UNDERWRITING AGREEMENT between REDSTAR PARTNERS, INC. and MORGAN JOSEPH & CO. INC. Dated: , 2008
between
and
XXXXXX
XXXXXX & CO. INC.
Dated:
, 2008
,
2008
Xxxxxx
Xxxxxx & Co. Inc.
000
Xxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
As
Representative of the
Several
Underwriters named in Schedule I hereto
Re:
Public Offering of Securities
Ladies
and Gentlemen:
The
undersigned, Redstar Partners, Inc., a Cayman Islands company (“Company”),
hereby confirms its agreement with Xxxxxx Xxxxxx & Co. Inc. (“Xxxxxx
Xxxxxx & Co.”
and
also referred to herein variously as “you,” or the “Representative”)
and
with the other underwriters named on Schedule I hereto for which Xxxxxx Xxxxxx
& Co. is acting as Representative (the Representative and the other
underwriters being collectively called the “Underwriters”
or,
individually, an “Underwriter”)
as
follows:
1. Purchase
and Sale of Securities.
1.1 Firm
Securities.
1.1.1 Purchase
of Firm Units.
On the
basis of the representations and warranties herein contained, but subject to
the
terms and conditions herein set forth, the Company agrees to issue and sell,
severally and not jointly, to the several Underwriters, an aggregate of
4,500,000 units (“Firm
Units”)
of the
Company, at a purchase price (net of discounts and commissions including the
Deferred Fees (defined below)) of $7.44 per Firm Unit. The Underwriters,
severally and not jointly, agree to purchase from the Company the number of
Firm
Units set forth opposite their respective names on Schedule I attached hereto
and made a part hereof at a purchase price (net of discounts and commissions)
of
$7.44 per Firm Unit. The Firm Units are to be offered initially to the public
(“Offering”)
at the
offering price of $8.00 per Firm Unit. Each Firm Unit consists of one ordinary
share, par value $0.0001 per share (“Ordinary
Shares”),
and
one warrant (“Warrant”).
The
Ordinary Shares 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
Representative informs the Company, in writing, of its decision to allow earlier
separate trading based on its assessment of the relative strengths of the
securities markets and small capitalization companies in general, and the
trading pattern of, and demand for, the Company’s securities in particular, but
in no event will the Representative allow separate trading until the Business
Day (as defined below) after (i) the Company has filed with the Securities
and
Exchange Commission (the “Commission”)
a
Current Report on Form 8-K (“Closing
8-K”)which
includes an audited balance sheet reflecting the Company’s receipt of the
proceeds of the Offering and the Private Placement (as defined in Section
2.22.4), including any proceeds the Company receives from the exercise of the
Over-allotment Option (as defined in Section 1.2.1), if such option is exercised
prior to the filing of the Closing 8-K, (ii) the Company has filed with the
Commission a Current Report on Form 8-K and issued a press release announcing
when such separate trading will begin, and (iii) the expiration of the
Over-allotment Option or its exercise in full. Each Warrant entitles its holder
to exercise it to purchase one Ordinary Share for $5.00 during the period
commencing on the later of the consummation by the Company of its “Business
Combination” (as defined below) or one year from the Effective Date of the
Registration Statement and terminating on the five-year anniversary of the
Effective Date. “Business
Combination”
shall
mean any merger, capital stock exchange, asset acquisition, stock purchase
or
other similar business combination consummated by the Company with one or more
operating businesses having its primary operations in the Peoples Republic
of
China (as described more fully in the Registration Statement (as defined in
Section 2.1.1 below)).
1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 10:00 a.m., New York
City 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
Representative and the Company at the offices of Ellenoff Xxxxxxxx & Schole,
LLP (“Underwriters’
Counsel”)
or at
such other place as shall be agreed upon by the Representative and the Company.
The hour and date of delivery and payment for the Firm Units are referred to
herein as the “Closing
Date.”
Payment for the Firm Units shall be made on the Closing Date at the
Representative’s election by wire transfer in federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $33,710,000 of the proceeds received by the Company for the Firm
Units (including $1,080,000 of the Deferred Fees (as defined in Section 1.1.3))
shall be deposited in the trust account established by the Company for the
benefit of the public stockholders as described in the Registration Statement
(“Trust
Account”)
pursuant to the terms of an Investment Management Trust Agreement (“Trust
Agreement”)
between the Company and Continental Stock Transfer & Trust Co.
(“Continental”
or
“Trustee”)
and
the remaining proceeds shall be paid (subject to Section 3.12 hereof) to the
order of the Company upon delivery to you of certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Units (or through the
facilities of the Depository Trust Company (“DTC”)
for
the account of the Underwriters. The Firm Units shall be registered in such
name
or names and in such authorized denominations as the Representative may request
in writing at least two full Business Days prior to the Closing Date. The
Company will permit the Representative to examine and package the Firm Units
for
delivery, at least one full Business Day (as defined below) prior to the Closing
Date. The Company shall not be obligated to sell or deliver the Firm Units
except upon tender of payment by the Representative for all the Firm Units.
“Business
Day”
shall
mean any day other than a Saturday, a Sunday or a legal holiday or a day on
which banking institutions or trust companies are authorized or obligated by
law
to close in New York City.
1.1.3 Deferral
of a Portion of Underwriters’ Discount.
On the
Closing Date and, if applicable, on the Option Closing Date (as defined in
Section 1.2.2), Xxxxxx Xxxxxx & Co. agrees to deposit into the Trust Account
a portion of the Underwriters’ discount equal to $0.24 per Unit in the Offering
and, if applicable, a portion of the discount equal to $0.24 per Option Unit
(as
defined in Section 1.2.1) (the “Deferred
Fees”)
until
the earlier of the completion of a Business Combination or the liquidation
of
the Trust Account. Upon the consummation of a Business Combination, Xxxxxx
Xxxxxx & Co. shall promptly receive the Deferred Fees, but only with respect
to those Units as to which the component shares have not been redeemed for
cash
by those stockholders who voted against the Business Combination and exercised
their redemption rights. In the event that the Company is unable to consummate
a
Business Combination and the Trustee of the Trust Account commences liquidation
of the Trust Account, Xxxxxx Xxxxxx & Co. hereby agrees to the following:
(i) to forfeit any rights or claims to the Deferred Fees and any interest
accrued thereon; and (ii) that the Deferred Fees shall be distributed on a
pro-rata basis among the holders of the Ordinary Shares included in the Units
sold in the Offering along with any interest accrued thereon, net of
taxes.
2
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 675,000 Units from the
Company (“Over-allotment
Option”).
Such
additional 675,000 Units, the net proceeds of which will be deposited in the
Trust Account, 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 Ordinary Shares and the Warrants included in the Units and the
Ordinary Shares issuable upon exercise of the Warrants are hereinafter referred
to collectively as the “Public
Securities.”
The
purchase price to be paid for the Option Units will be the same price per Option
Unit as the price per Firm Unit set forth in Section 1.1.1 hereof.
1.2.2 Exercise
of Option.
The
Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised
by the Representative as to all (at any time) or any part (from time to time)
of
the Option Units within 45 days after the Effective Date. The Underwriters
will
not be under any obligation to purchase any Option Units prior to the exercise
of the Over-allotment Option. The Over-allotment Option granted hereby may
be
exercised by the giving of oral notice to the Company by the Representative,
which must be confirmed in writing by overnight mail or facsimile transmission
setting forth the number of Option Units to be purchased and the date and time
for delivery of and payment for the Option Units (the “Option
Closing Date”),
which
will not be later than five full Business Days after the date of the notice
or
such other time and in such other manner as shall be agreed upon by the Company
and the Representative, at the offices of Underwriters’ Counsel or at such other
place as shall be agreed upon by the Company and the Representative. Upon
exercise of the Over-allotment Option, the Company will become obligated to
convey to the Underwriters, and, subject to the terms and conditions set forth
herein, the Underwriters will become obligated to purchase, the number of Option
Units specified in such notice.
1.2.3 Payment
and Delivery.
Payment
for the Option Units shall be made on the Option Closing Date at the
Representative’s election by wire transfer in federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $7.68 per Option Unit, which includes $0.24 of Deferred Fees per
Option Unit, shall be deposited in the Trust Account 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) for the account of the Underwriters. The certificates
representing the Option Units to be delivered will be in such denominations
and
registered in such names as the Representative requests not less than two full
Business Days prior to the Closing Date or the Option Closing Date, as the
case
may be, and will be made available to the Representative for inspection,
checking and packaging at the aforesaid office of the Company’s transfer agent
or correspondent not less than one full Business Day prior to such Closing
Date.
3
1.3 Representative’s
Purchase Option.
1.3.1 Purchase
Option.
The
Company hereby agrees to issue and sell to the Representative (and/or its
designees) on the Effective Date an option (“Representative’s
Purchase Option”)
for
the purchase of an aggregate of 315,000 units (“Representative’s
Units”)
for an
aggregate purchase price of $100.00. Each of the Representative’s Units is
identical to the Firm Units, including the Warrants to purchase Ordinary Shares
(sometimes referred to as the “Representative’s
Warrants”).
The
Representative’s Purchase Option shall be exercisable, in whole or in part,
commencing on the later of the consummation of a Business Combination and one
year from the Effective Date at an initial exercise price per Representative’s
Unit of $8.00 (100% of the initial public offering price of a Unit) and may
be
exercised on a cashless basis. The Representative’s Warrants shall expire on the
five-year anniversary of the Effective Date The Representative’s Purchase
Option, the Representative’s Units, the Ordinary Shares contained within the
Representative’s Units, the Representative’s Warrants and the Ordinary Shares
issuable upon exercise of the Representative’s Warrants are hereinafter referred
to collectively as the “Representative’s
Securities.”
The
Public Securities and the Representative’s Securities are hereinafter referred
to collectively as the “Securities.”
The
Representative understands and agrees that there are significant restrictions
against transferring the Representative’s Securities during the first year after
the Effective Date, as set forth in Section 3 of the Representative’s Purchase
Option.
1.3.2 Payment
and Delivery.
Delivery and payment for the Representative’s Purchase Option shall be made on
the Closing Date. The Company shall deliver to the Underwriters, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the Representative may
request.
2. Representations
and Warranties of the Company.
The
Company represents and warrants to the Underwriters as follows:
4
2.1 Filing
of Registration Statement.
2.1.1 Pursuant
to the Act.
The
Company has filed with the Commission a registration statement and an amendment
or amendments thereto, on Form S-1 (File No. 333-149327), including any related
preliminary prospectus (“Preliminary
Prospectus”),
for
the registration of the 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 (the “Regulations”)
of the
Commission under the Act. The conditions for use of Form S-1 to register the
Offering under the Act, as set forth in the General Instructions to such Form,
have been satisfied. 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 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
by
the Company with the Commission pursuant to Rule 424 of the Regulations), is
hereinafter called the “Prospectus.”
For
purposes of this Agreement, “Time
of Sale,”
as
used in the Act, means 4:30 p.m. New York City time, on the date of this
Agreement. Prior to the Time of Sale, the Company prepared a preliminary
Prospectus, dated [_______], 2008, for distribution by the Underwriters (the
“Sale
Preliminary Prospectus”).
If
the Company has filed, or is required pursuant to the terms hereof to file,
a
Registration Statement pursuant to Rule 462(b) under the Act registering
additional Securities of any type (a “Rule
462(b) Registration Statement”),
then,
unless otherwise specified, any reference herein to the term “Registration
Statement”
shall
be deemed to include such Rule 462(b) Registration Statement. Other than a
Rule
462(b) Registration Statement, which, if filed, becomes effective upon filing,
no other document with respect to the Registration Statement has heretofore
been
filed with the Commission. All of the Public Securities have been registered
under the Act pursuant to the Registration Statement or, if any Rule 462(b)
Registration Statement is filed, will be duly registered for public sale under
the Act with the filing of such Rule 462(b) Registration Statement. The
Registration Statement has been declared effective by the Commission on the
date
hereof. If, subsequent to the date of this Agreement, the Company or the
Representative has determined that at the Time of Sale the Sale Preliminary
Prospectus included an untrue statement of a material fact or omitted a
statement of material fact necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading and have agreed
to
provide an opportunity to purchasers of the Firm Units to terminate their old
purchase contracts and enter into new purchase contracts, then the Sale
Preliminary Prospectus will be deemed to include any additional information
available to purchasers at the time of entry into the first such new purchase
contract.
2.1.2 Pursuant
to the Exchange Act.
The
Company has filed with the Commission a Form 8-A (File Number 001-[________])
providing for the registration under the Securities Exchange Act of 1934, as
amended (“Exchange
Act”),
of
the Units, the Ordinary Shares and the Warrants. The registration of the Units,
Ordinary Shares 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 Sale Preliminary Prospectus or Prospectus or the
effectiveness of the Registration Statement or has instituted or, to the best
of
the Company’s knowledge, threatened to institute any proceedings with respect to
such an order.
5
2.3 Disclosures
in Registration Statement.
2.3.1 10b-5
Representation.
At the
time the Registration Statement became effective, upon the filing or first
use
(within the meaning of the Regulations) of the Prospectus and at all times
subsequent thereto up to the Closing Date and the Option Closing Date, if any,
the Registration Statement, the Sale Preliminary Prospectus and the Prospectus
contained and will contain all material statements that are required to be
stated therein in accordance with the Act and the Regulations, and did or will
in all material respects conform to the requirements of the Act and the
Regulations; and neither the Registration Statement, the Sale Preliminary
Prospectus nor the Prospectus, nor any amendment thereof or supplement thereto,
on their respective dates, nor the Sale Preliminary Prospectus as of the Time
of
Sale (or such subsequent Time of Sale pursuant to Section 2.1.1), did 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 or the Sale 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) or first used (within the meaning of the Regulations)
and when any amendment thereof or supplement thereto was first filed with the
Commission or first used (within the meaning of the Regulations), such
Preliminary Prospectus or the Sale Preliminary Prospectus and any amendments
thereof and supplements thereto complied or will have been corrected in the
Sale
Preliminary Prospectus and the Prospectus to comply in all material respects
with the applicable provisions of the Act and the Regulations and did not,
does
not and will not contain an untrue statement of a material fact or omit to
state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The representation and warranty made in this Section
2.3.1
does not apply to statements made or statements omitted in reliance upon and
in
conformity with written information furnished to the Company with respect to
the
Underwriters by the Representative expressly for use in the Registration
Statement, the Sale Preliminary Prospectus or the Prospectus or any amendment
thereof or supplement thereto which information, it is agreed, shall consist
solely of the names of the several Underwriters, the third full paragraph and
the subsections captioned “Pricing of Securities” (first paragraph only) and
“Commissions and Discounts” (second paragraph only) contained in the section of
the Prospectus entitled “Underwriting.”
2.3.2 Disclosure
of Agreements.
The
agreements and documents described in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus conform to the descriptions thereof
contained therein and there are no agreements or other documents required to
be
described in the Registration Statement, the Sale Preliminary Prospectus or
the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other
instrument (however characterized or described) to which the Company is a party
or by which its property or business is or may be bound or affected and (i)
that
is referred to in the Sale Preliminary Prospectus or the Prospectus, or (ii)
is
material to the Company’s business, financial condition or results 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.
6
2.3.3 Prior
Securities Transactions.
No
securities of the Company have been offered or 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, the Sale Preliminary
Prospectus and the Prospectus.
2.3.4 Regulations.
The
disclosures in the Registration Statement and the Sale Preliminary Prospectus
and the Prospectus concerning the effects of federal, state and local regulation
and any foreign law or regulation on the Company’s business and financial
condition and results as currently contemplated are correct in all material
respects and do not omit to state a material fact necessary to make the
statements therein, in light of the circumstances in which they were made,
not
misleading.
2.4 Changes
After Dates in Registration Statement.
2.4.1 No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, except as
otherwise specifically stated therein, (i) there has been no material adverse
change in the condition, financial or otherwise, results of operations, business
or prospects of the Company, (ii) there have been no material transactions
entered into by the Company, other than as contemplated pursuant to this
Agreement, (iii) no member of the Company’s management has resigned from any
position with the Company and (iv) no event or occurrence has taken place which
materially impairs, or would likely materially impair, with the passage of
time,
the ability of the members of the Company’s board of directors or management to
act in their capacities with the Company as described in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus.
2.4.2 Recent
Securities Transactions; Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement, the Sale Preliminary Prospectus 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.
To the
Company’s knowledge, Xxxxxxxxx Xxxx LLP (“Accounting
Firm”),
whose
report is filed with the Commission as part of the Registration Statement,
the
Sale Preliminary Prospectus and the Prospectus and included in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, are independent
registered public accountants as required by the Act, the Regulations and the
Public Company Accounting Oversight Board (including the rules and regulations
promulgated by such entity, the “PCAOB”).
To
the best of the Company’s knowledge, Accounting Firm is duly registered and in
good standing with the PCAOB. Accounting Firm has not, during the periods
covered by the financial statements included in the Registration Statement,
the
Sale Preliminary Prospectus and the Prospectus, provided to the Company any
non-audit services, as such term is used in Section 10A(g) of the Exchange
Act.
7
2.6 Financial
Statements; Statistical Data
2.6.1.
Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus fairly present the financial position, the results 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,
the Sale Preliminary Prospectus and the Prospectus present fairly the
information required to be stated therein. The Registration Statement, the
Sale
Preliminary Prospectus and the Prospectus disclose all material off-balance
sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of the Company with unconsolidated
entities or other persons that may have a material current or future effect
on
the Company’s financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses. There are no financial statements
(historical or pro forma) that are required to be included in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus that are not
included as required.
2.6.2.
Statistical
Data.
The
statistical, industry-related and market-related data included in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus
are
based on or derived from sources which the Company reasonably and in good faith
believes are reliable and accurate and such data agree with the sources from
which they are derived.
2.7 Authorized
Capital; Options; Etc.
The
Company had at the date or dates indicated in the Registration Statement, the
Sale Preliminary Prospectus and the Prospectus duly authorized, issued and
outstanding capitalization as set forth in the Registration Statement, the
Sale
Preliminary Prospectus, and the Prospectus. Based on the assumptions stated
in
the Registration Statement, the Sale Preliminary Prospectus, and the Prospectus,
the Company will have on the Closing Date the adjusted stock capitalization
set
forth therein. Except as set forth in, or contemplated by the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, on the Effective
Date, on the Closing Date and on the Option Closing Date, if any, there will
be
no options, warrants, or other rights to purchase or otherwise acquire any
authorized but unissued Ordinary Shares of the Company or any security
convertible into, exchangeable or exercisable for Ordinary Shares of the
Company, or any contracts or commitments to issue or sell Ordinary Shares or
any
such options, warrants, rights or convertible securities.
8
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 Public
Securities conform in all material respects to all statements relating thereto
contained in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus. The offers and sales of the outstanding securities of the Company
were at all relevant times either registered under the Act and the applicable
state securities or Blue Sky laws or, based in part on the representations
and
warranties of the purchasers of such securities, exempt from such registration
requirements.
2.8.2 Securities
Sold Pursuant to this Agreement.
The
Securities have been duly authorized and reserved for issuance and, when issued
and paid for, will be validly issued, fully paid and non-assessable; the holders
thereof are not and will not be subject to personal liability by reason of
being
such holders; the Securities are not and will not be subject to the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to be taken
for
the authorization, issuance and sale of the Securities has been duly and validly
taken. The form of certificates for the Securities conform to the corporate
law
of the jurisdiction of the Company’s incorporation. The Securities conform in
all material respects to all statements with respect thereto contained in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus.
When
issued, the Representative’s Securities will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
of the respective exercise prices therefor, the number and type of securities
of
the Company called for thereby in accordance with the terms thereof and such
Representative’s Securities are enforceable against the Company in accordance
with their respective terms, except (i) as such enforceability may be limited
by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally, (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
2.8.3 Placement
Warrants.
The
Placement Warrants (as defined in Section 2.22.4 hereof) 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 Placement Warrants are enforceable against the Company in
accordance with their respective terms, except: (i) as such enforceability
may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally; (ii) as enforceability of any indemnification or
contribution provision may be limited under federal and state securities laws;
and (iii) that the remedy of specific performance and injunctive and other
forms
of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
The
Ordinary Shares issuable upon exercise of the Placement Warrants have been
reserved for issuance upon the exercise of the Placement Warrants and, when
issued in accordance with the terms of the Placement Warrants, will be duly
and
validly authorized, validly issued, fully paid and non-assessable, and the
holders thereof are not and will not be subject to personal liability by reason
of being such holders.
9
2.8.4 No
Integration.
Other
than with respect to the Placement Warrants, neither the Company nor any of
its
affiliates has, prior to the date hereof, made any offer or sale of any
securities which are required to be or may be “integrated” pursuant to the Act
or the Regulations with the offer and sale of the Public Securities pursuant
to
the Registration Statement.
2.9 Registration
Rights of Third Parties.
Except
as set forth in the Registration Statement, the Sale Preliminary Prospectus
and
the Prospectus, no holders of any securities of the Company or any rights
exercisable for or convertible or exchangeable into securities of the Company
have the right to require the Company to register any such securities of the
Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity
and Binding Effect of Agreements.
This
Agreement, the Warrant Agreement (as defined in Section 2.21 hereof), the Trust
Agreement, the Services Agreement (as defined in Section 3.8.2 hereof), the
Securities Escrow Agreement (as defined in Section 2.22.2 hereof), the
Registration Rights Agreement and the Subscription Agreements (as defined in
Section 2.22.4 hereof) have been duly and validly authorized by the Company
and
constitute, and the Representative’s Purchase Option, has been duly and validly
authorized by the Company and, when executed and delivered, will constitute
the
valid and binding agreements of the Company, enforceable against the Company
in
accordance with their respective terms, except (i) as such enforceability may
be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors’ rights generally; (ii) as enforceability of any indemnification or
contribution provision may be limited under the Federal and state securities
laws; and (iii) that the remedy of specific performance and injunctive and
other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
2.11 No
Conflicts, Etc.
The
execution, delivery, and performance by the Company of this Agreement, the
Warrant Agreement, the Representative’s Purchase Option, the Trust Agreement,
the Services Agreement, the Securities Escrow Agreement, the Registration Rights
Agreement and the Subscription Agreements, the consummation by the Company
of
the transactions herein and therein contemplated (including the issuance of
the
Securities) and the compliance by the Company with the terms hereof and thereof
do not and will not, with or without the giving of notice or the lapse of time
or both (i) result in a breach of, or conflict with any of the terms and
provisions of, or constitute a default under, or result in the creation,
modification, termination or imposition of any lien, charge or encumbrance
upon
any property or assets of the Company pursuant to the terms of any agreement
or
instrument to which the Company is a party except pursuant to the Trust
Agreement referred to in Section 2.23 hereof; (ii) result in any violation
of
the provisions of the Memorandum and Articles of Association 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.
10
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
Memorandum and Articles of Association 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 as described in the Registration Statement,
the Sale Preliminary Prospectus and the Prospectus. The disclosures in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus
concerning the effects of federal, state and local regulation and any foreign
law or regulation on the Offering and the Company’s business purpose as
currently contemplated are correct in all material respects and do not omit
to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were
made, not misleading. Since its formation, the Company has conducted no business
and has incurred no liabilities other than in connection with and in furtherance
of the Offering as described in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus.
2.13.2 Transactions
Contemplated Herein.
The
Company has all corporate power and authority to enter into this Agreement
and
to carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have
been
obtained. No consent, authorization or order of, and no filing with, any court,
government agency or other body is required for the valid issuance, sale and
delivery, of the Securities and the consummation of the transactions and
agreements contemplated by this Agreement, the Warrant Agreement, the
Representative’s Purchase Option, the Trust Agreement, the Securities Escrow
Agreement, the Registration Rights Agreement and the Subscription Agreements
and
as contemplated by the Registration Statement, the Sale Preliminary Prospectus
and the Prospectus, except with respect to applicable federal and state
securities laws and the rules and regulations promulgated by the Financial
Industry National Regulatory Authority (“FINRA”).
2.14 D&O
Questionnaires.
To the
best of the Company’s knowledge, all information contained in the questionnaires
(“Questionnaires”)
completed by each of the Company’s stockholders prior to the Offering
(“Existing
Stockholders”),
directors and officers and provided to the Representative is true and correct
and the Company has not become aware of any information which would cause the
information disclosed in such questionnaires to become inaccurate or incorrect.
11
2.15 Litigation;
Governmental Proceedings.
There
is no action, suit, proceeding, inquiry, arbitration, investigation, litigation
or governmental proceeding pending or, to the best of the Company’s knowledge,
threatened against, or involving the Company or, to the best of the Company’s
knowledge, any Existing Stockholder which has not been disclosed, that is
required to be disclosed, in the Registration Statement, the Sale Preliminary
Prospectus, the Prospectus 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 jurisdiction of incorporation, and is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the conduct
of business requires such qualification, except where the failure to qualify
would not have a material adverse effect on the Company, its assets, business,
operations or financial condition or results.
2.17 Stop
Orders.
The
Commission has not issued any order preventing or suspending the use of the
Registration Statement, any Preliminary Prospectus, the Sale Preliminary
Prospectus or the Prospectus or any part thereof and has not, to the Company’s
knowledge, threatened to issue any such order.
2.18 Transactions
Affecting Disclosure to FINRA.
2.18.1 Finder’s
Fees.
There
are no claims, payments, arrangements, agreements or understandings relating
to
the payment of a finder’s, consulting or origination fee by the Company or any
Existing Stockholder with respect to the sale of the Securities hereunder or
any
other arrangements, agreements or understandings of the Company or, to the
Company’s knowledge, any Existing Stockholder that may affect the Underwriters’
compensation, as determined by FINRA.
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
FINRA member; or (iii) to any person or entity that has any direct or indirect
affiliation or association with any FINRA member, within the twelve months
prior
to the Effective Date, other than payments to the Representative in connection
with the Offering.
2.18.3 Use
of
Proceeds.
None of
the net proceeds of the Offering and Private Placement will be paid by the
Company to any participating FINRA 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 Sale Preliminary
Prospectus.
2.18.4 Insiders’
FINRA Affiliation.
No
officer, director or any beneficial owner of the Company’s unregistered
securities has any direct or indirect affiliation or association with any FINRA
member, as determined in accordance with the rules and regulations of FINRA.
The
Company will advise the Representative and its counsel if it learns that any
officer, director or owner of at least 5% of the Company’s outstanding Ordinary
Shares is or becomes an affiliate or associated person of a FINRA member
participating in the Offering.
12
2.19 Foreign
Corrupt Practices Act; Patriot Act.
2.19.1 Foreign
Corrupt Practices Act.
Neither
the Company nor any of the Existing Stockholders or any other person acting
on
behalf of the Company has, directly or indirectly, given or agreed to give
any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or
agent
of a customer or supplier, or official or employee of any governmental agency
or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist it
in
connection with any actual or proposed transaction) that (i) might subject
the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the Company, its assets, business or operations
as
reflected in any of the financial statements contained in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus or (iii) if not
continued in the future, might adversely affect the assets, business, operations
or prospects of the Company. The Company’s internal accounting controls and
procedures are sufficient to cause the Company to comply with the Foreign
Corrupt Practices Act of 1977, as amended.
2.19.2 Patriot
Act.
Neither
the Company nor, to the Company’s knowledge, any Company affiliates have
violated: (i) the Bank Secrecy Act, as amended, (ii) the Money Laundering
Control Act of 1986, as amended, or (iii) the Uniting and Strengthening of
America by Providing Appropriate Tools Required to Intercept and Obstruct
Terrorism (USA PATRIOT ACT) Act of 2001, and/or the rules and regulations
promulgated under any such law, or any successor law.
2.20 Officers’
Certificate.
Any
certificate signed by any duly authorized officer of the Company and delivered
to you or to your counsel shall be deemed a representation and warranty by
the
Company to the Underwriters as to the matters covered thereby.
2.21 Warrant
Agreement.
The
Company has entered into a warrant agreement with respect to the Warrants,
the
Placement Warrants and the Representative’s Warrants with Continental Stock
Transfer & Trust Co. (“Continental”)
substantially in the form annexed as Exhibit 4.5 to the Registration Statement
(“Warrant
Agreement”).
13
2.22 Agreements
With Existing Stockholders.
2.22.1 Insider
Letters.
The
Company has caused to be duly executed legally binding and enforceable
agreements (except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally; (ii) as enforceability of any indemnification, contribution or
noncompete provision may be limited under the federal and state securities
laws;
and (iii) that the remedy of specific performance and injunctive and other
forms
of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought)
substantially in the form annexed as Exhibits 10.1 and 10.2 to the Registration
Statement (“Insider
Letters”),
pursuant to which each of the Existing Stockholders of the Company agree to
certain matters, including but not limited to, certain matters described as
being agreed to by them under the “Proposed
Business”
section
of the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus.
2.22.2 Securities
Escrow Agreement.
The
Company has caused the Existing Stockholders to enter into a Stock Escrow
Agreement and a Warrant Escrow Agreement (collectively, the “Securities
Escrow Agreements”)
with
Continental (“Escrow
Agent”),
substantially in the form annexed as Exhibit 10.4 to the Registration Statement,
whereby (i) the Ordinary Shares owned by the Existing Stockholders, prior to
the
Closing Date, (the “Existing
Stockholders Shares”)
will
be held in escrow by the Escrow Agent, until one year from the date of
consummation of a Business Combination (subject to certain exceptions as set
forth in the Securities Escrow Agreements) and (ii) the Placement Warrants
will
be held in escrow by the Escrow Agent until the Company consummates a Business
Combination; provided, however, that if the Escrow Agent is notified by the
Company that the Company is being liquidated at any time during the applicable
Escrow Period (as that term is defined in the Securities Escrow Agreements),
then immediately prior to the effectiveness of such liquidation, the Escrow
Agent shall promptly destroy the certificates representing the Existing
Stockholders Shares and the Placement Warrants. During such escrow period,
the
Existing Stockholders shall be prohibited from selling or otherwise transferring
such shares (except as otherwise set forth in the Securities Escrow Agreements)
but will retain the right to vote such shares. To the Company’s knowledge, each
Securities Escrow Agreement is enforceable against each of the Existing
Stockholders and will not, with or without the giving of notice or the lapse
of
time or both, result in a breach of, or conflict with any of the terms and
provisions of, or constitute a default under, any agreement or instrument to
which any of the Existing Stockholders is a party. The Securities Escrow
Agreements shall not be amended, modified or otherwise changed without the
prior
written consent of the Representative.
2.22.3 No
Fiduciary Relationship in Pricing.
The
Company acknowledges and agrees that (i) the purchase and sale of the Units
pursuant to this Agreement is an arm’s-length commercial transaction between the
Company and the several Underwriters; (ii) in connection therewith and with
the
process leading to such transaction, each Underwriter is acting solely as a
principal and not the agent or fiduciary of the Company; (iii) no Underwriter
has assumed an advisory or fiduciary responsibility in favor of the Company
with
respect to the offering contemplated hereby or the process leading thereto
(irrespective of whether such Underwriter has advised or is currently advising
the Company on other matters) or any other obligation to the Company except
the
obligations expressly set forth in this Agreement; and (iv) the Company has
consulted its own legal and financial advisors to the extent it deemed
appropriate. The Company agrees that it will not claim that the Underwriters,
or
any of them, has rendered advisory services of any nature or respect, or owes
a
fiduciary or similar duty to the Company, in connection with such transaction
or
the process leading thereto.
14
2.22.4 Founders
Warrant Purchase Agreements.
Parallax Power Components LLC, McWong Consultants, Inc., Alex Xxxx Xxxxx and
Xxxxxxxx Xxxxxxx (collectively, the “Sponsor”)
and
the Representative each executed and delivered an agreement, substantially
in the form annexed as Exhibit 10.8 of the Registration Statement (collectively,
the “Subscription
Agreements”),
pursuant to which such entities, among other things, will purchase an aggregate
of 2,290,000 warrants substantially identical to the Warrants (the
“Placement
Warrants”)
at a
purchase price of $1.00 per Placement Warrant in a private placement in
accordance with Regulation D under the Act simultaneously with the consummation
of the Closing (the “Private
Placement”).
The
Sponsor, the Representative and the Company have delivered executed copies
of the Subscription Agreements and the Sponsor and the Representative have
delivered the purchase price on or before the Effective Date. Pursuant to the
Subscription Agreements, (i) $2,290,000 of the proceeds from the sale of the
Placement Warrants will be deposited on behalf of the Company in the Trust
Account in accordance with the terms of the Trust Agreement on the Closing
Date,
and (ii) the purchasers of the Placement Warrants have waived any and all rights
and claims that they may have to any proceeds, and any interest thereon, held
in
the Trust Account in respect of the Placement Warrants in the event that a
Business Combination is not consummated and the Trust Account is liquidated
in
accordance with the terms of the Trust Agreement. The Placement Warrants
will not be transferable (except in limited circumstances as described in the
Prospectus) or salable by the purchasers until the consummation of a business
combination, will be exercisable on a cashless basis and will be non-redeemable
as long as the purchasers, or their permitted transferees, hold such Placement
Warrants. There was no placement agent in the Private Placement and
no party shall be entitled to a placement fee or expense allowance from the
sale
of the Placement Warrants.
2.23 Investment
Management Trust Agreement.
The
Company has entered into the Trust Agreement with respect to certain proceeds
of
the Offering and the Private Placement substantially in the form annexed as
Exhibit 10.3 to the Registration Statement.
2.24 No
Existing Non-Competition Agreements.
No
Existing Stockholder, employee, officer or director of the Company is subject
to
any non-competition agreement or non-solicitation agreement with any employer
or
prior employer which could materially affect his ability to be an Existing
Stockholder, employee, officer and/or director of the Company.
2.25 Investment
Company Act; Investments.
The
Company has been advised concerning the Investment Company Act of 1940, as
amended (the “Investment
Company Act”),
and
the rules and regulations thereunder and has in the past conducted, and intends
in the future to conduct, its affairs in such a manner as to ensure that it
will
not become an “investment company” or a company “controlled” by an “investment
company” within the meaning of the Investment Company Act and such rules and
regulations. The Company is not, nor will the Company become upon the sale
of
the Units and the application of the proceeds therefrom as described in the
Registration Statement, the sale Preliminary Prospectus and the Prospectus
under
the caption “Use of Proceeds”, an “investment company” or a person controlled by
an “investment company” within the meaning of the Investment Company Act. No
more than 45% of the “value” (as defined in Section 2(a)(41) of the Investment
Company Act) of the Company’s total assets (exclusive of cash items and
“Government Securities” (as defined in Section 2(a)(16) of the Investment
Company Act) consist of, and no more than 45% of the Company’s net income after
taxes is derived from, securities other than the Government
Securities.
2.26 Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.27 Related
Party Transactions.
There
are no business relationships or related party transactions involving the
Company or any other person required to be described in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus that have not
been
described as required.
15
2.28 Data.
The
statistical, industry-related and market-related data included in the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus
are
based on or derived from sources which the Company reasonably and in good faith
believes are reliable and accurate, and such data agree with the sources from
which they are derived.
2.29 Business
Combinations.
None of
the Company nor any Sponsor, Insider, officer, director or Initial Stockholder
has (i) any specific Business Combination under consideration or contemplation
and (ii) has not (nor has anyone on its or their behalf) contacted any potential
target business or had any discussions, formal or otherwise, with respect to
such a transaction.
2.30 Distribution
of Offering Material By the Company.
The
Company has not distributed and will not distribute, prior to the later of
the
Closing Date and the completion of the Underwriters’ distribution of the Units,
any offering material in connection with the Offering and sale of the Units
other than the Sale Preliminary Prospectus and the Prospectus, in each case
as
supplemented and amended.
2.31 Ineligible
Issuer.
At the
time of filing the Registration Statement and at the date hereof, the Company
was and is an “ineligible issuer,” as defined in Rule 405 under the Securities
Act. The Company has not made any offer relating to the Securities that would
constitute an “issuer free writing Prospectus,” as defined in Rule 433, or that
would otherwise constitute a “free writing Prospectus,” as defined in Rule
405.
2.32 Xxxxxxxx-Xxxxx.
There is
and has been no failure on the part of the Company or any of the Company’s
directors or officers, in their capacities as such, to comply with (as and
when
applicable), and immediately following the effectiveness of the Registration
Statement the Company will be in compliance with, Sections 301, 402, 802
and 1102 of the Xxxxxxxx-Xxxxx Act of 2002, as amended (the “Xxxxxxxx-Xxxxx
Act”),
and
the rules and regulations promulgated by the Commission thereunder. Further,
there is and has been no failure on the part of the Company or any of the
Company’s directors or officers, in their capacities as such, to comply with (as
and when applicable), and immediately following the effectiveness of the
Registration Statement the Company will be in compliance with, all other
applicable provisions of the Xxxxxxxx-Xxxxx Act.
2.33 No
Transfer Taxes.
There
are no transfer taxes or other similar fees or charges under federal or foreign
law or the laws of any state, or any political subdivision thereof, required
to
be paid in connection with the execution and delivery of this Agreement or
the
issuance by the Company or sale by the Company of the Securities.
2.34 Rule 419
Under the Act.
Upon
delivery and payment for the Firm Units on the Closing Date and the filing
of
the Closing 8-K, the Company will not be subject to Rule 419 under the Act
and none of the Company’s outstanding securities will be deemed to be a “xxxxx
stock” as defined in rule 3a-51-1 under the Exchange Act.
2.35 Registration
Rights Agreement.
The
Company, the Existing Stockholders and the Representative have entered into
a
registration rights agreement (“Registration
Rights Agreement”)
substantially in the form annexed as Exhibit 10.7 to the Registration Statement,
whereby the Existing Stockholders and the Representative will be entitled to
certain registration rights as set forth in such Registration Rights Agreement
and described more fully in the Registration Statement.
16
2.36 Loans.
Parallax
Power Components, LLC has made a loan to the Company in the aggregate amount
of
$100,000 (the “Insider
Loan”)
substantially in the form annexed as Exhibit 10.8 to the Registration Statement.
The Insider Loan does not bear any interest and is to be repaid by the Company
out of the proceeds of the Offering not being deposited in the Trust
Account.
3. Covenants
of the Company.
The
Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement.
The
Company will deliver to the Representative, prior to filing, any amendment
or
supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and the Company shall not file any such amendment
or
supplement to which the Representative shall reasonably object.
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 Securities in accordance
with the provisions hereof and the Prospectus. If at any time when a Sale
Preliminary Prospectus or Prospectus relating to the 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 Underwriters’ counsel, the Sale
Preliminary Prospectus or 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 Sale Preliminary Prospectus or the
Prospectus to comply with the Act, the Company will notify the Representative
promptly and prepare and file with the Commission, subject to Section 3.1
hereof, an appropriate amendment or supplement in accordance with Section 10
of
the Act.
3.2.2 Filing
of Final Prospectus.
The
Company will file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule 424
of
the Regulations.
3.2.3 Exchange
Act Registration.
The
Company will use its best efforts to maintain the registration of the Securities
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 Public Securities under the Exchange Act without
the prior written consent of the Representative.
3.3 Ineligible
Issuer.
The
Company will not make any offer relating to the Securities that would constitute
an “issuer free writing Prospectus,” as defined in Rule 433, or that would
otherwise constitute a “free writing Prospectus,” as defined in Rule
405.
17
3.4 Securities
Covenants.
The
Company will endeavor in good faith, in cooperation with the Representative,
at
or prior to the time the Registration Statement becomes effective, to qualify
the Securities for offering and sale under the securities laws of such
jurisdictions as the Representative may reasonably designate, provided that
no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction. The Company shall pay all filings fees in connection with the
qualification of the securities under the securities laws of such jurisdictions
as the Representative may reasonably designate.
3.5 Delivery
to Underwriters of Preliminary Prospectus, Sale Preliminary Prospectus and
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, Sale Preliminary Prospectus and 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 a copy of all original executed consents of certified
experts.
3.6 Effectiveness
and Events Requiring Notice to the Representative.
The
Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representative immediately and confirm the notice
in writing (i) of the effectiveness of the Registration Statement and any
amendment thereto; (ii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or preventing or suspending the use of any Preliminary
Prospectus, the Prospectus or of the initiation, or the threatening, of any
proceeding for that purpose; (iii) of the issuance by any state securities
commission of any proceedings for the suspension of the qualification of the
Public Securities for offering or sale in any jurisdiction or of the initiation,
or the threatening, of any proceeding for that purpose; (iv) of the mailing
and
delivery to the Commission for filing of any amendment or supplement to the
Registration Statement or Prospectus; (v) of the receipt of any comments or
request for any additional information from the Commission; and (vi) of the
happening of any event during the period described in Section 3.2.3 hereof
that,
in the judgment of the Company or its counsel, makes any statement of a material
fact made in the Registration Statement, the Sale Preliminary Prospectus or
the
Prospectus untrue or that requires the making of any changes in the Registration
Statement, the Sale Preliminary Prospectus 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.
3.7 Review
of Quarterly 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 registered public
accounting firm 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 quarterly report on Form 10-Q
and the mailing of quarterly financial information to stockholders.
18
3.8 Affiliated
Transactions.
3.8.1 Business
Combinations.
The
Company will not consummate a Business Combination with any entity which is
affiliated with any Existing Stockholder unless the Company obtains an opinion
from an independent investment banking firm that the Business Combination is
fair to the Company’s stockholders from a financial perspective. No Existing
Stockholder or any affiliate of such person shall receive any fees of any type
(other than reimbursement of ordinary and customary expenses incurred on behalf
of the Company) in connection with any Business Combination.
3.8.2 Administrative
Services.
The
Company has entered into an agreement (“Services
Agreement”)
with
Provident Management (“Affiliate”)
substantially in the form annexed as Exhibit 10.5 to the Registration Statement
pursuant to which the Affiliate will make available to the Company general
and
administrative services, including office space, utilities, technology and
secretarial services for the Company’s use for $7,500 per month until the
earlier of consummation of a Business Combination or the Company’s
liquidation.
3.8.3 Compensation
to Existing Stockholders.
Except
as set forth above in this Section 3.8, the Company shall not pay any Existing
Stockholder or any of their affiliates any fees or compensation from the
Company, for services rendered to the Company prior to, or in connection with,
the consummation of a Business Combination; provided that the Company may repay
the Insider Loan and the Existing Stockholders shall be entitled to
reimbursement from the Company for their ordinary and customary expenses
incurred in connection with a Business Combination as set forth in Section
3.8.1.
3.9 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.
3.10 Reports
to the Representative.
3.10.1 Periodic
Reports, Etc.
For a
period of five years from the Effective Date or until such earlier time upon
which the Company is required to be liquidated or the registration of the Units,
Ordinary Shares and Warrants under the provisions of the Exchange Act is
terminated, the Company will furnish to the Representative (Xxxxxx Xxxxxx &
Co., Attn: Xxxx Xxxxxx) and its counsel copies of such financial statements
and
other periodic and special reports as the Company from time to time furnishes
generally to holders of any class of its securities, and promptly furnish to
the
Representative (i) a copy of each periodic report the Company shall be required
to file with the Commission; (ii) a copy of every press release and every news
item and article with respect to the Company or its affairs which was released
by the Company; (iii) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1
or
13E-4 received or prepared by the Company; (iv) two (2) 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
Representative may from time to time reasonably request; provided the
Representatives shall sign, if requested by the Company, a Regulation FD
compliant confidentiality agreement which is reasonably acceptable to the
Representatives and their counsel in connection with the Representative’s
receipt of such information. Documents filed with the Commission pursuant to
its
XXXXX system shall be deemed to have been delivered to the Representative
pursuant to this Section.
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3.10.2 Transfer
Sheets.
For a
period of two years following the Effective Date or until such earlier time
upon
which the Company is required to be liquidated, the Company shall retain
Continental or another transfer and warrant agent acceptable to the
Representative (“Transfer
Agent”)
and
will furnish to the Underwriters at the Company’s sole cost and expense, for a
period of one year following the Effective Date, such transfer sheets of the
Company’s securities as the Representative may request, including the daily and
monthly consolidated transfer sheets of the Transfer Agent and DTC. The
Underwriters acknowledge that Continental is an acceptable Transfer
Agent.
3.10.3 Secondary
Market Trading Maintenance.
Unless
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 Global
Market or NASDAQ Capital Market, until such earlier time upon which the Company
is required to be liquidated or upon consummation of a Business Combination,
the
Company shall take such other action as may be reasonably requested by the
Representative to obtain a secondary market trading exemption in such other
states as may be requested by the Representative.
3.10.4 Trading
Reports.
During
such time as any of the Securities are quoted on the OTC Bulletin Board (or
any
successor trading market such as the Bulletin Board Exchange) or the Pink
Sheets, LLC (or similar publisher of quotations) and no other automated
quotation system, the Company shall provide to the Representative, at its
expense, such reports published by the OTC Bulletin Board or the Pink Sheets,
LLC relating to price trading of the Securities, as the Representative shall
reasonably request.
3.11 Disqualification
of Form S-1.
Until
the earlier of seven years from the date hereof or until the Warrants have
expired and are no longer exercisable, the Company will not take any action
or
actions which may prevent or disqualify the Company’s use of Form S-1 (or other
appropriate form) for the registration of the Warrants and the Representative’s
Warrants under the Act (except in connection with a going-private
transaction).
20
3.12 Payment
of Expenses.
3.12.1 General
Expenses Related to the Offering.
The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at 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 Sale 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 Ordinary Shares
and the Warrants included in the Units and the Representative’s Purchase Option,
including any transfer or other taxes payable thereon; (iii) the listing and
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, and fees and
disbursements for the counsel retained for such purpose; (iv) filing fees
incurred in registering the Offering with the FINRA; (v) fees, costs and
expenses incurred in listing the Company on the OTC Bulletin Board; (vi) fees
and disbursements of the transfer and warrant agent; (vii) the Company’s
expenses associated with “due diligence” and “road show” meetings arranged by
the Representative; and (viii) the preparation, binding and delivery of
transaction “bibles,” in form and style reasonably satisfactory to the
Representative and transaction lucite cubes or similar commemorative items
in a
style and quantity as reasonably requested by the Representative; and (ix)
all
other actual, documented 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 3.12.1. The Company also agrees that,
if requested by the Representative, it will engage and pay up to $5,000 per
initial investigation (per individual) to an investigative search firm of the
Representative’s choice to conduct an investigation of each of the principals of
the Company as shall be mutually selected by the Representative and the Company.
The Representative may deduct from the net proceeds of the Offering payable
to
the Company on the Closing Date, or the Option Closing Date, if any, the
expenses set forth in this Agreement to be paid by the Company to the
Representative and others. If the Offering contemplated by this Agreement is
not
consummated for any reason whatsoever, then the Company shall reimburse the
Underwriters in full for their actual out-of-pocket expenses, including, without
limitation, their legal fees and disbursements and “road show” and due diligence
expenses.
3.12.2 Deferred
Fees.
Upon
the consummation of a Business Combination, the Company shall, in accordance
with Section 1.1.3, pay the Deferred Fees to Xxxxxx Xxxxxx & Co. These
payments shall be made by wire transfer to an account designated by the
Representative on the closing date of the Business Combination. The Company
further agrees to reimburse the Representative for all reasonable out-of-pocket
expenses, including, but not limited to, “road-show” and due diligence expenses
in the event the Representative assists the Company in trying to obtain
stockholder approval of a proposed Business Combination.
21
3.13 Application
of Net Proceeds.
The
Company will apply the net proceeds from the Offering and Private Placement
received by it in a manner consistent with the application described under
the
caption “Use of Proceeds” in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus.
3.14 Delivery
of Earnings Statements to Security Holders.
The
Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full calendar
month following the Effective Date, an earnings statement (which need not be
certified by independent public or independent certified public accountants
unless required by the Act or the Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Act) covering a period
of
at least twelve consecutive months beginning after the Effective
Date.
3.15 Notice
to FINRA.
For the
period of ninety (90) days following the Effective Date, in the event any person
or entity (regardless of any FINRA 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
FINRA and to Xxxxxx Xxxxxx & Co. and Underwriters’ Counsel 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
FINRA’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.
3.16 Stabilization.
Neither
the Company, nor, to its knowledge, any of its employees, directors or
stockholders (without the consent of the Representative) has taken or will
take,
directly or indirectly, any action designed to or that has constituted or that
might reasonably be expected to cause or result in, under the Exchange Act,
or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities.
3.17 Existing
Lock-Up Agreement.
The
Company will enforce all existing agreements between the Company and any of
its
Existing Stockholders that prohibit the sale, transfer, assignment, pledge
or
hypothecation of any of the Securities in connection with the IPO. In addition,
the Company will direct the Transfer Agent to place stop transfer restrictions
upon any such Securities of the Company that are bound by such existing
“lock-up” agreements for the duration of the periods contemplated in such
agreements.
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.
22
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
Accounting Firm or another independent registered public accounting firm
reasonably acceptable to the Representative.
3.20 Form
8-K.
The
Company has retained its Accounting Firm 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 Offering and
Private Placement. Promptly after the Closing Date, the Company shall file
the
Closing 8-K with the Commission, which Report shall contain the Company’s
Audited Financial Statements.
3.21 FINRA.
The
Company shall advise the FINRA if it is aware that any 5% or greater stockholder
of the Company becomes an affiliate or associated person of an FINRA 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
be
done to the reasonable satisfaction to counsel for the
Underwriters.
3.23 Investment
Company.
The
Company shall cause the proceeds of the Offering and Private Placement held
in
the Trust Account to be invested only in “government securities” with specific
maturity dates or in money market funds as set forth in the Trust Agreement
and
disclosed in the Registration Statement, Sale Preliminary Prospectus or
Prospectus. The Company will otherwise conduct its business in a manner so
that
it will not become subject to the Investment Company Act of 1940, as amended.
Furthermore, once the Company consummates a Business Combination, it will be
engaged in a business other than that of investing, reinvesting, owning, holding
or trading securities.
3.24 Business
Combination Announcement.
Within
five Business Days following the consummation by the Company of a Business
Combination, the Company shall cause an announcement (“Business
Combination Announcement”)
to be
placed, at its cost, in The Wall Street Journal, the New York Times and a third
publication to be selected by the Representative announcing the consummation
of
the Business Combination and indicating that the Representative was the managing
underwriter in the Offering. The Company shall supply the Representative with
a
draft of the Business Combination Announcement and provide the Representative
with a reasonable opportunity to comment thereon. The Company will not place
the
Business Combination Announcement without the final approval of the
Representative, which such approval will not be unreasonably
withheld.
3.25 Colorado
Trust Filing.
In the
event the Securities are registered in the State of Colorado, the Company will
cause a Colorado Form ES to be filed with the Commissioner of the State of
Colorado no less than 10 days prior to the distribution of the Trust Account
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.
23
3.26 Amendments
to Memorandum and Articles of Association.
(i)
The
Company covenants and agrees, that prior to its initial Business Combination
it
will not seek to amend or modify any of Sections 167 through 171 its Memorandum
and Articles of Association.
(ii)
The
Company acknowledges that the purchasers of the Public Securities in the
Offering shall be deemed to be third party beneficiaries of this Agreement
and
specifically this Section 3.26.
(iii)
The
Representative specifically advises the Company that it will not waive this
Section 3.29 under any circumstances.
3.27 Private
Placement Proceeds.
On the
Closing Date, the Company shall cause to be deposited $2,290,000 of proceeds
from the Private Placement in the Trust Account and shall provide Xxxxxx Xxxxxx
& Co. with evidence of the same.
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 Underwriters’
Counsel.
4.1.2 FINRA
Clearance.
By the
Effective Date, the Representative shall have received clearance from FINRA
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 3.4 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.
4.1.4 The
OTC Bulletin Board.
The
Public Securities shall have been admitted and approved for quotation on the
OTC
Bulletin Board.
24
4.2 Company
Counsel Matters.
4.2.1 Closing
Date and Option Closing Date Opinion of Company Counsel.
On the
Closing Date and the Option Closing Date, if any, the Representative shall
have
received the favorable opinion of Xxxxxxxx Xxxxxx, dated the Closing Date or
the
Option Closing Date, as the case may be, addressed to the Representative and
in
form and substance reasonably satisfactory to Underwriters’ Counsel, covering
the matters set forth on Appendix A hereto.
4.2.2 Closing
Date and Option Closing Date Opinion of Cayman Islands Counsel.
On the
Closing Date and the Option Closing Date, if any, the Representative shall
have
received the favorable opinion of Xxxxxx and Calder, dated the Closing Date
or
the Option Closing Date, as the case may be, addressed to the Representative
and
in form and substance reasonably satisfactory to Underwriters’ Counsel, covering
the matters set forth on Appendix B hereto.
4.2.3 Closing
Date and Option Closing Date Opinion of China Counsel.
On the
Closing Date and the Option Closing Date, if any, the Representative shall
have
received the favorable opinion of _________, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Representative and
in
form and substance reasonably satisfactory to Underwriters’ Counsel, covering
the matters set forth on Appendix C hereto.
4.2.4 Reliance.
In
rendering such opinion, such counsel may rely (i) as to matters involving the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to
the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to the Representative and
Underwriters’ Counsel) of other counsel reasonably acceptable to the
Representative and Underwriters’ Counsel, 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 Underwriters’ counsel in its opinion delivered to the
Underwriters.
4.3 Cold
Comfort Letter.
At the
time this Agreement is executed, and at each of the Closing Date and the Option
Closing Date, if any, you shall have received a letter, addressed to the
Representative and in form and substance satisfactory in all respects (including
the non-material nature of the changes or decreases, if any, referred to in
clause (iii) below) to you and to Underwriters’ Counsel from Accounting Firm
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 Registration
Statement, the Preliminary Prospectus, Sale Preliminary Prospectus and the
Prospectus, provided to the Company any non-audit services, as such term is
used
in Section 10A(g) of the Exchange Act;
25
(ii) Stating
that in their opinion the financial statements of the Company included in the
Registration Statement, the Sale Preliminary Prospectus and the 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 their 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, the Sale Preliminary Prospectus and the Prospectus do not comply
as
to form in all material respects with the applicable accounting requirements
of
the Act and the Regulations or are not fairly presented in conformity with
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, the Sale Preliminary Prospectus and the
Prospectus, or (b) at a date not later than five days prior to the Effective
Date, Closing Date or Option Closing Date, as the case may be, there was any
change in the capital stock or long-term debt of the Company, or any decrease
in
the stockholders’ equity of the Company as compared with amounts shown in the
January 25, 2008 balance sheet included in the Registration Statement, the
Sale
Preliminary Prospectus and the Prospectus, other than as set forth in or
contemplated by the Registration Statement, the Sale Preliminary Prospectus
and
the Prospectus or, if there was any decrease, setting forth the amount of such
decrease, and (c) during the period from [__________, 2008] 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 Ordinary Share, 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 the Sale Preliminary Prospectus
and
the Prospectus, or, if there was any such decrease, setting forth the amount
of
such decrease;
(iv) Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a break-down of commercial
papers and notes payable to banks);
26
(v) Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus in each case to the extent that such amounts,
numbers, percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi) Stating
that they have not, since the Company’s incorporation, brought to the attention
of the Company’s management any reportable condition related to internal
structure, design or operation as defined in the Statement on Auditing Standards
No. 60 “Communication of Internal Control Structure Related Matters Noted in an
Audit,” in the Company’s internal controls; and
(vii) Statements
as to such other matters incident to the transaction contemplated hereby as
you
may reasonably request.
4.4 Officers’
Certificates.
4.4.1 Officers’
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Chairman of
the
Board or the President and the Secretary or Assistant Secretary of the Company
(in their capacities as such), dated the Closing Date or the Option Closing
Date, as the case may be, respectively, to the effect that the Company has
performed all covenants and complied with all conditions required by this
Agreement to be performed or complied with by the Company prior to and as of
the
Closing Date, or the Option Closing Date, as the case may be, and that the
conditions set forth in Section 4.5 hereof have been satisfied as of such date
and that, as of Closing Date and the Option Closing Date, as the case may be,
the representations and warranties of the Company set forth in Section 2 hereof
are true and correct. In addition, the Representative will have received such
other and further certificates of officers of the Company (in their capacities
as such) as the Representative may reasonably request.
4.4.2 Secretary’s
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Secretary or
Assistant Secretary of the Company, dated the Closing Date or the Option Date,
as the case may be, respectively, certifying (i) that the Memorandum and
Articles of Association of the Company are true and complete, have not been
modified and are in full force and effect, (ii) that the resolutions relating
to
the public offering contemplated by this Agreement are in full force and effect
and have not been modified, (iii) all correspondence between the Company or
its
counsel and the Commission, (iv) as to the incumbency of the officers of the
Company. The documents referred to in such certificate shall be attached to
such
certificate.
27
4.5 No
Material Changes.
Prior
to and on each of the Closing Date and the Option Closing Date, if any, (i)
there shall have been no material adverse change or development involving a
prospective material adverse change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Registration Statement,
the
Sale Preliminary Prospectus and the Prospectus; (ii) no action suit or
proceeding, at law or in equity, shall have been pending or threatened against
the Company or any Existing Stockholder before or by any court or federal or
state commission, board or other administrative agency wherein an unfavorable
decision, ruling or finding may materially adversely affect the business,
operations, prospects or financial condition or income of the Company, except
as
set forth in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus; (iii) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or threatened by the Commission;
and (iv) the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus and any amendments or supplements thereto shall contain all material
statements which are required to be stated therein in accordance with the Act
and the Regulations and shall conform in all material respects to the
requirements of the Act and the Regulations, and neither the Registration
Statement, the Sale Preliminary Prospectus nor the Prospectus nor any amendment
or supplement thereto shall contain any untrue statement of a material fact
or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
4.6 Delivery
of Agreements.
4.6.1 Effective
Date Deliveries.
On the
Effective Date, the Company shall have delivered to the Representative executed
copies of the Securities Escrow Agreement, the Trust Agreement, the Warrant
Agreement, the Services Agreement, the Registration Rights Agreement and all
of
the Insider Letters and Subscription Agreement.
4.6.2 Closing
Date Deliveries.
On the
Closing Date, the Company shall have delivered to the Representative executed
copies of the Representative’s Purchase Option.
4.7 Opinion
of Counsel for the Underwriters.
All
proceedings taken in connection with the authorization, issuance or sale of
the
Securities as herein contemplated shall be reasonably satisfactory in form
and
substance to you and to Underwriters’ Counsel 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, Underwriters’ Counsel 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.
Unless
the Public Securities are listed or quoted, as the case may be, on the New
York
Stock Exchange, the American Stock Exchange, the NASDAQ Global Market, or the
NASDAQ Capital Market, the Company shall take such other action as may be
reasonably requested by the Representative to obtain a secondary market trading
exemption in such other states as may be requested by the
Representative.
28
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 Units (each a “Selected
Dealer”)
and
each of their respective directors, officers and employees and each person,
if
any, who controls any such Underwriter (“controlling
person”)
within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever as
incurred 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) the Registration
Statement, any Preliminary Prospectus, Sale Preliminary Prospectus or the
Prospectus (as from time to time each may be amended and supplemented,
including, but not limited to any information deemed to be a part thereof
pursuant to Rule 430A, Rule 430B or Rule 430C); (ii) any materials or
information provided to investors by, or with the approval of, the Company
in
connection with the marketing of the offering of the Securities, including
any
“road show” or investor presentations made to investors by the Company (whether
in person or electronically); (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
or the OTC Bulletin Board, NASDAQ, AMEX or other securities exchange; or (iv)
any post-effective amendments to the Registration Statement or Prospectus or
new
Registration Statement or Prospectus filed by the Company with the Commission,
any state securities commission or agency or the OTC Bulletin Board, NASDAQ,
AMEX or other securities exchange or the omission or alleged omission from
the
Registration Statement, any Preliminary Prospectus, the Sale Preliminary
Prospectus or the Prospectus or subsequent filing by the Company under clause
(iv) 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, and to reimburse each Underwriter, each Selected Dealer
and each of their respective directors, officers and employees and each
controlling person, if any, for any and all expenses (including the fees and
disbursements or counsel chosen by Xxxxxx Xxxxxx & Co.) as such expenses are
incurred by such Underwriter, such Selected Dealer or each of their respective
directors, officers and employees or such controlling person in connection
with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided however, that the foregoing
indemnity agreement shall not apply to any loss, claim, damage, liability or
expenses to the extent, but only to the extent, arising out of or based upon
(x)
any untrue statement or alleged untrue statement or omission or alleged omission
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 the Registration Statement, any Preliminary Prospectus,
Sale Preliminary Prospectus or the Prospectus, or any amendment or supplement
thereof, or in any application, as the case may be, or (y) the use of the Sale
Preliminary Prospectus or Prospectus in violation of any stop order or other
notice received by any Underwriter indicating the then-current Prospectus is
not
to be used in connection with the sale of any Securities. With respect to any
untrue statement or omission or alleged untrue statement or omission made in
the
Preliminary Prospectus, the indemnity agreement contained in this paragraph
shall not inure to the benefit of any Underwriter to the extent that any loss,
liability, claim, damage or expense of such Underwriter results from the fact
that a copy of the Prospectus was not given or sent to the person asserting
any
such loss, liability, claim or damage at or prior to the written confirmation
of
sale of the Securities to such person as required by the Act and the
Regulations, and if the untrue statement or omission has been corrected in
the
Prospectus, unless such failure to deliver the Prospectus was a result of
non-compliance by the Company with its obligations under Section 3.4 hereof.
The
Company agrees promptly to notify the Representative of the commencement of
any
litigation or proceedings against the Company or any of its officers, directors
or controlling persons in connection with the issue and sale of the Securities
or in connection with the Registration Statement, the Sale Preliminary
Prospectus or the Prospectus. The indemnity agreement set forth in this Section
5.1 shall be in addition to any liabilities that the Company may otherwise
have.
29
5.2 Indemnification
of the Company.
Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signed the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act 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 the Registration Statement, any Preliminary
Prospectus, the Sale Preliminary Prospectus, the 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, the Sale Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto or in any
such
application; and to reimburse the Company or any such director, officer or
controlling person, if any, for any and all expenses as such expenses are
reasonably incurred, in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action; provided, however, that the obligation of each Underwriter to indemnify
the Company (including any director, officer or controlling person thereof),
shall be limited to the commissions received by such Underwriter in connection
with the Public Securities underwritten by it. The Company hereby acknowledges
that the only information that the Underwriters have furnished to the Company
expressly for use in the Registration Statement, any Preliminary Prospectus,
the
Sale Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or in any such application, are the statements set forth in the
paragraphs entitled “Pricing of Securities” and “Commissions and Discounts”
under the caption “Underwriting” in the Prospectus. The indemnity agreement set
forth in this Section 5.2 shall be in addition to any liabilities that each
Underwriter may otherwise have.
5.3 Notifications
and Other Indemnification Procedures.
Promptly after receipt by an indemnified party under this Section 5 of notice
of
the commencement of any action, such indemnified party will, if a claim in
respect thereof is to be made against an indemnifying party under this Section
5, notify the indemnifying party in writing of the commencement thereof, but
the
failure to so notify the indemnifying party (i) will not relieve it from
liability under Sections 5.1 or 5.2 above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by
the
indemnifying party of substantial rights and defenses and (ii) will not, in
any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in Sections 5.1 or
5.2
above. In case any such action is brought against any indemnified party and
such
indemnified party seeks or intends to seek indemnity from an indemnifying party,
the indemnifying party will be entitled to participate in, and, to the extent
that it shall elect, jointly with all other indemnifying parties similarly
notified, by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel satisfactory to such indemnified party; provided,
however, if the defendants in any such action include both the indemnified
party
and the indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the indemnifying
party and the indemnified party in conducting the defense of any such action
or
that there may be legal defenses available to it and/or other indemnified
parties that are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party
or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of such indemnifying party’s election so to assume the defense of such
action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 5 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof unless (i) the indemnified party shall have employed
separate counsel in accordance with the provision of the preceding sentence
reasonably approved by the indemnifying party (or by Xxxxxx Xxxxxx & Co. in
the case of Section 5.2), representing the indemnified parties who are parties
to such action or (ii) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the
indemnifying party.
30
5.4 Settlements.
The
indemnifying party under this Section 5 shall not be liable for any settlement
of any proceeding effected without its written consent, which shall not be
withheld, delayed or conditioned unreasonably, but if settled with such consent
or if there is a final judgment for the plaintiff, the indemnifying party agrees
to indemnify the indemnified party against any loss, claim, damage, liability
or
expense by reason of such settlement or judgment. Notwithstanding the foregoing
sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses
of
counsel as contemplated by Section 5.3 hereof, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii)
such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party
is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or
consent (x) includes an unconditional release of such indemnified party from
all
liability on claims that are the subject matter of such action, suit or
proceeding and (y) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified
party.
5.5 Contribution.
5.5.1 Contribution
Rights.
In
order to provide for just and equitable contribution under the Act in any case
in which (i) any person entitled to indemnification under this Section 5 makes
claim for indemnification pursuant hereto but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and
the expiration of time to appeal or the denial of the last right of appeal)
that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Act, the Exchange Act or otherwise may be required on
the
part of any such person in circumstances for which indemnification is provided
under this Section 5, then, and in each such case, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred, in such proportions
that the Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
Prospectus bears to the initial offering price appearing thereon and the Company
is responsible for the balance; provided, that, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Underwriters shall
contribute in such proportion as is appropriate to reflect the relative fault
of
the Company and the Underwriters in connection with the actions or omissions
which resulted in such loss, claim, damage, liability or action, as well as
any
other relevant equitable considerations. The relative fault of the Company
and
the Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Underwriters and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. Notwithstanding the provisions of this Section 5.5.1,
no
Underwriter shall be required to contribute any amount in excess of the
underwriting commissions received by such Underwriter in connection with the
Securities underwritten by it and distributed to the public. 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.
31
5.5.2 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 5.5.2 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 3.12 and 5 hereof) or the several
Underwriters (except as provided in Section 5 hereof); provided, however, that
if such default occurs with respect to the Option Units, this Agreement will
not
terminate as to the Firm Units; and provided further that nothing herein shall
relieve a defaulting Underwriter of its liability, if any, to the other several
Underwriters and to the Company for damages occasioned by its default
hereunder.
32
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, the Sale
Preliminary Prospectus 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 Underwriters’
Counsel 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 Public 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 his reasonable
out-of-pocket expenses incurred in connection with his attendance at the
meeting, including but not limited to, food, lodging and
transportation.
8. Additional
Covenants.
8.1 Additional
Shares or Options.
The
Company hereby agrees that until the consummation of a Business Combination,
it
shall not issue any Ordinary Shares (except with respect to any exercise of
Warrants) or any options or other securities convertible into Ordinary Shares,
or any shares of preferred stock or other securities of the Company which
participate in any manner in the Trust Account or which vote as a class with
the
Ordinary Shares on a Business Combination.
33
8.2 Trust
Account Waiver Acknowledgment.
The
Company hereby agrees that it will use its reasonable best efforts prior to
engaging in discussions with any operating business which the Company seeks
to
acquire (“Target
Business”)
or
obtaining the services of any 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 Account, initially in an amount of $36,000,000
including Deferred Fees and proceeds of the Private Placement (without
giving effect to any exercise of the Over-allotment Option) for the benefit
of
the public stockholders and that, except for a portion of the interest earned
on
the amounts held in the Trust Account, the Company may disburse monies from
the
Trust Account only (i) to the public stockholders in the event they vote against
a Business Combination and elect to redeem their IPO Shares (as defined below
in
Section 8.5); (ii) to the holders of the IPO Shares upon the liquidation of
the
Company if the Company fails to consummate a Business Combination; (iii) to
the
Company after or concurrently with the consummation of a Business Combination;
or (iv) to the Company to pay for its income taxes or other working capital
requirements and (b) for and in consideration of the Company (i) agreeing to
evaluate such Target Business for purposes of consummating a Business
Combination with it or (ii) 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
Account (“Claim”)
and
waives any Claim it may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Account for any reason whatsoever. The foregoing
letters shall substantially be in the form attached hereto as Exhibits A and
B,
respectively. The Company may forego obtaining such waivers only if the Company
shall have received the approval of its Chief Executive Officer and the
approving vote or written consent of at least a majority of its Board of
Directors.
8.3 Insider
Letters.
The
Company shall not take any action or omit to take any action which would cause
a
breach of any of the Insider Letters executed between each Existing Stockholder
and Xxxxxx Xxxxxx & Co. and will not allow any amendments to, or waivers of,
such Insider Letters without the prior written consent of the
Representative.
8.4 Memorandum
and Articles of Association.
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 Memorandum and Articles of
Association. Prior to the consummation of a Business Combination, the Company
will not amend its Memorandum and Articles of Association without the prior
written consent of the Representative.
34
8.5 Acquisition/Liquidation
Procedure.
The
Company agrees: (i) prior to the consummation of any Business Combination,
it
will submit such transaction to the Company’s stockholders for their approval
(“Business
Combination Vote”)
even
if the nature of the acquisition is such as would not ordinarily require
stockholder approval under the laws of the Cayman Islands; and (ii) failure
of
the Company to effect a Business Combination within twenty-four (24) months
(or
thirty-six (36) months in the event of shareholder approval of an extension)
from the consummation of the offering (the “Termination
Date”),
shall
trigger an automatic winding-up of the Company and the Trust Account will be
liquidated to holders of IPO Shares in the manner described in the Sale
Preliminary Prospectus and the Prospectus as soon as reasonably practicable,
and
subject to the requirements of the laws of the Cayman Islands. For purposes
of
this Section 8.5, the term “IPO
Shares”
means
the Ordinary Shares included in the Public Securities.
8.5.1 Upon
liquidation of the Trust Account, subject to the requirements of the laws of
the
Cayman Islands, the Company will distribute only to the holders of IPO Shares
an
aggregate sum equal to the Company’s Liquidation Value (as defined below), which
sum shall be distributed pro rata among the holders of the IPO Shares. The
Company’s “Liquidation
Value”
means:
(i) all principal and accrued interest contained within the Trust Account,
less
any amounts previously distributed to the Company out of the interest earned
on
the Trust Account pursuant to the terms of the Trust Agreement (after payment
of, or provision for, applicable taxes and claims of creditors), plus (ii)
all
cash and other liquid assets (which shall be reduced to cash as part of the
Company’s winding up) then held by the Company outside of the Trust Account, all
as distributed in amounts to the holders as determined by Trustee, as trustee
of
the Trust Account. Only holders of IPO Shares as of the record date for the
distribution shall be entitled to receive liquidating distributions with respect
to the IPO Shares they beneficially own and the Company shall pay no liquidating
distributions with respect to any other shares of capital stock of the Company,
including the Ordinary Shares held by the Existing Stockholders prior to the
Offering (but shall include Ordinary Shares purchased by Existing Stockholders
in or after the Offering).
8.5.2 With
respect to the Business Combination Vote, the Company shall cause the Existing
Stockholders to vote all Ordinary Shares owned by them as of the record date
of
the vote in accordance with the vote of holders of a majority of the IPO Shares
present, in person or by proxy, at a meeting of the Company’s stockholders in
connection with the Business Combination Vote.
8.5.3 At
the
time the Company seeks approval of any extended period or potential Business
Combination (prior to the consummation of its initial Business Combination),
the
Company will offer each of the holders of the IPO Shares the right to redeem
their IPO Shares into a pro rata share of the Trust Account (the “Conversion
Price”).
If
holders of less than an aggregate of 35% in interest of the Company’s
Ordinary Shares vote against such approval of an extended period, if any,
and a Business Combination and elect to redeem 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 redeem Ordinary
Shares, based upon the Conversion Price, from those holders of Ordinary Shares
who affirmatively requested such redemption and who voted against the extended
period and/or the Business Combination as provided under the laws of the
Cayman Islands. If holders of an aggregate of 35% or more in interest of the
Ordinary Shares vote against approval of any extended period and/or the
potential Business Combination and elect to redeem their IPO Shares, the Company
will not proceed with such Business Combination and will liquidate or, if within
the twenty-four (24) months allotted to consummate a Business Combination,
seek
another Business Combination.
35
8.6 Rule
419.
The
Company agrees that it will use its best efforts to prevent the Company from
becoming subject to Rule 419 under the Act prior to the consummation of any
Business Combination, including but not limited to using its best efforts to
prevent any of the Company’s outstanding securities from being deemed to be a
“xxxxx stock” as defined in Rule 3a-51-1 under the Exchange Act during such
period.
8.7 Affiliated
Transactions.
The
Company shall cause each of the Existing Stockholders to agree that, in order
to
minimize potential conflicts of interest which may arise from multiple
affiliations, the Existing Stockholders will present to the Company for its
consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire an operating business, until the earlier of
the
consummation by the Company of a Business Combination, the liquidation of the
Company or until such time as the Existing Stockholders cease to be an officer
or director of the Company, subject to any pre-existing fiduciary or contractual
obligations the Existing Stockholders might have.
8.8 Target
Fair Market Value.
The
Company agrees that its initial Business Combination must be with one or more
Target Businesses that have an aggregate fair market value equal to at least
80%
of the Company’s net assets (all of the Company’s assets, including the funds
then held in the Trust Account less Deferred Fees held in the Trust
Account) at the time of signing a definitive agreement for such Business
Combination. The fair market value of each Target 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 sufficient fair market
value at the time of such transaction, or if the Target Business is affiliated
with any of the Existing Stockholders, the Company will obtain an opinion from
an unaffiliated, independent investment banking firm which is a member of the
FINRA 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.
8.9 Proxy
and Other Information.
The
Company shall provide counsel to the Representative with ten copies of all
proxy
information and all related material filed with the Commission in connection
with a Business Combination concurrently with such filing with the Commission.
In addition, the Company shall furnish any other state in which its Public
Securities were registered, such information as may be requested by such state.
36
8.10 Insider
Shares.
The
Company shall if the Underwriters do not exercise all or a portion of their
over-allotment option, (i) use its best efforts to cause the Initial
Shareholders to forfeit up to an aggregate of 168,750 ordinary shares in
proportion to the portion of the over-allotment option that was not exercised,
(ii) to the extent forfeited, record the aggregate fair value of the shares
forfeited and reacquired to treasury stock and a corresponding credit to
additional paid-in capital based on the difference between the fair market
value
of the ordinary shares forfeited and the price paid to the Company for such
forfeited shares and (iii) immediately cancel such forfeited shares resulting
in
the retirement of the treasury stock and a corresponding charge to additional
paid-in capital.
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 the Company, including the
indemnity agreements contained in Section 5 hereof, shall remain operative
and
in full force and effect regardless of any investigation made by or on behalf
of
any Underwriter, the Company or any controlling person, and shall survive
termination of this Agreement or the issuance and delivery of the 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.
37
10.2 Termination.
You
shall have the right to terminate this Agreement at any time prior to the
Closing Date, (i) if any domestic or international event or act or occurrence
has materially disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United States; or (ii)
if
trading on the New York Stock Exchange, the American Stock Exchange, the NASDAQ
Global Market, the NASDAQ Capital Market or on the NASD OTC Bulletin Board
(or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the American Stock Exchange, the NASDAQ Global
Market, the NASDAQ Capital Market or on the NASD OTC Bulletin Board (or
successor trading market) 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 materially
breached, or (viii) if the Representative shall have become aware after the
date
hereof of such a material adverse change in the conditions or prospects of
the
Company, or such adverse material change in general market conditions, including
without limitation as a result of terrorist activities after the date hereof,
as
in the Representative’s judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Units or to enforce contracts made by
the
Underwriters for the sale of the Securities.
10.3 Expenses.
In the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the
terms
herein, the obligations of the Company to pay the out of pocket expenses related
to the transactions contemplated herein shall be governed by Section 3.12
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
38
If
to the
Representative:
Xxxxxx
Xxxxxx & Co. Inc.
000
Xxxxx
Xxxxxx
00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxx Xxxxxx, Managing Director
Facsimile:
(000) 000-0000
Copy
to:
Ellenoff
Xxxxxxxx & Schole, LLP
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxx Xxxxxxxx, Esq.
Facsimile:
(000) 000-0000
If
to the
Company:
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx X. Xxxxxxx, President
Facsimile:
( )
Copy
to:
Xxxxxxxx
Xxxxxx
000
Xxxxxxxxx Xxx.
Xxx
Xxxx,
XX 00000
Attn:
Xxxxx Xxxxxx, Esq.
Facsimile:
(000) 000-0000
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.
39
11.5 Binding
Effect.
This
Agreement shall inure solely to the benefit of and shall be binding upon the
Representative, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have
or
be construed to have any legal or equitable right, remedy or claim under or
in
respect of or by virtue of this Agreement or any provisions herein contained.
This Agreement and all conditions and provisions hereof are intended to be
for
the sole and exclusive benefit of the parties hereto and said controlling
persons and their respective successors, officers, directors, heirs and legal
representatives, and it is not for the benefit of any other person. The term
“successors and assigns” shall not include a purchaser, in its capacity as such,
of securities from any of the Underwriters. The Company acknowledges and agrees
that: (i) the sale and issuance of the securities pursuant to this Agreement
is
an arm’s-length commercial transaction between the Company and the Underwriters;
(ii) in connection therewith and with the process leading to the Offering,
the
Underwriters are acting solely as a principal and not the agent or fiduciary
of
the Company; (iii) no Underwriter has assumed an advisory or fiduciary
responsibility in favor of the Company with respect to the Offering contemplated
hereby or the process leading thereto, including any negotiation related to
the
pricing of the Public Securities; and (iv) the Company has consulted its own
legal and financial advisors to the extent it has deemed appropriate in
connection with this Agreement and the Offering.
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 or the United
States of America for the Southern District of New York, and irrevocably submits
to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby
waives any objection to such exclusive jurisdiction and that such courts
represent an inconvenient forum. Any such process or summons to be served upon
the Company may be served by transmitting a copy thereof by registered or
certified mail, return receipt requested, postage prepaid, addressed to it
at
the address set forth in Section 11.1 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the Company in any action,
proceeding or claim. The Company agrees that the prevailing party(ies) in any
such action shall be entitled to recover from the other party(ies) all of its
reasonable attorneys’ fees and expenses relating to such action or proceeding
and/or incurred in connection with the preparation therefor.
11.7 Execution
in Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be
an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto. Delivery of a signed counterpart of this Agreement by fax or email/pdf
transmission shall constitute valid and sufficient delivery
thereof.
40
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 affect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
11.9 No
Fiduciary Duty.
The
Company acknowledges and agrees that neither the Representative, the
Underwriters nor the controlling persons of any of them shall have any fiduciary
or advisory duty to the Company or any of its controlling persons arising out
of, or in connection with, this Agreement or the offer and sale of the Public
Securities.
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,
|
||
| |
|
|
| By: | ||
|
Name:
Xxxxxx Xxxxxxx
Title:
President
|
||
Accepted
on the date first
above
written.
| XXXXXX XXXXXX & CO. INC. | ||||
| By: | ||||
|
Name:
Xxxx Xxxxxx
Title:
Managing Director
|
||||
41
SCHEDULE
I
4,500,000
Units
|
Underwriter
|
Number
of Firm Units
to
be Purchased
|
|
|
Xxxxxx
Xxxxxx & Co. Inc.
|
||
EXHIBIT
A
FORM
OF TARGET BUSINESS LETTER
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Gentlemen:
Reference
is made to the Final Prospectus of Redstar Partners, Inc. (the “Company”),
dated
,
2008
(the “Prospectus”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We
have
read the Prospectus and understand that the Company has established the Trust
Account, initially in an amount of at least $36,000,000 for the benefit of
the
Public Stockholders and the Underwriters of the Company’s initial public
offering (the “Underwriters”)
and
that, except for a portion of the interest earned on the amounts held in the
Trust Account, the Company may disburse monies from the Trust Account only:
(i)
to the Public Stockholders in the event they elect to redeem their IPO Shares,
(ii) to the Public Stockholders upon the liquidation of the Company if the
Company fails to consummate a Business Combination, (iii) to the Company and
the
Underwriters after or concurrently with the consummation of a Business
Combination or (iv) to the Company to pay for its tax obligations and certain
of
its working capital requirements.
For
and
in consideration of the Company agreeing to evaluate the undersigned for
purposes of consummating a Business Combination with it, the undersigned hereby
agrees that it does not have any right, title, interest or claim of any kind
in
or to any monies in the Trust Account (each, a “Claim”)
and
hereby waives any Claim it may have in the future as a result of, or arising
out
of, any negotiations, contracts or agreements with the Company and will not
seek
recourse against the Trust Account for any reason whatsoever.
|
Print Name of Target Business |
|
Authorized Signature of Target Business |
EXHIBIT
B
FORM
OF VENDOR LETTER
000
Xxxx
00xx
Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Gentlemen:
Reference
is made to the Final Prospectus of Redstar Partners, Inc. (the “Company”),
dated
,
2008
(the “Prospectus”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We
have
read the Prospectus and understand that the Company has established the Trust
Account, initially in an amount of at least $36,000,000 for the benefit of
the
Public Stockholders and the Underwriters of the Company’s initial public
offering (the “Underwriters”)
and
that, except for a portion of the interest earned on the amounts held in the
Trust Account, the Company may disburse monies from the Trust Account only:
(i)
to the Public Stockholders in the event they elect to redeem their IPO Shares,
(ii) to the Public Stockholders upon the liquidation of the Company if the
Company fails to consummate a Business Combination, (iii) to the Company and
the
Underwriters after or concurrently with the consummation of a Business
Combination or (iv) to the Company to pay for its tax obligations and certain
of
its working capital requirements.
For
and
in consideration of the Company agreeing to engage the services of the
undersigned, the undersigned hereby agrees that it does not have any right,
title, interest or claim of any kind in or to any monies in the Trust Account
(each, a “Claim”)
and
hereby waives any Claim it may have in the future as a result of, or arising
out
of, any services provided to the Company and will not seek recourse against
the
Trust Account for any reason whatsoever.
|
Print Name of Target Business |
|
Authorized Signature of Target Business |
