Exhibit 1.1
4,166,667 UNITS
HIGHPOINT ACQUISITION CORP.
UNDERWRITING AGREEMENT
New York, New York
______________, 2007
▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
As Representative of the Underwriters
named on Schedule A hereto
Ladies and Gentlemen:
The undersigned, Highpoint Acquisition Corp., a Delaware
corporation ("COMPANY"), hereby confirms its agreement with ▇.▇. ▇▇▇▇▇▇▇▇▇▇ &
Co., Inc. (hereinafter referred to as "YOU," "▇.▇. ▇▇▇▇▇▇▇▇▇▇" or the
"REPRESENTATIVE") and with the other underwriters named on Schedule A hereto for
which ▇.▇. ▇▇▇▇▇▇▇▇▇▇ is acting as Representative (the Representative and the
other Underwriters being collectively referred to herein as the "UNDERWRITERS"
or, individually, an "UNDERWRITER") as follows:
1. Purchase and Sale of Securities.
1.1 Firm Securities.
1.1.1 Purchase of Firm Units. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell, severally and
not jointly, to the several Underwriters, an aggregate of 4,166,667 units (the
"FIRM UNITS") of the Company at a purchase price (net of discounts and
commissions) of $5.70 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 A attached hereto and made a part
hereof at a purchase price (net of discounts and commissions) of $5.70 per Firm
Unit. The Firm Units are to be offered initially to the public (the "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 (the "COMMON
STOCK"), and two warrants to purchase shares of Common Stock (the "WARRANT(S)").
The shares of Common Stock and the Warrants included in the Firm Units will not
be separately transferable until 90 days after the effective date (the
"EFFECTIVE DATE") of the Registration Statement (as defined in Section 2.1.1
hereof) unless ▇.▇. ▇▇▇▇▇▇▇▇▇▇ informs the Company of its decision to allow
earlier separate trading based on their assessment of the relative strengths of
the securities markets and small capitalization companies in general, and the
trading pattern of, and demand for, the Company's securities in particular. ▇.▇.
▇▇▇▇▇▇▇▇▇▇ may decide to allow continued
trading of the Units following such separation. In no event will ▇.▇. ▇▇▇▇▇▇▇▇▇▇
allow separate trading until (i) the preparation of an audited balance sheet of
the Company reflecting receipt by the Company of the proceeds of the Offering
and the filing of such audited balance sheet with the Commission (as herein
defined) on a Form 8-K or similar form by the Company which includes such
balance sheet; (ii) the Company files a Form 8-K and issues a press release
announcing when such separate trading will begin; and (iii) the Business Day
(defined below) following the earliest to occur of the expiration of the
Over-allotment Option (defined below) or the exercise of the Over-allotment
Option in full. Each Warrant entitles its holder to purchase one share of
Common Stock for $5.00 per share during the period commencing on the later of
(a) the consummation by the Company of its "Business Combination" or (b) one
year from the Effective Date of the Registration Statement and terminating on
the four-year anniversary of the Effective Date. As used herein, the term
"BUSINESS COMBINATION" shall mean any acquisition by merger, capital stock
exchange, asset or stock acquisition, reorganization or otherwise, of an
operating business located in the United States selected by the Company (as
described more fully in the Registration Statement). The Company has the right
to redeem the Warrants (including the Representative's Warrants) upon the prior
written consent of ▇.▇. ▇▇▇▇▇▇▇▇▇▇ and not less than thirty (30) days written
notice at a price of $0.01 per Warrant at any time after the Warrants become
exercisable; so long as the average closing sales price of the Company's Common
Stock has been at least $8.50 for any twenty (20) trading days within a thirty
(30) trading day period ending on the third day prior to the day on which notice
is given (the "MEASUREMENT PERIOD"); provided, however, the Company may not
redeem the Warrants unless the shares of common stock underlying the Warrants
are covered by an effective registration statement from the beginning of the
Measurement Period through the date fixed for redemption.
1.1.2 Payment and Delivery. Delivery and payment for the
Firm Units shall be made at 10:00 A.M., New York time, on the third Business Day
following the Effective Date of the Registration Statement (or the fourth
Business Day following the Effective Date, if the Registration Statement is
declared effective after 4:30 p.m.) or at such earlier time as shall be agreed
upon by the Representative and the Company at the offices of the Representative
or at such other place as shall be agreed upon by the Representative and the
Company. The hour and date of delivery and payment for the Firm Units is called
the "CLOSING DATE." Payment for the Firm Units shall be made on the Closing Date
at the Representative's election by wire transfer in Federal (same day) funds or
by certified or bank cashier's check(s) in New York Clearing House funds.
$24,502,500 ($5.88 per unit; $28,185,000 if the Over-allotment Option (as
defined in Section 1.2) is exercised in full, which represents approximately
$5.88 per unit) of the proceeds received by the Company for the Firm Units, the
Convertible Loans (as defined in Section 1.5) and from the Private Placement (as
defined in Section 1.4) shall be deposited in the trust fund established by the
Company for the benefit of the public stockholders as described in the
Registration Statement (the "TRUST FUND") pursuant to the terms of an Investment
Management Trust Agreement (the "TRUST AGREEMENT") which amount includes up to
$500,000 ($0.12 per Firm Unit; $575,500 if the Over-allotment Option is
exercised in full, which represents $0.12 per Option Unit) payable to the
Representative as deferred underwriting discounts and commissions upon
consummation of a Business Combination. Any remaining proceeds (less
commissions, expense allowance and actual expense payments or other fees payable
pursuant to this Agreement) 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 (the "DTC")) for the account of the Underwriters.
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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 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. As used herein, the term "BUSINESS DAY" shall mean any day other
than a Saturday, Sunday or any day on which national banks in New York, New York
are not open for business.
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 625,000 units from the Company (the "OVER-ALLOTMENT
OPTION"). Such additional 625,000 units shall be identical in all respects to
the Firm Units and 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 (net of discounts and commissions) will be
$5.70 per Option Unit. The Option Units are to be offered initially to the
public at the offering price of $6.00 per Option Unit.
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 from 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, which will not be later than five 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. If such delivery
and payment for the Option Units does not occur on the Closing Date, the date
and time of the closing for such Option Units will be as set forth in the notice
(hereinafter the "OPTION CLOSING DATE"). 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, by deposit of the sum of $5.70 per
Option Unit in the Trust Fund pursuant to the Trust Agreement upon delivery to
you of certificates (in form and substance satisfactory to the Underwriters)
representing the Option Units (or through the facilities of DTC) for the account
of the
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Underwriters. The certificates representing the Option Units to be delivered
will be in such denominations and registered in such names as the Representative
requests not less than two 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 or Option Closing Date.
1.3 Representative's Purchase Option.
1.3.1 Purchase Option. The Company hereby agrees to issue
and sell to the Representative (and/or its designees) on the Effective Date an
option ("REPRESENTATIVE'S PURCHASE OPTION") for the purchase of an aggregate of
250,000 units (the "REPRESENTATIVE'S UNITS") for an aggregate purchase price of
$100.00. Each of the Representative's Units is identical to the Firm Units and
the Warrants included in the Representative's Units have an exercise price of
$5.00. The Representative's Purchase Option shall be exercisable, in whole or in
part, commencing on the later of the consummation of a Business Combination or
one year from the Effective Date and expiring on the five-year anniversary of
the Effective Date at an initial exercise price per Representative's Unit of
$6.60, which is equal to one hundred and ten percent (110%) of the initial
public offering price of a Unit. The Representative's Purchase Option, the
Representative's Units, the shares of Common Stock and the Warrants included in
the Representative's Units (the "REPRESENTATIVE'S WARRANTS") and the shares of
Common Stock issuable upon exercise of the Representative's Warrants are
hereinafter referred to collectively as the "REPRESENTATIVE'S SECURITIES." The
Public Securities and the Representative's Securities are hereinafter referred
to collectively as the "SECURITIES." The Representative understands and agrees
that there are significant restrictions against transferring the
Representative's Purchase Option during the first year after the Effective Date,
as set forth in Section 3 of the Representative's Purchase Option.
1.3.2 Delivery and Payment. Delivery and payment for the
Representative's Purchase Option shall be made on the Closing Date. The Company
shall deliver to the Representative and its designees, 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.
1.4 Private Placement to Officers and Directors and Designees.
Immediately prior to entering into this Agreement, Harbor Healthcare Holding LLC
and Moreco Partners LLC (the "INITIAL STOCKHOLDERS") purchased from the Company,
pursuant to the Placement Unit Purchase Agreement (as defined in Section 2.23.2
hereof), an aggregate of 150,000 units identical to the Units (the "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 (the
"PRIVATE PLACEMENT"). The Placement Units, the shares of Common Stock and the
Warrants included in the Placement Units (the "PLACEMENT WARRANTS") and the
shares of Common Stock issuable upon exercise of the Placement Warrants are
hereinafter referred to collectively as the "PLACEMENT SECURITIES." No placement
fees will be payable on the sale of the Placement Units.
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1.5 Convertible Loans. Immediately prior to the Closing, the Initial
Stockholders loaned the Company an aggregate of $800,000 (up to $920,000 if the
over-allotment option is exercised in full), which amount shall be deposited in
the Trust Fund pursuant to Section 1.1.2 (the "CONVERTIBLE LOANS"). The
principal balance of the Convertible Loans shall bear simple interest at a rate
of 4% per annum. Principal and interest will be payable from amounts not held in
the Trust Fund, which include certain distributions of interest from the Trust
Fund to the Company's management. The Convertible Loans are to be repaid on the
earlier to occur of (i) the closing of a Business Combination or (ii) the
Company's liquidation. If the Convertible Loans are to be repaid on the
Company's liquidation, such loans may be payable only out of interest earned on
the Trust Fund and not the principal balance of the Trust Fund. The Convertible
Loans shall be convertible, after completion of a Business Combination, into
Units at a rate of $6.00 per Unit at the option of the maker of the Convertible
Loan. Notwithstanding the foregoing, the Convertible Loans shall not be repaid
from the first $700,000 released to the Company from the interest earned on the
Trust Fund.
1.6 Incentive Warrants. Immediately prior to the Private Placement,
the Company issued to the Initial Stockholders incentive warrants (the
"INCENTIVE WARRANTS")to purchase up to an aggregate of 400,000 shares of Common
Stock (the "INCENTIVE WARRANT SHARES"). The Incentive Warrants are similar to
the public Warrants and will be exercisable for $5.00 per share, except that:
(i) they are not exercisable until three months after the Company completes a
Business Combination, and then (x) as to 200,000 of such shares, only if the
last sales price of the Common Stock equals or exceeds $7.50 per share for any
20 trading days within a 30 trading day period beginning after such initial
Business Combination, and (y) as to the remaining 200,000 shares, only if the
last sales price of the Common Stock equals or exceeds $9.00 per share for any
20 trading days within a 30 trading day period beginning after such initial
Business Combination; (ii) they will expire five years from the date of this
Agreement; (iii) they are exercisable on a "cashless basis"; and (iv) they are
not redeemable so long as they are held by the initial holder thereof or their
respective affiliates.
2. Representations and Warranties of the Company. The Company represents and
warrants to the Underwriters as follows:
2.1 Filing of Registration Statement.
2.1.1 Pursuant to the Act. The Company has filed with the
Securities and Exchange Commission (the "COMMISSION") a registration statement
and an amendment or amendments thereto, on Form S-1 (File No. 333-136908),
including the related preliminary prospectus (the "PRELIMINARY PROSPECTUS",
including the prospectus that is included in the Registration Statement
immediately prior to the effectiveness of the Registration Statement), for the
registration of the Securities under the Securities Act of 1933, as amended (the
"ACT"), which registration statement and amendment or amendments have been
prepared by the Company in conformity with the requirements of the Act, and the
rules and regulations (the "REGULATIONS") of the Commission under the Act. The
conditions for use of Form S-1 to register the Offering under the Act, as set
forth in the General Instructions to such Form, have been satisfied. Except as
the context may otherwise require, such registration statement, as amended, on
file with the Commission at the time the registration statement becomes
effective (including 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 Rule 430A of
the Regulations), is hereinafter called the "REGISTRATION STATEMENT," and the
form
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of the final prospectus dated the Effective Date included in the Registration
Statement (or, if applicable, the form of final prospectus containing
information permitted to be omitted at the time of effectiveness by Rule 430A of
the Regulations filed with the Commission pursuant to Rule 424 of the
Regulations), is hereinafter called the "PROSPECTUS." If the Company has filed,
or is required pursuant to the terms hereof to file, a registration statement
pursuant to Rule 462(b) under the Securities Act registering additional shares
of Common Stock (a "RULE 462(B) REGISTRATION STATEMENT"), then, unless otherwise
specified, any reference herein to the term "REGISTRATION STATEMENT" shall be
deemed to include such Rule 462(b) Registration Statement. Other than a Rule
462(b) Registration Statement, which, if filed, becomes effective upon filing,
no other document with respect to the Registration Statement has heretofore been
filed with the Commission. All of the Public Securities have been registered
under the Securities Act pursuant to the Registration Statement or, if any Rule
462(b) Registration Statement is filed, will be duly registered under the
Securities Act with the filing of such Rule 462(b) Registration Statement. The
Registration Statement has been declared effective by the Commission on the date
hereof.
2.1.2 Pursuant to the Exchange Act. The Company has filed
with the Commission a Form 8-A (File Number 000-__________) providing for the
registration under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), of the Units, the Common Stock and the Warrants. The
registration of the Units, Common Stock and Warrants under the Exchange Act has
been declared effective by the Commission on the date hereof.
2.2 No Stop Orders, Etc. Neither the Commission nor, to the best of
the Company's knowledge, any state regulatory authority has issued any order or
threatened to issue any order preventing or suspending the use of any
Preliminary Prospectus or has instituted or, to the best of the Company's
knowledge, threatened to institute any proceedings with respect to such an
order.
2.3 Disclosures in Registration Statement.
2.3.1 10b-5 Representation. At the time the Registration
Statement became effective, upon the filing or first use (within the meaning of
the Regulations) of the Prospectus and at the Closing Date and the Option
Closing Date, if any, the Registration Statement and the Prospectus contained or
will contain all material statements that are required to be stated therein in
accordance with the Act and the Regulations, and did or will in all material
respects conform to the requirements of the Act and the Regulations; neither the
Registration Statement nor any Preliminary Prospectus or the Prospectus, nor any
amendment or supplement thereto, on such dates, did or will contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein (in the case of the
Preliminary Prospectus and the Prospectus, 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) or first used (within the meaning of the
Regulations) and when any amendment thereof or supplement thereto was first
filed with the Commission or first used (within the meaning of the Regulations),
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied or will have been corrected to 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
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statements therein, in light of the circumstances under which they were made,
not misleading. The representation and warranty made in this Section 2.3.1 does
not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to the
Underwriters by the Representative expressly for use in the Registration
Statement or Prospectus or any amendment thereof or supplement thereto. It is
understood that the statements set forth in paragraphs _____________________ in
the Prospectus under the heading "Underwriting - Underwriting Terms" constitute
for the purposes of this Agreement, information furnished by the Representative
with respect to the Underwriters.
2.3.2 Disclosure of Agreements. The agreements and documents
described in the Registration Statement, the 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 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 Preliminary
Prospectus and/or the Prospectus or attached as an exhibit thereto, or (ii) is
material to the Company's business, has been duly and validly executed by the
Company, is in full force and effect in all material respects and is enforceable
against the Company and, to the Company's knowledge, the other parties thereto,
in accordance with its terms, except (x) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (z)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought, and none of
such agreements or instruments has been assigned by the Company, and neither the
Company nor, to the best of the Company's knowledge, any other party is in
breach or default thereunder and, to the best of the Company's knowledge, no
event has occurred that, with the lapse of time or the giving of notice, or
both, would constitute a breach or default thereunder. To the best of the
Company's knowledge, performance by the Company of the material provisions of
such agreements or instruments will not result in a violation of any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its assets or businesses, including, without limitation, those relating
to environmental laws and regulations.
2.3.3 Prior Securities Transactions. No securities of the
Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by, or under common control
with the Company within the three years prior to the date hereof, except as
disclosed in the Registration Statement.
2.3.4 Regulations. The disclosures in the Registration
Statement, the Preliminary Prospectus and/or the Prospectus concerning the
effects of Federal, State and local regulation on the Company's business as
currently contemplated are correct in all material respects and do not omit to
state a material fact necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
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2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. Since the respective dates
as of which information is given in the Registration Statement, any Preliminary
Prospectus and/or 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; (iii) no member of the Company's board
of directors or management has resigned from any position with the Company and
(iv) no event or occurrence has taken place which materially impairs, or would
likely materially impair, with the passage of time, the ability of the members
of the Company's board of directors or management to act in their capacities
with the Company as described in the Registration Statement and the Prospectus.
2.4.2 Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, and except as may otherwise be indicated or contemplated
herein or therein, the Company has not: (i) issued any securities or incurred
any liability or obligation, direct or contingent, for borrowed money; or (ii)
declared or paid any dividend or made any other distribution on or in respect to
its capital stock.
2.5 Independent Accountants. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ & Company, P.C.
("▇▇▇▇▇▇▇▇▇"), whose report is filed with the Commission as part of the
Registration Statement and included in the Registration Statement, the
Preliminary Prospectus and the Prospectus, are independent accountants as
required by the Act and the Regulations and the Public Company Accounting
Oversight Board (including the rules and regulations promulgated by such entity,
the "PCAOB"). ▇▇▇▇▇▇▇▇▇ is duly registered and in good standing with the PCAOB.
▇▇▇▇▇▇▇▇▇ has not, during the periods covered by the financial statements
included in the Registration Statement and the Prospectus, provided to the
Company any non-audit services, as such term is used in Section 10A(g) of the
Exchange Act.
2.6 Financial Statements; Statistical Data.
2.6.1 Financial Statements. The financial statements,
including the notes thereto and supporting schedules included in the
Registration Statement, the Preliminary Prospectus and the Prospectus fairly
present the financial position and the results of operations of the Company at
the dates and for the periods to which they apply; and such financial statements
have been prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. No other financial statements or supporting
schedules are required to be included or incorporated by reference in the
Registration Statement, the Preliminary Prospectus or the Prospectus. The
Registration Statement, the Preliminary Prospectus and the Prospectus disclose
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. There are no pro
forma or as adjusted financial statements
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which are required to be included in the Registration Statement and the
Prospectus in accordance with Regulation S-X which have not been included as so
required.
2.6.2 Statistical Data. The statistical, industry-related
and market-related data included in the Registration Statement, the Preliminary
Prospectus and/or the Prospectus are based on or derived from sources which the
Company reasonably and in good faith believes are reliable and accurate, and
such data agree with the sources from which they are derived.
2.7 Authorized Capital; Options, Etc. The Company had at the date or
dates indicated in the Registration Statement, the Preliminary Prospectus and/or
the Prospectus, as the case may be, duly authorized, issued and outstanding
capitalization as set forth in the Registration Statement, the Preliminary
Prospectus and/or the Prospectus. Based on the assumptions stated in the
Registration Statement, the Preliminary Prospectus and/or 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 Preliminary Prospectus and/or the Prospectus, on the Effective
Date, upon the filing or first use (within the meaning of the Regulations) of
the Preliminary Prospectus or Prospectus and on the Closing Date and the Option
Closing Date, if any, there will be no options, warrants, or other rights to
purchase or otherwise acquire any authorized, but unissued shares of Common
Stock of the Company or any security convertible into shares of Common Stock of
the Company, or any contracts or commitments to issue or sell shares of Common
Stock or any such options, warrants, rights or convertible securities.
2.8 Valid Issuance of Securities, Etc.
2.8.1 Outstanding Securities. All issued and outstanding
securities of the Company have been duly authorized and validly issued and are
fully paid and non-assessable; the holders thereof have no rights of rescission
with respect thereto, and are not subject to personal liability by reason of
being such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The Public Securities, the Placement
Securities, the Incentive Warrants, the Convertible Loans and the
Representative's Unit Purchase Option conform to all statements relating thereto
contained in the Registration Statement, the Preliminary Prospectus and/or the
Prospectus. The offers and sales of the outstanding Common Stock, the Placement
Securities, the Convertible Loans and the Incentive Warrants were at all
relevant times either registered under the Act and the applicable state
securities or Blue Sky laws or, based in part on the representations and
warranties of the purchasers of such shares of Common Stock, exempt from such
registration requirements.
2.8.2 Securities Sold Pursuant to this Agreement. The
Securities have been duly authorized and reserved for issuance 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, the Preliminary
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Prospectus and/or the Prospectus, as the case may be. When issued, the
Representative's Purchase Option, the Representative's Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representative's Purchase Option, the
Representative's Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except: (i) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; (ii) as enforceability of any
indemnification or contribution provision may be limited under the federal and
state securities laws; and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The shares of Common Stock issuable upon exercise of the
Warrants and included in the Representative's Purchase Option (and the shares of
Common Stock issuable upon exercise of the Representative's Warrants) have been
reserved for issuance upon the exercise of the Warrants, the Representative's
Purchase Option and the Representative's Warrants and when issued in accordance
with the terms of such securities, will be duly and validly authorized, 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.
2.8.3 Placement Securities. The Placement Securities have
been duly authorized and, when issued and paid for in accordance with the
Placement Unit Purchase Agreement, 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 Placement 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 Placement Securities has been duly and validly taken. The shares of
Common Stock issuable upon exercise of the Placement Units and the Placement
Warrants have been reserved for issuance upon the exercise of the Placement
Units and the Placement Warrants and, when issued in accordance with the terms
of the Placement Units and the Placement Warrants, will be duly and validly
authorized, validly issued, fully paid and non-assessable, and the holders
thereof are not and will not be subject to personal liability by reason of being
such holders.
2.8.4 Incentive Warrants. The Incentive Warrants have been
duly authorized and validly issued; the holders thereof are not and will not be
subject to personal liability by reason of being such holders; the Inventive
Warrant Shares 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 Incentive Warrants has been duly and
validly taken. The shares of Common Stock issuable upon exercise of the
Incentive Warrants have been reserved for issuance upon the exercise of the
Incentive Warrants and, when issued in accordance with the terms of the
Incentive 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.
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2.8.5 Convertible Loans. The Convertible Loans have been
duly authorized and validly issued; the holders thereof are not and will not be
subject to personal liability by reason of being such holders; the shares of
Common Stock issuable upon conversion of the Convertible Loans 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
Convertible Loans has been duly and validly taken. The shares of Common Stock
issuable upon conversion of the Convertible Loans have been reserved for
issuance upon the conversion of the Convertible Loans and, when issued in
accordance with the terms of the Convertible Loans, will be duly and validly
authorized, validly issued, fully paid and non-assessable, and the holders
thereof are not and will not be subject to personal liability by reason of being
such holders.
2.8.6 No Integration. Except with respect to the Placement
Securities, as to which no representation is made, 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 Public Securities pursuant to the
Registration Statement.
2.9 Registration Rights of Third Parties. Except as set
forth in the Registration Statement, the Preliminary Prospectus and/or the
Prospectus, no holders of any securities of the Company or any rights
exercisable for or convertible or exchangeable into securities of the Company
have the right to require the Company to register any such securities of the
Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity and Binding Effect of Agreements. This
Agreement, the Warrant Agreement (as defined in Section 2.22 hereof), the Trust
Agreement, the Services Agreement (as defined in Section 3.7.2 hereof), the
Placement Unit Purchase Agreement (as defined in Section 2.23.2 hereof), the
Escrow Agreement (as defined in Section 2.23.4 hereof), the Incentive Warrants
and the Convertible Loans have been duly and validly authorized by the Company
and constitute 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 as a matter of public policy; and (iii) that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
2.11 No Conflicts, Etc. The execution, delivery, and performance by
the Company of this Agreement, the Warrant Agreement, the Representative's
Purchase Option, the Trust Agreement, the Service Agreement, the Placement Unit
Purchase Agreement, the Escrow Agreement, the Incentive Warrants and the
Convertible Loans, the consummation by the Company of the transactions herein
and therein contemplated and the compliance by the Company with the terms hereof
and thereof do not and will not, with or without the giving of notice or the
lapse of time or both: (i) result in a breach of, or conflict with any of the
terms and provisions of, or constitute a default under, or result in the
creation, modification, termination or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to the terms of
any agreement or instrument to which the Company is a party except pursuant to
the Trust Agreement referred to in Section 2.24 hereof; (ii) result in any
violation of the provisions of the Amended and 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.
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2.12 No Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of any material
license, contract, indenture, mortgage, deed of trust, note, loan or credit
agreement, or any other agreement or instrument evidencing an obligation for
borrowed money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not in violation
of any term or provision of its Amended and Restated Certificate of
Incorporation or Bylaws or in violation of any material franchise, license,
permit, applicable law, rule, regulation, judgment or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its properties or businesses.
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. The Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies that it needs as of the date hereof to conduct
its business for the purposes described in the Registration Statement, the
Preliminary Prospectus and/or the Prospectus. The disclosures in the
Registration Statement, the Preliminary Prospectus and/or the 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. Since its formation,
the Company has conducted no business and has incurred no liabilities other than
in connection with and in furtherance of the Offering.
2.13.2 Transactions Contemplated Herein. The Company has all
corporate power and authority to enter into this Agreement and to carry out the
provisions and conditions hereof, and all consents, authorizations, approvals
and orders required in connection therewith have been obtained. No consent,
authorization or order of, and no filing with, any court, government agency or
other body is required for the valid issuance, sale and delivery, of the
Securities and the consummation of the transactions and agreements contemplated
by this Agreement, the Warrant Agreement, the Representative's Purchase Option,
the Trust Agreement, the Services Agreement, the Placement Unit Purchase
Agreement, the Escrow Agreement, the Incentive Warrants and the Convertible
Notes and as contemplated by the Prospectus, except with respect to applicable
federal and state securities laws.
2.14 D&O Questionnaires. All information contained in the
questionnaires (the "QUESTIONNAIRES") completed by each of the Initial
Stockholders and each of the Company's directors and officers and provided to
the Underwriters as an exhibit to his or her Insider Letter (as defined in
Section 2.23.1) is true and correct and the Company has not become aware of any
information which would cause the information disclosed in the questionnaires
completed by each Initial Stockholder to become inaccurate and incorrect.
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2.15 Litigation; Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding pending or, to the best of the Company's knowledge, threatened
against, or involving the Company or, to the best of the Company's knowledge,
any Initial Stockholder which has not been disclosed in the Registration
Statement, the Questionnaires, the Preliminary Prospectus and/or the Prospectus.
2.16 Good Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification, except where
the failure to qualify would not have a material adverse effect on the Company.
2.17 No Contemplation of a Business Combination. Prior to the date
hereof, neither the Company, its officers and directors nor the Initial
Stockholders had, and as of the Closing, the Company and such officers and
directors and Initial Stockholders will not have had: (a) any specific Business
Combination under consideration or contemplation or (b) any substantive
interactions or discussions with any target business regarding a possible
Business Combination.
2.18 Transactions Affecting Disclosure to NASD.
2.18.1 Except as described in the Preliminary Prospectus
and/or the Prospectus, there are no claims, payments, arrangements, agreements
or understandings relating to the payment of a finder's, consulting or
origination fee by the Company or any Initial Stockholder with respect to the
sale of the Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the best of the Company's knowledge, any
Initial Stockholder that may affect the Underwriters' compensation, as
determined by the National Association of Securities Dealers, Inc. (the "NASD").
2.18.2 The Company has not made any direct or indirect
payments (in cash, securities or otherwise) to: (i) 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) except with
respect to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, to any person or entity that has any direct or
indirect affiliation or association with any NASD member, within the twelve
months prior to the Effective Date, other than payments to ▇.▇. ▇▇▇▇▇▇▇▇▇▇.
2.18.3 Except with respect to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, no officer,
director, or beneficial owner of any class of the Company's securities (whether
debt or equity, registered or unregistered, regardless of the time acquired or
the source from which derived) (any such individual or entity, a "COMPANY
AFFILIATE") is a member, a person associated, or affiliated with a member of the
NASD.
2.18.4 Except with respect to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, no Company
Affiliate is an owner of stock or other securities of any member of the NASD
(other than securities purchased on the open market).
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2.18.5 No Company Affiliate has made a subordinated loan to
any member of the NASD.
2.18.6 No proceeds from the sale of the Public Securities
(excluding underwriting compensation), the Placement Securities or the
Convertible Loans will be paid to any NASD member, or any persons associated or
affiliated with a member of the NASD, except as specifically authorized herein.
2.18.7 Except with respect to ▇.▇. ▇▇▇▇▇▇▇▇▇▇, the Company
has not issued any warrants or other securities, or granted any options,
directly or indirectly to anyone who is a potential underwriter in the Offering
or a related person (as defined by NASD rules) of such an underwriter within the
180-day period prior to the initial filing date of the Registration Statement.
2.18.8 Except with respect to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, no person to
whom securities of the Company have been privately issued within the 180-day
period prior to the initial filing date of the Registration Statement has any
relationship or affiliation or association with any member of the NASD.
2.18.9 No NASD member intending to participate in the
Offering has a conflict of interest with the Company. For this purpose, a
"conflict of interest" exists when a member of the NASD and/or its associated
persons, parent or affiliates in the aggregate beneficially own 10% or more of
the Company's outstanding subordinated debt or common equity, or 10% or more of
the Company's preferred equity. "Members participating in the Offering" include
managing agents, syndicate group members and all dealers which are members of
the NASD.
2.18.10 Except with respect to ▇.▇. ▇▇▇▇▇▇▇▇▇▇ in connection
with the Offering and the Private Placement, the Company has not entered into
any agreement or arrangement (including, without limitation, any consulting
agreement or any other type of agreement) during the 180-day period prior to the
initial filing date of the Registration Statement, which arrangement or
agreement provides for the receipt of any item of value and/or the transfer of
any warrants, options, or other securities from the Company to an NASD member,
any person associated with a member (as defined by NASD rules), any potential
underwriters in the Offering and/or any related persons.
2.19 Foreign Corrupt Practices Act. Neither the Company nor any of the
Initial Stockholders or any directors or officers of the Company 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
-14-
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 Registration
Statement, the Preliminary Prospectus and/or the Prospectus or (iii) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company. The Company's internal accounting controls and
procedures are sufficient to cause the Company to comply with the Foreign
Corrupt Practices Act of 1977, as amended.
2.20 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.
2.21 Officers' Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to you or to your counsel shall
be deemed a representation and warranty by the Company to the Underwriters as to
the matters covered thereby.
2.22 Warrant Agreement. The Company has entered into a warrant
agreement with respect to the Warrants, the Representative's Warrants, the
Placement Warrants, the warrants issuable upon conversion of the Convertible
Loans and the Incentive Warrants with Continental Stock Transfer & Trust Company
substantially in the form filed as an exhibit to the Registration Statement (the
"WARRANT AGREEMENT"), providing for, among other things, the payment of a
warrant solicitation fee as contemplated by Section 3.9 hereof.
2.23 Agreements With Initial Stockholders.
2.23.1 Insider Letters. The Company has caused to be duly
executed legally binding and enforceable agreements (except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability of
any indemnification, contribution or noncompete provision may be limited under
the federal and state securities laws, and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought) annexed as Exhibit 10.1 to the Registration
Statement (the "INSIDER LETTER"), pursuant to which each of the Initial
Stockholders of the Company agree to certain matters, including but not limited
to, certain matters described as being agreed to by them under the "Proposed
Business" Section of the Prospectus.
2.23.2 Placement Unit Purchase Agreement. Certain of the
Company's officers and directors and their designees have executed and delivered
an agreement, annexed as an exhibit to the Registration Statement (the
"PLACEMENT UNIT PURCHASE AGREEMENT"), pursuant to which such persons, among
other things, have purchased an aggregate of 150,000 Placement Units in the
Private Placement. Pursuant to the Placement Unit Purchase Agreement, (i)
$900,000 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, and (ii) the purchasers of the Placement Units
have waived any and all rights and claims that they may have to any proceeds,
and any interest thereon, held in the Trust in respect of the 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.
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2.23.3 Convertible Loans. The Company has caused its Initial
Stockholders to enter into loan agreements with the Company with respect to the
Convertible Loans and the proceeds of such Convertible Loans shall be deposited
in the Trust Fund pursuant to Section 1.1.2. The principal balance of the
Convertible Loans shall bear simple interest at a rate of 4% per annum.
Principal and interest will be payable from amounts not held in the Trust Fund,
which include certain distributions of interest from the Trust Fund to the
Company's management. Pursuant to such loan agreements, the Convertible Loans
are to be repaid on the earlier to occur of (i) the closing of a Business
Combination or (ii) the Company's liquidation. If the Convertible Loans are to
be repaid on the Company's liquidation, such loans may be payable only out of
the interest earned on the Trust Fund and not the principal balance of the Trust
Fund. The Convertible Loans are convertible, after completion of a Business
Combination, into Units at a rate of $6.00 per unit at the option of the maker
of the Convertible Loan. Notwithstanding the foregoing, the Convertible Loans
shall not be repaid from the first $700,000 released to the Company from the
interest earned on the Trust Fund.
2.23.4 Escrow Agreement. The Company has caused the Initial
Stockholders to enter into an escrow agreement (the "ESCROW AGREEMENT") with
Continental Stock Transfer & Trust Company (the "ESCROW AGENT") substantially in
the form filed as an exhibit to the Registration Statement whereby the Common
Stock owned by the Initial Stockholders (not including any shares of Common
Stock included in the Placement Units which any of them may have purchased) will
be held in escrow by the Escrow Agent, until the third anniversary of the
Effective Date. During such escrow period, the Initial Stockholders shall be
prohibited from selling or otherwise transferring such shares (except (a) to
spouses and children of Initial Stockholders and trusts established for their
benefit, (b) after a Business Combination in a transaction whereby all the
outstanding shares of the Company are exchanged or converted into cash or
another entity's securities and (c) as otherwise set forth in the Escrow
Agreement) unless approved by the Company's public stockholders, but will retain
the right to vote such shares. The Escrow Agreement shall not be amended,
modified or otherwise changed without the prior written consent of ▇.▇.
▇▇▇▇▇▇▇▇▇▇, such consent not to be unreasonably withheld.
2.24 Investment Management Trust Agreement. The Company has entered
into the Trust Agreement with respect to certain proceeds of the Offering
substantially in the form filed as an exhibit to the Registration Statement.
2.25 Covenants Not to Compete. No Initial Stockholder or any officer
or director of the Company is subject to any noncompetition agreement or
non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be an Initial Stockholder, employee, officer
and/or director of the Company.
2.26 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).
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2.27 Subsidiaries. The Company does not own an interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business entity.
2.28 Related Party Transactions. No relationship, direct or indirect,
exists between or among any of the Company or any affiliate of the Company, on
the one hand, and any director, officer, shareholder, customer or supplier of
the Company or any affiliate of the Company, on the other hand, which is
required by the Act, the Exchange Act or the Regulations to be described in the
Registration Statement, the Preliminary Prospectus and/or the Prospectus which
is not so described and described as required. There are no outstanding loans,
advances (except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of their respective
family members, except as disclosed in the Registration Statement, the
Preliminary Prospectus and/or the Prospectus. The Company has not extended or
maintained credit, arranged for the extension of credit, or renewed an extension
of credit, in the form of a personal loan to or for any director or officer of
the Company.
2.29 No Influence. The Company has not offered, or caused the
Underwriters to offer, the Firm Units to any person or entity with the intention
of unlawfully influencing: (a) a customer or supplier of the Company or any
affiliate of the Company to alter the customer's or supplier's level or type of
business with the Company or such affiliate or (b) a journalist or publication
to write or publish favorable information about the Company or any such
affiliate.
2.30 Definition of "Knowledge". As used in herein, the term "KNOWLEDGE
OF THE COMPANY" (or similar language) shall mean the knowledge of the officers
and directors of the Company who are named in the Prospectus, with the
assumption that such officers and directors shall have made reasonable and
diligent inquiry of the matters presented.
3. Covenants of the Company. The Company covenants and agrees as follows:
3.1 Amendments to Registration Statement. The Company will deliver to
the Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the Representative
shall reasonably object in writing.
3.2 Federal Securities Laws.
3.2.1 Compliance. During the time when a Prospectus is
required to be delivered under the Act, the Company will use all reasonable
efforts to comply with all requirements imposed upon it by the Act, the
Regulations and the Exchange Act and by the regulations under the Exchange Act,
as from time to time in force, so far as necessary to permit the continuance of
sales of or dealings in the Public Securities in accordance with the provisions
hereof and the Prospectus. If at any time when a Prospectus relating to the
Public Securities is required to be delivered under the Act, any event shall
have occurred as a result of which, in the opinion of counsel for the Company or
counsel for the Underwriters, the Prospectus, as then
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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 during such period to amend the
Registration Statement or amend or supplement the Prospectus to comply with the
Act, the Company will notify the Representative promptly and prepare and file
with the Commission, subject to Section 3.1 hereof, an appropriate amendment to
the Registration Statement or amendment or supplement to the Prospectus (at the
expense of the Company) so as to correct such statement or omission or effect
such compliance.
3.2.2 Filing of Final Prospectus. The Company will file the
Prospectus (in form and substance satisfactory to the Representative) with the
Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3 Exchange Act Registration. For a period of five years
from the Effective Date, or until such earlier time upon which the Company is
required to be liquidated, the Company will use its best efforts to maintain the
registration of the Units, Common Stock and Warrants under the provisions of the
Exchange Act. The Company will not deregister the Units under the Exchange Act
without the prior written consent of ▇.▇. ▇▇▇▇▇▇▇▇▇▇.
3.2.4 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Compliance. As soon as it is legally
required to do so, the Company shall take all actions necessary to obtain and
thereafter maintain material compliance with each applicable provision of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated thereunder
and related or similar rules and regulations promulgated by any other
governmental or self regulatory entity or agency with jurisdiction over the
Company.
3.2.5 Ineligible Issuer. At the time of filing the
Registration Statement and at the date hereof, the Company was and is an
"ineligible issuer," as defined in Rule 405 under the Securities Act. The
Company has not made and will not make any offer relating to the Public
Securities that would constitute an "issuer free writing prospectus," as defined
in Rule 433, or that would otherwise constitute a "free writing prospectus," as
defined in Rule 405.
3.3 Blue Sky Filing. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Public Securities for offering and
sale under the securities laws of such jurisdictions as the Representative may
reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Representative agrees that such
action is not at the time necessary or advisable, use all reasonable efforts to
file and make such statements or reports at such times as are or may be required
by the laws of such jurisdiction.
3.4 Delivery to Underwriters of Prospectuses. The Company will deliver
to each of the several Underwriters, without charge, from time to time during
the period when the Prospectus is required to be delivered under the Act or the
Exchange Act such number of copies of each Preliminary Prospectus and Prospectus
and all amendments and supplements to such documents 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.
-18-
3.5 Effectiveness and Events Requiring Notice to the Representative.
The Company will use its best efforts to cause the Registration Statement to
remain effective and will notify the Representative immediately and confirm the
notice in writing: (i) of the effectiveness of the Registration Statement and
any amendment thereto; (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement, or any
post-effective amendment thereto or preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or of the initiation, or the
threatening, of any proceeding for that purpose; (iii) of the issuance by any
state securities commission of any proceedings for the suspension of the
qualification of the Public Securities for offering or sale in any jurisdiction
or of the initiation, or the threatening, of any proceeding for that purpose;
(iv) of the mailing and delivery to the Commission for filing of any amendment
or supplement to the Registration Statement or Prospectus; (v) of the receipt of
any comments or request for any additional information from the Commission; and
(vi) of the happening of any event during the period described in Section 3.4
hereof that, in the judgment of the Company, makes any statement of a material
fact made in the Registration Statement, the Preliminary Prospectus and/or the
Prospectus untrue or that requires the making of any changes in the Registration
Statement, the Preliminary Prospectus and/or the Prospectus in order to make the
statements therein, (with respect to the Prospectus in light of the
circumstances under which they were made), not misleading. If the Commission or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review of Financial Statements. Until the earlier of five years
from the Effective Date, or until such earlier upon which the Company is
required to be liquidated, the Company, at its expense, shall cause its
regularly engaged independent certified public accountants to review (but not
audit) the Company's financial statements for each of the first three fiscal
quarters prior to the announcement of quarterly financial information, the
filing of the Company's Form 10-Q quarterly report and the mailing of quarterly
financial information to stockholders.
3.7 Affiliated Transactions.
3.7.1 Business Combinations. The Company will not consummate
a Business Combination with any entity which is affiliated with any Initial
Stockholder unless the Company obtains an opinion from an independent investment
banking firm that the Business Combination is fair to the Company's stockholders
from a financial perspective.
3.7.2 Administrative Services. The Company has entered into
an agreement (the "SERVICE AGREEMENT") with Harbor Healthcare Holding LLC, (the
"AFFILIATE") in the form filed as an exhibit to the Registration Statement
pursuant to which the Affiliate will make available to the Company general and
administrative services including office space, utilities, receptionist and
secretarial support for the Company's use for $7,500 per month, which shall be
payable out of the interest earned on the Trust Account.
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3.7.3 Compensation. Except as set forth in this Section 3.7,
the Company shall not pay any Initial Stockholder or any of their affiliates any
fees or compensation from the Company, for services rendered to the Company
prior to, or in connection with, this Offering or the consummation of a Business
Combination; provided that the Initial Stockholders shall be entitled to
reimbursement from the Company for their out-of-pocket expenses incurred on the
Company's behalf, which includes an aggregate of $150,000 in loans which were
made to the Company prior to the effective date of the Registration Statement
and expenses incurred by them in connection with seeking and consummating a
Business Combination and repayment of the Convertible Loans.
3.8 Secondary Market Trading and Standard & Poor's. The Company will
apply to be included in Standard and Poor's Daily News and Corporation Records
Corporate Descriptions for a period of five years from the consummation of a
Business Combination. Promptly after the consummation of the Offering, the
Company shall take such steps as may be necessary to obtain a secondary market
trading exemption for the Company's securities in the State of California. The
Company shall also take such other action as may be reasonably requested by the
Representative to obtain a secondary market trading exemption in such other
states as may be requested by the Representative.
3.9 Warrant Solicitation Fees. The Company hereby engages ▇.▇.
▇▇▇▇▇▇▇▇▇▇, on a non-exclusive basis, as its agent for the solicitation of the
exercise of the Warrants. The Company will (i) assist ▇.▇. ▇▇▇▇▇▇▇▇▇▇ with
respect to such solicitation, if requested by ▇.▇. ▇▇▇▇▇▇▇▇▇▇, and (ii) at ▇.▇.
▇▇▇▇▇▇▇▇▇▇'▇ request, provide ▇.▇. ▇▇▇▇▇▇▇▇▇▇, and direct the Company's transfer
and warrant agent to provide to ▇.▇. ▇▇▇▇▇▇▇▇▇▇, at the Company's cost, lists of
the record and, to the extent known, beneficial owners of, the Warrants.
Commencing one year from the Effective Date, the Company will pay ▇.▇.
▇▇▇▇▇▇▇▇▇▇ five percent (5%) of the exercise price of the Warrants, payable on
the date of such exercise, on the terms provided for in the Warrant Agreement,
only if permitted under the rules and regulations of the NASD and only to the
extent that an investor who exercises his Warrants specifically designates, in
writing, that ▇.▇. ▇▇▇▇▇▇▇▇▇▇ solicited his exercise. ▇.▇. ▇▇▇▇▇▇▇▇▇▇ may engage
sub-agents in its solicitation efforts. The Company agrees to disclose the
arrangement to pay such solicitation fees to ▇.▇. ▇▇▇▇▇▇▇▇▇▇ in any prospectus
used by the Company in connection with the registration of the shares of Common
Stock underlying the Warrants.
3.10 Financial Public Relations Firm. Promptly after the execution of
a definitive agreement for a Business Combination, the Company shall retain a
financial public relations firm reasonably acceptable to the Representative for
a term to be agreed upon by the Company and the Representative.
3.11 Reports to the Representative.
3.11.1 Periodic Reports, Etc. For a period of five years
from the Effective Date or until such earlier time upon which the Company is
required to be liquidated, the Company will furnish to the Representative (Attn:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇) 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
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Commission; (ii) a copy of every press release and every news item and article
with respect to the Company or its affairs which was released by the Company;
(iii) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or
prepared by the Company; (iv) five copies of each Registration Statement; (v) a
copy of monthly statements, if any, setting forth such information regarding the
Company's results of operations and financial position (including balance sheet,
profit and loss statements and data regarding outstanding purchase orders) as is
regularly prepared by management of the Company; and (vi) such additional
documents and information with respect to the Company and the affairs of any
future subsidiaries of the Company as the Representative may from time to time
reasonably request; provided that the Representative shall sign, if requested by
the Company, a Regulation FD compliant confidentiality agreement which is
reasonably acceptable to the Representative and its counsel in connection with
the Representative's receipt of such information.
3.11.2 Transfer Sheets. For a period of five years following
the Effective Date or until such earlier time upon which the Company is required
to be liquidated, the Company shall retain a transfer and warrant agent
acceptable to the Representative (the "TRANSFER AGENT") and during the two (2)
year period following the Closing Date, will furnish to the Underwriters at the
Company's sole cost and expense such transfer sheets of the Company's securities
as the Representative may request, including the daily and monthly consolidated
transfer sheets of the Transfer Agent and DTC. Continental Stock Transfer &
Trust Company is acceptable to the Underwriters.
3.11.3 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 quoted on the Nasdaq Global
Market, or until such earlier time upon which the Company is required to be
liquidated, the Company shall engage ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC ("▇▇▇▇▇▇▇▇▇▇"), for a
one-time fee of $5,000 payable on the Closing Date, to deliver and update to the
Underwriters on a timely basis, but in any event on the Effective Date and at
the beginning of each fiscal quarter, a written report detailing those states in
which the Public Securities may be traded in non-issuer transaction under the
Blue Sky laws of the fifty States (the "SECONDARY MARKET TRADING SURVEY").
3.11.4 Trading Reports. During such time as the Public
Securities are quoted on the NASD OTC Bulletin Board (or any successor trading
market such as the Bulletin Board Exchange) or the Pink Sheets, LLC (or similar
publisher of quotations) and no other automated quotation system, the Company
shall provide to the Representative, at its expense, such reports published by
the NASD or the Pink Sheets, LLC relating to price trading of the Public
Securities, as the Representative shall reasonably request. In addition to the
requirements of the preceding sentence, for a period of two (2) years from the
Closing Date, the Company, at its expense, shall provide the Representative a
subscription to the Company's weekly Depository Transfer Company Security
Position Reports.
3.12 Disqualification of Form S-1. For a period equal to seven years
from the date hereof, the Company will not take any action or actions which may
prevent or disqualify the Company's use of Form S-1 (or other appropriate form)
for the registration of the Warrants and the Representative's Warrants under the
Act.
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3.13 Payment of Expenses.
3.13.1 General Expenses Related to the Offering. The Company
hereby agrees to pay on each of the Closing Date and the Option Closing Date, if
any, to the extent not paid at Closing Date, all expenses incident to the
performance of the obligations of the Company under this Agreement, including,
but not limited to: (i) the preparation, printing, filing and mailing (including
the payment of postage with respect to such mailing) of the Registration
Statement, the Preliminary Prospectus and/or the final Prospectus 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 printing and mailing the "Preliminary Blue
Sky Memorandum," and all amendments and supplements thereto, fees and
disbursements for the Representative's counsel retained for such purpose (such
fees, but not disbursements, shall be capped at $35,000 in the aggregate (of
which $15,000 has previously been paid)), and a one-time fee of $5,000 payable
to the Representative's counsel for the preparation of the Secondary Market
Trading Survey; (iv) filing fees, costs and expenses incurred in registering the
Offering with the NASD (including all COBRADesk fees); (v) costs of placing
"tombstone" advertisements in The Wall Street Journal, The New York Times and a
third publication to be selected by the Representative not to exceed $35,000 in
the aggregate; (vi) fees and disbursements of the transfer and warrant agent;
(vii) the Company's expenses associated with "due diligence" meetings arranged
by the Representative; (viii) the preparation, binding and delivery of closing
documents in form and style reasonably satisfactory to the Representative and
transaction lucite cubes or similar commemorative items in a style and quantity
as reasonably requested by the Representative; (ix) all costs and expenses
associated with "road show" marketing and "due diligence" trips for the
Company's management to meet with prospective investors, including without
limitation, all reasonable travel, food and lodging expenses associated with
such trips; and (x) all other costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section 3.13.1. 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 above to be paid by the Company to the
Representative and others upon the Company's receipt from underwriter of prior
written documentation of such expenses. 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 selected by the Representative. If the
Offering is successfully consummated, any amounts paid by the Company in
connection with such investigative search firm shall be credited against the
non-accountable expenses to be paid to the Representative pursuant to
Section 3.13.2 hereof. If the Offering is not consummated for any reason
whatsoever, except as a result of the Representatives or any Underwriter's
breach or default with respect to any of its obligations described in this
Agreement, then the Company shall reimburse the Representative in full for their
out of pocket accountable expenses actually incurred by the Representative,
including, without limitation, its legal fees and disbursements and "road show"
and due diligence expenses. The Representative shall retain such part of the
nonaccountable expense allowance previously paid as shall equal its actual
out-of-pocket expenses and refund the balance. If the amount previously paid is
insufficient to cover such actual out-of-pocket expenses, the Company shall
remain liable for and promptly pay any other actual out-of-pocket expenses.
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3.13.2 Nonaccountable Expenses. The Company further agrees
that in addition to the expenses payable pursuant to Section 3.13.1, on the
Closing Date, it will pay to the Representative a nonaccountable expense
allowance equal to one percent (1%) of the gross proceeds received by the
Company from the sale of the Firm Units (of which $_______ has previously been
paid) by deduction from the proceeds of the Offering contemplated herein.
3.13.3 Deferred Underwriting Compensation on Business
Combination. The Representative agrees that two percent (2%) of the gross
proceeds from the sale of the Firm Units ($500,000) (an additional $75,000 if
the over-allotment option is exercised in full) (the "CONTINGENT DISCOUNT") will
be deposited in and held in the Trust Fund. Upon consummation of a Business
Combination, the Company and the Underwriters further agree that in addition to
the expenses payable pursuant to Sections 3.13.1 and 3.13.2, the Company will
pay to the Representative an additional underwriting commission equal to the
Contingent Discount in respect to any IPO Shares (defined in Section 7.6) which
are not redeemed pursuant to Section 7.6 hereof. The Representative agrees that
the Representative shall forfeit any rights or claims to the Contingent Discount
in respect of any IPO Shares that are redeemed pursuant to Section 7.6 hereof.
In addition, in the event that the Company is unable to consummate a Business
Combination and American Stock Transfer & Trust Company ("AST"), the trustee of
the Trust Fund, commences liquidation of the Trust Fund as provided in the Trust
Agreement, the Representative agrees that (i) the Representative shall forfeit
any rights or claims to the Contingent Discount; and (ii) the Contingent
Discount, together with all other amounts on deposit in the Trust Fund, and any
accrued interest thereon (net of taxes payable), shall be distributed on a
pro-rata basis among the holders of the shares of Common Stock included in the
Units sold in the Offering.
3.14 Application of Net Proceeds. The Company will apply the net
proceeds from the Offering received by it in a manner consistent with the
application described under the caption "Use of Proceeds" in the Prospectus.
3.15 Delivery of Earnings Statements to Security Holders. The Company
will make generally available to its security holders as soon as practicable,
but not later than the first day of the fifteenth full calendar month following
the Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.
3.16 Notice to NASD.
3.16.1 Business Combination. In the event any person or
entity (regardless of any NASD affiliation or association) is engaged to assist
the Company in its search for a merger candidate or to provide any other merger
and acquisition services, the Company will provide the following to the NASD and
Representative prior to the consummation of the Business Combination: (i)
complete details of all services and copies of agreements governing such
services; and (ii) justification as to why the person or entity providing the
merger and acquisition services should not be considered an "underwriter and
related person" with respect to the Company's initial public offering, as such
term is defined in Rule 2710 of the NASD's Conduct Rules. The Company also
agrees that proper disclosure of such arrangement or potential arrangement will
be made in the proxy statement which the Company will file for purposes of
soliciting stockholder approval for the Business Combination.
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3.16.2 Broker/Dealer. In the event the Company intends to
register as a broker/dealer, merge with or acquire a registered broker/dealer,
or otherwise become a member of NASD, it shall promptly notify the NASD.
3.17 Stabilization. Neither the Company, nor, to its best knowledge,
any of its employees, directors or stockholders (without the consent of ▇.▇.
▇▇▇▇▇▇▇▇▇▇) has taken or will take, directly or indirectly, any action designed
to or that has constituted or that might reasonably be expected to cause or
result in, under the Exchange Act, or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Units.
3.18 Internal Controls. The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.19 Accountants. For a period of five years from the Effective Date
or until such earlier time upon which the Company is required to be liquidated,
the Company shall retain ▇▇▇▇▇▇▇▇▇ or other independent public accountants
reasonably acceptable to ▇.▇. ▇▇▇▇▇▇▇▇▇▇.
3.20 Form 8-K. The Company shall, on the date hereof, retain its
independent public accountants to audit the financial statements of the Company
as of the Closing Date (the "AUDITED FINANCIAL STATEMENTS") reflecting the
receipt by the Company of the proceeds of the initial public offering. As soon
as the Audited Financial Statements become available, the Company shall
immediately file a Current Report on Form 8-K with the Commission, which Report
shall contain the Company's Audited Financial Statements.
3.21 NASD. The Company shall advise the NASD if it is aware that any
5% or greater stockholder of the Company becomes an affiliate or associated
person of an NASD member participating in the distribution of the Company's
Public Securities.
3.22 Corporate Proceedings. All corporate proceedings and other legal
matters necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby shall have been done to the reasonable
satisfaction to counsel for the Underwriters.
3.23 Investment Company. The Company shall cause the proceeds of the
Offering to be held in the Trust Fund to be invested only in "government
securities" with specific maturity dates or in money market funds meeting
certain conditions under Rule 2a-7 promulgated under the Investment Company Act
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 be engaged in a business other than that of
investing, reinvesting, owning, holding or trading securities.
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3.24 Business Combination Announcement. Within five (5) Business Days
following the consummation by the Company of a Business Combination, the Company
shall cause an announcement ("BUSINESS COMBINATION ANNOUNCEMENT") to be placed,
at its cost, in The Wall Street Journal, The New York Times and a third
publication to be selected by ▇.▇. ▇▇▇▇▇▇▇▇▇▇ announcing the consummation of the
Business Combination and indicating that ▇.▇. ▇▇▇▇▇▇▇▇▇▇ was the managing
underwriter in the Offering. The Company shall supply ▇.▇. ▇▇▇▇▇▇▇▇▇▇ with a
draft of the Business Combination Announcement and provide ▇.▇. ▇▇▇▇▇▇▇▇▇▇ with
a reasonable advance opportunity to comment thereon. The Company will not place
the Business Combination Announcement without the final approval of ▇.▇.
▇▇▇▇▇▇▇▇▇▇, which approval will not be unreasonably withheld.
3.25 Colorado Trust Filing. In the event the Securities are registered
in the State of Colorado, the Company will cause a Colorado Form ES to be filed
with the Commissioner of the State of Colorado no less than 10 days prior to the
distribution of the Trust Fund in connection with a Business Combination and
will do all things necessary to comply with Section ▇▇-▇▇-▇▇▇ and Rule 51-3.4 of
the Colorado Securities Act.
3.26 Press Releases. The Company agrees that it will not issue press
releases or engage in any other publicity, without ▇.▇. ▇▇▇▇▇▇▇▇▇▇'▇ prior
written consent (not to be unreasonably withheld), for a period of forty (40)
days after the Closing Date.
3.27 Electronic Prospectus. The Company shall cause to be prepared and
delivered to the Representative, at its expense, within one (1) Business Day
from the effective date of this Agreement, an Electronic Prospectus to be used
by the Underwriters in connection with the Offering. As used herein, the term
"ELECTRONIC PROSPECTUS" means a form of prospectus, and any amendment or
supplement thereto, that meets each of the following conditions: (i) it shall be
encoded in an electronic format, satisfactory to the Representative, that may be
transmitted electronically by the other Underwriters to offerees and purchasers
of the Units for at least the period during which a Prospectus relating to the
Units is required to be delivered under the Securities Act; (ii) it shall
disclose the same information as the paper prospectus and prospectus filed
pursuant to ▇▇▇▇▇, except to the extent that graphic and image material cannot
be disseminated electronically, in which case such graphic and image material
shall be replaced in the electronic prospectus with a fair and accurate
narrative description or tabular representation of such material, as
appropriate; and (iii) it shall be in or convertible into a paper format or an
electronic format, satisfactory to the Representative, that will allow
recipients thereof to store and have continuously ready access to the prospectus
at any future time, without charge to such recipients (other than any fee
charged for subscription to the Internet as a whole and for on-line time).
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3.28 Reservation of Shares. The Company will reserve and keep
available that number of its authorized but unissued securities
which are issuable upon exercise of the Warrants and the Representative's
Purchase Option, Representative's Warrants, the Placement Units, the Placement
Warrants and the Convertible Loans outstanding from time to time.
3.29 Board Advisor. The Company agrees that it will, upon completion
of the proposed public offering contemplated herein, for a period of two (2)
years from the consummation of the Offering, the Representative shall have the
right to appoint an advisor ("ADVISOR") to the Company's Board of Directors.
Such Advisor shall be permitted to attend meetings of the Board, receive all
notices and other correspondence and communications sent by the Company to
members of its Board of Directors provided, that such Advisor shall not be
entitled to any compensation, other than reimbursement for all costs incurred in
attending such meetings including, food, lodging, and transportation. The
Company further agrees that, during said two (2) year period, it shall schedule
no less than four (4) formal and "in person" meetings of its Board of Directors
in each such year at which meetings such Advisor shall be permitted to attend as
set forth herein; said meetings shall be held quarterly each year and ten (10)
days advance notice of such meetings shall be given to the Advisor. Further,
during such two (2) year period, the Company shall give notice to the
Representative with respect to any proposed acquisitions, mergers,
reorganizations or other similar transactions. The Company shall indemnify and
hold such Advisor harmless against any and all claims, actions, damages, costs
and expenses, and judgments arising solely out of the attendance and
participation of such Advisor at any such meeting described herein, and, if the
Company maintains a liability insurance policy affording coverage for the acts
of its officers and directors, it shall, if possible, include such Advisor as an
insured under such policy.
3.30 Private Placement and Convertible Loan Proceeds. Immediately upon
establishment of the Trust Fund and prior to the Closing, the Company shall
deposit $900,000, representing all of the proceeds from the Private Placement in
the Trust Fund, and $800,000 ($920,000 if the Over-allotment Option is exercised
in full), representing all of the proceeds from the issuance of the Convertible
Loans in the Trust Fund and shall provide ▇.▇. ▇▇▇▇▇▇▇▇▇▇ with evidence of the
same.
3.31 No Amendment to Charter.
(i) The Company covenants and agrees, that it will not seek
to amend or modify provisions (A) - (E) of Article Sixth of its Amended and
Restated Certificate of Incorporation.
(ii) The Company acknowledges that the purchasers of the
Firm Units in this Offering shall be deemed to be third party beneficiaries of
Section 3.31 of this Agreement.
(iii) The Underwriters specifically acknowledge that they
may not waive this Section 3.31 under any circumstances.
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3.32 Right of First Refusal. For a period of twelve (12) months from
the completion of a Business Combination, but in any even not exceeding
thirty-six (36) months from the Closing, Company grants ▇.▇. ▇▇▇▇▇▇▇▇▇▇ the
right of first refusal to act as lead underwriter or minimally as a co-manager,
for any and all future public and private equity and debt offerings during such
thirty-six (36) month period of the Company, or any successor to or any
subsidiary of the Company.
4. Conditions of Underwriters' Obligations. The obligations of the several
Underwriters to purchase and pay for the Units, as provided herein, shall be
subject to the continuing accuracy of the representations and warranties of the
Company as of the date hereof and as of each of the Closing Date and the Option
Closing Date, if any, to the accuracy of the statements of officers of the
Company made pursuant to the provisions hereof and to the performance by the
Company of its obligations hereunder and to the following conditions:
4.1 Regulatory Matters.
4.1.1 Effectiveness of Registration Statement. The
Registration Statement shall have become effective not later than 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 ▇▇▇▇▇▇▇▇▇▇.
4.1.2 NASD Clearance. By the Effective Date, the
Representative shall have received clearance from the NASD as to the amount of
compensation allowable or payable to the Underwriters as described in the
Registration Statement.
4.1.3 No Commission Stop Order. At each of the Closing Date
and the Option Closing Date, the Commission has not issued any order or
threatened to issue any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any part thereof, and has not
instituted or threatened to institute any proceedings with respect to such an
order.
4.1.4 No Blue Sky Stop Orders. No order suspending the sale
of the Units in any jurisdiction designated by you pursuant to Section 3.3
hereof shall have been issued on either the Closing Date or the Option Closing
Date, and no proceedings for that purpose shall have been instituted or shall be
contemplated.
4.2 Company Counsel Matters.
4.2.1 Effective Date Opinion of Counsel. On the Effective
Date, the Representative shall have received the favorable opinion of Blank Rome
LLP ("BLANK ROME"), counsel to the Company, dated the Effective Date, addressed
to the Representative and in form and substance reasonably satisfactory to the
Representative to the effect that:
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(i) The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation, with full corporate power and authority to own its properties and
conduct its business as described in the Registration Statement, and, on the
Effective Date, as described in the "Preliminary Prospectus" (as hereafter
defined), and, on the Closing Date, as described in the Prospectus. The Company
is duly qualified and licensed and in good standing as a foreign corporation in
Pennsylvania. "Preliminary Prospectus" shall mean, for purposes of Section 4.2
of this Agreement, the prospectus contained in the Registration Statement at the
time the Registration Statement is declared effective by the Commission.
(ii) All issued and outstanding securities of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof are not subject to personal liability by
reason of being such holders; and none of such securities were issued in
violation of the preemptive rights of any stockholder of the Company arising by
operation of law or under the Amended and Restated Certificate of Incorporation
or Bylaws of the Company. The offers and sales of the outstanding Common Stock
were at all relevant times either registered under the Act or exempt from such
registration requirements. The authorized and outstanding capital stock of the
Company is as set forth in the Preliminary Prospectus and the Prospectus. The
Units, the Common Stock and the Warrants conform to the descriptions thereof
contained in the Registration Statement, the Preliminary Prospectus and the
Prospectus in all material respects.
(iii) The Securities, the Placement Securities, the
Incentive Warrants and the Convertible Loans have been duly authorized and, when
issued and paid for, the Securities, Placement Securities and Incentive Warrants
will be validly issued, fully paid and non-assessable; the holders thereof are
not and, when issued, will not be subject to personal liability by reason of
being such holders. The Securities, the Placement Securities, the Incentive
Warrants and the Convertible Loans are not and, when issued, will not be subject
to the preemptive rights of any holders of any security of the Company arising
under the Delaware General Corporation Law or under the Amended and Restated
Certificate of Incorporation or Bylaws of the Company. The Representative's
Purchase Option, the Representative's Warrants, the Warrants, the Incentive
Warrants, the Placement Units, the Placement Warrants, and the Convertible Loans
constitute valid and binding obligations of the Company to issue and sell, upon
exercise thereof and payment therefor, or in the case of the Convertible Loans,
to issue upon conversion thereof, the number and type of securities of the
Company called for thereby and such Representative's Purchase Option, the
Representative's Warrants, the Warrants, the Incentive Warrants, the Placement
Units, the Placement Warrants, and the Convertible Loans, when issued, in each
case, are enforceable against the Company in accordance with their respective
terms. The certificates representing the Securities are in proper form. A
sufficient number of shares of Common Stock have been reserved for issuance upon
exercise of the Placement Units, Placement Warrants, Warrants, the
Representative's Purchase Option, the Representative's Warrants, the Incentive
Warrants, and the Convertible Loans. The shares of Common Stock issuable upon
exercise of or conversion of (i) the Warrants, the Representative's Warrants and
the Incentive Warrants will, upon exercise of the Warrants, the Representative's
Purchase Option, the Representative's Warrants or the Incentive Warrants as the
case may be, and payment of the respective exercise price thereof, and (ii) the
Convertible Loans will upon conversion thereof, be duly and validly issued,
fully paid and non-assessable and will not have been issued in violation of or
subject to preemptive rights, under the Delaware General Corporate Law or the
Company's Amended and Restated Certificate of Incorporation or By-laws or, to
such counsel's knowledge, any contractual pre-emptive right under any agreement
to which the Company is a party.
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(iv) The Company has the corporate power and authority to
execute and deliver this Agreement, the Warrant Agreement, the Services
Agreements, the Trust Agreement, the Placement Unit Purchase Agreement, the
Escrow Agreement, the Incentive Warrants, the Convertible Loans and the
Representative's Purchase Option and, except as set forth in the Prospectus with
respect to certain events subsequent to the Closing Date, to perform its
obligations hereunder and thereunder.
(v) This Agreement, the Warrant Agreement, the Services
Agreements, the Trust Agreement, the Placement Unit Purchase Agreement and the
Escrow Agreement have each been duly and validly authorized and, when executed
and delivered by the Company, constitute, and the Representative's Purchase
Option has been duly and validly authorized by the Company and, when executed
and delivered, will constitute, the valid and binding obligations of the Company
and each of the Warrant Agreement, the Services Agreement, the Trust Agreement,
the Placement Unit Purchase Agreement and the Escrow Agreement is enforceable
against the Company in accordance with their respective terms.
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(vi) Except as set forth in the Prospectus with respect to
certain events subsequent to the Closing Date, the execution, delivery and
performance of this Agreement, the Warrant Agreement, the Representative's
Purchase Option, the Escrow Agreement, the Trust Agreement, the Placement Unit
Purchase Agreement, the Incentive Warrant, the Convertible Loans and the
Services Agreements, the issuance and sale of the Securities, the consummation
of the transactions contemplated hereby and thereby, and compliance by the
Company with the terms and provisions hereof and thereof, do not and will not,
with or without the giving of notice or the lapse of time, or both, (a) to such
counsel's knowledge, conflict with, or result in a breach of, any of the terms
or provisions of, or constitute a default under, or result in the creation or
modification of any lien, security interest, charge or encumbrance upon any of
the properties or assets of the Company pursuant to the terms of, any mortgage,
deed of trust, note, indenture, loan, contract, commitment or other agreement or
instrument filed as an exhibit to the Registration Statement, (b) result in any
violation of the provisions of the Amended and Restated Certificate of
Incorporation or the By-Laws of the Company, or (c) to such counsel's knowledge,
violate any statute or any judgment, order or decree, rule or regulation
applicable to the Company of any court, domestic or foreign, or of any federal,
state or other regulatory authority or other governmental body having
jurisdiction over the Company, its properties or assets.
(vii) The Registration Statement, each Preliminary
Prospectus and the Prospectus and any post-effective amendments or supplements
thereto (other than the financial statements included therein, as to which no
opinion need be rendered) each as of their respective dates complied as to form
in all material respects with the requirements of the Act and Regulations. The
Securities and each agreement filed as an exhibit to the Registration Statement
conform in all material respects to the description thereof contained in the
Registration Statement, the Preliminary Prospectus and the Prospectus. No United
States or state statute or regulation required to be described in the
Preliminary Prospectus and/or Prospectus is not described as required (except as
to the Blue Sky laws of the various states, as to which such counsel expresses
no opinions), nor are any contracts or documents of a character required to be
described in the Registration Statement, Preliminary Prospectus or the
Prospectus or to be filed as exhibits to the Registration Statement not so
described or filed as required (except for the contracts and documents described
in the "Underwriting" section of the Registration Statement, as to which such
counsel expresses no opinions).
(viii) Based solely on a call to the Commission on the
Effective Date, the Registration Statement is effective under the Act. To such
counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act or applicable state
securities laws.
(ix) To such counsel's knowledge, there is no action, suit
or proceeding before or by any court of governmental agency or body, domestic or
foreign, now pending, or threatened against the Company that is required to be
described in the Registration Statement.
(x) No consent, approval, authorization, order,
registration, filing, qualification, license or permit of or with any court or
any judicial, regulatory or other legal or governmental agency or body is
required for the execution, delivery and performance of the Underwriting
Agreement with respect to the Offering except for (1) such as may be required
under state securities or blue sky laws in connection with the purchase and
distribution of the Units by the Underwriters (as to which such counsel need
express no opinion), (2) such as have been made or obtained under the Securities
Act, (3) such as may have been obtained or are required by the NASD and (4) such
as may have been obtained or are required in connection with the listing of the
Company's shares on the Over-the-Counter Bulletin Board.
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(xi) The statements under the captions "Description of
Securities" and Item 14 of Part II of the Registration Statement, insofar as
such statements constitute a summary of the legal matters, the Company's
Certificate of Incorporation or the Company's By-laws referred to therein,
fairly present the information called for with respect to such legal matters,
the Company's Certificate of Incorporation or the Company's By-laws.
(xii) The opinion of counsel shall further include a
statement to the effect that counsel has participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company and representatives of the
Underwriters at which the contents of the Registration Statement, Preliminary
Prospectus, the Prospectus and related matters were discussed and although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement, Preliminary Prospectus and the Prospectus (except as
otherwise set forth in this opinion), no facts have come to the attention of
such counsel which should lead them to believe that either the Registration
Statement, the Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, as of the date of such opinion contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no opinion with respect to the financial
statements and schedules and other financial and statistical data and
information included in or omitted from the Registration Statement Preliminary
Prospectus or the Prospectus). The opinion of counsel shall state that such
counsel is not opining as to the Placement Securities with respect to any rights
to rescind or the effect any exercise of such rights will have on any other
securities of the Company or on the Offering.
4.2.2 Closing Date and Option Closing Date Opinion of
Counsel. On each of the Closing Date and the Option Closing Date, if any, the
Representative shall have received the favorable opinion of Blank Rome, dated
the Closing Date or the Option Closing Date, as the case may be set forth above,
addressed to the Representative and in form and substance reasonably
satisfactory to the counsel to the Representative, confirming as of the Closing
Date and, if applicable, the Option Closing Date, the statements made by Blank
Rome in its opinion delivered on the Effective Date.
4.2.3 Reliance. In rendering such opinion, such counsel may
rely: (i) as to matters involving the application of laws other than the laws of
the United States and jurisdictions in which they are admitted, to the extent
such counsel deems proper and to the extent specified in such opinion, if at
all, upon an opinion or opinions (in form and substance reasonably satisfactory
to the Representative) of other counsel reasonably acceptable to the
Representative, 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
jurisdiction having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to the Underwriters' counsel if requested. The
opinion of counsel for the Company and any opinion relied upon by such counsel
for the Company shall include a statement to the effect that it may be relied
upon by counsel for the Underwriters in its opinion delivered to the
Underwriters.
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4.3 Cold Comfort Letter. At the time this Agreement is executed, and
at each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representative and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to
▇▇▇▇▇▇▇▇▇▇ from ▇▇▇▇▇▇▇▇▇ dated, respectively, as of the date of this Agreement
and as of the Closing Date and the Option Closing Date, if any:
(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 Registration Statement, the Preliminary Prospectus
and the Prospectus, provided to the Company any non-audit services, as such term
is used in Section 10A(g) of the Exchange Act;
(ii) Stating that in their opinion the financial statements
of the Company included in the Registration Statement, the 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 of directors and the various
committees of the board of directors, consultations with officers and other
employees of the Company responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that: (a) the unaudited financial statements of
the Company included in the Registration Statement, the Preliminary Prospectus
and the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Regulations or are not
fairly presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited financial
statements of the Company included in the Registration Statement, Preliminary
Prospectus and the Prospectus; (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 __________, 2006 balance sheet included in the Registration
Statement, the Preliminary Prospectus and the Prospectus, other than as set
forth in or contemplated by the Registration Statement, the Preliminary
Prospectus and the Prospectus, or, if there was any decrease, setting forth the
amount of such decrease, and (c) during the period from __________, 2006 to a
specified date not later than five days prior to the Effective Date, Closing
Date or Option Closing Date, as the case may be, there was any decrease in
revenues, net earnings or net earnings per share of Common Stock, in each case
as compared with the corresponding period in the preceding year and as compared
with the corresponding period in the preceding quarter, other than as set forth
in or contemplated by the Registration Statement, the Preliminary Prospectus and
the Prospectus, or, if there was any such decrease, setting forth the amount of
such decrease;
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(iv) Setting forth, at a date not later than five days prior
to the Effective Date, the amount of liabilities of the Company (including a
break-down of commercial papers and notes payable to banks);
(v) Stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Registration
Statement, the Preliminary Prospectus and the Prospectus in each case to the
extent that such amounts, numbers, percentages, statements and information may
be derived from the general accounting records, including work sheets, of the
Company and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures do not constitute
an examination in accordance with generally accepted auditing standards) set
forth in the letter and found them to be in agreement;
(vi) Stating that they have not during the immediately
preceding five year period brought to the attention of the Company's management
any reportable condition related to internal structure, design or operation as
defined in the Statement on Auditing Standards No. 60 "Communication of Internal
Control Structure Related Matters Noted in an Audit," in the Company's internal
controls; and
(vii) Statements as to such other matters incident to the
transaction contemplated hereby as you may reasonably request.
4.4 Officers' Certificates.
4.4.1 Officers' Certificate. At each of the Closing Date and
the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Chairman of the Board or the President
and the Secretary or Assistant Secretary of the Company, dated the Closing Date
or the Option Closing Date, as the case may be, respectively, to the effect that
the Company has performed all covenants and complied with all conditions
required by this Agreement to be performed or complied with by the Company prior
to and as of the Closing Date, or the Option Closing Date, as the case may be,
and that the conditions set forth in Section 4.5 hereof have been satisfied as
of such date and that, as of Closing Date and the Option Closing Date, as the
case may be, the representations and warranties of the Company set forth in
Section 2 hereof are true and correct. In addition, the Representative will have
received such other and further certificates of officers of the Company as the
Representative may reasonably request.
4.4.2 Secretary's Certificate. At each of the Closing Date
and the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary or Assistant Secretary of the
Company, dated the Closing Date or the Option Date, as the case may be,
respectively, certifying: (i) that the By-Laws and Amended 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.
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4.5 No Material Changes. Prior to and on each of the Closing Date and
the Option Closing Date, if any: (i) there shall have been no material adverse
change or development involving a prospective material adverse change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) no action suit or proceeding, at law
or in equity, shall have been pending or threatened against the Company or any
Initial Stockholder before or by any court or federal or state commission, board
or other administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations, prospects or
financial condition or income of the Company, except as set forth in the
Registration Statement, the Preliminary Prospectus and Prospectus; (iii) no stop
order shall have been issued under the Act and no proceedings therefor shall
have been initiated or threatened by the Commission; and (iv) the Registration
Statement, the 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 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 the case of
the Prospectus, in light of the circumstances under which they were made), not
misleading.
4.6 Delivery of Agreements.
4.6.1 Effective Date Deliveries. On the Effective Date, the
Company shall have delivered to the Representative executed copies of the Escrow
Agreement, the Trust Agreement, the Warrant Agreement, the Services Agreement,
all of the Insider Letters and the Placement Unit Purchase Agreement.
4.6.2 Closing Date Deliveries. On the Closing Date, the
Company shall have delivered to the Representative and Legend Merchant Group,
Inc. and/or their designees executed copies of the Representative's Purchase
Option.
4.7 Secondary Market Trading Survey. On the Closing Date, the
Representative shall have received the Secondary Market Trading Survey from
▇▇▇▇▇▇▇▇▇▇.
5. Indemnification.
5.1 Indemnification of Underwriters.
5.1.1 General. Subject to the conditions set forth below,
the Company agrees to indemnify and hold harmless each of the Underwriters and
each dealer selected by you that participates in the offer and sale of the Units
(each a "Selected Dealer") and each of their respective directors, officers and
employees and each person, if any, who controls any such Underwriter
("CONTROLLING PERSON") within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim, damage
and expense whatsoever
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(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 federal, state or
local statute, law, rule, regulation or ordinance or at common law or otherwise
or under the laws, rules and regulation of foreign countries, arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in (i) any Preliminary Prospectus, the Registration Statement, or the
Prospectus (as from time to time each may be amended and supplemented); (ii) in
any post-effective amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Representative's Purchase Option; or (iii) any application
or other document or written communication (in this Section 5 collectively
called "APPLICATION") executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Units under
the securities laws thereof or filed with the Commission, any state securities
commission or agency, the OTC Bulletin Board or 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 the Prospectus, or any amendment or
supplement thereof, or in any application, as the case may be, which furnished
written information, it is expressly agreed, consists solely of the information
described in the last sentence of Section 2.3.1. With respect to any untrue
statement or omission or alleged untrue statement or omission made in the
Preliminary Prospectus, the indemnity agreement contained in this paragraph
shall not inure to the benefit of any Underwriter to the extent that any loss,
liability, claim, damage or expense of such Underwriter results from the fact
that a copy of the Prospectus was not given or sent to the person asserting any
such loss, liability, claim or damage at or prior to the written confirmation of
sale of the Securities to such person as required by the Act and the
Regulations, and if the untrue statement or omission has been corrected in the
Prospectus, unless such failure to deliver the Prospectus was a result of
non-compliance by the Company with its obligations under Section 3.4 hereof. The
Company agrees promptly to notify the Representative of the commencement of any
litigation or proceedings against the Company or any of its officers, directors
or controlling persons in connection with the issue and sale of the Securities
or in connection with the Preliminary Prospectus, the Registration Statement, or
the Prospectus.
5.1.2 Procedure. If any action is brought against an
Underwriter or controlling person in respect of which indemnity may be sought
against the Company pursuant to Section 5.1.1, such Underwriter 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) and payment of
actual expenses. Such Underwriter 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 or such 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; (ii) the Company shall not have
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employed counsel to have charge of the defense of such action; or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to the Company (in which case the Company shall not have the right to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses of not more
than one additional firm of attorneys selected by the Underwriter and/or
controlling person shall be borne by the Company. Notwithstanding anything to
the contrary contained herein, if the Underwriter or controlling person shall
assume the defense of such action as provided above, the Company shall have the
right to approve the terms of any settlement of such action which approval shall
not be unreasonably withheld.
5.2 Indemnification of the Company. Each Underwriter, severally and
not jointly, agrees to indemnify and hold harmless the Company, its directors,
officers and employees and agents who control the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the foregoing indemnity
from the Company to the several Underwriters, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions
made in any Preliminary Prospectus, the Registration Statement, or the
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
the Prospectus, or any amendment or supplement thereto or in any such
application, which furnished written information, it is expressly agreed,
consists solely of the information described in the last sentence of Section
2.3.1. 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 the Prospectus, or any amendment or supplement thereto or any
application, and in respect of which indemnity may be sought against any
Underwriter, such Underwriter shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the several Underwriters by the provisions of Section
5.1.2.
5.3 Contribution.
5.3.1 Contribution Rights. In order to provide for just and
equitable contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for indemnification
pursuant hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Act, the Exchange Act or otherwise may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 5, then, and in each such case, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
the Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance;
provided, that, no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the
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Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. Notwithstanding the provisions of this
Section 5.3.1, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Public Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section, each director, officer and employee of
an Underwriter or the Company, as applicable, and each person, if any, who
controls an Underwriter or the Company, as applicable, within the meaning of
Section 15 of the Act shall have the same rights to contribution as the
Underwriters or the Company, as applicable.
5.3.2 Contribution Procedure. Within fifteen days after
receipt by any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The contribution provisions contained in
this Section are intended to supersede, to the extent permitted by law, any
right to contribution under the Act, the Exchange Act or otherwise available.
The Underwriters' obligations to contribute pursuant to this Section 5.3 are
several and not joint.
6. Default by an Underwriter.
6.1 Default Not Exceeding 10% of Firm Units or Option Units. If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the over-allotment option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10% of
the number of Firm Units or Option Units that all Underwriters have agreed to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
their respective commitments hereunder.
6.2 Default Exceeding 10% of Firm Units or Option Units. In the event
that the default addressed in Section 6.1 above relates to more than 10% of the
Firm Units or Option Units, you may in your discretion arrange for yourself or
for another party or parties to purchase such Firm Units or Option Units to
which such default relates on the terms contained herein. If within one Business
Day after such default relating to more than 10% of the Firm Units or Option
Units you do not arrange for the purchase of such Firm Units or Option Units,
then the Company shall be entitled to a further period of one Business Day
within which to procure another party or parties satisfactory to you to purchase
said Firm Units or Option Units on such
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terms. In the event that neither you nor the Company arrange for the purchase of
the Firm Units or Option Units to which a default relates as provided in this
Section 6, this Agreement may be terminated by you or the Company without
liability on the part of the Company (except as provided in Sections 3.15 and 5
hereof) or the several Underwriters (except as provided in Section 5 hereof);
provided, however, that if such default occurs with respect to the Option Units,
this Agreement will not terminate as to the Firm Units; and provided further
that nothing herein shall relieve a defaulting Underwriter of its liability, if
any, to the other several Underwriters and to the Company for damages occasioned
by its default hereunder.
6.3 Postponement of Closing Date. In the event that the Firm Units or
Option Units to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, you or the Company shall have the right to postpone the Closing
Date or Option Closing Date for a reasonable period, but not in any event
exceeding five Business Days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement, the Preliminary Prospectus and/or
the Prospectus, as the case may be, or in any other documents and arrangements,
and the Company agrees to file promptly any amendment to, or to supplement, the
Registration Statement, the Preliminary Prospectus and/or the Prospectus, as the
case may be, that in the opinion of counsel for the Underwriters may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any party substituted under this Section 6 with like effect as if it had
originally been a party to this Agreement with respect to such Securities.
7. Additional Covenants.
7.1 Additional Shares or Options. The Company hereby agrees that until
the Company consummates a Business Combination, it shall not issue any shares of
Common Stock or any options or other securities convertible into Common Stock,
or any shares of Preferred Stock which participate in any manner in the Trust
Fund or which vote as a class with the Common Stock on a Business Combination.
7.2 Trust Fund Waiver Acknowledgments. The Company hereby agrees that
it will not commence its due diligence investigation of any operating business
or businesses which the Company seeks to acquire (each, a "TARGET BUSINESS") or
obtain the services of any vendor unless and until such Target Business or
vendor acknowledges in writing, whether through a letter of intent, memorandum
of understanding or other similar document (and subsequently acknowledges the
same in any definitive document replacing any of the foregoing), that (a) it has
read the Prospectus and understands that the Company has established the Trust
Fund, initially in an amount of $24,502,500 (without giving effect to any
exercise of the Over-allotment Option) for the benefit of the Public
Stockholders and that, except for a portion of the interest earned on the
amounts held in the Trust Fund, the Company may disburse monies from the Trust
Fund only (i) to the Public Stockholders in the event of the conversion of their
shares , (ii) to the Public Stockholders upon the liquidation of the Company if
the Company fails to consummate a Business Combination, (iii) to the Company
after, or concurrently with, the consummation of a Business Combination and (b)
for and in consideration of the Company (1) agreeing to evaluate such Target
Business for purposes of consummating a Business Combination with it or (2)
agreeing to engage the services of the vendor, as the case may be, such Target
Business or vendor agrees that it does not have any right, title, interest or
claim of any kind in or to any
-38-
monies of 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. The foregoing letters shall substantially be in the
form attached hereto as Exhibit A and B, respectively. Furthermore, each officer
and director of the Company shall execute a waiver letter in the form attached
hereto as Exhibit C.
7.3 Insider Letters. The Company shall not take any action or omit to
take any action which would cause a breach of any of the Insider Letters
executed between each Initial Stockholder and ▇.▇. ▇▇▇▇▇▇▇▇▇▇ or the Placement
Unit Purchase Agreement and will not allow any amendments to, or waivers of,
such Insider Letters or the Placement Unit Purchase Agreement without the prior
written consent of ▇.▇. ▇▇▇▇▇▇▇▇▇▇.
7.4 Amended and 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 Amended and Restated Certificate
of Incorporation or By-Laws. Prior to the consummation of a Business
Combination, the Company will not amend its Amended and Restated Certificate of
Incorporation, without the prior written consent of ▇.▇. ▇▇▇▇▇▇▇▇▇▇.
7.5 Blue Sky Requirements. The Company shall provide counsel to the
Representative with ten copies of all proxy information and all related material
filed with the Commission in connection with a Business Combination concurrently
with such filing with the Commission. In addition, the Company shall furnish any
other state in which its initial public offering was registered, such
information as may be requested by such state.
7.6 Acquisition/Liquidation Procedure. The Company agrees: (i) that,
prior to the consummation of any Business Combination, it will submit such
transaction to the Company's stockholders for their approval ("BUSINESS
COMBINATION VOTE") even if the nature of the acquisition is such as would not
ordinarily require stockholder approval under applicable state law and will
publicly announce the record date determining the shareholders entitled to vote
at the meeting to approve the Business Combination at least two business days
prior to such record date; and (ii) that, in the event that the Company does not
effect a Business Combination within 24 months from the Effective Date, the
Company will be liquidated and will distribute to all holders of IPO Shares
(defined below) an aggregate sum equal to the Company's "LIQUIDATION VALUE." The
Company's "Liquidation Value" shall mean the Company's book value, as determined
by the Company and approved by ▇▇▇▇▇▇▇▇▇. In no event, however, will the
Company's Liquidation Value be less than the Trust Fund, inclusive of any net
interest income thereon. Only holders of IPO Shares shall be entitled to receive
liquidating distributions and the Company shall pay no liquidating distributions
with respect to any other shares of capital stock of the Company. With respect
to the Business Combination Vote, the Company shall cause all of the Initial
Stockholders to vote the shares of Common Stock owned by them immediately prior
to this Offering in accordance with the vote of the holders of a majority of the
IPO Shares present, in person or by proxy, at a meeting of the Company's
stockholders called for such purpose. At the time the Company seeks approval of
any potential Business Combination, the Company will offer each holder of Common
Stock issued in this Offering ("IPO SHARES") the right to convert their IPO
Shares at a per share price ("CONVERSION PRICE") equal to the amount in the
Trust Fund (inclusive of any interest income therein) calculated as of two
business days
-39-
prior to the consummation of the proposed Business Combination divided by the
total number of IPO Shares. If a majority of the holders of IPO Shares present
and entitled to vote on the Business Combination vote in favor of such Business
Combination and holders of less than 20% in interest of the Company's IPO Shares
elect to convert their IPO Shares, the Company may, but will not be required to,
proceed with such Business Combination. If the Company elects to so proceed, it
will convert shares, based upon the Conversion Price, from those holders of IPO
Shares who affirmatively requested such conversion and who voted against the
Business Combination. If holders of 20% or more in interest of the IPO Shares,
who vote against approval of any potential Business Combination, elect to
convert their IPO Shares, the Company will not proceed with such Business
Combination and will not convert such shares. In addition, the Initial
Stockholders, officers, directors and senior advisor of the Company have agreed,
and the Company shall cause the Initial Stockholders, officers, directors and
senior advisor of the Company, to vote the shares acquired by them (whether
directly or through an affiliate) (i) prior to the public offering and the
Private Placement, (ii) in the Private Placement, (iii) issuable upon conversion
of the Convertible Loans, (iv) issuable upon exercise of any warrants, including
the Incentive Warrants (to the extent exercised), and (v) any shares acquired in
connection with or following the public offering, in favor of an amendment to
the Company's Amended and Restated Certificate of Incorporation to extend the
Company's corporate life. The provisions of this Section 7.6 may not be
modified, amended or deleted under any circumstances.
7.7 Rule 419. The Company agrees that it will use its best efforts to
prevent the Company from becoming subject to Rule 419 under the Act prior to the
consummation of any Business Combination, including, but not limited to, using
its best efforts to prevent any of the Company's outstanding securities from
being deemed to be a "▇▇▇▇▇ stock" as defined in Rule 3a-51-1 under the Exchange
Act during such period.
7.8 Affiliated Transactions. The Company shall cause each of the
Initial Stockholders and each of its officers, directors and senior advisors to
agree that, in order to minimize potential conflicts of interest which may arise
from multiple affiliations, the Initial Stockholders and each of its officers,
directors and senior advisors will present to the Company for its consideration,
prior to presentation to any other person or company, any suitable opportunity
to acquire an operating business, until the earlier of the consummation by the
Company of a Business Combination, the liquidation of the Company or until such
time as such Persons cease to be an officer or director of the Company, subject
to any pre-existing fiduciary or contractual obligations such Persons might
have.
7.9 Target Net Assets. The Company agrees that the initial Target
Business that it acquires must have a fair market value equal to at least 80% of
the Company's net assets (all of the Company's assets, including the funds held
in the Trust Fund, less the Company's liabilities) at the time of such
acquisition. The fair market value of such business must be determined by the
Board of Directors of the Company based upon standards generally accepted by the
financial community, such as actual and potential sales, earnings and cash flow
and book value. If the Board of Directors of the Company is not able to
independently determine that the Target Business has a fair market value of at
least 80% of the Company's net assets at the time of such acquisition, the
Company will obtain an opinion from an unaffiliated, independent investment
banking firm which is a member of the NASD with respect to the satisfaction of
such criteria. The Company is not required to obtain an opinion from an
investment banking firm as to the fair market value if the Company's Board of
Directors independently determines that the Target Business does have sufficient
fair market value.
-40-
8. Representations and Agreements to Survive Delivery. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Closing Date or the Option Closing Date, if any, and such
representations, warranties and agreements of the Underwriters and Company,
including the indemnity agreements contained in Section 5 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company or any controlling person, and
shall survive termination of this Agreement or the issuance and delivery of the
Securities to the several Underwriters until the earlier of the expiration of
any applicable statute of limitations and the seventh anniversary of the later
of the Closing Date or the Option Closing Date, if any, at which time the
representations, warranties and agreements shall terminate and be of no further
force and effect.
9. Effective Date of This Agreement and Termination Thereof.
9.1 Effective Date. This Agreement shall become effective on the
Effective Date at the time the Registration Statement is declared effective by
the Commission.
9.2 Termination. You shall have the right to terminate this Agreement
at any time prior to any Closing Date, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in your opinion will in
the immediate future materially disrupt, general securities markets in the
United States; or (ii) if trading on the New York Stock Exchange, the American
Stock Exchange, the Boston Stock Exchange or on the NASD OTC Bulletin Board (or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the NASD OTC Bulletin Board or by order of the
Commission or any other government authority having jurisdiction, or (iii) if
the United States shall have become involved in a war or an increase in major
hostilities, or (iv) if a banking moratorium has been declared by a New York
State or federal authority, or (v) if a moratorium on foreign exchange trading
has been declared which materially adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Units, or (vii) if any of the Company's representations, warranties or
covenants hereunder are breached, or (viii) if the Representative shall have
become aware after the date hereof of such a material adverse change in the
conditions or prospects of the Company, or such adverse material change in
general market conditions, including, without limitation, as a result of
terrorist activities after the date hereof, as in the Representative's judgment
would make it impracticable to proceed with the offering, sale and/or delivery
of the Units or to enforce contracts made by the Underwriters for the sale of
the Units.
9.3 Expenses. In the event that this Agreement shall not be carried
out for any reason whatsoever, within the time specified herein or any
extensions thereof pursuant to the terms herein, the obligations of the Company
to pay the out of pocket expenses related to the transactions contemplated
herein shall be governed by Section 3.13 hereof.
-41-
9.4 Indemnification. Notwithstanding any contrary provision contained
in this Agreement, any election hereunder or any termination of this Agreement,
and whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way effected by, such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
10. Miscellaneous.
10.1 Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered by
hand or reputable overnight courier or delivered by facsimile transmission (with
printed confirmation of receipt) and confirmed and shall be deemed given when so
mailed, delivered or faxed (or if mailed, two days after such mailing):
If to the Representative:
▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PC
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Highpoint Acquisition Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
Blank Rome LLP
The Chrysler Building
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Ethan Seer, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10.2 Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
10.3 Amendment. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.
-42-
10.4 Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with this
Agreement) constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof, and supersede all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
10.5 Binding Effect. This Agreement shall inure solely to the benefit
of and shall be binding upon the Representative, the Underwriters, the Company
and the controlling persons, directors and officers referred to in Section 5
hereof, and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained.
10.6 Governing Law, Venue, etc.
10.6.1 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 the conflict of laws principles thereof. Each of the Representative
and the Company (and any individual signatory hereto): (i) agrees that any legal
suit, action or proceeding arising out of or relating to this agreement and/or
the transactions contemplated hereby shall be instituted exclusively in New York
Supreme Court, County of New York, or in the United States District Court for
the Southern District of New York, (ii) waives any objection which such party
may have or hereafter to the venue of any such suit, action or proceeding and
(iii) irrevocably and exclusively consents to the jurisdiction of the New York
Supreme Court, County of New York, and the United States District Court for the
Southern District of New York in any such suit, action or proceeding.
10.6.2 Each of the Representative and the Company (and any
individual signatory hereto) further agrees to accept and acknowledge service of
any and all process which may be served in any such suit, action or proceeding
in the New York Supreme Court, County of New York, or in the United States
District Court for the Southern District of New York and agrees that service of
process upon the Company or any such individual mailed by certified mail to the
Company's address shall be deemed in every respect effective service of process
upon the Company or any such individual in any such suit, action or proceeding,
and service of process upon the Representative mailed by certified mail to the
Representative's address shall be deemed in every respect effective service
process upon the Representative, in any such suit, action or proceeding.
10.6.3 THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST
EXTENT PERMITTED BY LAW, ON BEHALF OF ITS EQUITY HOLDERS AND CREDITORS) HEREBY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS.
10.6.4 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.
-43-
10.7 Execution in Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto. Delivery of a signed
counterpart of this Agreement by fax or email/pdf transmission shall constitute
valid and sufficient delivery thereof.
10.8 Waiver, Etc. The failure of any of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way effect the
validity of this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which enforcement of
such waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.
10.9 No Fiduciary Relationship. The Company hereby acknowledges that
the Underwriters are acting solely as underwriters in connection with the
offering of the Company's securities. The Company further acknowledges that the
Underwriters are acting pursuant to a contractual relationship created solely by
this Agreement entered into on an arm's length basis and in no event do the
parties intend that the Underwriters act or be responsible as a fiduciary to the
Company, its management, stockholders, creditors or any other person in
connection with any activity that the Underwriters may undertake or have
undertaken in furtherance of the offering of the Company's securities, either
before or after the date hereof. The Underwriters hereby expressly disclaim any
fiduciary or similar obligations to the Company, either in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions, and the Company hereby confirms its understanding and agreement to
that effect. The Company and the Underwriters agree that they are each
responsible for making their own independent judgments with respect to any such
transactions, and that any opinions or views expressed by the Underwriters to
the Company regarding such transactions, including but not limited to any
opinions or views with respect to the price or market for the Company's
securities, do not constitute advice or recommendations to the Company. The
Company hereby waives and releases, to the fullest extent permitted by law, any
claims that the Company may have against the Underwriters with respect to any
breach or alleged breach of any fiduciary or similar duty to the Company in
connection with the transactions contemplated by this Agreement or any matters
leading up to such transactions.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-44-
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,
HIGHPOINT ACQUISITION CORP.
By:
------------------------------------
Name: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
Accepted on the date first
above written.
▇.▇. ▇▇▇▇▇▇▇▇▇▇ & CO., INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
-45-
SCHEDULE A
HIGHPOINT ACQUISITION CORP.
4,166,667 UNITS
NUMBER OF FIRM UNITS
UNDERWRITER TO BE PURCHASED
----------- --------------------
▇.▇. ▇▇▇▇▇▇▇▇▇▇ & Co., Inc.
---------
4,166,667
-46-
EXHIBIT A
FORM OF TARGET BUSINESS LETTER
Highpoint Acquisition Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer
Gentlemen:
Reference is made to the Final Prospectus of Highpoint
Acquisition Corp. ("HAC"), dated __________, 2007 (the "PROSPECTUS").
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We have read the Prospectus and understand that HAC has
established the Trust Fund, initially in an amount of at least $24,502,500 for
the benefit of the Public Stockholders and the underwriters of HAC's initial
public offering (the "Underwriters") and that, except for a portion of the
interest earned on the amounts held in the Trust Fund, HAC may disburse monies
from the Trust Fund only (i) to the Public Stockholders in the event of the
redemption of their shares or the dissolution and liquidation of HAC or (ii) to
HAC and the Underwriters after it consummates or in connection with the
consummation of a Business Combination.
For and in consideration of HAC agreeing to evaluate the
undersigned for purposes of consummating a Business Combination with it, the
undersigned hereby agrees that it does not have any right, title, interest or
claim of any kind in or to any monies in the Trust Fund (the "CLAIM") and hereby
waives any Claim it may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with HAC and will not seek recourse
against the rust Fund for any reason whatsoever.
-----------------------------------------------
Print Name of Target Business
-----------------------------------------------
Authorized Signature of Target Business
-47-
EXHIBIT B
FORM OF VENDOR LETTER
Highpoint Acquisition Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer
Gentlemen:
Reference is made to the Final Prospectus of Highpoint
Acquisition Corp. ("HAC"), dated ___________, 2007 (the "PROSPECTUS").
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We have read the Prospectus and understand that HAC has
established the Trust Fund, initially in an amount of at least $24,502,500 for
the benefit of the Public Stockholders and the underwriters of HAC's initial
public offering (the "Underwriters") and that, except for a portion of the
interest earned on the amounts held in the Trust Fund, HAC may disburse monies
from the Trust Fund only (i) to the Public Stockholders in the event of the
redemption of their shares or the dissolution and liquidation of HAC or (ii) to
HAC and the Underwriters after it consummates or in connection with the
consummation of a Business Combination.
For and in consideration of HAC agreeing to evaluate the
undersigned for purposes of consummating a Business Combination with it, the
undersigned hereby agrees that it does not have any right, title, interest or
claim of any kind in or to any monies in the Trust Fund (the "CLAIM") and hereby
waives any Claim it may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with HAC and will not seek recourse
against the Trust Fund for any reason whatsoever.
-----------------------------------------------
Print Name of Vendor
-----------------------------------------------
Authorized Signature of Vendor
-48-
EXHIBIT C
FORM OF DIRECTOR/OFFICER LETTER
Highpoint Acquisition Corp.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer
Gentlemen:
The undersigned officer or director of Highpoint Acquisition
Corp. ("HAC") hereby acknowledges that HAC has established the Trust Fund,
initially in an amount of at least $24,502,500 for the benefit of the Public
Stockholders and the underwriters of HAC's initial public offering (the
"Underwriters") and that HAC may disburse monies from the Trust Fund only (i) to
the Public Stockholders in the event of the redemption of their shares or the
dissolution and liquidation of HAC or (ii) to HAC and the Underwriters after it
consummates or in connection with the consummation of a Business Combination.
The undersigned hereby agrees that it does not have any
right, title, interest or claim of any kind in or to any monies in the Trust
Fund (the "CLAIM") and hereby waives any Claim it may have in the future as a
result of, or arising out of, any contracts or agreements with HAC and will not
seek recourse against the Trust Fund for any reason whatsoever.
Notwithstanding the foregoing, such waiver shall not apply
to any shares acquired by the undersigned in the public market.
---------------------------------------------------
Print Name of Officer/Director
---------------------------------------------------
Authorized Signature of Officer/Director
-49-