EXHIBIT 1.1
UNDERWRITING AGREEMENT
BETWEEN
HARBOR ACQUISITION CORPORATION
AND
XXXXXX, XXXXX XXXXX, INCORPORATED
DATED:
EXHIBIT 1.1
HARBOR ACQUISITION CORPORATION
UNDERWRITING AGREEMENT
----------------------
Baltimore, Maryland
Xxxxxx, Xxxxx Xxxxx, Incorporated
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
The undersigned, Harbor Acquisition Corporation, a Delaware corporation
("COMPANY"), hereby confirms its agreement with Xxxxxx, Xxxxx Xxxxx,
Incorporated (hereinafter referred to as "YOU," "FBW," or the "REPRESENTATIVE")
and with the other underwriters named on SCHEDULE I hereto for which FBW is
acting as Representative (the Representative and the other underwriters being
hereby collectively referred to as the "UNDERWRITERS," or individually as 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 ten million (10,000,000) units ("FIRM
UNITS") of the Company at a purchase price (net of discounts and commissions,
but before the nonaccountable expense allowance described in Section 3.13.2) of
Five dollars and sixty-four cents ($5.64) per Firm Unit. The Underwriters,
severally and not jointly, agree to purchase from the Company the number of Firm
Units set forth opposite their respective names on SCHEDULE I attached hereto
and made a part hereof at a purchase price (net of discounts and commissions,
but before the nonaccountable expense allowance described in Section 3.13.2) of
Five dollars and sixty-four cents ($5.64) per Firm Unit. The Firm Units are to
be offered initially to the public (the "OFFERING") at the offering price set
forth on the cover page of the Prospectus (as defined in Section 2.1.1 hereof).
Each Firm Unit consists of one share of the Company's common stock, par value
$0.0001 per share (the "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 (the "EFFECTIVE
DATE") of the Registration Statement (as defined in Section 2.1.1 hereof) unless
FBW informs the Company of its decision to allow earlier separate trading, but
in no event will FBW 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 a filing of a Form 8-K by the Company that includes such
audited balance sheet. Each Warrant entitles its holder to exercise it to
purchase one share of Common Stock for Five ($5.00) Dollars during the period
commencing on the later of the consummation by the Company of a "Business
Combination" or one year from the Effective Date of the Registration Statement
and terminating on the five-year anniversary of the Effective Date unless
earlier redeemed as provided in the Warrant Agreement (as defined in Section
2.21 hereof). "BUSINESS COMBINATION" means an acquisition of an operating
business through a merger, capital stock exchange, asset acquisition or other
similar business combination (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., Baltimore, Maryland time, on the third business day
following the Effective Date of the Registration Statement (or the fourth
business day following the Effective Date, if the Registration Statement is
declared effective after 4:30 p.m.) or at such earlier time as shall be agreed
upon by the Representative and the Company at the offices of the Representative
or at such other place as shall be agreed upon by the Representative and the
Company. The hour and date of delivery and payment for the Firm Units is called
the "CLOSING Date." Payment for the Firm Units (after deduction for the
nonaccountable expense allowance pursuant to Section 3.13.2) 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: Fifty-three million five hundred thousand
dollars ($53,500,000) (without giving effect to the over-allotment option) 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 (the "TRUST AGREEMENT")
and the remaining two million one hundred fifty thousand dollars ($2,150,000) of
the proceeds shall be paid 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 (the "DTC")) for the account of the Underwriters. The Firm Units shall
be registered in such name or names and in such authorized denominations as the
Representative may request in writing at least two 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 one million five hundred thousand (1,500,000) units from the Company
(the "OVER-ALLOTMENT OPTION"). Such additional one million five hundred thousand
(1,500,000) 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" or "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 from the Representative, which must be confirmed in
writing by overnight mail or facsimile transmission setting forth the number of
Option Units to be purchased and the date and time for delivery of and payment
for the Option Units, which will not be later than five full business days after
the date of the notice or such other time as shall be agreed upon by the Company
and the Representative, at the offices of the Representative or at such other
place as shall be agreed upon by the Company and the Representative. If such
delivery and payment for the Option Units does not occur on the Closing Date,
the date and time of the closing for such Option Units will be as set forth in
the notice (hereinafter the "OPTION CLOSING DATE"). Upon exercise of the
Over-allotment Option, the Company will become obligated to convey to the
Underwriters, and, subject to the terms and conditions set forth herein, the
Underwriters will become obligated to purchase, the number of Option Units
specified in such notice.
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1.2.3 PAYMENT AND DELIVERY. Payment for the Option Units will 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: Five dollars and
sixty-four cents ($5.64) per Option Unit shall be deposited in the Trust Fund
pursuant to the Trust Agreement at the offices of the Representative or at such
other place as shall be agreed upon by the Representative and the Company, upon
delivery to you of certificates representing such securities (or through the
facilities of DTC) for the account of the Underwriters. The certificates
representing the Option Units to be delivered will be in such denominations and
registered in such names as the Representative requests not less than two full
business days prior to the Closing Date or the Option Closing Date, as the case
may be, and will be made available to the Representative for inspection,
checking and packaging at the aforesaid office of the Company's transfer agent
or correspondent not less than one full business day prior to such Closing Date
or Option Closing Date, as the case may be.
1.3 ESCROW OF UNDERWRITERS' DISCOUNT AND EXPENSE ALLOWANCE. The
Underwriters agree as follows: (a) On the Closing Date (and the Option Closing
Date, if applicable), the Underwriters shall deposit into the Trust Fund a
portion of their discount equal to 2.0% of the gross proceeds of the Offering
(collectively, the "ESCROWED DISCOUNT"), and (b) on the Closing Date, the
Representative shall deposit into the Trust Fund a portion of its
non-accountable expense allowance equal to 0.5% of the gross proceeds of the
Offering (the "ESCROWED EXPENSE ALLOWANCE" and collectively with the Escrowed
Discount, the "ESCROWED FEES"). The Escrowed Fees shall be held in the Trust
Fund in accordance with the Trust Agreement until the earlier of the completion
of a Business Combination or the liquidation of the Trust Fund. Upon the
consummation of a Business Combination, (i) the Underwriters shall promptly
receive the Escrowed Discount along with the net interest accrued thereon, and
(ii) the Representative shall promptly receive the Escrowed Expense Allowance
along with the net interest accrued thereon. In the event that the Company is
unable to consummate a Business Combination and Continental Stock Transfer &
Trust Company, the trustee of the Trust Fund, is directed to liquidate the Trust
Fund, the Underwriters hereby agree as follows: (x) the Underwriters shall
forfeit any rights or claims to the Escrowed Fees and any interest accrued
thereon; and (y) that the Escrowed Fees shall be distributed on a pro-rata basis
among the holders of the Public Securities along with any interest accrued
thereon.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Underwriters as follows:
2.1 FILING OF REGISTRATION STATEMENT.
2.1.1 PURSUANT TO THE ACT. The Company has filed with the Securities
and Exchange Commission ("COMMISSION") a registration statement and an amendment
or amendments thereto, on Form S-1 (File No. 333-126300), including any related
preliminary prospectus (the "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. The Company has
complied with all requests of the Commission for additional or supplemental
information.
The Company has delivered to the Representative a complete manually
signed copy of the Registration Statement and of each consent and certificate of
experts filed as a part thereof and has
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delivered to the Representative conformed copies of the Registration Statement
(without exhibits) and Preliminary Prospectuses and the Prospectus, as amended
or supplemented, in such quantities and at such places as the Representative has
reasonably requested. Each Preliminary Prospectus used by the Underwriters
pursuant to Rule 430A and the Prospectus, when filed, complied in all material
respects with the Securities Act and, as filed by electronic transmission
pursuant to XXXXX (except as may be permitted by Regulation S-T under the
Securities Act), was identical to the copy thereof delivered to the Underwriters
for use in connection with the offer and sale of the Public Securities.
2.1.2 PURSUANT TO THE EXCHANGE ACT. The Company has filed with the
Commission a Form 8-A (File Number 000-_____) providing for the registration
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
the Securities. The registration of the Securities under the Exchange Act has
been declared effective by the Commission on the date hereof.
2.1.3. AMERICAN STOCK EXCHANGE LISTING. The Units, the Warrants and
the Common Stock have been duly listed and admitted and authorized for trading,
subject on to official notice of issuance, on the American Stock Exchange, and
the Company knows of no reason or set of facts which is likely to adversely
affect such approval.
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
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
becomes effective and at all times subsequent thereto up to the Closing Date and
the Option Closing Date, if any, the Registration Statement and the Prospectus
will contain all material statements that are required to be stated therein in
accordance with the Act and the Regulations, and will in all material respects
conform to the requirements of the Act and the Regulations; neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, on such dates, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) of the Regulations) and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Act and the Regulations
and did not and will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The representation and warranty made in this Section
2.3.1 does not apply to statements made or statements omitted in reliance upon
and in conformity with written information furnished to the Company with respect
to the Underwriters by the Representative expressly for use in the Registration
Statement or Prospectus or any amendment thereof or supplement thereto.
2.3.2 DISCLOSURE OF AGREEMENTS. The agreements and documents
described in the Registration Statement and the Prospectus conform to the
descriptions thereof contained therein and there are no agreements or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other
instrument (however characterized or described) to which the Company is a party
or by which its property or business is or may be bound or affected and (i) that
is referred to in the Prospectus, or (ii) is material to the Company's business,
has been duly and validly executed by the Company, is in full force and effect
and is enforceable against the Company and,
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to the Company's knowledge, the other parties thereto, in accordance with its
terms, except (x) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (z)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought, and none of
such agreements or instruments has been assigned by the Company, and neither the
Company nor, to the best of the Company's knowledge, any other party is in
breach or default thereunder and, to the best of the Company's knowledge, no
event has occurred that, with the lapse of time or the giving of notice, or
both, would constitute a breach or default thereunder. To the best of the
Company's knowledge, performance by the Company of the material provisions of
such agreements or instruments will not result in a violation of any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its assets or businesses, including, without limitation, those relating
to environmental laws and regulations.
2.3.3 PRIOR SECURITIES TRANSACTIONS. No securities of the Company
have been sold by the Company or by or on behalf of, or for the benefit of, any
person or persons controlling, controlled by, or under common control with the
Company within the three years prior to the date hereof, except as disclosed in
the Registration Statement.
2.3.4 REGULATIONS. The disclosures in the Registration Statement
concerning the effects of federal, state and local regulation on this Offering
and the Company's business as currently contemplated are correct in all material
respects and do not omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading.
2.4 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 or agreements
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, except as otherwise specifically stated therein or in this
Agreement, the Company has not: (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money; or (ii)
declared or paid any dividend or made any other distribution on or in respect to
its capital stock.
2.5 INDEPENDENT ACCOUNTANTS. To the knowledge of the Company, Xxxxxxxxx,
Xxxxx Xxxxxxx LLP ("GGK"), whose report is filed with the Commission as part of
the Registration Statement, are independent accountants as required by the Act
and the Regulations. GGK 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, results of operations and cash
flows of the Company at the dates and for the periods to which they apply; such
financial statements comply with the applicable accounting requirements of the
Act and the Regulations; such financial statements have been prepared in
conformity with generally accepted accounting principles, consistently applied
throughout the periods involved; and the supporting schedules included in the
Registration Statement present fairly the information required to be stated
therein. The Registration Statement discloses all material off-balance sheet
transactions, arrangements, obligations
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(including contingent obligations), and other relationships of the Company with
unconsolidated entities or other persons, if any, 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 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, based in part on the representations and
warranties of the purchasers of such shares of Common Stock, exempt from such
registration requirements.
2.8.2 SECURITIES SOLD PURSUANT TO THIS AGREEMENT. The Securities
have been duly authorized and, when issued and paid for, will be validly issued,
fully paid and non-assessable; the holders thereof are not and will not be
subject to personal liability by reason of being such holders; the Securities
are not and will not be subject to the preemptive rights of any holders of any
security of the Company or similar contractual rights granted by the Company;
and all corporate action required to be taken for the authorization, issuance
and sale of the Securities has been duly and validly taken. The Securities
conform in all material respects to all statements with respect thereto
contained in the Registration Statement. When issued, the Warrants will
constitute valid and binding obligations of the Company to issue and sell, upon
exercise thereof and payment of the exercise prices therefor, the number and
type of securities of the Company called for thereby in accordance with the
terms thereof and such Warrants are enforceable against the Company in
accordance with their respective terms, except: (i) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (ii) as enforceability of any indemnification or
contribution provision may be limited under 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.
2.9 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 3.7.2 hereof) and the Escrow Agreement
(as defined in Section 2.22.2 hereof) have been duly and validly authorized by
the Company and constitute the valid and binding agreements of the Company,
enforceable
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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 Trust Agreement, the
Service Agreement and the Escrow Agreement, the consummation by the Company of
the transactions herein and therein contemplated and the compliance by the
Company with the terms hereof and thereof do not and will not, with or without
the giving of notice or the lapse of time or both: (i) result in a breach of, or
conflict with any of the terms and provisions of, or constitute a default under,
or result in the creation, modification, termination or imposition of any lien,
charge or encumbrance upon any property or assets of the Company pursuant to the
terms of any agreement or instrument to which the Company is a party except
pursuant to the Trust Agreement referred to in Section 2.23 hereof; (ii) result
in any violation of the provisions of the Certificate of Incorporation or the
By-Laws of the Company; or (iii) violate any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of its
properties 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 By-Laws or in
violation of any material franchise, license, permit, applicable law, rule,
regulation, judgment or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
businesses.
2.13 CORPORATE POWER; LICENSES; CONSENTS.
2.13.1 CONDUCT OF BUSINESS. The Company has all requisite corporate
power and authority, and has all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies that it needs as of the date hereof to conduct its business
purpose as described in the Prospectus.
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 Trust Agreement, the Services
Agreement and the Escrow Agreement and as contemplated by the Prospectus, except
with respect to applicable federal and state securities laws.
2.14 D&O QUESTIONNAIRES. To the best of the Company's knowledge, all
information contained in the questionnaires (the "QUESTIONNAIRES") completed by
each of the Company's stockholders immediately prior to the Offering (the
"INITIAL STOCKHOLDERS") and provided to the Underwriters as an exhibit to his or
her 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.
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2.15 LITIGATION; GOVERNMENTAL PROCEEDINGS. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding pending or, to the best of the Company's knowledge, threatened
against, or involving the Company or, to the best of the Company's knowledge,
any Initial Stockholder, which has not been disclosed in the Registration
Statement or the Questionnaires.
2.16 GOOD STANDING. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification, except where
the failure to qualify would not have a material adverse effect on the Company.
2.17 STOP ORDERS. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or any part
thereof.
2.18 TRANSACTIONS AFFECTING DISCLOSURE TO NASD.
2.18.1 FINDER'S FEES. Except as described in the Prospectus, there
are no claims, payments, arrangements, agreements or understandings relating to
the payment of a finder's, consulting or origination fee by the Company or any
Initial Stockholder with respect to the sale of the Securities hereunder or any
other arrangements, agreements or understandings of the Company or, to the best
of the Company's knowledge, any Initial Stockholder that may affect the
Underwriters' compensation, as determined by the National Association of
Securities Dealers, Inc. (the "NASD").
2.18.2 PAYMENTS WITHIN TWELVE MONTHS. The Company has not made any
direct or indirect payments (in cash, securities or otherwise) to: (i) any
person, as a finder's fee, consulting fee or otherwise, in consideration of such
person raising capital for the Company or introducing to the Company persons who
raised or provided capital to the Company; (ii) to any NASD member; or (iii) to
any person or entity that has any direct or indirect affiliation or association
with any NASD member, within the twelve months prior to the Effective Date,
other than payments to FBW.
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 INITIAL STOCKHOLDERS' NASD AFFILIATION. Based on
Questionnaires distributed to such persons, no officer, director or any
beneficial owner of the Company's unregistered securities has any direct or
indirect affiliation or association with any NASD member. The Company will
advise the Representative and its counsel if it learns that any officer,
director or owner of at least 5% of the Company's outstanding Common Stock is or
becomes and affiliate or associated person of an NASD member participating in
the Offering.
2.19 FOREIGN CORRUPT PRACTICES ACT. Neither the Company nor any of the
Initial Stockholders or any other person acting on behalf of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who was, is, or may be in a position to
help or hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) that (i) might subject the Company to any damage
or penalty in any civil, criminal or governmental litigation or proceeding; (ii)
if not given in the past, might have had a material adverse effect on the
assets, business or operations of the Company as reflected in any of the
financial statements contained in the Prospectus; or (iii) if not continued in
the future, might adversely affect the assets, business, operations or prospects
of the
9
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 with Continental Stock Transfer & Trust Company
substantially in the form filed as an exhibit to the Registration Statement (the
"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) forms of which are annexed as Exhibits 10.1,
10.2, and 10.9 and 10.10 to the Registration Statement (the "INSIDER LETTER"),
pursuant to which each of the Initial Stockholders of the Company agree to
certain matters including, but not limited to, certain matters described as
being agreed to by them under the "Proposed Business" Section of the Prospectus.
2.22.2 ESCROW AGREEMENT. The Company has caused the Initial
Stockholders to enter into an escrow agreement (the "ESCROW AGREEMENT") with
Continental Stock Transfer & Trust Company (the "ESCROW AGENT") substantially in
the form of Exhibit 10.4 to the Registration Statement, whereby the Common Stock
owned by each of the Initial Stockholders will be held in escrow by the Escrow
Agent, until the date that is six (6) months after the date a Business
Combination is consummated. 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 FBW.
2.23 INVESTMENT MANAGEMENT TRUST AGREEMENT. The Company has entered into
the Trust Agreement with respect to certain proceeds of the Offering
substantially in the form of Exhibit 10.3 to the Registration Statement, which
Trust Agreement shall not be amended, modified or otherwise changed without the
prior written consent of FBW.
2.24 COVENANTS NOT TO COMPETE. No Initial Stockholder, employee, officer
or director of the Company is subject to any non-competition or non-solicitation
agreement with any employer or prior employer which could materially affect his
ability to be an Initial Stockholder, employee, officer and/or director of the
Company.
2.25 INVESTMENTS. No more than 45% of the "value" (as defined in Section
2(a)(41) of the Investment Company Act of 1940 ("Investment Company Act")) of
the Company's total assets consist of, and no more than 45% of the Company's net
income after taxes is derived from, securities other than "Government
securities" (as defined in Section 2(a)(16) of the Investment Company Act).
10
2.26 SUBSIDIARIES. The Company does not own an interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business entity.
2.27 RELATED PARTY TRANSACTIONS. There are no business relationships or
related party transactions involving the Company or any other person required to
be described in the Prospectus that have not been described as required.
2.28 RULE 419. Upon delivery and payment for the Firm Units on the
Closing Date, the Company will not be subject to Rule 419 under the Act and none
of the Company's outstanding securities will be deemed to be a "xxxxx stock" as
defined in Rule 3a-51-1 under the Exchange Act.
2.29 XXXXXXXX-XXXXX ACT AND CORPORATE GOVERNANCE COMPLIANCE. 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, Sections 301, 402, 802 and
1102 of the Xxxxxxxx-Xxxxx Act and Part 8 of the American Stock Exchange's "AMEX
Company Guide," as amended. Further, 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, all other provisions of the Xxxxxxxx-Xxxxx Act and the American
Stock Exchange corporate governance requirements set forth in the AMEX Company
Guide, as amended, except as any such failure to comply, individually or in the
aggregate, would not have a material adverse effect on the Company.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees as follows:
3.1 AMENDMENTS TO REGISTRATION STATEMENT. The Company will deliver to the
Representative, prior to filing, any amendment or supplement to the Registration
Statement or Prospectus proposed to be filed after the Effective Date and not
file any such amendment or supplement to which the Representative shall
reasonably object in writing.
3.2 FEDERAL SECURITIES LAWS.
3.2.1 COMPLIANCE. During the time when a Prospectus is required to
be delivered under the Act, the Company will use all reasonable efforts to
comply with all requirements imposed upon it by the Act, the Regulations and the
Exchange Act and by the regulations under the Exchange Act, as from time to time
in force, so far as necessary to permit the continuance of sales of or dealings
in the Public Securities in accordance with the provisions hereof and the
Prospectus. If at any time when a Prospectus relating to the Public Securities
is required to be delivered under the Act, any event shall have occurred as a
result of which, in the opinion of counsel for the Company or counsel for the
Underwriters, the Prospectus, as then amended or supplemented, includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representative promptly and prepare and file with the
Commission, subject to Section 3.1 hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Act.
3.2.2 FILING OF FINAL PROSPECTUS. The Company will file the
Prospectus (in form and substance satisfactory to the Representative) with the
Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3 EXCHANGE ACT REGISTRATION. For a period of five years from the
Effective Date, or such earlier time upon which the Company is required to be
liquidated, the Company will use its best efforts to maintain the registration
of the Securities under the provisions of the Exchange Act. For a period of five
years from the Effective Date, or such earlier time upon which the Company is
required to
11
be liquidated, the Company will not deregister the Units under the Exchange Act
without the prior written consent of FBW.
3.3 BLUE SKY FILING. The Company will endeavor in good faith, in
cooperation with the Representative, at or prior to the time the Registration
Statement becomes effective, to qualify the Public Securities for offering and
sale under the securities laws of such jurisdictions as the Representative may
reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Representative agrees that such
action is not at the time necessary or advisable, use all reasonable efforts to
file and make such statements or reports at such times as are or may be required
by the laws of such jurisdiction.
3.4 DELIVERY TO UNDERWRITERS OF PROSPECTUSES. The Company will deliver to
each of the several Underwriters, without charge, from time to time during the
period when the Prospectus is required to be delivered under the Act or the
Exchange Act, such number of copies of each Preliminary Prospectus and the
Prospectus as such Underwriters may reasonably request and, as soon as the
Registration Statement or any amendment or supplement thereto becomes effective,
deliver to you two original executed Registration Statements, including
exhibits, and all post-effective amendments thereto and copies of all exhibits
filed therewith or incorporated therein by reference and all original executed
consents of certified experts.
3.5 EFFECTIVENESS AND EVENTS REQUIRING NOTICE TO THE REPRESENTATIVE. The
Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representative immediately and confirm the notice
in writing: (i) of the effectiveness of the Registration Statement and any
amendment thereto; (ii) of the issuance by the Commission of any stop order or
of the initiation, or the threatening, of any proceeding for that purpose; (iii)
of the issuance by any state securities commission of any proceedings for the
suspension of the qualification of the Public Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose; (iv) of the mailing and delivery to the Commission for filing of
any amendment or supplement to the Registration Statement or Prospectus; (v) of
the receipt of any comments or request for any additional information from the
Commission; and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Company shall not
file any amendment of the Registration Statement or supplement to the Prospectus
or any document incorporated by reference in the Registration Statement unless
the Company has furnished the Representative with a copy for review prior to
filing and shall not file any such proposed amendment or supplement to which the
Representative reasonable objects. 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 TRANSACTIONS.
3.7.1 AFFILIATE COMBINATIONS. The Company will not consummate a
Business Combination with any entity which is affiliated with any Initial
Stockholder unless the Company obtains
12
an opinion from an independent investment banking firm that the Business
Combination is fair to the Company's stockholders from a financial perspective.
3.7.2 ADMINISTRATIVE SERVICES. The Company has entered into an
agreement (the "SERVICES AGREEMENT") with Grand Cru Management LLC (the
"PROVIDER"), pursuant to which the Provider will make available to the Company
certain administrative, technology and secretarial services, as well as office
space, including a conference room, in Boston, Massachusetts, as the Company may
require time to time, for an amount not to exceed $7,500 per month.
3.7.3 AFFILIATE COMPENSATION. The Company shall not pay any Initial
Stockholder or any of their affiliates any fees or compensation from the
Company, for services rendered to the Company prior to, or in connection with,
the consummation of a Business Combination; PROVIDED that the Initial
Stockholders shall be entitled to reimbursement from the Company for their
reasonable out-of-pocket expenses incurred in connection with seeking and
consummating a Business Combination.
3.8 AMEX LISTING. The Company will use its best efforts to effect and
maintain the listing of the Units, Common Stock and Warrants on the American
Stock Exchange.
3.9 INTENTIONALLY OMITTED.
3.10 INTENTIONALLY OMITTED.
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: Xxxxxxx X.
Xxxxx) 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 such registration statements, financial statements
and periodic and special reports as the Company shall be required to file with
the Commission and from time to time furnishes generally to holders of any class
of its securities; and (ii) 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 INTENTIONALLY OMITTED.
3.11.3 INTENTIONALLY OMITTED.
3.11.4 PERIODIC REPORTING OBLIGATIONS. The Company shall file, on a
timely basis, and in compliance with the Exchange Act and the Xxxxxxxx-Xxxxx
Act, with the Commission and the American Stock Exchange all reports and
documents required to be filed under the Exchange Act.
3.12 DISQUALIFICATION OF FORM S-1. For a period equal to four years from
the date hereof, the Company will not take any action or actions which may
prevent or disqualify the Company's use of Form S-1 (or other appropriate form)
for the registration of the 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
13
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, including any transfer or other
taxes payable thereon; (iii) the qualification of the Public Securities under
state or foreign securities or Blue Sky laws, including the costs of printing
and mailing the "Preliminary Blue Sky Memorandum," and all amendments and
supplements thereto, fees and disbursements of Xxxxxxx LLP ("VENABLE") for such
purpose (such fees shall be capped at $35,000 in the aggregate, of which
$_______ has previously been paid); (iv) filing fees, costs and expenses
(including fees and disbursements for the Representative's counsel); (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 the Company's 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 $5,000 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 herein to be paid by the
Company to the Representative and others. If the Offering is not consummated for
any reason whatsoever, except as a result of the Underwriters' breach or default
with respect to any of its obligations described in this Agreement, then the
Company shall reimburse the Underwriters in full for their out-of-pocket
expenses actually incurred by the Underwriters, including, without limitation,
its legal fees and disbursements and "road show" and due diligence expenses. The
Representative shall retain such part of the nonaccountable expense allowance
(described below in Section 3.13.2) previously paid, if any, as shall equal its
actual out-of-pocket accountable expenses and refund the balance. If the amount
previously paid is insufficient to cover such actual out-of-pocket accountable
expenses, the Company shall remain liable for and promptly pay any other actual
out-of-pocket accountable expenses.
3.13.2 NONACCOUNTABLE EXPENSES. The Company further agrees that, in
addition to the expenses payable pursuant to Section 3.13.1, on the Closing
Date, it will pay to the Representative a nonaccountable expense allowance equal
to one and one-quarter percent (1.25%) of the gross proceeds from the sale of
the Firm Units by deduction from the proceeds of the Offering contemplated
herein.
3.13.3 EXPENSES RELATED TO BUSINESS COMBINATION. The Company further
agrees that, in the event the Representative assists the Company in trying to
obtain stockholder approval of a proposed Business Combination, the Company
agrees to reimburse the Representative for all out-of-pocket expenses,
including, but not limited to, "road-show" and due diligence expenses.
3.14 APPLICATION OF NET PROCEEDS. The Company will apply the net proceeds
from the Offering received by it in a manner consistent with the application
described under the caption "Use Of Proceeds" in the Prospectus.
3.15 DELIVERY OF EARNINGS STATEMENTS TO SECURITY HOLDERS. The Company
will make generally available to its security holders as soon as practicable,
but not later than the first day of the fifteenth full calendar month following
the Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.
3.16 NOTICE TO NASD. In the event any person or entity (regardless of any
NASD affiliation or association) is engaged to assist the Company in its search
for a merger candidate or to provide any other merger and acquisition services,
the Company will provide the following to the NASD and FBW prior to the
consummation of the Business Combination: (i) complete details of all services
and copies of agreements governing such services; and (ii) justification as to
why the person or entity providing the merger and acquisition services should
not be considered an "underwriter and related person" with respect
14
to the Company's initial public offering, as such term is defined in Rule 2710
of the NASD's Conduct Rules. The Company also agrees that proper disclosure of
such arrangement or potential arrangement will be made in the proxy statement
which the Company will file for purposes of soliciting stockholder approval for
the Business Combination.
3.17 STABILIZATION. Except with respect to the agreements among Xxxxxx X.
Xxxxx, Xxxxx A.R. Xxxxxx and certain other initial stockholders the
Representative in the form annexed as Exhibit 10.9 to the Registration
Statement, neither the Company, nor, to its knowledge, any of its employees,
directors or stockholders (without the consent of FBW) 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. For a period of five years from the Effective Date or
until such earlier time upon which the Company is required to be liquidated, the
Company shall retain GGK or other independent public accountants reasonably
acceptable to FBW.
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 (the "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 the proceeds of the
Offering to be held in the Trust Fund to be invested only in "government
securities" with specific maturity dates as set forth in the Trust Agreement and
disclosed in the Prospectus. The Company will otherwise conduct its business in
a manner so that it will not become subject to the Investment Company Act.
Furthermore, once the Company consummates a Business Combination, it will be
engaged in a business other than that of investing, reinvesting, owning, holding
or trading securities.
3.24 BUSINESS COMBINATION ANNOUNCEMENT. Within five business days
following the consummation by the Company of a Business Combination, the Company
shall cause an announcement ("Business Combination Announcement") to be placed,
at its cost, in THE WALL STREET JOURNAL, THE NEW YORK TIMES and a third
publication to be selected by the Representative announcing the consummation of
the Business Combination and indicating that the representative was the managing
underwriter in the Offering. The Company shall supply the Representative with a
draft of the Business Combination
15
Announcement and provide the Representative with a reasonable opportunity to
comment thereon. The Company will not place the Business Combination
Announcement without the final approval of the representative, which approval
will not be unreasonably withheld.
4. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the several
Underwriters to purchase and pay for the Units, as provided herein, shall be
subject to the continuing accuracy of the representations and warranties of the
Company as of the date hereof and as of each of the Closing Date and the Option
Closing Date, if any, to the accuracy of the statements of officers of the
Company made pursuant to the provisions hereof and to the performance by the
Company of its obligations hereunder and to the following conditions:
4.1 REGULATORY MATTERS.
4.1.1 EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement shall have become effective not later than 5:00 P.M., Baltimore,
Maryland 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 by the Company to the reasonable satisfaction of FBW.
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 Xxxxx, Xxxx &
X'Xxxxxxxx, P.C. ("XXXXX XXXX"), counsel to the Company, dated the Effective
Date, addressed to the Representative and in form and substance satisfactory to
the Representative to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation. The Company is duly qualified and licensed and in good standing
as a foreign corporation in each jurisdiction in which its ownership or leasing
of any properties or the character of its operations requires such qualification
or licensing, except where the failure to qualify would not have a material
adverse effect on the Company taken as a whole.
(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 outstanding capital stock of the Company is as
set forth in the Prospectus.
16
(iii) The Securities have been duly authorized and, when
issued and paid for, will be validly issued, fully paid and non-assessable; the
holders thereof are not and will not be subject to personal liability by reason
of being such holders. The Securities are not and will not be subject to the
preemptive rights of any holders of any security of the Company arising by
operation of law or under the Certificate of Incorporation or Bylaws of the
Company. When issued, 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, when issued, in each case, are enforceable against the Company in
accordance with their respective terms, except: (a) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (b) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws; and (c) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought. The
certificates representing the Securities are in due and proper form.
(iv) This Agreement, the Warrant Agreement, the Services
Agreement, the Trust Agreement and the Escrow Agreement have each been duly and
validly authorized and, when executed and delivered by the Company, constitute
the valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except: (a) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally; (b) as enforceability of any
indemnification or contribution provisions may be limited under the federal and
state securities laws; and (c) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
(v) The execution, delivery and performance of this
Agreement, the Warrant Agreement, the Escrow Agreement, the Trust Agreement and
the Services Agreement, the issuance and sale of the Securities, the
consummation of the transactions contemplated hereby and thereby, and compliance
by the Company with the terms and provisions hereof and thereof, do not and will
not, with or without the giving of notice or the lapse of time, or both, (a) to
such counsel's knowledge, conflict with, or result in a breach of, any of the
terms or provisions of, or constitute a default under, or result in the creation
or modification of any lien, security interest, charge or encumbrance upon any
of the properties or assets of the Company pursuant to the terms of, any
mortgage, deed of trust, note, indenture, loan, contract, commitment or other
agreement or instrument filed as an exhibit to the Registration Statement, (b)
result in any violation of the provisions of the Certificate of Incorporation or
the By-Laws of the Company, or (c) to such counsel's knowledge, violate any
statute or any judgment, order or decree, rule or regulation applicable to the
Company of any court, domestic or foreign, or of any federal, state or other
regulatory authority or other governmental body having jurisdiction over the
Company, its properties or assets.
(vi) The Registration Statement, each Preliminary Prospectus
and the Prospectus and any post-effective amendments or supplements thereto
(other than the financial statements included therein, as to which no opinion
need be rendered) each as of their respective dates complied as to form in all
material respects with the requirements of the Act and Regulations. The
Securities and each agreement filed as an exhibit to the Registration Statement
conform in all material respects to the description thereof contained in the
Registration Statement and the Prospectus to our knowledge. No federal or state
statute or regulation required to be described in the Prospectus is not
described as required, nor are any contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement not so described or filed as
required. The statements set forth in the Registration Statement under the
captions "Comparison to offerings of blank check companies," and "Description of
Securities," insofar as they purport to describe the provisions of laws, are
accurate in all material aspects and fairly summarize such provisions and to our
knowledge there are no other provisions of law that are required by the Act or
the Regulations to be described therein. Upon delivery and payment for the Firm
Units on the Closing Date, the
17
Company will not be subject to Rule 419 under the
Act and none of the Company's outstanding securities will be deemed to be a
"xxxxx stock" as defined in Rule 3a-51-1 under the Exchange Act.
(vii) Counsel has participated in conferences with officers
and other representatives of the Company, representatives of the independent
public accountants for the Company and representatives of the Underwriters at
which the contents of the Registration Statement, the Prospectus and related
matters were discussed and although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus (except as
otherwise set forth in this opinion), no facts have come to the attention of
such counsel which lead them to believe that either the Registration Statement
or the Prospectus or any amendment or supplement thereto, as of the date of such
opinion contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion with
respect to the financial statements and schedules and other financial and
statistical data included in the Registration Statement or Prospectus).
(viii) The Registration Statement is effective under the Act.
To such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act or applicable state
securities laws.
(ix) To such counsel's knowledge, there is no action, suit or
proceeding before or by any court of governmental agency or body, domestic or
foreign, now pending, or threatened against the Company that is required to be
described in the Registration Statement.
4.2.2 INTENTIONALLY OMITTED.
4.2.3 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 Xxxxx Xxxx, 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 the Representative,
confirming as of the Closing Date and, if applicable, the Option Closing Date,
the statements made by Xxxxx Xxxx in its opinion delivered on the Effective
Date.
4.2.4 RELIANCE. In rendering such opinion, such counsel may rely:
(i) as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent such
counsel deems proper and to the extent specified in such opinion, if at all,
upon an opinion or opinions (in form and substance reasonably satisfactory to
the Representative) of other counsel reasonably acceptable to the
Representative, familiar with the applicable laws; and (ii) as to matters of
fact, to the extent they deem proper, on certificates or other written
statements of officers of the Company and officers of departments of various
jurisdiction having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to the Underwriters' counsel if requested. The
opinion of counsel for the Company and any opinion relied upon by such counsel
for the Company shall include a statement to the effect that it may be relied
upon by counsel for the Underwriters in its opinion delivered to the
Underwriters.
4.3 COLD COMFORT LETTER. At the time this Agreement is executed, and at
each of the Closing Date and the Option Closing Date, if any, 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 from GGK dated,
respectively, as of the date of this Agreement and as of the Closing Date and
the Option Closing Date, if any:
18
(i) Confirming that they are independent accountants with respect to
the Company within the meaning of the Act and the applicable Regulations and
that they have not, during the periods covered by the financial statements
included in the Prospectus, provided to the Company any non-audit services, as
such term is used in Section 10A(g) of the Exchange Act;
(ii) Stating that in their opinion the financial statements of the
Company included in the Registration Statement and Prospectus comply as to form
in all material respects with the applicable accounting requirements of the Act
and the published Regulations thereunder;
(iii) Stating that, on the basis of a limited review which included
a reading of the latest available unaudited interim financial statements of the
Company (with an indication of the date of the latest available unaudited
interim financial statements), a reading of the latest available minutes of the
stockholders and board of directors and the various committees of the board of
directors, consultations with officers and other employees of the Company
responsible for financial and accounting matters and other specified procedures
and inquiries, nothing has come to their attention which would lead them to
believe that: (a) the unaudited financial statements of the Company included in
the Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Regulations or
are not fairly presented in conformity with generally accepted accounting
principles applied on a basis substantially consistent with that of the audited
financial statements of the Company included in the Registration Statement; (b)
at a date not later than five days prior to the Effective Date, Closing Date or
Option Closing Date, as the case may be, there was any change in the capital
stock or long-term debt of the Company, or any decrease in the stockholders'
equity of the Company as compared with amounts shown in the June 22, 2005
balance sheet included in the Registration Statement, other than as set forth in
or contemplated by the Registration Statement, or, if there was any decrease,
setting forth the amount of such decrease, and (c) during the period from June
22, 2005 to a specified date not later than five days prior to the Effective
Date, Closing Date or Option Closing Date, as the case may be, there was any
decrease in revenues, net earnings or net earnings per share of Common Stock, in
each case as compared with the corresponding period in the preceding year and as
compared with the corresponding period in the preceding quarter, other than as
set forth in or contemplated by the Registration Statement, or, if there was any
such decrease, setting forth the amount of such decrease;
(iv) Setting forth, at a date not later than five days prior to the
Effective Date, the amount of liabilities of the Company (including a break-down
of commercial paper and notes payable to banks);
(v) Stating that they have compared specific dollar amounts, numbers
of shares, percentages of revenues and earnings, statements and other financial
information pertaining to the Company set forth in the Prospectus in each case
to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including work
sheets, of the Company and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in agreement;
(vi) Stating that they have not during the immediately preceding
five year period brought to the attention of the Company's management any
reportable condition related to internal structure, design or operation as
defined in the Statement on Auditing Standards No. 60 "Communication of Internal
Control Structure Related Matters Noted in an Audit," in the Company's internal
controls; and
(vii) Statements as to such other matters incident to the
transaction contemplated hereby as you may reasonably request.
19
4.4 OFFICERS' CERTIFICATES.
4.4.1 OFFICERS' CERTIFICATE. At each of the Closing Date and the
Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Chairman of the Board or the President
and the Secretary or Assistant Secretary of the Company, dated the Closing Date
or the Option Closing Date, as the case may be, respectively, to the effect that
the Company has performed all covenants and complied with all conditions
required by this Agreement to be performed or complied with by the Company prior
to and as of the Closing Date, or the Option Closing Date, as the case may be,
and that the conditions set forth in Section 4.5 hereof have been satisfied as
of such date and that, as of Closing Date and the Option Closing Date, as the
case may be, the representations and warranties of the Company set forth in
Section 2 hereof are true and correct. In addition, the Representative will have
received such other and further certificates of officers of the Company as the
Representative may reasonably request.
4.4.2 SECRETARY'S CERTIFICATE. At each of the Closing Date and the
Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Secretary or Assistant Secretary of the
Company, dated the Closing Date or the Option Date, as the case may be,
respectively, certifying: (i) that the By-Laws and Certificate of Incorporation
of the Company are true and complete, have not been modified and are in full
force and effect; (ii) that the resolutions relating to the public offering
contemplated by this Agreement are in full force and effect and have not been
modified; (iii) all correspondence between the Company or its counsel and the
Commission; and (iv) as to the incumbency of the officers of the Company. The
documents referred to in such certificate shall be attached to such certificate.
4.5 NO MATERIAL CHANGES. Prior to and on each of the Closing Date and the
Option Closing Date, if any: (i) there shall have been no material adverse
change or development involving a prospective material adverse change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) no action suit or proceeding, at law
or in equity, shall have been pending or threatened against the Company or any
Initial Stockholder before or by any court or federal or state commission, board
or other administrative agency wherein an unfavorable decision, ruling or
finding may materially adversely affect the business, operations, prospects or
financial condition or income of the Company, except as set forth in the
Registration Statement and Prospectus; (iii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated or
threatened by the Commission; and (iv) the Registration Statement and the
Prospectus and any amendments or supplements thereto shall contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and shall conform in all material respects to the
requirements of the Act and the Regulations, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto shall
contain any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
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
Agreement, the Trust Agreement, the Warrant Agreement, the Services Agreement
and all of the Insider Letters.
4.6.2 INTENTIONALLY OMITTED.
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 Venable 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
20
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 LISTING ON THE AMERICAN STOCK EXCHANGE. On the Closing Date, the
Public Securities shall have been approved for listing on the American Stock
Exchange.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION OF UNDERWRITERS.
5.1.1 GENERAL. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless each of the Underwriters, and each
dealer selected by you that participates in the offer and sale of the Securities
(each, a "Selected Dealer"), and each of their respective directors, officers
and employees and each person, if any, who controls any such Underwriter
("CONTROLLING PERSON") within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim, damage
and expense whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, whether
arising out of any action between any of the Underwriters and the Company or
between any of the Underwriters and any third party or otherwise) to which they
or any of them may become subject under the Act, the Exchange Act or any other
statute or at common law or otherwise or under the laws of foreign countries,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in (i) any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time each may be amended and
supplemented); or (ii) any application or other document or written
communication (in this Section 5 collectively called "APPLICATION") executed by
the Company or based upon 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 or any securities exchange; or the omission or alleged omission therefrom
of a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company with
respect to an Underwriter by or on behalf of such Underwriter expressly for use
in any Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment or supplement thereof, or in any application, as the case may be. With
respect to any untrue statement or omission or alleged untrue statement or
omission made in the Preliminary Prospectus, the indemnity agreement contained
in this paragraph shall not inure to the benefit of any Underwriter to the
extent that any loss, liability, claim, damage or expense of such Underwriter
results from the fact that a copy of the Prospectus was not given or sent to the
person asserting any such loss, liability, claim or damage at or prior to the
written confirmation of sale of the Securities to such person as required by the
Act and the Regulations, and if the untrue statement or omission has been
corrected in the Prospectus, unless such failure to deliver the Prospectus was a
result of non-compliance by the Company with its obligations under Section 3.4
hereof. The Company agrees promptly to notify the Representative of the
commencement of any litigation or proceedings against the Company or any of its
officers, directors or controlling persons in connection with the issue and sale
of the Securities or in connection with the Registration Statement or
Prospectus.
5.1.2 PROCEDURE. If any action is brought against an Underwriter, a
Selected Dealer or a controlling person in respect of which indemnity may be
sought against the Company pursuant to Section 5.1.1, such Underwriter or
Selected Dealer, as the case may be, 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) and payment of
actual expenses. Such Underwriter, Selected Dealer or
21
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; (ii) the Company shall not have employed counsel to have charge of the
defense of such action; or (iii) such indemnified party or parties shall have
reasonably concluded that there may be defenses available to it or them which
are different from or additional to those available to the Company (in which
case the Company shall not have the right to direct the defense of such action
on behalf of the indemnified party or parties), in any of which events the
reasonable fees and expenses of not more than one additional firm of attorneys
selected by the Underwriter, Selected Dealer and/or controlling person shall be
borne by the Company. Notwithstanding anything to the contrary contained herein,
if the Underwriter, Selected Dealer or controlling person shall assume the
defense of such action as provided above, the Company shall have the right to
approve the terms of any settlement of such action which approval shall not be
unreasonably withheld.
5.2 INDEMNIFICATION OF THE COMPANY. Each Underwriter, severally and not
jointly, agrees to indemnify and hold harmless the Company, its directors,
officers and employees and agents who control the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the foregoing indemnity
from the Company to the several Underwriters, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions
made in any Preliminary Prospectus, the Registration Statement or Prospectus or
any amendment or supplement thereto or in any application, in reliance upon, and
in strict conformity with, written information furnished to the Company with
respect to such Underwriter by or on behalf of the Underwriter expressly for use
in such Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2.
5.3 CONTRIBUTION.
5.3.1 CONTRIBUTION RIGHTS. In order to provide for just and
equitable contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for indemnification
pursuant hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 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, in such proportions as is appropriate to reflect (a) the
relative benefits received by the indemnifying party or parties on the one hand
and the indemnified party on the other, from the Offering; or (b) if the
allocation provided by the foregoing clause (a) is not permitted by applicable
law, not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party on the
other, in connection with the statements or omissions or alleged statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefit received by the Company on the
one hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total proceeds from the Offering (before deducting expenses)
received by the Company bear to the total underwriting discounts and commissions
received by the Underwriters; 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.
22
Notwithstanding the provisions of this Section 5.3.1, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Public Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses. For purposes of this Section, each
director, officer and employee of an Underwriter or the Company, as applicable,
and each person, if any, who controls an Underwriter or the Company, as
applicable, within the meaning of Section 15 of the Act shall have the same
rights to contribution as the Underwriters or the Company, as applicable.
5.3.2 CONTRIBUTION PROCEDURE. Within fifteen 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 may be
terminated by you or the Company without liability on the part of the Company
(except as provided in Sections 3.13 and 5 hereof) or the several Underwriters
(except as provided in Section 5 hereof); PROVIDED, HOWEVER, that if such
default occurs with respect to the Option Units, this Agreement will not
terminate as to the Firm Units; and PROVIDED FURTHER that nothing herein shall
relieve a defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for damages occasioned by its default hereunder.
6.3 POSTPONEMENT OF CLOSING DATE. In the event that the Firm Units or
Option Units to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, you or the Company shall, subject to the requirements of the Act
and
23
the regulations thereunder, have the right to postpone the Closing Date or
Option Closing Date for a reasonable period, but not in any event exceeding five
business days, in order to effect whatever changes may thereby be made necessary
in the Registration Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any amendment to the
Registration Statement or the Prospectus that in the opinion of counsel for the
Underwriters may thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any party substituted under this Section 6 with
like effect as if it had originally been a party to this Agreement with respect
to such Securities.
7. RIGHT TO APPOINT REPRESENTATIVE. From the Effective Date until the
consummation of a Business Combination, upon notice from FBW to the Company, FBW
shall have the right to send a representative (who need not be the same
individual from meeting to meeting) to observe each meeting of the Board of
Directors of the Company; provided that such representative shall sign a
Regulation FD compliant confidentiality agreement which is reasonably acceptable
to FBW and its counsel in connection with such representative's attendance at
meetings of the Board of Directors; and provided further that upon written
notice to FBW, the Company may exclude the representative from meetings where,
in the written opinion of counsel for the Company, the representative's presence
would destroy the attorney-client privilege. The Company agrees to give FBW
written notice of each such meeting and to provide FBW with an agenda and
minutes of the meeting no later than it gives such notice and provides such
items to the other directors, and reimburse the representative of FBW for its
reasonable out-of-pocket expenses incurred in connection with its attendance at
the meeting, including but not limited to, food, lodging and transportation.
8. ADDITIONAL COVENANTS.
8.1 INTENTIONALLY OMITTED.
8.2 ADDITIONAL SHARES OR OPTIONS. The Company hereby agrees that until
the Company consummates a Business Combination, it shall not issue any shares of
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 LETTERS. The Company hereby agrees that it will
not commence its due diligence investigation of any operating business which the
Company seeks to acquire ("TARGET BUSINESS") or obtain the services of any
vendor unless and until the Target Business or the vendor executes a waiver
letter in the form attached hereto as EXHIBIT A and B, respectively.
Furthermore, each officer and director of the Company shall execute a waiver
letter in the form attached hereto as EXHIBIT C.
8.4 INSIDER LETTERS. The Company shall not take any action or omit to
take any action which would cause a breach of any of the Insider Letters
executed between each Initial Stockholder and FBW and will not allow any
amendments to, or waivers of, such Insider Letters without the prior written
consent of FBW.
8.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company shall not take
any action or omit to take any action that would cause the Company to be in
breach or violation of its Certificate of Incorporation or By-Laws. Prior to the
consummation of a Business Combination, the Company will not amend its
Certificate of Incorporation without the prior written consent of FBW.
8.6 BLUE SKY REQUIREMENTS. The Company shall provide counsel to the
Representative with ten copies of all proxy information and all related material
filed with the Commission in connection with a Business Combination concurrently
with such filing with the Commission. In addition, the Company shall furnish any
other state in which its initial public offering was registered, such
information as may be requested by such state.
24
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 net book value, as
determined by the Company and audited by GGK. 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, as well as any shares of Common Stock acquired in connection
with or following 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 the Business Combination Vote. At the time the
Company seeks approval of any potential Business Combination, the Company will
offer each of holders of the Company's Common Stock issued in this Offering (the
"IPO SHARES") the right to convert their IPO Shares at a per share price equal
to the amount in the Trust Fund (inclusive of any interest income therein) on
the record date (the "CONVERSION PRICE") for determination of stockholders
entitled to vote upon the proposal to approve such Business Combination (the
"RECORD DATE") divided by the total number of IPO Shares. If holders of less
than 20% in interest of the Company's IPO Shares vote against such approval of a
Business Combination, the Company may, but will not be required to, proceed with
such Business Combination. If the Company elects to so proceed, it will convert
shares, based upon the Conversion Price, from those holders of IPO Shares who
affirmatively requested such conversion and who voted against the Business
Combination. If holders of 20% or more in interest of the IPO Shares vote
against approval of any potential Business Combination, the Company will not
proceed with such Business Combination and will not convert such shares.
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 Xxxxxx X.
Xxxxx and Xxxxx A.R. Xxxxxx to agree that, in order to minimize potential
conflicts of interest which may arise from multiple affiliations, such Initial
Stockholders will present to the Company for its consideration, prior to
presentation to any other person or company, any suitable opportunity to acquire
an operating business, until the earlier of the consummation by the Company of a
Business Combination, the liquidation of the Company or until such time as the
Initial Stockholders cease to be an officer or director of the Company, subject
to any pre-existing fiduciary obligations such Initial Stockholders might have
or new fiduciary obligations related to or affiliated with entities to whom such
Initial Stockholders have pre-existing fiduciary obligations including, but not
limited to, fiduciary obligations to next generation, follow-on or successor
entities to any entities to which such Initial Stockholders have pre-existing
obligations or as otherwise set forth in the Registration Statement.
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 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
25
potential sales, earnings and cash flow and book value. If the Board of
Directors of the Company is not able to independently determine that the target
business has a fair market value of at least 80% of the Company's fair market
value at the time of such acquisition, the Company will obtain an opinion from
an unaffiliated, independent investment banking firm which is a member of the
NASD with respect to the satisfaction of such criteria. The Company is not
required to obtain an opinion from an investment banking firm as to the fair
market value if the Company's Board of Directors independently determines that
the Target Business does have sufficient fair market value.
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, Nasdaq 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 a banking moratorium has been
declared by a New York State or federal authority; or (iv) if a moratorium on
foreign exchange trading has been declared which materially adversely impacts
the United States securities market; or (v) 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 (vi) if any of the Company's representations,
warranties or covenants hereunder are breached; or (vii) if the United States
shall have become involved in a new war or an increase in major hostilities; 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 3.13.1 hereof.
26
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:
Xxxxxx, Xxxxx Xxxxx, Incorporated
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. Xxxxx
Copy to:
Xxxxxxx LLP
0000 Xxxxxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
Facsimile: (000) 000-0000
Attn: Xxxxxxxxx X. Xxxxxx, Esq.
If to the Company:
Harbor Acquisition Corporation
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Copy to:
Xxxxx, Xxxx & X'Xxxxxxxx, P.C.
Xxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
Attn: C. Xxxxxxx Xxxx, Esq.
Xxxxxx X. 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. 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
27
parties hereto with respect to the subject matter hereof and thereof, and
supersede all prior agreements and understandings of the parties, oral and
written, with respect to the subject matter hereof.
11.5 BINDING EFFECT. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representative, the Underwriters, the Company and
the Selected Dealers, 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 Maryland, without giving
effect to conflict of laws. The Company hereby agrees that any action,
proceeding or claim against it arising out of, relating in any way to this
Agreement shall be brought and enforced in the Maryland Circuit Court, for the
City of Baltimore or in the United States District Court for Baltimore, 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 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the Company
in any action, proceeding or claim. The Company agrees that the prevailing
party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys' fees and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor.
11.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto.
11.8 WAIVER, ETC. The failure of any of the parties hereto to at any time
enforce any of the provisions of this Agreement shall not be deemed or construed
to be a waiver of any such 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
28
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,
HARBOR ACQUISITION CORPORATION
By:
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board and
Chief Executive Officer
Accepted on the date first above written.
XXXXXX, XXXXX XXXXX, INCORPORATED.
By:
--------------------------------------
Name:
Title:
29
EXHIBIT 1.1
SCHEDULE I
HARBOR ACQUISITION CORPORATION
10,000,000 UNITS
NUMBER OF FIRM UNITS
UNDERWRITER TO BE PURCHASED
----------- --------------------
--------------------
EXHIBIT 1.1
EXHIBIT A
Harbor Acquisition Corporation
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Gentlemen:
Reference is made to the Final Prospectus of Harbor Acquisition
Corporation ("HARBOR"), dated __________, 2005 (the "PROSPECTUS"). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
We have read the Prospectus and understand that Harbor has established
the Trust Fund, initially in an amount of $__________ for the benefit of the
Public Stockholders and that Harbor may disburse monies from the Trust Fund only
(i) to the Public Stockholders in the event of the redemption of their shares or
the liquidation of Harbor or (ii) to Harbor and the Underwriters after Harbor
consummates a Business Combination.
For and in consideration of Harbor agreeing to evaluate the undersigned
for purposes of consummating a Business Combination with it, the undersigned
hereby agrees that it does not have any right, title, interest or claim of any
kind in or to any monies in the Trust Fund (the "CLAIM") and hereby waives any
Claim it may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with Harbor and will not seek recourse
against the Trust Fund for any reason whatsoever.
----------------------------------
Print Name of Target Business
----------------------------------
Authorized Signature of Target Business
EXHIBIT 1.1
EXHIBIT B
Harbor Acquisition Corporation
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Gentlemen:
Reference is made to the Final Prospectus of Harbor Acquisition
Corporation ("HARBOR"), dated ___________, 2005 (the "PROSPECTUS"). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
We have read the Prospectus and understand that Harbor has established
the Trust Fund, initially in an amount of $__________ for the benefit of the
Public Stockholders and that Harbor may disburse monies from the Trust Fund
only: (i) to the Public Stockholders in the event of the redemption of their
shares or the liquidation of Harbor; or (ii) to Harbor and the Underwriters
after Harbor consummates a Business Combination.
For and in consideration of Harbor engaging the services of the
undersigned, the undersigned hereby agrees that it does not have any right,
title, interest or claim of any kind in or to any monies in the Trust Fund (the
"CLAIM") and hereby waives any Claim it may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with Harbor and
will not seek recourse against the Trust Fund for any reason whatsoever.
----------------------------------
Print Name of Lender
----------------------------------
Authorized Signature of Lender
EXHIBIT 1.1
EXHIBIT C
Harbor Acquisition Corporation
Xxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Gentlemen:
The undersigned officer or director of Harbor Acquisition Corporation
("HARBOR") hereby acknowledges that Harbor has established the Trust Fund,
initially in an amount of $___________ for the benefit of the Public
Stockholders and that Harbor may disburse monies from the Trust Fund only (i) to
the Public Stockholders in the event of the redemption of their shares or the
liquidation of Harbor or (ii) to Harbor and the Underwriters after Harbor
consummates a Business Combination.
The undersigned hereby agrees that it does not have any right, title,
interest or claim of any kind in or to any monies in the Trust Fund (the
"CLAIM") and hereby waives any Claim it may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with Harbor and
will not seek recourse against the Trust Fund for any reason whatsoever.
Notwithstanding the foregoing, such waiver shall not apply to any shares
acquired by the undersigned in the public market.
----------------------------------
Print Name of Officer/Director
----------------------------------
Authorized Signature of Officer/Director
