UNDERWRITING AGREEMENT between STONELEIGH PARTNERS ACQUISITION CORP. and HCFP/BRENNER SECURITIES LLC
EXHIBIT
1.1.
between
and
HCFP/▇▇▇▇▇▇▇
SECURITIES LLC
Dated:
___________, 2006
__________,
2006
HCFP/▇▇▇▇▇▇▇
Securities LLC
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear
Sirs:
The
undersigned, Stoneleigh Partners Acquisition Corp., a Delaware corporation
(“Company”), hereby confirms its agreement with HCFP/▇▇▇▇▇▇▇ Securities LLC
(being referred to herein variously as “you,” “▇▇▇▇▇▇▇” or the “Representative”)
and with the other underwriters named on Schedule I hereto for which ▇▇▇▇▇▇▇
is
acting as Representative (the Representative and the other Underwriters being
collectively called the “Underwriters” or, individually, an “Underwriter”) as
follows:
1. Purchase
and Sale of Securities.
1.1 Firm
Securities.
1.1.1 Purchase
of Firm Units. On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to issue and sell, severally and not jointly, to the several
Underwriters, an aggregate of 850,000 Series A Units (“Series A Units”) and
9,200,000 Series B Units (“Series B Units” and together with the Series A Units,
the “Firm Units”) of the Company, at a purchase price (net of discounts and
commissions) of $8.075 per Series A Unit and $9.595 per Series B Unit. The
Underwriters, severally and not jointly, agree to purchase from the Company
the
number of Firm Units set forth opposite their respective names on Schedule
I
attached hereto and made a part hereof at a purchase price (net of discounts
and
commissions) of $8.075 per Series A Unit and $9.595 per Series B Unit. The
Series A Units and Series B Units are to be offered initially to the public
(“Offering”) at the offering price of $8.50 and $10.10 per Series A Unit and
Series B Unit, respectively. Each Series A Unit consists of two shares of the
Company’s common stock, par value $.0001 per share (“Common Stock”), and ten
Class Z Warrants (“Class Z Warrants”). Each Series B Unit consists of two shares
of the Company’s Class B common stock, par value $.0001 per share (“Class B
Common Stock”), and two Class W Warrants (“Class W Warrants,” and together with
the Class Z Warrants, “Warrants”). Each of the shares of Common Stock and Class
Z Warrants included in the Series A Units and each of the shares of Class B
Common Stock and Class W Warrants included in the Series B Units will not be
separately transferable until 90 days after the effective date (“Effective
Date”) of the Registration Statement (as defined in Section 2.1.1 hereof) unless
▇▇▇▇▇▇▇ informs the Company of its decision to allow earlier separate trading
of
either the shares of Common Stock and Class Z Warrants included in the Series
A
Units or the shares of Class B Common Stock and Class W Warrants included in
the
Series B Units, or all of the securities comprising both the Series A Units
and
Series B Units, but in no event will ▇▇▇▇▇▇▇ allow any separate trading until
the preparation of an audited balance sheet of the Company reflecting receipt
by
the Company of the proceeds of the Offering and the filing of a Form 8-K by
the
Company which includes such balance sheet. Each Class W Warrant entitles its
holder to exercise it to purchase one share of Common Stock for $5.00 during
the
period commencing on the later of (i) one year from the Effective Date of the
Registration Statement and (ii) the consummation by the Company of its “Business
Combination” and terminating on the five-year anniversary of the Effective Date.
Each Class Z Warrant entitles its holder to exercise it to purchase one share
of
Common Stock for $5.00 during the period commencing on the later of (i) one
year
from the Effective Date of the Registration Statement and (ii) the consummation
by the Company of its Business Combination and terminating on the seven-year
anniversary of the Effective Date. “Business Combination” shall mean any merger,
capital stock exchange, asset acquisition or other similar business combination
consummated by the Company with an operating business as
described more fully in the Registration Statement.
1
1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 10:00 A.M., New York
time, on the fourth business day following the Effective Date of the
Registration Statement or at such other time as shall be agreed upon by the
Representative and the Company at the offices of the Representative or at such
other place as shall be agreed upon by the Representative and the Company.
The
hour and date of delivery and payment for the Firm Units are called “Closing
Date.” Payment for the Firm Units shall be made on the Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $92,920,000 of the proceeds received by the Company for the Firm
Units shall be deposited in the trust fund established by the Company for the
benefit of the public stockholders as described in the Registration Statement
(“Trust Fund”) pursuant to the terms of an Investment Management Trust Agreement
(“Trust Agreement”) and the remaining proceeds shall be paid to the order of the
Company (subject to Section 3.13 hereof) upon delivery to you of certificates
(in form and substance satisfactory to the Underwriters) representing the Firm
Units (or through the facilities of the Depository Trust Company (“DTC”)) for
the account of the Underwriters. The Firm Units shall be registered in such
name
or names and in such authorized denominations as the Representative may request
in writing at least two full business days prior to the Closing Date. The
Company will permit the Representative to examine and package the Firm Units
for
delivery, at least one full business day prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Units except upon tender
of
payment by the Representative for all the Firm Units.
1.2 Over-Allotment
Option.
1.2.1 Option
Units.
For the
purposes of covering any over-allotments in connection with the distribution
and
sale of the Firm Units, the Underwriters are hereby granted, severally and
not
jointly, an option to purchase up to an additional 127,500 Series A Units and/or
1,380,000 Series B Units from the Company (“Over-allotment Option”). Such
additional 127,500 Series A Units and/or 1,380,000 Series B Units are
hereinafter referred to as “Option Units.” The Firm Units and the Option Units
are hereinafter collectively referred to as the “Units,” and the Units, the
shares of Common Stock, shares of Class B Common Stock and Warrants included
in
the Units and the shares of Common Stock issuable upon exercise of the Warrants
are hereinafter referred to collectively as the “Public Securities.” The
purchase price to be paid for the Option Units will be the same price per Option
Unit as the price per Firm Unit set forth in Section 1.1.1 hereof.
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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; provided,
however, that any exercise of the Over-allotment Option must ensure that the
net
proceeds to the Company therefrom will be sufficient for the Company to deposit
an amount equal to at least $10.10 per Series B Unit as to which the
Over-allotment Option is exercised. The Underwriters will not be under any
obligation to purchase any Option Units prior to the exercise of the
Over-allotment Option. The Over-allotment Option granted hereby may be exercised
by the giving of oral notice to the Company by the Representative, which must
be
confirmed in writing by overnight mail or facsimile transmission setting forth
the number of Option Units to be purchased and the date and time for delivery
of
and payment for the Option Units (the “Option Closing Date”), which will not be
later than five full business days after the date of the notice or such other
time as shall be agreed upon by the Company and the Representative, at the
offices of the Representative or at such other place as shall be agreed upon
by
the Company and the Representative. Upon exercise of the Over-allotment Option,
the Company will become obligated to convey to the Underwriters, and, subject
to
the terms and conditions set forth herein, the Underwriters will become
obligated to purchase, the number of Option Units specified in such
notice.
1.2.3 Payment
and Delivery.
Payment
for the Option Units shall be made on the Option Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $10.10 per Series B Unit sold pursuant to the Over-Allotment Option
shall be deposited in the Trust Fund pursuant to the Trust Agreement and the
remaining proceeds shall be paid to the order of the Company (subject to Section
3.13 hereof) upon delivery to you of certificates (in form and substance
satisfactory to the Underwriters) representing such securities (or through
the
facilities of DTC) for the account of the Underwriters. The certificates
representing the Option Units to be delivered will be in such denominations
and
registered in such names as the Representative requests not less than two full
business days prior to the Closing Date or the Option Closing Date, as the
case
may be, and will be made available to the Representative for inspection,
checking and packaging at the aforesaid office of the Company’s transfer agent
or correspondent not less than one full business day prior to such Closing
Date.
1.3 Representative’s
Purchase Option.
1.3.1 Purchase
Option.
The
Company hereby agrees to issue and sell to the Representative (and/or their
designees) on the Effective Date an option (“Representative’s Purchase Option”)
for the purchase of an aggregate of ______ Series A Units and/or _______ Series
B Units (“Representative’s Units”) for an aggregate purchase price of $100. Each
of the Representative’s Units is identical to the Firm Units except that the
exercise price of the Warrants included in the Representative’s Units shall be
$____ per share and the Class Z Warrants included in the Representative’s Units
shall be exercisable by the Representative terminating on the five-year
anniversary of the Effective Date. The Representative’s Purchase Option shall be
exercisable, in whole or in part, commencing on the later of (i) one year from
the Effective Date and (ii) the consummation of a Business Combination and
expiring on the five-year anniversary of the Effective Date at an initial
exercise price per Representative’s Unit of $________ per Series A Unit and
$________ per Series B Unit. The Representative’s Purchase Option, the
Representative’s Units, the Warrants underlying 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.
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1.3.2 Payment
and Delivery.
Delivery and payment for the Representative’s Purchase Option shall be made on
the Closing Date. The Company shall deliver to the Underwriters, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the Representative may request.
2. Representations
and Warranties of the Company. The Company represents and warrants to the
Underwriters as follows:
2.1 Filing
of
Registration Statement.
2.1.1 Pursuant
to the Act.
The
Company has filed with the Securities and Exchange Commission (“Commission”) a
registration statement and an amendment or amendments thereto, on Form S-1
(File No. 333-_______), including any related preliminary prospectus
(“Preliminary Prospectus”), for the registration of the Public Securities under
the Securities Act of 1933, as amended (“Act”), which registration statement and
amendment or amendments have been prepared by the Company in conformity with
the
requirements of the Act, and the rules and regulations (“Regulations”) of the
Commission under the Act. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time
the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof
or incorporated therein and all information deemed to be a part thereof as
of
such time pursuant to paragraph (b) of Rule 430A of the Regulations), is
hereinafter called the “Registration Statement,” and the form of the final
prospectus dated the Effective Date included in the Registration Statement
(or,
if applicable, the form of final prospectus filed with the Commission pursuant
to Rule 424 of the Regulations), is hereinafter called the “Prospectus.” The
Registration Statement has been declared effective by the Commission on the
date
hereof.
2.1.2 Pursuant
to the Exchange Act.
The
Company has filed with the Commission a Form 8-A (File Number 000-________)
providing for the registration under the Securities Exchange Act of 1934, as
amended (“Exchange Act”), of the Series A Units, Series B Units, the Common
Stock, Class B Common Stock, Class W Warrants and Class Z Warrants. The
registration of the Series A Units, Series B Units, the Common Stock, Class
B
Common Stock, Class W Warrants and Class Z Warrants under the Exchange Act
has
been declared effective by the Commission on the date hereof.
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2.2 No
Stop
Orders, Etc. Neither the Commission nor, to the best of the Company’s knowledge,
any state regulatory authority has issued, or threatened to issue, any order
preventing or suspending the use of any Preliminary Prospectus or has instituted
or, to the best of the Company’s knowledge, threatened to institute any
proceedings with respect to such an order.
2.3 Disclosures
in Registration Statement.
2.3.1 10b-5
Representation.
At the
time the Registration Statement became effective and at all times subsequent
thereto up to the Closing Date and the Option Closing Date, if any, the
Registration Statement and the Prospectus will contain all material statements
that are required to be stated therein in accordance with the Act and the
Regulations, and will in all material respects conform to the requirements
of
the Act and the Regulations; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, on such dates, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading. When
any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Securities or
any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied or will comply in all material respects with the applicable provisions
of the Act and the Regulations and did not and will not contain an untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. The representation
and warranty made in this Section 2.3.1 does not apply to statements made or
statements omitted in reliance upon and in conformity with written information
furnished to the Company with respect to the Underwriters by the Representative
expressly for use in the Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
2.3.2 Disclosure
of Agreements.
The
agreements and documents described in the Registration Statement and the
Prospectus conform to the descriptions thereof contained therein and there
are
no agreements or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits
to
the Registration Statement, that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which
the
Company is a party or by which its property or business is or may be bound
or
affected and (i) that is referred to in the Prospectus, or (ii) is material
to
the Company’s business, has been duly and validly executed by the Company, is in
full force and effect and is enforceable against the Company and, to the
Company’s knowledge, the other parties thereto, in accordance with its terms,
except (x) as such enforceability may be limited by bankruptcy, 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.
5
2.3.3 Prior
Securities Transactions.
No
securities of the Company have been sold by the Company or by or on behalf
of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company since the Company’s formation, except as
disclosed in the Registration Statement.
2.3.4 Regulations.
The
disclosures in the Registration Statement 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.
2.4 Changes
After Dates in Registration Statement.
2.4.1 No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise specifically stated therein,
(i) there has been no material adverse change in the condition, financial or
otherwise, or business prospects of the Company, (ii) there have been no
material transactions entered into by the Company, other than as contemplated
pursuant to this Agreement, and (iii) no member of the Company’s management has
resigned from any position with the Company.
2.4.2 Recent
Securities Transactions, Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (i) issued
any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its equity securities.
2.5 Independent
Accountants. BDO ▇▇▇▇▇▇▇, LLP (“BDO”), whose report is filed with the Commission
as part of the Registration Statement, are independent accountants as required
by the Act and the Regulations. BDO has not, during the periods covered by
the
financial statements included in the Prospectus, provided to the Company any
non-audit services, as such term is used in Section 10A(g) of the Exchange
Act.
2.6 Financial
Statements. The financial statements, including the notes thereto and supporting
schedules included in the Registration Statement and Prospectus fairly present
in all material respects the financial position, the results of operations
and
the cash flows of the Company at the dates and for the periods to which they
apply; and such financial statements have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout the
periods involved; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. The
Registration Statement discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and other
relationships of the Company with unconsolidated entities or other persons
that
may have a material current or future effect on the Company’s financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses.
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2.7 Authorized
Capital; Options; Etc. The Company had at the date or dates indicated in the
Prospectus duly authorized, issued and outstanding capitalization as set forth
in the Registration Statement and the Prospectus. Based on the assumptions
stated in the Registration Statement and the Prospectus, the Company will have
on the Closing Date the adjusted stock capitalization set forth therein. Except
as set forth in, or contemplated by, the Registration Statement and the
Prospectus, on the Effective Date and on the Closing Date, there will be no
options, warrants, or other rights to purchase or otherwise acquire any
authorized but unissued shares of Common Stock or Class B Common Stock of the
Company or any security convertible into shares of Common Stock or Class B
Common Stock of the Company, or any contracts or commitments to issue or sell
shares of Common Stock or Class B Common Stock or any such options, warrants,
rights or convertible securities.
2.8 Valid
Issuance of Securities; Etc.
2.8.1 Outstanding
Securities.
All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of any security
of
the Company or similar contractual rights granted by the Company. The authorized
Common Stock and Class B Common Stock conform to all statements relating thereto
contained in the Registration Statement and the Prospectus. The offers and
sales
of the outstanding Common Stock were at all relevant times either registered
under the Act and the applicable state securities or Blue Sky laws or, based
in
part on the representations and warranties of the purchasers of such shares
of
Common Stock, exempt from such registration requirements.
2.8.2 Securities
Sold Pursuant to this Agreement.
The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not
and
will not be subject to personal liability by reason of being such holders;
the
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company or similar contractual rights granted
by
the Company; and all corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly and validly
taken. The Securities conform in all material respects to all statements with
respect thereto contained in the Registration Statement. When issued, the
Representative’s Purchase Option, the Representative’s Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representative’s Purchase Option, the
Representative’s Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except (i) as such enforceability
may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (ii) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and
other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
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2.9 Registration
Rights of Third Parties. Except as set forth in the Prospectus, no holders
of
any securities of the Company or any rights exercisable for or convertible
or
exchangeable into securities of the Company have the right to require the
Company to register any such securities of the Company under the Act or to
include any such securities in a registration statement to be filed by the
Company.
2.10 Validity
and Binding Effect of Agreements. This Agreement, the Warrant Agreement (as
defined in Section 2.21 hereof), the Trust Agreement and the Services Agreement
(as defined in Section 3.7.2 hereof) have been duly and validly authorized
by
the Company and constitute, and the Representative’s Purchase Option, has been
duly and validly authorized by the Company and, when executed and delivered,
will constitute, the valid and binding agreements of the Company, enforceable
against the Company in accordance with their respective terms, except (i) as
such enforceability may be limited by bank-ruptcy, insolvency, reorganization
or
similar laws affecting creditors’ rights generally, (ii) as enforceability of
any indemnification or contribution provision may be limited under the federal
and state securities laws, and (iii) that the remedy of specific performance
and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.11 No
Conflicts, Etc. The execution, delivery, and performance by the Company of
this
Agreement, the Warrant Agreement, the Representative’s Purchase Option, the
Trust Agreement and the Services Agreement, the consummation by the Company
of
the transactions herein and therein contemplated and the compliance by the
Company with the terms hereof and thereof do not and will not, with or without
the giving of notice or the lapse of time or both (i) result in a breach of,
or
conflict with any of the terms and provisions of, or constitute a default under,
or result in the creation, modification, termination or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to
the
terms of any agreement or instrument to which the Company is a party except
pursuant to the Trust Agreement referred to in Section 2.23 hereof; (ii)
result in any violation of the provisions of the 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, business or assets.
2.12 No
Defaults; Violations. No material default exists in the due performance and
observance of any term, covenant or condition of any material license, contract,
indenture, mortgage, deed of trust, note, loan or credit agreement, or any
other
agreement or instrument evidencing an obligation for borrowed money, or any
other material agreement or instrument to which the Company is a party or by
which the Company may be bound or to which any of the properties or assets
of
the Company is subject. The Company is not in violation of any term or provision
of its Certificate of Incorporation or Bylaws or in violation of any material
franchise, license, permit, applicable law, rule, regulation, judgment or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties, businesses or assets.
8
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, consents and permits
of and from all governmental regulatory officials and bodies that it needs
as of
the date hereof to conduct its business purpose as described in the Prospectus.
The disclosures in the Registration Statement concerning the effects of federal,
state and local regulation on this offering and the Company’s business purpose
as currently contemplated are correct in all material respects and do not omit
to state a material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
2.13.2 Transactions
Contemplated Herein.
The
Company has all corporate power and authority to enter into this Agreement,
the
Representative’s Purchase Option, the Trust Agreement and the Services Agreement
and to carry out the provisions and conditions hereof, and all consents,
authorizations, approvals, licenses, certificates, permits and orders required
in connection therewith have been obtained. No consent, authorization or order
of, and no filing with, any court, government agency or other body is required
for the valid issuance, sale and delivery, of the Securities and the
consummation of the transactions and agreements contemplated by this Agreement,
the Warrant Agreement, the Representative’s Purchase Option and the Trust
Agreement and as contemplated by the Prospectus, except with respect to
applicable federal and state securities laws.
2.14 D&O
Questionnaires. To the best of the Company’s knowledge, all information
contained in the questionnaires
(“Questionnaires”) completed by each of the Company’s securityholders
immediately prior to the Offering (“Initial Stockholders”) and
provided to the Underwriters as an exhibit to his Insider Letter (as defined
in
Section 2.22) is true and correct and the Company has not become aware of any
information which would cause the information disclosed in the questionnaires
completed by each Initial Stockholder to become inaccurate and incorrect.
2.15 Litigation;
Governmental Proceedings. There is no action, suit, proceeding, inquiry,
arbitration, investigation, litigation or governmental proceeding pending or,
to
the best of the Company’s knowledge, threatened against, or involving the
Company or, to the best of the Company’s knowledge, any Initial Stockholder
which has not been disclosed in the Registration Statement or the
Questionnaires.
2.16 Good
Standing. The Company has been duly organized and is validly existing as a
corporation and is in good standing under the laws of its state of
incorporation, and is duly qualified to do business and is in good standing
as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of businesses requires such qualification, except where
the failure to qualify would not have a material adverse effect on the Company.
9
2.17 Stop
Orders. The Commission has not issued any order preventing or suspending the
use
of any Preliminary Prospectus or Prospectus or any part thereof.
2.18 Transactions
Affecting Disclosure to NASD.
2.18.1 Finder’s
Fees.
Except
as described in the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a finder’s, consulting
or origination fee by the Company or any Initial Stockholder with respect to
the
sale of the Securities hereunder or any other arrangements, agreements or
understandings of the Company or, to the best of the Company’s knowledge, any
Initial Stockholder that may affect the Underwriters’ compensation, as
determined by the National Association of Securities Dealers, Inc.
(“NASD”).
2.18.2 Payments
Within Twelve Months.
The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) (i) to any person, as a finder’s fee, consulting fee or otherwise, in
consideration of such person raising capital for the Company or introducing
to
the Company persons who raised or provided capital to the Company, (ii) to
any
NASD member or (iii) to any person or entity that has any direct or
indirect affiliation or association with any NASD member, within the twelve
months prior to the Effective Date, other than payments to ▇▇▇▇▇▇▇.
2.18.3 Use
of
Proceeds.
None of
the net proceeds of the Offering will be paid by the Company to any
participating NASD member or its affiliates, except as specifically authorized
herein and except as may be paid in connection with a Business Combination
as
contemplated by the Prospectus.
2.18.4 Insiders’
NASD Affiliation.
Based
on questionnaires distributed to such persons, except as set forth on
Schedule 2.18.4, no officer, director or any beneficial owner of the
Company’s unregistered securities has any direct or indirect affiliation or
association with any NASD member. The Company will advise the Representative
and
its counsel if it learns that any officer, director or owner of at least 5%
of
the Company’s outstanding securities is or becomes an affiliate or associated
person of an NASD member participating in the offering.
2.19 Foreign
Corrupt Practices Act. Neither the Company nor any of the Initial Stockholders
or any other person acting on behalf of the Company has, directly or indirectly,
given or agreed to give any money, gift or similar benefit (other than legal
price concessions to customers in the ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or official
or
employee of any governmental agency or instrumentality of any government
(domestic or foreign) or any political party or candidate for office (domestic
or foreign) or any political party or candidate for office (domestic or foreign)
or other person who was, is, or may be in a position to help or hinder the
business of the Company (or assist it in connection with any actual or proposed
transaction) that (i) might subject the Company to any damage or penalty in
any
civil, criminal or governmental litigation or proceeding, (ii) if not given
in
the past, might have had a material adverse effect on the assets, business
or
operations of the Company as reflected in any of the financial statements
contained in the Prospectus or (iii) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company.
The Company’s internal accounting controls and procedures are sufficient to
cause the Company to comply with the Foreign Corrupt Practices Act of 1977,
as
amended.
10
2.20 Officers’
Certificate. Any certificate signed by any duly authorized officer of the
Company and delivered to you or to your counsel shall be deemed a representation
and warranty by the Company to the Underwriters as to the matters covered
thereby.
2.21 Warrant
Agreement. The Company has entered into one or more warrant agreements with
respect to the Warrants and the Representative’s Warrants with Continental Stock
Transfer & Trust Company substantially in the form(s) filed as exhibit(s) to
the Registration Statement (“Warrant Agreements”), providing for, among other
things, the payment of a warrant solicitation fee as contemplated by Section
3.9
hereof.
2.22 Insider
Letters. The Company has caused to be duly executed legally binding and
enforceable agreements (except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (ii) as enforceability of any indemnification, contribution
or
noncompete provision may be limited under the federal and state securities
laws,
and (iii) that the remedy of specific performance and injunctive and other
forms
of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought)
annexed as Exhibits 10.1 through 10.6 to the Registration Statement
(collectively, “Insider Letters”), pursuant to which each of the Initial
Stockholders of the Company agree to certain matters described as being agreed
to by them under the “Proposed Business” section of the Prospectus, including,
but not limited to, their agreement to not sell any of their Common Stock or
Warrants, including any shares of Common Stock issuable upon exercise of such
Warrants, until the Company’s completion of a Business Combination.
2.23 Investment
Management Trust Agreement. The Company has entered into the Trust Agreement
with respect to certain proceeds of the Offering in form and substance
satisfactory to the Underwriters.
2.24 Covenants
Not to Compete. No Initial Stockholder, employee, officer or director of the
Company is subject to any noncompetition agreement or non-solicitation agreement
with any employer or prior employer which could materially affect his ability
to
be an Initial Stockholder, employee, officer and/or director of the
Company.
2.25 Investment
Company Act; Investments. The Company has been advised concerning the Investment
Act of 1940, as amended (the “Investment Company Act”), and the rules and
regulations thereunder and has in the past conducted, and intends in the future
to conduct, its affairs in such a manner as to ensure that it will not become
an
“investment company” or a company “controlled” by an “investment company” within
the meaning of the Investment Company Act and such rules and regulations. The
Company is not, nor will the Company become upon the sale of the Units and
the
application of the proceeds therefore as described in the Prospectus under
the
caption “Use of Proceeds”, an “investment company” or a person controlled by an
“investment company” within the meaning of the Investment Company Act. No more
than 45% of the “value” (as defined in Section 2(a)(41) of the Investment
Company Act) of the Company’s total assets (exclusive of cash items and
“Government Securities” (as defined in Section 2(a)(16) of the Investment
Company Act) consist of, and no more than 45% of the Company’s net income after
taxes is derived from, securities other than the Government
Securities.
11
2.26 Subsidiaries.
The Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.27 Related
Party Transactions. There are no business relationships or related party
transactions involving the Company or any other person required to be described
in the Prospectus that have not been described as required.
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
amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Representative promptly
and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment or supplement in accordance with Section 10 of the
Act.
3.2.2 Filing
of Final Prospectus.
The
Company will file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule 424
of
the Regulations.
3.2.3 Exchange
Act Registration.
For a
period of five years from the Effective Date, or until such earlier time upon
which the Company is required to be liquidated, the Company will use its best
efforts to maintain the registration of the Units, Common Stock, Class B 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 ▇▇▇▇▇▇▇.
12
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 the Prospectus as such
Underwriters may reasonably request and, as soon as the Registration Statement
or any amendment or supplement thereto becomes effective, deliver to you two
original executed Registration Statements, including exhibits, and all
post-effective amendments thereto and copies of all exhibits filed therewith
or
incorporated therein by reference and all original executed consents of
certified experts.
3.5 Effectiveness
and Events Requiring Notice to the Representative. The Company will use its
best
efforts to cause the Registration Statement to remain effective and will notify
the Representative immediately and confirm the notice in writing (i) of the
effectiveness of the Registration Statement and any amendment thereto, (ii)
of
the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding for that purpose, (iii) of the issuance by any
state securities commission of any proceedings for the suspension of the
qualification of the Public Securities for offering or sale in any jurisdiction
or of the initiation, or the threatening, of any proceeding for that purpose,
(iv) of the mailing and delivery to the Commission for filing of any amendment
or supplement to the Registration Statement or Prospectus, (v) of the receipt
of
any comments or request for any additional information from the Commission,
and
(vi) of the happening of any event during the period described in Section 3.4
hereof that, in the judgment of the Company, makes any statement of a material
fact made in the Registration Statement or the Prospectus untrue or that
requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission
or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review
of
Financial Statements. For a period of five years from the Effective Date, or
until such earlier time upon which the Company is required to be liquidated,
the
Company, at its expense, shall cause its regularly engaged independent certified
public accountants to review (but not audit) the Company’s financial statements
for each of the first three fiscal quarters prior to the announcement of
quarterly financial information, the filing of the Company’s Form 10-Q quarterly
report and the mailing of quarterly financial information to
stockholders.
13
3.7 Affiliated
Transactions.
3.7.1 Business
Combinations.
The
Company will not consummate a Business Combination with any entity which is
affiliated with any Initial Stockholder unless
the Company obtains an opinion from an independent investment banking firm
that
the Business Combination is fair to the Company’s stockholders from a financial
perspective.
3.7.2 Administrative
Services.
The
Company has entered into an agreement (“Services Agreement”) with PLM
International Inc. (“Affiliate”) pursuant to which the Affiliate will make
available to the Company general and administrative services, including office
space, utilities and secretarial support for the Company’s use for $7,500 per
month.
3.7.3 Affiliate
Compensation.
Except
as set forth above in this Section 3.7, the Company shall not pay any Initial
Stockholder or any of their affiliates any fees or compensation from the
Company, for services rendered to the Company prior to, or in connection with,
the consummation of a Business Combination; provided that the Initial
Stockholders shall be entitled to reimbursement from the Company for their
reasonable out-of-pocket expenses incurred in connection with seeking and
consummating a Business Combination.
3.8 Secondary
Market Trading and Standard & Poor’s. The Company will apply to be included
in Standard & Poor’s Daily News and Corporation Records Corporate
Descriptions for a period ending on the earlier of five years from the
consummation of a Business Combination, listing of the Company’s securities on a
national securities exchange or the Nasdaq Stock Market, or such earlier time
as
the Company is liquidated. Promptly after the consummation of the Offering,
the
Company shall take such steps as may be necessary to obtain a secondary market
trading exemption for the Company’s securities in 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
▇▇▇▇▇▇▇ a commission of five percent of the exercise price of the Warrants
for
each Warrant exercised, 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.
14
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: Avi Lipsker) and its counsel copies of such financial
statements and other periodic and special reports as the Company from time
to
time furnishes generally to holders of any class of its securities, and promptly
furnish to the Representative (i) a copy of each periodic report the Company
shall be required to file with the Commission, (ii) a copy of every press
release and every news item and article with respect to the Company or its
affairs which was released by the Company, (iii) a copy of each Form 8-K
or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the Company,
(iv)
five copies of each registration statement and (v) such additional documents
and
information with respect to the Company and the affairs of any future
subsidiaries of the Company as the Representative may from time to time
reasonably request.
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 liquidated, the Company shall retain a transfer and
warrant agent acceptable to the Representative (“Transfer Agent”) and 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. The Underwriters acknowledge that Continental Stock Transfer & Trust
Company is an acceptable Transfer Agent.
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
National Market, or until such earlier time upon which the Company is required
to be liquidated, the Company shall engage ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (“GM”), for a
one-time fee of $5,000 payable on the Closing Date to deliver and update to
the
Underwriters on a timely basis, but in any event on the Effective Date and
at
the beginning of each fiscal quarter, a written report detailing those states
in
which the Public Securities may be traded in non-issuer transactions under
the
Blue Sky laws of the fifty States (“Secondary Market Trading Survey”).
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.
3.12 Disqualification
of Form S-1. For a period equal to seven years from the date hereof, unless
the
Company is liquidated, 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.
15
3.13 Payment
of Expenses.
3.13.1 General
Expenses Related to the Offering.
The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at Closing Date, all expenses incident
to
the performance of the obligations of the Company under this Agreement,
including but not limited to (i) the preparation, printing, filing and mailing
(including the payment of postage with respect to such mailing) of the
Registration Statement, the Preliminary and Final Prospectuses and the printing
and mailing of this Agreement and related documents, including the cost of
all
copies thereof and any amendments thereof or supplements thereto supplied to
the
Underwriters in quantities as may be required by the Underwriters, (ii) the
printing, engraving, issuance and delivery of the Units, the shares 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
of GM retained for such purpose (such fees shall be $35,000 in the aggregate
(of
which $15,000 has previously been paid)), and a one-time fee of $5,000 payable
to GM for the preparation of the Secondary Market Trading Survey,
(iv) filing fees, costs and expenses (including fees of $5,000 and
disbursements for the Representative’s counsel) incurred in registering the
Offering with the NASD, (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, (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 transaction “bibles,” in form and style
reasonably satisfactory to the Representative and (ix) 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 Company also
agrees that, if requested by the Representative, it will engage and pay for
an
investigative search firm of the Representative’s choice to conduct an
investigation of the principals of the Company as shall be mutually selected
by
the Representative and the Company. The Representative may deduct from the
net
proceeds of the Offering payable to the Company on the Closing Date, or the
Option Closing Date, if any, the expenses set forth herein to be paid by the
Company to the Representative and others. If the Offering contemplated by this
Agreement is not consummated for any reason whatsoever then the Company shall
reimburse the Underwriters in full for their out of pocket expenses, including,
without limitation, its legal fees (up to a maximum of $50,000) and
disbursements and
“road
show” and due diligence expenses. The
Representative shall retain such portion of the $25,000 previously paid as
shall
equal its actual out-of-pocket expenses and refund the balance, if any. 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. Subject to, and only upon the Closing, the $25,000
previously paid to the Representative as an advance against its expenses shall
be credited to the Company by reducing the discounts and commissions payable
to
▇▇▇▇▇▇▇ upon the sale of the Firm Units by $25,000.
3.13.2 Intentionally
Omitted.
16
3.13.3 Intentionally
Omitted.
3.14 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.
3.15 Notice
to
NASD. In the event any person or entity (regardless of any NASD affiliation
or
association) is engaged to assist the Company in its search for a merger
candidate or to provide any other merger and acquisition services, the Company
will provide the following to the NASD and ▇▇▇▇▇▇▇ prior to the consummation
of
the Business Combination: (i) complete details of all services and copies
of agreements governing such services; and (ii) justification as to why the
person or entity providing the merger and acquisition services should not be
considered an “underwriter and related person” with respect to the Company’s
initial public offering, as such term is defined in Rule 2710 of the NASD’s
Conduct Rules. The Company also agrees that proper disclosure of such
arrangement or potential arrangement will be made in the proxy statement which
the Company will file for purposes of soliciting stockholder approval for the
Business Combination.
3.16 Stabilization.
Neither the Company, nor, to its 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.
3.17 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.
3.18 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
BDO or other independent public accountants reasonably acceptable to
▇▇▇▇▇▇▇.
3.19 Form
8-K.
The Company shall, on the date hereof, retain its independent public accountants
to audit the financial statements of the Company as of the Closing Date
(“Audited Financial Statements”) reflecting the receipt by the Company of the
proceeds of the initial public offering. As soon as the Audited Financial
Statements become available, the Company shall immediately file a Current Report
on Form 8-K with the Commission, which Report shall contain the Company’s
Audited Financial Statements.
17
3.20 NASD.
The
Company shall advise the NASD if it is aware that any Initial Stockholder or
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.
3.21 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.
3.22 Investment
Company. The Company shall cause a portion of the proceeds of the Offering
to be
held in the Trust Fund to be invested only as set forth in the Trust Agreement
and disclosed in the Prospectus. Furthermore, once the Company consummates
a
Business Combination, it will be engaged in a business other than that of
investing, reinvesting, owning, holding or trading securities.
3.23 Investment
Banking Engagement. The Company hereby engages ▇▇▇▇▇▇▇ as its investment banker
in connection with the Company’s Business Combination to provide the Company
with assistance in structuring the Business Combination and negotiating its
terms.
3.23.1 Compensation.
As
compensation for the foregoing services, the Company will pay ▇▇▇▇▇▇▇ a cash
fee
or $3,500,000.
3.23.2 Payment.
All
fees payable under Section 3.23.1 are due and payable to ▇▇▇▇▇▇▇, by certified
check or wire transfer, at the closing of the Business Combination. If a
proposed Business Combination is not consummated for any reason, no amounts
shall be payable to ▇▇▇▇▇▇▇ under 3.23.1. The fee payable under Section 3.23.1
shall be paid to ▇▇▇▇▇▇▇ directly from the proceeds of the Trust Fund. The
Company shall instruct the trustee under the Trust Agreement to deliver the
fee
to ▇▇▇▇▇▇▇ simultaneously with the release of the remaining funds from the
Trust
Fund.
3.23.3 Expenses.
In
addition to the compensation described in Section 3.23.1 above, the Company
shall bear all reasonable out of pocket costs and expenses incurred by ▇▇▇▇▇▇▇
in connection with the performance of its services under this Section 3.23,
promptly after submission of appropriate evidence of having incurred such costs
and expenses.
3.24 Colorado
Trust Filing. In the event the Securities are registered in the State of
Colorado, the Company will cause a Colorado Form ES to be filed with the
Commissioner of the State of Colorado no less than 10 days prior to the
distribution of the Trust Fund in connection with a Business Combination and
will do all things necessary to comply with Section ▇▇-▇▇-▇▇▇ and Rule 51-3.4
of
the Colorado Securities Act.
4. Conditions
of Underwriters’ Obligations. The obligations of the several Underwriters to
purchase and pay for the Units, as provided herein, shall be subject to the
continuing accuracy of the representations and warranties of the Company as
of
the date hereof and as of each of the Closing Date and the Option Closing Date,
if any, to the accuracy of the statements of officers of the Company made
pursuant to the provisions hereof and to the performance by the Company of
its
obligations hereunder and to the following conditions:
18
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 GM.
4.1.2 NASD
Clearance.
By the
Effective Date, the Representative shall have received clearance from the NASD
as to the amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
4.1.3 No
Blue Sky Stop Orders.
No
order suspending the sale of the Units in any jurisdiction designated by you
pursuant to Section 3.3 hereof shall have been issued on either on the Closing
Date or the Option Closing Date, and no proceedings for that purpose shall
have
been instituted or shall be contemplated.
4.2 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 (“BR”), counsel to the Company, dated the Effective Date,
addressed to the Representative and in form and substance reasonably
satisfactory to GM substantially to the effect that:
(i) The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of its state of incorporation. The Company
is
duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing, except
where the failure to qualify would not have a material adverse effect on the
Company.
(ii) All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable; the holders thereof are
not subject to personal liability by reason of being such holders; and none
of
such securities were issued in violation of the preemptive rights of any
stockholder of the Company arising by operation of law or under the Certificate
of Incorporation or Bylaws of the Company. The offers and sales of the
outstanding Common Stock were at all relevant times either registered under
the
Act and the applicable state securities or Blue Sky Laws or exempt from such
registration requirements. The authorized and outstanding capital stock of
the
Company is as set forth in the Prospectus.
(iii) The
Securities have been duly authorized and, when issued and paid for, in
accordance with the terms thereof, will be validly issued, fully paid and
non-assessable; the holders thereof are not subject to personal liability by
reason of being such holders. The Securities are not subject to the preemptive
rights of any holders of any security of the Company arising by operation of
law
or under the Certificate of Incorporation or Bylaws of the Company. When issued,
the Representative’s Purchase Option, the Representative’s Warrants and the
Warrants will constitute valid and binding obligations of the Company to issue
and sell, upon exercise thereof and payment therefor, the number and type of
securities of the Company called for thereby and such Warrants, the
Representative’s Purchase Option, and the Representative’s Warrants, when
issued, in each case, are enforceable against the Company in accordance with
their respective terms. The certificates representing the Securities are in
proper legal form.
19
(iv) Each
of
this Agreement, the Warrant Agreement, the Services Agreement, the Trust
Agreement and the Representative’s Purchase Option have been duly and validly
authorized and, when executed and delivered by the Company, will constitute
the
valid and binding obligations of the Company, enforceable against the Company
in
accordance with their respective terms.
(v) The
execution, delivery and performance of this Agreement, the Warrant Agreement,
the Representative’s Purchase Option, the Trust Agreement and the Services
Agreement, the issuance and sale of the Securities, the consummation of the
transactions contemplated hereby and thereby, and compliance by the Company
with
the terms and provisions hereof and thereof, do not and will not, with or
without the giving of notice or the lapse of time, or both, (a) to such
counsel’s knowledge, conflict with, or result in a breach of, any of the terms
or provisions of, or constitute a default under, or result in the creation
or
modification of any lien, security interest, charge or encumbrance upon any
of
the properties or assets of the Company pursuant to the terms of, any mortgage,
deed of trust, note, indenture, loan, contract, commitment or other agreement
or
instrument filed as an exhibit to the Registration Statement, (b) result in
any
violation of the provisions of the Certificate of Incorporation or the By-Laws
of the Company, or (c) to such counsel’s knowledge, violate any United States
statute or any judgment, order or decree, rule or regulation applicable to
the
Company of any court, or of any United States federal, state or other regulatory
authority or other governmental body having jurisdiction over the Company,
its
properties or assets.
(vi) The
Registration Statement, each Preliminary Prospectus and the Prospectus and
any
post-effective amendments or supplements thereto (other than the financial
statements and other financial and statistical data and information included
therein (or omitted therefrom) as to which no opinion need be rendered) each
as
of their respective dates complied as to form in all material respects with
the
requirements of the Act and Regulations. The Securities and each agreement
filed
as an exhibit to the Registration Statement conform in all material respects
to
the description thereof contained in the Registration Statement and the
Prospectus. No United States statute or regulation required to be described
in
the Prospectus is not described as required, nor are any contracts or documents
of a character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement not so
described or filed as required.
(vii) Counsel
has participated in conferences with officers and other representatives of
the
Company, representatives of the independent public accountants for the Company
and representatives of the Underwriters at which the contents of the
Registration Statement, the Prospectus and related matters were discussed and
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus (except as otherwise set forth in this
opinion), no facts have come to the attention of such counsel which should
lead
them to believe that either the Registration Statement or the Prospectus or
any
amendment or supplement thereto, as of the date of such opinion contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and other financial and statistical data and information
and statistical data included in or omitted from the Registration Statement
or
the Prospectus).
20
(viii) The
Registration Statement is effective under the Act. To such counsel’s knowledge,
no stop order suspending the effectiveness of the Registration Statement has
been issued and no proceedings for that purpose have been instituted or are
pending or threatened under the Act or applicable state securities
laws.
(ix) To
such
counsel’s knowledge, there is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or
threatened against the Company that is required to be described in the
Registration Statement.
4.2.2 Closing
Date and Option Closing Date Opinion of Counsel.
On each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received the favorable opinion of BR, dated the Closing Date or
the
Option Closing Date, as the case may be, addressed to the Representative and
in
form and substance reasonably satisfactory to GM, confirming as of the Closing
Date and, if applicable, the Option Closing Date, the statements made by BR
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 (other than as to Delaware General Corporation Law),
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 GM) of other counsel reasonably acceptable to GM,
familiar with the applicable laws, and (ii) as to matters of fact, to the
extent they deem proper, on certificates or other written statements of officers
of the Company and officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of
the
Company, provided that copies of any such statements or certificates shall
be
delivered to the Underwriters’ counsel if requested. The opinion of counsel for
the Company and any opinion relied upon by such counsel for the Company shall
include a statement to the effect that it may be relied upon by counsel for
the
Underwriters in its opinion delivered to the Underwriters.
4.3 Cold
Comfort Letter. At the time this Agreement is executed, and at each of the
Closing Date and the Option Closing Date, if any, you shall have received a
letter, addressed to the Representative and in form and substance satisfactory
in all respects (including the non-material nature of the changes or decreases,
if any, referred to in clause (iii) below) to you and to GM from BDO dated,
respectively, as of the date of this Agreement and as of the Closing Date and
the Option Closing Date, if any:
21
(i) Confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations and that they have not, during
the periods covered by the financial statements included in the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act;
(ii) Stating
that in their opinion the financial statements of the Company included in the
Registration Statement and Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and the published
Regulations thereunder;
(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders
and
board of directors and the various committees of the board of directors,
consultations with officers and other employees of the Company responsible
for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that (a)
the unaudited financial statements of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting principles applied
on
a basis substantially consistent with that of the audited financial statements
of the Company included in the Registration Statement, (b) at a date not later
than five days prior to the Effective Date, Closing Date or Option Closing
Date,
as the case may be, there was any change in the capital stock or long-term
debt
of the Company, or any decrease in the stockholders’ equity of the Company as
compared with amounts shown in the March 15, 2006 balance sheet included in
the
Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any decrease, setting forth the amount
of such decrease, and (c) during the period from March 15, 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, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a break-down of commercial
papers and notes payable to banks);
(v) Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the extent that
such
amounts, numbers, percentages, statements and information may be derived from
the general accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal counsel, with
the
results obtained from the application of specified readings, inquiries and
other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
22
(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
Certificate of Incorporation of the Company are true and complete, have not
been
modified and are in full force and effect, (ii) that the resolutions relating
to
the public offering contemplated by this Agreement are in full force and effect
and have not been modified, (iii) all correspondence between the Company or
its
counsel and the Commission, and (iv) as to the incumbency of the officers of
the
Company. The documents referred to in such certificate shall be attached to
such
certificate.
4.5 No
Material Changes. Prior to and on each of the Closing Date and the Option
Closing Date, if any, (i) there shall have been no material adverse change
or
development involving a prospective material adverse change in the condition
or
prospects or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus, (ii) no action suit or proceeding, at
law
or in equity, shall have been pending or threatened against the Company or
any
Initial Stockholder before or by any court or federal or state commission,
board
or other administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations, prospects
or
financial condition or income of the Company, except as set forth in the
Registration Statement and Prospectus, (iii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated
or
threatened by the Commission, and (iv) the Registration Statement and the
Prospectus and any amendments or supplements thereto shall contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and shall conform in all material respects to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
23
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 Trust Agreement, the Warrant Agreement, the Services Agreement
and
all of the Insider Letters.
4.6.2 Closing
Date Deliveries.
On the
Closing Date, the Company shall have delivered to the Representative executed
copies of the Representative’s Purchase Option.
4.7 Opinion
of Counsel for the Underwriters. All proceedings taken in connection with the
authorization, issuance or sale of the Securities as herein contemplated shall
be reasonably satisfactory in form and substance to you and to GM and you shall
have received from such counsel a favorable opinion, dated the Closing Date
and
the Option Closing Date, if any, with respect to such of these proceedings
as
you may reasonably require. On or prior to the Effective Date, the Closing
Date
and the Option Closing Date, as the case may be, counsel for the Underwriters
shall have been furnished such documents, certificates and opinions as they
may
reasonably require for the purpose of enabling them to review or pass upon
the
matters referred to in this Section 4.7, or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions herein contained.
4.8 Secondary
Market Trading Survey. On the Closing Date, the Representative shall have
received the Secondary Market Trading Survey from GM.
5. Indemnification.
5.1 Indemnification
of Underwriters.
5.1.1 General.
Subject
to the conditions set forth below, the Company agrees to indemnify and hold
harmless each of the Underwriters, and each dealer selected by you that
participates in the offer and sale of the Securities (each a “Selected Dealer”)
and each of their respective directors, officers and employees and each person,
if any, who controls any such Underwriter (“controlling person”) within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all loss, liability, claim, damage and expense whatsoever (including
but
not limited to any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, whether arising out of any action between
any of the Underwriters and the Company or between any of the Underwriters
and
any third party or otherwise) to which they or any of them may become subject
under the Act, the Exchange Act or any other statute or at common law or
otherwise or under the laws of foreign countries, arising out of or based upon
any untrue statement or alleged untrue statement of a material fact contained
in
(i) any Preliminary Prospectus, the Registration Statement or the Prospectus
(as
from time to time each may be amended and supplemented); (ii) in any
post-effective amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Representative’s Purchase Option; 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 NASD OTC Bulletin Board, Nasdaq or any securities
exchange; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein,
in
the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company with respect to an Underwriter
by or on behalf of such Underwriter expressly for use in any Preliminary
Prospectus, the Registration Statement or Prospectus, or any amendment or
supplement thereof, or in any application, as the case may be. With respect
to
any untrue statement or omission 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 solely from the fact that a copy of the
Prospectus was not given or sent to the person asserting any such loss,
liability, claim or damage at or prior to the written confirmation of sale
of
the Securities to such person as required by the Act and the Regulations, and
if
the untrue statement or omission has been corrected in the Prospectus, unless
such failure to deliver the Prospectus was a result of non-compliance by the
Company with its obligations under Section 3.4 hereof. The Company agrees
promptly to notify the Representative of the commencement of any litigation
or
proceedings against the Company or any of its officers, directors or controlling
persons in connection with the issue and sale of the Securities or in connection
with the Registration Statement or Prospectus.
24
5.1.2 Procedure.
If any
action is brought against an Underwriter, a Selected Dealer or a controlling
person in respect of which indemnity may be sought against the Company pursuant
to Section 5.1.1, such Underwriter or Selected Dealer shall promptly notify
the Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the reasonable approval of such Underwriter or Selected Dealer,
as
the case may be) and payment of actual expenses. Such Underwriter, Selected
Dealer or controlling person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be
at
the expense of such Underwriter, Selected Dealer or controlling person unless
(i) the employment of such counsel at the expense of the Company shall have
been
authorized in writing by the Company in connection with the defense of such
action, or (ii) the Company shall not have employed counsel reasonably
satisfactory to the Underwriter or Selected Dealer, as the case may be, to
have
charge of the defense of such action, or (iii) such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it
or
them which are different from or additional to those available to the Company
(in which case the Company shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events the reasonable fees and expenses of not more than one additional firm
of
attorneys (in addition to a local firm of attorneys in any applicable
jurisdiction) selected by the Underwriter, Selected Dealer and/or controlling
person as to any action shall be borne by the Company. Notwithstanding anything
to the contrary contained herein, if the Underwriter, Selected Dealer or
controlling person shall assume the defense of such action as provided above,
the Company shall have the right to approve the terms of any settlement of
such
action which approval shall not be unreasonably withheld. The Company shall
not
settle any action without the prior consent of the Representative, unless such
settlement provides for a full release of the Underwriters and Selected Dealers
(whether or not named a party to the action), without admission of any
wrongdoing.
25
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 made in any Preliminary Prospectus, the Registration Statement or
Prospectus or any amendment or supplement thereto or in any application, in
reliance upon, and in strict conformity with, written information furnished
to
the Company with respect to such Underwriter by or on behalf of the Underwriter
expressly for use in such Preliminary Prospectus, the Registration Statement
or
Prospectus or any amendment or supplement thereto or in any such application.
In
case any action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration Statement
or
Prospectus or any amendment or supplement thereto or any application, and in
respect of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the several Underwriters by the provisions of Section
5.1.2.
5.3 Contribution.
5.3.1 Contribution
Rights.
In
order to provide for just and equitable contribution under the Act in any case
in which (i) any person entitled to indemnification under this Section 5
makes claim for indemnification pursuant hereto but it is judicially determined
(by the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding
the
fact that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Act, the Exchange Act or otherwise may be required on
the
part of any such person in circumstances for which indemnification is provided
under this Section 5, then, and in each such case, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred, in such proportions
that the Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
Prospectus bears to the initial offering price appearing thereon and the Company
is responsible for the balance; provided, that, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 5.3.1, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the 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.
26
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.
5.3.3 Trust
Fund Waiver.
Notwithstanding anything in this Agreement to the contrary, each underwriter
agrees that it does not have any right, title, interest or claim of any kind
in
or to any monies in the Trust Fund (each a “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.
6. Default
by an Underwriter.
6.1 Default
Not Exceeding 10% of Firm Units or Option Units. If any Underwriter or
Underwriters shall default in its or their obligations to purchase the Firm
Units or the Option Units, if the over-allotment option is exercised, hereunder,
and if the number of the Firm Units or Option Units with respect to which such
default relates does not exceed in the aggregate 10% of the number of Firm
Units
or Option Units that all Underwriters have agreed to purchase hereunder, then
such Firm Units or Option Units to which the default relates shall be purchased
by the non-defaulting Underwriters in proportion to their respective commitments
hereunder.
6.2 Default
Exceeding 10% of Firm Units or Option Units. In the event that the default
addressed in Section 6.1 above relates to more than 10% of the Firm Units or
Option Units, you may in your discretion arrange for yourself or for another
party or parties to purchase such Firm Units or Option Units to which such
default relates on the terms contained herein. If within one business day after
such default relating to more than 10% of the Firm Units or Option Units you
do
not arrange for the purchase of such Firm Units or Option Units, then the
Company shall be entitled to a further period of one business day within which
to procure another party or parties satisfactory to you to purchase said Firm
Units or Option Units on such terms. In the event that neither you nor the
Company arrange for the purchase of the Firm Units or Option Units to which
a
default relates as provided in this Section 6, this Agreement will be terminated
by you or the Company without liability on the part of the Company (except
as
provided in Sections 3.13.1 and 5 hereof) or the several Underwriters (except
as
provided in Section 5 hereof); provided, however, that if such default occurs
with respect to the Option Units, this Agreement will not terminate as to the
Firm Units; and provided further that nothing herein shall relieve a defaulting
Underwriter of its liability, if any, to the other several Underwriters and
to
the Company for damages occasioned by its default hereunder.
27
6.3 Postponement
of Closing Date. In the event that the Firm Units or Option Units to which
the
default relates are to be purchased by the non-defaulting Underwriters, or
are
to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Option Closing Date for
a
reasonable period, but not in any event exceeding five business days, in order
to effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and
the
Company agrees to file promptly any amendment to the Registration Statement
or
the Prospectus that in the opinion of counsel for the Underwriter may thereby
be
made necessary. The term “Underwriter” as used in this Agreement shall include
any party substituted under this Section 6 with like effect as if it had
originally been a party to this Agreement with respect to such
Securities.
7. Right
to
Appoint Representative/Designee.
7.1 Representative
Right. For a period of five years from the Effective Date (“Board Period”), upon
notice from ▇▇▇▇▇▇▇ to the Company, ▇▇▇▇▇▇▇ shall have the right to send a
representative (who need not be the same individual from meeting to meeting)
to
observe each meeting of the Board of Directors of the Company; provided that
such representative shall sign a Regulation FD compliant confidentiality
agreement which is reasonably acceptable to ▇▇▇▇▇▇▇ and its counsel in
connection with such representative’s attendance at meetings of the Board of
Directors; and provided further that upon written notice to ▇▇▇▇▇▇▇, the Company
may exclude the representative from meetings (or from the relevant portions
of
meetings) where, in the written opinion of counsel for the Company, the
representative’s presence would destroy the attorney-client privilege. The
Company agrees to give ▇▇▇▇▇▇▇ written notice of each such meeting and to
provide ▇▇▇▇▇▇▇ with an agenda and minutes of the meeting no later than it
gives
such notice and provides such items to the other directors, and reimburse the
representative of ▇▇▇▇▇▇▇ for its reasonable out-of-pocket expenses incurred
in
connection with its attendance at the meeting, including but not limited to,
food, lodging and transportation.
7.2 Designee
Right. Upon consummation of a Business Combination and until the expiration
of
the Board Period, ▇▇▇▇▇▇▇ shall be entitled to appoint a designee to the Board
of Directors of the Company.
28
8. Additional
Covenants.
8.1 Intentionally
Omitted.
8.2 Additional
Shares or Options. The Company hereby agrees that until the Company consummates
a Business Combination, it shall not issue any shares of Class B Common Stock
or
any options or other securities exercisable or convertible into or exchangeable
for Class B 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 Class B Common
Stock on a Business Combination.
8.3 Trust
Fund Waiver Acknowledgement. The Company hereby agrees that it will not commence
its due diligence investigation of any operating business which the Company
seeks to acquire (each a “Target Business”) or obtain the services of any vendor
unless and until such Target Business or vendor acknowledges in writing, whether
through a letter of intent, memorandum of understanding or other similar
document (and subsequently acknowledges the same in any definitive document
replacing any of the foregoing), that (a) it has read the Prospectus and
understands that the Company has established the Trust Fund for the benefit
of
the holders of the Class B Common Stock and that the Company may disburse monies
from the Trust Fund only (i) to the holders of the Class B Common Stock that
elect to convert their shares of Class B Common Stock (as described below in
Section 8.7), (ii) to the holders of the Class B Common Stock in the event
that
the Company does not effect a Business Combination within 18 months from the
consummation of this Offering (subject to extension for an additional six-month
period, as described in the prospectus) or (iii) to the Company after it
consummates a Business Combination and (b) for and in consideration of the
Company (1) agreeing to evaluate such Target Business for purposes of
consummating a Business Combination with it or (2) agreeing to engage the
services of the vendor, as the case may be, such Target Business or vendor
agrees that it does not have any Claim and waives any Claim it may have in
the
future as a result of, or arising out of, any negotiations, contracts or
agreements with the Company and will not seek recourse against the Trust Fund
for any reason whatsoever.
8.4 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 ▇▇▇▇▇▇▇ and will not allow any amendments to, or waivers of,
such Insider Letters without the prior written consent of ▇▇▇▇▇▇▇.
8.5 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
Certificate of Incorporation or By-Laws.
8.6 Blue
Sky
Requirements. The Company shall provide counsel to the Representative with
ten
copies of all proxy information and all related material filed with the
Commission in connection with a Business Combination concurrently with such
filing with the Commission. In addition, the Company shall furnish any other
state in which its initial public offering was registered, such information
as
may be requested by such state.
29
8.7 Acquisition/Liquidation
Procedure. The Company agrees: (i) that, prior to the consummation of any
Business Combination, it will submit such transaction to the Company's
stockholders for their approval (“Business Combination Vote”) even if the nature
of the acquisition is such as would not ordinarily require stockholder approval
under applicable state law; and (ii) that, in the event that the Company does
not effect a Business Combination within 18 months from the consummation of
this
Offering (subject to extension for an additional six-month period, as described
in the Prospectus), the Trust Fund will be distributed to all holders of its
Class B Common Stock and the Company will dissolve and liquidate. The Trust
Fund
will be distributed to all holders of the Class B Common Stock and the Company’s
remaining net assets, if any, will be distributed to the holders of Common
Stock
sold in this Offering. At
the
time the Company seeks approval of any potential Business Combination, the
Company will offer each of holders of the Company’s Class B Common Stock issued
in this Offering (“IPO Shares”) the right to convert their IPO Shares at a per
share price equal to the amount in the Trust Fund (inclusive of any interest
income therein) calculated as of two business days prior to the proposed
consummation of the Business Combination (“Conversion Price”) divided by the
total number of IPO Shares. If holders of less than 20% in interest of the
Company’s IPO Shares vote against such approval of a Business Combination, the
Company may, but will not be required to, proceed with such Business
Combination. If the Company elects to so proceed, it will convert shares, based
upon the Conversion Price, from those holders of IPO Shares who affirmatively
requested such conversion and who voted against the Business Combination. Only
holders of IPO Shares 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. If holders of 20% or more in interest
of
the IPO Shares have both voted against approval of any potential Business
Combination and elected to convert their IPO Shares as described above, the
Company will not proceed with such Business Combination and will not convert
such shares.
8.8 Rule
419.
The Company agrees that it will use its best efforts to prevent the Company
from
becoming subject to Rule 419 under the Act prior to the consummation of any
Business Combination, including but not limited to using its best efforts to
prevent any of the Company’s outstanding securities from being deemed to be a
“▇▇▇▇▇ stock” as defined in Rule 3a-51-1 under the Exchange Act during such
period.
8.9 Affiliated
Transactions. The Company shall cause each of the Initial Stockholders to agree
that, in order to minimize potential conflicts of interest which may arise
from
multiple affiliations, the Initial Stockholders will present to the Company
for
its consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire an operating business, until the earlier of
the
consummation by the Company of a Business Combination, the liquidation of the
Company or until such time as the Initial Stockholders cease to be an officer
or
director of the Company, subject to any pre-existing fiduciary obligations
the
Initial Stockholders might have or new fiduciary obligations related to or
affiliated with entities to whom the Initial Stockholders have pre-existing
fiduciary obligations.
8.10 Target
Net Assets. The Company agrees that the initial Target Business (which may
entail the simultaneous acquisition of several closely related operating
businesses) that it acquires must have a fair market value (in the aggregate)
equal to at least 80% of the Company’s net assets at the time of such
acquisition. The fair market value of such business must be determined by the
Board of Directors of the Company based upon standards generally accepted by
the
financial community, such as actual and potential sales, earnings and cash
flow
and book value. If the Board of Directors of the Company is not able to
independently determine that the Target Business has a fair market value of
at
least 80% of the Company’s fair market value at the time of such acquisition,
the Company will obtain an opinion from an unaffiliated, independent investment
banking firm which is a member of the NASD with respect to the satisfaction
of
such criteria. The Company is not required to obtain an opinion from an
investment banking firm as to the fair market value if the Company’s Board of
Directors independently determines that the Target Business does have sufficient
fair market value.
30
9. Representations
and Agreements to Survive Delivery. Except as the context otherwise requires,
all representations, warranties and agreements contained in this Agreement
shall
be deemed to be representations, warranties and agreements at the Closing Dates
and such representations, warranties and agreements of the Underwriters and
Company, including the indemnity agreements contained in Section 5 hereof,
shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any Underwriter, the Company or any controlling person,
and shall survive termination of this Agreement or the issuance and delivery
of
the Securities to the several Underwriters until the earlier of the expiration
of any applicable statute of limitations and the seventh anniversary of the
later of the Closing Date or the Option Closing Date, if any, at which time
the
representations, warranties and agreements shall terminate and be of no further
force and effect.
10. Effective
Date of This Agreement and Termination Thereof.
10.1 Effective
Date. This Agreement shall become effective on the Effective Date at the time
the Registration Statement is declared effective by the Commission.
10.2 Termination.
You shall have the right to terminate this Agreement at any time prior to any
Closing Date, (i) if any domestic or international event or act or occurrence
has materially disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United States; or (ii)
if
trading on the New York Stock Exchange, the American Stock Exchange, the Boston
Stock Exchange or on the NASD OTC Bulletin Board (or successor trading market)
shall have been suspended, or minimum or maximum prices for trading shall have
been fixed, or maximum ranges for prices for securities shall have been fixed,
or maximum ranges for prices for securities shall have been required on the
NASD
OTC Bulletin Board or by order of the Commission or any other government
authority having jurisdiction, or (iii) if the United States shall have become
involved in a new war or an increase in major hostilities, or (iv) if a banking
moratorium has been declared by a New York State or federal authority, or (v)
if
a moratorium on foreign exchange trading has been declared which materially
adversely impacts the United States securities market, or (vi) if the Company
shall have sustained a material loss by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether
or
not such loss shall have been insured, will, in your opinion, make it
inadvisable to proceed with the delivery of the Units, 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.
31
10.3 Expenses.
In the event that this Agreement shall not be carried out for any reason
whatsoever, within the time specified herein or any extensions thereof pursuant
to the terms herein, the obligations of the Company to pay the out of pocket
expenses related to the transactions contemplated herein shall be governed
by
Section 3.13.1 hereof.
10.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 shall not be
in
any way effected by, such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
11. Miscellaneous.
11.1 Notices.
All communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered or telecopied and confirmed
and shall be deemed given when so delivered or telecopied and confirmed or
if
mailed, two days after such mailing
If
to the
Representative:
HCFP/▇▇▇▇▇▇▇
Securities LLC
▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Avi
Lipsker, Managing Director
32
Copy
to:
▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
The
Chrysler Building
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, Esq.
If
to the
Company:
▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Chief
Financial Officer
Copy
to:
Blank
Rome LLP
The
Chrysler Building
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇, Esq.
11.2 Headings.
The headings contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
11.3 Amendment.
This Agreement may only be amended by a written instrument executed by each
of
the parties hereto.
11.4 Entire
Agreement. This Agreement (together with the other agreements and documents
being delivered pursuant to or in connection with this Agreement) constitute
the
entire agreement of the parties hereto with respect to the subject matter hereof
and thereof, and supersede all prior agreements and understandings of the
parties, oral and written, with respect to the subject matter
hereof.
11.5 Binding
Effect. This Agreement shall inure solely to the benefit of and shall be binding
upon the Representative, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 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.
33
11.6 Governing
Law. This Agreement shall be governed by and construed and enforced in
accor-dance with the laws of the State of New York, without giving effect to
conflict of laws. The Company hereby agrees that any action, proceeding or
claim
against it arising out of, relating in any way to this Agreement shall be
brought and enforced in the courts of the State of New York of the United States
of America for the Southern District of New York, and irrevocably submits to
such jurisdiction, which jurisdiction shall be exclu-sive. The Company hereby
waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it
at
the address set forth in Section 10 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action,
proceeding or claim. The Company agrees that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys’ fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor.
11.7 Execution
in Counterparts. This Agreement may be executed in one or more counterparts,
and
by the different parties hereto in separate counterparts, each of which shall
be
deemed to be an original, but all of which taken together shall constitute
one
and the same agreement, and shall become effective when one or more counterparts
has been signed by each of the parties hereto and delivered to each of the
other
parties hereto. Facsimile signatures shall be effective and binding as
originals.
11.8 Waiver,
Etc. The failure of any of the parties hereto to at any time enforce any of
the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
34
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,
STONELEIGH
PARTNERS ACQUISITION
CORP.
By: ___________________________________
Name:
Title:
Accepted
on the date first
above
written.
HCFP/▇▇▇▇▇▇▇
SECURITIES LLC
By:
_____________________________________
Name:
Avi
Lipsker
Title:
Managing Director
35
SCHEDULE
I
850,000
Series A Units
9,200,000
Series B Units
|
Underwriter
|
Number
of Series A Units
to
be Purchased
|
Number
of Series B Units
to
be Purchased
|
||
|
HCFP/▇▇▇▇▇▇▇
Securities LLC
|
||||
|
Total
|
850,000
|
9,200,000
|
||