Exhibit 1.1
6,000,000 UNITS
ALPHA SECURITY GROUP CORPORATION
UNDERWRITING AGREEMENT
New York, New York
__________________, 2007
Maxim Group LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
As Representative of the Underwriters
named on Schedule A hereto
Ladies and Gentlemen:
The undersigned, Alpha Security Group Corporation, a Delaware corporation
("COMPANY"), hereby confirms its agreement with Maxim Group LLC (the
"REPRESENTATIVE") and with the other underwriters named on Schedule A hereto,
for which the Representative is acting as representative (the Representative and
the other Underwriters being collectively referred to herein as the
"UNDERWRITERS," which term shall also include any underwriter substituted as
hereinafter provided in Section 6 hereof, or, individually, an "UNDERWRITER") as
follows:
1. Purchase and Sale of Securities.
1.1. Firm Securities.
1.1.1. Purchase of Firm Units and Related Matters.
1.1.1.1. On the basis of the representations and warranties
herein contained, subject to the terms and conditions herein, the Company agrees
to issue and sell, severally and not jointly, to the several Underwriters, an
aggregate of 6,000,000 units (as defined below) of the Company (the "FIRM
UNITS").
1.1.1.2. The Underwriters, severally and not jointly, agree to
purchase from the Company the number of Firm Units set forth opposite their
respective names on Schedule A attached hereto and made a part hereof at a
purchase price (net of discounts and commissions) of $9.37 per Firm Unit.
1.1.1.3. The Firm Units are to be offered initially to the public
(the "OFFERING") at the offering price of $10.00 per Firm Unit. Each Firm Unit
consists of one share of the Company's common stock, par value $.0001 per share
(the "COMMON STOCK"), and one warrant to purchase one share of Common Stock
(each, a "WARRANT" and, collectively, the "WARRANTS"). The shares of Common
Stock and the Warrants included in the Firm Units will
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not be separately transferable until 90 days after the effective date (the
"EFFECTIVE DATE") of the Registration Statement (as defined in Section 2.1.1
hereof), unless the Representative informs the Company in writing of its
decision to allow earlier separate trading based upon its assessment of factors
including, but not limited to, the relative strengths of the securities markets
and small capitalization companies in general, and the trading pattern of, and
demand for, the Company's securities in particular. In no event will the
Representative allow separate trading of the Common Stock and the Warrants
until: (i) the Company files with the Securities and Exchange Commission (the
"COMMISSION") a Current Report on Form 8-K that includes an audited balance
sheet reflecting the proceeds received by the Company from the Offering, (ii)
the Company issues a press release and files with the Commission a Current
Report on Form 8-K announcing when such separate trading will begin and (iii)
the Business Day (as defined below) following the earlier to occur of the
expiration of the Over-allotment Option (as defined below) and the exercise of
the Over-allotment Option in full.
1.1.1.4. Each Warrant shall entitle the holder thereof to
purchase one share of Common Stock for an exercise price of $7.50 per share
during the period commencing on the later of: (a) the consummation by the
Company of a Business Combination (as defined below) and (b) one year from the
Effective Date and terminating on the fourth anniversary of the Effective Date,
or earlier upon redemption of the Warrants as described herein. Notwithstanding
the foregoing, no Warrant will be exercisable unless at the time of exercise a
registration statement and related prospectus relating the Common Stock issuable
upon exercise of the Warrants is effective and current and such Common Stock has
been registered under the Act and qualified or deemed to be exempt under the
securities laws of the state of residence of the holder of the warrants. The
Company shall have the right to redeem the Warrants and the Representative's
Warrants, in whole and not in part, upon not less than thirty (30) days' prior
written notice to each holder thereof, at a price of $0.01 per Warrant at any
time after the Warrants become exercisable; provided that the last sale price of
the Company's Common Stock equals or exceeds $14.25 per share for any twenty
(20) trading days within a thirty (30) trading day period ending on the third
Business Day prior to the notice of redemption to the holders thereof.
1.1.1.5. As used herein, the term "BUSINESS COMBINATION" shall
mean any acquisition of, through a merger, capital stock exchange, asset
acquisition or other similar business combination, one or more businesses in the
U.S. homeland security or defense industries or a combination thereof. 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 permitted by law,
regulation or executive order to close. The closing of Offering 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."
1.1.2. Payment and Delivery for Firm Units; Deposits into Trust
Account.
1.1.2.1. Delivery and payment for the Firm Units shall be made at
10:00 a.m., New York City local time, on the third Business Day following the
Effective Date (or the fourth Business Day following the Effective Date, if the
pricing occurs after 4:30 p.m., New York City local time) or at such other time
as shall be agreed upon by the Representative and the
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Company, at the offices of the Representative or at such other place as shall be
agreed upon by the Representative and the Company. Payment for the Firm Units
shall be made on the Closing Date by wire transfer in immediately available
funds against delivery to the Representative for the respective accounts of the
Underwriters of certificates for the Firm Units to be purchased by them. It is
understood that each Underwriter has authorized the Representative, for its
account, to accept delivery of, receipt for, and make payment of the purchase
price for, the Firm Units which it has agreed to purchase. The Representative,
individually and not as representative of the Underwriters, may (but shall not
be obligated to) make payment of the purchase price for the Firm Units to be
purchased by any Underwriter whose funds have not been received by the
Representative by the Closing Date, it being agreed that such payment shall not
relieve the applicable Underwriter from its obligations hereunder.
1.1.2.2. $60,000,000 ($10.00 per unit; $68,820,000 if the
Over-allotment Option (as defined in Section 1.2) is exercised in full) of the
proceeds received by the Company for the Firm Units and from the Private
Placement (as defined in Section 1.3) shall be deposited in a trust account (the
"TRUST ACCOUNT") established by the Company for the benefit of the public
stockholders and the Underwriters, as described in the Registration Statement
and pursuant to the terms of an Investment Management Trust Agreement (the
"TRUST AGREEMENT"), which deposited amount shall include up to $1,800,000 ($0.30
per Firm Unit; $2,250,000 if the Over-allotment Option is exercised in full,
which represents $0.50 per Option Unit) payable to the Underwriters as deferred
underwriting discount, as described in Section 1.5, upon consummation of a
Business Combination. 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
shall not be obligated to sell or deliver the Firm Units except upon tender of
payment by the Representative for all the Firm Units.
1.2. Over-allotment Option.
1.2.1. Option Units. For the purposes of covering any Over-allotments
in connection with the distribution and sale of the Firm Units, the Underwriters
are hereby granted, severally and not jointly, an option (the "OVER-ALLOTMENT
OPTION") to purchase up to an additional 900,000 units (the "OPTION UNITS") from
the Company. The Option Units shall be identical in all respects to the Firm
Units. The Firm Units and Option Units are hereinafter collectively referred to
as the "UNITS," and the Units, the shares of Common Stock and the Warrants
included in the Units and the shares of Common Stock issuable upon exercise of
the Warrants are hereinafter referred to collectively as the "PUBLIC
SECURITIES." The purchase price to be paid for each Option Unit (net of
discounts and commissions) will be $9.37 per Option Unit (with $0.50 of the
underwriting discount per Option Unit being deposited into the Trust Account
pursuant to Section 1.4). 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 45 days after
the Effective Date. The Underwriters will not be under any obligation to
purchase any Option Units prior to the exercise
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of the Over-allotment Option. The Over-allotment Option may be exercised by the
giving of written notice to the Company by the Representative 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 seven (7)
Business Days after the date of the notice, or such other time as shall be
agreed upon by the Company and the Representative but not in any event prior to
the Closing Date, at the offices of the Representative or at such other place
and 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 of Option Units. Payment for the Option
Units shall be made on the Option Closing Date by wire transfer in immediately
available funds, by deposit of the sum of $9.37 per Option Unit in the Trust
Account pursuant to the Trust Agreement upon delivery to the Representative of
certificates (in form and substance satisfactory to the Representative)
representing the Option Units (or through the facilities of DTC) for the account
of the Underwriters. In addition, $0.50 of the underwriting discount per Option
Unit shall be deposited into the Trust Account. 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 in the City of New York not later than 10:00 a.m., New York City local
time, one full Business Day prior to the Closing Date or the Option Closing
Date, as the case may be.
1.3. Representative's Purchase Option.
1.3.1. Purchase Option. The Company hereby agrees to issue and sell to
the Representative (and/or their designees) on the Effective Date an option
("REPRESENTATIVE'S PURCHASE OPTION") for the purchase of an aggregate of 210,000
units (the "REPRESENTATIVE'S UNITS") for an aggregate purchase price of $100.00.
Each of the Representative's Units is identical to the Firm Units and the
Warrants included in the Representative's Units have an exercise price of $7.50.
The Representative's Purchase Option shall be exercisable, in whole or in part,
commencing on the later of the consummation of a Business Combination or
eighteen (18) months from the Effective Date and expiring on the five-year
anniversary of the Effective Date at an initial exercise price per
Representative's Unit of $11.00, which is equal to one hundred and ten percent
(110%) of the initial public offering price of a Unit. The Representative's
Purchase Option, the Representative's Units, the shares of Common Stock and the
Warrants included in the Representative's Units (the "REPRESENTATIVE'S
WARRANTS") and the shares of Common Stock issuable upon exercise of the
Representative's Warrants are hereinafter referred to collectively as the
"REPRESENTATIVE'S SECURITIES." The Public Securities and the Representative's
Securities are hereinafter referred to collectively as the "SECURITIES."
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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 Underwriters, upon payment therefor, certificates for the
Representative's Purchase Option in the name or names and in such authorized
denominations as the Representative may request.
1.4. Private Placement. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer,
President and Co-Chairman of the Board of Directors of the Company (the
"BOARD"), and ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a member of the Board (collectively, the
"PLACEMENT INVESTORS"), have heretofore purchased from the Company pursuant to a
Subscription Agreement (as defined in Section 2.24 hereof) an aggregate of
3,200,000 warrants (the "PLACEMENT WARRANTS") identical to the Public Warrants
at a purchase price of $1.00 per Placement Warrant in a private placement
effected pursuant to Section 4(2) and/or Regulation D promulgated under the
Securities Act of 1933, as amended (the "ACT"). The Placement Warrants and the
shares of Common Stock issuable upon exercise of the Placement Warrants are
hereinafter referred to collectively as the "PLACEMENT SECURITIES." No
underwriting discounts, commissions or placement fees have been or will be
payable in connection with the Private Placement. None of the Placement
Securities may be sold, assigned or transferred by the Placement Investors until
after consummation of a Business Combination. The Placement Investors shall have
no right to any liquidation distributions with respect to any portion of the
Placement Securities in the event the Company fails to consummate a Business
Combination. The Placement Investors shall not have redemption rights with
respect to the Placement Securities if a Business Combination is not completed.
1.5. Deferred Portion of Underwriters' Discount. The Representative agrees
that 3% of the gross proceeds from the sale of the Firm Units ($0.30 per Firm
Unit, or an aggregate of $1,800,000) and 5% of the gross proceeds from the sale
of any Option Units ($0.30 per Firm Unit and $0.50 per Option Unit or an
aggregate of up to $2,250,000 if the Over-allotment Option is exercised in full)
(collectively, such amounts are referred to herein as the "DEFERRED DISCOUNT")
will be deposited and held in the Trust Account and will be payable to the
Representative, along with any interest accrued thereon (net of taxes payable),
in respect of any shares of Common Stock issued in the Offering (such shares of
Common Stock, the "IPO SHARES"), which are not duly redeemed pursuant to Section
7.6 hereof, upon the consummation of a Business Combination. The Representative
agrees that it forfeits any rights or claims to the Deferred Discount and any
interest accrued thereon (net of taxes payable) in respect of any IPO Shares
that are redeemed pursuant to Section 7.6 hereof. In addition, in the event the
Company is unable to consummate a Business Combination and American Stock
Transfer & Trust Company ("AST"), as trustee of the Trust Account, commences
liquidation of the Trust Account, pursuant to the Trust Agreement, the
Representative agrees that: (i) it shall forfeit any rights or claims to the
total amount of the Deferred Discount, together with all other amounts on
deposit in the Trust Account, and (ii) any accrued interest thereon (net of
taxes payable), shall be distributed on a pro rata basis among the holders of
the IPO Shares.
1.6. Interest on Trust.
1.6.1. All interest earned on the funds held in the Trust Account
shall be added to the corpus of the Trust Account; provided, however, that,
pursuant to the Trust Agreement, an aggregate of up to $1,825,000 ($1,925,000 if
the Over-allotment Option is exercised in full, or a
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lesser amount if less than the full Over-allotment Option is exercised, pro rata
based on the amount of the Over-allotment Option exercised) of the interest
earned on the Trust Account will be released to the Company to fund working
capital requirements (including, if necessary, the costs of dissolution and
liquidation of the Company and the Trust Account). The Company will also be
permitted to draw amounts necessary to pay taxes on earned interest, State of
Delaware franchise taxes, repayment of up to $200,000 of an additional officer
loan to be made on or prior to the closing of the Offering by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ (such loan to be repaid within 90 days of the closing of the
Offering).
1.6.2. It is agreed that the first $125,000 of interest earned on the
funds held in the Trust Account shall, when earned, be immediately released to
the Company to fund working capital requirements of the Company (which amount
shall be credited towards the $1,825,000 or $1,925,000 amounts referred to in
Section 1.6.1 hereof). From and after the time that such $125,000 in Trust
Account interest is earned, if the Over-allotment Option is exercised by the
Underwriters, the Company shall be prohibited from drawing any amounts from the
Trust Account until $180,000 of interest shall have been earned thereon (or a
lesser amount if less than the full Over-allotment Option is exercised, pro rata
based on the amount of the Over-allotment Option exercised).
1.7. Non-Accountable Expense Allowance. As additional consideration for the
services to be provided hereunder, the Company shall pay to the Representative,
in cash at the Closing, a non-accountable expense allowance equal to one percent
(1%) of the gross proceeds of the Offering (which non-accountable expense
allowance shall not be payable on any proceeds from the sale of the Option
Units).
2. Representations and Warranties of the Company. The Company represents
and warrants to the Underwriters as follows:
2.1. Filing of Registration Statement.
2.1.1. Pursuant to the Act. The Company has filed with the Securities
and Exchange Commission (the "COMMISSION") a registration statement and an
amendment or amendments thereto, on Form S-1 (File No. 333-127999), 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") promulgated under the Act. Promptly after execution and delivery
of this Agreement, the Company will prepare and file a prospectus in accordance
with the provisions of Rule 430A ("RULE 430A") of the Regulations and paragraph
(b) of Rule 424 ("RULE 424(B)") of the Regulations. The information included in
such prospectus that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective pursuant to paragraph (b) of Rule 430A of the
Regulations is referred to as "RULE 430A INFORMATION." Each prospectus used
before such registration statement became effective, and any prospectus that
omitted the Rule 430A Information that was used after such effectiveness and
prior to the execution and delivery of this Agreement, is referred to herein as
a "PRELIMINARY PROSPECTUS." Such registration statement, including the
amendments thereto, the exhibits and any schedules thereto, at the time it
became effective, and including the Rule 430A Information, is herein called the
"REGISTRATION
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STATEMENT." Any registration statement filed pursuant to Rule 462(b) of the
Regulations is herein referred to as the "RULE 462(B) REGISTRATION STATEMENT,"
and after such filing the term "Registration Statement" shall include the Rule
462(b) Registration Statement. The prospectus dated _________________, 2007,
that was included in the Registration Statement at the Time of Sale is referred
to herein as the "SALE PRELIMINARY PROSPECTUS". For purposes of this Agreement
and the Act, "TIME OF SALE", means ________ p.m., New York City time, on the
date of this Agreement. The final prospectus in the form first furnished to the
Underwriters for use in connection with the Offering is referred to herein as
the "PROSPECTUS." For purposes of this Agreement, all references to the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("▇▇▇▇▇"). Other than a Rule 462(b) Registration
Statement, 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 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 Sale Preliminary
Prospectus included an untrue statement of a material fact or omitted a
statement of material fact necessary to make the statements therein, in the
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, then the
Sale Preliminary Prospectus will be deemed to include any additional information
available to purchasers at the time of entry into the first such new purchase
contract.
2.1.2. Pursuant to the Exchange Act. The Company has filed with the
Commission a Form 8-A (File Number 000-____________) providing for the
registration under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), of the Units, the Common Stock and the Warrants. The
registration of the Units, Common Stock and Warrants under the Exchange Act has
been declared effective by the Commission on the date hereof.
2.2. No Stop Orders, etc. Neither the Commission nor, to the Company's
knowledge, any state regulatory authority has issued any order or threatened to
issue any 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 has instituted or, to the best of the Company's
knowledge, threatened to institute any proceedings with respect to such an order
and any request on the part of the Commission for additional information has
been complied with.
2.3. Disclosures in Registration Statement.
2.3.1. 10b-5 Representation. At the time of effectiveness of the
Registration Statement and any Rule 462(b) Registration Statement (or at the
time any post-effective amendment to the Registration Statement became
effective) and at all times subsequent thereto up to the Closing Date and the
Option Closing Date, if any, the Registration Statement, the
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Rule 462(b) Registration Statement and any amendments or supplements thereto as
of their applicable effective dates contained or will contain all material
statements that are required to be stated therein in accordance with the Act and
the Regulations, and conformed or will conform, in all material respects, to the
requirements of the Act and the Regulations, and as of their applicable filing
dates and effective dates, did not and will not contain an untrue statement of a
material fact or omit to state 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. Neither the Prospectus, nor any
amendment or supplement thereto, on their respective dates and at the Closing
Date and Option Closing Date, if any, nor the Sale Preliminary Prospectus as of
the Time of Sale (or such subsequent Time of Sale pursuant to Section 2.1.1)
contained or will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein (in light of the circumstances under which they were made),
not misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Public Securities or any amendment thereto or pursuant to
Rule 424(a) of the Regulations) and when any amendment thereof or supplement
thereto was first filed with the Commission, the Sale Preliminary Prospectus and
any amendments thereof and supplements thereto complied and will comply in all
material respects with the applicable provisions of the Act and the Regulations
and did not and will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The representation and warranty made in this Section
2.3.1 does not apply to statements made or statements omitted in reliance upon
and in conformity with written information (the "UNDERWRITERS' INFORMATION")
furnished to the Company with respect to the Underwriters by the Representative
expressly for use in the Registration Statement, the Sale Preliminary Prospectus
or Prospectus or any amendment thereof or supplement thereto, which
Underwriters' Information, it is agreed, shall consist solely of: (i) the names
of the several Underwriters, (ii) the amount of selling concession and
reallowance per Unit, (iii) the second, third and fourth full paragraphs on page
84 of the Prospectus relating to and covering: (A) confirmation of sales to
discretionary accounts and (B) stabilizing transactions and penalty bids and
(iv) the disclosure contained under the heading "Foreign Regulatory Restrictions
on Purchase of Units" beginning on page 84 of the Prospectus.
2.3.2. Identical to ▇▇▇▇▇. The Sale Preliminary Prospectus and the
Prospectus delivered to the Underwriters for use in connection with the Offering
were identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
2.3.3. Disclosure of Agreements. The agreements and documents
described in the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus conform to the descriptions thereof contained therein and there are
no agreements or other documents required to be described in the Registration
Statement, the Sale Preliminary Prospectus or the Prospectus or to be filed with
the Commission as exhibits to the Registration Statement, that have not been so
described or filed. Each agreement or other instrument (however characterized or
described) to which the Company is a party or by which its property or business
is or may be bound or
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affected and: (i) that is referred to in 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. The 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.
2.3.4. 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.
2.3.5. Regulations. The disclosures in the Registration Statement
concerning the effects of Federal, State and local regulation on the Company's
business as currently contemplated are correct in all material respects and do
not omit to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
2.4. No Material Adverse Change. Since the respective dates as of which
information is given in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus: (i) there has been no material adverse change in
the condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company, whether or not arising in the ordinary course
of business (a "MATERIAL ADVERSE EFFECT"); (ii) there have been no transactions
entered into by the Company, other than those in the ordinary course of business
or as contemplated by this Agreement, which are material with respect to the
Company; (iii) no member of the Board or management has resigned from any
position with the Company; (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 Board or management to act in such capacities
as described in the Registration Statement, the Sale Preliminary Prospectus and
the Prospectus; (v) no securities have been issued by the Company or any
liability or obligation, direct or contingent, incurred for borrowed money by
the Company; and (vi) no dividend or distribution of any kind has been declared,
paid or made by the Company on any class of its capital stock.
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2.5. Independent Accountants. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP ("GGK"), whose
report is filed with the Commission as part of the Registration Statement and
included in the Registration Statement and the Prospectus, is an independent
registered public accounting firm as required by the Act, the Regulations and
the rules and regulations promulgated by the Public Company Accounting Oversight
Board (the "PCAOB"). GGK is duly registered and in good standing with the PCAOB.
GGK has not, during the periods covered by the financial statements included in
the Registration Statement, the Sale 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.
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 Sale 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 in the United States
("GAAP"), consistently applied throughout the periods involved; and the
supporting schedules included in the Registration Statement present fairly in
accordance with GAAP the information required to be stated therein. No other
financial statements or supporting schedules are required to be included or
incorporated by reference in the Registration Statement, the Sale Preliminary
Prospectus or the Prospectus. The Registration Statement, the Sale Preliminary
Prospectus and the Prospectus disclose all material off-balance sheet
transactions, arrangements, obligations (including contingent obligations), and
other relationships of the Company with unconsolidated entities or other persons
that may have a material current or future effect on the Company's financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses. There are no pro forma or as adjusted financial statements which
are required to be included in the Registration Statement, the Sale Preliminary
Prospectus or the Prospectus in accordance with Regulation S-X which have not
been included as so required. The selected financial data and the summary
financial information included in the Sale Preliminary Prospectus and the
Prospectus present fairly the information shown therein and have been compiled
on a basis consistent with that of the audited financial statements included in
the Registration Statement.
2.6.2. Statistical Data. The statistical, industry-related and
market-related data included in the Registration Statement, the Sale Preliminary
Prospectus and/or the Prospectus are based on or derived from sources which the
Company reasonably and in good faith believes are reliable and accurate, and
such data agree with the sources from which they are derived.
2.7. Authorized Capital; Options, etc. The Company had at the date or dates
indicated in each of the Registration Statement, the Sale Preliminary Prospectus
and the Prospectus, as the case may be, duly authorized, issued and outstanding
capitalization as set forth in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus. Based on the assumptions stated in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus, the
Company will have on the Closing Date the adjusted stock capitalization set
forth
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therein. Except as set forth in, or contemplated by, the Registration Statement,
the Sale 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 shares of Common Stock of the Company or any
security convertible into shares of Common Stock of the Company, or any
contracts or commitments to issue or sell shares of Common Stock or any such
options, warrants, rights or convertible securities.
2.8. Valid Issuance of Securities, etc.
2.8.1. Outstanding Securities. All issued and outstanding securities
of the Company (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 Placement Securities conform to the descriptions thereof contained
in the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus. The offers and sales of the Placement Securities and all other
outstanding shares of Common Stock or other securities of the Company 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 securities, exempt from such registration
requirements.
2.8.2. Securities to be Sold. 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 Public Securities has been duly and validly taken. The
Securities conform in all material respects to the descriptions thereof
contained in the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus, as the case may be. When issued, 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 of shares of
Common Stock called for thereby in accordance with the terms thereof and such
Warrants are enforceable against the Company in accordance with their respective
terms, except: (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (ii) as enforceability of any indemnification or contribution
provision may be limited under federal and state securities laws and (iii) that
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought. The shares of Common
Stock issuable upon exercise of the Warrants have been reserved for issuance
and, when issued in accordance with the terms of the Warrants, will be duly and
validly authorized, validly issued, fully paid and non-assessable; the holders
thereof 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 therefore, the number of shares of
Common Stock 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 an indemnification or contribution
provisions may be limited under federal and state 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 therefore may be brought. The shares of Common
Stock issuable upon exercise of the Placement Warrants have been reserved for
issuance and, when issued in accordance with the terms of the Placement
Warrants, will be duly 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. Representative's Securities. When issued, the Representative's
Purchase Option and the Representative's 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 and the Representative's
Warrants are enforceable against the Company in accordance with their respective
terms, except: (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws; and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought. The shares of
Common Stock issuable upon exercise of the Warrants included in the
Representative's Purchase Option (and the shares of Common Stock issuable upon
exercise of the Representative's Warrants) have been reserved for issuance upon
the exercise of the Warrants, the Representative's Purchase Option and the
Representative's Warrants and when issued in accordance with the terms of such
securities, will be duly and validly authorized, validly issued, fully paid and
non-assessable; the holders thereof are not and will not be subject to personal
liability by reason of being such holders.
2.8.5. No Integration. Neither the Company nor any of its affiliates
has, prior to the date hereof, made any offer or sale of any securities required
to be "integrated" with the offer and sale of the Public Securities pursuant to
the Act or the Regulations.
2.9. Registration Rights of Third Parties. Except as set forth in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus, no
persons have the right to require the Company to register any securities of the
Company under the Act or to include any securities in a registration statement
to be filed by the Company.
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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 Subscription
Agreement (as defined in Section 2.24 hereof) and the Escrow Agreement (as
defined in Section 2.23.2 hereof) have been duly and validly authorized,
executed and delivered 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 federal and state securities laws; and (iii) that
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought.
2.11. No Conflicts, etc. The execution, delivery, and performance by the
Company of this Agreement, the Warrant Agreement, the Representative's Purchase
Option, the Trust Agreement, the Subscription Agreement, the Service 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 except any lien,
charge or encumbrance pursuant to the Trust Agreement referred to in Section
2.24 hereof; (ii) result in any violation of the provisions of the Certificate
of Incorporation or the By-Laws of the Company; or (iii) violate any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its properties 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 Certificate of Incorporation or Bylaws or in
violation of any material franchise, license, permit, applicable law, rule,
regulation, judgment or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
businesses.
2.13. Corporate Power; Licenses; Consents.
2.13.1. Conduct of Business. The Company has all requisite corporate
power and authority, and has all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies that it needs as of the date hereof to conduct its business
described in the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus. The disclosures in the Registration Statement, the Sale
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Preliminary Prospectus 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.
2.13.3. Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration, qualification or
decree of, any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations hereunder, in
connection with the valid offering, issuance, sale and delivery of the Public
Securities, the Placement Securities or the Representative's Securities or the
consummation of the transactions and agreements contemplated by this Agreement,
the Warrant Agreement, the Representative's Purchase Option, the Trust
Agreement, the Subscription Agreement, the Services Agreement or the Escrow
Agreement, as contemplated by the Sale Preliminary Prospectus and Prospectus
except such as (i) have been already obtained, (ii) may be required under the
Act or the Regulations or state securities laws, (iii) may be required under the
by-laws, rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD"), (iv) may be required in connection with the exercise
of the Warrants and the issuance of the shares of Common Stock issuable upon
exercise thereof; or (v) may be required in connection with a Business
Combination.
2.14. D&O Questionnaires. To the best of the Company's knowledge, all
information contained in the questionnaires (the "QUESTIONNAIRES") completed by
each of the Company's stockholders immediately prior to the Offering (the
"INITIAL STOCKHOLDERS") and provided to the Underwriters as an exhibit to such
stockholder's Insider Letter (as defined in Section 2.23.1) is true and correct
and the Company has not become aware of any information which would cause the
information disclosed in the questionnaires completed by each Initial
Stockholder to become inaccurate and incorrect.
2.15. Litigation; Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding pending or, to the best of the Company's knowledge, threatened
against, or involving the Company or, to the best of the Company's knowledge,
any Initial Stockholder, which is required to be and has not been disclosed in
the Registration Statement, the Questionnaires, the Sale 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 the State of
Delaware 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 conduct of business requires such qualification, except where the
failure to qualify would not have a Material Adverse Effect.
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2.17. No Contemplation of a Business Combination. Prior to the date hereof,
none of the Company, its officers and directors and the Initial Stockholders
had, and as of the Closing, the Company and such officers and directors and
Initial Stockholders will not have had: (a) any specific Business Combination
under consideration or contemplation or (b) any substantive interactions or
discussions with any target business regarding a possible Business Combination.
2.18. Transactions Affecting Disclosure to NASD.
2.18.1. Except as described in the Sale Preliminary Prospectus and the
Prospectus, there are no claims, payments, arrangements, agreements or
understandings relating to the payment of a finder's, consulting or origination
fee by the Company or any Initial Stockholder with respect to the sale of the
Public Securities hereunder or the issuance of the Placement Securities or any
other arrangements, agreements or understandings of the Company or, to the
Company's knowledge, any Initial Stockholder that may affect the Underwriters'
compensation, as determined by the NASD.
2.18.2. The Company has not made any direct or indirect payments (in
cash, securities or otherwise) to: (i) any person, as a finder's fee, consulting
fee or otherwise, in consideration of such person raising capital for the
Company or introducing to the Company persons who raised or provided capital to
the Company; (ii) to any NASD member; or (iii) to any person or entity that has
any direct or indirect affiliation or association with any NASD member, within
the twelve months prior to the Effective Date, other than payments to the
Underwriters in connection with the Offering.
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 or a person associated
or affiliated with a member of the NASD.
2.18.4. No Company Affiliate is an owner of stock or other securities
of any member of the NASD (other than securities purchased on the open market).
2.18.5. No Company Affiliate has made a subordinated loan to any
member of the NASD.
2.18.6. No proceeds from the sale of the Public Securities (excluding
underwriting compensation) or the Placement Securities will be paid to any NASD
member, or any persons associated or affiliated with a member of the NASD,
except as specifically contemplated herein.
2.18.7. Except to the Representative in connection with the Offering,
the Company has not issued any warrants or other securities, or granted any
options, directly or indirectly to anyone who is a potential underwriter in the
Offering or a related person (as defined by NASD rules) of such an underwriter
within the 180-day period prior to the initial filing date of the Registration
Statement.
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2.18.8. Except to the Representative in connection with the Offering,
no person to whom securities of the Company have been privately issued within
the 180-day period prior to the initial filing date of the Registration
Statement has any relationship or affiliation or association with any member of
the NASD.
2.18.9. No NASD member intending to participate in the Offering has a
conflict of interest with the Company. For this purpose, a "conflict of
interest" exists when a member of the NASD and/or its associated persons, parent
or affiliates in the aggregate beneficially own 10% or more of the Company's
outstanding subordinated debt or common equity, or 10% or more of the Company's
preferred equity. "Members participating in the Offering" include managing
agents, syndicate group members and all dealers which are members of the NASD.
2.18.10. Except with respect to 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 or issuance of any warrants, options,
or other securities from the Company to an NASD member, any person associated
with a member (as defined by NASD rules), any potential underwriters in the
Offering and/or any related persons.
2.18.11. Neither the Company nor any officer or director of the
Company has engaged any third party (including any NASD member) to assist the
Company in its search for a merger or acquisition candidate or to provide any
other merger and acquisition services to the Company.
2.19. Foreign Corrupt Practices Act. Neither the Company nor, to the best
knowledge of the Company, any of the Initial Stockholders or any other person
acting on behalf of the Company has, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
governmental agency or instrumentality of any government (domestic or foreign)
or any political party or candidate for office (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed transaction)
that: (i) might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) if not given in the
past, might have had a Material Adverse Effect on the Company as reflected in
any of the financial statements contained in the Registration Statement and 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 best knowledge of the
Company, any officer, director or Initial Stockholder has violated: (i) the Bank
Secrecy Act, as amended, (ii) the Money Laundering Control Act of 1986, as
amended, or (iii) the Uniting and
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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 their 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 and the Placement Warrants with AST substantially
in the form filed as an exhibit to the Registration Statement (the "WARRANT
AGREEMENT"), providing for, among other things, the payment of a warrant
solicitation fee as contemplated by Section 3.9 hereof.
2.23. Agreements With Initial Stockholders.
2.23.1. Insider Letters. The Company has caused to be duly executed
the agreements annexed as Exhibits 10.1.1 through 10.1.10 to the Registration
Statement (collectively, the "INSIDER LETTERS"), pursuant to which each of the
Initial Stockholders and officers and directors of the Company have agreed to
certain matters, including but not limited to, certain matters described as
being agreed to by them under the "Proposed Business" Section of the Sale
Preliminary Prospectus and Prospectus. The Insider Letters are 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).
2.23.2. Escrow Agreement. The Company has caused the Initial
Stockholders to enter into an escrow agreement (the "ESCROW AGREEMENT") with AST
(in this context, the "ESCROW AGENT") substantially in the form filed as an
exhibit to the Registration Statement. Pursuant to the Escrow Agreement, the
Common Stock owned by the Initial Stockholders will be held in escrow by the
Escrow Agent, for a period (the "ESCROW PERIOD") commencing on the Effective
Date and expiring on the earliest of: (i) the approval by the Public
Stockholders of the release of such shares of Common Stock from escrow; and (ii)
one (1) year following the consummation of a Business Combination. During the
Escrow Period, the Initial Stockholders shall not sell, transfer or otherwise
dispose of their shares of Common Stock held in escrow, except: (i) by gift to a
member of Initial Stockholder's Immediate Family (as defined below) or to a
trust or other entity, the beneficiary of which is such Initial Stockholder or a
member of such Initial Stockholder's Immediate Family, (ii) by virtue of the
laws of descent and distribution upon the death of an Initial Stockholder, or
(iii) pursuant to a qualified domestic relations order. The Escrow Agreement
shall not be amended, modified or otherwise changed without the prior written
consent of the Representative, such consent not to be unreasonably withheld. For
purposes of this Agreement, the term "Immediate Family" shall mean the spouse,
siblings, parents, grandchildren or children of an Initial Stockholder.
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2.24. Subscription Agreement. Each of the Placement Investors have executed
and delivered a subscription agreement, annexed as an exhibit to the
Registration Statement (the "SUBSCRIPTION AGREEMENT"), pursuant to which each of
the Placement Investors has, among other things, purchased the Placement
Warrants in a Private Placement. Pursuant to the Subscription Agreement, each of
the Placement Investors has waived and hereby waives any and all rights and
claims each may have to any liquidation distribution, redemption rights or any
proceeds, and any interest thereon, held in the Trust Account in respect of the
shares of Common Stock underlying such Placement Warrants in the event that a
Business Combination is not consummated and the Trust Account is liquidated in
accordance with the terms of the Trust Agreement.
2.25. Investment Management Trust Agreement. The Company has entered into
the Trust Agreement with respect to certain proceeds of the Offering
substantially in the form filed as an exhibit to the Registration Statement.
2.26. Absence of Non-Competition Agreements. No Initial Stockholder,
employee, officer or director of the Company is subject to any non-competition
agreement or non-solicitation agreement with any employer or prior employer
which could materially affect his ability to be an Initial Stockholder,
employee, officer and/or director of the Company.
2.27. Subsidiaries. The Company does not own an interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business entity.
2.28. Related Party Transactions. No relationship, direct or indirect,
exists between or among any of the Company or any affiliate of the Company, on
the one hand, and any director, officer, shareholder, customer or supplier of
the Company or any affiliate of the Company, on the other hand, which is
required by the Act, the Exchange Act or the Regulations to be described in the
Registration Statement, the Sale Preliminary Prospectus and 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 Sale Preliminary Prospectus and the Prospectus. The Company has not extended
or maintained credit, arranged for the extension of credit, or renewed an
extension of credit, in the form of a personal loan to or for any director or
officer of the Company.
2.29. No Influence. The Company has not offered, or caused the Underwriters
to offer, the Firm Units to any person or entity with the intention of
unlawfully influencing: (a) a customer or supplier of the Company or any
affiliate of the Company to alter the customer's or supplier's level or type of
business with the Company or such affiliate or (b) a journalist or publication
to write or publish favorable information about the Company or any such
affiliate.
2.30. AMEX. As of the Effective Date, the Board shall have validly
appointed an audit committee and nominating committee, whose composition
satisfies the requirement of the rules and regulations of the American Stock
Exchange (the "AMEX") and the Board and/or audit committee and the nominating
committee has each adopted a charter that satisfies the
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requirements of AMEX. Neither the Board nor the audit committee thereof has been
informed, nor is any director of the Company aware, of: (i) any significant
deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect
the Company's ability to record, process, summarize and report financial
information; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal control over financial reporting.
2.31. ▇▇▇▇▇▇▇▇-▇▇▇▇▇. The Company is in material compliance with the
applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002, as amended, and the
rules and regulations promulgated thereunder and related or similar rules and
regulations promulgated by AMEX or any other governmental or self regulatory
entity or agency, except for violations which, singly or in the aggregate, would
not have a Material Adverse Effect. Without limiting the generality of the
foregoing, as of the effective date of the Registration Statement: (i) all
members of the Board who are required to be "independent" (as that term is
defined under applicable laws, rules and regulations), including, without
limitation, all members of the audit committee of the Board, meet the
qualifications of independence as set forth under applicable laws, rules and
regulations and (ii) the audit committee of the Board has at least one member
who is an "audit committee financial expert" (as that term is defined under
applicable laws, rules and regulations).
2.32. Listing of the Public Securities on AMEX. As of the Effective Date,
the Public Securities have been authorized for listing on the AMEX and, to the
Company's knowledge, 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 AMEX.
2.33. Title to Property. Except as disclosed in the Registration Statement,
the Company has good title or valid leasehold interests to all material
properties required for the operations of its business as proposed to be
conducted prior to a Business Combination, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind that would materially affect the value of such property
and materially interfere with the use made and proposed to be made of such
property by the Company; and all of the leases and subleases material to the
business of the Company, and under which the Company holds properties described
in the Prospectus, are in full force and effect, and the Company does not have
any notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company under any of the leases or subleases
mentioned above, or affecting or questioning the rights of the Company to the
continued possession of the leased or subleased premises under any such lease or
sublease.
2.34. Investment Company Act. The Company is not required, and upon the
issuance and sale of the Securities as herein contemplated and the application
of the net proceeds therefrom as described in the Prospectus will not be
required, to register as an "investment company" under the Investment Company
Act of 1940, as amended (the "1940 ACT").
2.35. Accounting Controls. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that: (a)
transactions are executed in
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accordance with management's general or specific authorization; (b) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (c) access to
assets is permitted only in accordance with management's general or specific
authorization; and (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences. Except as described in the Prospectus, since the end
of the Company's most recent audited fiscal year, there has been no: (y)
material weakness in the Company's internal control over financial reporting
(whether or not remediated) or (z) change in the Company's internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company's internal control over financial reporting.
2.36. Definition of "Knowledge". As used 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 Sale Preliminary Prospectus and
Prospectus, with the assumption, with respect to such persons, that they 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 Sale Preliminary Prospectus and 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 Sale Preliminary Prospectus
and Prospectus to comply with the Act, the Company will notify the
Representatives 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 Sale Preliminary Prospectus and 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 Representatives) with the
Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3. Exchange Act Registration. For a period of five years from the
Effective Date, or until such earlier time upon which the Company is required to
be liquidated, the Company will use its best efforts to maintain the
registration of the Units, Common Stock and Warrants under the provisions of the
Exchange Act. The Company will not deregister the Units under the Exchange Act
without the prior written consent of 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, as amended, and the rules and regulations
promulgated thereunder and related or similar rules and regulations promulgated
by the AMEX or any other governmental or self regulatory entity or agency with
jurisdiction over the Company.
3.3. Blue Sky Filings. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Public Securities for offering and
sale under the securities laws of such jurisdictions as the Representative may
reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. 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 of Materials to Underwriters. The Company has delivered to
each Underwriter, without charge, as many copies of the Sale Preliminary
Prospectus as such Underwriter reasonably requested, and the Company hereby
consents to the use of such copies for purposes permitted by the Act. The
Company will deliver to each of the several Underwriters, without charge and
from time to time during the period when a prospectus is required to be
delivered under the Act or the Exchange Act, such number of copies of each Sale
Preliminary Prospectus, the Prospectus and all amendments and supplements to
such documents as such Underwriters may reasonably request and has delivered and
will deliver to the Representative two manually executed Registration Statements
as originally filed, including exhibits, and amendments thereto and copies of
all exhibits filed therewith or incorporated therein by reference and all
manually executed consents of certified experts. The copies of the Registration
Statement and each amendment thereto, and of the Sale Preliminary Prospectus and
the Prospectus, as supplemented or amended, furnished to the Underwriters will
be identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
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
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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 of
prevention or suspension by the Commission of 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 or its counsel, makes any statement of a material
fact made in the Registration Statement, the Sale Preliminary Prospectus or the
Prospectus untrue or that requires the making of any changes in the Registration
Statement, the Sale Preliminary Prospectus and Prospectus in order to make the
statements therein, (with respect to the Prospectus and the Sale Preliminary
Prospectus and in light of the circumstances under which they were made), not
misleading. If the Commission or any state securities commission shall enter a
stop order or suspend such qualification at any time, the Company will make
every reasonable effort to obtain promptly the lifting of such order.
3.6. Review of Financial Statements. Until the earlier of five years from
the Effective Date, and the time the Company is required to be liquidated, the
Company, at its expense, shall cause its regularly engaged independent certified
public accountants to review (but not audit) the Company's financial statements
for each of the first three fiscal quarters prior to the announcement of
quarterly financial information, the filing of the Company's Form 10-Q quarterly
report and the mailing of quarterly financial information to stockholders.
3.7. Affiliated Transactions.
3.7.1. Business Combinations. The Company will not consummate its
initial Business Combination with any entity that is affiliated with any Initial
Stockholder or any officer or director of the Company unless: (i) such Business
Combination has been approved by the audit committee of the Board and the Board
or (ii) the Company obtains an opinion from an independent investment banking
firm that the Business Combination is fair to the Company's stockholders from a
financial perspective.
3.7.2. Administrative Services. The Company has entered into an
agreement (the "SERVICES AGREEMENT") with ASG Management, Inc. ("ASG"), in the
form filed as an exhibit to the Registration Statement pursuant to which ASG
will make available to the Company general and administrative services including
office space, utilities, receptionist and secretarial support for the Company's
use for $7,500 per month which shall be payable out of the interest earned on
the Trust Account.
3.7.3. Compensation. Except as set forth in this Section 3.7, the
Company shall not pay any Initial Stockholder or Placement Investor, any officer
or director of the Company or any of their affiliates, any fees or compensation
for services rendered to the Company prior to, or
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in connection with, this Offering or the consummation of a Business Combination;
provided, however that the reimbursement for any reasonable expenses incident to
the Offering and the search for a suitable business combination shall be
permitted.
3.8. Secondary Market Trading and Standard & Poor's. In the event the
Public Securities are not listed on the New York Stock Exchange or AMEX or
quoted on Nasdaq's National Market System (the "NMS"): (a) the Company will
apply to be included in Standard and Poor's Daily News and Corporation Records
Corporate Descriptions for a period of five years from the consummation of a
Business Combination and (b) the Company shall take such other action as may be
reasonably requested by the Representative to obtain a secondary market trading
exemption in all states as may be requested by the Representative.
3.9. Warrant Solicitation Fee. The Company shall pay to the Representative
a warrant solicitation fee on the terms set forth in the Warrant Agreement.
3.10. Reports to the Representative.
3.10.1. Periodic Reports, etc. For a period of two (2) years following
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 that 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 that was released by the Company; (iii) a copy of
each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the
Company; (iv) five copies of each Registration Statement; (v) a copy of monthly
statements, if any, setting forth such information regarding the Company's
results of operations and financial position (including balance sheet, profit
and loss statements and data regarding outstanding purchase orders) as is
regularly prepared by management of the Company; and (vi) such additional
documents and information with respect to the Company and the affairs of any
future subsidiaries of the Company as the Representative may from time to time
reasonably request; provided that the Representative shall sign, if requested by
the Company, a Regulation FD compliant confidentiality agreement 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.
3.10.2. Transfer Sheets. For a period of two (2) years following the
Effective Date or until such earlier time upon which the Company is required to
be liquidated, the Company shall retain AST as its transfer agent and registrar
(in this context, the "TRANSFER AGENT") and during the two (2) year period
following the Closing Date, will furnish to the Underwriters, at the Company's
sole cost and expense, such transfer sheets of the Company's securities as the
Representative may request, including the daily and monthly consolidated
transfer sheets of the Transfer Agent and DTC. Any change by the Company of its
Transfer Agent shall require the prior written approval of the Representative.
In addition, for a period of
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two (2) years from the Closing Date, the Company, at its expense, shall provide
the Representative a subscription to the Company's weekly Depository Transfer
Company Security Position Reports.
3.10.3. Secondary Market Trading Survey. In the event that the Public
Securities are no longer listed or quoted, as the case may be, on the New York
Stock Exchange, AMEX or the NMS, the Company shall engage Ellenoff ▇▇▇▇▇▇▇▇ &
Schole LLP ("EG&S"), for a one-time fee of $5,000, to deliver and update to the
Underwriters on a timely basis, but in any event 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") until the time the Company is
required to be liquidated.
3.11. Disqualification of Form S-1 and S-3. For a period equal to seven
years from the date hereof, the Company will not take any action or actions
which may prevent or disqualify the Company's use of Form S-1 or S-3 (or other
appropriate form) for the registration of the Warrants under the Act.
3.12. Payment of Expenses.
3.12.1. General Expenses Related to the Offering. The Company hereby
agrees to pay on each of the Closing Date and the Option Closing Date, if any,
to the extent not paid at the Closing Date, all fees and 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, any Preliminary Prospectus, the Sale Preliminary
Prospectus and the Prospectus 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 certificates for the Units, the shares of Common Stock and the
Warrants included in the Units and the Representative's Purchase Option
(including underlying Representative's Securities), including any transfer or
other taxes payable thereon; (iii) the listing of the Public Securities on AMEX;
(iv) filing fees for registering the Offering with the NASD (including all
COBRADesk fees); (v) costs of placing "tombstone" advertisements in The Wall
Street Journal, The New York Times and a third publication to be selected by the
Representative not to exceed $40,000 in the aggregate; (vi) fees and
disbursements of the transfer and warrant agent; (vii) the Company's expenses
associated with "due diligence" meetings arranged by the Representative; (viii)
the preparation, binding and delivery of leather bound volumes in form and style
reasonably satisfactory to the Representative and transaction Lucite cubes or
similar commemorative items in a style and quantity as reasonably requested by
the Representative; (ix) all costs and expenses associated with "road show"
marketing and "due diligence" trips for the Company's management to meet with
prospective investors, including without limitation, all travel, food and
lodging expenses and preparation of materials and investor presentations
associated with such trips; and (x) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 3.11.1. The Representative may deduct from the net
proceeds of the Offering payable to the Company on the
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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.
3.12.2. Termination of Agreement. If this Agreement is terminated by
the Representative in accordance with the provisions of Section 4.7 or 9.2, the
Company shall reimburse the Underwriters for all of their accountable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters.
3.12.3. Deferred Discount Payable on Business Combination. Upon
consummation of a Business Combination, the Company further agrees that, in
addition to the expenses payable pursuant to Section 3.12.1, it will pay the
Deferred Discount to the Representative.
3.13. Application of Net Proceeds. The Company will apply the net proceeds
it receives from the Private Placement and the Offering in the manner consistent
with the disclosure in the section of the Prospectus captioned "Use of
Proceeds."
3.14. Delivery of Earnings Statements to Security Holders. The Company will
make generally available to its security holders as soon as practicable, but not
later than the first day of the fifteenth full calendar month following the
Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.
3.15. Notice to NASD. In the event any person or entity (regardless of any
NASD affiliation or association but excluding attorneys, accountants, engineers,
environmental or labor consultants, investigatory firms, technology consultants
and specialists and similar providers that are not affiliated with or associated
with the NASD and are not brokers or finders) is engaged to assist the Company
in its search for a merger or acquisition candidate or to provide any other
merger and acquisition services, the Company will provide the following to the
NASD and the Representatives prior to the consummation of the Business
Combination: (i) complete details of all services and copies of agreements
governing such services (which may be appropriately redacted to account for
privilege or confidentiality concerns); and (ii) justification as to why the
person or entity providing the merger and acquisition services should not be
considered an "underwriter and related person" (as such term is defined in Rule
2710 of the NASD's Conduct Rules) with respect to the Offering. The Company also
agrees that, if required by law, proper disclosure of such arrangement or
potential arrangement will be made in the proxy statement which the Company will
file for purposes of soliciting stockholder approval for the Business
Combination.
3.16. Stabilization. Neither the Company, nor, to its knowledge, any of its
employees, directors or stockholders (without the consent of 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
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manipulation of the price of any security of the Company to facilitate the sale
or resale of the Units.
3.17. Internal Controls. The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.18. Accountants. For a period of five years from the Effective Date or
until such earlier time upon which the Company is required to be liquidated, the
Company shall retain GGK or another independent registered public accounting
firm reasonably acceptable to the Representative.
3.19. Form 8-K's. 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 Offering. As soon as the Audited
Financial Statements become available, the Company shall immediately file a
Current Report on Form 8-K with the Commission, which Report shall contain the
Company's Audited Financial Statements. Additionally, upon the Company's receipt
of the proceeds from the exercise of all or any portion of the Option Units, the
Company shall immediately file a Current Report on Form 8-K with the Commission,
which report shall disclose the Company's sale of such Option Units and its
receipt of the proceeds therefrom.
3.20. NASD. The Company shall advise the NASD if it is aware that any 5% or
greater stockholder of the Company becomes an affiliate or associated person of
an NASD member participating in the distribution of the Public Securities.
3.21. Corporate Proceedings. All corporate proceedings and other legal
matters necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby shall have been done to the reasonable
satisfaction to counsel for the Underwriters.
3.22. Investment Company. The Company shall cause the proceeds of the
Offering to be held in the Trust Account 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.
3.23. Business Combination Announcement. Within five (5) Business Days
following consummation of a Business Combination, the Company shall cause an
announcement
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("BUSINESS COMBINATION ANNOUNCEMENT") to be placed, at its cost, in The Wall
Street Journal, The New York Times and a third publication to be selected by the
Representative announcing the consummation of the Business Combination and
indicating that the Representative was the managing underwriters in the
Offering. The Company shall supply the Representative with a draft of the
Business Combination Announcement and provide the Representative with a
reasonable 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, delayed or
conditioned.
3.24. Press Releases. The Company agrees that, for a period of ninety (90)
days after the Closing Date, it will not issue press releases or engage in any
other publicity, without the prior written consent of the Representative (not to
be unreasonably withheld, delayed or conditioned).
3.25. Key-Man Insurance. Prior to the consummation of the Business
Combination, the Company will obtain key person life insurance with an insurer
rated at least AA or better in the most recent addition of "Best's Life Reports"
in the amount of $2,000,000 on the life of ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇. Such
insurance shall be maintained in full force and effect for a period of three
years from the date of the consummation of the Business Combination. The Company
shall be the sole beneficiary of such policy.
3.26. Electronic Prospectus. The Company shall cause to be prepared and
delivered to the Representative, at the Company's 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 Representatives, 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 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.
3.27. Reservation of Shares. The Company will reserve and keep available
that maximum number of its authorized but unissued securities that are issuable
upon exercise of the
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Warrants, the Placement Warrants and the Representative's Purchase Option
(including underlying Representative's Securities) outstanding from time to
time.
3.28. Private Placement Proceeds. The Private Placement shall have been
consummated and the Company shall deposit $3,200,000 of the proceeds from the
Private Placement in the Trust Account and shall provide the Representative with
evidence of the same.
3.29. No Amendment to Charter. The Company covenants and agrees that it
will not amend or modify (or seek to amend or modify) Article Third or
provisions (A) through (E) of Article Sixth of its Certificate of Incorporation.
3.29.1. The Company acknowledges that the purchasers of the Firm Units
and the Option Units in the Offering shall be deemed to be third party
beneficiaries of this Section 3.29.
3.29.2. The Representative and the Company specifically agree that
they will not waive or amend this Section 3.29 in any way.
3.30. AMEX Listing. The Company will use its best efforts to maintain the
listing of the Public Securities on the AMEX or on a national securities
exchange acceptable to the Representative for a period of at least five (5)
years from the date of this Agreement.
3.31. Issuer Free Writing Prospectuses. The Company represents and agrees
that, unless it obtains the prior consent of the Representative, and each
Underwriter represents and agrees that, unless it obtains the prior consent of
the Company and the Representative, it has not made and will not make any offer
relating to the Public Securities that would constitute an "issuer free writing
prospectus," as defined in Rule 433 of the Regulations, or that would otherwise
constitute a "free writing prospectus," as defined in Rule 405 of the
Regulations, required to be filed with the Commission. Any such free writing
prospectus consented to by the Representative or by the Company and the
Representative, as the case may be, is hereinafter referred to as a "PERMITTED
FREE WRITING PROSPECTUS." The Company represents that it has treated or agrees
that it will treat each Permitted Free Writing Prospectus as an "issuer free
writing prospectus," as defined in Rule 433 of the Regulations, and has complied
and will comply with the requirements of Rule 433 of the Regulations applicable
to any Permitted Free Writing Prospectus, including timely filing with the
Commission, where required, legending and record keeping.
3.33. Board Observer. The Company agrees that it will, for a period of no
less than two (2) years from the date of the Prospectus, permit a designee of
the Representative as a Board observer (the "OBSERVER"). The Observer shall
attend all meetings of the Board and receive all notices and other
correspondence and communications sent by the Company to members of the Board.
The Observer shall not be entitled to any compensation, other than reimbursement
for all costs incurred in attending such meetings including, food, lodging, and
transportation, for service as an Observer. The Company further agrees that,
during said two (2) year period, it shall schedule no less than four (4) formal
and "in person" meetings of its Board in each such year at which meetings the
Observer shall be permitted to attend as set forth herein; said meetings shall
be held quarterly each year and ten (10) days advance notice of such
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meetings shall be given to the Observer. Further, during such two (2) year
period, the Company shall give notice to the Representative with respect to any
proposed acquisitions, mergers, reorganizations or other similar transactions.
The Company shall indemnify and hold the Observer harmless against any and all
claims, actions, damages, costs and expenses, and judgments arising solely out
of the attendance and participation of the Observer at any such meeting
described herein, and, if the Company maintains a liability insurance policy
affording coverage for the acts of its officers and directors, it shall, if
possible, include the Observer as an insured under such policy.
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; No Commission Stop
Order. The Registration Statement has become effective, and, at each of the
Closing Date and the Option Closing Date, if any, 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 EG&S, as counsel to the Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in the
manner and within the time frame required by Rule 424(b) of the Regulations
(without reliance on Rule 424(b)(8) of the Regulations or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A of the Regulations).
4.1.2. NASD Clearance. By the Effective Date, the Representatives
shall have received clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriters as described in the Registration
Statement.
4.1.3. No Blue Sky Stop Orders. No order suspending the sale of the
Units in any jurisdiction designated by the Representative pursuant to Section
3.3 hereof shall have been issued on either the Closing Date or the Option
Closing Date, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
4.1.4. AMEX Listing. The Public Securities shall have been approved
for listing on the AMEX.
4.2. Company Counsel Matters.
4.2.1. Closing Date Opinion of Counsel. On the Closing Date, the
Representatives shall have received the favorable opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ &
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Kakoyiannis, P.C. ("▇▇▇▇▇▇▇"), counsel to the Company, dated the Closing Date,
addressed to the Representative and in form and substance satisfactory to the
Representative to the effect that:
(i) The Company has been duly organized and is validly existing
as a corporation and is in good standing under the laws of its state of
incorporation, with full power and authority to own its properties and conduct
its business as described in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus. The Company is duly qualified and licensed and in
good standing as a foreign corporation in each jurisdiction in which its
ownership or leasing of any properties or the character of its operations
requires such qualification or licensing, except where the failure to qualify
would not have a Material Adverse Effect.
(ii) 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 are not subject to personal liability by reason of being such holders;
and none of such securities were issued in violation of the preemptive rights of
any stockholder of the Company arising by operation of law or under the
Certificate of Incorporation or Bylaws of the Company. The offers and sales of
the outstanding Common Stock were at all relevant times either registered under
the Act and qualified under the applicable state securities or Blue Sky Laws or
exempt from such registration and/or qualification requirements. The authorized
and outstanding capital stock of the Company is as set forth in the Sale
Preliminary Prospectus and the Prospectus. The Units, the Common Stock, the
Warrants and the Placement Warrants conform to the descriptions thereof
contained in the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus.
(iii) The Securities have been duly authorized and, when issued
and paid for, will be validly issued, fully paid and non-assessable; the holders
thereof are not and will not be subject to personal liability by reason of being
such holders. The Securities are not and will not be subject to the preemptive
rights of any holders of any security of the Company arising by operation of law
or under the Certificate of Incorporation or Bylaws of the Company or, to such
counsel's knowledge, similar rights that entitle or will entitle any person to
acquire any security from the Company upon issuance or sale thereof. When
issued, the Warrants and the Representative's Purchase Option (including
underlying Representative's Securities) will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
therefor, the number and type of securities of the Company called for thereby
and such securities, when issued, are enforceable against the Company in
accordance with their respective terms, except: (a) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (b) as enforceability of any indemnification or
contribution provision may be limited under the United States and state
securities laws; and (c) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable defenses and
to the discretion of the court before which any proceeding therefor may be
brought. The certificates representing the Public Securities and the
Representative's Securities are in due and proper form. A sufficient number of
shares of Common Stock have been reserved for issuance upon exercise of the
Warrants, the Representative's Warrants and the Placement Warrants. The shares
of Common Stock
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underlying the Warrants, the Representative's Warrants and the Placement
Warrants will, upon exercise thereof, and payment of the exercise price thereof,
be duly authorized and validly issued, fully paid and non-assessable and will
not have been issued in violation of or subject to preemptive or, to such
counsel's knowledge, similar rights that entitle or will entitle any person to
acquire any securities from the Company upon issuance thereof.
(iv) The Placement Warrants constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
therefore, the number of shares of Common Stock called for thereby, 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 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 therefore may be brought. A sufficient number of shares of
Common Stock have been reserved for issuance upon exercise of the Placement
Warrants. The shares of Common Stock underlying the Placement Warrants will,
upon exercise of the Warrants and payment of the exercise price thereof, be duly
authorized and validly issued, fully paid and non assessable and will not have
been issued in violation of or subject to preemptive or, to such counsel's
knowledge, similar rights that entitle or will entitle any person to acquire any
securities from the Company upon issuance thereof.
(v) The Company has full right, power and authority to execute
and deliver this Agreement, the Warrant Agreement, the Representative's Purchase
Option, the Services Agreements, the Trust Agreement, the Subscription Agreement
and the Escrow Agreement and to perform its obligations thereunder, and all
corporate action required to be taken for the due and proper authorization,
execution and delivery of this Agreement, the Warrant Agreement, the
Representative's Purchase Option, the Services Agreements, the Trust Agreement,
the Escrow Agreement and the Subscription Agreement and consummation of the
transactions contemplated by the Underwriting Agreement, the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus and as described
in the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus have been duly and validly taken.
(vi) The Insider Letters and the Escrow Agreement have been duly
authorized, executed and delivered by the applicable Initial Stockholders (or,
if applicable, their affiliates) and constitute the valid and binding
obligations of such Initial Stockholders enforceable against them in accordance
with their respective terms, except: (a) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; (b) as enforceability of any indemnification or contribution
provisions may be limited under the federal and state securities laws; and (c)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(vii) This Agreement, the Warrant Agreement, the Representative's
Purchase Option, the Services Agreement, the Subscription Agreement, the Trust
Agreement and the Escrow Agreement have each been duly and validly authorized
and,
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when executed and delivered by the Company, will constitute the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except: (a) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (b) as enforceability of any indemnification or
contribution provisions may be limited under the United States and state
securities laws; and (c) that the remedy of specific performance and injunctive
and other forms of equitable relief may be subject to the equitable defenses and
to the discretion of the court before which any proceeding therefor may be
brought.
(viii) The execution, delivery and performance of this Agreement,
the Subscription Agreement, the Warrant Agreement, the Representative's Purchase
Option, the Escrow Agreement, the Trust Agreement and the Services Agreement,
the issuance and sale of the Public Securities, Placement Securities and the
Representative's Securities, the consummation of the transactions contemplated
hereby and thereby, and compliance by the Company with the terms and provisions
hereof and thereof, do not and will not, with or without the giving of notice or
the lapse of time, or both: (a) conflict with, or result in a breach of, any of
the terms or provisions of, or constitute a default under, or result in the
creation or modification of any lien, security interest, charge or encumbrance
upon any of the properties or assets of the Company pursuant to the terms of,
any mortgage, deed of trust, note, indenture, loan, contract, commitment or
other agreement or instrument filed as an exhibit to the Registration Statement,
(b) result in any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company, or (c) to such counsel's knowledge,
violate any statute or any U.S. judgment, order or decree, rule or regulation
applicable to the Company of any court, domestic or foreign, or of any federal,
state or other regulatory authority or other governmental body having
jurisdiction over the Company, its properties or assets (but excluding the Blue
Sky laws of the various states, as to which such counsel expresses no opinion).
(ix) The Registration Statement, the Sale Preliminary Prospectus,
the Prospectus and any post-effective amendments or supplements thereto (other
than the financial statements included therein, as to which no opinion need be
rendered) each comply as to form in all material respects with the requirements
of the Act and Regulations. The Public Securities, the Placement Securities and
the Representative's Securities and each agreement filed as an exhibit to the
Registration Statement conform in all material respects to the description
thereof contained in the Registration Statement, the Sale Preliminary Prospectus
and the Prospectus. No United States or state statute or regulation required to
be described in the Prospectus is not described as required (except as to the
Blue Sky laws of the various states, as to which such counsel expresses no
opinion), nor are any contracts or documents of a character required to be
described in the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement not so described or filed as required.
(x) The Registration Statement is effective under the Act. To
such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act or applicable state
securities laws.
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(xi) There is no action, suit or proceeding before or by any
court of governmental agency or body, domestic or foreign, now pending, or
threatened against the Company that is required to be described in the
Registration Statement.
(xii) No consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court or any judicial,
regulatory or other legal or governmental agency or body is required for the
execution, delivery and performance of this Agreement or consummation of the
transactions contemplated by this Agreement, the Registration Statement, the
Sale Preliminary Prospectus and the Prospectus, except for: (a) such as may be
required under state securities or blue sky laws in connection with the purchase
and distribution of the Units by the Underwriters (as to which such counsel need
express no opinion), (b) such as have been made or obtained under the Securities
Act and (c) such as are required by the NASD.
(xiii) The statements under the captions "Comparison to offerings
of blank check companies" and "Description of Securities" and Item 14 of Part II
of the Registration Statement and the Sale Preliminary Prospectus, insofar as
such statements constitute a summary of the legal matters, documents or
proceedings referred to therein, fairly present in all material respects the
information called for with respect to such legal matters, documents and
proceedings.
(xiv) The Public Securities are duly authorized for listing on
AMEX.
(xv) The opinion of counsel shall further include a statement to
the effect that such counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants for the Company and representatives of the Underwriters at which the
contents of the Registration Statement, the Prospectus, and related matters were
discussed and although such counsel is not passing upon, has not independently
checked or verified and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement, the Sale Preliminary Prospectus or the Prospectus (except as
otherwise set forth in this opinion), nothing has come to the attention of such
counsel which lead it to believe that the Registration Statement or any
amendment thereto, including the Rule 430 Information at the time such
Registration Statement or any such amendment became effective, 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 or that the
Prospectus or any amendment or supplement thereto, at the time the Prospectus
was issued or at the time any such amended or supplemented prospectus was issued
or at the Closing Date, included or includes an untrue statement of a material
fact or omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
opinion with respect to the financial statements and schedules and other
financial and statistical data included in the Registration Statement, the Sale
Preliminary Prospectus or the Prospectus).
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4.2.2. Option Closing Date Opinion of Counsel. On the Option Closing
Date, if any, the Representatives shall have received the favorable opinion of
▇▇▇▇▇▇▇, dated the Option Closing Date, addressed to the Representative and in
form and substance reasonably satisfactory to the counsel to the Representative,
confirming as of the Option Closing Date, the statements made by ▇▇▇▇▇▇▇ in its
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. Accountant's Comfort Letters.
4.3.1. Accountant's Initial Comfort Letter. At the time this Agreement
is executed, the Representative shall have received from GGK a letter dated the
date hereof, in form and substance satisfactory in all respects to the
Representative, together with signed or reproduced copies of such letter for
each of the other Underwriters, containing statements and information of the
type ordinarily included in accountants' comfort letters with respect to the
financial statements and certain financial information contained in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus,
including:
(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 Sale 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 and the Prospectus comply as
to form in all material respects with the applicable accounting requirements of
the Act and the Regulations;
(iii) Stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and board of directors and the various
committees of the board of directors, consultations with officers and other
employees of the Company responsible for financial and accounting matters and
other specified procedures and inquiries,
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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 Sale 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 GAAP
applied on a basis substantially consistent with that of the audited financial
statements of the Company included in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus; or (b) at a date not later than five
days prior to the Effective Date, Closing Date or Option Closing Date, as the
case may be, there was any change in the capital stock or long-term debt of the
Company, or any decrease in the stockholders' equity of the Company as compared
with amounts shown in the December 31, 2006 balance sheet included in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus,
other than as set forth in or contemplated by the Registration Statement, the
Sale Preliminary Prospectus and the Prospectus, or, if there was any decrease,
setting forth the amount of such decrease, and (c) during the period from
December 31, 2006 to a specified date not later than two (2) days prior to the
Effective Date, Closing Date or Option Closing Date, if any, as the case may be,
there was any decrease in revenues, net earnings or net earnings per share of
Common Stock, in each case as compared with the corresponding period in the
preceding year and as compared with the corresponding period in the preceding
quarter, other than as set forth in or contemplated by the Registration
Statement and the Prospectus, or, if there was any such decrease, setting forth
the amount of such decrease;
(iv) Setting forth, at a date not later than five days prior to
the Effective Date, the amount of liabilities of the Company;
(v) Stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus in each case to
the extent that such amounts, numbers, percentages, statements and information
may be derived from the general accounting records, including work sheets, of
the Company and excluding any questions requiring an interpretation by legal
counsel, with the results obtained from the application of specified readings,
inquiries and other appropriate procedures (which procedures do not constitute
an examination in accordance with generally accepted auditing standards) set
forth in the letter and found them to be in agreement;
(vi) Stating that they have not during the immediately preceding
five year period brought to the attention of the Company's management any
reportable condition related to internal structure, design or operation as
defined in the Statement on Auditing Standards No. 60 "Communication of Internal
Control Structure Related Matters Noted in an Audit," in the Company's internal
controls; and
(vii) Statements as to such other matters incident to the
transaction contemplated hereby as the Representatives may reasonably request.
4.3.2. Accountant's Bring-down Comfort Letter. At the Closing Date and
the Option Closing Date, if any, the Representative shall have received from GGK
a letter, dated as
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of the Closing Date or the Option Closing Date, as the case may be, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to Section 4.3.1, except that the specified date referred to shall be a date not
more than three business days prior to the Closing Date or the Option Closing
Date, as the case may be.
4.4. 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 Chief Executive Officer 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, to the effect that
the Company has performed all covenants and complied with all conditions
required by this Agreement to be performed or complied with by the Company prior
to and as of the Closing Date, or the Option Closing Date, as the case may be,
and that the conditions set forth in Section 4.5 hereof have been satisfied as
of such date and that, as of Closing Date and the Option Closing Date, as the
case may be, the representations and warranties of the Company set forth in
Section 2 hereof are true and correct. In addition, the Representative will have
received such other and further certificates of officers of the Company as the
Representative may reasonably request.
4.4.2. Secretary's Certificate. At each of the Closing Date and the
Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary or Assistant Secretary of the
Company, dated the Closing Date or the Option Closing Date, as the case may be,
certifying: (i) that the By-Laws and Certificate of Incorporation of the Company
are true and complete, have not been modified and are in full force and effect;
(ii) that the resolutions relating to the Offering are in full force and effect
and have not been modified; (iii) all correspondence between the Company or its
counsel and the Commission; and (iv) as to the incumbency of the officers of the
Company. The documents referred to in such certificate shall be attached to such
certificate.
4.5. No Material Changes. Prior to and on each of the Closing Date and the
Option Closing Date, if any: (i) there shall have been no Material Adverse
Change or development involving a prospective Material Adverse Change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Registration Statement, the Sale Preliminary Prospectus and Prospectus; (ii) no
action suit or proceeding, at law or in equity, shall have been pending or
threatened against the Company or any Initial Stockholder before or by any court
or federal or state commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may materially adversely affect the
business, operations, prospects or financial condition or income of the Company,
except as set forth in the Registration Statement, the Sale 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 Sale Preliminary Prospectus
and the Prospectus and any amendments or supplements thereto shall contain all
material statements which are required to be stated therein in accordance with
the Act and the Regulations and shall conform in all respects to the
requirements of the Act and the Regulations, and none of the Registration
Statement, the Sale Preliminary Prospectus or the Prospectus, or any amendment
or supplement thereto shall contain
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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 , the Sale Preliminary Prospectus and Prospectus, in light of
the circumstances under which they were made), not misleading.
4.6. Delivery of Agreements. On the Effective Date, the Company shall have
delivered to the Representative duly executed copies of the Escrow Agreement,
the Trust Agreement, the Warrant Agreement, the Representative's Purchase
Option, the Services Agreement and all of the Insider Letters.
4.7. Termination of Agreement. If any condition specified in this Section 4
shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on any Option Closing Date, the obligations of the several
Underwriters to purchase the relevant Firm Units or Option Units, as applicable,
may be terminated by the Representatives by notice to the Company at any time at
or prior to Closing Date or such Option Closing Date, as the case may be, and
such termination shall be without liability of any party to any other party
except as provided in Section 3.12.2 and except that Sections 2, 5 and 8 shall
survive any such termination and remain in full force and effect.
5. Indemnification and Contribution.
5.1. Indemnification of the 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 or any Underwriter 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, the Sale Preliminary
Prospectus, the Prospectus or any "issuer free writing prospectus" of the
Company, as defined in Rule 433 of the Regulations (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
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or the AMEX; 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 by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement, the Sale Preliminary Prospectus, the Prospectus or any "issuer free
writing prospectus" of the Company, or any amendment or supplement thereof, or
in any application, as the case may be, which furnished written information, it
is expressly agreed, consists solely of the Underwriters' Information. 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 any Preliminary Prospectus, the Registration Statement,
the Sale Preliminary Prospectus, the Prospectus or any "issuer free writing
prospectus" of the Company, as defined in Rule 433 of the Regulations (as from
time to time each may be amended and supplemented)
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, the Sale
Preliminary Prospectus, the Prospectus or any "issuer free writing prospectus"
of the Company, as defined in Rule 433 of the Regulations (as from time to time
each may be amended and supplemented), or any amendment
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or supplement thereto, or in any application, in reliance upon, and in strict
conformity with, written information furnished to the Company by or on behalf of
the Underwriter expressly for use therein or in any such application, which
furnished written information, it is expressly agreed, consists solely of the
Underwriters' Information. In case any action shall be brought against the
Company or any other person so indemnified based on any of the foregoing or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2.
5.3. Contribution.
5.3.1. Generally. If the indemnification provided for in Section 5.1
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred: (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Units
pursuant to this Agreement or (ii) if the allocation provided by clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
5.3.2. Relative Benefits. The relative benefits received by the
Company on the one hand and the Underwriters on the other hand in connection
with the offering of the Units pursuant to this Agreement shall be deemed to be
in the same respective proportions as the total net proceeds from the offering
of the Units pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the Underwriters, in
each case as set forth on the cover of the Prospectus, bear to the aggregate
initial public offering price of the Securities as set forth on the cover of the
Prospectus.
5.3.3. Relative Fault. The relative fault of the Company on the one
hand and the Underwriters on the other hand shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
5.3.4. Equitable Considerations. The Company and the Underwriters
agree that it would not be just and equitable if contribution pursuant to this
Section 5.3 were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations referred
to above in this Section 5.3. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section 5.3 shall be
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deemed to include any legal or other expenses reasonably incurred by such
indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
5.3.5. Limitation on Underwriters' Contributions. Notwithstanding the
provisions of this Section 5.3, no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Units
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of any such untrue or alleged untrue statement or
omission or alleged omission.
5.3.6. Fraudulent Misrepresentations. No person guilty of 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.
5.3.7. Others Included in Contribution Rights. For purposes of this
Section 5.3, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act and each
Underwriter's Affiliates and selling agents shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act shall have the same rights to contribution as the
Company. The Underwriters' respective obligations to contribute pursuant to this
Section 5.3 are several in proportion to the number of Firm Units set forth
opposite their respective names in Schedule A hereto and not joint.
6. Default by an Underwriter.
6.1. Default Not Exceeding 10% of Firm Units or Option Units. If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the Over-allotment Option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10% of
the number of Firm Units or Option Units that all Underwriters have agreed to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
their respective commitments hereunder.
6.2. Default Exceeding 10% of Firm Units or Option Units. In the event the
default addressed in Section 6.1 above relates to more than 10% of the Firm
Units or Option Units, if the Over-allotment Option is exercised, the
Representative may, in its discretion, arrange for the Representative or for
another party or parties to purchase such Firm Units or Option Units, if the
Over-allotment option is exercised, 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, if the
Over-allotment Option is exercised, 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 Representative to purchase said Firm Units or Option Units,
if the Over-allotment Option is
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exercised, on such terms. In the event neither the Representative nor the
Company arrange for the purchase of the Firm Units or Option Units to which a
default relates as provided in this Section 6, this Agreement may be terminated
by the Representative or the Company without liability on the part of the
Company (except as provided in Sections 3.12 and 5 hereof) or the several
Underwriters (except as provided in Section 5 hereof); provided, however, that
if such default occurs with respect to 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 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 and/or the Prospectus, as the case may be, that in the opinion of
counsel for the Underwriters may thereby be made necessary.
7. Additional Covenants.
7.1. Additional Shares or Options. The Company hereby agrees that, until
the earlier of the consummation of its initial Business Combination or the
distribution of the funds in the Trust Account, it shall not issue any shares of
Common Stock or any options or other securities convertible or exchangeable into
Common Stock or Preferred Stock, in each case, which would participate in any
manner in the Trust Account or vote as a class with the Common Stock on the
initial Business Combination. Except for registration statements covering
securities to be issued upon, or in connection with, a Business Combination, if
any, or which shall become effective upon or after the Business Combination, the
Company shall not file any registration statements under the Act with respect to
any of its securities prior to the Business Combination.
7.2. Trust Account 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 agreement, letter of
intent, memorandum of understanding or other similar document (and subsequently
acknowledges the same in any definitive document replacing any of the
foregoing), a waiver of all claims against the Trust Account, which waivers (or
the provisions thereof to be incorporated into the foregoing documents) shall be
substantially in the form attached hereto as Exhibit A (for Target Businesses)
and Exhibit B (for vendors), respectively. Notwithstanding the foregoing, in the
event any Target Business or vendor refuses to acknowledge such waivers of
claims against the Trust Account in writing, the Company may nonetheless
commence its due diligence investigations of such Target Business or retain such
vendor if and only if the Company determines, in good faith and with the
approval of the Company's Chief Executive Officer and the vote or written
consent of no less than a majority of the Board, including all non-
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independent directors, that the Company would be unable to obtain, on a
reasonable basis, substantially similar opportunities from another entity
willing to execute such a waiver.
7.3. Insider Letters. The Company shall not take any action or omit to take
any action that would cause a breach of any of the Insider Letters executed
between each Initial Stockholder and the Representatives and will not allow any
amendments to, or waivers of, such Insider Letters without the prior written
consent of the Representative.
7.4. Certificate of Incorporation and By-Laws. The Company shall not take
any action or omit to take any action that would cause the Company to be in
breach or violation of its Certificate of Incorporation or By-Laws. Prior to the
consummation of a Business Combination, the Company will not amend its
Certificate of Incorporation or By-Laws without the prior written consent of the
Representative.
7.5. Proxy and Other Information. The Company shall provide counsel to the
Representative with ten (10) copies of all proxy information and all related
material filed with the Commission in connection with a Business Combination
concurrently with such filing with the Commission. In addition, the Company
shall furnish any other state in which its initial public offering was
registered, such information as may be requested by such state.
7.6. Acquisition/Liquidation Procedures.
7.6.1. The Company agrees: (i) prior to the consummation of any
Business Combination, it will submit such transaction to the Company's
stockholders for their approval ("BUSINESS COMBINATION VOTE") even if the nature
of the acquisition is such as would not ordinarily require stockholder approval
under applicable state law; and (ii) in the event that the Company does not
effect a Business Combination within eighteen (18) months from the consummation
of the Offering (subject to extension for an additional six-month period, as
described in the Prospectus), the Company shall take all action necessary to
dissolve the Corporation and liquidate the Trust Account to holders of IPO
Shares in the manner described in the Sale Preliminary Prospectus and the
Prospectus as soon as reasonably practicable, and after approval of the
Company's stockholders and subject to the requirements of the Delaware General
Corporation Law (the "DGCL"), including the adoption of a resolution by the
Board, prior to such Termination Date, pursuant to Section 275(a) of the DGCL,
which shall deem the dissolution of the Company advisable and cause to be
prepared such notices as are required by Section 275(a) of the DGCL as promptly
thereafter as possible. If the Company does not consummate a Business
Combination by the Termination Date, the Company shall, with respect to any plan
of dissolution and liquidation, cause the Board to convene, adopt a plan of
dissolution and liquidation and, within five (5) Business Days of such adoption,
prepare and file a proxy statement with the Commission setting out the plan of
dissolution and liquidation. If the Company seeks approval from its stockholders
to consummate a Business Combination within 90 days of the expiration of 24
months from the Effective Date, the proxy statement related to such Business
Combination will also seek stockholder approval for the plan of dissolution and
liquidation in the event the stockholders do not approve the Business
Combination. If no proxy statement seeking the approval of the stockholders for
a Business Combination has been filed within 30 days prior to the date which is
24 months from the Effective Date, the Company shall
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cause the Board, prior to such date, to convene and adopt a plan of dissolution
and liquidation and on such date file a proxy statement with the Commission
seeking stockholder approval for such plan. Upon liquidation of the Trust
Account, the Company will distribute to all holders of IPO Shares an aggregate
sum equal to the Company's Liquidation Value. The Company's "LIQUIDATION VALUE"
means the Company's book value, as determined by the Company and audited and
approved by GGK. In no event, however, will the Company's Liquidation Value be
less than the amount contained in the Trust Account at that time, inclusive of
any net interest income thereon less any amounts previously distributed to the
Company out of the interest earned on the Trust Account pursuant to the terms of
the Trust Agreement (including payment of, or provision for applicable taxes).
Only holders of IPO Shares shall be entitled to receive liquidating
distributions with respect to the IPO Shares they beneficially own and the
Company shall pay no liquidating distributions with respect to any other shares
of capital stock of the Company, including the shares of Common Stock underlying
the Placement Warrants. With respect to any vote for any plan of dissolution and
liquidation recommended by the Board, the Company shall cause all of the Initial
Stockholders and the purchasers of the Placement Securities to vote the shares
of Common Stock owned by them immediately prior to this Offering and those
purchased in the Private Placement in favor of such plan of dissolution and
liquidation.
7.6.2. With respect to the Business Combination Vote, the Company
shall cause all of the Initial Stockholders to vote the shares of Common Stock
owned by them immediately prior to this Offering and the Private Placement in
accordance with the vote of holders of a majority of the IPO Shares present, in
person or by proxy, at a meeting of the Company's stockholders in connection
with the Business Combination Vote. In addition, the Company shall cause the
holders of the Placement Warrants to vote such shares in favor of the Business
Combination.
7.6.3. At the time the Company seeks approval of any potential
Business Combination (prior to the confirmation of its initial Business
Combination), the Company will offer each of the holders of the IPO Shares the
right to redeem their IPO Shares at a per share price equal to $10.00 (the
"REDEMPTION PRICE") (plus a portion of the interest income earned on the funds
in the trust account, but net of: (i) taxes payable on interest income earned,
State of Delaware franchise taxes, repayment of up to $200,000 of an additional
officer loan to be made on or prior to the closing of the Offering by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇ (such loan to be repaid within 90 days of the closing of the Offering)
and (ii) up to $1,825,000 ($1,925,000 if the Over-allotment option is exercised
in full) of interest income). If holders of less than 35% in interest of the
Company's IPO Shares and the shares of Common Stock underlying the Placement
Warrants vote against such approval of a Business Combination, the Company may,
but will not be required to, proceed with such Business Combination. If the
Company elects to so proceed, it will redeem shares, based upon the Redemption
Price, from those holders of IPO Shares who affirmatively requested such
redemption and who voted against the Business Combination. If holders of 35% or
more in interest of the IPO Shares vote against approval of any potential
Business Combination, the Company will not proceed with such Business
Combination and will not redeem such shares. Only holders of IPO Shares shall be
entitled to receive liquidating distributions and the Company shall pay no
liquidating distributions with respect to any other shares of capital stock of
the Company.
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7.7. Rule 419. The Company agrees it will use its best efforts to prevent
the Company from becoming subject to Rule 419 of the Regulations 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, it being agreed that the foregoing covenant shall not
apply to the publicly-traded price of any such securities.
7.8. Target Net Assets. The Company agrees that the initial Target Business
that it acquires must have a fair market value equal to at least 80% of the
Company's net assets at the time of such acquisition. The fair market value of
such business must be determined by the Board 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 is not able to independently
determine that the Target Business has a fair market value of at least 80% of
the Company's net assets at the time of such acquisition, the Company will
obtain an opinion from an unaffiliated, independent investment banking firm that
is a member of the NASD with respect to the satisfaction of such criteria.
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 date hereof, at the Closing Date or the Option Closing
Date, if any, and such representations, warranties and agreements of the
Underwriters and the 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 Public Securities to the several Underwriters until
the earlier of the expiration of any applicable statute of limitations and the
seventh (7th) anniversary of the later of the Closing Date and 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 withdraw from
this Agreement at any time prior to any Closing Date and this Agreement shall be
deemed terminated as of the time and date the Representative withdraws from this
Agreement pursuant to the terms hereof: (i) if any domestic or international
event or act or occurrence has materially disrupted or, in the Representative's
sole opinion, will in the immediate future materially disrupt, general
securities markets in the United States; or (ii) if trading on the New York
Stock Exchange, the AMEX or on the NMS or the NASD OTC Bulletin Board (or
successor trading market), as applicable, shall have been suspended, or minimum
or maximum prices for trading shall have been fixed, or maximum ranges for
prices for securities shall have been fixed, or maximum ranges for prices for
securities shall have been required on the NASD OTC Bulletin Board or by order
of the Commission or any other government authority having jurisdiction, or
(iii) if the
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United States shall have become involved in a war or an increase in major
hostilities, or (iv) if a banking moratorium has been declared by a New York
State or federal authority, or (v) if a moratorium on foreign exchange trading
has been declared which materially adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in the Representative's sole opinion, make it inadvisable to
proceed with the delivery of the Units, or (vii) if any of the Company's
representations, warranties or covenants hereunder are breached, or (viii) if
the Representative shall have become aware after the date hereof of such a
Material Adverse Change in the conditions or prospects of the Company, or such
adverse material change in general market conditions, including, without
limitation, as a result of terrorist activities after the date hereof, as in the
Representative's judgment would make it impracticable or inadvisable 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, within the time specified herein or any extensions thereof
pursuant to the terms herein, the obligations of the Company to pay the
accountable out of pocket expenses related to the transactions contemplated
herein shall be governed by Section 3.12 hereof.
9.4. Indemnification. Notwithstanding any contrary provision contained in
this Agreement, any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way effected by, such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
10. Miscellaneous.
10.1. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered by
hand or reputable overnight courier or delivered by facsimile transmission (with
printed confirmation of receipt) and confirmed and shall be deemed given when so
mailed, delivered or faxed (or if mailed, two days after such mailing):
If to the Representative:
Maxim Group LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director of Investment Banking
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
Ellenoff ▇▇▇▇▇▇▇▇ & Schole LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ Floor
45
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Page 46 of ▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company:
Alpha Security Group Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & Kakoyiann, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
10.2. Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
10.3. Amendment. This Agreement may only be amended by a written instrument
executed by each of the parties hereto.
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, except
as specifically provided for herein, 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 Representative, Company and the
Placement Investors: (i) agree that any legal suit, action or proceeding arising
out of or relating to this agreement and/or the transactions
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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) waive any objection which such party may have now or
hereafter to the venue of any such suit, action or proceeding and (iii)
irrevocably and exclusively consent 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 arising out of this
Agreement.
10.6.2. Each of the Representative, the Company and the Placement
Investors further agree 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 service of process upon the Company
mailed by certified mail to the Company's address shall be deemed in every
respect effective service of process upon the Company in any such suit, action
or proceeding, and service of process upon the Representatives mailed by
certified mail to the Representatives' addresses shall be deemed in every
respect effective service process upon the Representatives, in any such suit,
action or proceeding arising out of this Agreement.
10.6.3. THE COMPANY AND PLACEMENT INVESTORS HEREBY WAIVE ANY RIGHT TO
A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, THE REGISTRATION STATEMENT, THE PRELIMINARY SALE PROSPECTUS AND THE
PROSPECTUS.
10.6.4. The Company and the Placement Investors agree that the
prevailing party(is) 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 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.
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10.9. No Fiduciary Relationship. The Company and the Placement Investors
hereby acknowledge that the Underwriters are acting solely as underwriters in
connection with the offering of the Company's securities. The Company and the
Placement Investors further acknowledge 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 the
Underwriters act or be responsible as a fiduciary to the Company and its
management, stockholders, equity holders, creditors, the Placement Investors or
any other person in connection with any activity 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, the Placement Investors
and the Underwriters agree they are each responsible for making their own
independent judgments with respect to any such transactions, and 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 of the Placement Investors. The Company and the Placement
Investors hereby waive and release, to the fullest extent permitted by law, any
claim the Company or its Affiliates or the Placement Investors 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 involving such transactions.
[Signature Page Follows]
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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,
ALPHA SECURITY GROUP CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
AGREED TO AND ACCEPTED AS OF THE DATE FIRST WRITTEN ABOVE:
MAXIM GROUP LLC
By:
---------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director of Investment Banking
AGREED TO AND ACCEPTED AS TO THE COMPANY AND THE UNDERSIGNED, BUT SOLELY WITH
RESPECT TO SECTIONS 1.4, 1.6 AND 10.6 HEREOF:
-------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
AGREED TO AND ACCEPTED AS TO THE COMPANY AND THE UNDERSIGNED, BUT SOLELY WITH
RESPECT TO SECTIONS 1.4, 1.6 AND 10.6 HEREOF:
-------------------------------------
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
49
SCHEDULE A
ALPHA SECURITY GROUP CORPORATION
6,000,000 UNITS
NUMBER OF FIRM UNITS
UNDERWRITER TO BE PURCHASED
----------- --------------------
Maxim Group LLC
I-Bankers Securities, Inc.
---------
6,000,000
EXHIBIT A
FORM OF TARGET BUSINESS LETTER
__________________, 200___
Alpha Security Group Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Final Prospectus of Alpha Security Group
Corporation ("ALPHA"), dated ____________, 2007 (the "PROSPECTUS"). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
The authorized signatory of the undersigned business entity (collectively,
with its officers, directors, employees, owners, affiliates, agents and
representatives, "TARGET COMPANY") has read the Prospectus and understands that
Alpha has established a trust account (collectively with the initial principal
and interest accrued from time to time thereon, the "TRUST ACCOUNT"), initially
in an amount of at least $60,000,000 ($68,820,000 if the over-allotment option
is exercised in full), for the benefit of Alpha's public stockholders and the
underwriters of Alpha's initial public offering and that, except for: (i) taxes
payable on interest income earned, State of Delaware franchise taxes, repayment
of up to $200,000 of an additional officer loan to be made on or prior to the
closing of the Offering by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (such loan to be repaid within 90
days of the closing of the Offering) and (ii) $1,825,000 ($1,925,000 if the
over-allotment option is exercised in full) of the interest earned (after
payment of applicable taxes) on the amounts held in the Trust Account, Alpha may
disburse monies from the Trust Account only: (i) to such public stockholders in
the event of the conversion of their shares or the dissolution and liquidation
of Alpha or (ii) to Alpha and such underwriters after Alpha consummates a
business combination (as described in the Prospectus).
For and in consideration of Alpha agreeing to evaluate the undersigned for
purposes of consummating a Business Combination with it, and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Target Company hereby agrees that it does not now and shall not at
any time hereafter have any claim to, or make any claim against, the Trust
Account or Alpha's public stockholders, regardless of whether such claim arises
as a result of, in connection with or relating in any way to, the business
relationship between Alpha and Target Company, this waiver letter or any other
matter, and regardless of whether such claim arises based on contract, tort,
equity or any other theory of legal liability (any and all such claims are
collectively referred to hereafter as the "CLAIMS"). Target Company hereby
irrevocably waives any Claim it may have, now or in the future, and will not
seek recourse against, the Trust Account or such public stockholders for any
reason whatsoever. In the event that Target Company commences any action or
proceeding based upon, in connection with, relating to or arising out of any
matter relating to Alpha, which proceeding seeks, in whole or in part, relief
against the Trust Account or Alpha's public stockholders, whether in the form of
money damages or injunctive relief, in which Alpha or such beneficiaries
prevail, whether on the merits or otherwise, then Alpha shall be entitled to
recover from Target Company and/or the party(ies) who commenced the action or
proceeding, the legal fees and associated costs required to defend such action
or proceeding.
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Print Name of Target Company
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Authorized Signature of Target Company
EXHIBIT B
FORM OF VENDOR LETTER
__________________, 200___
Alpha Security Group Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Final Prospectus of Alpha Security Group
Corporation ("ALPHA"), dated ____________, 2007 (the "PROSPECTUS"). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
The authorized signatory of the undersigned vendor and/or service provider
of Alpha (collectively, with its officers, directors, employees, owners,
affiliates, agents and representatives, "VENDOR") has read the Prospectus and
understands that Alpha has established a trust account (collectively with the
initial principal and interest accrued from time to time thereon, the "TRUST
ACCOUNT"), initially in an amount of at least $60,000,000 ($68,820,000 if the
over-allotment option is exercised in full), for the benefit of Alpha's public
stockholders and the underwriters of Alpha's initial public offering and that,
except for: (i) taxes payable on interest income earned, State of Delaware
franchise taxes, repayment of up to $200,000 of an additional officer loan to be
made on or prior to the closing of the Offering by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (such
loan to be repaid within 90 days of the closing of the Offering) and (ii)
$1,825,000 ($1,925,000 if the over-allotment option is exercised in full) of the
interest earned (after payment of applicable taxes) on the amounts held in the
Trust Account, Alpha may disburse monies from the Trust Account only: (i) to
such public stockholders in the event of the conversion of their shares or the
dissolution and liquidation of Alpha or (ii) to Alpha and such underwriters
after Alpha consummates a business combination (as described in the Prospectus).
For and in consideration of Alpha agreeing to retain Vendor to provide
goods or services to Alpha, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, Vendor hereby agrees
that Vendor does not now and shall not at any time hereafter have any claim to,
or make any claim against, the Trust Account or Alpha's public stockholders,
regardless of whether such claim arises as a result of, in connection with or
relating in any way to, the business relationship between Alpha and Vendor, this
waiver letter or any other matter, and regardless of whether such claim arises
based on contract, tort, equity or any other theory of legal liability (any and
all such claims are collectively referred to hereafter as the "CLAIMS"). Vendor
hereby irrevocably waives any Claim it may have, now or in the future, and will
not seek recourse against, the Trust Account or such public stockholders for any
reason whatsoever. In the event that Vendor commences any action or proceeding
based upon, in connection with, relating to or arising out of any matter
relating to Alpha, which proceeding seeks, in whole or in part, relief against
the Trust Account or Alpha's public stockholders, whether in the form of money
damages or injunctive relief, in which Alpha or such beneficiaries prevail,
whether on the merits or otherwise, then Alpha shall be entitled to recover from
Vendor and/or the party(ies) who commenced the action or proceeding, the legal
fees and associated costs required to defend such action or proceeding.
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Print Name of Vendor
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Authorized Signature of Vendor