UNDERWRITING AGREEMENT
BETWEEN
RENAISSANCE ACQUISITION CORP.
AND
LADENBURG XXXXXXXX & CO. INC.
DATED: , 2006
-----------
RENAISSANCE ACQUISITION CORP.
UNDERWRITING AGREEMENT
New York, New York
, 2006
------------
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Renaissance Acquisition Corp., a Delaware corporation
("Company"), hereby confirms its agreement with Ladenburg Xxxxxxxx & Co. Inc.
(being referred to herein variously as "you," "Ladenburg" or the
"Representative") and with the other underwriters named on Schedule I hereto for
which Ladenburg 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 14,500,000 units ("Firm
Units") of the Company, at a purchase price (net of discounts and
commissions) of $5.64 per Firm Unit (including discounts and commissions of
$0.06 that will not be paid to the Underwriters unless and until a Business
Combination (as defined below) has been consummated by the Company). The
Underwriters, severally and not jointly, agree that they will not seek
payment of the discounts and commissions of $0.06 referred to in the
preceding sentence unless and until a Business Combination has been
consummated by the Company, and the Company agrees that it shall pay such
discounts and commissions only upon consummation of such Business
Combination. 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 $5.64 per Firm Unit.
The Firm Units are to be offered initially to the public ("Offering") at
the offering price of $6.00 per Firm Unit. Each Firm Unit consists of one
share of the Company's common stock, par value $.0001 per share ("Common
Stock"), and two warrants ("Warrant(s)"). The shares of Common Stock and
the Warrants included in the Firm Units will not be separately transferable
until 90 days after the effective date ("Effective Date") of the
Registration Statement (as defined in Section 2.1.1 hereof) unless
Ladenburg informs the Company of its decision to allow earlier separate
trading, but in no event will Ladenburg 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 Current
Report on Form 8-K with the Securities and Exchange Commission (the
"Commission") 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 of its "Business Combination" or one year from
the Effective Date and terminating on the four-year anniversary of the
Effective Date. "Business Combination" shall mean any merger, capital stock
exchange, asset
1
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 commencement of trading of the Firm Units 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: $81,950,000 of the proceeds received by the Company for the Firm
Units shall be deposited in the trust fund established by the Company for
the benefit of the public stockholders as described in the Registration
Statement ("Trust Fund") pursuant to the terms of an Investment Management
Trust Agreement ("Trust Agreement") and the remaining proceeds shall be
paid (subject to Section 3.13 hereof) to the order of the Company upon
delivery to you of certificates (in form and substance satisfactory to the
Underwriters) representing the Firm Units (or through the facilities of The
Depository Trust Company ("DTC")) for the account of the Underwriters. The
Firm Units shall be registered in such name or names and in such authorized
denominations as the Representative may request in writing at least two
full business days prior to the Closing Date. The Company will permit the
Representative to examine and package the Firm Units for delivery at least
one full business day prior to the Closing Date. The Company shall not be
obligated to sell or deliver the Firm Units except upon tender of payment
by the Representative for all the Firm Units.
1.2 Over-Allotment Option.
1.2.1 Option Units. For the purposes of covering any over-allotments
in connection with the distribution and sale of the Firm Units, the
Underwriters are hereby granted, severally and not jointly, an option to
purchase up to an additional 2,175,000 units from the Company
("Over-allotment Option"). Such additional 2,175,000 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
exercised by the giving of oral notice to the Company by the
Representative, which must be confirmed in writing by overnight mail or
facsimile transmission setting forth the number of Option Units to be
purchased and the date and time for delivery of and payment for the Option
Units (the "Option Closing Date"), which will not be later than five full
business days after the date of the notice or such other time as shall be
agreed upon by the Company and the Representative, at the offices of the
Representative or at such other place as shall be agreed upon by the
Company and the Representative. Upon exercise of the Over-allotment Option,
the Company will become obligated to convey to the Underwriters, and,
subject to the terms and conditions set forth herein, the Underwriters will
become obligated to purchase, the number of Option Units specified in such
notice.
1.2.3 Payment and Delivery. Payment for the Option Units shall be made
on the Option Closing Date at the Representative's election by wire
transfer in Federal (same day) funds or by certified or bank cashier's
check(s) in New York Clearing House funds, payable as follows: $5.70 per
Option Unit shall be deposited in the Trust Fund pursuant to the Trust
Agreement upon delivery to you of certificates (in form and substance
satisfactory to the Underwriters) representing the Option Units (or through
the facilities of DTC)
2
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 its designees) on the Effective Date an option
("Representative's Purchase Option") for the purchase of an aggregate of
_______ units ("Representative's Units") for an aggregate purchase price of
$100. Each of the Representative's Units is identical to the Firm Units.
The Representative's Purchase Option shall be exercisable, in whole or in
part, commencing on the later of the consummation of a Business Combination
and one year from the Effective Date and expiring on the five-year
anniversary of the Effective Date at an initial exercise price per
Representative's Unit of $____ (___% of the initial public offering price
of a Unit). The Representative's Purchase Option, the Representative's
Units, the Warrants included in the Representative's Units
("Representative's Warrants") and the shares of Common Stock issuable upon
exercise of the Representative's Warrants are hereinafter referred to
collectively as the "Representative's Securities." The Public Securities
and the Representative's Securities are hereinafter referred to
collectively as the "Securities." The Representative understands and agrees
that there are significant restrictions against transferring the
Representative's Purchase Option during the first year after the Effective
Date, as set forth in Section 3 of the Representative's Purchase Option.
1.3.2 Payment and Delivery. Delivery and payment for the
Representative's Purchase Option shall be made on the Closing Date. The
Company shall deliver to the Representative, upon payment therefor,
certificates for the Representative's Purchase Option in the name or names
and in such authorized denominations as the Representative may request.
2. Representations and Warranties of the Company. The Company represents and
warrants to the Underwriters as follows:
2.1 Filing of Registration Statement.
2.1.1 Pursuant to the Act. The Company has filed with the Commission a
registration statement and an amendment or amendments thereto, on Form S-1
(File No. 333-_______), including any related preliminary prospectus
("Preliminary Prospectus"), for the registration of the Public Securities
under the Securities Act of 1933, as amended ("Act"), which registration
statement and amendment or amendments have been prepared by the Company in
conformity with the requirements of the Act, and the rules and regulations
("Regulations") of the Commission under the Act. Except as the context may
otherwise require, such registration statement, as amended, on file with
the Commission at the time the registration statement becomes effective
(including the prospectus, financial statements, schedules, exhibits and
all other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to
paragraph (b) of Rule 430A of the Regulations), is hereinafter called the
"Registration Statement," and the form of the final prospectus dated the
Effective Date included in the Registration Statement (or, if applicable,
the form of final prospectus filed with the Commission pursuant to Rule 424
of the Regulations), is hereinafter called the "Prospectus." The
Registration Statement has been declared effective by the Commission on the
date hereof.
3
2.1.2 Pursuant to the Exchange Act. The Company has filed with the
Commission a Form 8-A (File Number 001-______) 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 does and will contain all material statements that are required
to be stated therein in accordance with the Act and the Regulations, and
will in all material respects conform to the requirements of the Act and
the Regulations; neither the Registration Statement nor the Prospectus, nor
any amendment or supplement thereto, on such dates, does or will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
When any Preliminary Prospectus was first filed with the Commission
(whether filed as part of the Registration Statement for the registration
of the Securities or any amendment thereto or pursuant to Rule 424(a) of
the Regulations) and when any amendment thereof or supplement thereto was
first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Act and the
Regulations and did not and will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The
representation and warranty made in this Section 2.3.1 does not apply to
statements made or statements omitted in reliance upon and in conformity
with written information furnished to the Company with respect to the
Underwriters by the Representative expressly for use in the Registration
Statement or Prospectus or any amendment thereof or supplement thereto.
2.3.2 Disclosure of Agreements. The agreements and documents described
in the Registration Statement and the Prospectus conform to the
descriptions thereof contained therein and there are no agreements or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed with the Commission as exhibits to the
Registration Statement, that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which
the Company is a party or by which its property or business is or may be
bound or affected and (i) that is referred to in the Prospectus, or (ii) is
material to the Company's business, has been duly and validly executed by
the Company, is in full force and effect and is enforceable against the
Company and, to the Company's knowledge, the other parties thereto, in
accordance with its terms, except (x) as such enforceability may be limited
by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (y) as enforceability of any indemnification
or contribution provision may be limited under the federal and state
securities laws, and (z) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and none of such agreements or
instruments has been assigned by the Company, and neither the Company nor,
to the best of the Company's knowledge, any other party is in breach or
default thereunder and, to the best of the Company's knowledge, no event
has occurred that, with the lapse of time or the giving of notice, or both,
would constitute a breach or default thereunder. To the best of the
Company's knowledge, performance by the Company of the material provisions
of such agreements or instruments will not result in a violation of any
existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over
the Company or any of its assets or businesses, including, without
4
limitation, those relating to environmental laws and regulations.
2.3.3 Prior Securities Transactions. No securities of the Company have
been sold by the Company or by or on behalf of, or for the benefit of, any
person or persons controlling, controlled by, or under common control with
the Company since the Company's formation, except as disclosed in the
Registration Statement.
2.3.4 Regulations. The disclosures in the Registration Statement
concerning the effects of Federal, State and local regulation on the
Company's business as currently contemplated are correct in all material
respects and do not omit to state a material fact.
2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, except as otherwise specifically stated therein, (i) there has
been no material adverse change in the condition, financial or otherwise,
or business prospects of the Company, (ii) there have been no material
transactions entered into by the Company, other than as contemplated
pursuant to this Agreement, and (iii) no member of the Company's management
has resigned from any position with the Company.
2.4.2 Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, and except as may otherwise be indicated or
contemplated herein or therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or contingent,
for borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its equity securities.
2.5 Independent Accountants. Xxxxxx LLP ("Xxxxxx"), whose report is filed
with the Commission as part of the Registration Statement, are independent
accountants as required by the Act and the Regulations. Xxxxxx 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
United States 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 summary financial data included in the Registration Statement and
the Prospectus present fairly the information shown thereon and have been
compiled on a basis consistent with the audited financial statements presented
therein. No other financial statements or schedules are required to be included
in the Registration Statement or the Prospectus. 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.
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
5
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 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 are 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 in accordance with this
Agreement, will be validly issued, fully paid and non-assessable; the
holders thereof are not and will not be subject to personal liability by
reason of being such holders; the Securities are not and will not be
subject to the preemptive rights of any holders of any security of the
Company or similar contractual rights granted by the Company; and all
corporate action required to be taken for the authorization, issuance and
sale of the Securities has been duly and validly taken. The Securities
conform in all material respects to all statements with respect thereto
contained in the Registration Statement. When issued, the Representative's
Purchase Option, the Representative's Warrants and the Warrants will
constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment of the respective exercise prices
therefor, the number and type of securities of the Company called for
thereby in accordance with the terms thereof and such Representative's
Purchase Option, the Representative's Warrants and the Warrants are
enforceable against the Company in accordance with their respective terms,
except (i) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally, (ii)
as enforceability of any indemnification or contribution provision may be
limited under the federal and state securities laws, and (iii) that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
2.8.3 Insider Warrants. RAC Partners LLC (the "Insider Purchaser"), an
affiliate of the Company's Chairman and Chief Executive Officer, has
committed to purchase an aggregate of 2,833,333 Warrants ("Insider
Warrants" and together with the shares of Common Stock underlying the
Insider Warrants, collectively referred to as the "Insider Securities") at
$0.60 per Warrant (for an aggregate purchase price of $1,699,999.80) from
the Company upon consummation of the Offering. The Insider Securities have
been duly authorized and, when issued and paid for in accordance with the
subscription agreements ("Subscription Agreements") and the Insider
Warrants, 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 Insider 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 Insider Securities has been duly and validly taken.
2.9 Registration Rights of Third Parties. Except as set forth in the
Prospectus, no holders of any securities of the Company or any rights
exercisable for or convertible or exchangeable into securities of the Company
have the right to require the Company to register any such securities of the
Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity and Binding Effect of Agreements. This Agreement, the Warrant
Agreement (as defined in Section 2.21 hereof), the Trust Agreement, the Services
Agreement (as defined in Section 2.29
6
hereof), the Subscription Agreements, the Escrow Agreements (as defined in
Section 2.22.2 hereof), the Registration Rights Agreement (as defined in Section
2.22.3 hereof) and the Representative's Purchase Option have 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 Warrant Agreement, the Representative's Purchase
Option, the Trust Agreement, the Services Agreement, the Subscription Agreements
and the Escrow Agreements, the consummation by the Company of the transactions
herein and therein contemplated and the compliance by the Company with the terms
hereof and thereof do not and will not, with or without the giving of notice or
the lapse of time or both (i) result in a breach of, or conflict with any of the
terms and provisions of, or constitute a default under, or result in the
creation, modification, termination or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to the terms of
any agreement or instrument to which the Company is a party except pursuant to
the Trust Agreement referred to in Section 2.24 hereof; (ii) result in any
violation of the provisions of the 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.
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 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 and the Escrow
Agreement and as contemplated by the Prospectus, except with respect to
applicable federal and state securities laws.
7
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, her or its
Insider Letter (as defined in Section 2.22.1) 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, that is required to be
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 assets,
business or operations of the Company.
2.17 Stop Orders. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or any part
thereof and has not threatened to issue any such order.
2.18 Transactions Affecting Disclosure to NASD.
2.18.1 Finder's Fees. Except as described in the Prospectus, there are
no claims, payments, arrangements, agreements or understandings relating to
the payment of a finder's, consulting or origination fee by the Company or
any Initial Stockholder with respect to the sale of the Securities
hereunder or any other arrangements, agreements or understandings of the
Company or, to the best of the Company's knowledge, any Initial Stockholder
that may affect the Underwriters' compensation, as determined by the
National Association of Securities Dealers, Inc. ("NASD").
2.18.2 Payments Within Twelve Months. The Company has not made any
direct or indirect payments (in cash, securities or otherwise) (i) to any
person, as a finder's fee, consulting fee or otherwise, in consideration of
such person raising capital for the Company or introducing to the Company
persons who raised or provided capital to the Company, (ii) to any NASD
member or (iii) to any person or entity that has any direct or indirect
affiliation or association with any NASD member, within the twelve months
prior to the Effective Date, other than payments to Ladenburg.
2.18.3 Use of Proceeds. None of the net proceeds of the Offering will
be paid by the Company to any participating NASD member or its affiliates,
except as specifically authorized herein and except as may be paid in
connection with a Business Combination as contemplated by the Prospectus.
2.18.4 Insiders' NASD Affiliation. Based on the Questionnaires, except
as set forth on Schedule 2.18.4, no officer, director or any beneficial
owner of the Company's unregistered securities has any direct or indirect
affiliation or association with any NASD member. The Company will advise
the Representative and its counsel if it learns that any officer, director
or beneficial owner of at least 5% of the Company's outstanding Common
Stock is or becomes an affiliate or associated person of an NASD member.
2.19 Foreign Corrupt Practices Act. Neither the Company nor any of the
Initial Stockholders or any other person acting on behalf of the Company
has, directly or indirectly, given or agreed to give any money, gift or
similar benefit (other than legal price concessions to customers in the
ordinary course of business) to any customer, supplier, employee or agent
of a customer or supplier, or official or employee of any governmental
8
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.
2.20. Officers' Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you or to your counsel shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
2.21 Warrant Agreement. The Company has entered into a warrant agreement
with respect to the Warrants, the Insider Warrants and the Representative's
Warrants with Continental Stock Transfer & Trust Company substantially in the
form annexed as Exhibit 4.5 to the Registration Statement ("Warrant Agreement").
2.22 Agreements With Initial Stockholders.
2.22.1 Insider Letters. The Company has caused to be duly executed
legally binding and enforceable agreements (except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability
of any indemnification, contribution or noncompete provision may be limited
under the federal and state securities laws, and (iii) that the remedy of
specific performance and injunctive and other forms of equitable relief may
be subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought) annexed as Exhibits
10.1 through 10.6 to the Registration Statement ("Insider Letters"),
pursuant to which each of the Initial Stockholders of the Company agrees 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.
2.22.2 Escrow Agreements.
(i) The Company and the Initial Stockholders have entered into an
escrow agreement ("Initial Share Escrow Agreement") with Continental
Stock Transfer & Trust Company ("Escrow Agent") substantially in the
form annexed as Exhibit 10.8 to the Registration Statement, whereby
the Common Stock owned by the Initial Stockholders will be held in
escrow by the Escrow Agent, until one year after the consummation of a
Business Combination. 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. 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 Ladenburg.
(ii) The Company and the Insider Purchaser have entered into an
escrow agreement ("Insider Warrant Escrow Agreement" and together with
the Initial Share Escrow Agreement, the "Escrow Agreements") with
Continental Stock Transfer & Trust Company ("Escrow Agent")
substantially in the form annexed as Exhibit 10.9 to the Registration
Statement, whereby the Insider Warrants owned by the Insider Purchaser
will be held in escrow by the Escrow Agent, until 30 days after the
consummation of a
9
Business Combination. During such escrow period, the Insider Purchaser
shall be prohibited from selling or otherwise transferring such
Insider Warrants (except for certain exceptions set forth in the
Escrow Agreement). To the Company's knowledge, the Escrow Agreement is
enforceable against the Insider Purchaser 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 the
Insider Purchaser is a party. The Insider Warrant Escrow Agreement
shall not be amended, modified or otherwise changed without the prior
written consent of Ladenburg.
2.22.3 Registration Rights Agreement. The Company and the Initial
Stockholders have entered into a registration rights agreement
("Registration Rights Agreement") substantially in the form annexed as
Exhibit 10.12 to the Registration Statement, whereby the Initial
Stockholders will be entitled to certain registration rights as set forth
in such Registration Rights Agreement and described more fully in the
Registration Statement.
2.22.4 Subscription Agreement. The Company has entered into the
Subscription Agreement substantially in the form annexed as Exhibit 10.13
to the Registration Statement with the Insider Purchaser to purchase the
Insider Warrants. Pursuant to the Subscription Agreements, the Insider
Purchaser has placed the purchase price for the Insider Warrants in escrow
prior to the date hereof. Simultaneously with the consummation of the
Offering, such purchase price shall be deposited into the Trust Fund
pursuant to the Trust Agreement.
2.23 Intentionally Omitted.
2.24 Investment Management Trust Agreement. The Company has entered into
the Trust Agreement with respect to certain proceeds of the Offering
substantially in the form annexed as Exhibit 10.7 to the Registration Statement.
The Trust Agreement will provide that there may be released to the Company
interest earned on the funds held pursuant to the Trust Agreement to fund (i)
expenses related to investigating and selecting a target business and the
Company's other working capital requirements in an amount up to $1,800,000 and
(ii) income and other taxes.
2.25 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.
2.26 Investment Company Act; Investments. The Company has been advised
concerning the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the rules and regulations thereunder and has in the past
conducted, and intends in the future to conduct, its affairs in such a manner as
to ensure that it will not become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act and such rules and regulations. The Company is not, nor will the
Company become upon the sale of the Units and the application of the proceeds
therefore as described in the Prospectus under the caption "Use of Proceeds", an
"investment company" or a person controlled by an "investment company" within
the meaning of the Investment Company Act. No more than 45% of the "value" (as
defined in Section 2(a)(41) of the Investment Company Act) of the Company's
total assets (exclusive of cash items and "Government Securities" (as defined in
Section 2(a)(16) of the Investment Company Act) consist of, and no more than 45%
of the Company's net income after taxes is derived from, securities other than
the Government Securities.
2.27 Subsidiaries. The Company does not own an interest in any corporation,
partnership, limited liability company, joint venture, trust or other business
entity.
10
2.28 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.
2.29 Administrative Services. The Company has entered into an agreement
("Services Agreement") with BMD Management Company, Inc. ("Affiliate")
substantially in the form annexed as Exhibit 10.10 to the Registration Statement
pursuant to which the Affiliate will make available to the Company general and
administrative services including office space, utilities and secretarial
support for the Company's use for $8,000 per month.
2.30 Loans. Xxxxx X. Xxxxxxxxx has made a loan to the Company in the
aggregate amount of $150,000 (the "Insider Loan") substantially in the form
annexed as Exhibit 10.11 to the Registration Statement. The Insider Loan does
not bear any interest and is repayable by the Company on the earlier to occur of
(i) April 30, 2007 or (ii) the date on which the Company consummates an initial
public offering of its securities.
2.31 American Stock Exchange Eligibility. As of the Effective Date, the
Public Securities have been approved for listing on the American Stock Exchange
("AMEX"). There is and has been no failure on the part of the Company or any of
the Company's directors or officers, in their capacities as such, to comply with
(as and when applicable), and immediately following the effectiveness of the
Registration Statement the Company will be in compliance with, Part 8 of the
American Stock Exchange's Company Guide, as amended.
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. 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 for a period of five years from the
Effective Date, or until the Company is required to be liquidated if
earlier, or, in the case of the Warrants, until the Warrants expire and are
no longer exercisable. The Company will not deregister the Units under the
Exchange Act without the prior written consent of Ladenburg.
11
3.2.4 Ineligible Issuer. At the time of filing the Registration
Statement and at the date hereof, the Company was and is an "ineligible
issuer," as defined in Rule 405 under the Securities Act. The Company has
not made and will not make any offer relating to the Public Securities that
would constitute an "issuer free writing prospectus," as defined in Rule
433, or that would otherwise constitute a "free writing prospectus," as
defined in Rule 405.
3.3 Blue Sky Filings. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Public Securities for offering and
sale under the securities laws of such jurisdictions as the Representative may
reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Representative agrees that such
action is not at the time necessary or advisable, use all reasonable efforts to
file and make such statements or reports at such times as are or may be required
by the laws of such jurisdiction.
3.4 Delivery to Underwriters of Prospectuses. The Company will deliver to
each of the several Underwriters, without charge, from time to time during the
period when the Prospectus is required to be delivered under the Act or the
Exchange Act, such number of copies of each Preliminary Prospectus and the
Prospectus as such Underwriters may reasonably request and, as soon as the
Registration Statement or any amendment or supplement thereto becomes effective,
deliver to you two original executed Registration Statements, including
exhibits, and all post-effective amendments thereto and copies of all exhibits
filed therewith or incorporated therein by reference and all original executed
consents of certified experts.
3.5 Effectiveness and Events Requiring Notice to the Representative. The
Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representative immediately and confirm the notice
in writing (i) of the effectiveness of the Registration Statement and any
amendment thereto, (ii) of the issuance by the Commission of any stop order or
of the initiation, or the threatening, of any proceeding for that purpose, (iii)
of the issuance by any state securities commission of any proceedings for the
suspension of the qualification of the Public Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the mailing and delivery to the Commission for filing of
any amendment or supplement to the Registration Statement or Prospectus, (v) of
the receipt of any comments or request for any additional information from the
Commission, and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review of Financial Statements. For a period of five years from the
Effective Date, or until such earlier time upon which the Company is required to
be liquidated, the Company, at its expense, shall cause its regularly engaged
independent certified public accountants to review (but not audit) the Company's
financial statements for each of the first three fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
Form 10-Q quarterly report and the mailing of quarterly financial information to
stockholders.
3.7 Affiliated Transactions.
3.7.1 Business Combinations. The Company will not consummate a
Business Combination with any entity which is affiliated with any Initial
Stockholder unless the Company obtains an opinion from an
12
independent investment banking firm that the Business Combination is fair
to the Company's stockholders from a financial perspective.
3.7.2 Intentionally Omitted.
3.7.3 Compensation. Except for payments made pursuant to the Services
Agreement and the repayment of the Insider Loan, the Company shall not pay
any Initial Stockholder or any of their affiliates any fees or
compensation, prior to, or in connection with, the consummation of a
Business Combination; provided further 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. If the Company does not
maintain the listing of the Public Securities on the AMEX or another national
securities exchange, 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 commercially
reasonable 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 Ladenburg, on a
non-exclusive basis, as its agent for the solicitation of the exercise of the
Warrants. The Company will (i) assist Ladenburg with respect to such
solicitation, if requested by Ladenburg, and (ii) at Ladenburg's request,
provide Ladenburg, and direct the Company's transfer and warrant agent to
provide to Ladenburg, 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 Ladenburg a commission of five percent of
the exercise price of the Warrants for each Warrant exercised, payable on the
date of such exercise, on the terms provided for in the Warrant Agreement, only
if permitted under the rules and regulations of the NASD and only to the extent
that an investor who exercises his Warrants specifically designates, in writing,
that Ladenburg solicited his exercise. Ladenburg may engage sub-agents in its
solicitation efforts. The Company agrees to disclose the arrangement to pay such
solicitation fees to Ladenburg in any prospectus used by the Company in
connection with the registration of the shares of Common Stock underlying the
Warrants.
3.10 Financial Public Relations Firm. Promptly after the execution of a
definitive agreement for a Business Combination, the Company shall retain a
financial public relations firm reasonably acceptable to the Representative for
a term to be agreed upon by the Company and the Representative.
3.11 Reports to the Representative.
3.11.1 Periodic Reports, Etc. For a period of five years from the
Effective Date or until such earlier time upon which the Company is
required to be liquidated, the Company will furnish to the Representative
(Attn: Xxxxx X. Xxxx) and its counsel copies of such financial statements
and other periodic and special reports as the Company from time to time
furnishes generally to holders of any class of its securities, and promptly
furnish to the Representative (i) a copy of each periodic report the
Company shall be required to file with the Commission, (ii) a copy of every
press release and every news item and article with respect to the Company
or its affairs which was released by the Company, (iii) a copy of each Form
8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the
Company, (iv) five copies of each registration statement filed by the
Company with the Commission under the Securities Act,
13
and (v) such additional documents and information with respect to the
Company and the affairs of any future subsidiaries of the Company as the
Representative may from time to time reasonably request.
3.11.2 Transfer Sheets. For a period of five years following the
Effective Date or until such earlier time upon which the Company is
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. Continental Stock Transfer & Trust Company is
acceptable to the Underwriters.
3.11.3 Intentionally Omitted.
3.11.4 Intentionally Omitted.
3.12 Disqualification of Form S-1. Until the earlier of seven years from
the date hereof or until the Warrants have expired and are no longer
exercisable, 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 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) if necessary, the qualification of the
Public Securities under state or foreign securities or Blue Sky laws, (iv)
filing fees, costs and expenses (including fees and disbursements of the
Representative's counsel) incurred in registering the Offering with the
NASD, (v) fees and disbursements of the transfer and warrant agent, (vi)
the Company's expenses associated with "due diligence" meetings arranged by
the Representative and (vii) 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 3.13.1. The
Company also agrees that, if requested by the Representative, it will
engage and pay up to $25,000 for an investigative search firm of the
Representative's choice to conduct an investigation of the principals of
the Company as shall be mutually selected by the Representative and the
Company. The Representative may deduct from the net proceeds of the
Offering payable to the Company on the Closing Date, or the Option Closing
Date, if any, the expenses set forth in this Agreement to be paid by the
Company to the Representative and others. If the Offering contemplated by
this Agreement is not consummated for any reason whatsoever then the
Company shall reimburse the Underwriters in full for their out of pocket
expenses, including, without limitation, its legal fees (up to a maximum of
$100,000) and disbursements and "road show" and due diligence expenses. The
Representative shall retain such part of the nonaccountable expense
allowance previously paid as shall equal its actual out-of-pocket expenses
and refund the balance. If the amount previously paid is insufficient to
cover such actual out-of-pocket expenses, subject to the preceding
sentences, the Company shall remain liable for and promptly pay any other
actual out-of-pocket expenses.
3.13.2 Nonaccountable Expenses. The Company agrees that, in addition
to the expenses payable pursuant to Section 3.13.1, it will pay to the
Representative an additional cash fee equal to 1.5% of the
14
gross proceeds received by the Company from the sale of the Firm Units (of
which $75,000 has previously been paid) representing a nonaccountable
expense allowance due to the Representative. The balance owed will be
payable only if and when the Company consummates a Business Combination. If
a Business Combination is not consummated, the Representative shall not be
entitled to any additional fee but will be entitled to retain the $75,000
advance previously paid.
3.13.3 Deferred Compensation. Upon the consummation of a Business
Combination, the Company shall pay (a) the Underwriters discounts and
commissions of $0.06 per Unit sold in the Offering and (b) the balance of
the Representative's nonaccountable expense allowance. These payments shall
be made by wire transfer to an account designated by the Representative on
the closing date of the Business Combination.
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. For a period of ninety days following the Effective
Date, 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 EBC prior to the consummation of the
Business Combination: (i) complete details of all services and copies of
agreements governing such services (which details or agreements may be
appropriately redacted to account for privilege or confidentiality concerns);
and (ii) justification as to why the person or entity providing the merger and
acquisition services should not be considered an "underwriter and related
person" 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. Neither the Company, nor, to its knowledge, any of its
employees, directors or stockholders (without the consent of Ladenburg) has
taken or will take, directly or indirectly, any action designed to or that has
constituted or that might reasonably be expected to cause or result in, under
the Exchange Act, or otherwise, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the Units.
3.18 Internal Controls. The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.19 Accountants. Until the earlier 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 Xxxxxx or another independent public accountant.
15
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") reflecting the receipt
by the Company of the proceeds of the initial public offering. As soon as the
Audited Financial Statements become available, the Company shall immediately
file a Current Report on Form 8-K with the Commission, which Report shall
contain the Company's Audited Financial Statements.
3.21 NASD. The Company shall advise the NASD if it is aware that any 5% or
greater stockholder of the Company becomes an affiliate or associated person of
an NASD member participating in the distribution of the Company's Public
Securities.
3.22 Corporate Proceedings. All corporate proceedings and other legal
matters necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby shall have been done to the reasonable
satisfaction to counsel for the Underwriters.
3.23 Investment Company. The Company shall cause a portion of the proceeds
of the Offering to be deposited and held in the Trust Fund, to be invested only
as set forth in the Trust Agreement and as more fully described in the
Prospectus. The Company will otherwise conduct its business in a manner so that
it will not become subject to the Investment Company Act. Furthermore, once the
Company consummates a Business Combination, it will be engaged in a business
other than that of investing, reinvesting, owning, holding or trading
securities.
3.24 Intentionally Omitted.
3.25 Intentionally Omitted.
3.26 Insider Warrants.
3.26.1 Insider Warrant Purchase Price. Simultaneously with the
consummation of the Offering, the Company shall cause the purchase price to
be paid for the Insider Warrants by the Insider Purchaser to be deposited
in the Trust Fund.
3.26.2 Insider Warrant Exercises. The Company hereby acknowledges and
agrees that, in the event the Company calls the Warrants for redemption
pursuant to the Warrant Agreement, the Insider Warrants may be exercised by
the Insider Purchaser or its affiliates by surrendering the Insider
Warrants for that number of shares of Common Stock equal to the quotient
obtained by dividing (x) the product of the number of shares of Common
Stock underlying the Insider Warrants, multiplied by the difference between
the Warrant Price and the "Fair Market Value" (defined below) by (y) the
Fair Market Value. The "Fair Market Value" shall mean the average reported
last sale price of the Common Stock for the 10 trading days ending on the
third business day prior to the date on which the notice of redemption is
sent to holders of Warrants.
3.27 AMEX Maintenance. Until the consummation of a Business Combination,
the Company will use commercially reasonable efforts to maintain the listing by
the AMEX of the Securities.
4. Conditions of Underwriters' Obligations. The obligations of the several
Underwriters to purchase and pay for the Units, as provided herein, shall be
subject to the continuing accuracy of the representations and warranties of the
Company as of the date hereof and as of each of the Closing Date and the Option
Closing Date, if any, to the accuracy of the statements of officers of the
Company made pursuant to the provisions hereof and to the performance by the
Company of its obligations hereunder and to the following conditions:
16
4.1 Regulatory Matters.
4.1.1 Effectiveness of Registration Statement. The Registration
Statement shall have become effective not later than 5:00 P.M., New York
time, on the date of this Agreement or such later date and time as shall be
consented to in writing by you, and, at each of the Closing Date and the
Option Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for the
purpose shall have been instituted or shall be pending or contemplated by
the Commission and any request on the part of the Commission for additional
information shall have been complied with to the reasonable satisfaction of
Xxxxxxxx Xxxxxx, counsel for the Underwriters ("GM").
4.1.2 NASD Clearance. By the Effective Date, the Representative shall
have received clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriters as described in the Registration
Statement.
4.1.3 No Blue Sky Stop Orders. No order suspending the sale of the
Units in any jurisdiction designated by you pursuant to Section 3.3 hereof
shall have been issued on either on the Closing Date or the Option Closing
Date, and no proceedings for that purpose shall have been instituted or
shall be contemplated.
4.2 Company Counsel Matters.
4.2.1 Effective Date Opinion of Counsel. On the Effective Date, the
Representative shall have received the favorable opinion of Dechert LLP
("Dechert"), dated the Effective Date, addressed to the Representative and
in form and substance satisfactory to GM 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
assets, business or operations of 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 or exempt from such registration requirements. The
authorized and, to such counsel's knowledge, outstanding capital stock
of the Company is as set forth in the Prospectus.
(iii) The Securities and Insider 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 and Insider Securities are not and will not be subject
to the preemptive rights of any holders of any security of the Company
arising by operation of law or under the Certificate of Incorporation
or Bylaws of the Company. When issued, the Representative's Purchase
Option, the Representative's Warrants, the Insider Warrants and the
Warrants will constitute valid and binding obligations of the Company
to issue and sell, upon exercise thereof and payment therefor, the
number and type of securities of the Company called for thereby and
such Warrants, the Insider 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
17
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 Services
Agreement, the Trust Agreement, the Subscription Agreement, the Escrow
Agreements and the Registration Rights Agreement have each been duly
and validly authorized, executed and delivered 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 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 Agreements, the Trust Agreement, the Subscription Agreement,
the Services Agreement and the Registration Rights Agreement and
compliance by the Company with the terms and provisions hereof and
thereof and the consummation of the transactions contemplated hereby
and thereby, and the issuance and sale of the Securities, 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 United States statute or any judgment, order or
decree, rule or regulation applicable to the Company of any court,
United States federal, state or other regulatory authority or other
governmental body having jurisdiction over the Company, its properties
or assets.
(vi) The Registration Statement, the Preliminary Prospectus and
the Prospectus and any post-effective amendments or supplements
thereto (other than the financial statements included therein, as to
which no opinion need be rendered) each as of their respective dates
complies as to form in all material respects with the requirements of
the Act and Regulations. The Securities and all other securities
issued or issuable by the Company conform in all material respects to
the description thereof contained in the Registration Statement and
the Prospectus. The descriptions in the Registration Statement and in
the Prospectus, insofar as such statements constitute a summary of
statutes, legal matters, contracts, documents or proceedings referred
to therein, fairly present in all material respects the information
required to be shown with respect to such statutes, legal matters,
contracts, documents and proceedings, and such counsel does not know
of any statutes or legal or governmental proceedings required to be
described in the Prospectus that are not described in the Registration
Statement or the Prospectus or included as exhibits to the
Registration Statement that are not described or included as required.
(vii) 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.
18
(viii) 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.
The opinion of counsel shall further include a statement to the effect
that such counsel has participated in conferences with officers and
other representatives of the Company, the Underwriters and the
independent public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus
contained therein 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 the Prospectus
contained therein (except as otherwise set forth in the foregoing
opinion), solely on the basis of the foregoing without independent
check and verification, no facts have come to the attention of such
counsel which lead them to believe that the Registration Statement or
any amendment thereto, at the time the Registration Statement or
amendment became effective, contained an 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 not
misleading or the Prospectus or any amendment or supplement thereto,
at the time they were filed pursuant to Rule 424(b) or at the date of
such counsel's opinion, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading (except that
such counsel need express no opinion with respect to the financial
information and statistical data and information included in the
Registration Statement or the Prospectus).
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 Dechert, dated the Closing
Date or the Option Closing Date, as the case may be, addressed to the
Representative and in form and substance reasonably satisfactory to GM,
confirming as of the Closing Date and, if applicable, the Option Closing
Date, the statements made by Dechert in its opinion delivered on the
Effective Date.
4.2.3 Reliance. In rendering such opinion, such counsel may rely (i)
as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent
such counsel deems proper and to the extent specified in such opinion, if
at all, upon an opinion or opinions (in form and substance reasonably
satisfactory to GM) of other counsel reasonably acceptable to GM, familiar
with the applicable laws, and (ii) as to matters of fact, to the extent
they deem proper, on certificates or other written statements of officers
of the Company and officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of
the Company, provided that copies of any such statements or certificates
shall be delivered to the Underwriters' counsel if requested. The opinion
of counsel for the Company and any opinion relied upon by such counsel for
the Company shall include a statement to the effect that it may be relied
upon by counsel for the Underwriters in its opinion delivered to the
Underwriters.
4.3 Cold Comfort Letter. At the time this Agreement is executed, and at
each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representative and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to GM from
Xxxxxx 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 an independent registered public
accounting firm 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;
19
(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 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, they have been advised by the Company officials
that (a) the unaudited financial statements of the Company included in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Regulations or are
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 and (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 no
change in the capital stock or long-term debt of the Company, or any
decrease in the stockholders' equity of the Company as compared with
amounts shown in the __________ __, 2006 balance sheet included in the
Registration Statement, 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;
(iv) 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;
(v) Stating that they have not provided the Company's management with
any written communication in accordance with Statement on Auditing
Standards No. 60 "Communication of Internal Control Structure Related
Matters Noted in an Audit;" and
(vi) Statements as to such other matters incident to the transaction
contemplated hereby as 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 (in their
capacities as such), dated the Closing Date or the Option Closing Date, as
the case may be, respectively, to the effect that the Company has performed
all covenants and complied with all conditions required by this Agreement
to be performed or complied with by the Company prior to and as of the
Closing Date, or the Option Closing Date, as the case may be, and that the
conditions set forth in Section 4.5 hereof have been satisfied as of such
date and that, as of Closing Date and the Option Closing Date, as the case
may be, the representations and warranties of the Company set forth in
Section 2 hereof are true and correct. In addition, the Representative will
have received such other and further certificates of officers (in their
capacities as such) 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
20
Secretary of the Company, dated the Closing Date or the Option 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 and are in full force and effect, (ii) that the resolutions
relating to the public offering contemplated by this Agreement are in full
force and effect and have not been modified, (iii) all correspondence
between the Company or its counsel and the Commission, (iv) all
correspondence between the Company or its counsel and AMEX concerning the
listing of the Securities on AMEX and (v) as to the incumbency of the
officers of the Company. The documents referred to in such certificate
shall be attached to such certificate.
4.5 No Material Changes. Prior to and on each of the Closing Date and the
Option Closing Date, if any, (i) there shall have been no material adverse
change or development 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.
4.6.1 Effective Date Deliveries. On the Effective Date, the Company
shall have delivered to the Representative executed copies of the Escrow
Agreements, the Trust Agreement, the Warrant Agreement, the Services
Agreement, the Subscription Agreements and all of the Insider Letters.
4.6.2 Closing Date Deliveries. On the Closing Date, the Company shall
have delivered to the Representative executed copies of the
Representative's Purchase Option.
4.7 Opinion of Counsel for the Underwriters. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to GM and you shall have received from such counsel a favorable opinion, dated
the Closing Date and the Option Closing Date, if any, with respect to such of
these proceedings as you may reasonably require. On or prior to the Effective
Date, the Closing Date and the Option Closing Date, as the case may be, counsel
for the Underwriters shall have been furnished such documents, certificates and
opinions as they may reasonably require for the purpose of enabling them to
review or pass upon the matters referred to in this Section 4.7, or in order to
evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions herein contained.
4.8 Intentionally Omitted.
4.9 Insider Securities. On the Closing Date, the Insider Purchaser shall
have purchased the Insider Warrants and the purchase price for such Insider
Warrants shall be deposited into the Trust Fund.
5. Indemnification.
21
5.1 Indemnification of Underwriters.
5.1.1 General. Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless each of the Underwriters, and each
dealer selected by you that participates in the offer and sale of the
Securities (each a "Selected Dealer") and each of their respective
directors, officers and employees and each person, if any, who controls any
such Underwriter ("controlling person") within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, against any and all loss,
liability, claim, damage and expense whatsoever (including but not limited
to any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or
threatened, or any claim whatsoever, whether arising out of any action
between any of the Underwriters and the Company or between any of the
Underwriters and any third party or otherwise) to which they or any of them
may become subject under the Act, the Exchange Act or any other statute or
at common law or otherwise or under the laws of foreign countries, arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in (i) any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time each may be amended and
supplemented); (ii) in any post-effective amendment or amendments or any
new registration statement and prospectus in which is included securities
of the Company issued or issuable upon exercise of the Representative's
Purchase Option; or (iii) any application or other document or written
communication (in this Section 5 collectively called "application")
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Securities under the
securities laws thereof or filed with the Commission, any state securities
commission or agency, Nasdaq, Amex or any other 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 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
22
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 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. If the
allocation provided by the immediately preceding sentence is unavailable
for any reason, the Company and the Underwriters shall contribute in such
proportion as is appropriate to reflect the relative fault of the Company
and the Underwriters in connection with the actions or omissions which
resulted in such loss, claim, damage, liability or action, as well as any
other relevant equitable considerations. The relative fault of the Company
and the Underwriters shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. Notwithstanding the
provisions of this Section 5.3.1, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Public Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that
such Underwriter has otherwise been required to pay in respect of such
losses, liabilities, claims, damages and expenses. For purposes of this
Section, each director, officer and employee of an Underwriter or the
Company, as applicable, and each person, if any, who controls an
Underwriter or the Company, as applicable, within the meaning of Section 15
of the Act shall have the same
23
rights to contribution as the Underwriters or the Company, as applicable.
5.3.2 Contribution Procedure. Within fifteen days after receipt by any
party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim
for contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not
relieve it from any liability which it may have to any other party other
than for contribution hereunder. In case any such action, suit or
proceeding is brought against any party, and such party notifies a
contributing party or its representative of the commencement thereof within
the aforesaid fifteen days, the contributing party will be entitled to
participate therein with the notifying party and any other contributing
party similarly notified. Any such contributing party shall not be liable
to any party seeking contribution on account of any settlement of any
claim, action or proceeding effected by such party seeking contribution on
account of any settlement of any claim, action or proceeding effected by
such party seeking contribution without the written consent of such
contributing party. The contribution provisions contained in this Section
are intended to supersede, to the extent permitted by law, any right to
contribution under the Act, the Exchange Act or otherwise available. The
Underwriters' obligations to contribute pursuant to this Section 5.3 are
several and not joint.
6. Default by an Underwriter.
6.1 Default Not Exceeding 10% of Firm Units or Option Units. If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the over-allotment option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10% of
the number of Firm Units or Option Units that all Underwriters have agreed to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
their respective commitments hereunder.
6.2 Default Exceeding 10% of Firm Units or Option Units. In the event that
the default addressed in Section 6.1 above relates to more than 10% of the Firm
Units or Option Units, you may in your discretion arrange for yourself or for
another party or parties to purchase such Firm Units or Option Units to which
such default relates on the terms contained herein. If within one business day
after such default relating to more than 10% of the Firm Units or Option Units
you do not arrange for the purchase of such Firm Units or Option Units, then the
Company shall be entitled to a further period of one business day within which
to procure another party or parties satisfactory to you to purchase said Firm
Units or Option Units on such 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
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.
24
7. Intentionally Omitted.
8. Additional Covenants.
8.1 Intentionally Omitted.
8.2 Additional Shares or Options. The Company hereby agrees that until the
consummation of 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.
8.3 Trust Fund Waiver Acknowledgment.
(a) Underwriters/Representative. Except with respect to the
underwriting discounts and commissions and all but $75,000 of the
nonaccountable expense allowance due to the Underwriters only upon
successful consummation of a Business Combination, each of the Underwriters
and the Representative hereby agree 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 waive 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.
(b) Target Businesses and Vendors. The Company hereby agrees that it
will not commence its due diligence investigation of any operating business
which the Company seeks to acquire (each a "Target Business") or obtain the
services of any vendor unless and until such Target Business or vendor
acknowledges in writing, whether through a letter of intent, memorandum of
understanding or other similar document (and subsequently acknowledges the
same in any definitive document replacing any of the foregoing), that (a)
it has read the Prospectus and understands that the Company has established
the Trust Fund for the benefit of the public stockholders and that the
Company may disburse monies from the Trust Fund only (i) to the public
stockholders in the event they elect to convert their IPO Shares (as
defined below in Section 8.8), (ii) to the public stockholders upon the
liquidation of the Company if the Company fails to consummate a Business
Combination or (iii) to the Company after, or concurrently with, the
consummation of a Business Combination and (b) for and in consideration of
the Company (1) agreeing to evaluate such Target Business for purposes of
consummating a Business Combination with it or (2) agreeing to engage the
services of the vendor, as the case may be, such Target Business or vendor
agrees that it does not have any Claim of any kind in or to any monies in
the Trust Fund and waives any Claim it may have in the future as a result
of, or arising out of, any negotiations, contracts or agreements with the
Company and will not seek recourse against the Trust Fund for any reason
whatsoever.
8.4 Insider Letters. The Company shall not take any action or omit to take
any action which would cause a breach of any of the Insider Letters and will not
allow any amendments to, or waivers of, such Insider Letters without the prior
written consent of Ladenburg.
8.5 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 Ladenburg.
8.6 Blue Sky Requirements. The Company shall provide counsel to the
Representative with ten copies of all proxy information and all related material
filed with the Commission in connection with a Business Combination concurrently
with such filing with the Commission. In addition, the Company shall
25
furnish any other state in which its initial public offering was registered,
such information as may be requested by such state.
8.7 Intentionally Omitted.
8.8 Acquisition/Liquidation Procedure. The Company agrees: (i) that, prior
to the consummation of any Business Combination, it will submit such transaction
to the Company's stockholders for their approval ("Business Combination Vote")
even if the nature of the acquisition is such as would not ordinarily require
stockholder approval under applicable state law; and (ii) that, in the event
that the Company does not effect a Business Combination within 18 months from
the consummation of this Offering (subject to extension for an additional
six-month period, as described in the Prospectus), the 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 Xxxxxx. In no event, however, will the Company's
Liquidation Value be less than the Trust Fund, inclusive of any net interest
income thereon. Only holders of IPO Shares shall be entitled to receive
liquidating distributions and the Company shall pay no liquidating distributions
with respect to any other shares of capital stock of the Company. With respect
to the Business Combination Vote, the Company shall cause all of the Initial
Stockholders to vote the shares of Common Stock owned by them immediately prior
to this Offering in accordance with the vote of the holders of a majority of the
IPO Shares present, in person or by proxy, at a meeting of the Company's
stockholders called for such purpose. At the time the Company seeks approval of
any potential Business Combination, the Company will offer each holder of Common
Stock issued in this Offering ("IPO Shares") the right to convert their IPO
Shares at a per share price ("Conversion Price") equal to the amount in the
Trust Fund (inclusive of any interest income therein) calculated as of two
business days prior to the consummation of the proposed Business Combination
divided by the total number of IPO Shares. If a majority of the holders of IPO
Shares present and entitled to vote on the Business Combination vote in favor of
such Business Combination and holders of less than 20% in interest of the
Company's IPO Shares elect to convert their IPO Shares, the Company may, but
will not be required to, proceed with such Business Combination. If the Company
elects to so proceed, it will convert shares, based upon the Conversion Price,
from those holders of IPO Shares who affirmatively requested such conversion and
who voted against the Business Combination. If holders of 20% or more in
interest of the IPO Shares, who vote against approval of any potential Business
Combination, elect to convert their IPO Shares, the Company will not proceed
with such Business Combination and will not convert such shares. The provisions
of this Section 8.8 may not be modified, amended or deleted under any
circumstances.
8.9 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.
8.10 Affiliated Transactions. The Company shall cause each of the Initial
Stockholders to agree that, in order to minimize potential conflicts of interest
which may arise from multiple affiliations, the Initial Stockholders will
present to the Company for its consideration, prior to presentation to any other
person or company, any suitable opportunity to acquire an operating business,
until the earlier of the consummation by the Company of a Business Combination,
the liquidation of the Company or until such time as the Initial Stockholders
cease to be an officer or director of the Company, subject to any pre-existing
fiduciary or contractual obligations the Initial Stockholders might have.
8.11 Target Net Assets. The Company agrees that the initial Target Business
that it acquires must have a fair market value equal to at least 80% of the
Company's net assets (all of the Company's assets, including the funds held in
the Trust Fund, less the Company's liabilities) at the time of such acquisition.
The fair market value of such business must be determined by the Board of
Directors of the Company based upon standards generally accepted by the
financial community, such as actual and potential sales, earnings and cash
26
flow and book value. If the Board of Directors of the Company is not able to
independently determine that the target business has a fair market value of at
least 80% of the Company's net assets at the time of such acquisition, the
Company will obtain an opinion from an unaffiliated, independent investment
banking firm which is a member of the NASD reasonably acceptable to Ladenburg
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
at the Closing Dates and such representations, warranties and agreements of the
Underwriters and Company, including the indemnity agreements contained in
Section 5 hereof, shall remain operative and in full force and effect regardless
of any investigation made by or on behalf of any Underwriter, the Company or any
controlling person, and shall survive termination of this Agreement or the
issuance and delivery of the Securities to the several Underwriters until the
earlier of the expiration of any applicable statute of limitations and the
seventh anniversary of the later of the Closing Date or the Option Closing Date,
if any, at which time the representations, warranties and agreements shall
terminate and be of no further force and effect.
10. Effective Date of This Agreement and Termination Thereof.
10.1 Effective Date. This Agreement shall become effective on the Effective
Date at the time the Registration Statement is declared effective by the
Commission.
10.2 Termination. You shall have the right to terminate this Agreement at
any time prior to any Closing Date, (i) if any domestic or international event
or act or occurrence has materially disrupted, or in your opinion will in the
immediate future materially disrupt, general securities markets in the United
States; or (ii) if trading on the New York Stock Exchange, the American Stock
Exchange, the Boston Stock Exchange or on the NASD OTC Bulletin Board (or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the NASD OTC Bulletin Board or by order of the
Commission or any other government authority having jurisdiction, or (iii) if
the United States shall have become involved in a new war or an increase in
major hostilities, or (iv) if a banking moratorium has been declared by a New
York State or federal authority, or (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Units, or (vii) if any of the Company's representations, warranties or
covenants hereunder are breached, or (viii) if the Representative shall have
become aware after the date hereof of such a material adverse change in the
conditions or prospects of the Company, or such adverse material change in
general market conditions, including without limitation as a result of terrorist
activities after the date hereof, as in the Representative's judgment would make
it impracticable to proceed with the offering, sale and/or delivery of the Units
or to enforce contracts made by the Underwriters for the sale of the 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.
27
10.4 Indemnification. Notwithstanding any contrary provision contained in
this Agreement, any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way effected by, such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
11. Miscellaneous.
11.1 Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telecopied and confirmed and shall be deemed given when so delivered or
telecopied and confirmed or if mailed, two days after such mailing
If to the Representative:
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx
Copy to:
Xxxxxxxx Xxxxxx
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxx Xxxxxx, Esq.
If to the Company:
Renaissance Acquisition Corp.
00 X. Xxxxxx Xxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxxxxx, Chairman and Chief Executive Officer
Copy to:
Dechert LLP
00 Xxxxxxxxxxx Xxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx Xxxxx, 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. Except for Section 8.8 (which may not be amended under any
circumstances), 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.
28
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 conflicts of law principles that would result in the application of
the substantive laws of another jurisdiction. The Company hereby agrees that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York of the United States of America for the Southern District of New York,
and irrevocably submits to such jurisdiction, which jurisdiction shall be
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 original or facsimile 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 provision, nor to in any way effect the validity of
this Agreement or any provision hereof or the right of any of the parties hereto
to thereafter enforce each and every provision of this Agreement. No waiver of
any breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
11.9 No Fiduciary Duty. The Company acknowledges and agrees that neither
the Representative, the Underwriters nor the controlling persons of any of them
shall have any fiduciary or advisory duty to the Company or any of its
controlling persons arising out of, or in connection with, this Agreement or the
offer and sale of the Securities.
29
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,
RENAISSANCE ACQUISITION CORP.
By:
-------------------------------------
Name:
Title:
Accepted on the date first above written.
LADENBURG XXXXXXXX & CO. INC.
By:
--------------------------
Name:
Title:
30
SCHEDULE I
RENAISSANCE ACQUISITION CORP.
14,500,000 UNITS
Number of Firm Units
Underwriter to be Purchased
----------- ---------------
Ladenburg Xxxxxxxx & Co. Inc.
14,500,000
