UNDERWRITING AGREEMENT between HIGHBURY FINANCIAL INC. and THINKEQUITY PARTNERS LLC Dated: January , 2006 HIGHBURY FINANCIAL INC. UNDERWRITING AGREEMENT
between
and
THINKEQUITY
PARTNERS LLC
Dated:
January ,
2006
January
,
2006
ThinkEquity
Partners LLC
As
Representative of the several Underwriters
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Dear
Sirs:
The
undersigned, Highbury Financial Inc., a Delaware corporation (“Company”), hereby
confirms its agreement with ThinkEquity Partners LLC (being referred to herein
variously as “you,” “TEP” or the “Representative”) and with the other
underwriters named on Schedule I hereto for which TEP 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
6,733,333 units (“Firm Units”) of the Company, at a purchase price (net of
discounts and commissions) of $5.69 per Firm Unit. The Underwriters, severally
and not jointly, agree to purchase from the Company the number of Firm Units
set
forth opposite their respective names on Schedule I attached hereto and made
a
part hereof at a purchase price (net of discounts and commissions) of $5.69
per
Firm Unit. The Firm Units are to be offered initially to the public (“Offering”)
at the offering price of $6.00 per Firm Unit. Each Firm Unit consists of one
share of the Company’s common stock, par value $.0001 per share (“Common
Stock”), and two warrants (“Warrant(s)”). The shares of Common Stock and the
Warrants included in the Firm Units will not be separately transferable until
the earlier to occur of (i) the expiration of the Underwriter’s Over-allotment
Option (as defined in Section 1.2.1 hereof) or (ii) 20 days after the exercise
in full by the Underwriters of the Over-allotment Option, but in no event will
separate trading occur before an audited balance sheet has been prepared
reflecting receipt by the Company of the proceeds of the Offering and filed
with
the Securities and Exchange Commission (the “Commission”) with a Current Report
on Form 8-K. Each Warrant entitles its holder to exercise it to purchase one
share of Common Stock for $5.00 during the period commencing on the later of
the
consummation by the Company of its “Business Combination” or one year from the
effective date (“Effective Date”) of the Registration Statement (as defined in
Section 3.1.1
hereof)
and terminating on the four-year anniversary of the Effective Date. “Business
Combination” shall mean the Company
acquiring, or acquiring control of, through a merger, capital stock exchange,
asset acquisition, stock purchase or other similar business combination, one
or
more financial services businesses (as described more fully in the Registration
Statement).
1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 1:00 P.M., New York
time, on the third business day following the date of this Agreement (or the
fourth business day following the date of this Agreement, if this Agreement
is
executed after 4:30 p.m., New York time) or at such earlier time as shall be
agreed upon by the Representative and the Company at the offices of the
Representative or at such other place as shall be agreed upon by the
Representative and the Company. The hour and date of delivery and payment for
the Firm Units is called the “Closing Date.” Payment for the Firm Units shall be
made on the Closing Date at the Representative’s election by wire transfer in
Federal (same day) funds or by certified or bank cashier’s check(s) in New York
Clearing House funds, payable as follows: $36,542,665 of
the
proceeds received by the Company for the Firm Units shall be deposited in the
trust account established by the Company for the benefit of the public
stockholders and the Underwriters as described in the Registration Statement
(“Trust Fund”) pursuant to the terms of an Investment Management Trust Agreement
(as defined in Section 3.22
hereof) and the remaining proceeds
shall be
paid to the order of the Company upon delivery to you of certificates (in form
and substance satisfactory to the Underwriters) representing the Firm Units
(or
through the facilities of the Depository Trust Company (“DTC”)) for the account
of the Underwriters. The Firm Units shall be registered in such name or names
and in such authorized denominations as the Representative may request in
writing at least two full business days prior to the Closing Date. The Company
will permit the Representative to examine and package the Firm Units for
delivery, at least one full business day prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Units except upon tender
of
payment by the Representative for all the Firm Units.
1.2 Over-Allotment
Option.
1.2.1 Option
Units.
For the
purposes of covering any over-allotments in connection with the distribution
and
sale of the Firm Units, the Underwriters are hereby granted, severally and
not
jointly, an option to purchase up to an additional 1,010,000 units
from the Company (“Over-allotment Option”). Such additional
1,010,000 units
are
hereinafter referred to as “Option Units.” The Firm Units and the Option Units
are hereinafter collectively referred to as the “Units,” and the Units, the
shares of Common Stock and the Warrants included in the Units and the shares
of
Common Stock issuable upon exercise of the Warrants are hereinafter referred
to
collectively as the “Public Securities.” The purchase price 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
to the Trust Fund at the offices of the Representative or at such other place
as
shall be agreed upon by the Representative and the Company upon delivery to
you
of certificates representing such securities (or through the facilities of
DTC).
The certificates representing the Option Units to be delivered will be in such
denominations and registered in such names as the Representative requests not
less than two full business days prior to the Closing Date or the Option Closing
Date, as the case may be, and will be made available to the Representative
for
inspection, checking and packaging at the aforesaid office of the Company’s
transfer agent or correspondent not less than one full business day prior to
such Closing Date.
1.3 Private
Placement to the Initial Stockholders.
The
Company’s stockholders immediately prior to the Offering (“Initial
Stockholders”) purchased from the Company pursuant to the Placement Unit
Purchase Agreement (as defned in Section 3.23 hereof) an aggregate of 166,667
units identical to the Units (“Placement Units”) at a purchase price of $6.00
per Placement Unit in a private placement that occurred immediately prior to
the
entering into of this agreement (“Private Placement”). The Placement Units, the
shares of Common Stock and Warrants included in the Placement Units (“Placement
Warrants”) and the shares of Common Stock issuable upon exercise of the
Placement Warrants are hereinafter referred to collectively as the “Placement
Securities.”
1.4 Representative’s
Purchase Option.
1.4.1 Purchase
Option.
The
Company hereby agrees to issue and sell to the Representative (and/or its
designees) on the Effective Date an option (“Representative’s Purchase Option”)
for the purchase of up to an aggregate of 336,667 units (“Representative’s
Units”) for an aggregate purchase price of $100. Each of the Representative’s
Units is identical to the Firm Units except that the Warrants included in the
Representative’s Units (“Representative’s Warrants”) have an exercise price of
$6.25 (125% of the exercise price of the Warrants included in the Units sold
to
the public). The Representative’s Purchase Option shall be exercisable, in whole
or in part, commencing on the later of (i) one year from the Effective Date
and
(ii) the consummation of a Business Combination, and expiring on the four-year
anniversary of the Effective Date at an exercise price per Representative’s Unit
of $7.50, which is equal to one hundred twenty five percent (125%) of
the
initial public offering price of a Unit. The Representative’s Purchase Option,
the Representative’s Units, the Representative’s Warrants and the shares of
Common Stock issuable upon exercise of the Representative’s Warrants are
hereinafter referred to collectively as the “Representative’s Securities.” The
Public Securities and the Representative’s Securities are hereinafter referred
to collectively as the “Securities.”
1.4.2 Payment
and Delivery.
Delivery and payment for the Representative’s Purchase Option shall be made on
the Closing Date. The Company shall deliver to the Underwriters, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the Representative may request.
2. Qualified
Independent Underwriter.
2.1 The
Representative hereby confirms its engagement of EarlyBirdCapital, Inc. as,
and
EarlyBirdCapital, Inc. hereby confirms its agreement with the Representative
to
render services as a, "qualified independent underwriter" within the meaning
of
Rule 2720(b)(15) of the National Association of Securities Dealers, Inc.
(“NASD”) with respect to the offering and sale of the Firm Units.
EarlyBirdCapital, Inc., in its capacity as a qualified independent underwriter
and not otherwise, is referred to herein as the "QIU."
2.2 Representations
and Warranties of QIU.
The QIU
hereby represents and warrants to, and agrees with, the Underwriters that with
respect to the offering and sale of the Firm Units as described in the
Prospectus:
2.2.1
Such QIU constitutes a "qualified independent underwriter" within the meaning
of
Rule 2720(b)(15);
2.2.2
Such QIU has participated in the preparation of the Registration Statement
and
the Prospectus and has exercised the usual standards of "due diligence" in
respect thereto;
2.2.3
Such QIU has undertaken the legal responsibilities and liabilities of an
underwriter under the Securities Act of 1933, as amended (“Act”) specifically
including those inherent in Section 11 thereof;
2.2.4
Such QIU recommends, as of the date of the execution and delivery of this
Agreement, a maximum initial public offering price per Firm Unit of $6.00 for
each Firm Unit; and
2.2.5
Subject to the provisions of Section 5 hereof, such QIU will furnish to the
Underwriters at the Closing Date a letter, dated the Closing Date, in form
and
substance satisfactory to the Underwriters, to the effect of clauses 2.2.1
through 2.2.4 above.
2.3 The
Company, the Underwriters and the QIU severally agree to comply in all material
respects with all of the requirements of Rule 2720 applicable to them in
connection with the offering and sale of the Firm Units. The Company agrees
to
cooperate with the Underwriters and the QIU to enable the Underwriters to comply
with Rule 2720 and the QIU to perform the services contemplated by this
Agreement.
3. Representations
and Warranties of the Company.
The
Company represents and warrants to the Underwriters as follows:
3.1 Filing
of Registration Statement.
3.1.1 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. 333-127272), including the
preliminary prospectus dated as of January 20, 2006 (the “Sale
Preliminary Prospectus”), and any other related preliminary prospectus
(collectively, the “Preliminary Prospectus”), for the registration of the Public
Securities under the Act, which registration statement and amendment or
amendments, including the Sale Preliminary Prospectus, have been prepared by
the
Company in conformity with the requirements of the Act, and the rules and
regulations (“Regulations”) of the Commission under the Act. Except as the
context may otherwise require, such registration statement, as amended, on
file
with the Commission at the time the registration statement becomes effective
(including the prospectus, financial statements, schedules, exhibits and all
other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to paragraph
(b) of Rule 430A of the Regulations), is hereinafter called the “Registration
Statement,” and the form of the final prospectus dated the Effective Date
included in the Registration Statement (or, if applicable, the form of final
prospectus filed with the Commission pursuant to Rule 424 of the Regulations),
is hereinafter called the “Prospectus.” The Registration Statement has been
declared effective by the Commission on the date hereof.
3.1.2 Pursuant
to the Exchange Act.
The
Company has filed with the Commission a Form 8-A (File Number 000-51682)
providing for the registration under the Securities Exchange Act of 1934, as
amended (“Exchange Act”), of the Units, the Common Stock and the Warrants. The
registration of the Units, Common Stock and Warrants under the Exchange Act
is
effective on the date hereof.
3.2 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 effectiveness of the Registration Statement or the use of the
Preliminary Prospectus or Prospectus or any part thereof or has instituted
or,
to the best of the Company’s knowledge, threatened to institute any proceedings
with respect to such an order.
3.3 Disclosures
in Registration Statement.
3.3.1
10b-5 Representation. At the time the Registration Statement became
effective and at all times subsequent thereto up to the Closing Date and
the
Option Closing Date, if any, the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus will contain all material statements that are
required to be stated therein in accordance with the Act and the Regulations,
and will in all material respects conform to the requirements of the Act
and the
Regulations; neither the Registration Statement, the Sale Preliminary Prospectus
nor the Prospectus, nor any amendment or supplement thereto, including the
Sale
Preliminary Prospectus, on such dates, will contain any untrue statement
of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances
under
which they were made, not misleading. When any Preliminary Prospectus was
first
filed with the Commission (whether filed as part of the Registration Statement
for the registration of the Securities or any amendment thereto or pursuant
to
Rule 424(a) of the Regulations) and when any amendment thereof or supplement
thereto was first filed with the Commission, such Preliminary Prospectus
and any
amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Act and the Regulations
and did not and will not contain an untrue statement of a material fact or
omit
to state any material fact required to be stated therein or necessary in
order
to make the statements therein, in light of the circumstances under which
they
were made, not misleading. The representations and warranties made in this
Section 3.3.1 do not apply to statements made or statements omitted in reliance
upon, and in strict conformity with, written information furnished to the
Company with respect to the Underwriters by or on behalf of the Underwriters
expressly for use in the Registration Statement; it being understood that
the
only information furnished to the Company with respect to the Underwriters
or on
behalf of the Underwriters is: (a) the public offering price and underwriting
discounts figures appearing on the cover page; (b) the table under the caption
“Underwriting - Commissions and Discounts” in the Prospectuses; (c) the fifth,
sixth and seventh paragraphs of text under the caption “Underwriting -
Regulatory Restrictions on Purchase of Securities” in the Prospectuses
concerning stabilizing transactions, over-allotments and coverage transactions;
and (d) the paragraph of text under the caption “Underwriting - NASD Rule 2720”
in the Prospectuses, regarding the offering compliance with Rule 2720 of
the
Conduct rules of the NASD. It being further understood that the market-related
data included in the Registration Statement and the Prospectus shall not
constitute written information furnished to the Company with respect to the
Underwriters or on behalf of the Underwriters. Nothing has come to the attention
of the Company that has caused the Company to believe that the market-related
data included in the Registration Statement and the Prospectus is not based
on
or derived from sources that are reliable and accurate (in accordance with
the
methodologies used to derive such market-related data set forth in the
underlying source material) in all material respects.
3.3.2 Disclosure
of Agreements.
The
agreements and documents described in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus conform to the descriptions thereof
contained therein and there are no agreements or other documents required to
be
described in the Registration Statement, the Sale Preliminary Prospectus or
the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other
instrument (however characterized or described) to which the Company is a party
or by which its property or business is or may be bound or affected and (i)
that
is referred to in the Prospectus, or (ii) is material to the Company’s business,
has been duly and validly executed by the Company, is in full force and effect
and is enforceable against the Company and, to the Company’s knowledge, the
other parties thereto, in accordance with its terms, except (x) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the federal
and
state securities laws, and (z) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought, and none of such agreements or instruments has been assigned
by
the Company, and neither the Company nor, to the best of the Company’s
knowledge, any other party is in breach or default thereunder and, to the best
of the Company’s knowledge, no event has occurred that, with the lapse of time
or the giving of notice, or both, would constitute a breach or default
thereunder. To the best of the Company’s knowledge, performance by the Company
of the material provisions of such agreements or instruments will not result
in
a violation of any existing applicable law, rule, regulation, judgment, order
or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its assets or businesses, including,
without limitation, those relating to environmental laws and
regulations.
3.3.3 Prior
Securities Transactions.
No
securities of the Company have been sold by the Company or by or on behalf
of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company since the formation of the Company, except
as disclosed in the Registration Statement.
3.3.4 Regulations.
The
disclosures in the Registration Statement concerning the effects of Federal,
State and local regulation on the Company’s business as currently contemplated
are correct in all material respects and do not omit to state a material fact
necessary to make the statements therein, in light of the circumstances in
which
they were made, not misleading.
3.4 Changes
After Dates in Registration Statement.
3.4.1 No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, except as
otherwise specifically stated therein, (i) there has been no material adverse
change in the condition, financial or otherwise, or business prospects of the
Company, (ii) there have been no material transactions entered into by the
Company, other than as contemplated pursuant to this Agreement, and (iii) no
member of the Company’s management has resigned from any position with the
Company.
3.4.2 Recent
Securities Transactions, Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus,
and
except as may otherwise be indicated or contemplated herein or therein, the
Company has not (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money; or (ii) declared or paid
any dividend or made any other distribution on or in respect to its equity
securities.
3.5 Independent
Accountants.
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP (“GGK”), whose report is filed with the Commission
as part of the Registration Statement, are independent accountants as required
by the Act and the Regulations. GGK 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.
3.6 Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus, fairly present the financial position, the results of operations
and
the cash flows of the Company at the dates and for the periods to which they
apply; and such financial statements have been prepared in conformity with
United States generally accepted accounting principles (“GAAP”), consistently
applied throughout the periods involved. The Registration Statement discloses
all material off-balance sheet transactions, arrangements, obligations
(including contingent obligations), and other relationships of the Company
with
unconsolidated entities or other persons that may have a material current or
future effect on the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures, capital
resources, or significant components of revenues or expenses.
3.7 Authorized
Capital; Options; Etc.
The
Company had at the date or dates indicated in the Sale Preliminary Prospectus
and the Prospectus duly authorized, issued and outstanding capital stock as
set
forth in the, Registration Statement, the Sale Preliminary Prospectus 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, the Sale Preliminary Prospectus and the Prospectus,
on the Effective Date and on the Closing Date, there will be no options,
warrants, or other rights to purchase or otherwise acquire any authorized but
unissued shares of Common Stock of the Company or any security convertible
into
shares of Common Stock of the Company, or any contracts or commitments to issue
or sell shares of Common Stock or any such options, warrants, rights or
convertible securities.
3.8 Valid
Issuance of Securities; Etc.
3.8.1 Outstanding
Securities.
All
issued and outstanding securities of the Company (including, without limitation
the Placement Securities) have been duly authorized and validly issued and
are
fully paid and non-assessable; the holders thereof have no rights of rescission
with respect thereto, and are not subject to personal liability by reason of
being such holders; and none of such securities were issued in violation of
the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The authorized Common Stock conforms
to all statements relating thereto contained in the Registration Statement,
the
Sale Preliminary Prospectus and the Prospectus. The offers and sales of the
outstanding Common Stock were at all relevant times either registered under
the
Act and the applicable state securities or Blue Sky laws or, based in part
on
the representations and warranties of the purchasers of such shares of Common
Stock, exempt from such registration requirements.
3.8.2 Securities
Sold Pursuant to this Agreement.
The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not
and
will not be subject to personal liability by reason of being such holders;
the
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual rights granted
by
the Company; and all corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly and validly
taken. The Securities conform in all material respects to all statements with
respect thereto contained in the Registration Statement. When issued, the
Representative’s Purchase Option, the Representative’s Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representative’s Purchase Option, the
Representative’s Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except (i) as such enforceability
may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (ii) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and
other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
3.8.3
Placement
Warrants.
The
Placement Warrants constitute valid and binding obligations of the Company
to
issue and sell, upon exercise thereof and payment of the respective exercise
prices therefor, the number and type of securities of the Company called for
thereby in accordance with the terms thereof, and such Placement Warrants are
enforceable against the Company in accordance with their respective terms,
except: (i) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally; (ii) as
enforceability of any indemnification or contribution provision may be limited
under federal and state securities laws; and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. The shares of Common Stock issuable upon
exercise of the Placement Warrants have been reserved for issuance upon the
exercise of the Placement Warrants and, when issued in accordance with the
terms
of the Placement Warrants, will be duly and validly authorized, validly issued,
fully paid and non-assessable, and the holders thereof are not and will not
be
subject to personal liability by reason of being such holders.
3.8.4 No
Integration.
Neither
the Company nor any of its affiliates has, prior to the date hereof, made any
offer or sale of any securities which are required to be “integrated” pursuant
to the Act or the Regulations with the offer and sale of the Securities pursuant
to the Registration Statement
3.9 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.
3.10 Validity
and Binding Effect of Agreements.
This
Agreement, the Warrant Agreement (as defined in Section 3.21 hereof), the Trust
Agreement (as defined in Section 3.22 hereof), those certain letter agreements
(each substantially in the forms filed as Exhibit 10.7 to the Registration
Statement), pursuant to which each of the Initial Stockholders agrees to certain
matters, including but not limited to, certain matters described as being agreed
to by them under the “Proposed Business” section of the Prospectus (“Insider
Letters”), the Placement Unit Purchase Agreement (as defined in Section 3.23
hereof), the Stock Escrow Agreement between the Company and Continental Stock
Transfer & Trust Company (substantially in the form filed as Exhibit 10.9 to
the Registration Statement (“Stock Escrow Agreement”) the Representative’s
Purchase Option (as defined in Section 1.4.1 hereof) and the Services Agreement
(as defined in Section 3.28 hereof) have been duly and validly authorized by
the
Company and 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 equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
3.11 No
Conflicts, Etc.
The
execution, delivery, and performance by the Company of this Agreement, the
Warrant Agreement, the Representative’s Purchase Option, the Trust Agreement,
the Insider Letters, the Placement Unit Purchase Agreement the Services
Agreement and the Stock Escrow Agreement, the consummation by the Company of
the
transactions herein and therein contemplated and the compliance by the Company
with the terms hereof and thereof do not and will not, with or without the
giving of notice or the lapse of time or both (i) result in a breach of, or
conflict with any of the terms and provisions of, or constitute a default under,
or result in the creation, modification, termination or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to
the
terms of any agreement or instrument to which the Company is a party except
pursuant to the Trust Agreement referred to in Section 3.22 hereof; (ii) result
in any violation of the provisions of the Restated Certificate of Incorporation
or the By-laws of the Company; or (iii) violate any existing applicable law,
rule, regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of its
properties or business.
3.12 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
Restated Certificate of Incorporation or By-laws or in violation of any material
franchise, license, permit, applicable law, rule, regulation, judgment or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or businesses.
3.13 Corporate
Power; Licenses; Ownership.
3.13.1 Conduct
of Business.
The
Company has all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and permits of and
from all governmental regulatory officials and bodies that it needs as of the
date hereof to conduct its business and to consummate a Business Combination
as
described in the Sale Preliminary Prospectus and the Prospectus. The disclosures
in the Registration Statement and in the Sale Preliminary Prospectus 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.
3.13.2 Transactions
Contemplated Herein.
The
Company has all corporate power and authority to enter into this Agreement
and
to carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have
been
obtained. No consent, authorization or order of, and no filing with, any court,
government agency or other body is required for the valid issuance, sale and
delivery, of the Securities and the consummation of the transactions and
agreements contemplated by this Agreement, the Warrant Agreement, the
Representative’s Purchase Option, the Trust Agreement, the Insider Letters, the
Services Agreement, the Stock Escrow Agreement and the Placement Unit Purchase
Agreement and as contemplated by the Prospectus, except with respect to
applicable federal and state securities laws.
3.13.3 Ownership.
Except as set forth in the Sale Preliminary Prospectus and the Prospectus,
the
Company owns or has valid leasehold interests in all material properties
and
assets required for the operation of its business as now conducted, including
those described in the Registration Statement and the Prospectus as being
owned
by it; and the Company has good and marketable title to all properties and
assets owned by it material to its business in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by the Company.
All
real property leases to which the Company or any of its subsidiaries is a
party
are valid, subsisting and, to the knowledge of the Company, enforceable by
the
Company or such subsidiary, in each case with no exceptions that would
materially interfere with the use made or to be made thereof by the Company
or
its subsidiaries and each of the Company and its subsidiaries enjoys peaceful
and undisturbed possession under all such leases to which it is a party as
lessee.
3.14 D&O
Questionnaires.
To the
best of the Company’s knowledge, all information contained in the director and
officer questionnaires and NASD supplemental questionnaires (“Questionnaires”)
completed by each of the Initial Stockholders and provided to the Underwriters
as an exhibit to his or her Insider Letters 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.
3.15 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, the Sale Preliminary Prospectus or the Questionnaires,
except for actions, suits, proceedings, inquiries, arbitrations, investigations,
litigation or government proceedings pending against any Initial Stockholder
that would not individually or in the aggregate have a material adverse effect
on such Initial Stockholder, the Company or the Offering.
3.16 Good
Standing.
The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of its state of incorporation, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct
of
business requires such qualification, except where the failure to qualify would
not have a material adverse effect on the Company.
3.17 Transactions
Affecting Disclosure to NASD.
3.17.1 Finder’s
Fees.
Except
as described in the Sale Preliminary Prospectus and 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 NASD.
3.17.2
Payments Within Twelve Months.
The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) (i) to any person, as a finder’s fee, consulting fee or otherwise, in
consideration of such person raising capital for the Company or introducing
to
the Company persons who raised or provided capital to the Company, (ii) to
any
NASD member or (iii) to any person or entity that has any direct or indirect
affiliation or association with any NASD member, within the twelve months prior
to the Effective Date.
3.17.3 Use
of
Proceeds.
None of
the net proceeds from the sale of the Securities or the Placement Securities
will be paid by the Company to any participating NASD member or its affiliates,
except as specifically authorized or contemplated herein and in the Placement
Unit Purchase Agreement and except as may be paid in connection with a Business
Combination as contemplated by the Sale Preliminary Prospectus and the
Prospectus.
3.17.4 Insiders’
NASD Affiliation. Based on the Questionnaires distributed to such persons,
except as set forth on Schedule 3.17.4, no officer, director or any beneficial
owner of the Company’s unregistered securities has any direct or indirect
affiliation or association with any NASD member. The Company will advise
the
Representative and its counsel if it learns that any officer, director or
owner
of at least 5% of the Company’s outstanding Common Shares is or becomes an
affiliate or associated person of an NASD member participating in the
Offering.
3.18 Foreign
Corrupt Practices Act.
Neither
the Company nor any of the Initial Stockholders or any other person acting
on
behalf of the Company has, directly or indirectly, given or agreed to give
any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or
agent
of a customer or supplier, or official or employee of any governmental agency
or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist it
in
connection with any actual or proposed transaction) that (i) might subject
the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company
as
reflected in any of the financial statements contained in the Prospectus or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company’s internal
accounting controls and procedures are sufficient to cause the Company to comply
with the Foreign Corrupt Practices Act of 1977, as amended.
3.19 Patriot
Act.
Neither
the Company nor any officer, director or Initial Stockholder has violated:
(i)
the Bank Secrecy Act, as amended; (ii) the Money Laundering Control Act of
1986,
as amended; or (iii) the Uniting and Strengthening of America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT)
Act of 2001, and/or the rules and regulations promulgated under any such law,
or
any successor law.
3.20 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.
3.21 Warrant
Agreement.
The
Company has entered into a warrant agreement with respect to the Warrants ,
the
Representative’s Warrants and the Placement Warrants with Continental Stock
Transfer & Trust Company substantially in the form filed as Exhibit 4.4 to
the Registration Statement (“Warrant Agreement”).
3.22 Investment
Management Trust Agreement.
The
Company has entered into the Investment Management Trust Agreement with respect
to certain proceeds of the Offering substantially in the form filed as Exhibit
10.10 to the Registration Statement (“Trust Agreement”).
3.23 Placement
Unit Purchase Agreement.
The
Initial Stockholders have executed and delivered an agreement, annexed as
Exhibit 10.19 to the Registration Statement (“Placement Unit Purchase
Agreement”), pursuant to which such parties have, among other things, purchased
an aggregate of 166,667 Placement Units in the Private Placement. Pursuant
to
the Placement Unit Purchase Agreement, (i) $1,000,002 of the proceeds from
the
sale of the Placement Units will be deposited by the Company in the Trust Fund
in accordance with the terms of the Trust Agreement prior to the Closing Date,
and (ii) the purchasers of the Placement Units have waived any and all rights
and claims they may have to any proceeds, and any interest thereon, held in
the
Trust Fund in respect of the shares of Common Stock included in such Placement
Units in the event that a Business Combination is not consummated and the Trust
Fund is liquidated in accordance with the terms of the Trust
Agreement.
3.24 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.
3.25 Investments.
No more
than 45% of the “value” (as defined in Section 2(a)(41) of the Investment
Company Act of 1940 (“Investment Company Act”)) of the Company’s total assets
consist of, and no more than 45% of the Company’s net income after taxes is
derived from, securities other than “Government securities” (as defined in
Section 2(a)(16) of the Investment Company Act).
3.26 Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
3.27 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.
3.28 Administrative
Services.
The
Company has entered into the Office Service Agreement (the “Services Agreement”)
with Berkshire
Capital Securities LLC
substantially in the form annexed as Exhibit 10.11 to the Registration Statement
pursuant to which the affiliate will make available to the Company general
and
administrative support for the Company’s use for $7,500 per month.
4. Covenants
of the Company.
The
Company covenants and agrees as follows:
4.1 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.
4.2 Federal
Securities Laws.
4.2.1 Compliance.
During
the time when a Prospectus is required to be delivered under the Act, the
Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary
to
permit the continuance of sales of or dealings in the Public Securities in
accordance with the provisions hereof and the Prospectus. If at any time when
a
Prospectus relating to the Public Securities is required to be delivered under
the Act, any event shall have occurred as a result of which, in the opinion
of
counsel for the Company or counsel for the Underwriters, the Prospectus, as
then
amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Representative promptly
and
prepare and file with the Commission, subject to Section 4.1
hereof,
an appropriate amendment or supplement in accordance with Section 10 of the
Act.
4.2.2 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.
4.2.3 Exchange
Act Registration.
Until
the earlier of five years from the Effective Date or the date that the Company
is liquidated, the Company (i) will use its best efforts to maintain the
registration of the Units, Common Stock and Warrants under the provisions of
the
Exchange Act and (ii) will not deregister the Units, Common Stock or Warrants
under the Exchange Act without the prior written consent of TEP; provided
that
the
Company may terminate its Exchange Act registration, without the prior written
consent of TEP, in the event all of the outstanding voting stock of the Company
is acquired by a third party.
4.3 Blue
Sky Filings.
The
Company will endeavor in good faith, in cooperation with the Representative,
at
or prior to the time the Registration Statement becomes effective, to qualify
the Public Securities for offering and sale under the securities laws of such
jurisdictions as the Representative may reasonably designate, provided that
no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. Until
the
earliest of (i) the date on which all Underwriters shall have ceased to engage
in market making activities in respect of the Public Securities, (ii) the date
on which the Public Securities are listed or quoted, as the case may be, on
the
New York Stock Exchange, the American Stock Exchange or the Nasdaq National
Market (or any successor to such entities) and (iii) the date of the liquidation
of the Company (the period from the Effective Date to such earliest date, the
“Blue Sky Compliance Period”), in each jurisdiction where such qualification
shall be effected, the Company will, unless the Representative agrees that
such
action is not at the time necessary or advisable, use all reasonable efforts
to
file and make such statements or reports at such times as are or may be required
by the laws of such jurisdiction.
4.4 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.
4.5 Effectiveness
and Events Requiring Notice to the Representative.
The
Company will use its best efforts to cause the Registration Statement to remain
effective until distribution of the Public Securities is complete and will
notify the Representative immediately and confirm the notice in writing (i)
of
the effectiveness of the Registration Statement and any amendment thereto,
(ii)
of the issuance by the Commission of any stop order or of the initiation, or
the
threatening, of any proceeding for that purpose when the Company becomes aware
of such, (iii) of the issuance by any state securities commission of any
proceedings for the suspension of the qualification of the Public Securities
for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that purpose when the Company becomes aware of such,
(iv)
of the mailing and delivery to the Commission for filing of any amendment or
supplement to the Registration Statement or Prospectus, (v) of the receipt
of
any comments or request for any additional information from the Commission,
and
(vi) of the happening of any event during the period described in Section
4.3
hereof
that, in the judgment of the Company, makes any statement of a material fact
made in the Registration Statement or the Prospectus untrue or that requires
the
making of any changes in the Registration Statement or the Prospectus in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. If the Commission or any state securities commission
shall enter a stop order or suspend such qualification during any such time,
the
Company will make every reasonable effort to obtain promptly the lifting of
such
order.
4.6 Affiliated
Transactions.
4.6.1 Business
Combinations.
The
Company will not consummate a Business Combination with any entity which is
affiliated with any Initial Stockholder unless the Company obtains an opinion
from an independent investment banking firm that is a member of the NASD that
the Business Combination is fair to the Company’s stockholders from a financial
perspective.
4.6.2 Compensation.
Except
for payments made to Berkshire Capital Securities LLC as disclosed in the
Prospectus, the Company shall not pay any Initial Stockholder or any of their
affiliates any fees or compensation from the Company, for services rendered
to
the Company prior to, or in connection with, the consummation of a Business
Combination; provided that the Initial Stockholders and their affiliates shall
be entitled to reimbursement from the Company for their reasonable out-of-pocket
expenses incurred in connection with seeking and consummating a Business
Combination.
4.7 Secondary
Market Trading.
During
the Blue Sky Compliance Period, the Company shall promptly take such action
as
may be reasonably requested by the Representative to maintain secondary market
trading in such other states as may be reasonably requested by the
Representative.
4.8 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, but not affiliated with, the Representative for a
term
to be agreed upon by the Company and the Representative.
4.9 Reports
to the Representative.
4.9.1 Periodic
Reports, Etc.
For a
period of five years from the Effective Date, the Company will furnish to the
Representative and its counsel copies of such financial statements and other
periodic and special reports as the Company from time to time furnishes
generally to holders of any class of its securities, and promptly furnish to
the
Representative (i) a copy of each periodic report the Company shall be required
to file with the Commission, (ii) a copy of every press release and every news
item and article with respect to the Company or its affairs which was released
by the Company, (iii) a copy of each Current Report on Form 8-K and Schedules
13D, 13G, 14D-1 or 13E-4 received or prepared by the Company, (iv) five copies
of each registration statement filed by the Company with the Commission under
the Securities Act, (v) such additional documents and information with respect
to the Company and the affairs of any future subsidiaries of the Company as
the
Representative may from time to time reasonably request, provided that the
Representative shall sign, if required by the Company, a Regulation FD compliant
confidentiality agreement reasonably acceptable to the Representative in
connection with the Representative’s receipt of such information.
4.9.2 Transfer
Agent.
During
the Blue Sky Compliance Period, the Company shall retain a transfer and warrant
agent acceptable to the Representative (“Transfer Agent”). The Underwriters
acknowledge that Continental Stock Transfer & Trust Company is an acceptable
Transfer Agent.
4.9.3 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 the Nasdaq National
Market, the Company shall engage Cooley Godward LLP, counsel to the Underwriters
(“Cooley”) to deliver and update to the Underwriters on a timely basis, but in
any event on the Effective Date and at the beginning of each fiscal quarter,
a
written report detailing those states in which the Public Securities may be
traded in non-issuer transactions under the Blue Sky laws of the fifty States
(“Secondary Market Trading Survey”).
4.10 Payment
of Expenses.
4.10.1 General
Expenses Related to the Offering.
The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at the Closing Date, all expenses incident
to the performance of the obligations of the Company under this Agreement,
including but not limited to (i) the preparation (exclusive of the fees and
expenses of counsel to the Underwriters), printing, filing and mailing
(including the payment of postage with respect to such mailing) of the
Registration Statement, the Preliminary and Final Prospectuses and the printing
and mailing of this Agreement and related documents, including the cost of
all
copies thereof and any amendments thereof or supplements thereto supplied to
the
Underwriters in quantities as may be required by the Underwriters, (ii) the
printing, engraving, issuance and delivery of the Units, the shares of Common
Stock and the Warrants included in the Units and the Representative’s Purchase
Option, including any transfer or other taxes payable thereon, (iii) the
qualification of the Public Securities under state or foreign securities or
Blue
Sky laws, including the costs of preparing, printing and mailing the
“Preliminary Blue Sky Memorandum,” and all amendments and supplements thereto
and quarterly opinions relating thereto, the preparation of the Secondary Market
Trading Survey (as defined above), and the reasonable fees and disbursements
of
Cooley related thereto; provided that the Company shall not be required to
reimburse the Representative or Cooley for any amounts under this clause (iii)
in excess of $40,000, (iv) filing fees, costs and expenses (excluding fees
and
disbursements for the Representative’s counsel) incurred in registering the
Offering with the NASD and the Commission, (v) fees and disbursements of the
Transfer Agent, (vi) the Company’s expenses associated with “due diligence” and
“road show” meetings arranged by the Representative, and (vii) 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 4.10.1. 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.
4.10.2 Nonaccountable
Expenses.
The
Company further agrees that, in addition to the expenses payable pursuant to
Section 4.10.1, on the closing date of a Business Combination, it will pay
to
the Representative a nonaccountable expense allowance equal to $673,333.30,
plus
any accrued interest on such amount, net of taxes payable, which amount shall
be
reduced by the Underwriter's Conversion Payment (as defined below), by deduction
from the Trust Fund (the "Underwriters Deferred Compensation"). In the event
that the Company fails to consummate a Business Combination, the Underwriters
will forfeit the Underwriters Deferred Compensation. The "Underwriter's
Conversion Payment" shall mean the product of (A) the number of shares actually
converted into cash by stockholders of the Company in connection with a Business
Combination, multiplied by (B) the Per Share Conversion Amount (as defined
below). The "Per Share Conversion Amount" shall mean $167,333.50 divided by
the
Maximum Eligible Conversion Shares (as defined below). The "Maximum Eligible
Conversion Shares" shall mean (C) the product of (i) 6,733,333 plus the actual
number of units sold pursuant to the Underwriters' exercise, if any, of the
Over-allotment Option, multiplied by (ii) 20 percent; (D) rounded down to the
nearest whole number (including, in the event that the product derived in (C)
above is a whole number, the next lower whole number). For illustrative
purposes, assuming no exercise of the Over-allotment Option, the Maximum
Eligible Conversion Shares would be 1,346,666, and the Per Share Conversion
Amount would be $0.124257627. Assuming full exercise of the Over-allotment
Option, the Maximum Eligible Conversion Shares would be 1,548,666, and the
Per
Share Conversion Amount would be $0.108050104.
4.11 Application
of Net Proceeds.
The
Company will apply the net proceeds from the Offering and the Private Placement
received by it in a manner consistent with the application described under
the
caption “Use Of Proceeds” in the Prospectus.
4.12 Delivery
of Earnings Statements to Security Holders.
The
Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the sixteenth full calendar
month following the Effective Date, an earnings statement (which need not be
certified by independent public or independent certified public accountants
unless required by the Act or the Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Act) covering a period
of
at least twelve consecutive months beginning after the Effective
Date.
4.13 Notice
to NASD.
In the
event any person or entity (excluding attorneys, accountants, engineers,
environmental or labor consultants, investigatory firms, technology consultants
and specialists and similar service providers that are not affiliated or
associated with the NASD and are not brokers or finders) is engaged, in writing,
to assist the issuer in finding or evaluating the initial Business Combination,
the Company will provide the following to the NASD and TEP prior to the
consummation of the Business Combination: (i) copies of agreements governing
said services (which agreements may be appropriately redacted to account for
privilege or confidentiality concerns); and (ii) a justification as to why
the
person or entity providing the merger and acquisition services should not be
considered an “underwriter or related person” with respect to the Company’s
initial public offering, as such term is defined in Rule 2710(a)(6) of the
NASD
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.
4.14 Stabilization.
Neither
the Company, nor, to its knowledge, any of its employees, directors or
stockholders (without the consent of TEP) 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.
4.15 Internal
Controls.
During
the Blue Sky Compliance Period, the Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management’s general or specific
authorization, (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets, (iii) access
to
assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared
with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
4.16 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.
4.17 NASD.
During
the period of the distribution of the Public Securities, the Company shall
advise the NASD if it is aware that any 5% or greater stockholder of the Company
becomes an affiliate or associated person of an NASD member participating in
the
distribution of the Company’s Public Securities.
4.18 Corporate
Proceedings.
All
corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall
have
been done to the reasonable satisfaction to counsel for the
Underwriters.
4.19 Investment
Company.
The
Company shall cause the proceeds of the Offering to be held in the Trust Fund
to
be invested only in money market funds meeting conditions of the Investment
Company Act or securities issued or guaranteed by the United States as set
forth
in the Trust Agreement and disclosed in the Prospectus. The Company will
otherwise conduct its business in a manner so that it will not become subject
to
the Investment Company Act. Furthermore, once the Company consummates a Business
Combination, it will conduct its business in a manner so that it will not become
subject to the Investment Company Act.
4.20 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.
4.21 Private
Placement Proceeds.
Immediately upon establishment of the Trust Fund and prior to the Closing,
the
Company shall deposit $1,000,002 of the proceeds from the Private Placement
in
the Trust Fund and shall provide TEP with evidence of the same.
4.22 Independent
Public Accountant.
The
Company shall use commercially reasonable efforts to retain an independent
public accountant of national standing selected by the Company’s Board of
Directors until at least the third anniversary of the Closing Date or until
such
earlier time upon which the Company is required to be liquidated or is no longer
required to file reports under the Exchange Act.
5. 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, the
condition (in the case of the Underwriters) that the QIU shall have furnished
to
the Underwriters the letter referred to in Section 2.2.5 hereof and to the
following conditions:
5.1 Regulatory
Matters.
5.1.1 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 ▇▇▇▇▇▇.
5.1.2 NASD
Clearance.
By the
Effective Date, the Representative shall have received clearance from the NASD
as to the amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
5.1.3 No
Blue Sky Stop Orders.
No
order suspending the sale of the Units in any jurisdiction designated by you
pursuant to Section 4.3
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.
5.2 Company
Counsel Matters.
5.2.1 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 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP (“▇▇▇▇▇▇▇”),
counsel to the Company, dated as of the Closing Date or the Option Closing
Date,
as the case may be, addressed to the Representative and in form and substance
satisfactory to ▇▇▇▇▇▇ and attached hereto as Exhibit A.
5.2.2 Reliance.
In
rendering such opinion, such counsel may rely (i) as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to
the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to ▇▇▇▇▇▇) of other counsel
reasonably acceptable to ▇▇▇▇▇▇, familiar with the applicable laws, and (ii)
as
to matters of fact, to the extent they deem proper, on certificates or other
written statements of officers of the Company and officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company, provided that copies of any such
statements or certificates shall be delivered to ▇▇▇▇▇▇ 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.
5.3 Cold
Comfort Letter.
At the
time this Agreement is executed, and at each of the Closing Date and the Option
Closing Date, if any, you shall have received a letter, addressed to the
Representative and in form and substance satisfactory in all respects (including
the non-material nature of the changes or decreases, if any, referred to in
clause (iii) below) to you and to ▇▇▇▇▇▇ from GGK dated, respectively, as of
the
date of this Agreement and as of the Closing Date and the Option Closing Date,
if any:
(i) Confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations and that they have not, during
the periods covered by the financial statements included in the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act;
(ii) Stating
that in their opinion the financial statements of the Company included in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act and the published Regulations thereunder;
(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders
and
Board and the various committees of the Board, consultations with officers
and
other employees of the Company responsible for financial and accounting matters
and other specified procedures and inquiries, nothing has come to their
attention which would lead them to believe that (a) the unaudited financial
statements of the Company included in the Registration Statement do not comply
as to form in all material respects with the applicable accounting requirements
of the Act and the Regulations or are not fairly presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements of the Company included
in the Registration Statement, (b) at a date not later than five days prior
to
the Effective Date, Closing Date or Option Closing Date, as the case may be,
there was any change in the capital stock or long-term debt of the Company,
or
any decrease in the stockholders’ equity of the Company as compared with amounts
shown in the November 30, 2005 balance sheet included in the Registration
Statement, other than as set forth in or contemplated by the Registration
Statement, or, if there was any decrease, setting forth the amount of such
decrease, and (c) during the period from November 30, 2005 to a specified date
not later than five days prior to the Effective Date, Closing Date or Option
Closing Date, as the case may be, there was any decrease in revenues, net
earnings or net earnings per share of Common Stock, in each case as compared
with the corresponding period in the preceding year and as compared with the
corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a break-down of commercial
papers and notes payable to banks);
(v) Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the extent that
such
amounts, numbers, percentages, statements and information may be derived from
the general accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal counsel, with
the
results obtained from the application of specified readings, inquiries and
other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi) Stating
that they have not during the immediately preceding five year period brought
to
the attention of the Company’s management any reportable condition related to
internal structure, design or operation as defined in the Statement on Auditing
Standards No. 60 “Communication of Internal Control Structure Related Matters
Noted in an Audit,” in the Company’s internal controls; and
(vii) Statements
as to such other matters incident to the transaction contemplated hereby as
you
may reasonably request.
5.4 Officers’
Certificates.
5.4.1 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
5.5
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 3 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.
5.4.2 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 By-laws and Restated
Certificate of Incorporation of the Company are true and complete, have not
been
modified and are in full force and effect, (ii) that the resolutions relating
to
the public offering contemplated by this Agreement are in full force and effect
and have not been modified, (iii) all correspondence between the Company or
its
counsel and the Commission, and (iv) as to the incumbency of the officers of
the
Company. The documents referred to in such certificate shall be attached to
such
certificate.
5.5 No
Material Changes.
Prior
to and on each of the Closing Date and the Option Closing Date, if any, (i)
there shall have been no material adverse change or development involving a
prospective material adverse change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Registration Statement,
the
Sale Preliminary Prospectus and the 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, the Sale Preliminary Prospectus and
the
Prospectus, (iii) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or threatened by the Commission,
and (iv) the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus and any amendments or supplements thereto shall contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and shall conform in all material respects to the
requirements of the Act and the Regulations, and neither the Registration
Statement, the Sale Preliminary Prospectus nor the Prospectus nor any amendment
or supplement thereto shall contain any untrue statement of a material fact
or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
5.6 Delivery
of Agreements.
5.6.1 Effective
Date Deliveries.
On the
Effective Date, the Company shall have delivered to the Representative executed
copies of the Insider Letters, the Trust Agreement, the Warrant Agreement,
the
Stock Escrow Agreement and the Placement Unit Purchase Agreement.
5.6.2 Closing
Date Deliveries.
On the
Closing Date, the Company shall have delivered to the Representative the
Representative’s Purchase Option.
5.7 Opinion
of Counsel for the Underwriters.
All
proceedings taken in connection with the authorization, issuance or sale of
the
Securities as herein contemplated shall be reasonably satisfactory in form
and
substance to you and to ▇▇▇▇▇▇ and you shall have received from such counsel
a
favorable opinion, dated the Closing Date and the Option Closing Date, if any,
with respect to such of these proceedings as you may reasonably require. On
or
prior to the Effective Date, the Closing Date and the Option Closing Date,
as
the case may be, counsel for the Underwriters shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this
Section 5.7,
or in
order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
5.8 Secondary
Market Trading Survey.
On the
Closing Date, the Representative shall have received the Secondary Market
Trading Survey from ▇▇▇▇▇▇.
6. Indemnification.
6.1 Indemnification
of Underwriters.
6.1.1 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; or (iii) any application
or other document or written communication (in this Section 6
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, Nasdaq or any securities exchange; or
the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to an Underwriter by or on behalf of
such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in any
application, as the case may be. With respect to any untrue statement or
omission or alleged untrue statement or omission made in the Preliminary
Prospectus, the indemnity agreement contained in this paragraph shall not inure
to the benefit of any Underwriter to the extent that any loss, liability, claim,
damage or expense of such Underwriter results from the fact that a copy of
the
Prospectus was not given or sent to the person asserting any such loss,
liability, claim or damage at or prior to the written confirmation of sale
of
the Securities to such person as required by the Act and the Regulations, and
if
the untrue statement or omission has been corrected in the Prospectus, unless
such failure to deliver the Prospectus was a result of non-compliance by the
Company with its obligations under Section 4.4
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.
6.1.2 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 6.1.1,
such
Underwriter or Selected Dealer shall promptly notify the Company in writing
of
the institution of such action and the Company shall assume the defense of
such
action, including the employment and fees of counsel (subject to the reasonable
approval of such Underwriter or Selected Dealer, as the case may be) and payment
of actual expenses; provided,
that
the failure to give such notice shall not relieve the Company from any liability
it may have under Sections 6.1.1
or
6.1.2
hereof,
except to the extent the Company has been materially prejudiced (through
forfeiture of substantive rights or defenses) by such failure and; provided further,
that
the failure to notify the Company shall not relieve the Company from any
liability that it may have to an indemnified party as determined under Sections
6.1.1
or
6.1.2
hereof.
Such Underwriter, Selected Dealer or controlling person shall have the right
to
employ its or their own counsel in any such case, but the fees and expenses
of
such counsel shall be at the expense of such Underwriter, Selected Dealer or
controlling person unless (i) the employment of such counsel at the expense
of
the Company shall have been authorized in writing by the Company in connection
with the defense of such action, or (ii) the Company shall not have employed
counsel to take charge of the defense of such action, or (iii) such indemnified
party or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to those
available to the Company (in which case the Company shall not have the right
to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses of not more
than one additional firm of attorneys selected by the Underwriter, Selected
Dealer and/or controlling person shall be borne by the Company. Notwithstanding
anything to the contrary contained herein, if the Underwriter, Selected Dealer
or controlling person shall assume the defense of such action as provided above,
the Company shall have the right to approve the terms of any settlement of
such
action which approval shall not be unreasonably withheld.
6.2 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(a) 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 6.1.2.
6.3 Contribution.
6.3.1 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
6
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 6
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
6,
then,
and in each such case, the Company and the Underwriters shall contribute to
the
aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated by said indemnity agreement incurred by the Company and the
Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance;
provided, that, no person guilty of a fraudulent misrepresentation (within
the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any
person who was not guilty of such fraudulent misrepresentation. Notwithstanding
the provisions of this Section 6.3.1,
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 6,
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.
6.3.2 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 6
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 6.3
are
several and not joint.
7. Default
by an Underwriter.
7.1 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.
7.2 Default
Exceeding 10% of Firm Units or Option Units.
In the
event that the default addressed in Section 7.1
above
relates to more than 10% of the Firm Units or Option Units, you may in your
discretion arrange for yourself or for another party or parties to purchase
such
Firm Units or Option Units to which such default relates on the terms contained
herein. If within one business day after such default relating to more than
10%
of the Firm Units or Option Units you do not arrange for the purchase of such
Firm Units or Option Units, then the Company shall be entitled to a further
period of one business day within which to procure another party or parties
reasonably satisfactory to you to purchase said Firm Units or Option Units
on
such terms. In the event that neither you nor the Company arrange for the
purchase of the Firm Units or Option Units to which a default relates as
provided in this Section 7,
this
Agreement will be terminated without liability on the part of the Company
(except as provided in Sections 4.12 and 6
hereof)
or the several Underwriters (except as provided in Section 6
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.
7.3 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 7
with
like effect as if it had originally been a party to this Agreement with respect
to such Securities.
8. Additional
Covenants.
8.1 Additional
Shares or Options.
The
Company hereby agrees that until the earlier of the consummation of a Business
Combination or the distribution of the Trust Fund referred to in Section
8.7
hereof,
it shall not issue any shares of Common Stock or any options or other securities
convertible into Common Stock, or any shares of Preferred Stock which
participate in any manner in the Trust Fund or which vote as a class with the
Common Stock on a Business Combination.
8.2 Trust
Fund Waiver Acknowledgment.
The
Company hereby agrees that it will not commence its due diligence investigation
of any operating business which the Company seeks to acquire (each a “Target
Business”) or obtain the services of any vendor or other third party unless and
until such Target Business, vendor, or other third party acknowledges in
writing, whether through a letter of intent, memorandum of understanding or
other similar document (and subsequently acknowledges the same in any definitive
document replacing any of the foregoing), that (a) it understands that the
Company has established the Trust Fund, initially in an amount of $36,542,665
(without giving effect to any exercise of the Over-allotment Option) for the
benefit of the Public Stockholders and the Underwriters as described in Section
4.10.2 hereof, and that the Company may disburse monies from the Trust Fund
only
(i) to the Public Stockholders in the event they elect to convert their IPO
Shares (described below in Section 8.7),
(ii)
to the Public Stockholders in the event that the Company does not effect a
Business Combination within 18 months from the consummation of this Offering
(subject to extension for an additional 6-month period, as described in the
Prospectus) or (iii) to the Company and the Underwriters as described in Section
4.10.2. hereof, after it consummates a Business Combination and (b) for and
in
consideration of the Company (1) agreeing to evaluate such Target Business
for
purposes of consummating a Business Combination with it or (2) agreeing to
engage the services of the vendor or other third party, as the case may be,
such
Target Business, vendor or other third party agrees that it does not have any
right, title, interest or claim of any kind in or to any monies in the Trust
Fund (“Claim”) and waives any Claim it may have in the future as a result of, or
arising out of, any negotiations, contracts or agreements with the Company
and
will not seek recourse against the Trust Fund for any reason whatsoever.
Notwithstanding the foregoing, in the event any Target Business, vendor or
other
third party refuses to acknowledge in writing that it does not have any rights,
title, interest or claims of any kind in or to any monies in the Trust Fund,
the
Company may nonetheless commence its due diligence investigations of such Target
Business or obtain the services of any such vendor or third party if and only
if
the Company’s Board determines in good faith after due inquiry that the Company
would be unable to obtain, on a reasonable basis, substantially similar services
or opportunities from another entity willing to execute such a
waiver.
8.3 Insider
Letters and Stock Escrow Agreement.
The
Company shall not take any action or omit to take any action that would cause
a
breach of any of the Insider Letters or the Stock Escrow Agreement and will
not
allow any amendments to, or waivers of any provisions of, such Insider Letters
or the Stock Escrow Agreement without the prior written consent of
TEP.
8.4 Placement
Unit Purchase Agreement.
The
Company shall not take any action or omit to take any action that would cause
a
breach of the Placement Unit Purchase Agreement executed by and among each
Initial Stockholder, TEP and the Company and will not allow any amendments
to,
or waivers of any provisions of, such Placement Unit Purchase Agreement without
the prior written consent of TEP.
8.5 Restated
Certificate of Incorporation and By-laws.
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 Restated Certificate of
Incorporation or By-laws. Prior to the consummation of a Business Combination
or
until the distribution of the Trust Fund referred to in Section 8.7
hereof,
the Company will not amend its Restated Certificate of Incorporation without
the
prior written consent of TEP.
8.6 Blue
Sky Requirements.
The
Company shall provide counsel to the Representative with ten copies of all
proxy
information and all related material filed with the Commission in connection
with a Business Combination concurrently with such filing with the Commission.
In addition, the Company shall furnish any other state in which its initial
public offering was registered, such information as may be requested by such
state.
8.7 Acquisition/Distribution
Procedure.
The
Company agrees: (i) that, prior to the consummation of the initial Business
Combination, it will submit such transaction to the Company’s stockholders for
their approval (“Business Combination Vote”) even if the nature of the
acquisition is such as would not ordinarily require stockholder approval under
applicable state law; and (ii) that, in the event that the Company does not
effect a Business Combination within 18 months from the consummation of this
Offering (subject to extension for an additional six-month period, as described
in the Prospectus), the Company will be liquidated and will distribute to all
holders of IPO Shares (as defined below) an aggregate sum equal to the Company’s
“Liquidation Value.” The Company’s “Liquidation Value” shall mean the Company’s
book value, as determined by the Company and approved by GGK. In no event,
however, will the Company’s Liquidation Value be less than the Trust Fund,
inclusive of any net interest income thereon. Only holders of IPO Shares shall
be entitled to receive liquidating distributions and the Company shall pay
no
liquidating distributions with respect to any other shares of capital stock
of
the Company. With respect to the initial Business Combination Vote, the Company
shall cause all of the Initial Stockholders to vote the shares of Common Stock
owned by them, including any shares acquired by them before the Offering or
any
IPO Shares owned by them, in accordance with the vote of the holders of a
majority of the IPO Shares. At the time the Company seeks approval of the
initial Business Combination, the Company will offer each holder of the
Company’s Common Stock issued in this Offering (the “IPO Shares”) the right to
convert their IPO Shares at a per share conversion price (the “Conversion
Price”) equal to the amount in the Trust Fund (inclusive of any interest income
thereon, net of taxes payable) calculated as of two business days prior to
the
consummation of such proposed Business Combination divided by the total number
of IPO Shares. If holders of less than 20% in interest of the Company’s IPO
Shares vote against such approval of a Business Combination and elect to convert
their IPO Shares, the Company may, but will not be required to, proceed with
such Business Combination. If the Company elects to so proceed, it will convert
shares, based upon the Conversion Price, from those holders of IPO Shares who
affirmatively requested such conversion and who voted against the Business
Combination. Only holders of IPO Shares and the Underwriters, as described
in
Section 4.10.2 hereof, shall be entitled to receive distributions from the
Trust
Fund and the Company shall pay no distributions with respect to any other shares
of capital stock of the Company. If holders of 20% or more in interest of the
IPO Shares vote against approval of any potential Business Combination and
elect
to convert their IPO Shares, the Company will not proceed with such Business
Combination and will not convert such shares.
8.8 Rule
419.
The
Company agrees that it will use its best efforts to prevent the Company from
becoming subject to Rule 419 under the Act prior to the consummation of any
Business Combination, including but not limited to using its best efforts to
prevent any of the Company’s outstanding securities from being deemed to be a
“▇▇▇▇▇ stock” as defined in Rule 3a-51-1 under the Exchange Act during such
period.
8.9 Presentation
of Potential Target Businesses.
The
Company shall cause each of its officers and directors to agree that, in order
to minimize potential conflicts of interest which may arise from multiple
affiliations, the officers and directors will present to the Company for its
consideration, prior to presentation to any other entity, any business
opportunity which may reasonably be required to be presented to the Company
under Delaware law, until the earlier of the consummation by the Company of
a
Business Combination, the liquidation of the Company or until such time as
each
such officer or director shall cease to be an officer or director of the
Company, subject to any other contractual or fiduciary obligations such officers
and directors might have.
8.10 Target
Net Assets.
The
Company agrees that the initial Target Business(es) in a Business Combination
must have a fair market value equal to at least 80% of the Company’s net assets
at the time of such Business Combination. The fair market value of such
business(es) must be determined by the Board of 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 the Company is
not
able to independently determine that the Target Business(es) has a fair market
value of at least 80% of the Company’s net assets at the time of such Business
Combination, the Company will obtain an opinion from an unaffiliated,
independent investment banking firm which is a member of the NASD with respect
to the satisfaction of such criteria.
9. Representations
and Agreements to Survive Delivery.
Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
`warranties and agreements at the Closing Dates and such representations,
warranties and agreements of the Underwriters and Company, including the
indemnity agreements contained in Section 6
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.
10. Effective
Date of This Agreement and Termination Thereof.
10.1 Effective
Date.
This
Agreement shall become effective on the Effective Date at the time the
Registration Statement is declared effective by the Commission.
10.2 Termination.
You
shall have the right to terminate this Agreement at any time prior to any
Closing Date, (i) if any domestic or international event or act or occurrence
has materially disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United States; or (ii)
if
trading on the New York Stock Exchange, the American Stock Exchange, the Boston
Stock Exchange or on the NASD OTC Bulletin Board (or successor trading market)
shall have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been fixed,
or maximum ranges for prices for securities shall have been required on the
NASD
OTC Bulletin Board or by order of the Commission or any other government
authority having jurisdiction, or (iii) if the United States shall have become
involved in a new war or an increase in major hostilities, or (iv) if a banking
moratorium has been declared by a New York State or federal authority, or (v)
if
a moratorium on foreign exchange trading has been declared which materially
adversely impacts the United States securities market, or (vi) if the Company
shall have sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether
or
not such loss shall have been insured, will, in your opinion, make it
inadvisable to proceed with the delivery of the Units, (vii) if any of the
Company’s representations, warranties or covenants hereunder are breached, or
(viii) if the Representative shall have become aware after the date hereof
of
such a material adverse change in the conditions or prospects of the Company,
or
such adverse material change in general market conditions, including without
limitation as a result of terrorist activities after the date hereof, as in
the
Representative’s judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Units or to enforce contracts made by
the
Underwriters for the sale of the Securities.
10.3 Expenses.
In the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the
terms
herein, the obligations of the Company to pay the out of pocket expenses related
to the transactions contemplated herein shall be governed by Section 4.10.1
hereof.
10.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 6
shall
not be in any way affected by, such election or termination or failure to carry
out the terms of this Agreement or any part hereof.
11. Miscellaneous.
11.1 Notices.
All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered or telecopied and confirmed
and shall be deemed given when so delivered or telecopied and confirmed or
if
mailed, two days after such mailing
If
to the
Representative:
ThinkEquity
Partners LLC
As
Representative of the several Underwriters
▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇,
▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇
▇▇▇▇▇, Managing Director
Copy
to:
▇▇▇▇▇▇
Godward LLP
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇-▇▇▇▇▇▇▇
a Marca, Esq.
If
to the
Company:
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Chief Executive Officer
Copy
to:
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP
▇▇▇
▇▇▇▇
▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, Esq.
11.2 Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Agreement.
11.3 Amendment.
This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
11.4 Entire
Agreement.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
11.5 Binding
Effect.
This
Agreement shall inure solely to the benefit of and shall be binding upon the
Representative, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 6
hereof,
and their respective successors, legal representatives and assigns, and no
other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provisions
herein contained.
11.6 Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to conflict of laws. The
Company hereby agrees that any action, proceeding or claim against it arising
out of, relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of New
York
of the United States of America located in the City and County 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 this Section 11.
Such
mailing shall be deemed personal service and shall be legal and binding upon
the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from
the
other party(ies) all of its reasonable attorneys’ fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
11.7 No
Fiduciary Duty.
The
Company acknowledges that neither 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 Units.
11.8 Execution
in Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be
an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto.
11.9 Waiver,
Etc.
The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
If
the
foregoing correctly sets forth the understanding between the Underwriters and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
Very
truly yours,
By:____________________________________________
Name:
Title:
Accepted
on the date first
above
written
THINKEQUITY
PARTNERS LLC
By:___________________________________________
Name:
Title:
SCHEDULE
I
6,733,333
Units
|
Underwriter
|
Number
of Firm Units
to
be Purchased
|
|
ThinkEquity
Partners LLC
|
|
|
EarlyBirdCapital,
Inc.
|
SCHEDULE
3.17.4
INSIDER
NASD
MEMBER
R.
▇▇▇▇▇
▇▇▇▇▇▇▇
Berkshire
Capital Securities LLC
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ Berkshire
Capital Securities LLC
▇.
▇▇▇▇▇▇▇ Forth Berkshire
Capital Securities LLC
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ The
Praedium Group LLC
The
▇▇▇▇▇▇▇ ▇▇▇▇▇ Trust The
Praedium Group LLC
The
▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Trust The
Praedium Group LLC
Broad
Hollow LLC
Berkshire
Capital Securities LLC
EXHIBIT
A