4,000,000 Units Prime Acquisition Corp. UNDERWRITING AGREEMENT
4,000,000
Units
[Ÿ], 2011
Chardan
Capital Markets, LLC
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As
Representative of the Underwriters
named
on Schedule A
hereto
Ladies
and Gentlemen:
The
undersigned, Prime Acquisition Corp., an exempted company organized under the
laws of the Cayman Islands (“Company”), hereby confirms its
agreement with Chardan Capital Markets, LLC (hereinafter referred to as “you”, “Chardan”, or as the “Representative”) and with the
other underwriters named on Schedule A hereto for which
you are acting as representative (the Representative and the other Underwriters
being collectively referred to herein as the “Underwriters” or,
individually, an “Underwriter”) as
follows:
1. Purchase and Sale of
Securities.
1.1 Firm
Securities.
1.1.1 Purchase of Firm
Units. On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth, the
Company agrees to issue and sell, severally and not jointly, to the several
Underwriters, an aggregate of 4,000,000 units (the “Firm Units”) of the Company at
a purchase price (net of discounts and commissions, $0.28 of which shall be
deposited into the Trust Fund (as defined herein)) of $9.50 per Firm
Unit. The Underwriters, severally and not jointly, agree to purchase
from the Company the number of Firm Units set forth opposite their respective
names on Schedule A
attached hereto and made a part hereof at a purchase price (net of discounts and
commissions, $0.28 of which shall be deposited into the Trust Fund) of $9.50 per
Firm Unit. The Firm Units (and the Option Units (as hereinafter
defined), if any) are to be offered initially to the public (the “Offering”) at the offering
price of $10.00 per Unit. Each Firm Unit consists of one ordinary
share, par value $0.001 per share of the Company (the “Ordinary Shares”), and
one-half of a warrant to purchase one Ordinary Share (the “Warrant(s)”). The
Ordinary Shares and the Warrants included in the Firm Units will not be
separately transferable until ninety (90) days after the Effective Date (as
defined below). The Representative may decide to allow continued
trading of the Units following such separation. In no event will the
Company allow separate trading until (i) the preparation of an audited balance
sheet of the Company reflecting receipt by the Company of the proceeds of the
Offering and the filing of such audited balance sheet with the Commission (as
herein defined) on a Form 6-K or similar form by the Company which includes such
balance sheet and (ii) the issuance of a press release announcing when such
separate trading shall begin. Each full Warrant entitles its holder
to purchase one Ordinary Share for $7.50 per share during the period commencing
on the later of (a) the consummation by the Company of its “Business
Combination” or (b) one (1) year from the effective date (the “Effective Date”) of the
Registration Statement and terminating on the five (5) year anniversary of the
Effective Date. As used herein, the term “Business Combination” shall
mean any acquisition by merger, capital stock exchange, asset acquisition, stock
purchase or similar business combination, or control through contractual
arrangements, of one or more operating businesses by the Company. The
Company’s initial focus will be on acquiring an operating business in
the Greater China region. The Company has the right to redeem the
Warrants, with the prior consent of the Representative, upon not less than
thirty (30) days written notice at a price of $0.01 per Warrant at any time
after the Warrants become exercisable; so long as the last sales price of the
Ordinary Shares has been at least $15.00 for any twenty (20) trading days within
a thirty (30) trading day period ending on the third (3rd) Business Day prior to
the day on which notice is given, provided there is an effective registration
statement covering the resale of the Ordinary Shares issuable upon exercise of
the Warrants and a current prospectus is available throughout the thirty (30)
day written notice period. Notwithstanding
the foregoing, holders of the redeemable warrants may exercise their warrants on
a cashless basis if such registration statement or post effective amendment
relating to the exercise of the warrants is not declared effective
within 90 days from completing a business combination. As
used herein, the term “Business
Day” shall mean any day other than a Saturday, Sunday or any day on which
national banks in New York, New York are not open for business.
1.1.2 Payment and
Delivery. Delivery and payment for the Firm Units shall be
made at 10:00 A.M., New York time, on the third (3rd) Business Day following the
Effective Date of the Registration Statement (or the fourth (4th) Business Day
following the Effective Date, if the Registration Statement is declared
effective after 4:30 p.m.) or at such earlier time as shall be agreed upon by
the Representative and the Company at the offices of Chardan or at such other
place as shall be agreed upon by the Representative and the
Company. The closing of the public offering contemplated by this
Agreement is referred to herein as the “Closing” and the hour and
date of delivery and payment for the Firm Units is referred to herein as the
“Closing
Date.” Payment for the Firm Units shall be made on the Closing
Date at the Representative’s election by wire transfer in Federal (same day)
funds or by certified or bank cashier’s check(s) in New York Clearing House
funds. $40,000,000 ($45,868,000 if the Over-allotment Option (as
defined in Section 1.2) is exercised in full), or approximately $10.00 per unit
(or $9.97 per unit if the Over-allotment Option is exercised in full), of the
proceeds received by the Company for the Firm Units and from the Private
Placement (as defined in Section 1.4) shall be deposited in the trust fund
established by the Company for the benefit of the public shareholders as
described in the Registration Statement (the “Trust Fund”) pursuant to the
terms of an Investment Management Trust Agreement (the “Trust Agreement”) which amount
includes up to $1,120,000 ($0.28 per Firm Unit; $1,288,000 if the Over-allotment
Option is exercised in full) payable to the Representative as contingent
compensation upon consummation of a Business Combination. The
proceeds (less commissions, expense allowance and actual expense payments or
other fees payable pursuant to this Agreement) shall be paid to the order of the
Company upon delivery to the Representative of certificates (in form and
substance satisfactory to the Underwriters) representing the Firm Units (or
through the facilities of the Depository Trust Company (the “DTC”)) for the account of the
Underwriters. 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 (2) 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 (1) 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.
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1.2 Over-Allotment
Option.
1.2.1 Option
Units. For the purpose 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 600,000 units from the Company (the “Over-allotment
Option”). Such additional 600,000 units shall be identical in
all respects to the Firm Units and are hereinafter referred to as “Option Units.” The
Firm Units and the Option Units are hereinafter collectively referred to as the
“Units,” and the Units,
the Ordinary Shares and the Warrants included in the Units and the Ordinary
Shares issuable upon exercise of the Warrants are hereinafter referred to
collectively as the “Public
Securities.” The purchase price to be paid for the Option
Units (net of discounts and commissions) will be $9.50 per Option Unit (of which
$0.28 of such discounts and commissions shall be deposited in the Trust Fund
pursuant to Section 1.5). The Option Units are to be offered
initially to the public at the offering price of $10.00 per Option
Unit.
1.2.2 Exercise of
Option. The Over-allotment Option granted pursuant to Section
1.2.1 hereof may be exercised by the Representative as to all (at any time) or
any part (from time to time) of the Option Units within forty-five (45) days
after the Effective Date. The Underwriters will not be under any
obligation to purchase any Option Units prior to the exercise of the
Over-allotment Option. The Over-allotment Option granted hereby may
be exercised by the giving of oral notice to the Company from the
Representative, which must be confirmed in writing by overnight mail or
facsimile transmission setting forth the number of Option Units to be purchased
and the date and time for delivery of and payment for the Option Units, which
will not be later than five (5) 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 or in such other manner as shall be agreed upon by the Company and the
Representative. If such delivery and payment for the Option Units
does not occur on the Closing Date, the date and time of the closing for such
Option Units will be as set forth in the notice (hereinafter the “Option Closing
Date”). Upon exercise of the Over-allotment Option, the
Company will become obligated to convey to the Underwriters, and, subject to the
terms and conditions set forth herein, the Underwriters will become obligated to
purchase, the number of Option Units specified in such notice.
1.2.3 Payment and
Delivery. Payment for the Option Units shall be made on the
Option Closing Date at the Representative’s election by wire transfer in Federal
(same day) funds or by certified or bank cashier’s check(s) in New York Clearing
House funds, by deposit of the sum of $9.50 per Option Unit (of which $0.28 of
the Underwriters’ discounts and commission shall be deposited in the Trust Fund
pursuant to Section 1.5) in the Trust Fund pursuant to the Trust Agreement upon
delivery to the Representative of certificates (in form and substance
satisfactory to the Underwriters) representing the Option Units (or through the
facilities of DTC) for the account of the Underwriters. The
certificates representing the Option Units to be delivered will be in such
denominations and registered in such names as the Representative requests
not less than two (2) 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 (1) full
Business Day prior to such Closing Date or Option Closing Date.
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1.3 Representative’s Purchase
Option.
1.3.1 Purchase
Option. As additional consideration, 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 360,000 units (the
“Representative’s
Units”) for an aggregate purchase price of $100.00, provided that in the
event that the over-allotment option is not exercised in full, a certain amount
of Representative's Unit Option shall be cancelled so that the number of
Representative's Units equals 10% of the number of units sold in the
Offering. The Representative’s Purchase Option shall be exercisable,
in whole or in part, commencing on the later of the consummation of the Business
Combination or the six (6) month anniversary date of the Effective Date and
expiring on the five (5) year anniversary date of the Effective Date, for cash
or on a cashless basis, at an initial exercise price per Representative’s Unit
of $12.00, which is equal to one hundred and twenty percent (120%) of the
initial public offering price of a Unit. The Representative’s
Purchase Option, the Representative’s Units, the Ordinary Shares and the
Warrants included in the Representative’s Units (the “Representative’s Warrants”)
and the Ordinary Shares issuable upon exercise of the Representative’s Warrants
are hereinafter referred to collectively as the “Representative’s
Securities.” The Public Securities and the Representative’s
Securities are hereinafter referred to collectively as the “Securities.” The
Representative understands and agrees that there are significant restrictions
against transferring the Representative’s Purchase Option during the first six
(6) months after the Effective Date, as set forth in Section 3 of the
Representative’s Purchase Option.
1.3.2 Delivery and
Payment. Delivery and payment for the Representative’s
Purchase Option shall be made on the Closing Date. The Company shall
deliver to the Representative and their designees upon payment therefor,
certificates for the Representative’s Purchase Option in the name or names and
in such authorized denominations as the Representative may request.
1.4 Private Placement to the
Representative, Officers and Directors and
Designees. Immediately prior to the Closing, the
Representative, certain officers and directors of the Company and their
designees, or entities wholly owned by them, shall purchase from the Company
pursuant to the Placement Warrant Purchase Agreement (as defined in Section
2.23.2 hereof) an aggregate of 1,638,800 warrants identical to the Warrants (the
“Placement Warrants”) at
a purchase price of $1.00 per Placement Warrant in a private placement (the
“Private
Placement”). The Placement Warrants and the Ordinary Shares
issuable upon exercise of the Placement Warrants are hereinafter referred to
collectively as the “Placement
Securities.” There will be no placement agent in the Private
Placement and no party shall be entitled to a placement fee or expense allowance
from the sale of the Placement Securities.
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1.5 Contingent Portion of
Underwriters’ Discount. The Representative, on its own behalf
and behalf of the other Underwriters, agree that 2.8% of the gross proceeds from
the sale of the Firm Units ($1,120,000) and the Option Units (an aggregate of
$1,288,000 if the Over-allotment Option is exercised in full) (the “Contingent Discount”) will be
deposited in and held in the Trust Fund and payable to the Representative upon
the consummation of a Business Combination. In addition, in the event
the Company is unable to consummate a Business Combination and American Stock
Transfer & Trust Company (“AST” or “Escrow Agent”), the trustee of
the Trust Fund, commences liquidation of the Trust Fund as provided in the Trust
Agreement, the Representative, on its own behalf and on behalf of the other
Underwriters, agree that (i) the several Underwriters shall forfeit any rights
or claims to the Contingent Discount; and (ii) the Contingent Discount, together
with all other amounts on deposit in the Trust Fund, and any accrued interest
thereon (net of taxes payable), shall be distributed on a pro-rata basis among
the holders of the Ordinary Shares included in the Units sold in the
Offering.
2. Representations and
Warranties of the Company. The Company represents and warrants
to the Underwriters as follows:
2.1 Filing of Registration
Statement.
2.1.1 Pursuant to the
Act. The Company has filed with the Securities and Exchange
Commission (the “Commission”) a registration
statement and an amendment or amendments thereto, on Form F-1 (File No.
333-_______), including any related preliminary prospectus (the “Preliminary Prospectus”,
including any prospectus that is included in the Registration Statement
immediately prior to the effectiveness of the Registration Statement), for the
registration of the Public Securities under the Act, which registration
statement and amendment or amendments have been prepared by the Company in
conformity with the requirements of the Act, and the rules and regulations (the
“Regulations”) of the
Commission under the Act. The conditions for use of Form F-1 to
register the Offering under the Act, as set forth in the General Instructions to
such Form, have been satisfied in all material respects. Except as
the context may otherwise require, such registration statement, as amended, on
file with the Commission at the time the registration statement becomes
effective (including the prospectus, financial statements, schedules, exhibits
and all other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to Rule 430A of
the Regulations), is hereinafter called the “Registration Statement,” and
the form of the final prospectus dated the Effective Date included in the
Registration Statement (or, if applicable, the form of final prospectus
containing information permitted to be omitted at the time of effectiveness by
Rule 430A of the Regulations filed with the Commission pursuant to Rule 424 of
the Regulations), is hereinafter called the “Prospectus.” For
purposes of this Agreement, “Time of Sale”, as used in the
Act, means 5:00 p.m., New York City time, on the date of this
Agreement. If the Company has filed, or is required pursuant to the
terms hereof to file, a registration statement pursuant to Rule 462(b) under the
Securities Act registering the Securities (a “Rule 462(b) Registration
Statement”), then, unless otherwise specified, any reference herein to
the term “Registration
Statement” shall be deemed to include such Rule 462(b) Registration
Statement. Other than a Rule 462(b) Registration Statement, which, if
filed, becomes effective upon filing, no other document with respect to the
Registration Statement has heretofore been filed with the
Commission. All of the Public Securities have been registered under
the Securities Act pursuant to the Registration Statement or, if any Rule 462(b)
Registration Statement is filed, will be duly registered under the Securities
Act with the filing of such Rule 462(b) Registration Statement. The
Registration Statement has been declared effective by the Commission on the date
hereof. If, subsequent to the date of this
Agreement, the Company or the Representative have determined that at the Time of
Sale the Prospectus included an untrue statement of a material fact or omitted a
statement of material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, and have agreed to
provide an opportunity to purchasers of the Firm Units to terminate their old
purchase contracts and enter into new purchase contracts, the Prospectus will be
deemed to include any additional information available to purchasers at the time
of entry into the first such new purchase contract.
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2.1.2 Pursuant to the Exchange
Act. The Company has filed with the Commission a Form 8-A
(File Number 000-[Ÿ]) providing for the
registration under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), of the Units,
the Ordinary Shares and the Warrants. The registration of the Units,
Ordinary Shares and Warrants under the Exchange Act will be declared effective
by the Commission on or prior to the Effective Date.
2.2 No Stop Orders,
Etc. Neither the Commission nor, to the best of the Company’s
knowledge, any state regulatory authority has issued any order or threatened to
issue any order preventing or suspending the use of any Preliminary Prospectus
or has instituted or, to the best of the Company’s knowledge, threatened to
institute any proceedings with respect to such an order.
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2.3 Disclosures in Registration
Statement.
2.3.1 10b-5
Representation. At the time the Registration Statement became
effective, upon the filing or first use (within the meaning of the Regulations)
of the Prospectus and at the Closing Date and the Option Closing Date, if any,
the Registration Statement and the Prospectus contained or will contain all
material statements that are required to be stated therein in accordance with
the Act and the Regulations, and did or will in all material respects conform to
the requirements of the Act and the Regulations. Neither the
Registration Statement nor any Preliminary Prospectus or the Prospectus, nor any
amendment or supplement thereto, on their respective dates, did or will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Preliminary Prospectus and the Prospectus, in light of the
circumstances under which they were made), not misleading. When any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Securities or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) or first used
(within the meaning of the Regulations) and when any amendment thereof or
supplement thereto was first filed with the Commission or first used (within the
meaning of the Regulations), such Preliminary Prospectus and any amendments
thereof and supplements thereto complied or will have been corrected in the
Prospectus to comply in all material respects with the applicable provisions of
the Act and the Regulations and did not and will not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The
representation and warranty made in this Section 2.3.1 does not apply to
statements made or statements omitted in reliance upon and in conformity with
written information furnished to the Company with respect to the Underwriters by
the Representative expressly for use in the Registration Statement or Prospectus
or any amendment thereof or supplement thereto. It is understood the
statements set forth in the Prospectus under the heading “Underwriting”
constitute, for the purposes of this Agreement, information furnished by the
Representative with respect to the Underwriters.
2.3.2 Disclosure of
Agreements. The agreements and documents described in the
Registration Statement, the Preliminary Prospectus and the Prospectus conform to
the descriptions thereof contained therein and there are no agreements or other
documents required to be described in the Registration Statement, the
Preliminary Prospectus or the Prospectus or to be filed with the Commission as
exhibits to the Registration Statement, that have not been so described or
filed. Each agreement or other instrument (however characterized or
described) to which the Company is a party or by which its property or business
is or may be bound or affected and (i) that is referred to in the Registration
Statement, Preliminary Prospectus or the Prospectus or attached as an exhibit
thereto, or (ii) is material to the Company’s business, has been duly and
validly executed by the Company, is in full force and effect in all material
respects and is enforceable against the Company and, to the Company’s knowledge,
the other parties thereto, in accordance with its terms, except (x) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the federal and
state securities laws, and (z) that the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought, and none of such agreements or
instruments has been assigned by the Company, and neither the Company nor, to
the Company’s knowledge, any other party is in breach or default thereunder and,
to 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 Company’s knowledge, performance by the Company of
the material provisions of such agreements or instruments will not result in a
material violation of any existing applicable law, rule, regulation, judgment,
order or decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its assets or businesses, including,
without limitation, those relating to environmental laws and
regulations.
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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
date of the Company’s formation, except as disclosed in the Registration
Statement.
2.3.4 Regulations. The
disclosures in the Registration Statement, the Preliminary Prospectus and the
Prospectus concerning the effects of Federal, state and local regulation on the
Company’s business as currently contemplated fairly summarize, to the best of
the Company’s knowledge, such effects and do not omit to state a material fact
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading.
2.4 Changes After Dates in
Registration Statement.
2.4.1 No Material Adverse
Change. Except as contemplated in the Prospectus, since the
respective dates as of which information is given in the Registration Statement,
any Preliminary Prospectus and/or the Prospectus, except as otherwise
specifically stated therein: (i) there has been no material adverse change in
the condition, financial or otherwise, or business prospects of the Company;
(ii) there have been no material transactions entered into by the Company, other
than as contemplated pursuant to this Agreement; (iii) no member of the
Company’s board of directors or management has resigned from any position with
the Company and (iv) no event or occurrence has taken place which materially
impairs, or would likely materially impair, with the passage of time, the
ability of the members of the Company’s board of directors or management to act
in their capacities with the Company as described in the Registration Statement
and the Prospectus.
2.4.2 Recent Securities
Transactions, Etc. Except as contemplated in the Prospectus,
subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not: (i) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its capital stock.
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2.5 Independent
Accountants. To the best of the Company’s knowledge, ▇▇▇▇▇
▇▇▇▇▇▇▇ LLP (“▇▇▇▇▇”),
whose report is filed with the Commission as part of the Registration Statement
and included in the Registration Statement, the Preliminary Prospectus and the
Prospectus, are independent accountants as required by the Act and the
Regulations and the Public Company Accounting Oversight Board (including the
rules and regulations promulgated by such entity, the “PCAOB”). To the
best of the Company’s knowledge, ▇▇▇▇▇ is duly registered and in good standing
with the PCAOB. ▇▇▇▇▇ has not, during the periods covered by the
financial statements included in the Registration Statement and the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act.
2.6 Financial Statements;
Statistical Data.
2.6.1 Financial
Statements. The financial statements, including the notes
thereto and supporting schedules included in the Registration Statement, the
Preliminary Prospectus and the Prospectus fairly present the financial position
and the results of operations of the Company at the dates and for the periods to
which they apply; and such financial statements have been prepared in conformity
with generally accepted accounting principles, consistently applied throughout
the periods involved; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated
therein. To the best of the Company’s knowledge, no other financial
statements or supporting schedules are required to be included or incorporated
by reference in the Registration Statement, the Preliminary Prospectus or the
Prospectus. The Registration Statement, the Preliminary Prospectus
and the Prospectus disclose all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and other
relationships of the Company with unconsolidated entities or other persons that
may have a material current or future effect on the Company’s financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses. To the best of the Company’s knowledge, there are no pro
forma or as adjusted financial statements which are required to be included in
the Registration Statement and the Prospectus in accordance with Regulation S-X
which have not been included as so required.
2.6.2 Statistical
Data. The statistical, industry-related and market-related
data included in the Registration Statement, the Preliminary Prospectus and the
Prospectus are based on or derived from sources which the Company reasonably and
in good faith believes are reliable and accurate, and such data agree with the
sources from which they are derived.
2.7 Authorized Capital; Options,
Etc. The Company had at the date or dates indicated in the
Registration Statement, the Preliminary Prospectus and the Prospectus, as the
case may be, duly authorized, issued and outstanding capitalization as set forth
in the Registration Statement, the Preliminary Prospectus and the
Prospectus. Based on the assumptions stated in the Registration
Statement, the Preliminary Prospectus and the Prospectus, the Company will have
on the Closing Date the adjusted stock capitalization set forth
therein. Except as set forth in, or contemplated by, the Registration
Statement, the Preliminary Prospectus and the Prospectus, on the Effective Date
of the Prospectus and on the Closing Date and the Option Closing Date, if any,
there will be no options, warrants, or other rights to purchase or otherwise
acquire any authorized, but unissued Ordinary Shares of the Company or any
security convertible into Ordinary Shares of the Company, or any contracts or
commitments to issue or sell Ordinary Shares or any such options, warrants,
rights or convertible securities.
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2.8 Valid Issuance of
Securities, Etc.
2.8.1 Outstanding
Securities. All issued and outstanding securities of the
Company (including, without limitation, the Placement Securities) have been duly
authorized and validly issued and are fully paid and non-assessable; the holders
thereof have no rights of rescission with respect thereto, and are not subject
to personal liability by reason of being such holders; and none of such
securities were issued in violation of the preemptive rights of any holders of
any security of the Company or similar contractual rights granted by the
Company. The Public Securities conform to all statements relating
thereto contained in the Registration Statement, the Preliminary Prospectus and
the Prospectus. Subject to the disclosure contained in the Registration
Statement, the Preliminary Prospectus and the Prospectus with respect to the
Placement Securities, the offers and sales of the outstanding Ordinary Shares
were at all relevant times either registered under the Act and the applicable
state securities or Blue Sky laws or, based in part on the representations and
warranties of the purchasers of such Ordinary Shares, exempt from such
registration requirements.
2.8.2 Securities Sold Pursuant to
this Agreement. The Securities have been duly authorized and
reserved for issuance and when issued and paid for, will be validly issued,
fully paid and non-assessable; the holders thereof are not and will not be
subject to personal liability by reason of being such holders; the Securities
are not and will not be subject to the preemptive rights of any holders of any
security of the Company or similar contractual rights granted by the Company;
and all corporate action required to be taken for the authorization, issuance
and sale of the Securities has been duly and validly taken. The
Securities conform in all material respects to all statements with respect
thereto contained in the Registration Statement, the Preliminary Prospectus and
the Prospectus, as the case may be. When issued, the Representative’s
Purchase Option, the Representative’s Warrants and the Warrants will constitute
valid and binding obligations of the Company to issue and sell, upon exercise
thereof and payment of the respective exercise prices therefor, the number and
type of securities of the Company called for thereby in accordance with the
terms thereof and such Representative’s Purchase Option, the Representative’s
Warrants and the Warrants are enforceable against the Company in accordance with
their respective terms, except: (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under federal and state securities laws; and (iii) that
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. The
Ordinary Shares issuable upon exercise of the Representative’s Purchase Option,
the Representative’s Warrants and the Warrants have been reserved for issuance
upon the exercise of the Representative’s Purchase Option, the Representative’s
Warrants and the Warrants, respectively, and, when issued in accordance with the
terms of such securities, will be duly and validly authorized, validly issued,
fully paid and non-assessable; the holders thereof are not and will not be
subject to personal liability by reason of being such holders.
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2.8.3 Placement
Warrants. The Placement Warrants constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
of the respective exercise prices therefor, the number and type of securities of
the Company called for thereby in accordance with the terms thereof, and such
Placement Warrants are enforceable against the Company in accordance with their
respective terms, except: (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under federal and state securities laws; and (iii) that
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. The
Ordinary Shares issuable upon exercise of the Placement Warrants have been
reserved for issuance upon the exercise of the Placement Warrants and, when
issued in accordance with the terms of the Placement Warrants, will be duly and
validly authorized, validly issued, fully paid and non-assessable, and the
holders thereof are not and will not be subject to personal liability by reason
of being such holders.
2.8.4 No
Integration. Subject to the disclosure contained in the
Registration Statement, the Preliminary Prospectus and/or the Prospectus with
respect to the Placement Securities, neither the Company nor any of its
affiliates has, prior to the date hereof, made any offer or sale of any
securities which are required to be “integrated” pursuant to the Act or the
Regulations with the offer and sale of the Public Securities pursuant to the
Registration Statement.
2.9 Registration Rights of Third
Parties. Except as set forth in the Registration Statement,
the Preliminary Prospectus or the Prospectus, no holders of any securities of
the Company or any rights exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company to register any
such securities of the Company under the Act or to include any such securities
in a registration statement to be filed by the Company.
2.10 Validity and Binding Effect
of Agreements. This Agreement, the Warrant Agreement (as
defined in Section 2.22 hereof), the Trust Agreement, the Services Agreement (as
defined in Section 3.7.2 hereof), the Placement Warrant Purchase Agreement (as
defined in Section 2.23.2 hereof) and the Escrow Agreement (as defined in
Section 2.23.3 hereof) have been duly and validly authorized by the Company and
constitute valid and binding agreements of the Company, enforceable against the
Company in accordance with their respective terms, except: (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally; (ii) as enforceability of
any indemnification or contribution provision may be limited under the federal
and state securities laws; and (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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2.11 No Conflicts,
Etc. The execution, delivery, and performance by the Company
of this Agreement, the Warrant Agreement, Representative’s Purchase Option, the
Trust Agreement, the Services Agreement, the Placement Warrant Purchase
Agreement, and the Escrow Agreement, the consummation by the Company of the
transactions herein and therein contemplated and the compliance by the Company
with the terms hereof and thereof do not and will not, with or without the
giving of notice or the lapse of time or both: (i) result in a breach of, or
conflict with any of the terms and provisions of, or constitute a default under,
or result in the creation, modification, termination or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to the
terms of any agreement or instrument to which the Company is a party; (ii)
result in any violation of the provisions of the Amended and Restated Articles
of Incorporation or the By-laws of the Company; or (iii) violate any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its properties or business.
2.12 No Defaults;
Violations. No material default exists in the due performance
and observance of any term, covenant or condition of any material license,
contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or
any other agreement or instrument evidencing an obligation for borrowed money,
or any other material agreement or instrument to which the Company is a party or
by which the Company may be bound or to which any of the properties or assets of
the Company is subject. The Company is not in violation of any term or provision
of its Amended and Restated Articles of Incorporation or By-laws or in violation
of any material franchise, license, permit, applicable law, rule, regulation,
judgment or decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its properties or
businesses.
2.13 Corporate Power; Licenses;
Consents.
2.13.1 Conduct of
Business. The Company has all requisite corporate power and
authority, and has all necessary authorizations, approvals, orders, licenses,
certificates and permits of and from all governmental regulatory officials and
bodies that it needs as of the date hereof to conduct its business for the
purposes described in the Registration Statement, the Preliminary Prospectus and
the Prospectus. The disclosures in the Registration Statement and the
Prospectus concerning the effects of federal, state and local regulation on this
Offering and the Company’s business purpose as currently contemplated are
correct in all material respects and do not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Since its formation, the Company has conducted no
business and has incurred no liabilities other than in connection with and in
furtherance of the Offering.
2.13.2 Transactions Contemplated
Herein. The Company has all corporate power and authority to
enter into this Agreement and to carry out the provisions and conditions hereof,
and all consents, authorizations, approvals and orders required in connection
therewith have been obtained. No consent, authorization or order of,
and no filing with, any court, government agency or other body is required for
the valid issuance, sale and delivery, of the Securities and the consummation of
the transactions and agreements contemplated by this Agreement, the Warrant
Agreement, Representative’s Purchase Option, the Trust Agreement, the Services
Agreement, the Placement Warrant Purchase Agreement and the Escrow Agreement and
as contemplated by the Prospectus, except with respect to applicable federal and
state securities laws and the rules and regulations promulgated by the Financial
Industry Regulatory Authority (the “FINRA”).
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2.14 D&O
Questionnaires. All information contained in the
questionnaires (the “Questionnaires”) completed by
each of the Company’s shareholders immediately prior to the Offering (the “Initial Shareholders”) and
each of the Company’s officers and directors and provided to the Underwriters as
an exhibit to his or her Insider Letter (as defined in Section 2.23.1) is true
and correct and the Company has not become aware of any information which would
cause the information disclosed in the questionnaires completed by each Initial
Shareholder, officer or director, 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 Shareholder
which has not been disclosed in the Registration Statement, the Questionnaires,
the Preliminary Prospectus and the Prospectus.
2.16 Good
Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification, except where
the failure to qualify would not have a material adverse effect on the
Company.
2.17 No Contemplation of a
Business Combination. Prior to the date hereof, neither the
Company, its officers and directors nor the Initial Shareholders had, and as of
the Closing, the Company and such officers and directors and Initial
Shareholders will not have had: (i) any specific Business Combination under
consideration or contemplation; or (ii) any substantive interactions or
discussions with any target business regarding a possible Business
Combination.
2.18 Transactions Affecting
Disclosure to FINRA.
2.18.1 Except
as described in the Preliminary Prospectus and/or the Prospectus, there are no
claims, payments, arrangements, agreements or understandings relating to the
payment of a finder’s, consulting or origination fee by the Company or any
Initial Shareholder with respect to the sale of the Securities hereunder or any
other arrangements, agreements or understandings of the Company or, to the
Company’s knowledge, any Initial Shareholder that may affect the Underwriters’
compensation, as determined by the FINRA.
2.18.2 The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise,
in consideration of such person raising capital for the Company or introducing
to the Company persons who raised or provided capital to the Company; (ii) to
any FINRA member; or (iii) to any person or entity that has any direct or
indirect affiliation or association with any FINRA member, within the twelve
(12) months prior to the Effective Date, other than payments to the
Representative.
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2.18.3 No
officer, director, or beneficial owner of any class of the Company’s securities
(whether debt or equity, registered or unregistered, regardless of the time
acquired or the source from which derived) (any such individual or entity, a
“Company Affiliate”) is
a member, a person associated, or affiliated with a member of the
FINRA.
2.18.4 No
Company Affiliate is an owner of stock or other securities of any member of the
FINRA (other than securities purchased on the open market).
2.18.5 No
Company Affiliate has made a subordinated loan to any member of the
FINRA.
2.18.6 No
proceeds from the sale of the Public Securities (excluding underwriting
compensation) or the Placement Securities will be paid to any FINRA member, or
any persons associated or affiliated with a member of the FINRA, except as
specifically authorized herein and in the Placement Warrant Purchase
Agreement.
2.18.7 Except
with respect to the Representative, the Company has not issued any warrants or
other securities, or granted any options, directly or indirectly to anyone who
is a potential underwriter in the Offering or a related person (as defined by
FINRA rules) of such an underwriter within the 180-day period prior to the
initial filing date of the Registration Statement.
2.18.8 No
person to whom securities of the Company have been privately issued within the
180-day period prior to the initial filing date of the Registration Statement
has any relationship or affiliation or association with any member of the
FINRA.
2.18.9 No
FINRA member intending to participate in the Offering has a conflict of interest
with the Company. For this purpose, a “conflict of interest” exists
when a member of the FINRA and its associated persons, parent or affiliates in
the aggregate beneficially own 10% or more of the Company’s outstanding
subordinated debt or common equity, or 10% or more of the Company’s preferred
equity. “Members participating in the Offering” include managing
agents, syndicate group members and all dealers which are members of the
FINRA.
2.18.10 Except with respect to the
Representative in connection with the Offering, the Company has not entered into
any agreement or arrangement (including, without limitation, any consulting
agreement or any other type of agreement) during the 180-day period prior to the
initial filing date of the Registration Statement, which arrangement or
agreement provides for the receipt of any item of value and/or the transfer of
any warrants, options, or other securities from the Company to a FINRA member,
any person associated with a member (as defined by FINRA rules), any potential
underwriters in the Offering and any related persons.
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2.19 Foreign Corrupt Practices
Act. Neither the Company nor any of the Initial Shareholders
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 Registration Statement, the Preliminary Prospectus and/or the
Prospectus; or (iii) if not continued in the future, might adversely affect the
assets, business, operations or prospects of the Company. The
Company’s internal accounting controls and procedures are sufficient to cause
the Company to comply with the Foreign Corrupt Practices Act of 1977, as
amended.
2.20 Patriot
Act. Neither the Company nor, to the Company’s knowledge, any
officer, director or Initial Shareholder has violated: (i) the Bank Secrecy Act,
as amended; (ii) the Money Laundering Control Act of 1986, as amended; or (iii)
the Uniting and Strengthening of America by Providing Appropriate Tools Required
to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and/or the
rules and regulations promulgated under any such law, or any successor
law.
2.21 Officers’
Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to the Representative or to the
Representative’s counsel shall be deemed a representation and warranty by the
Company to the Underwriters as to the matters covered thereby.
2.22 Warrant
Agreement. The Company has entered into a warrant agreement
with respect to the Warrants, the Representative’s Warrants and the Placement
Warrants with AST substantially in the form filed as an exhibit to the
Registration Statement (the “Warrant
Agreement”).
2.23 Agreements With Initial
Shareholders.
2.23.1 Insider
Letters. The Company has caused to be duly executed legally
binding and enforceable agreements (except: (i) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally; (ii) as enforceability of any indemnification,
contribution or noncompete provision may be limited under the federal and state
securities laws; and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought) annexed as exhibits to the Registration Statement (the “Insider Letter”), pursuant to
which each of the officers, directors and Initial Shareholders of the Company
agree to certain matters, including but not limited to, certain matters
described as being agreed to by them under the “Proposed Business” Section of
the Prospectus.
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2.23.2 Placement Warrant Purchase
Agreement. Certain of the Company’s officers and directors and
their designees have executed and delivered an agreement, annexed as an exhibit
to the Registration Statement (the “Placement Warrant Purchase
Agreement”), pursuant to which such persons, among other things, have
purchased an aggregate of 1,638,800 Placement Warrants in the Private
Placement. Pursuant to the Placement Warrant Purchase Agreement all
of the proceeds from the sale of the Placement Warrants will be deposited by the
Company in the Trust Fund in accordance with the terms of the Trust Agreement
prior to the Closing.
2.23.3 Escrow
Agreement. The Company has caused the Initial Shareholders and
the purchasers of the Placement Warrants to enter into an escrow agreement (the
“Escrow Agreement”) with
the Escrow Agent substantially in the form filed as an exhibit to the
Registration Statement, whereby the Ordinary Shares owned by the Initial
Shareholders and Placement Warrants will be held in escrow by the Escrow Agent
until, with respect to 50% of the shares and Placement Warrants held by each
Initial Shareholder and holder of Placement Warrants, nine (9) months after the
consummation of a Business Combination, and, with respect to the balance, until
12 months after the consummation of a Business Combination. During such escrow
period, the Initial Shareholders and holders of the Placement Warrants shall be
prohibited from selling or otherwise transferring such shares and Placement
Warrants (except as otherwise set forth in the Escrow Agreement) but will retain
the right to vote any such Ordinary Shares. To the Company’s knowledge, the
Escrow Agreement is enforceable against each of the Initial Shareholders and the
holders of the Placement Warrants and will not, with or without the giving of
notice or the lapse of time or both, result in a breach of, or conflict with any
of the terms and provisions of, or constitute a default under, any agreement or
instrument to which any of the Initial Shareholders is a party. The Escrow
Agreement shall not be amended, modified or otherwise changed without the prior
written consent of the Representative.
2.24 Investment Management Trust
Agreement. The Company has entered into the Trust Agreement
with respect to certain proceeds of the Offering and the Private Placement
substantially in the form filed as an exhibit to the Registration
Statement.
2.25 Covenants Not to
Compete. No Initial Shareholder 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
Shareholder, employee, officer or director of the Company.
2.26 Investments. No
more than 45% of the “value” (as defined in Section 2(a)(41) of the Investment
Company Act of 1940 (“Investment Company Act”)) of the Company’s total assets
consist of, and no more than 45% of the Company’s net income after taxes is
derived from, securities other than “Government Securities” (as defined in
Section 2(a)(16) of the Investment Company Act).
2.27 Subsidiaries. The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business
entity.
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2.28 Related Party
Transactions. No relationship, direct or indirect, exists
between or among any of the Company or any Company Affiliate, on the one hand,
and any director, officer, shareholder, customer or supplier of the Company or
any Company Affiliate, on the other hand, which is required by the Act, the
Exchange Act or the Regulations to be described in the Registration Statement,
the Preliminary Prospectus and/or the Prospectus which is not so described and
described as required. There are no outstanding loans, advances
(except normal advances for business expenses in the ordinary course of
business) or guarantees of indebtedness by the Company to or for the benefit of
any of the officers or directors of the Company or any of their respective
family members, except as disclosed in the Registration Statement, the
Preliminary Prospectus and/or the Prospectus. The Company has not
extended or maintained credit, arranged for the extension of credit, or renewed
an extension of credit, in the form of a personal loan to or for any director or
officer of the Company.
2.29 No
Influence. The Company has not offered, or caused the
Underwriters to offer, the Firm Units to any person or entity with the intention
of unlawfully influencing: (i) a customer or supplier of the Company or any
Company Affiliate to alter the customer’s or supplier’s level or type of
business with the Company or such affiliate; or (ii) a journalist or publication
to write or publish favorable information about the Company or any such
affiliate.
2.30 Trading of the Public
Securities on the Nasdaq Capital Market. As of the Closing
Date, the Public Securities will have been authorized for listing on the Nasdaq
Capital Market and no proceedings have been instituted or threatened which would
effect, and no event or circumstance has occurred as of the Effective Date which
is reasonably likely to effect, the listing of the Public Securities on the
Nasdaq Capital Market.
2.31 Definition of
“Knowledge”. As used in herein, the term “knowledge of the Company” (or
similar language) shall mean the knowledge of the officers and directors of the
Company who are named in the Prospectus, with the assumption that such officers
and directors shall have made reasonable and diligent inquiry of the matters
presented.
3. Covenants of the
Company. The Company covenants and agrees as
follows:
3.1 Amendments to Registration
Statement. The Company will deliver to the Representative,
prior to filing, any amendment or supplement to the Registration Statement or
Prospectus proposed to be filed after the Effective Date and not file any such
amendment or supplement to which the Representative shall reasonably object in
writing.
3.2 Federal Securities
Laws.
3.2.1 Compliance. During
the time when a Prospectus is required to be delivered under the Act, the
Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Public Securities in
accordance with the provisions hereof and the Prospectus. If at any
time when a Prospectus relating to the Public Securities is required to be
delivered under the Act, any event shall have occurred as a result of which, in
the opinion of counsel for the Company or counsel for the Underwriters, the
Prospectus, as then amended or supplemented, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary during such period
to amend the Registration Statement or amend or supplement the Prospectus to
comply with the Act, the Company will notify the Representative promptly and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment to the Registration Statement or amendment or supplement
to the Prospectus (at the expense of the Company) so as to correct such
statement or omission or effect such compliance.
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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 (5) 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, Ordinary Shares 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 the
Representative.
3.2.4 ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Compliance. As soon as it is legally required to do so, the
Company shall take all actions necessary to obtain and thereafter maintain
material compliance with each applicable provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002 and the rules and regulations promulgated thereunder and related or similar
rules and regulations promulgated by any other governmental or self regulatory
entity or agency with jurisdiction over the Company.
3.3 Blue Sky
Filing. Unless the Public Securities are listed on the Nasdaq
Capital Market or another national securities exchange, the Company will
endeavor in good faith, in cooperation with the Representative, at or prior to
the time the Registration Statement becomes effective, to qualify the Public
Securities for offering and sale under the securities laws of such jurisdictions
as the Representative may reasonably designate, provided that no such
qualification shall be required in any jurisdiction where, as a result thereof,
the Company would be subject to service of general process or to taxation as a
foreign corporation doing business in such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
3.4 Delivery to Underwriters of
Prospectuses. The Company will deliver to each of the several
Underwriters, without charge, from time to time during the period when the
Prospectus is required to be delivered under the Act or the Exchange Act such
number of copies of each Preliminary Prospectus and Prospectus and all
amendments and supplements to such documents as such Underwriters may reasonably
request and, as soon as the Registration Statement or any amendment or
supplement thereto becomes effective, deliver to the Representative 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.
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3.5 Effectiveness and Events
Requiring Notice to the Representative. The Company will use
its best efforts to cause the Registration Statement to remain effective and
will notify the Representative immediately and confirm the notice in writing:
(i) of the effectiveness of the Registration Statement and any amendment
thereto; (ii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement, or any post-effective amendment
thereto or preventing or suspending the use of any Preliminary Prospectus or the
Prospectus or of the initiation, or the threatening, of any proceeding for that
purpose; (iii) of the issuance by any state securities commission of any
proceedings for the suspension of the qualification of the Public Securities for
offering or sale in any jurisdiction or of the initiation, or the threatening,
of any proceeding for that purpose; (iv) of the mailing and delivery to the
Commission for filing of any amendment or supplement to the Registration
Statement or Prospectus; (v) of the receipt of any comments or request for any
additional information from the Commission; and (vi) of the happening of any
event during the period described in Section 3.4 hereof that, in the judgment of
the Company, makes any statement of a material fact made in the Registration
Statement, the Preliminary Prospectus and/or the Prospectus untrue or that
requires the making of any changes in the Registration Statement, the
Preliminary Prospectus and/or the Prospectus in order to make the statements
therein, (with respect to the Prospectus in light of the circumstances under
which they were made), not misleading. If the Commission or any state
securities commission shall enter a stop order or suspend such qualification at
any time, the Company will make every reasonable effort to obtain promptly the
lifting of such order.
3.6 Review of Financial
Statements. Until the earlier of five (5) years from the
Effective Date, or until such earlier date 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 or filing of quarterly financial information, if any.
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 Shareholder
unless the Company obtains an opinion from an independent investment banking
firm stating the Business Combination is fair to the Company’s shareholders from
a financial perspective.
3.7.2 Administrative
Services. The Company has entered into an agreement (the
“Services Agreement”)
with Kaiyuan Real Estate Development (the “Affiliate”) in the form filed
as an exhibit to the Registration Statement pursuant to which the Affiliate will
make available to the Company general and administrative services including
office space, utilities, receptionist and secretarial support for the Company’s
use for $7,500 per month.
3.7.3 Compensation. Except
as set forth in this Section 3.7, the Company shall not pay any Initial
Shareholder or any of their affiliates any fees or compensation from the
Company, for services rendered to the Company prior to, or in connection with,
this Offering or the consummation of a Business Combination; provided that the Initial
Shareholders shall be entitled to reimbursement from the Company for their
out-of-pocket expenses incurred on the Company’s behalf, which includes an
aggregate of $100,000 in loans which were made to the Company prior to the
effective date of the Registration Statement and expenses incurred by them in
connection with seeking and consummating a Business Combination as described in
the Registration Statement.
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3.8 Secondary Market
Trading. In the event the Public Securities are not listed on
the Nasdaq Capital Market or such other national securities exchange, the
Company will apply to be included in Mergent, Inc. Manual for a period of five
(5) years from the consummation of a Business Combination. Promptly
after the consummation of the Offering, the Company shall take such steps as may
be necessary to obtain a secondary market trading exemption for the Company’s
securities in the State of California. The Company shall also take
such other action as may be reasonably requested by the Representative to obtain
a secondary market trading exemption in such other states as may be requested by
the Representative.
3.9 Reserved.
3.10 Financial Public Relations
Firm. Promptly after the execution of a definitive agreement
for a Business Combination, the Company shall retain a financial public
relations firm reasonably acceptable to the Representative for a term to be
agreed upon by the Company and the Representative.
3.11 Reports to the
Representative.
3.11.1 Periodic Reports,
Etc. For a period of five (5) 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 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 6-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; provided that the
Representative shall sign, if requested by the Company, a Regulation FD
compliant confidentiality agreement which is reasonably acceptable to the
Representative and its counsel in connection with the Representative’s receipt
of such information. Documents filed with the Commission pursuant to
its Electronic Data Gathering, Analysis and Retrieval System (“▇▇▇▇▇”) shall be deemed to
have been delivered to the Representative pursuant to this section.
3.11.2 Transfer
Sheets. For a period of five (5) years following the Effective
Date or until such earlier time upon which the Company is required to be
liquidated, the Company shall retain a transfer and warrant agent acceptable to
the Representative (the “Transfer Agent”) and during
the two (2) year period following the Closing Date. In the event the
Public Securities are not listed on the Nasdaq Capital Market or such other
national securities exchange, the Company 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. American
Stock Transfer & Trust Company is an acceptable Transfer Agent to the
Underwriters.
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3.11.3 Secondary Market Trading
Survey. Until such time as the Public Securities are listed or
quoted, as the case may be, on the New York Stock Exchange, the American Stock
Exchange or quoted on the Nasdaq Global Select Market or Nasdaq Global Market,
or until such earlier time upon which the Company is required to be liquidated,
the Company shall engage ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇, PC (“ML”), 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 (the “Secondary Market Trading
Survey”), a copy of which will be provided to the Company and ▇▇▇▇▇
▇▇▇▇▇.
3.11.4 Trading
Reports. During such time as the Public Securities are quoted
on the OTC Bulletin Board (or any successor trading market) 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 OTC Bulletin Board or the Pink Sheets, LLC relating to
price trading of the Public Securities, as the Representative shall reasonably
request. In addition to the requirements of the preceding sentence,
for a period of two (2) years from the Closing Date, the Company, at its
expense, shall provide Chardan a subscription to the Company’s weekly Depository
Transfer Company Security Position Reports.
3.12 Disqualification of Form
F-1. For a period equal to seven (7) years from the
date hereof, the Company will not take any action or actions which may prevent
or disqualify the Company’s use of Form F-1 (or other appropriate form) for the
registration of the Warrants and the Representative’s Purchase Option and the
securities underlying the Representative’s Purchase Option under the
Act.
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3.13 Payment of
Expenses.
3.13.1 General Expenses Related to
the Offering. The Company hereby agrees to pay on each of the
Closing Date and the Option Closing Date, if any, to the extent not paid at
Closing Date, all expenses incident to the performance of the obligations of the
Company under this Agreement, including, but not limited to: (i) the
preparation, printing, filing and mailing (including the payment of postage with
respect to such mailing) of the Registration Statement, the Preliminary
Prospectus and/or the final Prospectus and the printing and mailing of this
Agreement and related documents, including the cost of all copies thereof and
any amendments thereof or supplements thereto supplied to the Underwriters in
quantities as may be required by the Underwriters; (ii) the printing, engraving,
issuance and delivery of the Units, the Ordinary Shares and the Warrants
included in the Units and the Representative’s Purchase Option, including any
transfer or other taxes payable thereon; (iii) the qualification of the Public
Securities under state or foreign securities or Blue Sky laws, including the
costs of printing and mailing the “Preliminary Blue Sky Memorandum,” and all
amendments and supplements thereto, fees and disbursements for counsel of
Chardan’s choice retained for such purpose (such fees shall be $35,000 in the
aggregate to be due on the Closing Date (of which $7,500 has previously been
paid)), and a one-time fee of $5,000 payable to the counsel of Chardan’s choice
for the preparation of the Secondary Market Trading Survey; (iv) filing fees
incurred in registering the Offering with the FINRA (including all COBRADesk
fees); (v) fees and disbursements of the transfer and warrant agent; (vi) the
Company’s expenses associated with “due diligence” meetings arranged by the
Representative (none of which will be received or paid on behalf of an
underwriter and related person); (vii) the preparation, binding and delivery of
bound volumes in form and style reasonably satisfactory to Chardan and 12
transaction lucite cubes or similar commemorative items in a style as reasonably
requested by Chardan; (viii) all costs and expenses associated with “road show”
marketing and “due diligence” trips for the Company’s management to meet with
prospective investors, including without limitation, all travel, food and
lodging expenses associated with such trips; (ix) all costs associated with an
independent third-party background investigation of each of the Company’s
officers, directors and Initial Shareholders in an amount not to exceed $15,000;
and (x) all other reasonable costs and expenses incident to the performance of
its obligations hereunder which are not otherwise specifically provided for in
this Section 3.13.1. The Representative may deduct from the net
proceeds of the Offering payable to the Company on the Closing Date, or the
Option Closing Date, if any, the expenses set forth above to be paid by the
Company to the Representative and others, as agreed to by the Company in
writing. If the Offering is not consummated for any reason
whatsoever, except as a result of the Representative’s or any Underwriter’s
breach or default with respect to any of its obligations described in this
Agreement, then the Company shall reimburse the Representative in full for their
out-of-pocket accountable expenses actually incurred by the Representative,
including, without limitation, their legal fees (less any amounts previously
paid). Additionally, upon any such termination, the Representative
shall return to the Company any portion of the amounts advanced towards the
Underwriters’ discount (of which $50,000 has previously been paid (“Advance”)) in excess of the
out-of-pocket accountable expenses actually incurred by the Representative,
including, without limitation, their legal fees.
3.13.2 Fee on Business
Combination. Upon consummation of a Business Combination, the
Company and the Underwriters agree that in addition to the expenses payable
pursuant to Section 3.13.1, the Company will pay to the Representative the
Contingent Discount as set forth in Section 1.5 above.
3.13.3 Fee on Termination of
Offering. Notwithstanding anything contained herein to the
contrary, upon termination of the Offering the Company shall: (A) reimburse the
Representative for, or otherwise pay and bear, the expenses and fees to be paid
and borne by the Company as provided for in Paragraph 3.13.1 above, as
applicable, and (B) reimburse the Representative for the full amount of their
accountable out-of-pocket expenses actually incurred to such date (which shall
include, but shall not be limited to, all fees and disbursements of the
Representative’s counsel, travel, lodging and other “road show” expenses,
mailing, printing and reproduction expenses, and any expenses incurred by the
Representative in conducting their due diligence), less the amounts previously
paid and any amounts previously paid to the Representative in reimbursement for
such expenses. If applicable, and solely in the event of a
termination of this Offering, the Representative shall refund to the Company any
portion of the Advance previously received by the Representative which is in
excess of the accountable out-of-pocket expenses actually incurred to such date
by the Representative.
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3.14 Application of Net
Proceeds. The Company will apply the net proceeds from the
Offering received by it in a manner consistent with the application described
under the caption “Use of Proceeds” in the Prospectus.
3.15 Delivery of Earnings
Statements to Security Holders. The Company will make
generally available to its security holders as soon as practicable, but not
later than the first day of the fifteenth (15th) 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 (12)
consecutive months beginning after the Effective Date.
3.16 Notice to
FINRA.
3.16.1 Business
Combination. In the event any person or entity (regardless of
any FINRA affiliation or association) is engaged to assist the Company in its
search for a merger candidate or to provide any other merger and acquisition
services, the Company will provide the following to the FINRA and the
Representative prior to the consummation of the Business
Combination: (i) complete details of all services and copies of
agreements governing such services; 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 5110 of FINRA’s 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 shareholder approval for the Business
Combination.
3.16.2 Broker/Dealer. In
the event the Company intends to register as a broker/dealer, merge with or
acquire a registered broker/dealer, or otherwise become a member of FINRA, it
shall promptly notify the FINRA.
3.17 Stabilization.
Neither the Company, nor, to its knowledge, any of its employees, directors or
shareholders (without the consent of the Representative) has taken or will take,
directly or indirectly, any action designed to or that has constituted or that
might reasonably be expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Units.
3.18 Internal
Controls. The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management’s general or specific
authorization; (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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3.19 Accountants. For
a period of five (5) years from the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company shall retain
▇▇▇▇▇ or other independent public accountants reasonably acceptable to the
Representative.
3.20 Form
6-K. The Company shall, on the date hereof, retain its
independent public accountants to audit the financial statements of the Company
as of the Closing Date (the “Audited Financial Statements”)
reflecting the receipt by the Company of the proceeds of the initial public
offering and the Private Placement, as well as the proceeds from the exercise of
the Over-Allotment if such exercise has occurred on the date of the
Prospectus. Within three (3) trading days of the Closing Date, the
Company will file a Current Report on Form 6-K with the Commission, which Report
shall contain the Company’s Audited Financial Statements.
3.21 FINRA. The
Company shall advise the FINRA if it is aware that any 5% or greater shareholder
of the Company becomes an affiliate or associated person of a FINRA member
participating in the distribution of the Company’s Public
Securities.
3.22 Corporate
Proceedings. All corporate proceedings and other legal matters necessary
to carry out the provisions of this Agreement and the transactions contemplated
hereby shall have been done to the reasonable satisfaction to counsel for the
Underwriters.
3.23 Investment Company.
The Company shall cause the proceeds of the Offering to be held in the Trust
Fund to be invested only in “government securities” with specific maturity dates
or in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act as set forth in the Trust Agreement and
disclosed in the Prospectus. The Company will otherwise conduct its business in
a manner so that it will not become subject to the Investment Company Act.
Furthermore, once the Company consummates a Business Combination, it will be
engaged in a business other than that of investing, reinvesting, owning, holding
or trading securities.
3.24 Business Combination
Announcement. Within five (5) Business Days following the
consummation by the Company of a Business Combination, the Company
shall cause an announcement (“Business Combination Announcement”) to be placed,
at its cost, in The Wall Street Journal, The New York Times and a third
publication to be selected by the Representative announcing the consummation of
the Business Combination and indicating that the Representative were the
co-managing underwriters in the Offering (subject to an aggregate maximum amount
of $10,000). The Company shall supply the Representative with a draft
of the Business Combination Announcement and provide the
Representative with a reasonable advance opportunity to comment
thereon. The Company will not place the Business
Combination Announcement without the final approval of the Representative, which
approval will not be unreasonably withheld.
3.25 Colorado Trust
Filing. In the event the Securities are registered in the
State of Colorado, the Company will cause a Colorado Form ES to be filed with
the Commissioner of the State of Colorado no less than ten (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.
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3.26 Press
Releases. The Company agrees it will not issue press releases
or engage in any other publicity, without Chardan’s prior written consent (not
to be unreasonably withheld), for a period of forty (40) days after the Closing
Date.
3.27 Reserved.
3.28 Electronic
Prospectus. The Company shall cause to be prepared and delivered to
the Representative, at its expense, within one (1) Business Day from the
effective date of this Agreement, an Electronic Prospectus to be used by the Underwriters in
connection with the Offering. As used herein, the term “Electronic Prospectus” means a
form of prospectus, and any amendment or supplement thereto, that meets each of
the following conditions: (i) it shall be encoded in an electronic format,
satisfactory to the Representative, that may be transmitted electronically by
the other Underwriters to offerees and purchasers of the Units for at least the
period during which a Prospectus relating to the Units is required to be
delivered under the Securities Act; (ii) it shall disclose the same information
as the paper prospectus and prospectus filed pursuant to ▇▇▇▇▇, except to the
extent that graphic and image material cannot be disseminated electronically, in
which case such graphic and image material shall be replaced in the electronic
prospectus with a fair and accurate narrative description or tabular
representation of such material, as appropriate; and (iii) it shall be in or
convertible into a paper format or an electronic format, satisfactory to the
Representative, that will allow recipients thereof to store and have
continuously ready access to the prospectus at any future time, without charge
to such recipients (other than any fee charged for subscription to the Internet
as a whole and for on-line time). The Company hereby confirms that it
has included or will include in the Prospectus filed pursuant to ▇▇▇▇▇ or
otherwise with the Commission and in the Registration Statement at the time it
was declared effective an undertaking that, upon receipt of a request by an investor or his or her
representative within the period when a prospectus relating to the Units is
required to be delivered under the Securities Act, the Company shall transmit or
cause to be transmitted promptly, without charge, a paper copy of the
Prospectus.
3.29 Reservation of
Shares. The Company will reserve and keep available that
maximum number of its authorized but unissued securities which are issuable upon
exercise of the Warrants and the Representative’s Purchase Option,
Representative’s Warrants and the Placement Warrants outstanding from time to
time.
3.30 Right of First
Refusal. In the event that gross cash available from the Trust
Fund to the Company (net of any cash required to repurchase Ordinary Shares from
shareholders pursuant to agreements entered into prior to the Business
Combination to ensure that the Business Combination is approved) is equal to or
greater than $20 million or $32 million, respectively, the Company shall engage
the Representative, for a period of not less than twelve (12) or eighteen (18)
months, respectively, as the Company’s exclusive financial advisor, merger and
acquisition advisor, placement agent, and underwriter under market terms and
rates and shall give notice and a right of first refusal to the Representative
with respect to any proposed securities issuances, securities placements,
acquisitions, mergers, reorganizations, or other similar
transactions.
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3.31 Private Placement
Proceeds. Immediately upon establishment of the Trust Fund and
prior to the Closing, the Company shall deposit $1,638,800 of the proceeds from
the Private Placement in the Trust Fund and shall provide the Representative
with evidence of the same.
3.32 No Amendment to
Charter.
(i) The
Company covenants and agrees it will not seek to amend or modify Article 156 of
its Amended and Restated Memorandum and Articles of Association without the
prior approval of holders of 80% or more of the Company’s IPO Shares (as defined
in Section 7.6(ii) of this Agreement).
(ii) The
Company acknowledges that the purchasers of the Firm Units and Option Units in
this Offering shall be deemed to be third party beneficiaries of Section 3.32 of
this Agreement.
(iii) The
Representative and the Company specifically agree that, except pursuant to its
own terms, this Section 3.32 shall not be modified or amended in any
way.
3.33 Financial
Printer. The Company shall retain a financial printer,
reasonably acceptable to the Representative, for the purpose of facilitating the
Company’s ▇▇▇▇▇ filings and the printing of the Preliminary Prospectus and
Prospectus.
3.34 Listing on the Nasdaq
Capital Market. The Company will use its best efforts to
maintain the listing of the Public Securities on the Nasdaq Capital Market or
such other national securities exchange until the earlier of five (5) years from
the Effective Date or until the Public Securities are no longer registered under
the Exchange Act.
4. Conditions of Underwriters’
Obligations. The obligations of the several Underwriters to
purchase and pay for the Units, as provided herein, shall be subject to the
continuing accuracy of the representations and warranties of the Company as of
the date hereof and as of each of the Closing Date and the Option Closing Date,
if any, to the accuracy of the statements of officers of the Company made
pursuant to the provisions hereof and to the performance by the Company of its
obligations hereunder and to the following conditions:
4.1 Regulatory
Matters.
4.1.1 Effectiveness of
Registration Statement. The Registration Statement shall have
become effective not later than 5:00 P.M., New York time, on the date of this
Agreement or such later date and time as shall be consented to in writing by the
Representative, 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 ML.
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4.1.2 FINRA
Clearance. By the Effective Date, the Representative shall
have received clearance from the FINRA as to the amount of compensation
allowable or payable to the Underwriters as described in the Registration
Statement.
4.1.3 No Commission Stop
Order. At each of the Closing Date and the Option Closing
Date, the Commission has not issued any order or threatened to issue any order
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
or any part thereof, and has not instituted or threatened to institute any
proceedings with respect to such an order.
4.1.4 No Blue Sky Stop
Orders. No order suspending the sale of the Units in any
jurisdiction designated by the Representative pursuant to Section 3.3 hereof
shall have been issued on either the Closing Date or the Option Closing Date,
and no proceedings for that purpose shall have been instituted or shall be
contemplated.
4.1.5. The Nasdaq Capital
Market. The Securities shall have been admitted and approved
for listing on the Nasdaq Capital Market.
4.2 Company Counsel
Matters.
4.2.1 Closing Date Opinion of
Counsel. On the Closing Date, the Representative shall have
received the favorable opinions of ▇▇▇▇▇▇▇, ▇▇▇▇ and ▇▇▇▇▇▇▇ (“▇▇▇▇▇▇▇”) and Loeb & Loeb
LLP (“Loeb”), each as
counsel to the Company, dated the Closing Date, addressed to the Representative
and in form and substance reasonably satisfactory to the
Representative.
Each opinion of counsel shall further
include a statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company,
representatives of the independent public accountants for the Company and
representatives of the Underwriters at which the contents of the Registration
Statement, Preliminary Prospectus, the Prospectus and related matters were
discussed and although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement, Preliminary Prospectus and the
Prospectus (except as otherwise set forth in this opinion), no facts have come
to the attention of such counsel which lead them to believe that either the
Registration Statement, Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, as of the date of such opinion contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and related notes and schedules and other financial and
statistical data included in the Registration Statement, Preliminary Prospectus
or the Prospectus). The opinion of counsel shall state that such
counsel is not opining as to the Placement Securities with respect to any rights
to rescind or the effect any exercise of such rights will have on any other
securities of the Company or on the Offering.
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4.2.2 Option Closing Date Opinion
of Counsel. On each Option Closing Date, if any, the
Representative shall have received the favorable opinions of Loeb and ▇▇▇▇▇▇▇,
dated each Option Closing Date, addressed to the Representative and in form and
substance reasonably satisfactory to counsel to the Representative, confirming
as of each Option Closing Date, the statements made by Loeb and ▇▇▇▇▇▇▇ in its
respective opinion delivered on the Closing Date.
4.2.3 Reliance. In
rendering such opinion, such counsel may rely: (i) as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to the Representative) of other
counsel reasonably acceptable to the Representative, familiar with the
applicable laws; and (ii) as to matters of fact, to the extent they deem proper,
on certificates or other written statements of officers of the Company and
officers of departments of various jurisdiction having custody of documents
respecting the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to the
Underwriters’ counsel if requested. The opinion of counsel for the
Company and any opinion relied upon by such counsel for the Company shall
include a statement to the effect that it may be relied upon by counsel for the
Underwriters in its opinion delivered to the Underwriters.
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, the Representative 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 the
Representative and to ML from ▇▇▇▇▇ dated, respectively, as of the date of this
Agreement and as of the Closing Date and the Option Closing Date, if
any:
(i) Confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations and that they have not, during
the periods covered by the financial statements included in the Registration
Statement, the Preliminary Prospectus and the Prospectus, provided to the
Company any non-audit services, as such term is used in Section 10A(g) of the
Exchange Act;
(ii) Stating
that in their opinion the financial statements of the Company included in the
Registration Statement, the Preliminary Prospectus and the Prospectus comply as
to form in all material respects with the applicable accounting requirements of
the Act and the published Regulations thereunder;
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(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available minutes of the shareholders and board of directors and the various
committees of the board of directors, consultations with officers and other
employees of the Company responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that: (a) the unaudited financial statements of
the Company included in the Registration Statement, the Preliminary Prospectus
and the Prospectus do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Regulations or are not
fairly presented in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the audited financial
statements of the Company included in the Registration Statement, Preliminary
Prospectus and the Prospectus; (b) at a date not later than five (5) 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 shareholders’ equity of the Company as compared with amounts
shown in the September 30, 2010 balance sheet included in the Registration
Statement, the Preliminary Prospectus and the Prospectus, other than as set
forth in or contemplated by the Registration Statement, the Preliminary
Prospectus and the Prospectus, or, if there was any decrease, setting forth the
amount of such decrease; and (c) during the period from September 30, 2010
(balance sheet date) to a specified date not later than five (5) 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 Ordinary
Share, in each case as compared with the corresponding period in the preceding
year and as compared with the corresponding period in the preceding quarter,
other than as set forth in or contemplated by the Registration Statement, the
Preliminary Prospectus and the Prospectus, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) Stating
they have compared specific dollar amounts, numbers of shares, percentages of
revenues and earnings, statements and other financial information pertaining to
the Company set forth in the Registration Statement, the Preliminary Prospectus
and the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(v) Stating
they have not, since inception, provided the Company’s management with any
written communication in accordance with Statement on Auditing Standards No. 60
“Communication of Internal Control Structure Related Matters Noted in an Audit”;
and
(vi) Statements
as to such other matters incident to the transaction contemplated hereby as the
Representative 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.
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4.4.2 Secretary’s
Certificate. At each of the Closing Date and the Option
Closing Date, if any, the Representative shall have received a certificate of
the Company signed by the Secretary or Assistant Secretary of the Company, dated
the Closing Date or the Option Date, as the case may be, respectively,
certifying: (i) that the By-laws and Amended and Restated Articles 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; (iv) all correspondence between the Company or its counsel
and the Nasdaq Stock Market; and (v) 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 that is likely to result in a 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 Shareholder before or by any court or federal or state commission,
board or other administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations, prospects or
financial condition or income of the Company, except as set forth in the
Registration Statement, the Preliminary Prospectus and Prospectus; (iii) no stop
order shall have been issued under the Act and no proceedings therefor shall
have been initiated or threatened by the Commission; and (iv) the Registration
Statement, the Preliminary Prospectus and the Prospectus and any amendments or
supplements thereto shall contain all material statements which are required to
be stated therein in accordance with the Act and the Regulations and shall
conform in all material respects to the requirements of the Act and the
Regulations, and neither the Registration Statement, the Preliminary Prospectus
nor the Prospectus nor any amendment or supplement thereto shall contain any
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein (in the case of
the Prospectus, in light of the circumstances under which they were made), not
misleading.
4.6 Delivery of
Agreements.
4.6.1 Effective Date
Deliveries. On the Effective Date, the Company shall have
delivered to the Representative executed copies of the Stock Escrow Agreement,
Warrant Escrow Agreement, the Trust Agreement, the Warrant Agreement, the
Services Agreement, all of the Insider Letters and the Placement Warrant
Purchase Agreement.
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4.6.2 Closing Date
Deliveries. On the Closing Date, the Company shall have
delivered to the Representative and their designees executed copies of the
Representative’s Purchase Option.
4.7 Secondary Market Trading
Survey. On the Closing Date, the Representative shall have
received the Secondary Market Trading Survey from ML.
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 the Representative
that participates in the offer and sale of the Units (each a “Selected Dealer”)
and each of their respective directors, officers and employees and each person,
if any, who controls any such Underwriter (“Controlling Person”) within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever
(including but not limited to any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, whether arising out of any
action between any of the Underwriters and the Company or between any of the
Underwriters and any third party or otherwise) to which they or any of them may
become subject under the Act, the Exchange Act or any other federal, state or
local statute, law, rule, regulation or ordinance or at common law or otherwise
or under the laws, rules and regulation of foreign countries, arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in: (i) any Preliminary Prospectus, the Registration Statement, or the
Prospectus (as from time to time each may be amended and supplemented); (ii) in
any post-effective amendment or amendments or any new registration statement and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the Representative’s Purchase Option; or (iii) any application
or other document or written communication (in this Section 5 collectively
called “Application”)
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Units under the securities
laws thereof or filed with the Commission, any state securities commission or
agency, the OTC Bulletin Board or Nasdaq or any securities exchange; or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with respect to an Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement, or the Prospectus, or any amendment or supplement
thereof. With respect to any untrue statement or omission or alleged
untrue statement or omission made in the Preliminary Prospectus, the indemnity
agreement contained in this paragraph shall not inure to the benefit of any
Underwriter to the extent that any loss, liability, claim, damage or expense of
such Underwriter results from the fact that a copy of the Prospectus was not
given or sent to the person asserting any such loss, liability, claim or damage
at or prior to the written confirmation of sale of the Securities to such person
as required by the Act and the Regulations, and if the untrue statement or
omission has been corrected in the Prospectus, unless such failure to deliver
the Prospectus was a result of non-compliance by the Company with its
obligations under Section 3.4 hereof. The Company agrees promptly to
notify the Representative of the commencement of any litigation or proceedings
against the Company or any of its officers, directors or Controlling Persons in
connection with the issue and sale of the Securities or in connection with the
Preliminary Prospectus, the Registration Statement, or the
Prospectus.
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5.1.2 Procedure. If
any action is brought against an Underwriter or Controlling Person in respect of
which indemnity may be sought against the Company pursuant to Section 5.1.1,
such Underwriter shall promptly notify the Company in writing of the institution
of such action and the Company shall assume the defense of such action,
including the employment and fees of counsel (subject to the reasonable approval
of such Underwriter) and payment of actual expenses. Such Underwriter
or Controlling Person shall have the right to employ its or their own counsel in
any such case, but the fees and expenses of such counsel shall be at the expense
of such Underwriter or such Controlling Person unless: (i) the employment of
such counsel at the expense of the Company shall have been authorized in writing
by the Company in connection with the defense of such action; (ii) the Company
shall not have employed counsel to have charge of the defense of such action; or
(iii) such indemnified party or parties shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to the Company (in which case the Company shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events the reasonable fees and
expenses of not more than one additional firm of attorneys selected by the
Underwriter and/or Controlling Person shall be borne by the
Company. Notwithstanding anything to the contrary contained herein,
if the Underwriter or Controlling Person shall assume the defense of such action
as provided above, the Company shall have the right to approve the terms of any
settlement of such action which approval shall not be unreasonably
withheld.
5.2 Indemnification of the
Company. Each Underwriter, severally and not jointly, agrees
to indemnify and hold harmless the Company, its directors, officers and
employees and agents who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act against any and all loss, liability,
claim, damage and expense described in the foregoing indemnity from the Company
to the several Underwriters, as incurred, but only with respect to untrue
statements or omissions, or alleged untrue statements or omissions made in any
Preliminary Prospectus, the Registration Statement, or the Prospectus, or any
amendment or supplement thereto, or in any Application, in reliance upon, and in
strict conformity with, written information furnished to the Company with
respect to such Underwriter by or on behalf of the Underwriter expressly for use
in such Preliminary Prospectus, the Registration Statement, or the Prospectus,
or any amendment or supplement thereto or in any such Application, which
furnished written information, it is expressly agreed, consists solely of the
information described in the last sentence of Section 2.3.1. In case
any action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration Statement, or
the Prospectus, or any amendment or supplement thereto or any Application, and
in respect of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the several Underwriters by the provisions of Section
5.1.2.
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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.
5.3.2 Contribution
Procedure. Within fifteen (15) 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 (15) 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.
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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, the Representative may in its discretion arrange for itself 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
(1) Business Day after such default relating to more than 10% of the Firm Units
or Option Units, the Representative does not arrange for the purchase of such
Firm Units or Option Units, then the Company shall be entitled to a further
period of one (1) Business Day within which to procure another party or parties
satisfactory to the Company and the Representative to purchase said Firm Units
or Option Units on such terms. In the event the Representative does
not arrange for the purchase of the Firm Units or Option Units to which a
default relates as provided in this Section 6, this Agreement may be terminated
by the Company without liability on the part of the Company (except as provided
in Sections 3.13 and 5 hereof) or the several Underwriters (except as provided
in Section 5 hereof); provided, however, that if such default
occurs with respect to the Option Units, this Agreement will not terminate as to
the Firm Units; and provided
further that nothing herein shall relieve a defaulting Underwriter of its
liability, if any, to the other several Underwriters and to the Company for
damages occasioned by its default hereunder.
6.3 Postponement of Closing
Date. In the event 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, the Representative 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 (5) Business
Days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement, the Preliminary Prospectus and/or the Prospectus, as the
case may be, or in any other documents and arrangements, and the Company agrees
to file promptly any amendment to, or to supplement, the Registration Statement,
the Preliminary Prospectus and/or the Prospectus, as the case may be, that in
the opinion of counsel for the Underwriters may thereby be made necessary. The
term “Underwriter” as used in this Agreement shall include any party substituted
under this Section 6 with like effect as if it had originally been a party to
this Agreement with respect to such Securities.
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7. Additional
Covenants.
7.1 Additional Shares or
Options. The Company hereby agrees that until the Company
consummates a Business Combination, it shall not issue any Ordinary Shares or
any options or other securities convertible into Ordinary Shares, or any shares
of Preferred Stock which participate in any manner in the Trust Fund or which
vote as a class with the Ordinary Shares on a Business Combination.
7.2 Trust Fund Waiver
Acknowledgments. The Company hereby agrees that it will not
commence its due diligence investigation of any operating business or businesses
which the Company seeks to acquire (each, a “Target Business”) or obtain
the services of any vendor unless and until such Target Business or vendor
acknowledges in writing, whether through a letter of intent, memorandum of
understanding or other similar document (and subsequently acknowledges the same
in any definitive document replacing any of the foregoing), that: (i) it has
read the Prospectus and understands that the Company has established the Trust
Fund, initially in an amount of $40,000,000 (which includes $1,120,000 of
deferred underwriting discounts and which does not give effect to any exercise
of the Over-allotment Option) for the benefit of the Public Shareholders and
that, except for a portion of the interest earned on the amounts held in the
Trust Fund, the Company may disburse monies from the Trust Fund only: (a) to the
Public Shareholders in the event of the redemption of their shares or the
dissolution and liquidation of the Trust Fund as part of the Company’s plan of
dissolution and liquidation; or (b) to the Company after it consummates a
Business Combination; and (ii) for and in consideration of the Company (A)
agreeing to evaluate such Target Business for purposes of consummating a
Business Combination with it; or (B) agreeing to engage the services of the
vendor, as the case may be, such Target Business or vendor agrees that it does
not have any right, title, interest or claim of any kind in or to any monies of
the Trust Fund (“Claim”)
and waives any Claim it may have in the future as a result of, or arising out
of, any negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever. The
foregoing letters shall substantially be in the form attached hereto as Exhibit A and B,
respectively. Furthermore, each officer and director of the Company
shall execute a waiver letter in the form attached hereto as Exhibit
C.
7.3 Insider
Letters. The Company shall not take any action or omit to take
any action which would cause a breach of any of the Insider Letters executed
between each Initial Shareholder and the Representative or the Placement Warrant
Purchase Agreement and will not allow any amendments to, or waivers of, such
Insider Letters or the Placement Warrant Purchase Agreement without the prior
written consent of the Representative.
7.4 Amended and Restated
Memorandum and Articles of Association. The Company shall not
take any action or omit to take any action that would cause the Company to be in
breach or violation of its Amended and Restated Memorandum and Articles of
Association. Subject to Section 3.32, prior to the consummation of a
Business Combination, the Company will not amend its Amended and Restated
Memorandum and Articles of Association, without the prior written consent of the
Representative.
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7.5 Tender Offer Documents,
Proxy Materials and Other Information. The Company shall
provide counsel to the Representative with copies of all tender offer documents
or proxy information and all related material filed with the Commission in
connection with a Business Combination concurrently with such filing with the
Commission. In addition, the Company shall furnish any other state in
which its initial public offering was registered, such information as may be
requested by such state.
7.6 Acquisition/Liquidation
Procedure. The Company agrees that it will comply with Article
156 of its Memorandum and Articles of Association, as amended, in connection
with the consummation of a Business Combination or the failure to consummate a
Business Combination within 18 months from the Effective Date (subject to
extension for an additional six month period, as described in the
Prospectus).
7.7 Rule 419. The Company
agrees that it will use its best efforts to prevent the Company from becoming
subject to Rule 419 under the Act prior to the consummation of any Business
Combination, including, but not limited to, using its best efforts to prevent
any of the Company’s outstanding securities from being deemed to be a “▇▇▇▇▇
stock” as defined in Rule 3a-51-1 under the Exchange Act during such
period.
7.8 Presentation of Potential
Target Businesses. The Company shall cause each of the Initial
Shareholders to agree that, in order to minimize potential conflicts of interest
which may arise from multiple affiliations, the Initial Shareholders 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, subject to any pre-existing fiduciary
obligations the Initial Shareholders might have.
7.9 Target Fair Market
Value. The Company agrees that the initial Target Business
that it acquires must have a fair market value equal to at least 80% of the
amount held in the Company’s Trust Fund (excluding the deferred underwriting
compensation payable to the Representative) 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 amount in the Trust Fund (excluding the deferred underwriting
compensation payable to the Representative) at the time of such acquisition, the
Company will obtain an opinion from an unaffiliated, independent investment
banking firm which may or may not be a member of the FINRA with respect to the
satisfaction of such criteria. The Company is not required to obtain
an opinion from an investment banking firm as to the fair market value if the
Company’s Board of Directors independently determines that the Target Business
does have sufficient fair market value.
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8. Representations and
Agreements to Survive Delivery. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Closing Date or the Option Closing Date, if any, and such
representations, warranties and agreements of the Underwriters and Company,
including the indemnity agreements contained in Section 5 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company or any Controlling Person, and
shall survive termination of this Agreement or the issuance and delivery of the
Securities to the several Underwriters until the earlier of the expiration of
any applicable statute of limitations and the seventh anniversary of the later
of the Closing Date or the Option Closing Date, if any, at which time the
representations, warranties and agreements shall terminate and be of no further
force and effect.
9. Effective Date of This
Agreement and Termination Thereof.
9.1 Effective
Date. This Agreement shall become effective on the Effective
Date at the time the Registration Statement is declared effective by the
Commission.
9.2 Termination. The
Representative 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 the Representative’s opinions will in
the immediate future materially disrupt, general securities markets in the
United States; or (ii) if trading on the New York Stock Exchange, the American
Stock Exchange, the Nasdaq Stock Market or on the OTC Bulletin Board (or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the OTC Bulletin Board or by order of the Commission
or any other government authority having jurisdiction; or (iii) if the United
States or any Asian country (as defined in the Prospectus) shall have become
involved in a war or an increase in major hostilities, or (iv) if a banking
moratorium has been declared by a New York State or federal authority, or (v) if
a moratorium on foreign exchange trading has been declared which materially
adversely impacts the United States securities markets; 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 the Representative’s opinions,
make it inadvisable to proceed with the delivery of the Units; or (vii) if any
of the Company’s representations, warranties or covenants hereunder are
breached; or (viii) if the Representative shall have become aware after the date
hereof of such a material adverse change in the conditions or prospects of the
Company, or such adverse material change in general market conditions,
including, without limitation, as a result of terrorist activities after the
date hereof, as in the Representative’s judgment would make it impracticable to
proceed with the offering, sale and/or delivery of the Units or to enforce
contracts made by the Underwriters for the sale of the Units.
9.3 Expenses. In
the event this Agreement shall not be carried out for any reason whatsoever,
except as a result of the Representative’s or any underwriters’ breach or
default with respect to any of its material obligations pursuant to this
Agreement, 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 actually incurred by the Representative related to the transactions
contemplated herein shall be governed by Section 3.13 hereof.
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9.4 Indemnification. Notwithstanding
any contrary provision contained in this Agreement, any election hereunder or
any termination of this Agreement, and whether or not this Agreement is
otherwise carried out, the provisions of Section 5 shall not be in any way
effected by, such election or termination or failure to carry out the terms of
this Agreement or any part hereof.
10. Miscellaneous.
10.1 Notices. All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered by hand or reputable
overnight courier or delivered by facsimile transmission (with printed
confirmation of receipt) and confirmed and shall be deemed given when so mailed,
delivered or faxed (or if mailed, two (2) days after such mailing):
If to the
Representative:
Chardan
Capital Markets, LLC
▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.: ▇▇▇▇▇
▇▇▇▇▇▇▇, Chief Executive Officer
Fax: (▇▇▇)-▇▇▇-▇▇▇▇
Copy
to:
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn.:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
If to the
Company:
▇▇. ▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
People’s
Republic of China
Telephone:
▇▇ (▇▇▇) ▇▇▇▇ ▇▇▇▇
Copy
to:
Loeb
& Loeb
▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇)
▇▇▇-▇▇▇▇
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10.2 Headings. The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any of
the terms or provisions of this Agreement.
10.3 Amendment. This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
10.4 Entire
Agreement. This Agreement (together with the other agreements
and documents being delivered pursuant to or in connection with this Agreement)
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof, and supersede all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
10.5 Binding
Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representative, the Underwriters, the Company and
the Controlling Persons, directors and officers referred to in Section 5 hereof,
and their respective successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provisions
herein contained.
10.6 Governing Law, Venue,
etc.
10.6.1 This
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of New York, without giving effect to the conflict of laws
principles thereof. The Company irrevocably appoints Loeb & Loeb,
LLP, with offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (and its
successors) as its authorized agent in the Borough of Manhattan in The City of
New York upon which process may be served in any such suit or proceeding, and
agrees that service of process upon such agent, and written notice of said
service to the Company by the person serving the same to the address provided in
Section 10.1, shall be deemed in every respect effective service of process upon
the Company in any such suit or proceeding. The Company irrevocably appoints
Loeb and Loeb, LLP as its authorized agent in the Borough of Manhattan in The
City of New York upon which process may be served in any such suit or
proceeding, and agrees that service of process upon such agent, and written
notice of said service to the Company by the person serving the same to the
address provided in Section 10.1, shall be deemed in every respect effective
service of process upon the Company in any such suit or proceeding. Each of the
Representative and the Company (and any individual signatory hereto): (i) agrees
that any legal suit, action or proceeding arising out of or relating to this
agreement and/or the transactions contemplated hereby shall be instituted
exclusively in New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York; (ii) waives any
objection which such party may have or hereafter to the venue of any such suit,
action or proceeding; and (iii) irrevocably and exclusively consents to the
jurisdiction of the New York Supreme Court, County of New York, and the United
States District Court for the Southern District of New York in any such suit,
action or proceeding.
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10.6.2 Each of
the Representative and the Company (and any individual signatory hereto) further
agrees to accept and acknowledge service of any and all process which may be
served in any such suit, action or proceeding in the New York Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York and agrees that service of process upon the Company or any
such individual mailed by certified mail to the Company’s address shall be
deemed in every respect effective service of process upon the Company or any
such individual in any such suit, action or proceeding, and service of process
upon the Representative mailed by certified mail to the Representative’s
addresses shall be deemed in every respect effective service process upon the
Representative, in any such suit, action or proceeding.
10.6.3 THE
COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON
BEHALF OF ITS EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE
REGISTRATION STATEMENT AND THE PROSPECTUS.
10.6.4 The
Company agrees that the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of its reasonable attorneys’
fees and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
10.7 Execution in
Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto. Delivery of a signed counterpart
of this Agreement by fax or email/.pdf transmission shall constitute valid and
sufficient delivery thereof.
10.8 Waiver,
Etc. The failure of any of the parties hereto to at any time
enforce any of the provisions of this Agreement shall not be deemed or construed
to be a waiver of any such provision, nor to in any way effect the validity of
this Agreement or any provision hereof or the right of any of the parties hereto
to thereafter enforce each and every provision of this Agreement. No
waiver of any breach, non-compliance or non-fulfillment of any of the provisions
of this Agreement shall be effective unless set forth in a written instrument
executed by the party or parties against whom or which enforcement of such
waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.
- 40
-
10.9 No Fiduciary
Relationship. The Company hereby acknowledges that the Underwriters are
acting solely as underwriters in connection with the offering of the Company’s
securities. The Company further acknowledges that the Underwriters are acting
pursuant to a contractual relationship created solely by this Agreement entered
into on an arm’s length basis and in no event do the parties intend that the
Underwriters act or be responsible as a fiduciary to the Company, its
management, shareholders, creditors or any other person in connection with any
activity that the Underwriters may undertake or have undertaken in furtherance
of the offering of the Company’s securities, either before or after the date
hereof. The Underwriters hereby expressly disclaim any fiduciary or similar
obligations to the Company, either in connection with the transactions
contemplated by this Agreement or any matters leading up to such transactions,
and the Company hereby confirms its understanding and agreement to that effect.
The Company and the Underwriters agree that they are each responsible for making
their own independent judgments with respect to any such transactions, and that
any opinions or views expressed by the Underwriters to the Company regarding
such transactions, including but not limited to any opinions or views with
respect to the price or market for the Company’s securities, do not constitute
advice or recommendations to the Company. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company
may have against the Underwriters with respect to any breach or alleged breach
of any fiduciary or similar duty to the Company in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
- 41
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If the
foregoing correctly sets forth the understanding between the Underwriters and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
|
Very
truly yours,
|
|||
|
By:
|
|||
|
Name:
|
▇▇▇▇▇
▇▇▇▇-▇▇▇▇ ▇▇▇
|
||
|
Title:
|
Chief
Executive
Officer
|
||
|
Agreed
to and accepted on the
date
first above written.
|
||
|
Chardan
Capital Markets, LLC,
as
Representative of the several Underwriters
|
||
|
By:
|
||
|
Name: ▇▇▇▇▇
▇▇▇▇▇▇▇
|
||
|
Title:
Chief Executive Officer
|
||
|
Underwriter
|
Number of Firm Units
to be Purchased
|
|||
|
Chardan
Capital Markets, LLC
|
||||
|
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, LLC
|
||||
|
Maxim
Group LLC
|
||||
| 4,000,000 | ||||
- 43
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EXHIBIT
A
Form
of Target Business Letter
Prime
Acquisition ▇▇▇▇.▇▇. ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
People’s
Republic of China
Attn.: ▇▇▇▇▇
▇▇▇▇-▇▇▇▇ ▇▇▇, Chief Executive Officer
Gentlemen:
Reference
is made to the Final Prospectus of Prime Acquisition Corp., (the “Company”), dated [Ÿ] (the “Prospectus”). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
We have
read the Prospectus and understand that the Company has established the Trust
Fund, initially in an amount of at least $40,000,000 for the benefit of the
Public Shareholders and the underwriters of the Company’s initial public
offering (the “Underwriters”) and that, except for the interest earned on the
amounts held in the Trust Fund, the Company may disburse monies from the Trust
Fund only: (i) to the Public Shareholders in the event of the redemption of
their shares or the dissolution and liquidation of the Company; (ii) to the
Company and the Underwriters after it consummates a Business Combination; or
(iii) for the payment of taxes.
For and
in consideration of the Company agreeing to evaluate the undersigned for
purposes of consummating a Business Combination with it, the undersigned hereby
agrees that it does not have any right, title, interest or claim of any kind in
or to any monies in the Trust Fund (the “Claim”) and hereby waives any
Claim it may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever.
|
Print
Name of Target Business
|
|
|
Authorized
Signature of Target
Business
|
- 44
-
Form
of Vendor Letter
▇▇. ▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
People’s
Republic of China
Attn.: ▇▇▇▇▇
▇▇▇▇-▇▇▇▇ ▇▇▇, Chief Executive Officer
Gentlemen:
Reference
is made to the Final Prospectus of Prime Acquisition Corp. (the “Company”), dated [Ÿ] (the “Prospectus”). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
We have
read the Prospectus and understand that the Company has established the Trust
Fund, initially in an amount of at least $40,000,000 for the benefit of the
Public Shareholders and the underwriters of the Company’s initial public
offering (the “Underwriters”) and that, except for the interest earned on the
amounts held in the Trust Fund, the Company may disburse monies from the Trust
Fund only: (i) to the Public Shareholders in the event of the redemption of
their shares or the dissolution and liquidation of the Company; (ii) to the
Company and the Underwriters after it consummates a Business Combination; or
(iii) for the payment of taxes.
For and
in consideration of the Company agreeing to use the products or services of the
undersigned, the undersigned hereby agrees that it does not have any right,
title, interest or claim of any kind in or to any monies in the Trust Fund (the
“Claim”) and hereby
waives any Claim it may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever.
|
Print
Name of Vendor
|
||
|
Authorized
Signature of Vendor
|
- 45
-
Form
of Director/Officer Letter
▇▇. ▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
People’s
Republic of China
Attn.: ▇▇▇▇▇
▇▇▇▇-▇▇▇▇ ▇▇▇, Chief Executive Officer
Gentlemen:
The
undersigned officer or director of Prime Acquisition Corp. (the “Company”) hereby acknowledges
that the Company has established the Trust Fund, initially in an amount of at
least $40,000,000 for the benefit of the Public Shareholders and the
underwriters of the Company’s initial public offering (the “Underwriters”) and
that, except for the interest earned on the amounts held in the Trust Fund, the
Company may disburse monies from the Trust Fund only: (i) to the Public
Shareholders in the event of the redemption of their shares or the dissolution
and liquidation of the Company; (ii) to the Company and the Underwriters after
it consummates a Business Combination; or (iii) for the payment of
taxes.
The
undersigned hereby agrees that it does not have any right, title, interest or
claim of any kind in or to any monies in the Trust Fund (the “Claim”) and hereby waives any
Claim it may have in the future as a result of, or arising out of, any contracts
or agreements with the Company and will not seek recourse against the Trust Fund
for any reason whatsoever.
Notwithstanding
the foregoing, such waiver shall not apply to any shares acquired by the
undersigned in the public market.
|
Print
Name of Officer/Director
|
|
|
Authorized
Signature of
Officer/Director
|
- 46
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