EXHIBIT 1.1
UNDERWRITING AGREEMENT
BETWEEN
ASIA AUTOMOTIVE ACQUISITION CORP.
AND
XXXXXX & XXXXXXX, LLC
Dated: _____________, 2005
ASIA AUTOMOTIVE ACQUISITION CORP.
UNDERWRITING AGREEMENT
_______________, 2005
Xxxxxx & Xxxxxxx, LLC
1270 Avenue of the America
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Asia Automotive Acquisition Corp., a Delaware corporation
("COMPANY"), hereby confirms its agreement with Xxxxxx & Xxxxxxx, LLC (being
referred to herein variously as "YOU," "XXXXXX" or the "REPRESENTATIVE") and
with the other underwriters named on Schedule I hereto for which Xxxxxx is
acting as Representative (the Representative and the other Underwriters being
collectively called the "UNDERWRITERS" or, individually, an "UNDERWRITER") as
follows:
1. Purchase and Sale of Securities.
1.1. Firm Securities.
1.1.1. Purchase of Firm Units. On the basis of the
representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company agrees to issue and sell,
severally and not jointly, to the several Underwriters, an aggregate of
4,000,000 units ("FIRM Units") of the Company at a purchase price (net of
discounts and commissions) of $7.44 per Firm Unit. The Underwriters,
severally and not jointly, agree to purchase from the Company the number of
Firm Units set forth opposite their respective names on Schedule I attached
hereto and made a part hereof at a purchase price (net of discounts and
commissions) of $7.44 per Firm Unit. The Firm Units are to be offered
initially to the public ("OFFERING") at the offering price of $8.00 per
Firm Unit. Each Firm Unit consists of one share of the Company's common
stock, par value $.0001 per share ("COMMON STOCK"), and one warrant
("WARRANTS"). The shares of Common Stock and the Warrants included in the
Firm Units will not be separately transferable until 20 trading days after
the effective date ("EFFECTIVE DATE") of the Registration Statement (as
defined in Section 2.1.1 hereof) unless Xxxxxx informs the Company of its
decision to allow earlier separate trading, but in no event xxxx Xxxxxx
allow separate trading until the preparation of an audited balance sheet of
the Company reflecting receipt by the Company of the proceeds of the
Offering and the filing of a Form 8-K by the Company which includes such
balance sheet. Each Warrant entitles its holder to exercise it to purchase
one share of Common Stock for $5.00 during the period commencing on the
later of the consummation by the Company
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of its "BUSINESS COMBINATION" or one year from the Effective Date of the
Registration Statement and terminating on the five-year anniversary of the
Effective Date. "Business Combination" shall mean any merger, capital stock
exchange, asset or stock acquisition or other similar business combination
consummated by the Company with an operating business (as described more
fully in the Registration Statement).
1.1.2. Payment and Delivery. Delivery and payment for the Firm
Units shall be made at 10:00 A.M., New York time, on the third business day
following the Effective Date (or the fourth business day following the
Effective Date, if the Registration Statement is declared effective after
4:30 p.m.) or at such earlier time as shall be agreed upon by the
Representative and the Company at the offices of the Representative or at
such other place as shall be agreed upon by the Representative and the
Company. The hour and date of delivery and payment for the Firm Units are
called "CLOSING DATE." Payment for the Firm Units shall be made on the
Closing Date at the Representative's election by wire transfer in Federal
(same day) funds or by certified or bank cashier's check(s) in New York
Clearing House funds, payable as follows: $_______ of the proceeds received
by the Company for the Firm Units shall be deposited in the trust fund
established by the Company for the benefit of the public stockholders as
described in the Registration Statement ("TRUST FUND") pursuant to the
terms of an Investment Management Trust Agreement ("TRUST AGREEMENT") and
the remaining proceeds shall be paid to the order of the Company upon
delivery to you (or through the facilities of the Depository Trust Company
("DTC") of certificates (in form and substance satisfactory to the
Underwriters) representing the Firm Units) for the account of the
Underwriters. The Firm Units shall be registered in such name or names and
in such authorized denominations as the Representative may request in
writing at least two full business days prior to the Closing Date. The
Company will permit the Representative to examine and package the Firm
Units for delivery, at least one full business day prior to the Closing
Date. The Company shall not be obligated to sell or deliver any of the Firm
Units except upon tender of payment by the Representative for all the Firm
Units.
1.2. Over-Allotment Option.
1.2.1. Option Units. For the purposes of covering any
over-allotments in connection with the distribution and sale of the Firm
Units, the Underwriters are hereby granted, severally and not jointly, an
option to purchase up to an additional 600,000 units from the Company
("OVER-ALLOTMENT OPTION"). Such additional 600,000 units are hereinafter
referred to as "OPTION UNITS." The Firm Units and the Option Units are
hereinafter collectively referred to as the "UNITS," and the Units, the
shares of Common Stock and the Warrants included in the Units and the
shares of Common Stock issuable upon exercise of the Warrants are
hereinafter referred to collectively as the "PUBLIC SECURITIES." The
purchase price to be paid for the Option Units will be the same price per
Option Unit as the price per Firm Unit set forth in Section 1.1.1 hereof.
1.2.2. Exercise of Option. The Over-allotment Option granted
pursuant to Section 1.2.1 hereof may be exercised by the Representative as
to all (at any time) or any part (from time to time) of the Option Units
within 45 days after the Effective Date. The Underwriters will not be under
any obligation to purchase any Option Units prior to the exercise of the
Over-allotment Option. The Over-allotment Option granted hereby may be
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exercised by the giving of oral notice to the Company by the
Representative, which must be confirmed in writing by overnight mail or
facsimile transmission setting forth the number of Option Units to be
purchased and the date and time for delivery of and payment for the Option
Units, which will not be later than five full business days after the date
of the notice or such other time as shall be agreed upon by the Company and
the Representative, at the offices of the Representative or at such other
place as shall be agreed upon by the Company and the Representative. 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 on the notice (hereinafter the "OPTION CLOSING DATE"). Upon
exercise of the Over-allotment Option, the Company will become obligated to
convey to the Underwriters, and, subject to the terms and conditions set
forth herein, the Underwriters will become obligated to purchase, the
number of Option Units specified in such notice.
1.2.3. Payment and Delivery. Payment for the Option Units
shall be made on the Option Closing Date at the Representative's election
by wire transfer in Federal (same day) funds or by certified or bank
cashier's check(s) in New York Clearing House funds, payable as follows:
$7.44 per Option Unit shall be deposited in the Trust Fund pursuant to the
Trust Agreement and the remaining proceeds shall be paid to the order of
the Company upon delivery to you (or through the facilities of DTC) of
certificates (in form and substance satisfactory to the Underwriters)
representing the Option Units for the account of the Underwriters. The
certificates representing the Option Units to be delivered will be in such
denominations and registered in such names as the Representative requests
not less than two full business days prior to the Closing Date or the
Option Closing Date, as the case may be, and will be made available to the
Representative for inspection, checking and packaging at the aforesaid
office of the Company's transfer agent or correspondent not less than one
full business day prior to such Closing Date.
1.3. Representative's Purchase Option.
1.3.1. Purchase Option. The Company hereby agrees to issue and
sell to the Representative (and/or their designees) on the Effective Date
an option ("REPRESENTATIVE'S PURCHASE OPTION") for the purchase of an
aggregate of 320,000 units ("REPRESENTATIVE'S UNITS") for an aggregate
purchase price of $100.00. Each of the Representative's Units is identical
to the Firm Units, except that the Warrants included in the
Representative's Units ("REPRESENTATIVE'S WARRANTS") have an exercise price
of $6.25 (125% of the exercise price of the Warrants included in the Units
sold to the public). The Representative's Purchase Option shall be
exercisable, in whole or in part, commencing on the later of the
consummation of a Business Combination or one year from the Effective Date
and expiring on the four-year anniversary of the Effective Date at an
initial exercise price per Representative's Unit of $8.80, 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 Warrants included in the Representatives Units (the
"REPRESENTATIVE WARRANTS") and the shares of Common Stock issuable upon
exercise of the Representative's Warrants are hereinafter referred to
collectively as the "REPRESENTATIVE'S SECURITIES." The Public Securities
and the Representative's Securities are hereinafter referred to
collectively as the "SECURITIES." The Representative understands and agrees
that there are significant restrictions against transferring the
Representative's Purchase Option during the
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first year after the Effective Date, as set forth in Section 3 of the
Representative's Purchase Option.
1.3.2. Delivery and Payment. Delivery and payment for the
Representative's Purchase Option shall be made on the Closing Date. The
Company shall deliver to the Underwriters, upon payment therefor,
certificates for the Representative's Purchase Option in the name or names
and in such authorized denominations as the Underwriters may request.
2. Representations and Warranties of the Company. The Company represents and
warrants to the Underwriters as follows:
2.1. Filing of Registration Statement.
2.1.1. Pursuant to the Act. The Company has filed with the
Securities and Exchange Commission ("COMMISSION") a registration statement
and an amendment or amendments thereto, on Form S-1 (File No. 333-o),
including any related preliminary prospectus ("PRELIMINARY PROSPECTUS"),
for the registration of the Public Securities under the Securities Act of
1933, as amended ("ACT"), which registration statement and amendment or
amendments have been prepared by the Company in conformity with the
requirements of the Act, and the rules and regulations ("REGULATIONS") of
the Commission under the Act. Except as the context may otherwise require,
such registration statement, as amended, on file with the Commission at the
time the registration statement becomes effective (including the
prospectus, financial statements, schedules, exhibits and all other
documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to
paragraph (b) of Rule 430A of the Regulations), is hereinafter called the
"REGISTRATION STATEMENT," and the form of the final prospectus dated the
Effective Date included in the Registration Statement (or, if applicable,
the form of final prospectus filed with the Commission pursuant to Rule 424
of the Regulations), is hereinafter called the "PROSPECTUS." The
Registration Statement has been declared effective by the Commission on the
date hereof.
2.1.2. Pursuant to the Exchange Act. The Company has filed
with the Commission a Form 8-A (File Number 000-______) providing for the
registration under the Securities Exchange Act of 1934, as amended
("EXCHANGE ACT"), of the Units, the Common Stock and the Warrants. The
registration of the Units, Common Stock and Warrants under the Exchange Act
has been declared effective by the Commission on the date hereof.
2.2. No Stop Orders, Etc. Neither the Commission nor, to the best of
the Company's knowledge, any state regulatory authority has issued any order or
threatened to issue any order preventing or suspending the use of any
Preliminary Prospectus or has instituted or, to the best of the Company's
knowledge, threatened to institute any proceedings with respect to such an
order.
2.3. Disclosures in Registration Statement.
2.3.1. 10b-5 Representation. At the time the Registration
Statement became effective and at all times subsequent thereto up to the
Closing Date and the Option Closing Date, if any, the Registration
Statement and the Prospectus will contain all material
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statements that are required to be stated therein in accordance with the
Act and the Regulations, and will in all material respects conform to the
requirements of the Act and the Regulations and neither the Registration
Statement nor the Prospectus, nor any amendment or supplement thereto, on
such dates, will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. When any Preliminary Prospectus was first filed with
the Commission (whether filed as part of the Registration Statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) of the Regulations) and when any amendment thereof or supplement
thereto was first filed with the Commission, such Preliminary Prospectus
and any amendments thereof and supplements thereto complied or will have
been corrected in the Prospectus to comply in all material respects with
the applicable provisions of the Act and the Regulations and did not and
will not contain an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The representation and warranty made in this
Section 2.3.1 does not apply to statements made or statements omitted in
reliance upon and in conformity with written information furnished to the
Company with respect to the Underwriters by the Representative expressly
for use in the Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
2.3.2. Disclosure of Agreements. The agreements and documents
described in the Registration Statement and the Prospectus conform to the
descriptions thereof contained therein and there are no agreements or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed with the Commission as exhibits to the
Registration Statement, that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which
the Company is a party or by which its property or business is or may be
bound or affected and (i) that is referred to in the Prospectus, or (ii) is
material to the Company's business, has been duly and validly executed by
the Company, is in full force and effect and is enforceable against the
Company and, to the Company's knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (y) as enforceability of any indemnification
or contribution provision may be limited under the federal and state
securities laws, and (z) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and none of such agreements or
instruments has been assigned by the Company, and neither the Company nor,
to the best of the Company's knowledge, any other party is in breach or
default thereunder and, to the best of the Company's knowledge, no event
has occurred that, with the lapse of time or the giving of notice, or both,
would constitute a breach or default thereunder. To the best of the
Company's knowledge, performance by the Company of the material provisions
of such agreements or instruments will not result in a violation of any
existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over
the Company or any of its assets or businesses, including, without
limitation, those relating to environmental laws and regulations.
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2.3.3. Prior Securities Transactions. No securities of the
Company have been sold by the Company or by or on behalf of, or for the
benefit of, any person or persons controlling, controlled by, or under
common control with the Company within the three years prior to the date
hereof, except as disclosed in the Registration Statement.
2.3.4. Regulations. The disclosures in the Registration
Statement concerning the effects of Federal, State and local regulation on
the Company's business purpose 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. Changes After Dates in Registration Statement.
2.4.1. No Material Adverse Change. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise specifically stated therein, (i) there has
been no material adverse change in the condition, financial or otherwise,
or business prospects of the Company, (ii) there have been no material
transactions entered into by the Company, other than as contemplated
pursuant to this Agreement, and (iii) no member of the Company's management
has resigned from any position with the Company.
2.4.2. Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, and except as may otherwise be indicated or
contemplated herein or therein, the Company has not (i) issued any
securities or incurred any material liability or obligation, direct or
contingent, for borrowed money; or (ii) declared or paid any dividend or
made any other distribution on or in respect to its capital stock.
2.5. Independent Accountants. Xxxxxxxxx, Kass and Co. PC ("RKC"), whose
report is filed with the Commission as part of the Registration Statement, are
independent accountants as required by the Act and the Regulations. RKC has not,
during the periods covered by the financial statements included in the
Prospectus, provided to the Company any non-audit services, as such term is used
in Section 10A(g) of the Exchange Act.
2.6. Financial Statements. The financial statements, including the
notes thereto and supporting schedules included in the Registration Statement
and Prospectus fairly present the financial position, the results of operations
and the cash flows of the Company at the dates and for the periods to which they
apply; and such financial statements have been prepared in conformity with
generally accepted accounting principles, consistently applied throughout the
periods involved; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. The
Registration Statement discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and other
relationships of the Company with unconsolidated entities or other persons that
may have a material current or future effect on the Company's financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses.
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2.7. Authorized Capital; Options; Etc. The Company had at the date or
dates indicated in the Prospectus duly authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
Based on the assumptions stated in the Registration Statement and the
Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein. Except as set forth in, or contemplated by,
the Registration Statement and the Prospectus, on the Effective Date and on the
Closing Date, there will be no options, warrants, or other rights to purchase or
otherwise acquire any authorized but unissued shares of Common Stock of the
Company or any security convertible into shares of Common Stock of the Company,
or any contracts or commitments to issue or sell shares of Common Stock or any
such options, warrants, rights or convertible securities.
2.8. Valid Issuance of Securities; Etc.
2.8.1. Outstanding Securities. All issued and outstanding
securities of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; the holders thereof have no rights of
rescission with respect thereto, and are not subject to personal liability
by reason of being such holders; and none of such securities were issued in
violation of the preemptive rights of any holders of any security of the
Company or similar contractual rights granted by the Company. The
authorized Common Stock conforms in all material respects to all statements
relating thereto contained in the Registration Statement and the
Prospectus. The offers and sales of the outstanding Common Stock were at
all relevant times either registered under the Act and the applicable state
securities or Blue Sky laws or, based in part on the representations and
warranties of the purchasers of such shares of Common Stock, exempt from
such registration requirements.
2.8.2. Securities Sold Pursuant to this Agreement. The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not
and will not be subject to personal liability by reason of being such
holders; the Securities are not and will not be subject to the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to be
taken for the authorization, issuance and sale of the Securities has been
duly and validly taken. The Securities conform in all material respects to
all statements with respect thereto contained in the Registration
Statement. When issued, the Representative's Purchase Option, the
Representative's Warrant, and the Warrants will constitute valid and
binding obligations of the Company to issue and sell, upon exercise thereof
and payment of the respective exercise prices therefor, the number and type
of securities of the Company called for thereby in accordance with the
terms thereof and such Representative's Purchase Option, the
Representative's Warrants, and Warrants are enforceable against the Company
in accordance with their respective terms, except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally; (ii) as enforceability
of any indemnification or contribution provision may be limited under the
federal and state securities laws; and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
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2.9. Registration Rights of Third Parties. Except as set forth in the
Prospectus, no holders of any securities of the Company or any rights
exercisable for or convertible or exchangeable into securities of the Company
have the right to require the Company to register any such securities of the
Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10. Validity and Binding Effect of Agreements. This Agreement, the
Warrant Agreement (as defined in Section 2.20 hereof), the Trust Agreement, the
Services Agreement (as defined in Section 3.7.2 hereof) and the Escrow Agreement
(as defined in Section 2.21.2 hereof) have been duly and validly authorized by
the Company and constitute, and the Representative's Purchase Option, has been
duly and validly authorized by the Company and, when executed and delivered,
will constitute, the valid and binding agreements of the Company, enforceable
against the Company in accordance with their respective terms, except: (i) as
such enforceability may be limited by 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.
2.11. No Conflicts, Etc. The execution, delivery, and performance by
the Company of this Agreement, the Representative's Purchase Option, the Warrant
Agreement, the Trust Agreement, the Services 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 pursuant to the Trust
Agreement referred to in Section 2.22 hereof; (ii) result in any violation of
the provisions of the Certificate of Incorporation or the Bylaws 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.
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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 purpose as described in the Prospectus. The
disclosures in the Registration Statement concerning the effects of
federal, state and local regulation on this offering and the Company's
business purpose as currently contemplated are correct in all material
respects and do not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
2.13.2. Transactions Contemplated Herein. The Company has all
requisite corporate power and authority to enter into this Agreement and to
carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have
been obtained. No consent, authorization or order of, and no filing with,
any court, government agency or other body is required for the valid
issuance, sale and delivery, of the Securities and the consummation of the
transactions and agreements contemplated by this Agreement, the Warrant
Agreement, the Representative's Purchase Option, the Trust Agreement, the
Services Agreement and the Escrow Agreement and as contemplated by the
Prospectus, except with respect to applicable federal and state securities
laws.
2.14. D&O Questionnaires. To the best of the Company's knowledge, all
information contained in the questionnaires ("QUESTIONNAIRES") completed by each
of the Company's stockholders immediately prior to the Offering ("INITIAL
STOCKHOLDERS") and provided to the Underwriters as an exhibit to his or her
Insider Letter (as defined in Section 2.21.1) 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 has not been disclosed in the Registration
Statement or the Questionnaires.
2.16. Good Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification, except where
the failure to qualify would not have a material adverse effect on the Company.
2.17. Transactions Affecting Disclosure to NASD.
2.17.1. Finder's Fees. Except as described in the Prospectus,
there are no claims, payments, arrangements, agreements or understandings
relating to the payment of a finder's, consulting or origination fee by the
Company or any Initial Stockholder with respect to the sale of the
Securities hereunder or any other arrangements, agreements or
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understandings of the Company or, to the best of the Company's knowledge,
any Initial Stockholder that may affect the Underwriters' compensation, as
determined by the National Association of Securities Dealers, Inc.
("NASD").
2.17.2. Payments Within Twelve Months. The Company has not
made any direct or indirect payments (in cash, securities or otherwise):
(i) to any person, as a finder's fee, consulting fee or otherwise, in
consideration of such person raising capital for the Company or introducing
to the Company persons who raised or provided capital to the Company; (ii)
to any NASD member; or (iii) to any person or entity that has any direct or
indirect affiliation or association with any NASD member, within the twelve
months prior to the Effective Date, other than payments to Xxxxxx.
2.17.3. Use of Proceeds. None of the net proceeds of the
Offering will be paid by the Company to any participating NASD member or
its affiliates, except as specifically authorized herein and except as may
be paid in connection with a Business Combination as contemplated by the
Prospectus.
2.17.4. Insiders' NASD Affiliation. Based on questionnaires
distributed to such persons, no officer, director or any beneficial owner
of the Company's unregistered securities has any direct or indirect
affiliation or association with any NASD member. The Company will advise
the Representative and its counsel if it learns that any officer, director
or owner of at least 5% of the outstanding shares of Common Stock is or
becomes an affiliate or associated person of an NASD member participating
in the offering.
2.18. Foreign Corrupt Practices Act. Neither the Company nor any of the
Initial Stockholders or any other person acting on behalf of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a position to
help or hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) that (i) might subject the Company to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, might have had a material adverse effect on the
assets, business or operations of the Company as reflected in any of the
financial statements contained in the Prospectus or (iii) if not continued in
the future, might adversely affect the assets, business, operations or prospects
of the Company. The Company's internal accounting controls and procedures are
sufficient to cause the Company to comply with the Foreign Corrupt Practices Act
of 1977, as amended.
2.19. Officers' Certificate. Any certificate signed by any duly
authorized officer of the Company, in connection with the Offering, and
delivered to you or to your counsel shall be deemed a representation and
warranty by the Company to the Underwriters as to the matters covered thereby.
2.20. Warrant Agreement. The Company has entered into a warrant
agreement with respect to the Warrants and the Representative's Warrants with
Continental Stock Transfer &
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Trust Company substantially in the form filed as an exhibit to the Registration
Statement ("WARRANT AGREEMENT"), providing for, among other things, the payment
of a warrant solicitation fee as contemplated by Section 3.9 hereof.
2.21. Agreements With Initial Stockholders.
2.21.1. Letters. The Company has caused to be duly executed
legally binding and enforceable agreements (except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability
of any indemnification, contribution or noncompete provision may be limited
under the federal and state securities laws, and (iii) that the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought) a form of which is
annexed as Exhibit 10.1 to the Registration Statement ("INSIDER LETTER"),
pursuant to which each of the Initial Stockholders of the Company agree to
certain matters, including but not limited to, certain matters described as
being agreed to by them under the "Proposed Business" Section of the
Prospectus.
2.21.2. Escrow Agreement. The Company has caused the Initial
Stockholders to enter into an escrow agreement ("ESCROW AGREEMENT") with
Continental Stock Transfer & Trust Company ("ESCROW AGENT"), substantially
in the form annexed as Exhibit 10.__ to the Registration Statement, whereby
the Common Stock owned by each of the Initial Stockholders will be held in
escrow by the Escrow Agent, until the third anniversary of the Effective
Date. During such escrow period, the Initial Stockholders shall be
prohibited from selling or otherwise transferring such shares (except to
spouses and children of Initial Stockholders and trusts established for
their benefit and as otherwise set forth in the Escrow Agreement), but will
retain the right to vote such shares and receive any distributions with
respect to such shares. To the Company's knowledge, the Escrow Agreement is
enforceable against each of the Initial Stockholders and will not, with or
without the giving of notice or the lapse of time or both, result in a
breach of, or conflict with any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which any of the
Initial Stockholders is a party. The Escrow Agreement shall not be amended,
modified or otherwise changed without the prior written consent of Xxxxxx.
2.22. Investment Management Trust Agreement. The Company has entered
into the Trust Agreement with respect to certain proceeds of the Offering
substantially in the form annexed as Exhibit 10.5 to the Registration
Statement.
2.23. Covenants Not to Compete. No Initial Stockholder, employee,
officer or director of the Company is subject to any noncompetition agreement or
non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be an Initial Stockholder, employee, officer
and/or director of the Company.
2.24. Investments. No more than 45% of the "value" (as defined in
Section 2(a)(41) of the Investment Company Act of 1940 ("INVESTMENT COMPANY
ACT")) of the Company's total assets consist of, and no more than 45% of the
Company's net income after taxes is derived
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from, securities other than "Government securities" (as defined in Section
2(a)(16) of the Investment Company Act).
2.25. Subsidiaries. The Company does not own an interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business entity.
2.26. Related Party Transactions. There are no business relationships
or related party transactions involving the Company or any other person required
to be described in the Prospectus that have not been described as required.
3. Covenants of the Company. The Company covenants and agrees as follows:
3.1. Amendments to Registration Statement. The Company will deliver to
the Representative, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the Representative
shall reasonably object in writing.
3.2. Federal Securities Laws.
3.2.1. Compliance. During the time when a Prospectus is
required to be delivered under the Act, the Company will use all reasonable
efforts to comply with all requirements imposed upon it by the Act, the
Regulations and the Exchange Act and by the regulations under the Exchange
Act, as from time to time in force, so far as necessary to permit the
continuance of sales of or dealings in the Public Securities in accordance
with the provisions hereof and the Prospectus. If at any time when a
Prospectus relating to the Public Securities is required to be delivered
under the Act, any event shall have occurred as a result of which, in the
opinion of counsel for the Company or counsel for the Underwriters, the
Prospectus, as then amended or supplemented, includes an untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representative promptly and prepare and file with
the Commission, subject to Section 3.1 hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Act.
3.2.2. Filing of Final Prospectus. The Company will file the
Prospectus (in form and substance satisfactory to the Representative) with
the Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3. Exchange Act Registration. For a period of five years
from the Effective Date, or until such earlier time upon which the Company
is required to be liquidated, the Company will use its best efforts to
maintain the registration of the Units, Common Stock and Warrants under the
provisions of the Exchange Act and, the Company will not deregister the
Units, Common Stock and Warrants under the Exchange Act without the prior
written consent of Xxxxxx.
3.3. Blue Sky Filing. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective, to
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qualify the Public Securities for offering and sale under the securities laws of
such jurisdictions as the Representative may reasonably designate, provided that
no such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
3.4. Delivery to Underwriters of Prospectuses. The Company will deliver
to each of the several Underwriters, without charge, from time to time during
the period when the Prospectus is required to be delivered under the Act or the
Exchange Act such number of copies of each Preliminary Prospectus and the
Prospectus as such Underwriters may reasonably request and, as soon as the
Registration Statement or any amendment or supplement thereto becomes effective,
deliver to you two original executed Registration Statements, including
exhibits, and all post-effective amendments thereto and copies of all exhibits
filed therewith or incorporated therein by reference and all original executed
consents of certified experts.
3.5. Effectiveness and Events Requiring Notice to the Representative.
The Company will use its best efforts to cause the Registration Statement to
remain effective and will notify the Representative immediately and confirm the
notice in writing: (i) of the effectiveness of the Registration Statement and
any amendment thereto; (ii) of the issuance by the Commission of any stop order
or of the initiation, or the threatening, of any proceeding for that purpose
when the Company becomes aware of such; (iii) of the issuance by any state
securities commission of any proceedings for the suspension of the qualification
of the Public Securities for offering or sale in any jurisdiction or of the
initiation, or the threatening, of any proceeding for that purpose when the
Company becomes aware of such; (iv) of the mailing and delivery to the
Commission for filing of any amendment or supplement to the Registration
Statement or Prospectus; (v) of the receipt of any comments or request for any
additional information from the Commission; and (vi) of the happening of any
event during the period described in Section 3.2.3 hereof that, in the judgment
of the Company, makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If the Commission or any state securities commission shall enter a
stop order or suspend such qualification at any time, the Company will make
every reasonable effort to obtain promptly the lifting of such order.
3.6. Review of Financial Statements. For a period of five years from
the Effective Date, or until such earlier time upon which the Company is
required to be liquidated, the Company, at its expense, shall cause its
regularly engaged independent certified public accountants to review (but not
audit) the Company's financial statements for each of the first three fiscal
quarters prior to the announcement of quarterly financial information, the
filing of the Company's Form 10-Q quarterly report and the mailing of quarterly
financial information to stockholders.
3.7. Affiliated Transactions.
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3.7.1. Business Combinations. The Company will not consummate
a Business Combination with any entity which is affiliated with any Initial
Stockholder unless the Company obtains an opinion from an independent
investment banking firm that the Business Combination is fair to the
Company's stockholders from a financial perspective.
3.7.2. Office Space and Administrative Services. The Company
has entered into an agreement ("SERVICES AGREEMENT") with Asia Development
Capital LLC ("ADCLLC") substantially in the form annexed as Exhibit 10.__
to the Registration Statement pursuant to which ADCLLC will make available
to the Company administrative, technology and secretarial services, as well
as the use of certain limited office space, in Birmingham, Michigan for
$7,500 per month.
3.7.3. Affiliate Compensation. Except as set forth above in
this Section 3.7, the Company shall not pay any Initial Stockholder or any
of their affiliates any fees or compensation from the Company, for services
rendered to the Company prior to, or in connection with, the consummation
of a Business Combination; provided that the Initial Stockholders shall be
entitled to reimbursement from the Company for their reasonable
out-of-pocket expenses incurred in connection with seeking and consummating
a Business Combination.
3.8. Secondary Market Trading and Standard & Poor's. The Company will
apply to be included in Standard & Poor's Daily News and Corporation Records
Corporate Descriptions for a period of five years from the consummation of a
Business Combination. Promptly after the consummation of the Offering, the
Company shall take such steps as may be necessary to obtain a secondary market
trading exemption for the Company's securities in the State of California. The
Company shall also take such other action as may be reasonably requested by the
Representative to obtain a secondary market trading exemption in such other
states as may be requested by the Representative.
3.9. Warrant Solicitation Fees. The Company hereby engages Xxxxxx, on a
non-exclusive basis, as its agent for the solicitation of the exercise of the
Warrants. The Company will (i) assist Xxxxxx with respect to such solicitation,
if requested by Xxxxxx, and (ii) at Xxxxxx'x request, provide Xxxxxx, and direct
the Company's transfer and warrant agent to provide to Xxxxxx, at the Company's
cost, lists of the record and, to the extent known, beneficial owners of, the
Warrants. Commencing one year from the Effective Date, the Company will pay
Xxxxxx a commission of two and one-half percent of the exercise price of the
Warrants for each Warrant exercised, payable on the date of such exercise, on
the terms provided for in the Warrant Agreement, only if permitted under the
rules and regulations of the NASD and only to the extent that an investor who
exercises his Warrants specifically designates, in writing, that Xxxxxx
solicited his exercise. Xxxxxx may engage sub-agents in its solicitation
efforts. The Company agrees to disclose the arrangement to pay such solicitation
fees to Xxxxxx in any prospectus used by the Company in connection with the
registration of the shares of Common Stock underlying the Warrants.
3.10. Financial Public Relations Firm. Promptly after the execution of
a definitive agreement for a Business Combination, the Company shall retain a
financial public relations firm
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reasonably acceptable to, but not affiliated with, the Representative for a term
to be agreed upon by the Company and the Representative.
3.11. Reports to the Representative.
3.11.1. Periodic Reports, Etc. For a period of five years
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 (Attn: Xxxxxx Xxxxxxxxx) 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 every
press release and every news item and article with respect to the Company
or its affairs which was released by the Company; (ii) a copy of each
Schedule 13D, 13G, 14D-1 or 13E-4 received or prepared by the Company;
(iii) five copies of each Registration Statement; (iv) 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 (v) such
additional documents and information with respect to the Company and the
affairs of any future subsidiaries of the Company as the Representative may
from time to time reasonably request; provided that the Representative
shall sign, if requested by the Company, a Regulation FD compliant
confidentiality agreement which is reasonably acceptable to the Company,
the Representative, and their respective counsel in connection with the
Representative's receipt of such information.
3.11.2. Transfer Sheets. For a period of two years following
the Effective Date or until such earlier time upon which the Company is
required to be liquidated, the Company shall retain a transfer and warrant
agent acceptable to the Representative ("TRANSFER AGENT") and will furnish
to the Underwriters at the Company's sole cost and expense such transfer
sheets of the Company's securities as the Representative may request,
including the daily and monthly consolidated transfer sheets of the
Transfer Agent and DTC. The Underwriters acknowledge that Continental Stock
Transfer & Trust Company is an acceptable Transfer Agent.
3.11.3. Secondary Market Trading Survey. Until such time as
the Public Securities are listed or quoted, as the case may be, on the New
York Stock Exchange, the American Stock Exchange or quoted on the Nasdaq
National Market, or until such earlier time upon which the Company is
required to be liquidated, the Company shall engage counsel, selected by
Xxxxxx, ("BLUE SKY COUNSEL") for a one-time fee of $5,000 payable on the
Closing Date, to deliver and update to the Underwriters on a timely basis,
but in any event on the Effective Date and at the beginning of each fiscal
quarter, a written report detailing those states in which the Public
Securities may be traded in non-issuer transactions under the Blue Sky laws
of the fifty States ("SECONDARY MARKET TRADING SURVEY").
3.11.4. Trading Reports. During such time the Public
Securities are quoted on the NASD OTC Bulletin Board (or any successor
trading market such as the Bulletin Board Exchange) or the Pink Sheets, LLC
(or similar publisher of quotations) and no other automated quotation
system, the Company shall provide to the Representative, at its expense,
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such reports published by the NASD or the Pink Sheets, LLC relating to
price trading of the Securities, as the Representative shall reasonably
request.
3.12. Disqualification of Form S-1. For a period equal to seven years
from the date hereof, or until such earlier time upon which the Company is
required to be liquidated, the Company will not take any action or actions which
may prevent or disqualify the Company's use of Form S-1 (or other appropriate
form) for the registration of the Warrants and the Representative's Warrants
under the Act.
3.13. Payment of Expenses.
3.13.1. General Expenses Related to the Offering. The Company
hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at the Closing Date, all expenses
incident to the performance of the obligations of the Company under this
Agreement, including, but not limited to: (i) the preparation, printing,
filing and mailing (including the payment of postage with respect to such
mailing) of the Registration Statement, the Preliminary and final
Prospectuses and the printing and mailing of this Agreement and related
documents, including the cost of all copies thereof and any amendments
thereof or supplements thereto supplied to the Underwriters in quantities
as may be required by the Underwriters; (ii) the printing, engraving,
issuance and delivery of the Units, the shares of Common Stock and the
Warrants included in the Units and the Representative's Purchase Option,
including any transfer or other taxes payable thereon; (iii) the
qualification of the Public Securities under state or foreign securities or
Blue Sky laws, including the costs of printing and mailing the "Preliminary
Blue Sky Memorandum," and all amendments and supplements thereto, fees and
disbursements for the Counsel to the Underwriters retained for such purpose
(such fees shall be capped at $35,000 in the aggregate (of which $5,000 has
previously been paid)), and a one-time fee of $5,000 payable to Blue Sky
Counsel for the preparation of the Secondary Market Trading Survey; (iv)
filing fees, costs and expenses (including disbursements for the
Representative's counsel but excluding legal fees) incurred in registering
the Offering with the NASD; (v) costs of placing "tombstone" advertisements
in The Wall Street Journal, The New York Times and a third publication to
be selected by the Representative; (vi) fees and disbursements of the
transfer and warrant agent; (vii) the Company's expenses associated with
"due diligence" meetings arranged by the Representative; (viii) the
preparation, binding and delivery of transaction "bibles," in form and
style reasonably satisfactory to the Representative and transaction lucite
cubes or similar commemorative items in a style and quantity as reasonably
requested by the Representative; and (ix) all other costs and expenses
customarily borne by an issuer incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in
this Section 3.13. The Company also agrees that it will reimburse
Representative for the cost of the investigative search firm of the
Representative's choice that conducted an investigation of the principals
of the Company. The Representative may deduct from the net proceeds of the
Offering payable to the Company on the Closing Date, or the Option Closing
Date, if any, the expenses set forth in this Agreement to be paid by the
Company to the Representative and others. If the Offering contemplated by
this Agreement is terminated by the Company at any time after commencement
of the road show, the Company shall reimburse the Representative in full
for its out of pocket accountable
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expenses actually incurred by the Representative, including, without
limitation, its legal fees/up to a maximum of $50,000.
3.13.2. Merger and Acquisition Fees. The Company further
agrees that, in addition to the expenses payable pursuant to Section
3.13.1, it will pay at the closing of the business combination to Xxxxxx a
fee for providing merger and acquisition services in connection with a
business combination equal to one percent (1%) of the gross proceeds
received by the Company from the sale of the Firm Units.
3.14. Application of Net Proceeds. The Company will apply the net
proceeds from the Offering received by it in a manner consistent with the
application described under the caption "Use Of Proceeds" in the Prospectus.
3.15. Delivery of Earnings Statements to Security Holders. The Company
will make generally available to its security holders as soon as practicable,
but not later than the first day of the fifteenth full calendar month following
the Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.
3.16. Notice to NASD. In the event any person or entity (regardless of
any NASD affiliation or association) is engaged to assist the Company in its
search for a merger candidate or to provide any other merger and acquisition
services, the Company will provide the following to the NASD and to Xxxxxx prior
to the consummation of the Business Combination: (i) complete details of all
services and copies of agreements governing such services; and (ii)
justification as to why the person or entity providing the merger and
acquisition services should not be considered an "underwriter and related
person" with respect to the Company's initial public offering, as such term is
defined in Rule 2710 of the NASD's Conduct Rules. The Company also agrees that
proper disclosure of such arrangement or potential arrangement will be made in
the proxy statement which the Company will file for purposes of soliciting
stockholder approval for the Business Combination.
3.17. Stabilization. Except with respect to the agreement between
Xxxxxx and each of the Initial Stockholders (the "WARRANT PURCHASE AGREEMENT")
annexed as Exhibit 10.__ to the Registration Statement, neither the Company,
nor, to its knowledge, any of its employees, directors or stockholders (without
the consent of Xxxxxx) has taken or will take, directly or indirectly, any
action designed to or that has constituted or that might reasonably be expected
to cause or result in, under the Exchange Act, or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Units.
3.18. Internal Controls. The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the
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recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.19. Accountants. For a period of five years from the Effective Date
or until such earlier time upon which the Company is required to be liquidated,
the Company shall retain RKC, one of the "Big Four" accounting firms, BDO
Xxxxxxx, LLP or Xxxxxx LLP.
3.20. Form 8-K. The Company shall, on the date hereof, retain its
independent public accountants to audit the financial statements of the Company
as of the Closing Date ("AUDITED FINANCIAL STATEMENTS") that reflect the receipt
by the Company of the proceeds of the initial public offering. As soon as the
Audited Financial Statements become available, the Company shall immediately
file a Current Report on Form 8-K with the Commission, which Report shall
contain the Company's Audited Financial Statements. 3.21. NASD. The Company
shall advise the NASD if it is aware that any 5% or greater stockholder of the
Company becomes an affiliate or associated person of an NASD member
participating in the distribution of the Company's Securities.
3.22. Corporate Proceedings. All corporate proceedings and other legal
matters necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby shall have been done to the reasonable
satisfaction to counsel for the Underwriters.
3.23. Investment Company. The Company shall cause the proceeds of the
Offering to be held in the Trust Fund to be invested only in "government
securities" with specific maturity dates 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 shall be
engaged in a business other than that of investing, reinvesting, owning, holding
or trading securities.
3.24. Business Combination Announcement. Within five business days
following the consummation by the Company of a Business Combination, the Company
shall cause an announcement ("BUSINESS COMBINATION ANNOUNCEMENT") to be placed,
at its cost, in The Wall Street Journal. Such announcement shall describe the
consummation of the Business Combination and indicate that the Representative
was the managing underwriter in the Offering. The Company shall supply the
Representative with a draft of the Business Combination Announcement and provide
the Representative with a reasonable opportunity to comment thereon. The Company
will not place the Business Combination Announcement without the final approval
of the Representative, which such approval will not be unreasonably withheld.
3.25. Colorado Trust Filing. In the event the Securities are registered
in the State of Colorado, the Company will cause a Colorado Form ES to be filed
with the Commissioner of the State of Colorado no less than 10 days prior to the
distribution of the Trust Fund in connection with a Business Combination and
will do all things necessary to comply with Section 00-00-000 and Rule 51-3.4 of
the Colorado Securities Act.
4. Conditions of Underwriters' Obligations. The obligations of the several
Underwriters to purchase and pay for the Units, as provided herein, shall be
subject to the continuing accuracy of
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the representations and warranties of the Company as of the date hereof and as
of each of the Closing Date and the Option Closing Date, if any, to the accuracy
of the statements of officers of the Company made pursuant to the provisions
hereof and to the performance by the Company of its obligations hereunder and to
the following conditions:
4.1. Regulatory Matters.
4.1.1. Effectiveness of Registration Statement. The
Registration Statement shall have become effective not later than 5:00
P.M., New York City local time, on the date of this Agreement or such
later date and time as shall be consented to in writing by you, and, at
each of the Closing Date and the Option Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that 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 Xxxxxx
Xxxxx Xxxxxxxx & Xxxxxxx LLP, counsel to the Underwriters ("XXXXXX").
4.1.2. NASD Clearance. By the Effective Date, the
Representative shall have received clearance from the NASD as to the
amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
4.1.3. No Blue Sky Stop Orders. No order suspending the sale
of the Units in any jurisdiction designated by you pursuant to Section
3.3 hereof shall have been issued on either on the Closing Date or the
Option Closing Date, and no proceedings for that purpose shall have
been instituted or shall be contemplated.
4.2. Company Counsel Matters.
4.2.1. Effective Date Opinion of Counsel. On the Effective
Date, the Representative shall have received the favorable opinion of
Xxxxxx Xxxxxxxxxx & Xxxxx PC, counsel to the Company ("XXXXXX
XXXXXXXXXX"), dated the Effective Date, addressed to the Representative
and in form and substance satisfactory to Xxxxxx to the effect that:
(i) The Company has been duly organized and is
validly existing as a corporation and is in good standing under the laws of its
state of incorporation. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations requires such
qualification or licensing, except where the failure to qualify would not have a
material adverse effect on the Company.
(ii) All issued and outstanding securities of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof are not subject to personal liability by
reason of being such holders and none of such securities were issued in
violation of the preemptive rights of any stockholder of the Company arising by
operation of law or under the Certificate of Incorporation or Bylaws of the
Company. The offers and sales of the outstanding Common Stock were at all
relevant times either registered under the Act and the applicable state
securities or Blue Sky Laws or exempt from such registration. The authorized and
outstanding capital stock of the Company is as set forth in the Prospectus.
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(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, as amended, or
Bylaws of the Company. When issued, the Warrants, 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
therefor, the number and type of securities of the Company called for thereby
and such Warrants, the Representative's Purchase Option and the Representative's
Warrants, when issued, in each case, are enforceable against the Company in
accordance with their respective terms, 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 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. The
certificates representing the Securities are in due and proper form.
(iv) This Agreement, the Warrant Agreement, the
Representative's Purchase Option, the Services Agreement, the Trust Agreement
and the Escrow Agreement have each been duly and validly authorized and, when
executed and delivered by the Company, 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 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.
(v) The execution, delivery and performance of this
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 Securities, the consummation of the transactions contemplated
hereby and thereby, and compliance by the Company with the terms and provisions
hereof and thereof, do not and will not, with or without the giving of notice or
the lapse of time, or both, (a) to such counsel's knowledge, conflict with, or
result in a breach of, any of the terms or provisions of, or constitute a
default under, or result in the creation or modification of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to the terms of, any mortgage, deed of trust, note, indenture,
loan, contract, commitment or other agreement or instrument filed as an exhibit
to the Registration Statement, (b) result in any violation of the provisions of
the Certificate of Incorporation or the Bylaws of the Company, or (c) to such
counsel's knowledge, violate any statute or any judgment, order or decree, rule
or regulation applicable to the Company of any court, domestic or foreign, or of
any federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company, its properties or assets.
(vi) The Registration Statement, each Preliminary
Prospectus and the Prospectus and any post-effective amendments or supplements
thereto (other than the financial
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statements included therein, as to which no opinion need be rendered) each as of
their respective dates complied as to form in all material respects with the
requirements of the Act and Regulations. The Securities and each agreement filed
as an exhibit to the Registration Statement conform in all material respects to
the description thereof contained in the Registration Statement and the
Prospectus. No statute or regulation required to be described in the Prospectus
is not described as required, nor are any contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement not so described or filed as
required.
(vii) Counsel has participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company and representatives of the
Underwriters at which the contents of the Registration Statement, the Prospectus
and related matters were discussed and although such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and
Prospectus (except as otherwise set forth in this opinion), no facts have come
to the attention of such counsel which should lead them to believe that either
the Registration Statement or the Prospectus or any amendment or supplement
thereto, as of the date of such opinion contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements and schedules and
other financial and statistical data included in the Registration Statement or
Prospectus).
(viii) The Registration Statement is effective under
the Act. To such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the Act or
applicable state securities laws.
(ix) To such counsel's knowledge, there is no action,
suit or proceeding before or by any court 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.
4.2.2. Closing Date and Option Closing Date Opinion of
Counsel. On each of the Closing Date and the Option Closing Date, if any,
the Representative shall have received the favorable opinion of Xxxxxx
Xxxxxxxxxx, dated the Closing Date or the Option Closing Date, as the case
may be, addressed to the Representative and in form and substance
reasonably satisfactory to Xxxxxx, confirming as of the Closing Date and,
if applicable, the Option Closing Date, the statements made by Xxxxxx
Xxxxxxxxxx in their opinion delivered on the Effective Date.
4.2.3. Reliance. In rendering such opinion, such counsel may
rely (i) as to matters involving the application of laws other than the
laws of the United States and jurisdictions in which they are admitted, to
the extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance
reasonably satisfactory to Xxxxxx) of other counsel reasonably acceptable
to Xxxxxx, familiar with the applicable laws, and (ii) as to matters of
fact, to the extent they deem
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proper, on certificates or other written statements of officers of the
Company and officers of departments of various jurisdictions having custody
of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall
be delivered to the Underwriters' counsel if requested. The opinion of
counsel for the Company and any opinion relied upon by such counsel for the
Company shall include a statement to the effect that it may be relied upon
by counsel for the Underwriters in its opinion delivered to the
Underwriters.
4.3. Cold Comfort Letter. At the time this Agreement is executed, and
at each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representative and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to Xxxxxx
from RKC dated, respectively, as of the date of this Agreement and as of the
Closing Date and the Option Closing Date, if any:
(i) Confirming that they are independent accountants
with respect to the Company within the meaning of the Act and the applicable
Regulations and that they have not, during the periods covered by the financial
statements included in the Prospectus, provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange Act;
(ii) Stating that in their opinion the financial
statements of the Company included in the Registration Statement and Prospectus
comply as to form in all material respects with the applicable accounting
requirements of the Act and the published Regulations thereunder;
(iii) Stating that, on the basis of a limited review
which included a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and board of directors and the various
committees of the board of directors, consultations with officers and other
employees of the Company responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that (a) the unaudited financial statements of
the Company included in the Registration Statement do not comply as to form in
all material respects with the applicable accounting requirements of the Act and
the Regulations or are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements of the Company included in the
Registration Statement, (b) at a date not later than five days prior to the
Effective Date, Closing Date or Option Closing Date, as the case may be, there
was any change in the capital stock or long-term debt of the Company, or any
decrease in the stockholders' equity of the Company as compared with amounts
shown in the __________, 2005 balance sheet included in the Registration
Statement, other than as set forth in or contemplated by the Registration
Statement, or, if there was any decrease, setting forth the amount of such
decrease, and (c) during the period from ____ __, 2005 to a specified date not
later than five days prior to the Effective Date, Closing Date or Option Closing
Date, as the case may be, there was any decrease in revenues, net earnings or
net earnings per share of Common Stock, in each case as compared with the
corresponding period in the preceding year and as compared with the
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corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) Setting forth, at a date not later than five
days prior to the Effective Date, the amount of liabilities of the Company
(including a break-down of commercial papers and notes payable to banks);
(v) Stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company set forth in the
Prospectus in each case to the extent that such amounts, numbers, percentages,
statements and information may be derived from the general accounting records,
including work sheets, of the Company and excluding any questions requiring an
interpretation by legal counsel, with the results obtained from the application
of specified readings, inquiries and other appropriate procedures (which
procedures do not constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter and found them to be in
agreement;
(vi) Stating that they have not during the
immediately preceding five year period brought to the attention of the Company's
management any reportable condition related to internal structure, design or
operation as defined in the Statement on Auditing Standards No. 60
"Communication of Internal Control Structure Related Matters Noted in an Audit,"
in the Company's internal controls; and
(vii) Statements as to such other matters incident to
the transaction contemplated hereby as you may reasonably request.
4.4. Officers' Certificates.
4.4.1. Officers' Certificate. At each of the Closing Date and
the Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Chairman of the Board or the
President and the Secretary or Assistant Secretary of the Company, dated
the Closing Date or the Option Closing Date, as the case may be,
respectively, to the effect that the Company has performed all covenants
and complied with all conditions required by this Agreement to be performed
or complied with by the Company prior to and as of the Closing Date, or the
Option Closing Date, as the case may be, and that the conditions set forth
in Section 4.5 hereof have been satisfied as of such date and that, as of
the 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, respectively, certifying (i) that the Bylaws and Certificate
of Incorporation of the Company are true and complete, have not been
modified
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and are in full force and effect, (ii) that the resolutions relating to the
public offering contemplated by this Agreement are in full force and effect
and have not been modified, (iii) all correspondence between the Company or
its counsel and the Commission, and (iv) as to the incumbency of the
officers of the Company. The documents referred to in such certificate
shall be attached to such certificate.
4.5. No Material Changes. Prior to and on each of the Closing Date and
the Option Closing Date, if any, (i) there shall have been no material adverse
change or development involving a prospective material adverse change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus, (ii) no action suit or proceeding, at law
or in equity, shall have been pending or threatened against the Company or any
Initial Stockholder before or by any court or federal or state commission, board
or other administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations, prospects or
financial condition or income of the Company, except as set forth in the
Registration Statement and Prospectus, (iii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated or
threatened by the Commission, and (iv) the Registration Statement and the
Prospectus and any amendments or supplements thereto shall contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and shall conform in all material respects to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
4.6. Delivery of Agreements. On the Effective Date, the Company shall
have delivered to the Representative executed copies of the Escrow Agreement,
the Trust Agreement, the Warrant Agreement, the Warrant Purchase Agreement, the
Services Agreement and all of the Insider Letters. On the Closing Date, the
Company shall have delivered to the Representative executed copies of the
Representative's Purchase Option.
4.7. Opinion of Counsel for the Underwriters. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to Xxxxxx and you shall have received from such counsel a favorable opinion,
dated the Closing Date and the Option Closing Date, if any, with respect to such
of these proceedings as you may reasonably require. On or prior to the Effective
Date, the Closing Date and the Option Closing Date, as the case may be, counsel
for the Underwriters shall have been furnished such documents, certificates and
opinions as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in this Section 4.7, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
4.8. Secondary Market Trading Survey. On the Closing Date, the
Representative shall have received the Secondary Market Trading Survey from Blue
Sky Counsel.
5. Indemnification.
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5.1. Indemnification of Underwriters.
5.1.1. General. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each of the Underwriters, and
each dealer selected by you that participates in the offer and sale of the
Securities (each a "SELECTED DEALER") and each of their respective
directors, officers and employees and each person, if any, who controls any
such Underwriter ("CONTROLLING PERSON") within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against any and all loss,
liability, claim, damage and expense whatsoever (including but not limited
to any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, whether arising out of any action
between any of the Underwriters and the Company or between any of the
Underwriters and any third party or otherwise) to which they or any of them
may become subject under the Act, the Exchange Act or any other statute or
at common law or otherwise or under the laws of foreign countries, arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in (i) any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time each may be amended and
supplemented); (ii) any materials or information provided to investors by,
or with the approval of, the Company in connection with the marketing of
the offering of the Securities, including any "road show" or investor
presentations made to investors by the Company (whether in person or
electronically); 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, Nasdaq or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such
statement or omission was made in reliance upon and in conformity with
written information furnished to the Company with respect to an Underwriter
by or on behalf of such Underwriter expressly for use in any Preliminary
Prospectus, the Registration Statement or Prospectus, or any amendment or
supplement thereof, or in any application, as the case may be. With respect
to any untrue statement or omission or alleged untrue statement or omission
made in the Preliminary Prospectus, the indemnity agreement contained in
this paragraph shall not inure to the benefit of any Underwriter to the
extent that any loss, liability, claim, damage or expense of such
Underwriter results from the fact that a copy of the Prospectus was not
given or sent to the person asserting any such loss, liability, claim or
damage at or prior to the written confirmation of sale of the Securities to
such person as required by the Act and the Regulations, and if the untrue
statement or omission has been corrected in the Prospectus, unless such
failure to deliver the Prospectus was a result of non-compliance by the
Company with its obligations under Section 3.4 hereof. The Company agrees
promptly to notify the Representative of the commencement of any litigation
or proceedings against the Company or any of its officers, directors or
controlling persons in connection with the issue and sale of the Securities
or in connection with the Registration Statement or Prospectus.
5.1.2. Procedure. If any action is brought against an
Underwriter, a Selected Dealer or a controlling person in respect of which
indemnity may be sought against
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the Company pursuant to Section 5.1.1, such Underwriter or Selected Dealer
shall promptly notify the Company in writing of the institution of such
action and the Company shall assume the defense of such action, including
the employment and fees of counsel (subject to the reasonable approval of
such Underwriter or Selected Dealer, as the case may be) and payment of
actual expenses. Such Underwriter, Selected Dealer or controlling person
shall have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of such
Underwriter, Selected Dealer or controlling person unless (i) the
employment of such counsel at the expense of the Company shall have been
authorized in writing by the Company in connection with the defense of such
action, or (ii) the Company shall not have employed counsel 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, Selected Dealer
and/or controlling person shall be borne by the Company. Notwithstanding
anything to the contrary contained herein, if the Underwriter, Selected
Dealer or controlling person shall assume the defense of such action as
provided above, the Company shall have the right to approve the terms of
any settlement of such action which approval shall not be unreasonably
withheld.
5.2. Indemnification of the Company. Each Underwriter, severally and
not jointly, agrees to indemnify and hold harmless the Company, its directors,
officers and employees and agents who control the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the foregoing indemnity
from the Company to the several Underwriters, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions
made in any Preliminary Prospectus, the Registration Statement or Prospectus or
any amendment or supplement thereto or in any application, in reliance upon, and
in strict conformity with, written information furnished to the Company with
respect to such Underwriter by or on behalf of the Underwriter expressly for use
in such Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2.
5.3. Contribution.
5.3.1. Contribution Rights. In order to provide for just and
equitable contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for
indemnification pursuant hereto but it is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of
appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 5
-27-
provides for indemnification in such case, or (ii) contribution under the
Act, the Exchange Act or otherwise may be required on the part of any such
person in circumstances for which indemnification is provided under this
Section 5, then, and in each such case, the Company and the Underwriters
shall contribute to the aggregate losses, liabilities, claims, damages and
expenses of the nature contemplated by said indemnity agreement incurred by
the Company and the Underwriters, as incurred, in such proportions that the
Underwriters are responsible for that portion represented by the percentage
that the underwriting discount appearing on the cover page of the
Prospectus bears to the initial offering price appearing thereon and the
Company is responsible for the balance; provided, that, no person guilty of
a fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. Notwithstanding the provisions of
this Section 5.3.1, no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages that such Underwriter has
otherwise been required to pay in respect of such losses, liabilities,
claims, damages and expenses. For purposes of this Section, each director,
officer and employee of an Underwriter or the Company, as applicable, and
each person, if any, who controls an Underwriter or the Company, as
applicable, within the meaning of Section 15 of the Act shall have the same
rights to contribution as the Underwriters or the Company, as applicable.
5.3.2. Contribution Procedure. Within fifteen days after
receipt by any party to this Agreement (or its representative) of notice of
the commencement of any action, suit or proceeding, such party will, if a
claim for contribution in respect thereof is to be made against another
party ("contributing party"), notify the contributing party of the
commencement thereof, but the omission to so notify the contributing party
will not relieve it from any liability which it may have to any other party
other than for contribution hereunder. In case any such action, suit or
proceeding is brought against any party, and such party notifies a
contributing party or its representative of the commencement thereof within
the aforesaid fifteen days, the contributing party will be entitled to
participate therein with the notifying party and any other contributing
party similarly notified. Any such contributing party shall not be liable
to any party seeking contribution on account of any settlement of any
claim, action or proceeding effected by such party seeking contribution on
account of any settlement of any claim, action or proceeding effected by
such party seeking contribution without the written consent of such
contributing party. The contribution provisions contained in this Section
are intended to supersede, to the extent permitted by law, any right to
contribution under the Act, the Exchange Act or otherwise available. The
Underwriters' obligations to contribute pursuant to this Section 5.3 are
several and not joint.
6. Default by an Underwriter.
6.1. Default Not Exceeding 10% of Firm Units or Option Units. If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the over-allotment option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10% of
the number of Firm Units or Option Units that all Underwriters have agreed to
purchase
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hereunder, then such Firm Units or Option Units to which the default relates
shall be purchased by the non-defaulting Underwriters in proportion to their
respective commitments hereunder.
6.2. Default Exceeding 10% of Firm Units or Option Units. In the event
that the default addressed in Section 6.1 above relates to more than 10% of the
Firm Units or Option Units, you may in your discretion arrange for yourself or
for another party or parties to purchase such Firm Units or Option Units to
which such default relates on the terms contained herein. If within one business
day after such default relating to more than 10% of the Firm Units or Option
Units you do not arrange for the purchase of such Firm Units or Option Units,
then the Company shall be entitled to a further period of one business day
within which to procure another party or parties satisfactory to you to purchase
said Firm Units or Option Units on such terms. In the event that neither you nor
the Company arrange for the purchase of the Firm Units or Option Units to which
a default relates as provided in this Section 6, this Agreement will be
terminated by you or the Company without liability on the part of the Company
(except as provided in Sections 3.13 and 5 hereof) or the several Underwriters
(except as provided in Section 5 hereof); provided, however, that if such
default occurs with respect to the Option Units, this Agreement will not
terminate as to the Firm Units; and provided further that nothing herein shall
relieve a defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for damages occasioned by its default hereunder.
6.3. Postponement of Closing Date. In the event that the Firm Units or
Option Units to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, you or the Company shall have the right to postpone the Closing
Date or Option Closing Date for a reasonable period, but not in any event
exceeding five business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment to the Registration Statement or the Prospectus that in the opinion of
counsel for the Underwriters may thereby be made necessary. The term
"UNDERWRITER" as used in this Agreement shall include any party substituted
under this Section 6 with like effect as if it had originally been a party to
this Agreement with respect to such Securities.
7. Right to Appoint Observer. For a period of two years from the Effective Date,
upon notice from Xxxxxx to the Company, Xxxxxx shall have the right to send a
representative (who need not be the same individual from meeting to meeting) to
observe each meeting of the Board of Directors of the Company; provided that
such representative shall sign a Regulation FD compliant confidentiality
agreement which is reasonably acceptable to Xxxxxx and its counsel in connection
with such representative's attendance at meetings of the Board of Directors; and
provided further that upon written notice to Xxxxxx, the Company may exclude the
representative from meetings where, in the written opinion of counsel for the
Company, the representative's presence would destroy the attorney-client
privilege. The Company agrees to give Xxxxxx written notice of each such meeting
and to provide Xxxxxx with an agenda and minutes of the meeting no later than it
gives such notice and provides such items to the other directors and to
reimburse the representative of Xxxxxx for its reasonable out-of-pocket expenses
incurred in connection with its attendance at the meeting, including but not
limited to, food, lodging and transportation.
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8. Additional Covenants.
8.1. Additional Shares or Options. The Company hereby agrees that until
the Company consummates a Business Combination, it shall not issue any shares of
Common Stock or any options or other securities convertible into Common Stock,
or any shares of Preferred Stock which participate in any manner in the Trust
Fund or which vote as a class with the Common Stock on a Business Combination.
8.2. Trust Fund Waiver Acknowledgment. Prior to the commencement by the
Company of its due diligence investigation of any operating business which the
Company seeks to acquire ("TARGET BUSINESS") or the obtaining of the services of
any vendor, the Company shall seek to have such Target Business or vendor
acknowledges in writing, whether through a letter of intent, memorandum of
understanding or other similar document (and subsequently acknowledges the same
in any definitive document replacing any of the foregoing), that (a) it has read
the Prospectus and understands that the Company has established the Trust Fund,
initially in an amount of $______________ for the benefit of the Public
Stockholders and that the Company may disburse monies from the Trust Fund only
(i) to the Public Stockholders in the event of the conversion of their shares or
the liquidation of the Company or (ii) to the Company after it consummates a
Business Combination and (b) for and in consideration of the Company (1)
agreeing to evaluate such Target Business for purposes of consummating a
Business Combination with it or (2) agreeing to engage the services of the
vendor, as the case may be, such Target Business or vendor agrees that it does
not have any right, title, interest or claim of any kind in or to any monies in
the Trust Fund ("CLAIM") and waives any Claim it may have in the future as a
result of, or arising out of, any negotiations, contracts or agreements with the
Company and will not seek recourse against the Trust Fund for any reason
whatsoever.
8.3. Insider Letters. The Company shall not take any action or omit to
take any action which would cause a breach of any of the Insider Letters
executed between each Initial Stockholder, officer and director and Xxxxxx and
will not allow any amendments to, or waivers of, such Insider Letters without
the prior written consent of Xxxxxx.
8.4. Certificate of Incorporation and Bylaws. 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 Bylaws. Prior to the
consummation of a Business Combination, the Company will not amend its
Certificate of Incorporation without the prior written consent of Xxxxxx.
8.5. Blue Sky Requirements. The Company shall provide counsel to the
Representative with ten copies of all proxy information and all related material
filed with the Commission in connection with a Business Combination concurrently
with such filing with the Commission. In addition, the Company shall furnish any
other state in which its initial public offering was registered, such
information as may be requested by such state.
8.6. Acquisition/Liquidation Procedure. The Company agrees: (i) that,
prior to the consummation of any Business Combination, it will submit such
transaction to the Company's stockholders for their approval ("BUSINESS
COMBINATION VOTE") even if the nature of the acquisition is such as would not
ordinarily require stockholder approval under applicable state
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law; and (ii) that, in the event that the Company does not effect a Business
Combination within 18 months from the consummation of this Offering (subject to
extension for an additional six-month period, as described in the Prospectus),
the Company will be liquidated and will distribute to all holders of IPO Shares
(defined below) an aggregate sum equal to the Company's "Liquidation Value." The
Company's "LIQUIDATION VALUE" shall mean the Company's book value, as determined
by the Company and approved by RKC. In no event, however, will the Company's
Liquidation Value be less than the Trust Fund, inclusive of any net interest
income thereon. Only holders of IPO Shares shall be entitled to receive
liquidating distributions and the Company shall pay no liquidating distributions
with respect to any other shares of capital stock of the Company. With respect
to the Business Combination Vote, the Company shall cause all of the Initial
Stockholders to vote the shares of Common Stock owned by them immediately prior
to this Offering in accordance with the vote of the holders of a majority of the
IPO Shares present, in person or by proxy, at a meeting of the Company's
stockholders called for such purpose. At the time the Company seeks approval of
any potential Business Combination, the Company will offer each holder of the
Company's Common Stock issued in this Offering ("IPO SHARES") the right to
convert their IPO Shares at a per share price ("CONVERSION PRICE") equal to the
amount in the Trust Fund (inclusive of any interest income therein) calculated
as of two business days prior to the consummation of the proposed Business
Combination divided by the total number of IPO Shares. If holders of less than
20% in interest of the Company's IPO Shares elect to convert their IPO Shares,
the Company may, but will not be required to, proceed with such Business
Combination. If the Company elects to so proceed, it will convert shares, based
upon the Conversion Price, from those holders of IPO Shares who affirmatively
requested such conversion and who voted against the Business Combination. If
holders of 20% or more in interest of the IPO Shares, who vote against approval
of any potential Business Combination, elect to convert their IPO Shares, the
Company will not proceed with such Business Combination and will not convert
such shares.
8.7. Rule 419. The Company agrees that it will use its best efforts to
prevent the Company from becoming subject to Rule 419 under the Act prior to the
consummation of any Business Combination, including but not limited to using its
best efforts to prevent any of the Company's outstanding securities from being
deemed to be a "xxxxx stock" as defined in Rule 3a-51-1 under the Exchange Act
during such period.
8.8. Affiliated Transactions. Except as set forth on Schedule 8.8, the
Company shall cause each of the officers to agree that, in order to minimize
potential conflicts of interest which may arise from multiple affiliations, the
officers will present to the Company for its consideration, prior to
presentation to any other person or company, any suitable opportunity to acquire
an operating business, until the earlier of the consummation by the Company of a
Business Combination, the liquidation of the Company or until such time as the
officers cease to be an officer of the Company, subject to any pre-existing
fiduciary obligations the officers might have.
8.9. Target Net Assets. The Company agrees that the initial Target
Business that it acquires must have a fair market value equal to at least 80% of
the Company's net assets at the time of such acquisition. The fair market value
of such business must be determined by the Board of Directors of the Company
based upon standards generally accepted by the financial community, such as
actual and potential sales, earnings and cash flow and book value. If the
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Board of Directors of the Company is not able to independently determine that
the target business has a fair market value of at least 80% of the Company's net
assets at the time of such acquisition, the Company will obtain an opinion from
an unaffiliated, independent investment banking firm which is a member of the
NASD with respect to the satisfaction of such criteria. The Company is not
required to obtain an opinion from an investment banking firm as to the fair
market value if the Company's Board of Directors independently determines that
the Target Business does have sufficient fair market value.
9. Representations and Agreements to Survive Delivery. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
as of the Closing Date or the Option Closing Date, if any, and such
representations, warranties and agreements of the Underwriters and Company,
including the indemnity agreements contained in Section 5 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company or any controlling person, and
shall survive termination of this Agreement or the issuance and delivery of the
Securities to the several Underwriters until the earlier of the expiration of
any applicable statute of limitations and the seventh anniversary of the later
of the Closing Date or the Option Closing Date, if any, at which time the
representations, warranties and agreements shall terminate and be of no further
force and effect.
10. Effective Date of This Agreement and Termination Thereof.
10.1. Effective Date. This Agreement shall become effective on the
Effective Date at the time the Registration Statement is declared effective by
the Commission.
10.2. Termination. You shall have the right to terminate this Agreement
at any time prior to the Closing Date, (i) if any domestic or international
event or act or occurrence has materially disrupted, or in your opinion will in
the immediate future materially disrupt, general securities markets in the
United States; or (ii) if trading on the New York Stock Exchange, the American
Stock Exchange, the Nasdaq Stock Market or on the NASD OTC Bulletin Board (or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the NASD OTC Bulletin Board or by order of the
Commission or any other government authority having jurisdiction, or (iii) if
the United States shall have become involved in a new war or an increase in
major hostilities, or (iv) if a banking moratorium has been declared by a New
York State or federal authority, or (v) if a moratorium on foreign exchange
trading has been declared which materially and adversely impacts the United
States securities market, or (vi) if the Company shall have sustained a material
loss by fire, explosion, flood, accident, hurricane, earthquake, theft, sabotage
or other calamity or malicious act which, whether or not such loss shall have
been insured, will, in your opinion, make it inadvisable to proceed with the
delivery of the Units, or (vii) if any of the Company's representations,
warranties or covenants hereunder are breached, or (viii) if the Representative
shall have become aware after the date hereof of such a material adverse change
in the conditions or prospects of the Company, or such adverse material change
in general market conditions, including without limitation as a result of
terrorist activities after the date hereof, as in the Representative's judgment
would make it impracticable to proceed with the
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offering, sale and/or delivery of the Units or to enforce contracts made by the
Underwriters for the sale of the Securities.
10.3. Expenses. In the event that this Agreement shall not be carried
out for any reason whatsoever, within the time specified herein or any
extensions thereof pursuant to the terms herein, the obligations of the Company
to pay the out of pocket expenses related to the transactions contemplated
herein shall be governed by Section 3.13 hereof.
10.4. Indemnification. Notwithstanding any contrary provision contained
in this Agreement, any election hereunder or any termination of this Agreement,
and whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way affected by, such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
11. Miscellaneous.
11.1. Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telecopied and confirmed and shall be deemed given when so delivered or
telecopied and confirmed or if mailed, two days after such mailing
If to the Representative:
Xxxxxx & Xxxxxxx, LLC
1270 Avenue of the Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxx Xxxxx, Chief Financial Officer
Copy to:
Xxxxxx Xxxxx Xxxxxxxx & Xxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxxxx, Esq.
If to the Company:
Asia Automotive Acquisition Corp.
000 Xxx Xxxxx Xxxxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxx, Chief Executive Officer
Copy to:
Xxxxxx Xxxxxxxxxx & Xxxxx PC
000 Xxxx Xxxx Xxxx Xxxx
-00-
Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
11.2. Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
11.3. Amendment. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.
11.4. Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with this
Agreement) constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof, and supersede all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
11.5. Binding Effect. This Agreement shall inure solely to the benefit
of and shall be binding upon the Representative, the Underwriters, the Company
and the controlling persons, directors and officers referred to in Section 5
hereof, and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained.
11.6. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
giving effect to conflict of laws. The Company hereby agrees that any action,
proceeding or claim against it arising out of, relating in any way to this
Agreement shall be brought and enforced in the courts of the State of New York
of the United States of America for the Southern District, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The Company
hereby waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it at
the address set forth in Section 11.1 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action,
proceeding or claim. The Company agrees that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys' fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor.
11.7. Execution in Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.
11.8. Waiver, Etc. The failure of any of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such
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provision, nor to in any way affect the validity of this Agreement or any
provision hereof or the right of any of the parties hereto to thereafter enforce
each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought; and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
If the foregoing correctly sets forth the understanding between the Underwriters
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
ASIA AUTOMOTIVE ACQUISITION CORP.
By:
--------------------------------------
Name: Xxxx Xxxxxx
Title: Chief Executive Officer
Accepted on the date first above written.
XXXXXX & XXXXXXX, LLC
By:
--------------------------------------
Name:
Title:
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SCHEDULE I
ASIA AUTOMOTIVE ACQUISITION CORP.
4,000,000 Units
UNDERWRITER NUMBER OF FIRM UNITS TO BE PURCHASED
Xxxxxx & Xxxxxxx, LLC
Chardan Capital Markets
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