UNDERWRITING AGREEMENT
BETWEEN
COCONUT PALM ACQUISITION CORP.
AND
XXXXXX XXXXXX & CO. INC.
AND
EARLYBIRDCAPITAL, INC.
DATED: _____________, 2005
COCONUT PALM ACQUISITION CORP.
UNDERWRITING AGREEMENT
----------------------
New York, New York
_______________, 2005
Xxxxxx Xxxxxx & Co. Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
EarlyBirdCapital, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Coconut Palm Acquisition Corp., a Delaware
corporation ("Company"), hereby confirms its agreement with Xxxxxx Xxxxxx & Co.
Inc. ("Xxxxxx Xxxxxx & Co.") and EarlyBirdCapital, Inc. ("EBC," together with
Xxxxxx Xxxxxx, referred to herein variously as "you," or the "Representatives")
and with the other underwriters named on Schedule I hereto for which Xxxxxx
Xxxxxx & Co. and EBC are acting as Representatives (the Representatives and the
other Underwriters being collectively called the "Underwriters" or,
individually, an "Underwriter") as follows:
1. PURCHASE AND SALE OF SECURITIES.
1.1 FIRM SECURITIES.
1.1.1 PURCHASE OF FIRM UNITS. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell, severally and
not jointly, to the several Underwriters, an aggregate of 10,000,000 units
("Firm Units") of the Company, at a purchase price (net of discounts and
commissions) of $5.58 per Firm Unit. The Underwriters, severally and not
jointly, agree to purchase from the Company the number of Firm Units set forth
opposite their respective names on Schedule I attached hereto and made a part
hereof at a purchase price (net of discounts and commissions) of $5.58 per Firm
Unit. The Firm Units are to be offered initially to the public ("Offering") at
the offering price of $6.00 per Firm Unit. Each Firm Unit consists of one share
of the Company's common stock, par value $.0001 per share ("Common Stock"), and
two warrants ("Warrant(s)"). The shares of Common Stock and the Warrants
included in the Firm Units will not be separately transferable until 90 days
after the effective date ("Effective Date") of the Registration Statement (as
defined in Section 2.1.1 hereof) unless the Representatives inform the Company
of their decision to allow earlier separate trading, but in no event will the
Representatives allow separate trading until the preparation of an audited
balance sheet of the Company reflecting receipt by the Company of the proceeds
of the Offering and the filing of a Form 8-K by the Company which includes such
balance sheet. Each Warrant entitles its holder to exercise it to purchase one
share of Common Stock for $5.00 during the period commencing on the later of the
consummation by the Company of its "Business Combination" or one year from the
Effective Date of the Registration Statement and terminating on the four-year
anniversary of the Effective Date. "Business Combination" shall mean any
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merger, capital stock exchange, asset acquisition or other similar business
combination consummated by the Company with an operating business (as described
more fully in the Registration Statement).
1.1.2 PAYMENT AND DELIVERY. Delivery and payment for the Firm
Units shall be made at 10:00 A.M., New York time, on the fourth business day
following the effective date of the Registration Statement or at such earlier
time as shall be agreed upon by the Representatives and the Company at the
offices of Xxxxxxxx Xxxxxx or at such other place as shall be agreed upon by the
Representatives and the Company. The hour and date of delivery and payment for
the Firm Units are called "Closing Date." Payment for the Firm Units shall be
made on the Closing Date at the Representatives' 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: $54,250,000 of the proceeds received
by the Company for the Firm Units shall be deposited in the trust fund
established by the Company for the benefit of the public stockholders as
described in the Registration Statement ("Trust Fund") pursuant to the terms of
an Investment Management Trust Agreement ("Trust Agreement") and the remaining
proceeds shall be paid (subject to Section 3.13 hereof) to the order of the
Company upon delivery to you of certificates (in form and substance satisfactory
to the Underwriters) representing the Firm Units (or through the facilities of
the Depository Trust Company ("DTC")) for the account of the Underwriters. The
Firm Units shall be registered in such name or names and in such authorized
denominations as the Representatives may request in writing at least two full
business days prior to the Closing Date. The Company will permit the
Representatives 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
Representatives 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 1,500,000 units from the Company ("Over-allotment
Option"). Such additional 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." 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 Representatives as to
all (at any time) or any part (from time to time) of the Option Units within 45
days after the Effective Date. The Underwriters will not be under any obligation
to purchase any Option Units prior to the exercise of the Over-allotment Option.
The Over-allotment Option granted hereby may be exercised by the giving of oral
notice to the Company by the Representatives, which must be confirmed in writing
by overnight mail or facsimile transmission setting forth the number of Option
Units to be purchased and the date and time for delivery of and payment for the
Option Units (the "Option Closing Date"), which will not be later than five full
business days after the date of the notice or such other time as shall be agreed
upon by the Company and the Representatives, at the offices of Xxxxxxxx Xxxxxx
or at such other place as shall be agreed upon by the Company and the
Representatives. Upon exercise of the Over-allotment Option, the Company will
become obligated to convey to the Underwriters, and, subject to the terms and
conditions set forth herein, the Underwriters will become obligated to purchase,
the number of Option Units specified in such notice.
1.2.3 PAYMENT AND DELIVERY. Payment for the Option Units shall
be made on the Option Closing Date at the Representatives' election by wire
transfer in Federal (same day) funds or by certified or bank cashier's check(s)
in New York Clearing House funds, payable as follows: $5.58 per Option Unit
shall be deposited in the Trust Fund pursuant to the Trust Agreement upon
delivery to you of certificates (in form and substance satisfactory to the
Underwriters) representing the Option Units (or through the facilities of DTC)
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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 Representatives request 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 Representatives for inspection, checking and packaging at the
aforesaid office of the Company's transfer agent or correspondent not less than
one full business day prior to such Closing Date.
1.3 REPRESENTATIVES' PURCHASE OPTION.
1.3.1 PURCHASE OPTION. The Company hereby agrees to issue and
sell to the Representatives (and/or their designees) on the Effective Date an
option ("Representatives' Purchase Option") for the purchase of an aggregate of
1,000,000 units ("Representatives' Units") for an aggregate purchase price of
$100. Each of the Representatives' Units is identical to the Firm Units except
that the Warrants included in the Representatives' Units ("Representatives'
Warrants") have an exercise price of $ 6.00 (120%) of the exercise price of the
Warrants included in the Units sold to the public). The Representatives'
Purchase Option shall be exercisable, in whole or in part, commencing on the
later of the consummation of a Business Combination and one year from the
Effective Date and expiring on the five-year anniversary of the Effective Date
at an initial exercise price per Representatives' Unit of $ 7.50, which is equal
to one hundred twenty five (125%) of the initial public offering price of a
Unit. The Representatives' Purchase Option, the Representatives' Units, the
Representatives' Warrants and the shares of Common Stock issuable upon exercise
of the Representatives' Warrants are hereinafter referred to collectively as the
"Representatives' Securities." The Public Securities and the Representatives'
Securities are hereinafter referred to collectively as the "Securities." The
Representatives understand and agree that there are significant restrictions
against transferring the Representatives' Purchase Option during the first year
after the Effective Date, as set forth in Section 3 of the Representatives'
Purchase Option.
1.3.2 PAYMENT AND DELIVERY. Delivery and payment for the
Representatives' Purchase Option shall be made on the Closing Date. The Company
shall deliver to the Underwriters, upon payment therefor, certificates for the
Representatives' Purchase Option in the name or names and in such authorized
denominations as the Representatives may request.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to the Underwriters as follows:
2.1 FILING OF REGISTRATION STATEMENT.
2.1.1 PURSUANT TO THE ACT. The Company has filed with the
Securities and Exchange Commission ("Commission") a registration statement and
an amendment or amendments thereto, on Form S-1 (File No. 333-125105), including
any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Public Securities under the Securities Act of 1933, as
amended ("Act"), which registration statement and amendment or amendments have
been prepared by the Company in conformity with the requirements of the Act, and
the rules and regulations ("Regulations") of the Commission under the Act.
Except as the context may otherwise require, such registration statement, as
amended, on file with the Commission at the time the registration statement
becomes effective (including the prospectus, financial statements, schedules,
exhibits and all other documents filed as a part thereof or incorporated therein
and all information deemed to be a part thereof as of such time pursuant to
paragraph (b) of Rule 430A of the Regulations), is hereinafter called the
"Registration Statement," and the form of the final prospectus dated the
Effective Date included in the Registration Statement (or, if applicable, the
form of final prospectus filed with the Commission pursuant to Rule 424 of the
Regulations), is hereinafter called the "Prospectus." The Registration Statement
has been declared effective by the Commission on the date hereof.
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2.1.2 PURSUANT TO THE EXCHANGE ACT. The Company has filed with
the Commission a Form 8-A (File Number 000-51418) providing for the registration
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), of the
Units, the Common Stock and the Warrants. The registration of the Units, Common
Stock and Warrants under the Exchange Act has been declared effective by the
Commission on the date hereof.
2.2 NO STOP ORDERS, ETC. Neither the Commission nor, to the best of
the Company's knowledge, any state regulatory authority has issued any order or
threatened to issue any order preventing or suspending the use of any
Preliminary Prospectus or has instituted or, to the best of the Company's
knowledge, threatened to institute any proceedings with respect to such an
order.
2.3 DISCLOSURES IN REGISTRATION STATEMENT.
2.3.1 10B-5 REPRESENTATION. At the time the Registration
Statement became effective and at all times subsequent thereto up to the Closing
Date and the Option Closing Date, if any, the Registration Statement and the
Prospectus does and will contain all material statements that are required to be
stated therein in accordance with the Act and the Regulations, and will in all
material respects conform to the requirements of the Act and the Regulations;
and neither the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, on such dates, does or will contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. When any Preliminary Prospectus was first
filed with the Commission (whether filed as part of the Registration Statement
for the registration of the Securities or any amendment thereto or pursuant to
Rule 424(a) of the Regulations) and when any amendment thereof or supplement
thereto was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Act and the Regulations
and did not and will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading. The representation and warranty made in this Section
2.3.1 does not apply to statements made or statements omitted in reliance upon
and in conformity with written information furnished to the Company with respect
to the Underwriters by the Representatives expressly for use in the Registration
Statement or Prospectus or any amendment thereof or supplement thereto.
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2.3.2 DISCLOSURE OF AGREEMENTS. The agreements and documents
described in the Registration Statement and the Prospectus conform to the
descriptions thereof contained therein and there are no agreements or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other
instrument (however characterized or described) to which the Company is a party
or by which its property or business is or may be bound or affected and (i) that
is referred to in the Prospectus, or (ii) is material to the Company's business,
has been duly and validly executed by the Company, is in full force and effect
and is enforceable against the Company and, to the Company's knowledge, the
other parties thereto, in accordance with its terms, except (x) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the federal and
state securities laws, and (z) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought, and none of such agreements or instruments has been assigned by
the Company, and neither the Company nor, to the best of the Company's
knowledge, any other party is in breach or default thereunder and, to the best
of the Company's knowledge, no event has occurred that, with the lapse of time
or the giving of notice, or both, would constitute a breach or default
thereunder. To the best of the Company's knowledge, performance by the Company
of the material provisions of such agreements or instruments will not result in
a violation of any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its assets or businesses, including,
without limitation, those relating to environmental laws and regulations.
2.3.3 PRIOR SECURITIES TRANSACTIONS. No securities of the
Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by, or under common control
with the Company since the Company's formation, except as disclosed in the
Registration Statement.
2.3.4 REGULATIONS. The disclosures in the Registration
Statement concerning the effects of Federal, State and local regulation on the
Company's business as currently contemplated are correct in all material
respects and do not omit to state a material fact.
2.4 CHANGES AFTER DATES IN REGISTRATION STATEMENT.
2.4.1 NO MATERIAL ADVERSE CHANGE. Since the respective dates
as of which information is given in the Registration Statement and the
Prospectus, except as otherwise specifically stated therein, (i) there has been
no material adverse change in the condition, financial or otherwise, or business
prospects of the Company, (ii) there have been no material transactions entered
into by the Company, other than as contemplated pursuant to this Agreement, and
(iii) no member of the Company's management has resigned from any position with
the Company.
2.4.2 RECENT SECURITIES TRANSACTIONS, ETC. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, and except as may otherwise be indicated or contemplated
herein or therein, the Company has not (i) issued any securities or incurred any
liability or obligation, direct or contingent, for borrowed money; or (ii)
declared or paid any dividend or made any other distribution on or in respect to
its equity securities.
2.5 INDEPENDENT ACCOUNTANTS. Xxxxxx LLP ("Xxxxxx"), whose report is
filed with the Commission as part of the Registration Statement, are independent
accountants as required by the Act and the Regulations. Xxxxxx has not, during
the periods covered by the financial statements included in the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act.
2.6 FINANCIAL STATEMENTS. The financial statements, including the
notes thereto and supporting schedules included in the Registration Statement
and Prospectus fairly present the financial position, the results
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of operations and the cash flows of the Company at the dates and for the periods
to which they apply; such financial statements have been prepared in conformity
with generally accepted accounting principles, consistently applied throughout
the periods involved; and the supporting schedules included in the Registration
Statement present fairly the information required to be stated therein. The
Registration Statement discloses all material off-balance sheet transactions,
arrangements, obligations (including contingent obligations), and other
relationships of the Company with unconsolidated entities or other persons that
may have a material current or future effect on the Company's financial
condition, changes in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant components of revenues
or expenses.
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
Representatives' Purchase Option, the Representatives' Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representatives' Purchase Option, the
Representatives' Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except (i) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
2.9 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
6
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, and the Representatives' Purchase Option, has been
duly validly authorized by the Company and, when executed and delivered, will
constitute the valid and binding agreements of the Company, enforceable against
the Company in accordance with their respective terms, except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability of
any indemnification or contribution provision may be limited under the federal
and state securities laws, and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
2.11 NO CONFLICTS, ETC. The execution, delivery, and performance by
the Company of this Agreement, the Warrant Agreement, the Representatives'
Purchase Option, the Trust Agreement, the Services Agreement and the Escrow
Agreement, the consummation by the Company of the transactions herein and
therein contemplated and the compliance by the Company with the terms hereof and
thereof do not and will not, with or without the giving of notice or the lapse
of time or both (i) result in a breach of, or conflict with any of the terms and
provisions of, or constitute a default under, or result in the creation,
modification, termination or imposition of any lien, charge or encumbrance upon
any property or assets of the Company pursuant to the terms of any agreement or
instrument to which the Company is a party except pursuant to the Trust
Agreement referred to in Section 2.24 hereof; (ii) result in any violation of
the provisions of the Certificate of Incorporation, as amended, or the Bylaws of
the Company; or (iii) violate any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
business.
2.12 NO DEFAULTS; VIOLATIONS. No material default exists in the due
performance and observance of any term, covenant or condition of any material
license, contract, indenture, mortgage, deed of trust, note, loan or credit
agreement, or any other agreement or instrument evidencing an obligation for
borrowed money, or any other material agreement or instrument to which the
Company is a party or by which the Company may be bound or to which any of the
properties or assets of the Company is subject. The Company is not in violation
of any term or provision of its Certificate of Incorporation, as amended, or
Bylaws or in violation of any material franchise, license, permit, applicable
law, rule, regulation, judgment or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of its
properties or businesses.
2.13 CORPORATE POWER; LICENSES; CONSENTS.
2.13.1 CONDUCT OF BUSINESS. The Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies that it needs as of the date hereof to conduct
its business purpose as described in the Prospectus. The disclosures in the
Registration Statement concerning the effects of federal, state and local
regulation on this offering and the Company's business purpose as currently
contemplated are correct in all material respects and do not omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
2.13.2 TRANSACTIONS CONTEMPLATED HEREIN. The Company has all
corporate power and authority to enter into this Agreement and to carry out the
provisions and conditions hereof, and all consents, authorizations, approvals
and orders required in connection therewith have been obtained. No consent,
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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 Representatives' Purchase Option,
the Trust Agreement and the Escrow Agreement and as contemplated by the
Prospectus, except with respect to applicable federal and state securities laws.
2.14 D&O QUESTIONNAIRES. To the best of the Company's knowledge, all
information contained in the questionnaires ("Questionnaires") completed by the
Company's stockholder ("Existing Stockholder") and the Company's officers and
directors immediately prior to the Offering 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 the Existing
Stockholder and the Company's officers and directors to become inaccurate and
incorrect.
2.15 LITIGATION; GOVERNMENTAL PROCEEDINGS. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding pending or, to the best of the Company's knowledge, threatened
against, or involving the Company or, to the best of the Company's knowledge,
the Existing Stockholder or the Company's officers and directors which has not
been disclosed, that is required to be disclosed, in the Registration Statement
or the Questionnaires.
2.16 GOOD STANDING. The Company has been duly organized and is
validly existing as a corporation and is in good standing under the laws of its
state of incorporation, and is duly qualified to do business and is in good
standing as a foreign corporation in each jurisdiction in which its ownership or
lease of property or the conduct of business requires such qualification, except
where the failure to qualify would not have a material adverse effect on the
assets, business or operations of the Company.
2.17 STOP ORDERS. The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus or Prospectus or any part
thereof and has not threatened to issue any such order.
2.18 TRANSACTIONS AFFECTING DISCLOSURE TO NASD.
2.18.1 FINDER'S FEES. Except as described in the Prospectus,
there are no claims, payments, arrangements, agreements or understandings
relating to the payment of a finder's, consulting or origination fee by the
Company, the Existing Stockholder or the Company's officers and directors 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, the Existing Stockholder or the Company's officers and directors that
may affect the Underwriters' compensation, as determined by the National
Association of Securities Dealers, Inc. ("NASD").
2.18.2 PAYMENTS WITHIN TWELVE MONTHS. The Company has not made
any direct or indirect payments (in cash, securities or otherwise) (i) to any
person, as a finder's fee, consulting fee or otherwise, in consideration of such
person raising capital for the Company or introducing to the Company persons who
raised or provided capital to the Company, (ii) to any NASD member or (iii) to
any person or entity that has any direct or indirect affiliation or association
with any NASD member, within the twelve months prior to the Effective Date,
other than payments to the Representatives.
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.
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2.18.4 INSIDERS' NASD AFFILIATION. Based on questionnaires
distributed to such persons, except as set forth on Schedule 2.18.4, no officer,
director or any beneficial owner of the Company's unregistered securities has
any direct or indirect affiliation or association with any NASD member. The
Company will advise the Representatives and each of 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 an affiliate or associated person of an NASD member
participating in the offering.
2.19 FOREIGN CORRUPT PRACTICES ACT. Neither the Company, the Existing
Stockholder, the Company's officers or directors nor any other person acting on
behalf of the Company has, directly or indirectly, given or agreed to give any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or agent
of a customer or supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or may
be in a position to help or hinder the business of the Company (or assist it in
connection with any actual or proposed transaction) that (i) might subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company as
reflected in any of the financial statements contained in the Prospectus or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company's internal
accounting controls and procedures are sufficient to cause the Company to comply
with the Foreign Corrupt Practices Act of 1977, as amended.
2.20. 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 and the Representatives' Warrants with
Continental Stock Transfer & Trust Company substantially in the form annexed as
Exhibit 4.5 to the Registration Statement ("Warrant Agreement").
2.22 AGREEMENTS WITH THE EXISTING STOCKHOLDER AND OFFICERS AND
DIRECTORS.
2.22.1 INSIDER LETTERS. The Company has caused to be duly
executed legally binding and enforceable agreements (except (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, (ii) as enforceability of
any indemnification, contribution or noncompete provision may be limited under
the federal and state securities laws, and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought) annexed as Exhibits 10.1, 10.2, 10.3, 10.4,
10.5 and 10.6 to the Registration Statement ("Insider Letters"), pursuant to
which the Existing Stockholder and each of the Company's officers and directors
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 Existing
Stockholder to enter into an escrow agreement ("Escrow Agreement") with
Continental Stock Transfer & Trust Company ("Escrow Agent"), substantially in
the form annexed as Exhibit 10.8 to the Registration Statement, whereby the
Common Stock owned by the Existing Stockholder will be held in escrow by the
Escrow Agent, until the third anniversary of the Effective Date. During such
escrow period, the Existing Stockholder shall be prohibited from selling or
otherwise transferring such shares (except to its limited partners, its limited
partners' spouses and children 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
9
against each the Existing Stockholder and will not, with or without the giving
of notice or the lapse of time or both, result in a breach of, or conflict with
any of the terms and provisions of, or constitute a default under, any agreement
or instrument to which the Existing Stockholder is a party. The Escrow Agreement
shall not be amended, modified or otherwise changed without the prior written
consent of the Representatives.
2.23 INTENTIONALLY OMITTED.
2.24 INVESTMENT MANAGEMENT TRUST AGREEMENT. The Company has entered
into the Trust Agreement with respect to certain proceeds of the Offering
substantially in the form annexed as Exhibit 10.7 to the Registration Statement.
2.25 COVENANTS NOT TO COMPETE. Neither the Existing Stockholder, nor
any employee, officer or director of the Company is subject to any
noncompetition agreement or non-solicitation agreement with any employer or
prior employer which could materially affect his, her or its ability to be a
stockholder, employee, officer and/or director of the Company.
2.26 INVESTMENT COMPANY ACT; INVESTMENTS. The Company has been
advised concerning the Investment Act of 1940, as amended (the "Investment
Company Act"), and the rules and regulations thereunder and has in the past
conducted, and intends in the future to conduct, its affairs in such a manner as
to ensure that it will not become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act and such rules and regulations. The Company is not, nor will the
Company become upon the sale of the Units and the application of the proceeds
therefore as described in the Prospectus under the caption "Use of Proceeds", an
"investment company" or a person controlled by an "investment company" within
the meaning of the Investment Company Act. No more than 45% of the "value" (as
defined in Section 2(a)(41) of the Investment Company Act of 1940 ("Investment
Company Act")) of the Company's total assets (exclusive of cash items and
"Government Securities" (as defined in Section 2(a)(16) of the Investment
Company Act)) consist of, and no more than 45% of the Company's net income after
taxes is derived from, securities other than the Government Securities.
2.27 SUBSIDIARIES. The Company does not own an interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business entity.
2.28 RELATED PARTY TRANSACTIONS. There are no business relationships
or related party transactions involving the Company or any other person required
to be described in the Prospectus that have not been described as required.
3. COVENANTS OF THE COMPANY. The Company covenants and agrees as follows:
3.1 AMENDMENTS TO REGISTRATION STATEMENT. The Company will deliver
to the Representatives, 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 Representatives
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 Representatives 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.
10
3.2.2 FILING OF FINAL PROSPECTUS. The Company will file the
Prospectus (in form and substance satisfactory to the Representatives) with the
Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3 EXCHANGE ACT REGISTRATION. The Company will use its best
efforts to maintain the registration of the Units, Common Stock and Warrants
under the provisions of the Exchange Act (except in connection with a
going-private transaction) for a period of five years from the Effective Date,
or until the Company is required to be liquidated if earlier, or, in the case of
the Warrants, until the Warrants expire and are no longer exercisable. The
Company will not deregister the Units under the Exchange Act without the prior
written consent of the Representatives.
3.3 BLUE SKY FILING. The Company will endeavor in good faith, in
cooperation with the Representatives, at or prior to the time the Registration
Statement becomes effective, to qualify the Securities for offering and sale
under the securities laws of such jurisdictions as the Representatives 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 Representatives agree 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
REPRESENTATIVES. The Company will use its best efforts to cause the Registration
Statement to remain effective and will notify the Representatives 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 3.2.3 hereof that, in the judgment
of the Company, makes any statement of a material fact made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If the Commission or any state securities commission shall enter a
stop order or suspend such qualification at any time, the Company will make
every reasonable effort to obtain promptly the lifting of such order.
3.6 REVIEW OF FINANCIAL STATEMENTS. Until the earlier of five years
from the Effective Date, or until such earlier time upon which the Company is
required to be liquidated, the Company, 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.
11
3.7 AFFILIATED TRANSACTIONS.
3.7.1 BUSINESS COMBINATIONS. The Company will not consummate a
Business Combination with any entity which is affiliated with the Existing
Stockholder or the Company's officers and directors unless the Company obtains
an opinion from an independent investment banking firm that the Business
Combination is fair to the Company's stockholders from a financial perspective.
3.7.2 ADMINISTRATIVE SERVICES. The Company has entered into an
agreement ("Services Agreement") with Royal Palm Capital Management, LLLP
("Affiliate") substantially in the form annexed as Exhibit 10.12 to the
Registration Statement pursuant to which the Affiliate will make available to
the Company general and administrative, including office space, utilities and
secretarial support for the Company's use for $7,500 per month.
3.7.3 COMPENSATION. Except as set forth above in this Section
3.7, the Company shall not pay the Existing Stockholder, nor any of the
Company's officers and directors 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
such entity and the individuals shall be entitled to reimbursement from the
Company for their reasonable out-of-pocket expenses incurred in connection with
seeking and consummating a Business Combination.
3.8 SECONDARY MARKET TRADING AND STANDARD & POOR'S. The Company will
apply to be included in Standard & Poor's Daily News and Corporation Records
Corporate Descriptions for a period of five years from the consummation of a
Business Combination. Promptly after the consummation of the Offering, the
Company shall take such commercially reasonable steps as may be necessary to
obtain a secondary market trading exemption for the Company's securities in the
State of California. The Company shall also take such other action as may be
reasonably requested by the Representatives to obtain a secondary market trading
exemption in such other states as may be requested by the Representatives.
3.9 INTENTIONALLY OMITTED.
3.10 FINANCIAL PUBLIC RELATIONS FIRM. Promptly after the execution of
a definitive agreement for a Business Combination, the Company shall retain a
financial public relations firm reasonably acceptable to Xxxxxx Xxxxxx & Co. for
a term to be agreed on by the Company and Xxxxxx Xxxxxx & Co.
3.11 REPORTS TO THE REPRESENTATIVES.
3.11.1 TRANSFER SHEETS. For a period of five years following
the Effective Date or until such earlier time at which the Company is
liquidated, the Company shall retain a transfer and warrant agent acceptable to
Xxxxxx Xxxxxx & Co. ("Transfer Agent") and will furnish to Xxxxxx Xxxxxx & Co.
at the Company's sole cost and expense such transfer sheets of the Company's
securities as Xxxxxx Xxxxxx & Co. may request, including the daily and monthly
consolidated transfer sheets of the Transfer Agent and DTC. Xxxxxx Xxxxxx & Co.
acknowledges that CST&T is an acceptable Transfer Agent.
12
3.11.2 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 Representatives (if to Xxxxxx
Xxxxxx & Co., Attn: Xxxx Xxxxxx, and if to EBC, Attn: Xxxxxx Xxxxxx, President
and Managing Director of Investment Banking) and their 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 Representatives (i) a copy of each periodic report the
Company shall be required to file with the Commission, (ii) a copy of every
press release and every news item and article with respect to the Company or its
affairs which was released by the Company, (iii) a copy of each Form 8-K or
Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the Company, (iv)
five copies of each registration statement filed by the Company with the
Commission under the Securities Act, (v) a copy of monthly statements, if any,
setting forth such information regarding the Company's results of operations and
financial position (including balance sheet, profit and loss statements and data
regarding outstanding purchase orders) as is regularly prepared by management of
the Company and (vi) such additional documents and information with respect to
the Company and the affairs of any future subsidiaries of the Company as the
Representatives may from time to time reasonably request.
3.11.3 SECONDARY MARKET TRADING SURVEY. Until such time as the
Public Securities are listed or quoted, as the case may be, on the New York
Stock Exchange, the American Stock Exchange or quoted on the Nasdaq National
Market, or until such earlier time upon which the Company is required to be
liquidated, the Company shall engage Xxxxxxxx Xxxxxx ("GM"), for a one-time fee
of $5,000 payable on the Closing Date , to deliver and update to the
Underwriters on a timely basis, but in any event on the Effective Date and at
the beginning of each fiscal quarter, a written report detailing those states in
which the Public Securities may be traded in non-issuer transactions under the
Blue Sky laws of the fifty States ("Secondary Market Trading Survey").
3.11.4 INTENTIONALLY OMITTED.
3.12 DISQUALIFICATION OF FORM S-1. Until the earlier of seven years
from the date hereof or until the Warrants have expired and are no longer
exercisable, the Company will not take any action or actions which may prevent
or disqualify the Company's use of Form S-1 (or other appropriate form) for the
registration of the Warrants and the Representatives' Warrants under the Act
(except in connection with a going-private transaction).
3.13 PAYMENT OF EXPENSES. The Company hereby agrees to pay on each of
the Closing Date and the Option Closing Date, if any, to the extent not paid at
Closing Date, all expenses incident to the performance of the obligations of the
Company under this Agreement, including but not limited to (i) the preparation,
printing, filing and mailing (including the payment of postage with respect to
such mailing) of the Registration Statement, the Preliminary and Final
Prospectuses and the printing and mailing of this Agreement and related
documents, including the cost of all copies thereof and any amendments thereof
or supplements thereto supplied to the Underwriters in quantities as may be
required by the Underwriters, (ii) the printing, engraving, issuance and
delivery of the Units, the shares of Common Stock and the Warrants included in
the Units and the Representatives' Purchase Option, including any transfer or
other taxes payable thereon, (iii) the qualification of the Public Securities
under state or foreign securities or Blue Sky laws, including the costs of
printing and mailing the "Preliminary Blue Sky Memorandum," and all amendments
and supplements thereto, fees and disbursements of GM retained for such purpose
(such fees shall be $35,000 in the aggregate (of which $15,000 has previously
been paid)), and a one-time fee of $5,000 payable to GM for the preparation of
the Secondary Market Trading Survey, (iv) filing fees, costs and expenses
(including disbursements for the Representatives' counsel) incurred in
registering the Offering with the NASD, (v) fees and disbursements of the
transfer and warrant agent, (vi) the Company's expenses associated with "due
diligence" meetings arranged by the Representatives, (vii) the preparation,
binding and delivery of transaction
13
"bibles," in form and style reasonably satisfactory to the Representatives and
transaction lucite cubes or similar commemorative items in a style and quantity
as reasonably requested by the Representatives and (viii) all other costs and
expenses customarily borne by an issuer incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section 3.13.1. The Company also agrees that, if requested by the
Representatives, it will engage and pay up to $5,000 for an investigative search
firm of the Representatives' choice to conduct an investigation of the
principals of the Company as shall be mutually selected by the Representatives
and the Company. The Representatives may deduct from the net proceeds of the
Offering payable to the Company on the Closing Date, or the Option Closing Date,
if any, the expenses set forth in this Agreement to be paid by the Company to
the Representatives and others. If the Offering contemplated by this Agreement
is not consummated for any reason whatsoever then the Company shall reimburse
the Underwriters in full for their out of pocket expenses, including, without
limitation, its legal fees (up to a maximum of $50,000) and disbursements and
"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 to each of
Xxxxxx Xxxxxx & Co. and EBC prior to the consummation of the Business
Combination: (i) complete details of all services and copies of agreements
governing such services; and (ii) justification as to why the person or entity
providing the merger and acquisition services should not be considered an
"underwriter and related person" with respect to the Company's initial public
offering, as such term is defined in Rule 2710 of the NASD's Conduct Rules. The
Company also agrees that proper disclosure of such arrangement or potential
arrangement will be made in the proxy statement which the Company will file for
purposes of soliciting stockholder approval for the Business Combination.
3.17 STABILIZATION. Except with respect to the agreement between
Xxxxxx Xxxxxx & Co. and each of Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxx X.
Xxxx, Xxxxx X. Xxxxxxx and Xxxxxx X. Xxxxxxxx, the form of which is annexed as
Exhibit 10.11 to the Registration Statement, neither the Company, nor, to its
knowledge, any of its employees, directors or stockholders (without the consent
of Xxxxxx Xxxxxx & Co. 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.
14
3.18 INTERNAL CONTROLS. The Company will maintain a system of
internal accounting controls sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management's general or
specific authorization, (ii) transactions are recorded as necessary in order to
permit preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management's general or specific
authorization, and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.19 ACCOUNTANTS. Until the earlier of five years from the Effective
Date or until such earlier time upon which the Company is required to be
liquidated, the Company shall retain Xxxxxx or other independent public
accountants reasonably acceptable to the Representatives.
3.20 FORM 8-K. The Company shall, on the date hereof, retain its
independent public accountants to audit the financial statements of the Company
as of the Closing Date ("Audited Financial Statements") reflecting the receipt
by the Company of the proceeds of the initial public offering. As soon as the
Audited Financial Statements become available, the Company shall immediately
file a Current Report on Form 8-K with the Commission, which Report shall
contain the Company's Audited Financial Statements.
3.21 NASD. The Company shall advise the NASD if it is aware that any
5% or greater stockholder of the Company becomes an affiliate or associated
person of an NASD member participating in the distribution of the Company's
Public Securities.
3.22 CORPORATE PROCEEDINGS. All corporate proceedings and other legal
matters necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby shall have been done to the reasonable
satisfaction to counsel for the Underwriters.
3.23 INVESTMENT COMPANY. The Company shall cause a portion of the
proceeds of the Offering to be held in the Trust Fund to be invested 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 Representatives announcing the consummation of
the Business Combination and indicating that the Representatives were the
managing underwriters in the Offering. The Company shall supply the
Representatives with a draft of the Business Combination Announcement and
provide the Representatives with a reasonable opportunity to comment thereon.
The Company will do not place the Business Combination Announcement without the
final approval of the Representatives, which such approvals will not be
unreasonably withheld.
3.25 COLORADO TRUST FILING. In the event the Securities are registered
in the State of Colorado, the Company will cause a Colorado Form ES to be filed
with the Commissioner of the State of Colorado no less than 10 days prior to the
distribution of the Trust Fund in connection with a Business Combination and
will do all things necessary to comply with Section 00-00-000 and Rule 51-3.4 of
the Colorado Securities Act.
3.26 INTENTIONALLY OMITTED.
15
4 CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the several
Underwriters to purchase and pay for the Units, as provided herein, shall be
subject to the continuing accuracy of the representations and warranties of the
Company as of the date hereof and as of each of the Closing Date and the Option
Closing Date, if any, to the accuracy of the statements of officers of the
Company made pursuant to the provisions hereof and to the performance by the
Company of its obligations hereunder and to the following conditions:
4.1 REGULATORY MATTERS.
4.1.1 EFFECTIVENESS OF REGISTRATION STATEMENT. The
Registration Statement shall have become effective not later than 5:00 P.M., New
York time, on the date of this Agreement or such later date and time as shall be
consented to in writing by you, and, at each of the Closing Date and the Option
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for the purpose shall have
been instituted or shall be pending or contemplated by the Commission and any
request on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx
& Xxxxxxx LLP, counsel to the Underwriters ("Xxxxxx").
4.1.2 NASD CLEARANCE. By the Effective Date, the
Representatives shall have received clearance from the NASD as to the amount of
compensation allowable or payable to the Underwriters as described in the
Registration Statement.
4.1.3 NO BLUE SKY STOP ORDERS. No order suspending the sale of
the Units in any jurisdiction designated by 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 Representatives shall have received the favorable opinion of GM,
counsel to the Company, dated the Effective Date, addressed to the
Representatives and in form and substance satisfactory to Xxxxxx to the effect
that:
(i) The Company has been duly organized and is
validly existing as a corporation and is in good standing under the laws of its
state of incorporation. The Company is duly qualified and licensed and in good
standing as a foreign corporation in each jurisdiction in which its ownership or
leasing of any properties or the character of its operations requires such
qualification or licensing, except where the failure to qualify would not have a
material adverse effect on the assets, business or operations of the Company.
(ii) All issued and outstanding securities of the
Company have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof are not subject to personal liability by
reason of being such holders; and none of such securities were issued in
violation of the preemptive rights of any stockholder of the Company arising by
operation of law or under the Certificate of Incorporation or Bylaws of the
Company. The offers and sales of the outstanding Common Stock were at all
relevant times either registered under the Act or exempt from such registration
requirements. The authorized and, to such counsel's knowledge, outstanding
capital stock of the Company is as set forth in the Prospectus.
(iii) The Securities 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 Representatives' Purchase Option, the
16
Representatives' Warrants and the Warrants will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
therefor, the number and type of securities of the Company called for thereby
and such Warrants, the Representatives' Purchase Option, and the
Representatives' 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, and the Representatives' Purchase Option has been duly and validly
authorized by the Company and, when executed and delivered, will constitute, the
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except (a) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (b) as enforceability of any indemnification or
contribution provisions may be limited under the federal and state securities
laws, and (c) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(v) The execution, delivery and performance of this
Agreement, the Warrant Agreement, the Representatives' Purchase Option, the
Escrow Agreement, the Trust Agreement and the Services Agreement and compliance
by the Company with the terms and provisions thereof and the consummation of the
transactions contemplated thereby, and the issuance and sale of the Securities,
do not and will not, with or without the giving of notice or the lapse of time,
or both, (a) to such counsel's knowledge, conflict with, or result in a breach
of, any of the terms or provisions of, or constitute a default under, or result
in the creation or modification of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company pursuant to the
terms of, any mortgage, deed of trust, note, indenture, loan, contract,
commitment or other agreement or instrument filed as an exhibit to the
Registration Statement, (b) result in any violation of the provisions of the
Certificate of Incorporation or the Bylaws of the Company, or (c) to such
counsel's knowledge, violate any United States statute or any judgment, order or
decree, rule or regulation applicable to the Company of any court, United States
federal, state or other regulatory authority or other governmental body having
jurisdiction over the Company, its properties or assets.
(vi) The Registration Statement, the Preliminary
Prospectus and the Prospectus and any post-effective amendments or supplements
thereto (other than the financial statements included therein, as to which no
opinion need be rendered) each as of their respective dates appeared on their
face to comply as to form in all material respects with the requirements of the
Act and Regulations. The Securities and all other securities issued or issuable
by the Company conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectus. The descriptions in
the Registration Statement and in the Prospectus, insofar as such statements
constitute a summary of statutes, legal matters, contracts, documents or
proceedings referred to therein, fairly present in all material respects the
information required to be shown with respect to such statutes, legal matters,
contracts, documents and proceedings, and such counsel does not know of any
statutes or legal or governmental proceedings required to be described in the
Prospectus that are not described in the Registration Statement or the
Prospectus or included as exhibits to the Registration Statement that are not
described or included as required.
(vii) The Registration Statement is effective under
the Act. To such counsel's knowledge, no stop order suspending the effectiveness
of the Registration Statement has been issued and no
17
proceedings for that purpose have been instituted or are pending or threatened
under the Act or applicable state securities laws.
(viii) To such counsel's knowledge, there is no action,
suit or proceeding before or by any court of governmental agency or body,
domestic or foreign, now pending, or threatened against the Company that is
required to be described in the Registration Statement.
The opinion of counsel shall further include a statement to the effect that such
counsel has participated in conferences with officers and other representatives
of the Company, the Underwriters and the independent public accountants of the
Company, at which conferences the contents of the Registration Statement and the
Prospectus contained therein and related matters were discussed and, although
such counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus contained therein (except as otherwise
set forth in the foregoing opinion), solely on the basis of the foregoing
without independent check and verification, no facts have come to the attention
of such counsel which lead them to believe that the Registration Statement or
any amendment thereto, at the time the Registration Statement or amendment
became effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading or the Prospectus or any amendment or
supplement thereto, at the time they were filed pursuant to Rule 424(b) or at
the date of such counsel's opinion, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statement therein, in light of the circumstances under
which they were made, not misleading (except that such counsel need express no
opinion with respect to the financial information and statistical data and
information included in the Registration Statement or the Prospectus).
4.2.2 CLOSING DATE AND OPTION CLOSING DATE OPINION OF COUNSEL.
On each of the Closing Date and the Option Closing Date, if any, the
Representatives shall have received the favorable opinion of GM, dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Representatives and in form and substance reasonably satisfactory to Xxxxxx,
confirming as of the Closing Date and, if applicable, the Option Closing Date,
the statements made by GM in their opinion delivered on the Effective Date.
4.2.3 RELIANCE. In rendering such opinion, such counsel may
rely (i) as to matters involving the application of laws other than the laws of
the United States and jurisdictions in which they are admitted, to the extent
such counsel deems proper and to the extent specified in such opinion, if at
all, upon an opinion or opinions (in form and substance reasonably satisfactory
to Xxxxxx) of other counsel reasonably acceptable to Xxxxxx, familiar with the
applicable laws, and (ii) as to matters of fact, to the extent they deem proper,
on certificates or other written statements of officers of the Company and
officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to the
Underwriters' counsel if requested. The opinion of counsel for the Company and
any opinion relied upon by such counsel for the Company shall include a
statement to the effect that it may be relied upon by counsel for the
Underwriters in its opinion delivered to the Underwriters.
4.3 COLD COMFORT LETTER. At the time this Agreement is executed, and
at each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representatives and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to Xxxxxx
from Xxxxxx dated, respectively, as of the date of this Agreement and as of the
Closing Date and the Option Closing Date, if any:
(i) Confirming that they are 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;
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(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 May 12, 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 May 12, 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 papers and notes payable to banks);
(v) Stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Prospectus in
each case to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including work
sheets, of the Company and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in agreement;
(vi) Stating that they have not during the immediately
preceding five year period brought to the attention of the Company's management
any reportable condition related to internal structure, design or operation as
defined in the Statement on Auditing Standards No. 60 "Communication of Internal
Control Structure Related Matters Noted in an Audit," in the Company's internal
controls; and
(vii) Statements as to such other matters incident to the
transaction contemplated hereby as you may reasonably request.
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4.4 OFFICERS' CERTIFICATES.
4.4.1 OFFICERS' CERTIFICATE. At each of the Closing Date and
the Option Closing Date, if any, the Representatives shall have received a
certificate of the Company signed by the Chairman of the Board or the President
and the Secretary or Assistant Secretary of the Company (in their capacities as
such), dated the Closing Date or the Option Closing Date, as the case may be,
respectively, to the effect that the Company has performed all covenants and
complied with all conditions required by this Agreement to be performed or
complied with by the Company prior to and as of the Closing Date, or the Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.5 hereof have been satisfied as of such date and that, as of Closing Date and
the Option Closing Date, as the case may be, the representations and warranties
of the Company set forth in Section 2 hereof are true and correct. In addition,
the Representatives will have received such other and further certificates of
officers of the Company (in their capacities as such) as the Representatives may
reasonably request.
4.4.2 SECRETARY'S CERTIFICATE. At each of the Closing Date and
the Option Date, if any, the Representatives 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 Bylaws and Certificate of Incorporation of the Company
are true and complete, have not been modified and are in full force and effect,
(ii) that the resolutions relating to the public offering contemplated by this
Agreement are in full force and effect and have not been modified, (iii) all
correspondence between the Company or its counsel and the Commission, 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, the
Existing Stockholder or the Company's officers and directors 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 Representatives executed copies of the
Escrow Agreement, the Trust Agreement, the Warrant Agreement, the Services
Agreement and all of the Insider Letters.
4.6.2 CLOSING DATE DELIVERIES. On the Closing Date, the
Company shall have delivered to the Representatives executed copies of the
Representatives' Purchase Option.
4.7 OPINION OF COUNSEL FOR THE UNDERWRITERS. All proceedings taken
in connection with the authorization, issuance or sale of the Securities as
herein contemplated shall be reasonably satisfactory in form
20
and substance to you and to Xxxxxx and you shall have received from such counsel
a favorable opinion, dated the Closing Date and the Option Closing Date, if any,
with respect to such of these proceedings as you may reasonably require. On or
prior to the Effective Date, the Closing Date and the Option Closing Date, as
the case may be, counsel for the Underwriters shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in this
Section 4.7, or in order to evidence the accuracy, completeness or satisfaction
of any of the representations, warranties or conditions herein contained.
4.8 SECONDARY MARKET TRADING SURVEY. On the Closing Date, the
Representatives shall have received the Secondary Market Trading Survey from GM.
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) in any post-effective amendment or amendments or any new
registration statement and prospectus in which is included securities of the
Company issued or issuable upon exercise of the Representatives' Purchase
Option; or (iii) any application or other document or written communication (in
this Section 5, collectively called "application") executed by the Company or
based upon written information furnished by the Company in any jurisdiction in
order to qualify the Securities under the securities laws thereof or filed with
the Commission, any state securities commission or agency, Nasdaq 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 Representatives 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
21
Section 5.1.1, such Underwriter or Selected Dealer shall promptly notify the
Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the reasonable approval of such Underwriter or Selected Dealer, as
the case may be) and payment of actual expenses. Such Underwriter, Selected
Dealer or controlling person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such Underwriter , Selected Dealer or controlling person unless
(i) the employment of such counsel at the expense of the Company shall have been
authorized in writing by the Company in connection with the defense of such
action, or (ii) the Company shall not have employed counsel to have charge of
the defense of such action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to the Company (in
which case the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
the reasonable fees and expenses of not more than one additional firm of
attorneys selected by the Underwriter , Selected Dealer and/or controlling
person shall be borne by the Company. Notwithstanding anything to the contrary
contained herein, if the Underwriter, Selected Dealer or controlling person
shall assume the defense of such action as provided above, the Company shall
have the right to approve the terms of any settlement of such action which
approval shall not be unreasonably withheld.
5.2 INDEMNIFICATION OF THE COMPANY. Each Underwriter, severally and
not jointly, agrees to indemnify and hold harmless the Company, its directors,
officers and employees and agents who control the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the foregoing indemnity
from the Company to the several Underwriters, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions
made in any Preliminary Prospectus, the Registration Statement or Prospectus or
any amendment or supplement thereto or in any application, in reliance upon, and
in strict conformity with, written information furnished to the Company with
respect to such Underwriter by or on behalf of the Underwriter expressly for use
in such Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2.
5.3 CONTRIBUTION.
5.3.1 CONTRIBUTION RIGHTS. In order to provide for just and
equitable contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for indemnification
pursuant hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Act, the Exchange Act or otherwise may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 5, then, and in each such case, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
the Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance;
provided, that, no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Underwriters shall contribute in such proportion as
is appropriate to reflect the relative fault of the
22
Company and the Underwriters in connection with the actions or omissions which
resulted in such loss, claim, damage, liability or action, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company or the Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission.
Notwithstanding the provisions of this Section 5.3.1, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Public Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses. For purposes of this Section, each
director, officer and employee of an Underwriter or the Company, as applicable,
and each person, if any, who controls an Underwriter or the Company, as
applicable, within the meaning of Section 15 of the Act shall have the same
rights to contribution as the Underwriters or the Company, as applicable.
5.3.2 CONTRIBUTION PROCEDURE. Within fifteen days after
receipt by any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The contribution provisions contained in
this Section are intended to supersede, to the extent permitted by law, any
right to contribution under the Act, the Exchange Act or otherwise available.
The Underwriters' obligations to contribute pursuant to this Section 5.3 are
several and not joint.
6 DEFAULT BY AN UNDERWRITER.
6.1 DEFAULT NOT EXCEEDING 10% OF FIRM UNITS OR OPTION UNITS. If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the over-allotment option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10% of
the number of Firm Units or Option Units that all Underwriters have agreed to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion to
their respective commitments hereunder.
6.2 DEFAULT EXCEEDING 10% OF FIRM UNITS OR OPTION UNITS. In the
event that the default addressed in Section 6.1 above relates to more than 10%
of the Firm Units or Option Units, you may in your discretion arrange for
yourself or for another party or parties to purchase such Firm Units or Option
Units to which such default relates on the terms contained herein. If within one
business day after such default relating to more than 10% of the Firm Units or
Option Units you do not arrange for the purchase of such Firm Units or Option
Units, then the Company shall be entitled to a further period of one business
day within which to procure another party or parties satisfactory to you to
purchase said Firm Units or Option Units on such terms. In the event that
neither you nor the Company arrange for the purchase of the Firm Units or Option
Units to which a default relates as provided in this Section 6, this Agreement
will be terminated 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
23
nothing herein shall relieve a defaulting Underwriter of its liability, if any,
to the other several Underwriters and to the Company for damages occasioned by
its default hereunder.
6.3 POSTPONEMENT OF CLOSING DATE. In the event that the Firm Units
or Option Units to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, you or the Company shall have the right to postpone the Closing
Date or Option Closing Date for a reasonable period, but not in any event
exceeding five business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment to the Registration Statement or the Prospectus that in the opinion of
counsel for the Underwriters may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 6 with like effect as if it had originally been a party to
this Agreement with respect to such Securities.
7 RIGHT TO APPOINT OBSERVER. Until the consummation of a Business
Combination, upon notice from Xxxxxx Xxxxxx & Co. to the Company, Xxxxxx Xxxxxx
& Co. shall have the right to send a representative (who need not be the same
individual from meeting to meeting) to observe each meeting of the Board of
Directors of the Company; provided that such representative shall sign a
Regulation FD compliant confidentiality agreement which is reasonably acceptable
to Xxxxxx Xxxxxx & Co. and its counsel in connection with such representative's
attendance at meetings of the Board of Directors; and provided further that upon
written notice to Xxxxxx Xxxxxx & Co., the Company may exclude the
representative from meetings where, in the written opinion of counsel for the
Company, the representative's presence would destroy the attorney-client
privilege. The Company agrees to give Xxxxxx Xxxxxx & Co. written notice of each
such meeting and to provide Xxxxxx Xxxxxx & Co. with an agenda and minutes of
the meeting no later than it gives such notice and provides such items to the
other directors and to reimburse the representative of Xxxxxx Xxxxxx & Co. for
their reasonable out-of-pocket expenses incurred in connection with their
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 consummation of a Business Combination, it shall not issue any shares
of Common Stock or any options or other securities convertible into Common
Stock, or any shares of Preferred Stock which participate in any manner in the
Trust Fund or which vote as a class with the Common Stock on a Business
Combination.
8.3 TRUST FUND WAIVER ACKNOWLEDGMENT. The Company hereby agrees that
it will use its reasonable best efforts prior to commencing its due diligence
investigation of any operating business which the Company seeks to acquire
("Target Business") or obtaining the services of any vendor to cause such Target
Business or vendor to acknowledge in writing, whether through a letter of
intent, memorandum of understanding or other similar document (and subsequently
acknowledges the same in any definitive document replacing any of the
foregoing), that (a) it has read the Prospectus and understands that the Company
has established the Trust Fund, initially in an amount of $54,250,000 for the
benefit of the public stockholders and that the Company may disburse monies from
the Trust Fund only (i) to the public stockholders in the event they elect to
convert their IPO Shares (as defined below in Section 8.8), (ii) to the public
stockholders upon the liquidation of the Company if the Company fails to
consummate a Business Combination or (iii) after or concurrently with the
consummation of a Business Combination and (b) for and in consideration of the
Company (1) agreeing to evaluate such Target Business for purposes of
consummating a Business Combination with it or (2) agreeing to engage the
services of the vendor, as the case may be, such Target Business or vendor
agrees that it does not have any right, title, interest or claim of any kind in
or to any monies in the Trust Fund ("Claim") and waives any Claim it may have in
the future as a result of, or arising out of, any
24
negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever.
8.4 INSIDER LETTERS. The Company shall not take any action or omit
to take any action which would cause a breach of any of the Insider Letters and
will not allow any amendments to, or waivers of, such Insider Letters without
the prior written consent of the Representatives
8.5 CERTIFICATE OF INCORPORATION AND BYLAWS. The Company shall not
take any action or omit to take any action that would cause the Company to be in
breach or violation of its Certificate of Incorporation, as amended, or Bylaws.
Prior to the consummation of a Business Combination, the Company will not amend
its Certificate of Incorporation without the prior written consent of the
Representatives.
8.6 BLUE SKY REQUIREMENTS. The Company shall provide counsel to each
of the Representatives with ten copies of all proxy information and all related
material filed with the Commission in connection with a Business Combination
concurrently with such filing with the Commission. In addition, the Company
shall furnish any other state in which its initial public offering was
registered, such information as may be requested by such state.
8.7 INTENTIONALLY OMITTED.
8.8 ACQUISITION/LIQUIDATION PROCEDURE. The Company agrees: (i) that,
prior to the consummation of any Business Combination, it will submit such
transaction to the Company's stockholders for their approval ("Business
Combination Vote") even if the nature of the acquisition is such as would not
ordinarily require stockholder approval under applicable state law; and (ii)
that, in the event that the Company does not effect a Business Combination
within 18 months from the consummation of this Offering (subject to extension
for an additional six-month period, as described in the Prospectus), the Company
will be liquidated and will distribute to all holders of IPO Shares (defined
below) an aggregate sum equal to the Company's "Liquidation Value." The
Company's "Liquidation Value" shall mean the Company's book value, as determined
by the Company and approved by Xxxxxx. In no event, however, will the Company's
Liquidation Value be less than the Trust Fund, inclusive of any net interest
income thereon. Only holders of IPO Shares shall be entitled to receive
liquidating distributions and the Company shall pay no liquidating distributions
with respect to any other shares of capital stock of the Company. With respect
to the Business Combination Vote, the Company shall cause the Existing
Stockholder to vote the shares of Common Stock owned by it immediately prior to
this Offering in accordance with the vote of the holders of a majority of the
IPO Shares present, in person or by proxy, at a meeting of the Company's
stockholders called for such purpose. At the time the Company seeks approval of
any potential Business Combination, the Company will offer each holder of the
Company's Common Stock issued in this Offering ("IPO Shares") the right to
convert their IPO Shares at a per share price ("Conversion Price") equal to the
amount in the Trust Fund (inclusive of any interest income therein) calculated
as of two business days prior to the consummation of the proposed Business
Combination divided by the total number of IPO Shares. If holders of less than
20% in interest of the Company's IPO Shares elect to convert their IPO Shares,
the Company may, but will not be required to, proceed with such Business
Combination. If the Company elects to so proceed, it will convert shares, based
upon the Conversion Price, from those holders of IPO Shares who affirmatively
requested such conversion and who voted against the Business Combination. If
holders of 20% or more in interest of the IPO Shares, who vote against approval
of any potential Business Combination, elect to convert their IPO Shares, the
Company will not proceed with such Business Combination and will not convert
such shares.
8.9 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.
25
8.10 AFFILIATED TRANSACTIONS. The Company shall cause the Existing
Stockholder and the Company's officers and directors to agree that, in order to
minimize potential conflicts of interest which may arise from multiple
affiliations, the Existing Stockholder and the Company's officers and directors
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 Company's
officers and directors cease to be an officer or director of the Company,
subject to any pre-existing fiduciary or contractual obligations the Company's
officers and directors might have.
8.11 TARGET NET ASSETS. The Company agrees that the initial Target
Business that it acquires must have a fair market value equal to at least 80% of
the Company's net assets (all of the Company's assets, including the funds held
in the Trust Fund, less the Company's liabilities) at the time of such
acquisition. The fair market value of such business must be determined by the
Board of Directors of the Company based upon standards generally accepted by the
financial community, such as actual and potential sales, earnings and cash flow
and book value. If the Board of Directors of the Company is not able to
independently determine that the target business has a fair market value of at
least 80% of the Company's net assets at the time of such acquisition, the
Company will obtain an opinion from an unaffiliated, independent investment
banking firm which is a member of the NASD with respect to the satisfaction of
such criteria. The Company is not required to obtain an opinion from an
investment banking firm as to the fair market value if the Company's Board of
Directors independently determines that the Target Business does have sufficient
fair market value.
9 REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. Except as the
context otherwise requires, all representations, warranties and agreements
contained in this Agreement shall be deemed to be representations, warranties
and agreements as of the Closing 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 the Closing Date, (i) if any domestic or
international event or act or occurrence has materially disrupted, or in your
opinion will in the immediate future materially disrupt, general securities
markets in the United States; or (ii) if trading on the New York Stock Exchange,
the American Stock Exchange, the Boston Stock Exchange or on the NASD OTC
Bulletin Board (or successor trading market) shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been fixed, or maximum ranges for prices
for securities shall have been required on the NASD OTC Bulletin Board or by
order of the Commission or any other government authority having jurisdiction,
or (iii) if the United States shall have become involved in a new war or an
increase in major hostilities, or (iv) if a banking moratorium has been declared
by a New York State or federal authority, or (v) if a moratorium on foreign
exchange trading has been declared which materially adversely impacts the United
States securities market, or (vi) if the Company shall have sustained a material
loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Units, or (vii) if any of the Company's representations, warranties or
covenants hereunder are breached, or (viii) if the Representatives shall have
become aware after the date hereof of such a material adverse change in the
conditions or prospects of the
26
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 Representatives' judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Units or to enforce contracts made by the
Underwriters for the sale of the Securities.
10.3 EXPENSES. In the event that this Agreement shall not be carried
out for any reason whatsoever, within the time specified herein or any
extensions thereof pursuant to the terms herein, the obligations of the Company
to pay the out of pocket expenses related to the transactions contemplated
herein shall be governed by Section 3.13 hereof.
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 Representatives:
Xxxxxx Xxxxxx & Co. Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
and
EarlyBirdCapital, Inc.
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Chairman
Copy to:
Xxxxxx Xxxxxxxx Frome Xxxxxxxxxx & Xxxxxxx LLP
Park Avenue Towers
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxxxxxxx, Esq.
If to the Company:
Coconut Palm Acquisition Corp.
000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Chairman
27
Copy to:
Xxxxxxxx Xxxxxx
The Chrysler Building
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx Xxxx Xxxxxx, Esq.
11.2 HEADINGS. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
11.3 AMENDMENT. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.
11.4 ENTIRE AGREEMENT. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with this
Agreement) constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof, and supersede all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
11.5 BINDING EFFECT. This Agreement shall inure solely to the benefit
of and shall be binding upon the Representatives, the Underwriters, the Company
and the controlling persons, directors and officers referred to in Section 5
hereof, and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained.
11.6 GOVERNING LAW. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York, without
giving effect to conflicts of law principles that would result in the
application of the substantive laws of another jurisdiction. The Company hereby
agrees that any action, proceeding or claim against it arising out of, or
relating in any way to this Agreement shall be brought and enforced in the
courts of the State of New York of the United States of America for the Southern
District of New York, and irrevocably submits to such jurisdiction, which
jurisdiction shall be exclusive. The Company hereby waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum. Any
such process or summons to be served upon the Company may be served by
transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
10 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
28
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.
29
If the foregoing correctly sets forth the understanding between
the Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
between us.
Very truly yours,
COCONUT PALM ACQUISITION CORP.
By: ___________________________________
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
Accepted on the date first
above written.
XXXXXX XXXXXX & CO. INC.
By: ______________________________
Name: Xxxxx X. Xxxxxxxx
Title: Managing Director
Accepted on the date first
above written.
EARLYBIRDCAPITAL, INC.
By: ______________________________
Name: Xxxxxx Xxxxxx
Title: Managing Director
30
SCHEDULE I
COCONUT PALM ACQUISITION CORP.
10,000,000 UNITS
Number of Firm Units
Underwriter to be Purchased
----------- ---------------
Xxxxxx Xxxxxx & Co. Inc.
EarlyBirdCapital, Inc.
