
determined by the Financial Industry Regulatory Authority (“FINRA”).
2.18.2 Payments
Within Twelve Months.
Other
than payments to the Underwriters, the Company has not within the twelve months
prior to the Effective Date 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 FINRA member or (iii) to any person or entity that has
any
direct or indirect affiliation or association with any FINRA
member.
2.18.3 Use
of
Proceeds.
None of
the net proceeds of the Offering will be paid by the Company to any
participating FINRA member or its affiliates, except as specifically authorized
herein and except as may be paid in connection with a Business Combination
as
contemplated by the Prospectus.
2.18.4 Insiders’
FINRA Affiliation.
Based
on the Questionnaires, except as set forth on Schedule 2.18.4, no officer,
director or any beneficial owner of the Company’s unregistered securities has
any direct or indirect affiliation or association with any FINRA 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 Shares is
or becomes an affiliate or associated person of an FINRA member participating
in
the offering.
2.18.5 Form
211.
A market
maker (the “Market
Maker”)
reasonably acceptable to the Representative has submitted a Form 211 to the
OTC
Compliance Unit and the Company will cooperate with the Representative to
receive approval as expeditiously as possible for the quotation of the
Securities on the Over-the-Counter Bulletin Board (“OTC
Bulletin Board”)
administered by FINRA.
2.19 Foreign
Corrupt Practices Act.
Neither
the Company nor any of the Initial Stockholders or any other person acting
on
behalf of the Company has, directly or indirectly, given or agreed to give
any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or
agent
of a customer or supplier, or official or employee of any governmental agency
or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist it
in
connection with any actual or proposed transaction) that (i) might subject
the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company
as
reflected in any of the financial statements contained in the Prospectus or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company’s internal
accounting controls and procedures are sufficient to cause the Company to comply
with the Foreign Corrupt Practices Act of 1977, as amended.
12
2.20 Officers’
Certificate.
Any
certificate signed by any duly authorized officer of the Company and delivered
to you or to your counsel shall be deemed a representation and warranty by
the
Company to the Underwriters as to the matters covered thereby.
2.21 Warrant
Agreement.
The
Company has entered into a warrant agreement with respect to the Warrants,
the
Insider Warrants and the Representative’s Warrants with American Stock Transfer
& Trust Company substantially in the form annexed as Exhibit 4.4 to the
Registration Statement (“Warrant Agreement”).
2.22 Agreements
With Initial Stockholders.
2.22.1 Insider
Letters.
The
Company has caused to be duly executed legally binding and enforceable
agreements (except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally, (ii) as enforceability of any indemnification, contribution or
noncompete provision may be limited under the federal and state securities
laws,
and (iii) that the remedy of specific performance and injunctive and other
forms
of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought)
annexed as Exhibits 10.1 through 10.7 to the Registration Statement
(“Insider
Letters”),
pursuant to which each of the Initial Stockholders of the Company agrees to
certain matters, including but not limited to, certain matters described as
being agreed to by them under the “Proposed Business” section of the
Prospectus.
2.22.2 Escrow
Agreement.
The
Company and the Initial Stockholders have entered into an escrow agreement
(“Escrow
Agreement”)
with
American Stock Transfer & Trust Company (“Initial
Share Escrow Agent”)
substantially in the form annexed as Exhibit 10.9 to the Registration Statement,
whereby the securities owned by the Initial Stockholders immediately prior
to
the Offering will be held in escrow by the Initial Share Escrow Agent, until
the
first anniversary of the consummation of a Business Combination (subject to
certain exceptions as set forth in the Escrow Agreement). During such escrow
period, the Initial Stockholders shall be prohibited from selling or otherwise
transferring such shares (except as 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 the
Representative.
13
2.22.3 Subscription
Agreements.
The
Company has entered into Subscription Agreements substantially in the form
annexed as Exhibit 10.13 to the Registration Statement with each Insider
Purchaser to purchase the respective number of Insider Securities described
in
the Registration Statement. Pursuant to the Subscription Agreements, the Insider
Purchasers have placed the purchase price for the Insider Securities in escrow
prior to the date hereof. Simultaneously with the consummation of the Offering,
such purchase price shall be deposited into the Trust Fund pursuant to the
Trust
Agreement. No Subscription Agreement shall be amended, modified or otherwise
changed without the prior written consent of the Representative.
2.22.4 Registration
Rights Agreement.
The
Company and the Initial Stockholders have entered into a registration rights
agreement (“Registration
Rights Agreement”)
substantially in the form annexed as Exhibit 10.12 to the Registration
Statement, whereby the Initial Stockholders will be entitled to certain
registration rights as set forth in such Registration Rights Agreement and
described more fully in the Registration Statement.
2.23 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 10.8 to the
Registration Statement, which Trust Agreement shall not be amended, modified
or
otherwise changed without the prior written consent of the Representative (such
consent not to be unreasonably withheld). The Trust Agreement will provide
that
there may be released to the Company (i) amounts necessary to purchase up to
15%
of the Shares sold in the Offering, as described in more detail in the
Prospectus, (ii) up to $1,350,000 of interest earned on the funds held pursuant
to the Trust Agreement to fund expenses related to investigating and selecting
a
Target Business and the Company’s other working capital requirements and (iii)
any amounts the Company may need to pay its income or other tax
obligations.
2.24 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.
2.25 Investment
Company Act; Investments.
The
Company has been advised concerning the Investment Company Act of 1940, as
amended (the “Investment Company Act”), and the rules and regulations thereunder
and has in the past conducted, and intends in the future to conduct, its affairs
in such a manner as to ensure that it will not become an “investment company” or
a company “controlled” by an “investment company” within the meaning of the
Investment Company Act and such rules and regulations. The Company is not,
nor
will the Company become upon the sale of the Units and the application of the
proceeds therefore as described in the Prospectus under the caption “Use of
Proceeds,” an “investment company” or a person controlled by an “investment
company” within the meaning of the Investment Company Act. No more than 45% of
the “value” (as defined in Section 2(a)(41) of the Investment Company Act) of
the Company’s total assets (exclusive of cash items and “Government Securities”
(as defined in Section 2(a)(16) of the Investment Company Act) consist of,
and
no more than 45% of the Company’s net income after taxes is derived from,
securities other than the Government Securities.
14
2.26 Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.27 Related
Party Transactions.
There
are no business relationships or related party transactions involving the
Company or any other person required to be described in the Prospectus that
have
not been described as required. There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors or Initial Stockholders of the Company or any of the
members of the families of any of them, except as disclosed in the Registration
Statement and the Prospectus.
2.28 No
Distribution of Offering Material.
The
Company has not distributed and will not distribute prior to the Closing Date
any offering material in connection with the offering and sale of the Units
other than any Preliminary Prospectuses, the Prospectus, the Registration
Statement and other materials, if any, permitted by the Act.
2.29 Title
to Assets.
Except
as set forth in the Registration Statement and Prospectus, the Company has
good
and marketable title to all properties and assets described in the Registration
Statement and Prospectus as owned by it, free and clear of any pledge, lien,
security interest, encumbrances, claim or equitable interest, other than such
as
would not have a material adverse effect on the financial condition, earnings,
operations, business or business prospects of the Company.
2.30 Taxes.
The
Company has timely filed all necessary federal, state and foreign income and
franchise tax returns and has paid all taxes shown thereon as due, and there
is
no tax deficiency that has been or, to the best of the Company’s knowledge,
might be asserted against the Company that might have a material adverse effect
on the financial condition, earnings, operations, business or business prospects
of the Company, and all material tax liabilities are adequately provided for
on
the books of the Company.
2.31 Rule
419.
Upon
delivery and payment for the Firm Units on the Closing Date and the filing
of
the Closing 8-K, the Company will not be subject to Rule 419 under the Act
and
none of the Company’s outstanding securities will be deemed to be a “▇▇▇▇▇
stock” as defined in Rule 3a-51-1 under the Exchange Act.
15
2.32 Loans.
▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ has made a loan to the Company in the aggregate amount of $100,000
(the “Insider Loan” substantially in the form annexed as Exhibit 10.11 to the
Registration Statement). The Insider Loan does not bear any interest and is
repayable by the Company on the earlier to occur of (i) May 19, 2009 or
(ii) the date on which the Company consummates an initial public offering
of its securities.
2.33 Share
Repurchases.
If the
Company repurchases any IPO Shares prior to the vote held to approve a Business
Combination, such repurchases shall (i) be made only in open market transactions
at times when the Company is not in possession of any material non-public
information and (ii) comply with Rule 10b-18 under the Exchange Act at prices
(inclusive of commissions) not to exceed the per-share amount then held in
the
Trust Fund.
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.
The
Company shall prepare the Prospectus in a form approved by the Representative
and file such Prospectus pursuant to Rule 424(b) under the Securities Act as
promptly as possible, but in no event later than is required by the rules of
the
Commission. During the time when a Prospectus is required to be delivered under
the Act, the Company will use its best efforts to comply with all requirements
imposed upon it by the Act, the Regulations and the Exchange Act and by the
regulations under the Exchange Act, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the Public
Securities in accordance with the provisions hereof and the Prospectus. If
at
any time when a Prospectus relating to the Public Securities is required to
be
delivered under the Act, any event shall have occurred as a result of which,
in
the opinion of counsel for the Company or counsel for the Underwriters, the
Prospectus, as then amended or supplemented, includes an untrue statement of
a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under
which they were made, not misleading, or if it is necessary at any time to
amend
the Prospectus to comply with the Act, the Company will notify the
Representative promptly and prepare and file with the Commission, subject to
Section 3.1 hereof, an appropriate amendment or supplement in accordance with
Section 10 of the Act.
3.2.2 Filing
of Final Prospectus.
The
Company will file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule 424
of
the Regulations.
3.2.3 Exchange
Act Registration.
The
Company will use its best efforts to maintain the registration of the Units,
Shares 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, or until the Company is required to be liquidated, if earlier
or, in the case of the Warrants, until the Warrants expire and are no longer
exercisable. The Company will not deregister the Units, the Shares or the
Warrants under the Exchange Act without the prior written consent of the
Representative.
16
3.2.4 Ineligible
Issuer.
At the
time of filing the Registration Statement and at the date hereof, the Company
was and is an “ineligible issuer,” as defined in Rule 405 under the Securities
Act. The Company has not made and will not make any offer relating to the Public
Securities that would constitute an “issuer free writing prospectus,” as defined
in Rule 433, or that would otherwise constitute a “free writing prospectus,” as
defined in Rule 405.
3.3 Blue
Sky Filings.
The
Company will use its best efforts, in cooperation with the Representative,
at or
prior to the time the Registration Statement becomes effective, to qualify
the
Public Securities for offering and sale under the securities laws of such
jurisdictions as the Representative may reasonably designate, provided that
no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time necessary
or advisable, use its best efforts to file and make such statements or reports
at such times as are or may be required by the laws of such
jurisdiction.
3.4 Delivery
to Underwriters of Prospectuses.
The
Company will deliver to each of the several Underwriters, without charge, from
time to time during the period when the Prospectus is required to be delivered
under the Act or the Exchange Act, such number of copies of each Preliminary
Prospectus and the Prospectus as such Underwriters may reasonably request and,
as soon as the Registration Statement or any amendment or supplement thereto
becomes effective, deliver to you two original executed Registration Statements,
including exhibits, and all post-effective amendments thereto and copies of
all
exhibits filed therewith or incorporated therein by reference and all original
executed consents of certified experts.
3.5 Effectiveness
and Events Requiring Notice to the Representative.
The
Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representative immediately and confirm the notice
in writing (i) of the effectiveness of the Registration Statement and any
amendment thereto, (ii) of the issuance by the Commission of any stop order
or
of the initiation, or the threatening, of any proceeding for that purpose,
(iii)
of the issuance by any state securities commission of any proceedings for the
suspension of the qualification of the Public Securities for offering or sale
in
any jurisdiction or of the initiation, or the threatening, of any proceeding
for
that purpose, (iv) of the mailing and delivery to the Commission for filing
of
any amendment or supplement to the Registration Statement or Prospectus, (v)
of
the receipt of any comments or request for any additional information from
the
Commission, and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or
the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company shall
not
file any amendment of the Registration Statement or supplement to the Prospectus
or any document incorporated by reference in the Registration Statement unless
the Company has furnished the Representative with a copy for review prior to
filing and shall not file any such proposed amendment or supplement to which
the
Representative reasonably objects. If the Commission or any state securities
commission shall enter a stop order or suspend such qualification at any time,
the Company will use commercially reasonable effort to obtain promptly the
lifting of such order.
17
3.6 Review
of Financial Statements.
Until
the earlier of five years from the Effective Date, or until such earlier time
upon which the Company is required to be liquidated, the Company, at its
expense, shall cause its regularly engaged independent certified public
accountants to review (but not audit) the Company’s financial statements for
each of the first three fiscal quarters prior to the announcement of quarterly
financial information, the filing of the Company’s Form 10-Q quarterly report
and the mailing of quarterly financial information to stockholders.
3.7 Affiliated
Transactions.
3.7.1 Business
Combinations.
The
Company will not consummate a Business Combination with any entity which is
affiliated with any Initial Stockholder unless the Company obtains an opinion
from an independent investment banking firm that the Business Combination is
fair to the Company’s stockholders from a financial perspective.
3.7.2 Administrative
Services.
The
Company has entered into an agreement (“Services
Agreement”)
with
Crescendo Advisors II, LLC (“Crescendo”)
substantially in the form annexed as Exhibit 10.10 to the Registration Statement
pursuant to which Crescendo will make available to the Company general and
administrative services including office space, utilities and secretarial
support for a monthly fee of $10,000.
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 incurred in connection with seeking and
consummating a Business Combination.
3.8 Secondary
Market Trading and Standard & Poor’s.
The
Company will apply to be included in Standard & Poor’s Daily News and
Corporation Records Corporate Descriptions for a period of five years from
the
consummation of a Business Combination. Promptly after the consummation of
the
Offering, the Company shall take such steps as may be necessary to obtain a
secondary market trading exemption for the Company’s securities in the State of
California. The Company shall also take such other action as may be reasonably
requested by the Representative to obtain a secondary market trading exemption
in such other states as may be requested by the Representative.
18
3.9 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act.
The
Company has taken all necessary actions to ensure, that, upon and at all times
after the effectiveness of the Registration Statement, it will be in compliance
with all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules
and regulations promulgated thereunder or implementing the provision thereof
(“▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act”)
that
are then in effect and is actively taking steps to ensure that it will be in
compliance with other applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act not
currently in effect upon the effectiveness of such provisions.
3.10 Financial
Public Relations Firm.
Promptly after the execution of a definitive agreement for a Business
Combination, the Company shall retain a financial public relations firm
reasonably acceptable to the Representative for a term to be agreed upon by
the
Company and the Representative.
3.11 Reports
to the Representative.
3.11.1 Periodic
Reports, Etc.
For a
period of five years from the Effective Date or until such earlier time upon
which the Company is required to be liquidated, the Company will furnish to
the
Representative (Attn: Chief Executive Officer) and its counsel copies of
such financial statements and other periodic and special reports as the Company
from time to time furnishes generally to holders of any class of its securities,
and promptly furnish to the Representative (i) a copy of each periodic report
the Company shall be required to file with the Commission, (ii) a copy of every
press release and every news item and article with respect to the Company or
its
affairs which was released by the Company, (iii) a copy of each Form 8-K or
Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the Company, (iv)
five copies of each registration statement filed by the Company with the
Commission under the Securities Act, (v) a copy of monthly statements, if any,
setting forth such information regarding the Company’s results of operations and
financial position (including balance sheet, profit and loss statements and
data
regarding outstanding purchase orders) as is regularly prepared by management
of
the Company and (vi) such additional documents and information with respect
to
the Company and the affairs of any future subsidiaries of the Company as the
Representative may from time to time reasonably request.
3.11.2 Secondary
Market Trading Survey.
Until
such time as the Public Securities are listed or quoted, as the case may be,
on
the New York Stock Exchange, the American Stock Exchange or quoted on Nasdaq,
or
until such earlier time upon which the Company is required to be liquidated,
the
Company shall engage ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (“GM”),
for a
one-time fee of $5,000 payable on the Closing Date, to deliver and update to
the
Representative on a timely basis, but in any event on the Effective Date and
at
the beginning of each fiscal quarter, a written report detailing those states
in
which the Public Securities may be traded in non-issuer transactions under
the
Blue Sky laws of the fifty States (“Secondary
Market Trading Survey”).
19
3.12 Disqualification
of Form S-1.
Until
the earlier of seven years from the date hereof or until the Warrants have
expired and are no longer exercisable, the Company will not take any action
or
actions which may prevent or disqualify the Company’s use of Form S-1 (or other
appropriate form) for the registration of the Warrants and the Representative’s
Warrants under the Act.
3.13 Payment
of Expenses.
3.13.1 General
Expenses Related to the Offering.
The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at Closing Date, all expenses incident
to
the performance of the obligations of the Company under this Agreement,
including but not limited to (i) the preparation, 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 and the
Warrants included in the Units and the Representative’s Purchase Option,
including any transfer or other taxes payable thereon, (iii) the qualification
of the Public Securities under state or foreign securities or Blue Sky laws,
including the costs of printing and mailing the “Preliminary
Blue Sky Memorandum,”
and
all amendments and supplements thereto, fees and disbursements of GM (such
fees
shall be $35,000 in the aggregate (of which $15,000 has previously been paid)),
and a one-time fee of $5,000 payable to GM for the preparation of the Secondary
Market Trading Survey, (iv) filing fees incurred in registering the Offering
with FINRA (not to exceed $10,000), (v) fees and disbursements of the
transfer and warrant agent, (vi) the Company’s expenses associated with “due
diligence” meetings arranged by the Representative, (vii) the preparation,
binding and delivery of transaction “bibles,” in form and style reasonably
satisfactory to the Representative and transaction lucite cubes or similar
commemorative items in a style and quantity as reasonably requested by the
Representative and (viii) all other costs and expenses customarily borne by
an
issuer incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 3.13.1. The Company also
agrees that, if requested by the Representative, it will engage and pay 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 (up
to
an aggregate of $100,000 (less any deposits received)), including, without
limitation, its legal fees and disbursements and “road show” and due
diligence expenses.
20
3.13.2 Deferred
Compensation.
Upon
the consummation of a Business Combination, the Company shall pay the
Underwriters the Deferred Commissions. This payment shall be made by wire
transfer to an account designated by the Representative on the closing date
of
the Business Combination.
3.13.3 Business
Combination Expenses.
To the
extent the Representative provides the Company with assistance in the Company's
search for a Target Business and/or due diligence investigation, structuring
or
negotiation of a Business Combination, the Company shall reimburse the
Representative for all actual out of pocket costs and expenses incurred in
connection therewith promptly after submission of appropriate evidence of having
incurred such costs and expenses.
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 FINRA.
For a
period of ninety days following the Effective Date, in the event any person
or
entity (regardless of any FINRA 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 FINRA
and the Representative prior to the consummation of the Business
Combination: (i) complete details of all services and copies of agreements
governing such services (which details or agreements may be appropriately
redacted to account for privilege or confidentiality concerns); 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 FINRA’s Conduct Rules. The Company also agrees that
proper disclosure of such arrangement or potential arrangement will be made
in
the proxy statement which the Company will file for purposes of soliciting
stockholder approval for the Business Combination.
3.17 Stabilization.
Neither
the Company, nor, to its knowledge, any of its employees, directors or
stockholders (without the consent of the Representative) has taken or will
take,
directly or indirectly, any action designed to or that has constituted or that
might reasonably be expected to cause or result in, under the Exchange Act,
or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Units.
21
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.
Until
the earlier of five years from the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company shall retain
BDO or another independent registered public accountant.
3.20 Form
8-K.
The
Company shall, on the date hereof, retain its independent public accountants
to
audit the financial statements of the Company as of the Closing Date
(“Audited
Financial Statements”)
reflecting the receipt by the Company of the proceeds of the initial public
offering. As soon as the Audited Financial Statements become available, the
Company shall immediately file a Current Report on Form 8-K with the Commission,
which Report shall contain the Company’s Audited Financial
Statements.
3.21 FINRA.
The
Company shall advise FINRA if it is aware that any 5% or greater stockholder
of
the Company becomes an affiliate or associated person of a FINRA member
participating in the distribution of the Company’s Public
Securities.
3.22 Corporate
Proceedings.
All
corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall
have
been done to the reasonable satisfaction of counsel for the
Underwriters.
3.23 Investment
Company.
The
Company shall cause a portion of the proceeds of the Offering to be held in
the
Trust Fund to be invested only as set forth in the Trust Agreement and as more
fully described in the Prospectus. The Company will otherwise conduct its
business in a manner so that it will not become subject to the Investment
Company Act. Furthermore, once the Company consummates a Business Combination,
it will be engaged in a business other than that of investing, reinvesting,
owning, holding or trading securities.
3.24 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, The New York Times and a third
publication to be selected by the Representative announcing the consummation
of
the Business Combination and indicating that the Representative was
the managing underwriters 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.
22
3.25 Insider
Warrants.
3.25.1 Insider
Warrant Purchase Price.
Simultaneously with the consummation of the Offering, the purchase price for
the
Insider Warrants shall be deposited in the Trust Fund.
3.25.2 Insider
Warrant Exercises.
The
Company hereby acknowledges and agrees that the Insider Warrants may not be
called for redemption and shall be exercisable by the holder by surrendering
such Warrants for that number of Shares equal to the quotient obtained by
dividing (x) the product of the number of Shares underlying the Warrants,
multiplied by the difference between the Warrant Price and the “Fair Market
Value” (defined below) by (y) the Fair Market Value; provided in each case such
Insider Warrants are held by the Insider Purchaser or its affiliates. The
“Fair
Market Value”
shall
mean (i) in the event of redemption, the average reported last sale price of
the
Shares for the 10 trading days ending on the third business day prior to the
date on which the notice of redemption is sent to holders of Warrants or (ii)
in
any other case, the average reported last sale price of the Shares for the
5
trading days ending on the trading day preceding the day of
exercise.
3.26 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 time, on the date of this Agreement or such later date and time as shall
be
consented to in writing by you, and, at each of the Closing Date and the Option
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for the purpose shall have
been instituted or shall be pending or contemplated by the Commission and any
request on the part of the Commission for additional information shall have
been
complied with to the reasonable satisfaction of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP, counsel
to the Underwriters (“GT”).
23
4.1.2 FINRA
Clearance.
By the
Effective Date, the Representative shall have received clearance from FINRA
as
to the amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
4.1.3 No
Blue Sky Stop Orders.
No
order suspending the sale of the Units in any jurisdiction designated by you
pursuant to Section 3.3 hereof shall have been issued on either on the Closing
Date or the Option Closing Date, and no proceedings for that purpose shall
have
been instituted or shall be contemplated.
4.2 Company
Counsel Matters.
4.2.1 Effective
Date Opinion of Counsel.
On the
Effective Date, the Representative shall have received the favorable opinion
of
GM, counsel to the Company, dated the Effective Date, addressed to the
Representative and in form and substance satisfactory to GT 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 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, except where the
failure to qualify would not have a material adverse effect on the assets,
business or operations of the Company. To such counsel’s knowledge, the Company
is not in violation of any term or provision of its Certificate of Incorporation
or Bylaws.
(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 Shares were at all relevant times either registered under the Act
or
exempt from such registration requirements. The authorized and, to such
counsel’s knowledge, outstanding capital stock of the Company is as set forth in
the Prospectus.
(iii) The
Securities and Insider 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 and Insider Securities are not and will not be
subject to the preemptive rights of any holders of any security of the Company
arising by operation of law or under the Certificate of Incorporation or Bylaws
of the Company. When issued, the Representative’s Purchase Option, the
Representative’s Warrants, the Insider Warrants and the Warrants will constitute
valid and binding obligations of the Company to issue and sell, upon exercise
thereof and payment therefor, the number and type of securities of the Company
called for thereby and such Warrants, the Insider 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.
24
(iv) This
Agreement, the Warrant Agreement, the Trust Agreement, the Registration Rights
Agreement, the Subscription Agreements, the Services Agreement and the Escrow
Agreement have each been duly and validly authorized and, when executed and
delivered by the Company, constitute, and the Representative’s Purchase Option
has been duly and validly authorized by the Company and, when executed and
delivered, will constitute, the valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
except (a) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, (b) as
enforceability of any indemnification or contribution provisions may be limited
under the federal and state securities laws, and (c) that the remedy of specific
performance and 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,
the Registration Rights Agreement, the Services Agreement and the Subscription
Agreements and compliance by the Company with the terms and provisions thereof
and the consummation of the transactions contemplated thereby, and the issuance
and sale of the Securities, do not and will not, with or without the giving
of
notice or the lapse of time, or both, (a) to such counsel’s knowledge, conflict
with, or result in a breach of, any of the terms or provisions of, or constitute
a default under, or result in the creation or modification of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to the terms of, any mortgage, deed of trust, note, indenture,
loan, contract, commitment or other agreement or instrument filed as an exhibit
to the Registration Statement, (b) result in any violation of the provisions
of
the Certificate of Incorporation or Bylaws of the Company, or (c) to such
counsel’s knowledge, violate any United States statute or any judgment, order or
decree, rule or regulation applicable to the Company of any court, United States
federal, state or other regulatory authority or other governmental body having
jurisdiction over the Company, its properties or assets.
25
(vi) The
Registration Statement, the Preliminary Prospectus and the Prospectus and any
post-effective amendments or supplements thereto (other than the financial
statements included therein, as to which no opinion need be rendered) each
as of
their respective dates complied as to form in all material respects with the
requirements of the Act and Regulations. The Securities and all other securities
issued or issuable by the Company, 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. The
descriptions in the Registration Statement and in the Prospectus, insofar as
such statements constitute a summary of statutes, legal matters, contracts,
documents or proceedings referred to therein, fairly present in all material
respects the information required to be shown with respect to such statutes,
legal matters, contracts, documents and proceedings, and such counsel does
not
know of any statutes or legal or governmental proceedings required to be
described in the Prospectus that are not described in the Registration Statement
or the Prospectus or included as exhibits to the Registration Statement that
are
not described or included as required. Upon delivery and payment for the Firm
Units on the Closing Date and the filing of the Closing 8-K, the Company will
not be subject to Rule 419 under the Act and none of the Company's outstanding
securities will be deemed to be a “▇▇▇▇▇ stock” as defined in Rule 3a-51-1 under
the Exchange Act.
(vii) The
Registration Statement is effective under the Act. To such counsel’s knowledge,
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or threatened under the Act or applicable state securities
laws.
(viii) To
such
counsel’s knowledge, there is no action, suit or proceeding before or by any
court of governmental agency or body, domestic or foreign, now pending, or
threatened against the Company that is required to be described in the
Registration Statement.
The
opinion of counsel shall further include a statement to the effect that such
counsel has participated in conferences with officers and other representatives
of the Company, the Underwriters and the independent public accountants of
the
Company, at which conferences the contents of the Registration Statement and
the
Prospectus contained therein and related matters were discussed and, although
such counsel is not passing upon and does not assume any responsibility for
the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus contained therein (except as otherwise
set forth in the foregoing opinion), solely on the basis of the foregoing
without independent check and verification, no facts have come to the attention
of such counsel which lead them to believe that the Registration Statement
or
any amendment thereto, at the time the Registration Statement or amendment
became effective, contained an untrue statement of a material fact or omitted
to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or the Prospectus or any amendment or
supplement thereto, at the time they were filed pursuant to Rule 424(b) or
at
the date of such counsel’s opinion, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading (except that such counsel need express
no
opinion with respect to the financial information and statistical data and
information included in the Registration Statement or the
Prospectus).
26
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 GM, dated the Closing Date or
the
Option Closing Date, as the case may be, addressed to the Representative and
in
form and substance reasonably satisfactory to GT, confirming as of the Closing
Date and, if applicable, the Option Closing Date, the statements made by GM
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 GT) of other counsel reasonably
acceptable to GT, 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 GT from BDO dated, respectively, as of the
date of this Agreement and as of the Closing Date and the Option Closing Date,
if any:
(i) Confirming
that they are an independent registered public accounting firm 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;
27
(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 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, they have been advised by the
Company officials that (a) the unaudited financial statements of the Company
included in the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Regulations or are 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 and (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 no
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 21, 2008 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;
(iv) 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;
(v) Stating
that they have not provided the Company’s management with any written
communication in accordance with Statement on Auditing Standards No. 60
“Communication of Internal Control Structure Related Matters Noted in an Audit;”
and
(vi) Statements
as to such other matters incident to the transaction contemplated hereby as
you
may reasonably request.
28
4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Chairman of
the
Board or the President and the Secretary or Assistant Secretary of the Company,
dated the Closing Date or the Option Closing Date, as the case may be,
respectively, to the effect that the Company has performed all covenants and
complied with all conditions required by this Agreement to be performed or
complied with by the Company prior to and as of the Closing Date, or the Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.5 hereof have been satisfied as of such date and that, as of Closing Date
and
the Option Closing Date, as the case may be, the representations and warranties
of the Company set forth in Section 2 hereof are true and correct. In addition,
the Representative will have received such other and further certificates of
officers of the Company as the Representative may reasonably request. Such
certificate shall include a statement to the effect that it may be relied upon
by counsel for the Representative in any opinion it may deliver to the
Underwriters.
4.4.2 Secretary’s
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Secretary or
Assistant Secretary of the Company, dated the Closing Date or the Option Date,
as the case may be, respectively, certifying (i) that the Certificate of
Incorporation and Bylaws 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, (iv) as to the incumbency of the officers of the
Company, (v) no action is contemplated in connection with a merger,
consolidation or liquidation, dissolution or reorganization of the Company
or
for the sale, lease or other transfer of all or substantially all of its assets,
(vi) that the minute books and records of the Company made available to
Representative's counsel are its original (or true copies thereof) and complete
minute books and records, (vii) complete specimens of the Units, Shares and
Warrants of the Company and (viii) each officer or director who signed the
Registration Statement was duly elected or appointed. 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 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 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.
29
4.6 Delivery
of Agreements.
4.6.1 Effective
Date Deliveries.
On the
Effective Date, the Company shall have delivered to the Representative executed
copies of the Escrow Agreement, the Trust Agreement, the Warrant Agreement,
the
Services Agreement, the Subscription Agreements and all of the Insider
Letters.
4.6.2 Closing
Date Deliveries.
On the
Closing Date, the Company shall have delivered to the Representative executed
copies of the Representative’s Purchase Option.
4.7 Opinion
of Counsel for the Underwriters.
All
proceedings taken in connection with the authorization, issuance or sale of
the
Securities as herein contemplated shall be reasonably satisfactory in form
and
substance to you and to GT 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 and Blue Sky Memorandum.
On the
Closing Date, the Representative shall have received the Secondary Market
Trading Survey and all supplements and amendments to the Preliminary Blue Sky
Memorandum.
4.9 Quotation
on the FINRA OTC Bulletin Board.
On the
Closing Date, the Public Securities shall have been approved for quotation
on
the FINRA OTC Bulletin Board.
4.10 Insider
Warrants.
On the
Closing Date, the Insider Purchasers shall have purchased the Insider Warrants
and the purchase price for such Insider Warrants shall be deposited into the
Trust Fund.
30
5. Indemnification.
5.1 Indemnification
of Underwriters.
5.1.1 General.
Subject
to the conditions set forth below, the Company agrees to indemnify and hold
harmless each of the Underwriters, and each dealer selected by you that
participates in the offer and sale of the Securities (each a “Selected
Dealer”)
and
each of their respective directors, officers and employees and each person,
if
any, who controls any such Underwriter (“controlling
person”)
within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever
(including but not limited to any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising out of any
action between any of the Underwriters and the Company or between any of the
Underwriters and any third party or otherwise) to which they or any of them
may
become subject under the Act, the Exchange Act or any other statute or at common
law or otherwise or under the laws of foreign countries, arising out of or
based
upon any untrue statement or alleged untrue statement of a material fact
contained in (i) any Preliminary Prospectus, the Registration Statement or
the
Prospectus (as from time to time each may be amended and supplemented); (ii)
in
any post-effective amendment or amendments or any new registration statement
and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Representative’s Purchase Option; (iii) any materials or
information provided to investors by, or with the approval of, the Company
in
connection with marketing or the offering of the Securities, including any
“road
show” or investor presentations made by the Company; or (iv) any application or
other document or written communication (whether in person or electronically)
(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 Securities under the
securities laws thereof or filed with the Commission, any state securities
commission or agency, NYSE, Nasdaq, AMEX or any other securities exchange or
the
OTC Bulletin Board; 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.
31
5.1.2 Procedure
.
If any
action is brought against an Underwriter, a Selected Dealer or a controlling
person in respect of which indemnity may be sought against the Company pursuant
to Section 5.1.1, such Underwriter or Selected Dealer shall promptly notify
the
Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the reasonable approval of such Underwriter or Selected Dealer,
as
the case may be) and payment of actual expenses. Such Underwriter, Selected
Dealer or controlling person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be
at
the expense of such Underwriter, Selected Dealer or controlling person unless
(i) the employment of such counsel at the expense of the Company shall have
been
authorized in writing by the Company in connection with the defense of such
action, or (ii) the Company shall not have employed counsel reasonably
acceptable to the Underwriter or Selected Dealer, as the case may be, 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. This Indemnification provided
for
in this Section 5.1 shall not be available to any party who shall fail to give
notice as provided in this Section 5.1.2 if the Company was unaware of the
proceeding to which such notice would have related and was actually prejudiced
by the failure to give such notice; provided, however, that indemnification
shall only be limited to the extent of such prejudice; provided, further, that,
the omission so to notify the Company will not relieve it from any liability
which it may have to any indemnified party otherwise than under this Section
5.1. The Company shall not without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release
of
such indemnified party from all liability on claims that are the subject matter
of such proceedings.
5.2 Indemnification
of the Company.
Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, officers and employees and agents who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage and expense
described in the foregoing indemnity from the Company to the several
Underwriters, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in any Preliminary
Prospectus, the Registration Statement 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.
32
5.3 Contribution.
5.3.1 Contribution
Rights.
In
order to provide for just and equitable contribution under the Act in any case
in which (i) any person entitled to indemnification under this Section 5 makes
claim for indemnification pursuant hereto but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and
the expiration of time to appeal or the denial of the last right of appeal)
that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Act, the Exchange Act or otherwise may be required on
the
part of any such person in circumstances for which indemnification is provided
under this Section 5, then, and in each such case, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred, in such proportions
that the Underwriters and the Company are responsible for; provided, that,
no
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was
not
guilty of such fraudulent misrepresentation. Notwithstanding the provisions
of
this Section 5.3.1, no Underwriter shall be required to contribute any amount
in
excess of the amount by which the total price at which the Public Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section, 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.
33
6. Default
by an Underwriter.
6.1 Default
Not Exceeding 10% of Firm Units or Option Units.
If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the over-allotment option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10%
of
the number of Firm Units or Option Units that all Underwriters have agreed
to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion
to
their respective commitments hereunder.
6.2 Default
Exceeding 10% of Firm Units or Option Units.
In the
event that the default addressed in Section 6.1 above relates to more than
10%
of the Firm Units or Option Units, you may in your discretion arrange for
yourself or for another party or parties to purchase such Firm Units or Option
Units to which such default relates on the terms contained herein. If within
one
business day after such default relating to more than 10% of the Firm Units
or
Option Units you do not arrange for the purchase of such Firm Units or Option
Units, then the Company shall be entitled to a further period of one business
day within which to procure another party or parties satisfactory to you to
purchase said Firm Units or Option Units on such terms. In the event that
neither you nor the Company arrange for the purchase of the Firm Units or Option
Units to which a default relates as provided in this Section 6, this Agreement
will be terminated without liability on the part of the Company (except as
provided in Sections 3.13 and 5 hereof) or the several Underwriters (except
as
provided in Section 5 hereof); provided, however, that if such default occurs
with respect to the Option Units, this Agreement will not terminate as to the
Firm Units; and provided further that nothing herein shall relieve a defaulting
Underwriter of its liability, if any, to the other several Underwriters and
to
the Company for damages occasioned by its default hereunder.
34
6.3 Postponement
of Closing Date.
In the
event that the Firm Units or Option Units to which the default relates are
to be
purchased by the non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, you or the Company shall have the right to
postpone the Closing Date or Option Closing Date for a reasonable period, but
not in any event exceeding five business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company agrees
to
file promptly any amendment to the Registration Statement or the Prospectus
that
in the opinion of counsel for the Underwriters may thereby be made necessary.
The term “Underwriter”
as
used
in this Agreement shall include any party substituted under this Section 6
with
like effect as if it had originally been a party to this Agreement with respect
to such Securities.
7. Additional
Covenants.
7.1 Additional
Shares or Options.
The
Company hereby agrees that until the consummation of a Business Combination,
it
shall not issue any Shares or any options or other securities convertible or
exercisable or exchangeable into Shares, or any shares of Preferred Stock which
participate in any manner in the Trust Fund or which vote as a class with the
Shares on a Business Combination.
7.2 Trust
Fund Waiver Acknowledgment.
(i) Underwriters/Representative.
Except
with respect to the Deferred Commissions due to the Underwriters only
upon successful consummation of a Business Combination, each of the Underwriters
and the Representative hereby agree 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
waive 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.
(ii) Target
Businesses and Vendors.
The
Company hereby agrees that it will not commence its due diligence investigation
of any Target Business or obtain the services of any vendor unless and until
such Target Business or vendor acknowledges in writing, whether through a letter
of intent, memorandum of understanding or other similar document (and
subsequently acknowledges the same in any definitive document replacing any
of
the foregoing), that (a) it has read the Prospectus and understands that the
Company has established the Trust Fund for the benefit of the public
stockholders and that the Company may disburse monies from the Trust Fund only
(i) to the public stockholders in the event they elect to convert their IPO
Shares (as defined below in Section 7.6), (ii) to the Company from time to
time
in certain amounts not to exceed $1,350,000 for its working capital
requirements, as well any amounts necessary to pay for its tax obligations,
(iii) to the public stockholders upon the liquidation of the Company if the
Company fails to consummate a Business Combination or (iv) to the Company after,
or concurrently with, the consummation of a Business Combination and (b) for
and
in consideration of the Company (1) agreeing to evaluate such Target Business
for purposes of consummating a Business Combination with it or (2) agreeing
to
engage the services of the vendor, as the case may be, such Target Business
or
vendor agrees that it does not have any Claim of any kind in or to any monies
in
the Trust Fund 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.
35
7.3 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 and will not allow any amendments to,
or
waivers of, such Insider Letters without the prior written consent of the
Representative.
7.4 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 or Bylaws without the prior written
consent of the Representative.
7.5 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.
7.6 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 will publicly announce
the
record date establishing the stockholders that will be entitled to vote at
the
meeting to approve the Business Combination at least two business days prior
to
such record date; and (ii) that, in the event that the Company does not effect
a
Business Combination within 24 months from the consummation of the Offering,
or
30 months from the consummation of the Offering if a definitive agreement has
been executed within 24 months after the consummation of the Offering and the
Business Combination has not been consummated within such 24-month period,
the
Company will be liquidated and will distribute to all holders of IPO Shares
(defined below) an aggregate sum equal to the Company’s “Liquidation Value.” The
Company’s “Liquidation
Value”
shall
mean the Company’s book value, as determined by the Company and approved by BDO.
In no event, however, will the Company’s Liquidation Value be less than the
Trust Fund, inclusive of any net interest income thereon after any permitted
distributions to the Company as set forth in Section 2.23 hereof. 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
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 Shares 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 after
any permitted distributions to the Company as set forth in Section 2.23 hereof)
calculated as of two business days prior to the consummation of the proposed
Business Combination divided by the total number of IPO Shares. If a majority
of
the holders of IPO Shares present and entitled to vote on the Business
Combination vote in favor of such Business Combination and holders of less
than
40% 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. Notwithstanding the foregoing, a holder of IPO Shares, together
with any affiliate of his or any other person with whom he is acting in concert
or as a ‘‘group’’ (as defined in Section 13(d)(3) of the Exchange Act) will be
restricted from seeking conversion rights with respect to 10% or more of the
IPO
Shares. 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 40% 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. The provisions of this Section 7.6 may not be modified, amended
or
deleted under any circumstances.
36
7.7 Rule
419.
The
Company agrees that it will use its best efforts to prevent the Company from
becoming subject to Rule 419 under the Act prior to the consummation of any
Business Combination, including but not limited to using its best efforts to
prevent any of the Company’s outstanding securities from being deemed to be a
“▇▇▇▇▇ stock” as defined in Rule 3a-51-1 under the Exchange Act during such
period.
7.8 Affiliated
Transactions.
The
Company shall cause each of the Initial Stockholders to agree that, in order
to
minimize potential conflicts of interest which may arise from multiple
affiliations, the Initial Stockholders will present to the Company for its
consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire a Target Business that derives more than 50%
of
its gross revenues from operations in any one or more segments of the
construction, engineering, water, design, environmental, energy, recycling,
waste management, logistics or related industries, unless and until Symphony
Acquisition Corp. enters into a definitive agreement for its initial business
combination, at which point the Initial Stockholders shall agree to present
to
the Company for its consideration, prior to presentation to any other person
or
company, any suitable opportunity to acquire a Target Business in any industry
whatever, until the earlier of the consummation by the Company of a Business
Combination, the liquidation of the Company or until such time as the Initial
Stockholders cease to be an officer or director of the Company, subject to
any
pre-existing fiduciary or contractual obligations the Initial Stockholders
might
have.
37
7.9 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 (all of the
Company’s assets, including the funds held in the Trust Fund, less the Company’s
liabilities) at the time of such acquisition. The fair market value of such
business must be determined by the Board of Directors of the Company based
upon
standards generally accepted by the financial community, such as actual and
potential sales, earnings and cash flow and book value. If the Board of
Directors of the Company is not able to independently determine that the Target
Business has a fair market value of at least 80% of the Company’s net assets at
the time of such acquisition, the Company will obtain an opinion from an
unaffiliated, independent investment banking firm which is a member of FINRA
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.
7.10 Exchange
Act Compliance.
The
Company agrees that until the consummation of a Business Combination as
contemplated in the Prospectus, it will use its best efforts to comply with
the
rules and regulations under the Exchange Act with respect to (a) the furnishing
and content of proxy statements related to the Business Combination; and (b)
the
requirements and filing deadlines for current reports on Form 8-K.
7.11 Share
Repurchases.
If the
Company repurchases any IPO Shares prior to the vote held to approve a Business
Combination, the Company agrees that such repurchases shall (i) be made only
in
open market transactions at times when the Company is not in possession of
any
material non-public information and (ii) comply with Rule 10b-18 under the
Exchange Act at prices (inclusive of commissions) not to exceed the per-share
amount then held in the Trust Fund.
8. Representations
and Agreements to Survive Delivery.
Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at the Closing Date or Option Closing Date 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.
9. Effective
Date of This Agreement and Termination Thereof.
9.1 Effective
Date.
This
Agreement shall become effective on the Effective Date at the time the
Registration Statement is declared effective by the Commission.
38
9.2 Termination.
You
shall have the right to terminate this Agreement at any time prior to any
Closing Date, (i) if any domestic or international event or act or occurrence
has materially disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United States; or (ii)
if
trading on the New York Stock Exchange, the American Stock Exchange or on the
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 OTC Bulletin Board or by order
of
the Commission or any other government authority having jurisdiction, or (iii)
if the United States shall have become involved in a new war or an increase
in
major hostilities, or (iv) if a banking moratorium has been declared by a New
York State or federal authority, or (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Units, or (vii) if any of the Company’s representations, warranties or
covenants hereunder are breached, or (viii) if the Representative shall have
become aware after the date hereof of such a material adverse change in the
conditions or prospects of the Company, or such adverse material change in
general market conditions, including without limitation as a result of terrorist
activities after the date hereof, as in the Representative’s judgment would make
it impracticable to proceed with the offering, sale and/or delivery of the
Units
or to enforce contracts made by the Underwriters for the sale of the
Securities.
9.3 Expenses.
In the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the
terms
herein, the obligations of the Company to pay the out of pocket expenses related
to the transactions contemplated herein shall be governed by Section 3.13
hereof.
9.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 shall not be
in
any way affected by, such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
10. Miscellaneous.
10.1 Notices.
All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered or telecopied and confirmed
and shall be deemed given when so delivered or telecopied and confirmed or
if
mailed, two days after such mailing
If
to the
Representative:
EarlyBirdCapital,
Inc.
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇▇▇▇▇▇, President and Chief Executive Officer
Copy
to:
▇▇▇▇▇▇▇▇▇
Traurig, LLP
MetLife
Building
▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
39
If
to the
Company:
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
Copy
to:
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
The
Chrysler Building
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Esq.
10.2 Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Agreement.
10.3 Amendment.
Except
for Section 7.6 (which may not be amended under any circumstances), this
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
10.4 Entire
Agreement.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
10.5 Binding
Effect.
This
Agreement shall inure solely to the benefit of and shall be binding upon the
Representative, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have
or
be construed to have any legal or equitable right, remedy or claim under or
in
respect of or by virtue of this Agreement or any provisions herein
contained.
40
10.6 Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of
another jurisdiction. The Company hereby agrees that any action, proceeding
or
claim against it arising out of, or relating in any way to this Agreement shall
be brought and enforced in the courts of the State of New York of the United
States of America for the Southern District of New York, and irrevocably submits
to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby
waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it
at
the address set forth in Section 10.1 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.
10.7 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. Facsimile signatures will be binding and effective as
originals.
10.8 Waiver,
Etc.
The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
10.9 No
Fiduciary Duty.
The
Company acknowledges and agrees that none of the Representative, the
Underwriters nor the controlling persons of any of them shall have any fiduciary
or advisory duty to the Company or any of its controlling persons arising out
of, or in connection with, this Agreement or the offer and sale of the
Securities.
41
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.
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Very
truly yours,
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By:
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Name:
___________________________
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Title:
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Accepted
on the date first
above
written.
EARLYBIRDCAPITAL,
INC.
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By:
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Name:
Title:
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42
SCHEDULE
I
6,125,000
Units
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Underwriter
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Number
of Firm Units
to
be Purchased
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EarlyBirdCapital,
Inc.
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▇▇▇▇▇▇
▇▇▇▇▇▇ & Co. Inc.
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Pali
Capital, Inc.
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Total
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6,125,000
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