UNDERWRITING AGREEMENT
between
PLATINUM ENERGY RESOURCES, INC.
and
CASIMIR CAPITAL, L.P.
and
CANTOR XXXXXXXXXX & CO.
As Representatives of the Underwriters named on Schedule I
Dated: , 2005
PLATINUM ENERGY RESOURCES, INC.
UNDERWRITING AGREEMENT
New York, New York
, 2005
Casimir Capital X.X.
Xxxxxx Xxxxxxxxxx & Co.
As Representatives of the Underwriters named on Schedule I hereto
c/o Casimir Capital L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Platinum Energy Resources, Inc., a Delaware corporation
("Company"), hereby confirms its agreement with Casimir Capital, L.P. and Cantor
Xxxxxxxxxx & Co. (hereinafter referred to as "you," or the "Representatives")
and with the other underwriters named on Schedule I hereto for which you are
acting as acting as Representatives (the Representatives and the other
Underwriters being collectively called the "Underwriters" or, individually, an
"Underwriter") as follows:
1. Purchase and Sale of Securities.
1.1 Firm Securities.
1.1.1 Purchase of Firm Units. On the basis of the representations
and warranties herein contained, but subject to the terms and conditions herein
set forth, the Company agrees to issue and sell, severally and not jointly, to
the several Underwriters, an aggregate of 18,000,000 units ("Firm Units") of the
Company at a purchase price (net of discounts and commissions) of $7.52 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 $7.52 per share. The Units are to be offered
initially to the public (the "Offering") at the offering price of $8.00 per Firm
Unit. Each Firm Unit consists of one share of the Company's common stock, par
value $.0001 per share (the "Common Stock"), and one warrant ("Warrant(s)"). The
shares of Common Stock and the Warrants included in the Firm Units will not be
separately transferable until 90 days after the effective date (the "Effective
Date") of the Registration Statement (as defined in Section 2.1.1 hereof),
unless the Representatives inform the Company of their decision to allow earlier
separate trading, but in no event will the Representatives allow separate
trading until (i) until the business day following the earlier to occur of the
expiration of the underwriters' over-allotment option or its exercise in full
and (ii) .the preparation of an audited balance sheet of the Company reflecting
receipt by the Company of the proceeds of the Offering and the filing of such
audited balance sheet with the Commission (as herein defined) on a Form 8-K or
similar form by the Company which includes such balance sheet. Each Warrant
entitles its holder to exercise it to purchase one share of Common Stock for
$6.00 during the period commencing on the later of the consummation by the
Company of its "Business Combination" or one year from the Effective Date of the
Registration Statement and terminating on the four-year anniversary of the
Effective Date. "Business Combination" shall mean any merger, capital stock
exchange, asset or stock acquisition or other similar business combination
consummated by the Company with an operating business (as described more fully
in the Registration Statement).
1.1.2 Payment and Delivery. Delivery and payment for the Firm Units
shall be made at 10:00 A.M., New York time, on the third business day following
the Effective Date of the Registration Statement (or the fourth business day
following the Effective Date, if the Registration Statement is declared
effective after 4:30 p.m.) or at such earlier time as shall be agreed upon by
the Representatives and the Company at the offices of one of the Representatives
or at such other place as shall be agreed upon by the Representatives and the
Company. The hour and date of delivery and payment for the Firm Units is called
the "Closing Date." Payment for the Firm Units shall be made on the Closing Date
at the Representatives' election by wire transfer in Federal (same day) funds or
by certified or bank cashier's check(s) in New York Clearing House funds,
payable as follows: $131,760,000 of the proceeds received by the Company for the
Firm Units shall be deposited in the trust fund established by the Company for
the benefit of the public stockholders as described in the Registration
Statement ("Trust Fund") pursuant to the terms of an Investment Management Trust
Agreement (the "Trust Agreement") and the remaining proceeds shall be paid to
the order of the Company upon delivery to you (or through the facilities of the
Depository Trust Company (the "DTC")) of certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Units for the account of
the Underwriters. The Firm Units shall be registered in such name or names and
in such authorized denominations as the Representatives may request in writing
at least two full business days prior to the Closing Date. The Company will
permit the Representatives to examine and package the Firm Units for delivery,
at least one full business day prior to the Closing Date. The Company shall not
be obligated to sell or deliver any of the Firm Units except upon tender of
payment by the Representatives for all the Firm Units.
1.2 Over-Allotment Option.
1.2.1 Option Units. For the purposes of covering any over-allotments
in connection with the distribution and sale of the Firm Units, the Underwriters
are hereby granted, severally and not jointly, an option to purchase up to an
additional 2,700,000 units from the Company (the "Over-allotment Option"). Such
additional 2,700,000 units are hereinafter referred to as "Option Units." The
Firm Units and the Option Units are hereinafter collectively referred to as the
"Units," and the Units, the shares of Common Stock and the Warrants included in
the Units and the shares of Common Stock issuable upon exercise of the Warrants
are hereinafter referred to collectively as the "Public Securities." The
purchase price to be paid for the Option Units will be the same price per Option
Unit as the price per Firm Unit set forth in Section 1.1.1 hereof.
1.2.2 Exercise of Option. The Over-allotment Option granted pursuant
to Section 1.2.1 hereof may be exercised by the Representatives as to all (at
any time) or any part (from time to time) of the Option Units within 45 days
after the Effective Date. The Underwriters will not be under any obligation to
purchase any Option Units prior to the exercise of the Over-allotment Option.
The Over-allotment Option granted hereby may be exercised by the giving of oral
notice to the Company from the Representatives, which must be confirmed in
writing by overnight mail or facsimile transmission setting forth the number of
Option Units to be purchased and the date and time for delivery of and payment
for the Option Units, which will not be later than five full business days after
the date of the notice or such other time as shall be agreed upon by the Company
and the Representatives, at the offices of one of the Representatives or at such
other place as shall be agreed upon by the Company and the Representatives. If
such delivery and payment for the Option Units does not occur on the Closing
Date, the date and time of the closing for such Option Units will be as set
forth in the notice (hereinafter the "Option Closing Date"). Upon exercise of
the Over-allotment Option, the Company will become obligated to convey to the
Underwriters, and, subject to the terms and conditions set forth herein, the
Underwriters will become obligated to purchase, the number of Option Units
specified in such notice.
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1.2.3 Payment and Delivery. Payment for the Option Units shall be
made on the Option Closing Date at the Representatives' election by wire
transfer in Federal (same day) funds or by certified or bank cashier's check(s)
in New York Clearing House funds, payable as follows: $7.52 per Option Unit
shall be deposited in the Trust Fund pursuant to the Trust Agreement and the
remaining proceeds shall be paid to the order of the Company upon delivery to
you (or through the facilities of DTC) of certificates (in form and substance
satisfactory to the Underwriters) representing the Option Units for the account
of the Underwriters. The certificates representing the Option Units to be
delivered will be in such denominations and registered in such names as the
Representatives request not less than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be, and will be made
available to the Representatives for inspection, checking and packaging at the
aforesaid office of the Company's transfer agent or correspondent not less than
one full business day prior to such Closing Date.
1.3 Representatives' Purchase Option.
1.3.1 Purchase Option. The Company hereby agrees to issue and sell
to the Representatives (and/or their designees) on the Effective Date an option
("Representatives' Purchase Option") for the purchase of an aggregate of 900,000
units (the "Representatives' Units") for an aggregate purchase price of $100.00.
Each of the Representatives' Units is identical to the Firm Units, except that
the Warrants included in the Representatives' Units ("Representatives Warrants")
have an exercise price of $7.50 (125% of the exercise price of the Warrants
included in the units sold to the public). The Representatives' Purchase Option
shall be exercisable, in whole or in part, commencing on the later of the
consummation of a Business Combination or one year from the Effective Date and
expiring on the five-year anniversary of the Effective Date at an initial
exercise price per Representatives' Unit of $10.00, which is equal to one
hundred and twenty five percent (125%) of the initial public offering price of a
Unit. The Representatives' Purchase Option, the Representatives' Units, the
Warrants included in the Representatives' Units (the "Representatives'
Warrants") and the shares of Common Stock issuable upon exercise of the
Representatives' Warrants are hereinafter referred to collectively as the
"Representatives' Securities." The Public Securities and the Representatives'
Securities are hereinafter referred to collectively as the "Securities." The
Representatives understand and agree that there are significant restrictions
against transferring the Representatives' Purchase Option during the first year
after the Effective Date, as set forth in Section 3 of the Representatives'
Purchase Option.
1.3.2 Delivery and Payment. Delivery and payment for the
Representatives' Purchase Option shall be made on the Closing Date. The Company
shall deliver to the Underwriters, upon payment therefor, certificates for the
Representatives' Purchase Option in the name or names and in such authorized
denominations as the Underwriters may request.
2. Representations and Warranties of the Company. The Company represents and
warrants to the Underwriters as follows:
2.1 Filing of Registration Statement.
2.1.1 Pursuant to the Act. The Company has filed with the Securities
and Exchange Commission ("Commission") a registration statement and an amendment
or amendments thereto, on Form S-1 (File No. 333-125687), including any related
preliminary prospectus (the "Preliminary Prospectus"), for the registration of
the Public Securities under the Securities Act of 1933, as amended ("Act"),
which registration statement and amendment or amendments have been prepared by
the Company in conformity with the requirements of the Act, and the rules and
regulations ("Regulations") of the Commission under the Act. Except as the
context may otherwise require, such registration statement, as amended, on file
with the Commission at the time the registration statement becomes effective
(including the prospectus, financial statements, schedules, exhibits and all
other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to paragraph
(b) of Rule 430A of the Regulations), is hereinafter called the "Registration
Statement," and the form of the final prospectus dated the Effective Date
included in the Registration Statement (or, if applicable, the form of final
prospectus filed with the Commission pursuant to Rule 424 of the Regulations),
is hereinafter called the "Prospectus." The Registration Statement has been
declared effective by the Commission on the date hereof.
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2.1.2 Pursuant to the Exchange Act. The Company has filed with the
Commission a Form 8-A (File Number 000- ) providing for the registration under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), of the
Units, the Common Stock and the Warrants. The registration of the Units, Common
Stock and Warrants under the Exchange Act has been declared effective by the
Commission on the date hereof.
2.2 No Stop Orders, Etc. Neither the Commission nor, to the best of the
Company's knowledge, any state regulatory authority has issued any order or
threatened to issue any order preventing or suspending the use of any
Preliminary Prospectus or has instituted or, to the best of the Company's
knowledge, threatened to institute any proceedings with respect to such an
order.
2.3 Disclosures in Registration Statement.
2.3.1 10b-5 Representation. At the time the Registration Statement
became effective and at all times subsequent thereto up to the Closing Date and
the Option Closing Date, if any, the Registration Statement and the Prospectus
will contain all material statements that are required to be stated therein in
accordance with the Act and the Regulations, and will in all material respects
conform to the requirements of the Act and the Regulations and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement
thereto, on such dates, will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) of the Regulations) and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied or will have been corrected
in the Prospectus to comply in all material respects with the applicable
provisions of the Act and the Regulations and did not and will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
representation and warranty made in this Section 2.3.1 does not apply to
statements made or statements omitted in reliance upon and in conformity with
written information furnished to the Company with respect to the Underwriters by
the Representatives expressly for use in the Registration Statement or
Prospectus or any amendment thereof or supplement thereto.
2.3.2 Disclosure of Agreements. The agreements and documents
described in the Registration Statement and the Prospectus conform to the
descriptions thereof contained therein and there are no agreements or other
documents required to be described in the Registration Statement or the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed. Each agreement or other
instrument (however characterized or described) to which the Company is a party
or by which its property or business is or may be bound or affected and (i) that
is referred to in the Prospectus, and (ii) is material to the Company's
business, has been duly and validly executed by the Company, is in full force
and effect in all material respects and is enforceable against the Company and,
to the Company's knowledge, the other parties thereto, in accordance with its
terms, except (x) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (z)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought, and none of
such agreements or instruments has been assigned by the Company, and neither the
Company nor, to the best of the Company's knowledge, any other party is in
breach or default thereunder and, to the best of the Company's knowledge, no
event has occurred that, with the lapse of time or the giving of notice, or
both, would constitute a breach or default thereunder. To the best of the
Company's knowledge, performance by the Company of the material provisions of
such agreements or instruments will not result in a violation of any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its assets or businesses, including, without limitation, those relating
to environmental laws and regulations.
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2.3.3 Prior Securities Transactions. No securities of the Company
have been sold by the Company or by or on behalf of, or for the benefit of, any
person or persons controlling, controlled by, or under common control with the
Company within the three years prior to the date hereof, except as disclosed in
the Registration Statement.
2.3.4 Regulations. The disclosures in the Registration Statement
concerning the effects of Federal, State and local regulation on the Company's
business as currently contemplated are correct in all material respects and do
not omit to state a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading.
2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. Since the respective dates as of
which information is given in the Registration Statement and the Prospectus,
except as otherwise specifically stated therein: (i) there has been no material
adverse change in the condition, financial or otherwise, or business prospects
of the Company; (ii) there have been no material transactions entered into by
the Company, other than as contemplated pursuant to this Agreement; and (iii) no
member of the Company's management has resigned from any position with the
Company.
2.4.2 Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information is given in the Registration Statement
and the Prospectus, and except as may otherwise be indicated or contemplated
herein or therein, the Company has not: (i) issued any securities or incurred
any liability or obligation, direct or contingent, for borrowed money; or (ii)
declared or paid any dividend or made any other distribution on or in respect to
its capital stock.
2.5 Independent Accountants. Xxxxxx & Kliegman LLP ("MK"), whose report is
filed with the Commission as part of the Registration Statement, are independent
accountants as required by the Act and the Regulations. MK has not, during the
periods covered by the financial statements included in the Prospectus, provided
to the Company any non-audit services, as such term is used in Section 10A(g) of
the Exchange Act.
2.6 Financial Statements. The financial statements, including the notes
thereto and supporting schedules included in the Registration Statement and
Prospectus fairly present the financial position, the results of operations and
cash flows of the Company at the dates and for the periods to which they apply;
and such financial statements have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
involved; and the supporting schedules included in the Registration Statement
present fairly the information required to be stated therein. The Registration
Statement discloses all material off-balance sheet transactions, arrangements,
obligations (including contingent obligations), and other relationships of the
Company with unconsolidated entities or other persons that may have a material
current or future effect on the Company's financial condition, changes in
financial condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or expenses.
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2.7 Authorized Capital; Options, Etc. The Company had at the date or dates
indicated in the Prospectus duly authorized, issued and outstanding
capitalization as set forth in the Registration Statement and the Prospectus.
Based on the assumptions stated in the Registration Statement and the
Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein. Except as set forth in, or contemplated by,
the Registration Statement and the Prospectus, on the Effective Date and on the
Closing Date, there will be no options, warrants, or other rights to purchase or
otherwise acquire any authorized, but unissued shares of Common Stock of the
Company or any security convertible into shares of Common Stock of the Company,
or any contracts or commitments to issue or sell shares of Common Stock or any
such options, warrants, rights or convertible securities.
2.8 Valid Issuance of Securities, Etc.
2.8.1 Outstanding Securities. All issued and outstanding securities
of the Company have been duly authorized and validly issued and are fully paid
and non-assessable; the holders thereof have no rights of rescission with
respect thereto, and are not subject to personal liability by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The authorized Common Stock conforms
in all material respects to all statements relating thereto contained in the
Registration Statement and the Prospectus. The offers and sales of the
outstanding Common Stock were at all relevant times either registered under the
Act and the applicable state securities or Blue Sky laws or, based in part on
the representations and warranties of the purchasers of such shares of Common
Stock, exempt from such registration requirements.
2.8.2 Securities Sold Pursuant to this Agreement. The Securities
have been duly authorized and, when issued and paid for, will be validly issued,
fully paid and non-assessable; the holders thereof are not and will not be
subject to personal liability by reason of being such holders; the Securities
are not and will not be subject to the preemptive rights of any holders of any
security of the Company or similar contractual rights granted by the Company;
and all corporate action required to be taken for the authorization, issuance
and sale of the Securities has been duly and validly taken. The Securities
conform in all material respects to all statements with respect thereto
contained in the Registration Statement. When issued, the Representatives'
Purchase Option, the Representatives' Warrants and the Warrants will constitute
valid and binding obligations of the Company to issue and sell, upon exercise
thereof and payment of the respective exercise prices therefor, the number and
type of securities of the Company called for thereby in accordance with the
terms thereof and such Representatives' Purchase Option, the Representatives'
Warrants and the Warrants are enforceable against the Company in accordance with
their respective terms, except: (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws; and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
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2.9 Registration Rights of Third Parties. Except as set forth in the
Prospectus, no holders of any securities of the Company or any rights
exercisable for or convertible or exchangeable into securities of the Company
have the right to require the Company to register any such securities of the
Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity and Binding Effect of Agreements. This Agreement, the
Warrant Agreement (as defined in Section 2.21 hereof), the Trust Agreement, the
Services Agreement (as defined in Section 3.7.2 hereof) and the Escrow Agreement
(as defined in Section 2.22.2 hereof) have been duly and validly authorized by
the Company and constitute, and the Representatives' Purchase Option, has been
duly 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 Representatives' Purchase
Option, the Trust Agreement, the Service Agreement and the Escrow Agreement, the
consummation by the Company of the transactions herein and therein contemplated
and the compliance by the Company with the terms hereof and thereof do not and
will not, with or without the giving of notice or the lapse of time or both: (i)
result in a breach of, or conflict with any of the terms and provisions of, or
constitute al default under, or result in the creation, modification,
termination or imposition of any lien, charge or encumbrance upon any property
or assets of the Company pursuant to the terms of any agreement or instrument to
which the Company is a party except pursuant to the Trust Agreement referred to
in Section 2.23 hereof; (ii) result in any violation of the provisions of the
Certificate of Incorporation or the By-Laws of the Company; or (iii) violate any
existing applicable law, rule, regulation, judgment, order or decree of any
governmental agency or court, domestic or foreign, having jurisdiction over the
Company or any of its properties or business.
2.12 No Defaults; Violations. No 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 Amended and Restated Certificate of Incorporation or Bylaws or in
violation of any material franchise, license, permit, applicable law, rule,
regulation, judgment or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
businesses.
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. The Company has all requisite corporate
power and authority, and has all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies that it needs as of the date hereof to conduct its business
purpose as described in the Prospectus. The disclosures in the Registration
Statement concerning the effects of federal, state and local regulation on this
offering and the Company's business purpose as currently contemplated are
correct in all material respects and do not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
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2.13.2 Transactions Contemplated Herein. The Company has all
requisite corporate power and authority to enter into this Agreement and to
carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have been
obtained. No consent, authorization or order of, and no filing with, any court,
government agency or other body is required for the valid issuance, sale and
delivery, of the Securities and the consummation of the transactions and
agreements contemplated by this Agreement, the Warrant Agreement, the
Representatives' Purchase Option, the Trust Agreement, the Services Agreement
and the Escrow Agreement and as contemplated by the Prospectus, except with
respect to applicable federal and state securities laws.
2.14 D&O Questionnaires. To the best of the Company's knowledge, all
information contained in the questionnaires (the "Questionnaires") completed by
each of the Company's stockholders immediately prior to the Offering (the
"Initial Stockholders") and provided to the Underwriters as an exhibit to his or
her Insider Letter (as defined in Section 2.22.1) is true and correct and the
Company has not become aware of any information which would cause the
information disclosed in the questionnaires completed by each Initial
Stockholder to become inaccurate and incorrect.
2.15 Litigation; Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding pending or, to the best of the Company's knowledge, threatened
against, or involving the Company or, to the best of the Company's knowledge,
any Initial Stockholder which has not been disclosed in the Registration
Statement or the Questionnaires.
2.16 Good Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification, except where
the failure to qualify would not have a material adverse effect on the Company..
2.17 Stop Orders. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or any part
thereof.
2.18 Transactions Affecting Disclosure to NASD.
2.18.1 Finder's Fees. Except as described in the Prospectus, there
are no claims, payments, arrangements, agreements or understandings relating to
the payment of a finder's, consulting or origination fee by the Company or any
Initial Stockholder with respect to the sale of the Securities hereunder or any
other arrangements, agreements or understandings of the Company or, to the best
of the Company's knowledge, any Initial Stockholder that may affect the
Underwriters' compensation, as determined by the National Association of
Securities Dealers, Inc. (the " NASD ").
2.18.2 Payments Within Twelve Months. The Company has not made any
direct or indirect payments (in cash, securities or otherwise): (i) to any
person, as a finder's fee, consulting fee or otherwise, in consideration of such
person raising capital for the Company or introducing to the Company persons who
raised or provided capital to the Company; (ii) to any NASD member; or (iii) to
any person or entity that has any direct or indirect affiliation or association
with any NASD member, within the twelve months prior to the Effective Date,
other than payments to the Representatives.
2.18.3 Use of Proceeds. None of the net proceeds of the Offering
will be paid by the Company to any participating NASD member or its affiliates,
except as specifically authorized herein and except as may be paid in connection
with a Business Combination as contemplated by the Prospectus.
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2.18.4 Insiders' NASD Affiliation. Based on questionnaires
distributed to such persons, other than Xxxxx X. Xxxxxx, no officer, director or
any beneficial owner of the Company's unregistered securities has any direct or
indirect affiliation or association with any NASD member. The Company will
advise the Representatives and its counsel if it learns that any officer,
director or owner of at least 5% of the Company's outstanding Common Shares is
or becomes an affiliate or associated person of an NASD member participating in
the offering.
2.19 Foreign Corrupt Practices Act. Neither the Company, nor to the
knowledge of the Company, any of the Initial Stockholders or any other person
acting on behalf of the Company has, directly or indirectly, given or agreed to
give any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier,
employee or agent of a customer or supplier, or official or employee of any
governmental agency or instrumentality of any government (domestic or foreign)
or any political party or candidate for office (domestic or foreign) or any
political party or candidate for office (domestic or foreign) or other person
who was, is, or may be in a position to help or hinder the business of the
Company (or assist it in connection with any actual or proposed transaction)
that (i) might subject the Company to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) if not given in the
past, might have had a material adverse effect on the assets, business or
operations of the Company as reflected in any of the financial statements
contained in the Prospectus or (iii) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company.
The Company's internal accounting controls and procedures are sufficient to
cause the Company to comply with the Foreign Corrupt Practices Act of 1977, as
amended.
2.20. Officers' Certificate. Any certificate signed by any duly authorized
officer of the Company, in connection with the Offering, and delivered to you or
to your counsel shall be deemed a representation and warranty by the Company to
the Underwriters as to the matters covered thereby.
2.21 Warrant Agreement. The Company has entered into a warrant agreement
with respect to the Warrants and the Representatives' Warrants with Continental
Stock Transfer & Trust Company substantially in the form filed as an exhibit to
the Registration Statement (the "Warrant Agreement"), providing for, among other
things, the payment of a warrant solicitation fee as contemplated by Section 3.9
hereof.
2.22 Agreements With Initial Stockholders.
2.22.1 Insider Letters. The Company has caused to be duly executed
legally binding and enforceable agreements (except (i) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally, (ii) as enforceability of any
indemnification, contribution or noncompete provision may be limited under the
federal and state securities laws, and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought) annexed as Exhibits 10.1 through 10.8, to
the Registration Statement (the "Insider Letter"), pursuant to which each of the
Initial Stockholders of the Company agree to certain matters, including but not
limited to, certain matters described as being agreed to by them under the
"Proposed Business" Section of the Prospectus.
2.22.2 Escrow Agreement . The Company has caused the Initial
Stockholders to enter into an escrow agreement (the "Escrow Agreement") with
Continental Stock Transfer & Trust Company (the "Escrow Agent") substantially in
the form annexed as Exhibit 10.10 to the Registration Statement, whereby the
Common Stock owned by each of the Initial Stockholders will be held in escrow by
the Escrow Agent, until the third anniversary of the Effective Date. During such
escrow period, the Initial Stockholders shall be prohibited from selling or
otherwise transferring such shares (except to spouses and children of Initial
Stockholders and trusts established for their benefit and as otherwise set forth
in the Escrow Agreement), but will retain the right to vote such shares and
receive any distributions with respect to such shares. The Escrow Agreement
shall not be amended, modified or otherwise changed without the prior written
consent of The Represenatives.
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2.23 Investment Management Trust Agreement. The Company has entered into
the Trust Agreement with respect to certain proceeds of the Offering
substantially in the form annexed as Exhibit 10.9 to the Registration Statement.
2.24 Covenants Not to Compete. No Initial Stockholder of the Company is
subject to any noncompetition agreement or non-solicitation agreement with any
employer or prior employer which could materially affect his ability to be an
Initial Stockholder, employee, officer and/or director of the Company.
2.25 Investments. No more than 45% of the "value" (as defined in Section
2(a)(41) of the Investment Company Act of 1940 ("Investment Company Act")) of
the Company's total assets consist of, and no more than 45% of the Company's net
income after taxes is derived from, securities other than "Government
securities" (as defined in Section 2(a)(16) of the Investment Company Act).
2.26 Subsidiaries. The Company does not own an interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business entity.
2.27 Related Party Transactions. There are no business relationships or
related party transactions involving the Company or any other person required to
be described in the Prospectus that have not been described as required.
3. Covenants of the Company. The Company covenants and agrees as follows:
3.1 Amendments to Registration Statement. The Company will deliver to the
Representatives, prior to filing, any amendment or supplement to the
Registration Statement or Prospectus proposed to be filed after the Effective
Date and not file any such amendment or supplement to which the Representatives
shall reasonably object in writing.
3.2 Federal Securities Laws .
3.2.1 Compliance. During the time when a Prospectus is required to
be delivered under the Act, the Company will use all reasonable efforts to
comply with all requirements imposed upon it by the Act, the Regulations and the
Exchange Act and by the regulations under the Exchange Act, as from time to time
in force, so far as necessary to permit the continuance of sales of or dealings
in the Public Securities in accordance with the provisions hereof and the
Prospectus. If at any time when a Prospectus relating to the Public Securities
is required to be delivered under the Act, any event shall have occurred as a
result of which, in the opinion of counsel for the Company or counsel for the
Underwriters, the Prospectus, as then amended or supplemented, includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representatives promptly and prepare and file with the
Commission, subject to Section 3.1 hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Act.
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3.2.2 Filing of Final Prospectus. The Company will file the
Prospectus (in form and substance satisfactory to the Representatives) with the
Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3 Exchange Act Registration. 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 will use its best efforts to maintain the
registration of the Units, Common Stock and Warrants under the provisions of the
Exchange Act and the Company will not deregister the Units under the Exchange
Act without the prior written consent of the Representatives.
3.3 Blue Sky Filings. The Company will endeavor in good faith, in
cooperation with the Representatives, at or prior to the time the Registration
Statement becomes effective, to qualify the Public Securities for offering and
sale under the securities laws of such jurisdictions as the Representatives may
reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. In each jurisdiction where such qualification
shall be effected, the Company will, unless the Representatives agree that such
action is not at the time necessary or advisable, use all reasonable efforts to
file and make such statements or reports at such times as are or may be required
by the laws of such jurisdiction.
3.4 Delivery to Underwriters of Prospectuses. The Company will deliver to
each of the several Underwriters, without charge, from time to time during the
period when the Prospectus is required to be delivered under the Act or the
Exchange Act such number of copies of each Preliminary Prospectus and the
Prospectus as such Underwriters may reasonably request and, as soon as the
Registration Statement or any amendment or supplement thereto becomes effective,
deliver to you two original executed Registration Statements, including
exhibits, and all post-effective amendments thereto and copies of all exhibits
filed therewith or incorporated therein by reference and all original executed
consents of certified experts.
3.5 Effectiveness and Events Requiring Notice to the Representatives. The
Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representatives immediately and confirm the notice
in writing: (i) of the effectiveness of the Registration Statement and any
amendment thereto; (ii) of the issuance by the Commission of any stop order or
of the initiation, or the threatening, of any proceeding for that purpose, when
the Company becomes aware of such; (iii) of the issuance by any state securities
commission of any proceedings for the suspension of the qualification of the
Public Securities for offering or sale in any jurisdiction or of the initiation,
or the threatening, of any proceeding for that purpose, when the Company becomes
aware of such; (iv) of the mailing and delivery to the Commission for filing of
any amendment or supplement to the Registration Statement or Prospectus; (v) of
the receipt of any comments or request for any additional information from the
Commission; and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review of Financial Statements. For a period of five years from the
Effective Date, or until such earlier time upon which the Company is required to
be liquidated, the Company, at its expense, shall cause its regularly engaged
independent certified public accountants to review (but not audit) the Company's
financial statements for each of the first three fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
Form 10-Q quarterly report and the mailing of quarterly financial information to
stockholders.
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3.7 Affiliated Transactions.
3.7.1 Business Combinations. The Company will not consummate a
Business Combination with any entity which is affiliated with any Initial
Stockholder unless the Company obtains an opinion from an independent investment
banking firm that the Business Combination is fair to the Company's stockholders
from a financial perspective.
3.7.2 Office Space and Administrative Services. The Company has
entered into an agreement with Platinum Partners Value Arbitrage, L.P., a
limited partnership owned and managed by an affiliate of Xxxx Xxxxxxxxx, the
Company's Chairman of the Board, pursuant to which the Company will pay such
entity approximately $7,500 per month for office space and other general and
administrative services including secretarial support (the "Services
Agreements").
3.7.3 Affiliate Compensation. Except as set forth in this Section
3.7, the Company shall not pay any Initial Stockholder or any of their
affiliates any fees or compensation from the Company, for services rendered to
the Company prior to, or in connection with, the consummation of a Business
Combination; provided that the Initial Stockholders shall be entitled to
reimbursement from the Company for their out-of-pocket expenses incurred in
connection with seeking and consummating a Business Combination.
3.8 Secondary Market Trading and Standard & Poor's. The Company will apply
to be included in Standard & Poor's Daily News and Corporation Records Corporate
Descriptions for a period ending on the earlier of five years from the
consummation of a Business Combination, listing of the Company's securities on a
national securities exchange or the Nasdaq Stock Market, or such earlier time as
the Company is liquidated. Promptly after the consummation of the Offering, the
Company shall take such steps as may be necessary to obtain a secondary market
trading exemption for the Company's securities in the State of California. The
Company shall also take such other action as may be reasonably requested by the
Representatives to obtain a secondary market trading exemption in such other
states as may be requested by the Representatives.
3.9 Warrant Solicitation Fees. The Company hereby engages Casimir, on a
non-exclusive basis, as its agent for the solicitation of the exercise of the
Warrants. The Company will (i) assist Casimir with respect to such solicitation,
if requested by Casimir, and (ii) at Casimir's request, provide Casimir, and
direct the Company's transfer and warrant agent to provide to Casimir, at the
Company's cost, lists of the record and, to the extent known, beneficial owners
of, the Warrants. Commencing one year from the Effective Date, the Company will
pay Casimir a commission of five percent of the exercise price of the Warrants
for each Warrant exercised, payable on the date of such exercise, on the terms
provided for in the Warrant Agreement, only if permitted under the rules and
regulations of the NASD and only to the extent that an investor who exercises
his Warrants specifically designates, in writing, that Casimir solicited his
exercise. Casimir may engage sub-agents in its solicitation efforts. The Company
agrees to disclose the arrangement to pay such solicitation fees to Casimir in
any prospectus used by the Company in connection with the registration of the
shares of Common Stock underlying the Warrants.
3.10 Financial Public Relations Firm. Promptly after the execution of a
definitive agreement for a Business Combination, the Company shall retain a
financial public relations firm reasonably acceptable to, but not affiliated
with, the Representatives for a term to be agreed upon by the Company and the
Representatives.
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3.11 Reports to the Representatives.
3.11.1 Periodic Reports, Etc. For a period of five years from the
Effective Date or until such earlier time upon which the Company is required to
be liquidated, the Company will furnish to the Representatives 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 Representatives: (i) a copy of each
periodic report the Company shall be required to file with the Commission; (ii)
a copy of every press release and every news item and article with respect to
the Company or its affairs which was released by the Company; (iii) a copy of
each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared by the
Company; (iv) five copies of each Registration Statement; (v) a copy of monthly
statements, if any, setting forth such information regarding the Company's
results of operations and financial position (including balance sheet, profit
and loss statements and data regarding outstanding purchase orders) as is
regularly prepared by management of the Company; and (vi) such additional
documents and information with respect to the Company and the affairs of any
future subsidiaries of the Company as the Representatives may from time to time
reasonably request; provided that the Representatives shall sign, if requested
by the Company, a Regulation FD compliant confidentiality agreement which is
reasonably acceptable to the Company, the Representatives and their respective
counsel in connection with the Representatives' receipt of such information.
3.11.2 Transfer Sheets. For a period of five years following the
Effective Date or until such earlier time upon which the Company is liquidated,
the Company shall retain a transfer and warrant agent acceptable to the
Representatives (the "Transfer Agent") and will furnish to the Underwriters at
the Company's sole cost and expense such transfer sheets of the Company's
securities as the Representative may request, including the daily and monthly
consolidated transfer sheets of the Transfer Agent and DTC. The Underwriters
acknowledge that American Stock Transfer & Trust Company is an acceptable
Transfer Agent.
3.11.3 Secondary Market Trading Survey. Until such time as the
Public Securities are listed or quoted, as the case may be, on the New York
Stock Exchange, the American Stock Exchange or quoted on the NASDAQ National
Market, or until such earlier time upon which the Company is required to be
liquidated, the Company shall engage Xxxxxxx Xxxxxx LLP ("Xxxxxxx Xxxxxx"), for
a one-time fee of $5,000 payable on the Closing Date, to deliver and update to
the Underwriters on a timely basis, but in any event on the Effective Date and
at the beginning of each fiscal quarter, a written report detailing those states
in which the Public Securities may be traded in non-issuer transactions under
the Blue Sky laws of the fifty States (the "Secondary Market Trading Survey").
3.11.4 Trading Reports. During such time as the Public Securities
are quoted on the NASD OTC Bulletin Board (or any successor trading market such
as the Bulletin Board Exchange) or the Pink Sheets, LLC (or similar publisher of
quotations) and no other automated quotation system, the Company shall provide
to the Representative, at its expense, such reports published by the NASD or the
Pink Sheets, LLC relating to price trading of the Public Securities, as the
Representatives shall reasonably request.
3.12 Disqualification of Form S-1. For a period equal to seven years from
the date hereof, or until such earlier time upon which the Company is required
to be liquidated, the Company will not take any action or actions which may
prevent or disqualify the Company's use of Form S-1 (or other appropriate form)
for the registration of the Warrants and the Representatives' Warrants under the
Act.
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3.13 Payment of Expenses.
3.13.1 General Expenses Related to the Offering. The Company hereby
agrees to pay on each of the Closing Date and the Option Closing Date, if any,
to the extent not paid at Closing Date, all expenses incident to the performance
of the obligations of the Company under this Agreement, including, but not
limited to: (i) the preparation, printing, filing and mailing (including the
payment of postage with respect to such mailing) of the Registration Statement,
the Preliminary and final Prospectuses and the printing and mailing of this
Agreement and related documents, including the cost of all copies thereof and
any amendments thereof or supplements thereto supplied to the Underwriters in
quantities as may be required by the Underwriters; (ii) the printing, engraving,
issuance and delivery of the Units, the shares of Common Stock and the Warrants
included in the Units and the Representatives' Purchase Option, including any
transfer or other taxes payable thereon; (iii) the qualification of the Public
Securities under state or foreign securities or Blue Sky laws, including the
costs of printing and mailing the "Preliminary Blue Sky Memorandum," and all
amendments and supplements thereto, fees and disbursements for the
Representatives' counsel retained for such purpose (such fees shall be capped at
$35,000 in the aggregate of which $15,000 has previously been paid) and a
one-time fee of $5,000 payable to the Representative's counsel for the
preparation of the Secondary Market Trading Survey; (iv) filing fees, costs and
expenses (including fees of Representatives' counsel and disbursements for the
Representatives' counsel) incurred in registering the Offering with the NASD;
(v) costs of placing "tombstone" advertisements in The Wall Street Journal , The
New York Times and a third publication to be selected by Casimir; (vi) fees and
disbursements of the transfer and warrant agent; (vii) the Company's expenses
associated with "due diligence" meetings arranged by the Representatives; (viii)
the preparation, binding and delivery of transaction "bibles," in form and style
reasonably satisfactory to the Representatives and transaction lucite cubes or
similar commemorative items in a style and quantity as reasonably requested by
the Representatives; and (ix) all other costs and expenses customarily borne by
an issuer incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section 3.13.1. The Company also
agrees that it will reimburse Representatives for the cost of the investigative
search firm of the Representatives' choice that conducted an investigation of
the principals of the Company, which costs are not expected to exceed $25,000.
The Representatives may deduct from the net proceeds of the Offering payable to
the Company on the Closing Date, or the Option Closing Date, if any, the
expenses set forth herein to be paid by the Company to the Representatives and
others. If the Offering contemplated by this Agreement is not consummated for
any reason whatsoever, except as a result of the Representatives' or any
Underwriter's breach or default with respect to any of its obligations described
in this Agreement, then the Company shall reimburse the Representatives in full
for its out of pocket accountable expenses actually incurred by the
Representatives, including, without limitation, its legal fees (up to a maximum
of $50,000).
3.13.2 Nonaccountable Expenses. The Company further agrees that, in
addition to the expenses payable pursuant to Section 3.13.1, on each of the
Closing Date, it will pay to the Representatives a nonaccountable expense
allowance equal to one percent (1%) of the gross proceeds received by the
Company from the sale of the Firm Units by deduction from the proceeds of the
Offering contemplated herein.
3.14 Application of Net Proceeds. The Company will apply the net proceeds
from the Offering received by it in a manner consistent with the application
described under the caption "Use of Proceeds" in the Prospectus.
3.15 Delivery of Earnings Statements to Security Holders. The Company will
make generally available to its security holders as soon as practicable, but not
later than the first day of the fifteenth full calendar month following the
Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.
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3.16 Notice to NASD. In the event any person or entity (regardless of any
NASD affiliation or association) is engaged to assist the Company in its search
for a merger candidate or to provide any other merger and acquisition services,
the Company will provide the following to the NASD and Representatives prior to
the consummation of the Business Combination: (i) complete details of all
services and copies of agreements governing such services; and (ii)
justification as to why the person or entity providing the merger and
acquisition services should not be considered an "underwriter and related
person" with respect to the Company's initial public offering, as such term is
defined in Rule 2710 of the NASD's Conduct Rules. The Company also agrees that
proper disclosure of such arrangement or potential arrangement will be made in
the proxy statement which the Company will file for purposes of soliciting
stockholder approval for the Business Combination.
3.17 Stabilization. Neither the Company, nor, to its knowledge, any of its
employees, directors or stockholders (without the consent of the
Representatives) has taken or will take, directly or indirectly, any action
designed to or that has constituted or that might reasonably be expected to
cause or result in, under the Exchange Act, or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Units.
3.18 Internal Controls. The Company will maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary in order to permit
preparation of financial statements in accordance with generally accepted
accounting principles and to maintain accountability for assets; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.19 Accountants. For a period of five years from the Effective Date or
until such earlier time upon which the Company is required to be liquidated, the
Company shall retain MK or other independent public accountants reasonably
acceptable to the Representatives.
3.20 Form 8-K. The Company shall, on the date hereof, retain its
independent public accountants to audit the financial statements of the Company
as of the Closing Date (the "Audited Financial Statements") reflecting the
receipt by the Company of the proceeds of the initial public offering. As soon
as the Audited Financial Statements become available, the Company shall
immediately file a Current Report on Form 8-K with the Commission, which Report
shall contain the Company's Audited Financial Statements.
3.21 NASD. The Company shall advise the NASD if it is aware that any 5% or
greater stockholder of the Company becomes an affiliate or associated person of
an NASD member participating in the distribution of the Company's Public
Securities.
3.22 Corporate Proceedings. All corporate proceedings and other legal
matters necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby shall have been done to the reasonable
satisfaction to counsel for the Underwriters.
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3.23 Investment Company. The Company shall cause the proceeds of the
Offering to be held in the Trust Fund to be invested only as set forth in the
Trust Agreement and as more fully disclosed in the Prospectus. The Company will
otherwise conduct its business in a manner so that it will not become subject to
the Investment Company Act. Furthermore, once the Company consummates a Business
Combination, it will be engaged in a business other than that of investing,
reinvesting, owning, holding or trading securities.
3.24 No Fiduciary Duty. 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, on the one hand, and the several
Underwriters, on the other, (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.
3.25 Colorado Trust Filing. In the event the Securities are registered in
the State of Colorado, the Company will cause a Colorado Form ES to be filed
with the Commissioner of the State of Colorado no less than 10 days prior to the
distribution of the Trust Fund in connection with a Business Combination and
will do all things necessary to comply with Section 00-00-000 and Rule 51-3.4 of
the Colorado Securities Act.
4. Conditions of Underwriters' Obligations. The obligations of the several
Underwriters to purchase and pay for the Units, as provided herein, shall be
subject to the continuing accuracy of 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 Xxxxxxx Xxxxxx.
4.1.2 NASD Clearance. By the Effective Date, the Representatives
shall have received clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriters as described in the Registration
Statement.
4.1.3 No Blue Sky Stop Orders. No order suspending the sale of the
Units in any jurisdiction designated by you pursuant to Section 3.3 hereof shall
have been issued on either on the Closing Date or the Option Closing Date, and
no proceedings for that purpose shall have been instituted or shall be
contemplated.
4.2 Company Counsel Matters.
4.2.1 Effective Date Opinion of Counsel. On the Effective Date, the
Representatives shall have received the favorable opinion of Xxxxx Xxxxx Xxxx
Xxxxxx Xxxxxxx and Xxxxx, P.C. ("Mintz Xxxxx"), counsel to the Company, dated
the Effective Date, addressed to the Representatives and in form and substance
satisfactory to the Representatives to the effect that:
(i) The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation. The Company is duly qualified and licensed and in good standing
as a foreign corporation in each jurisdiction in which its ownership or leasing
of any properties or the character of its operations requires such qualification
or licensing, except where the failure to qualify would not have a material
adverse effect on the Company.
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(ii) All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof are not subject to personal liability by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any stockholder of the Company arising by operation of law
or under the Certificate of Incorporation or Bylaws of the Company. The offers
and sales of the outstanding Common Stock were at all relevant times either
registered under the Act and the applicable state securities or Blue Sky Laws or
exempt from such registration requirements. The authorized and outstanding
capital stock of the Company is as set forth in the Prospectus.
(iii) The Securities have been duly authorized and, when
issued and paid for, will be validly issued, fully paid and non-assessable; the
holders thereof are not and will not be subject to personal liability by reason
of being such holders. The Securities are not and will not be subject to the
preemptive rights of any holders of any security of the Company arising under
the Delaware General Corporation Law or under the Certificate of Incorporation
or Bylaws of the Company. When issued, the Representatives' Purchase Option, the
Representatives' Warrants and the Warrants will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment
therefor, the number and type of securities of the Company called for thereby
and such Warrants, the Representatives' Purchase Option, and the
Representatives' Warrants, when issued, in each case, are enforceable against
the Company in accordance with their respective terms, except: (a) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally; (b) as enforceability of any
indemnification or contribution provision may be limited under the federal and
state securities laws; and (c) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The certificates representing the Securities are in due and
proper form.
(iv) This Agreement, the Warrant Agreement, the Services
Agreements, the Trust Agreement and the Escrow Agreement have each been duly and
validly authorized and, when executed and delivered by the Company, constitute,
and the Representatives' Purchase Option has been duly and validly authorized by
the Company and, when executed and delivered, will constitute, the valid and
binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except: (a) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; (b) as enforceability of any indemnification or
contribution provisions may be limited under the federal and state securities
laws; and (c) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(v) The execution, delivery and performance of this Agreement,
the Warrant Agreement, the Representatives' Purchase Option, the Escrow
Agreement, the Trust Agreement and the Services Agreements, the issuance and
sale of the Securities, the consummation of the transactions contemplated hereby
and thereby, and compliance by the Company with the terms and provisions hereof
and thereof, do not and will not, with or without the giving of notice or the
lapse of time, or both, (a) to such counsel's knowledge, conflict with, or
result in a breach of, any of the terms or provisions of, or constitute a
default under, or result in the creation or modification of any lien, security
interest, charge or encumbrance upon any of the properties or assets of the
Company pursuant to the terms of, any mortgage, deed of trust, note, indenture,
loan, contract, commitment or other agreement or instrument filed as an exhibit
to the Registration Statement, (b) result in any violation of the provisions of
the Certificate of Incorporation or the By-Laws of the Company, or (c) to such
counsel's knowledge, violate any statute or any judgment, order or decree, rule
or regulation applicable to the Company of any court, domestic or foreign, or of
any federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company, its properties or assets.
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(vi) The Registration Statement, each Preliminary Prospectus
and the Prospectus and any post-effective amendments or supplements thereto
(other than the financial statements included therein, as to which no opinion
need be rendered) each as of their respective dates complied as to form in all
material respects with the requirements of the Act and Regulations. The
Securities and each agreement filed as an exhibit to the Registration Statement
conform in all material respects to the description thereof contained in the
Registration Statement and the Prospectus. No United States or state statute or
regulation required to be described in the Prospectus is not described as
required (except as to the Blue Sky laws of the various states, as to which such
counsel expresses no opinions), nor are any contracts or documents of a
character required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement not so
described or filed as required (except for the contracts and documents described
in the "Underwriting" section of the Registration Statement, as to which such
counsel expresses no opinions).
(vii) The opinion of counsel shall further include a statement
to the effect that counsel has participated in conferences with officers and
other representatives of the Company, representatives of the independent public
accountants for the Company and representatives of the Underwriters at which the
contents of the Registration Statement, the Prospectus and related matters were
discussed and although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and Prospectus (except as otherwise set
forth in this opinion), no facts have come to the attention of such counsel
which should lead them to believe that either the Registration Statement or the
Prospectus or any amendment or supplement thereto, as of the date of such
opinion contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion with
respect to the financial statements and schedules and other financial and
statistical data included in the Registration Statement or Prospectus).
(viii) The Registration Statement is effective under the Act.
To such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose have
been instituted or are pending or threatened under the Act or applicable state
securities laws.
(ix) To such counsel's knowledge, there is no action, suit or
proceeding before or by any court of governmental agency or body, domestic or
foreign, now pending, or threatened against the Company that is required to be
described in the Registration Statement.
4.2.2 Intentionally Left Blank.
4.2.3 Closing Date and Option Closing Date Opinion of Counsel. On
each of the Closing Date and the Option Closing Date, if any, the
Representatives shall have received the favorable opinion of Xxxxx Xxxxx, dated
the Closing Date or the Option Closing Date, as the case may be set forth above,
addressed to the Representatives and in form and substance reasonably
satisfactory to the Representatives, confirming as of the Closing Date and, if
applicable, the Option Closing Date, the statements made by Xxxxx Xxxxx in its
opinion delivered on the Effective Date.
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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 Representatives) of other counsel reasonably acceptable to the
Representatives, familiar with the applicable laws; and (ii) as to matters of
fact, to the extent they deem proper, on certificates or other written
statements of officers of the Company and officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company, provided that copies of any such statements or
certificates shall be delivered to the Underwriters' counsel if requested. The
opinion of counsel for the Company and any opinion relied upon by such counsel
for the Company shall include a statement to the effect that it may be relied
upon by counsel for the Underwriters in its opinion delivered to the
Underwriters.
4.3 Cold Comfort Letter. At the time this Agreement is executed, and at
each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representatives and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to Xxxxxxx
Xxxxxx from MK dated, respectively, as of the date of this Agreement and as of
the Closing Date and the Option Closing Date, if any:
(i) Confirming that they are independent accountants with
respect to the Company within the meaning of the Act and the applicable
Regulations and that they have not, during the periods covered by the financial
statements included in the Prospectus, provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange Act;
(ii) Stating that in their opinion the financial statements of
the Company included in the Registration Statement and Prospectus comply as to
form in all material respects with the applicable accounting requirements of the
Act and the published Regulations thereunder;
(iii) Stating that, on the basis of a limited review which
included a reading of the latest available unaudited interim financial
statements of the Company (with an indication of the date of the latest
available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and board of directors and the various
committees of the board of directors, consultations with officers and other
employees of the Company responsible for financial and accounting matters and
other specified procedures and inquiries, nothing has come to their attention
which would lead them to believe that: (a) the unaudited financial statements of
the Company included in the Registration Statement do not comply as to form in
all material respects with the applicable accounting requirements of the Act and
the Regulations or are not fairly presented in conformity with generally
accepted accounting principles applied on a basis substantially consistent with
that of the audited financial statements of the Company included in the
Registration Statement; (b) at a date not later than five days prior to the
Effective Date, Closing Date or Option Closing Date, as the case may be, there
was any change in the capital stock or long-term debt of the Company, or any
decrease in the stockholders' equity of the Company as compared with amounts
shown in the , 2005 balance sheet included in the Registration Statement, other
than as set forth in or contemplated by the Registration Statement, or, if there
was any decrease, setting forth the amount of such decrease, and (c) during the
period from , 2005 to a specified date not later than five days prior to the
Effective Date, Closing Date or Option Closing Date, as the case may be, there
was any decrease in revenues, net earnings or net earnings per share of Common
Stock, in each case as compared with the corresponding period in the preceding
year and as compared with the corresponding period in the preceding quarter,
other than as set forth in or contemplated by the Registration Statement, or, if
there was any such decrease, setting forth the amount of such decrease;
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(iv) Setting forth, at a date not later than five days prior
to the Effective Date, the amount of liabilities of the Company (including a
break-down of commercial papers and notes payable to banks);
(v) Stating that they have compared specific dollar amounts,
numbers of shares, percentages of revenues and earnings, statements and other
financial information pertaining to the Company set forth in the Prospectus in
each case to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including work
sheets, of the Company and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in agreement;
(vi) Stating that they have not during the immediately
preceding five year period brought to the attention of the Company's management
any reportable condition related to internal structure, design or operation as
defined in the Statement on Auditing Standards No. 60 "Communication of Internal
Control Structure Related Matters Noted in an Audit," in the Company's internal
controls; and
(vii) Statements as to such other matters incident to the
transaction contemplated hereby as you may reasonably request.
4.4 Officers' Certificates.
4.4.1 Officers' Certificate. At each of the Closing Date and the
Option Closing Date, if any, the Representatives shall have received a
certificate of the Company signed by the Chairman of the Board or the President
and the Secretary or Assistant Secretary of the Company, dated the Closing Date
or the Option Closing Date, as the case may be, respectively, to the effect that
the Company has performed all covenants and complied with all conditions
required by this Agreement to be performed or complied with by the Company prior
to and as of the Closing Date, or the Option Closing Date, as the case may be,
and that the conditions set forth in Section 4.5 hereof have been satisfied as
of such date and that, as of Closing Date and the Option Closing Date, as the
case may be, the representations and warranties of the Company set forth in
Section 2 hereof are true and correct. In addition, the Representatives will
have received such other and further certificates of officers of the Company as
the Representatives may reasonably request.
4.4.2 Secretary's Certificate. At each of the Closing Date and the
Option Closing Date, if any, the Representatives shall have received a
certificate of the Company signed by the Secretary or Assistant Secretary of the
Company, dated the Closing Date or the Option Date, as the case may be,
respectively, certifying: (i) that the By-Laws and Certificate of Incorporation
of the Company are true and complete, have not been modified and are in full
force and effect; (ii) that the resolutions relating to the public offering
contemplated by this Agreement are in full force and effect and have not been
modified; (iii) all correspondence between the Company or its counsel and the
Commission; and (iv) as to the incumbency of the officers of the Company. The
documents referred to in such certificate shall be attached to such certificate.
4.5 No Material Changes. Prior to and on each of the Closing Date and the
Option Closing Date, if any: (i) there shall have been no material adverse
change or development involving a prospective material adverse change in the
condition or prospects or the business activities, financial or otherwise, of
the Company from the latest dates as of which such condition is set forth in the
Registration Statement and Prospectus; (ii) no action suit or proceeding, at law
or in equity, shall have been pending or, to the knowledge of the Company,
threatened against the Company or any Initial Stockholder before or by any court
or federal or state commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may materially adversely affect the
business, operations, prospects or financial condition or income of the Company,
except as set forth in the Registration Statement and Prospectus; (iii) no stop
order shall have been issued under the Act and no proceedings therefor shall
have been initiated or threatened by the Commission; and (iv) the Registration
Statement and the Prospectus and any amendments or supplements thereto shall
contain all material statements which are required to be stated therein in
accordance with the Act and the Regulations and shall conform in all material
respects to the requirements of the Act and the Regulations, and neither the
Registration Statement nor the Prospectus nor any amendment or supplement
thereto shall contain any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
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4.6 Delivery of Agreements.
4.6.1 Effective Date Deliveries. On the Effective Date, the Company
shall have delivered to the Representatives executed copies of the Escrow
Agreement, the Trust Agreement, the Warrant Agreement, the Services Agreement
and all of the Insider Letters.
4.6.2 Closing Date Deliveries. On the Closing Date, the Company
shall have delivered to the Representatives executed copies of the
Representatives' Purchase Option.
4.7 Opinion of Counsel for the Underwriters. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to Xxxxxxx Xxxxxx and you shall have received from such counsel a favorable
opinion, dated the Closing Date and the Option Closing Date, if any, with
respect to such of these proceedings as you may reasonably require. On or prior
to the Effective Date, the Closing Date and the Option Closing Date, as the case
may be, counsel for the Underwriters shall have been furnished such documents,
certificates and opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in this Section
4.7, or in order to evidence the accuracy, completeness or satisfaction of any
of the representations, warranties or conditions herein contained.
4.8 Secondary Market Trading Survey. On the Closing Date, the
Representative shall have received the Secondary Market Trading Survey from
Xxxxxxx Krooks.
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 (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, whether
arising out of any action between any of the Underwriters and the Company or
between any of the Underwriters and any third party or otherwise) to which they
or any of them may become subject under the Act, the Exchange Act or any other
statute or at common law or otherwise or under the laws of foreign countries,
arising out of or based upon any untrue statement or alleged untrue statement of
a material fact contained in (i) any Preliminary Prospectus, the Registration
Statement or the Prospectus (as from time to time each may be amended and
supplemented); (ii) in any post-effective amendment or amendments or any new
registration statement and prospectus in which is included securities of the
Company issued or issuable upon exercise of the Representatives' Purchase
Option; or (iii) any application or other document or written communication (in
this Section 5 collectively called "application") executed by the Company or
based upon written information furnished by the Company in any jurisdiction in
order to qualify the Units under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq or any securities
exchange; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company with respect to an Underwriter
by or on behalf of such Underwriter expressly for use in any Preliminary
Prospectus, the Registration Statement or Prospectus, or any amendment or
supplement thereof, or in any application, as the case may be. With respect to
any untrue statement or omission or alleged untrue statement or omission made in
the Preliminary Prospectus, the indemnity agreement contained in this paragraph
shall not inure to the benefit of any Underwriter to the extent that any loss,
liability, claim, damage or expense of such Underwriter results from the fact
that a copy of the Prospectus was not given or sent to the person asserting any
such loss, liability, claim or damage at or prior to the written confirmation of
sale of the Securities to such person as required by the Act and the
Regulations, and if the untrue statement or omission has been corrected in the
Prospectus, unless such failure to deliver the Prospectus was a result of
non-compliance by the Company with its obligations under Section 3.4 hereof. The
Company agrees promptly to notify the Representatives of the commencement of any
litigation or proceedings against the Company or any of its officers, directors
or controlling persons in connection with the issue and sale of the Securities
or in connection with the Registration Statement or Prospectus.
21
5.1.2 Procedure. If any action is brought against an Underwriter or
controlling person in respect of which indemnity may be sought against the
Company pursuant to Section 5.1.1, such Underwriter shall promptly notify the
Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and reasonable fees
of counsel (subject to the reasonable approval of such Underwriter) and payment
of actual expenses. Such Underwriter or controlling person shall have the right
to employ its or their own counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Underwriter or such controlling
person unless: (i) the employment of such counsel at the expense of the Company
shall have been authorized in writing by the Company in connection with the
defense of such action; (ii) the Company shall not have employed counsel to have
charge of the defense of such action; or (iii) such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it or
them which are different from or additional to those available to the Company
(in which case the Company shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events the reasonable fees and expenses of not more than one additional firm of
attorneys selected by the Underwriter and/or controlling person shall be borne
by the Company. Notwithstanding anything to the contrary contained herein, if
the Underwriter or controlling person shall assume the defense of such action as
provided above, the Company shall have the right to approve the terms of any
settlement of such action which approval shall not be unreasonably withheld.
5.2 Indemnification of the Company. Each Underwriter, severally and not
jointly, agrees to indemnify and hold harmless the Company, its directors,
officers and employees, agents and each other person 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 any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment or supplement thereto or in any
application, in reliance upon, and in strict conformity with, written
information furnished to the Company with respect to such Underwriter by or on
behalf of the Underwriter expressly for use in such Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or supplement thereto or
in any such application. In case any action shall be brought against the Company
or any other person so indemnified based on any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or supplement thereto or
any application, and in respect of which indemnity may be sought against any
Underwriter, such Underwriter shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the several Underwriters by the provisions of Section
5.1.2.
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5.3 Contribution.
5.3.1 Contribution Rights. In order to provide for just and
equitable contribution under the Act in any case in which (i) any person
entitled to indemnification under this Section 5 makes claim for indemnification
pursuant hereto but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 5 provides for indemnification in such case, or (ii) contribution
under the Act, the Exchange Act or otherwise may be required on the part of any
such person in circumstances for which indemnification is provided under this
Section 5, then, and in each such case, the Company and the Underwriters shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
the Underwriters, as incurred, in such proportions that the Underwriters are
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance;
provided, that, no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Notwithstanding
the provisions of this Section 5.3.1, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Public Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages that such Underwriter
has otherwise been required to pay in respect of such losses, liabilities,
claims, damages and expenses. For purposes of this Section, each director,
officer and employee of an Underwriter or the Company, as applicable, and each
person, if any, who controls an Underwriter or the Company, as applicable,
within the meaning of Section 15 of the Act shall have the same rights to
contribution as the Underwriters or the Company, as applicable.
5.3.2 Contribution Procedure. Within fifteen days after receipt by
any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The contribution provisions contained in
this Section are intended to supersede, to the extent permitted by law, any
right to contribution under the Act, the Exchange Act or otherwise available.
The Underwriters' obligations to contribute pursuant to this Section 5.3 are
several and not joint.
23
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 3.15 and 5 hereof) or the several Underwriters (except as
provided in Section 5 hereof); provided , however , that if such default occurs
with respect to the Option Units, this Agreement will not terminate as to the
Firm Units; and provided further that nothing herein shall relieve a defaulting
Underwriter of its liability, if any, to the other several Underwriters and to
the Company for damages occasioned by its default hereunder.
6.3 Postponement of Closing Date. In the event that the Firm Units or
Option Units to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, you or the Company shall have the right to postpone the Closing
Date or Option Closing Date for a reasonable period, but not in any event
exceeding five business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment to the Registration Statement or the Prospectus that in the opinion of
counsel for the Underwriters may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 6 with like effect as if it had originally been a party to
this Agreement with respect to such Securities.
7. Right to Appoint Observer. For a period of two years from the Effective Date,
upon notice from the Representatives to the Company, the Representatives shall
have the right to send one 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, inclusive of the prohibitions on xxxxxxx
xxxxxxx as provided by the federal and state securities laws, which is
reasonably acceptable to the representatives, the Company and their counsel in
connection with such Representatives' attendance at meetings of the Board of
Directors; and provided further that upon written notice to the representatives,
the Company may exclude the representative from meetings where, in the written
opinion of counsel for the Company, the Representatives' presence would destroy
the attorney-client privilege. The Company agrees to give the representative
written notice of each such meeting and to provide the representative with an
agenda and minutes of the meeting no later than it gives such notice and
provides such items to the other directors, and reimburse the representative of
the representatives for its reasonable out-of-pocket expenses incurred in
connection with its attendance at the meeting, including but not limited to,
food, lodging and transportation.
24
8. Additional Covenants.
8.1 Intentionally Omitted.
8.2 Additional Shares or Options. The Company hereby agrees that until the
Company consummates a Business Combination (as such term is defined in the
Registration Statement), it shall not issue any shares of Common Stock or any
options or other securities convertible into Common Stock, or any shares of
Preferred Stock which participate in any manner in the Trust Fund or which vote
as a class with the Common Stock on a Business Combination.
8.3 Trust Fund Waiver Letters. The Company hereby agrees that it will not
commence its due diligence investigation of any operating business which the
Company seeks to acquire ("Target Business") or obtain the services of any
vendor unless and until such Target Business or vendor acknowledges in writing,
whether through a letter of intent, memorandum of understanding or other similar
document (and subsequently acknowledges the same in any definitive document
replacing any of the foregoing), that (a) it has read the Prospectus and
understands that the Company has established the Trust Fund, initially in an
amount of $95,160,000 (without giving effect to any exercise of the
Over-allotment Option) for the benefit of the Public Stockholders and that the
Company may disburse monies from the Trust Fund only (i) to the Public
Stockholders in the event they elect to convert their IPO Shares (as defined
below in Section 8.8) or the liquidation of the Company or (ii) to the Company
after it consummates a Business Combination and (b) for and in consideration of
the Company (1) agreeing to evaluate such Target Business for purposes of
consummating a Business Combination with it or (2) agreeing to engage the
services of the vendor, as the case may be, such Target Business or vendor
agrees that it does not have any right, title, interest or claim of any kind in
or to any monies in the Trust Fund ("Claim") and waives any Claim it may have in
the future as a result of, or arising out of, any negotiations, contracts or
agreements with the Company and will not seek recourse against the Trust Fund
for any reason whatsoever. The foregoing letters shall substantially be in the
form attached hereto as Exhibit A and Exhibit B , respectively. Furthermore,
each officer and director of the Company shall execute a waiver letter in the
form attached hereto as Exhibit C.
8.4 Insider Letters. The Company shall not take any action or omit to take
any action which would cause a breach of any of the Insider Letters executed
between each Initial Stockholder and Casimir and will not allow any amendments
to, or waivers of, such Insider Letters without the prior written consent of the
Representatives.
8.5 Certificate of Incorporation and By-Laws. The Company shall not take
any action or omit to take any action that would cause the Company to be in
breach or violation of its Certificate of Incorporation or By-Laws. Prior to the
consummation of a Business Combination, the Company will not amend its
Certificate of Incorporation without the prior written consent of the
Representatives.
8.6 Blue Sky Requirements. The Company shall provide counsel to the
Representatives with ten copies of all proxy information and all related
material filed with the Commission in connection with a Business Combination
concurrently with such filing with the Commission. In addition, the Company
shall furnish any other state in which its initial public offering was
registered, such information as may be requested by such state.
8.7 Intentionally Omitted.
8.8 Acquisition/Liquidation Procedure. The Company agrees: (i) that, prior
to the consummation of any Business Combination, it will submit such transaction
to the Company's stockholders for their approval ("Business Combination Vote")
even if the nature of the acquisition is such as would not ordinarily require
stockholder approval under applicable state law; and (ii) that, in the event
that the Company does not effect a Business Combination within 18 months from
the consummation of this Offering (subject to extension for an additional
six-month period, as described in the Prospectus), the Company will be
liquidated and will distribute to all holders of IPO Shares (defined below) an
aggregate sum equal to the Company's "Liquidation Value." With respect to the
Business Combination Vote, the Company shall cause all of the Initial
Stockholders to vote the shares of Common Stock owned by them immediately prior
to this Offering in accordance with the vote of the holders of a majority of the
IPO Shares present, in person or by proxy, at a meeting of the Company's
stockholders called for such purpose. At the time the Company seeks approval of
any potential Business Combination, the Company will offer each holder of the
Company's Common Stock issued in this Offering (the "IPO Shares") the right to
convert their IPO Shares at a per share price equal to the amount in the Trust
Fund (inclusive of any interest income therein) on the record date (the
"Conversion Price") for determination of stockholders entitled to vote upon the
proposal to approve such Business Combination (the "Record Date") divided by the
total number of IPO Shares. The Company's "Liquidation Value" shall mean the
Company's book value, as determined by the Company and audited by MK. In no
event, however, will the Company's Liquidation Value be less than the Trust
Fund, inclusive of any net interest income thereon. If holders of less than 20%
in interest of the Company's IPO Shares elect to convert their IPO Shares, the
Company may, but will not be required to, proceed with such Business
Combination. If the Company elects to so proceed, it will convert shares, based
upon the Conversion Price, from those holders of IPO Shares who affirmatively
requested such conversion and who voted against the Business Combination. Only
holders of IPO Shares shall be entitled to receive liquidating distributions and
the Company shall pay no liquidating distributions with respect to any other
shares of capital stock of the Company. If holders of 20% or more in interest of
the IPO Shares, who vote against approval of any potential Business Combination,
elect to convert their IPO Shares, the Company will not proceed with such
Business Combination and will not convert such shares.
25
8.9 Rule 419. The Company agrees that it will use its best efforts to
prevent the Company from becoming subject to Rule 419 under the Act prior to the
consummation of any Business Combination, including, but not limited to, using
its best efforts to prevent any of the Company's outstanding securities from
being deemed to be a "xxxxx stock" as defined in Rule 3a-51-1 under the Exchange
Act during such period.
8.10 Presentation of Potential Target Businesses. The Company shall cause
each of the Initial Stockholders to agree that, in order to minimize potential
conflicts of interest which may arise from multiple affiliations, the Initial
Stockholders will present to the Company for its consideration, prior to
presentation to any other person or company, any suitable opportunity to acquire
an operating business, until the earlier of the consummation by the Company of a
Business Combination, the liquidation of the Company or until such time as the
Initial Stockholders cease to be an officer or director of the Company, subject
to any pre-existing fiduciary obligations the Initial Stockholders might have.
8.11 Target Net Assets. The Company agrees that the initial Target
Business that it acquires must have a fair market value equal to at least 80% of
the Company's net assets at the time of such acquisition. The fair market value
of such business must be determined by the Board of Directors of the Company
based upon standards generally accepted by the financial community, such as
actual and potential sales, earnings and cash flow and book value. If the Board
of Directors of the Company is not able to independently determine that the
target business has a fair market value of at least 80% of the Company's fair
market value at the time of such acquisition, the Company will obtain an opinion
from an unaffiliated, independent investment banking firm which is a member of
the NASD with respect to the satisfaction of such criteria. The Company is not
required to obtain an opinion from an investment banking firm as to the fair
market value if the Company's Board of Directors independently determines that
the Target Business does have sufficient fair market value.
26
9. Representations and Agreements to Survive Delivery. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Closing Date or the Option Closing Date, if any, and such
representations, warranties and agreements of the Underwriters and Company,
including the indemnity agreements contained in Section 5 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company or any controlling person, and
shall survive termination of this Agreement or the issuance and delivery of the
Securities to the several Underwriters until the earlier of the expiration of
any applicable statute of limitations and the seventh anniversary of the later
of the Closing Date or the Option Closing Date, if any, at which time the
representations, warranties and agreements shall terminate and be of no further
force and effect.
10. Effective Date of This Agreement and Termination Thereof.
10.1 Effective Date. This Agreement shall become effective on the
Effective Date at the time the Registration Statement is declared effective by
the Commission.
10.2 Termination. You shall have the right to terminate this Agreement at
any time prior to any Closing Date, (i) if any domestic or international event
or act or occurrence has materially disrupted, or in your opinion will in the
immediate future materially disrupt, general securities markets in the United
States; or (ii) if trading on the New York Stock Exchange, the American Stock
Exchange, the Boston Stock Exchange or on the NASD OTC Bulletin Board (or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the NASD OTC Bulletin Board or by order of the
Commission or any other government authority having jurisdiction, or (iii) if
the United States shall have become involved in a new war or an increase in
major hostilities, or (iv) if a banking moratorium has been declared by a New
York State or federal authority, or (v) if a moratorium on foreign exchange
trading has been declared which materially adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss
by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Units, or (vii) if any of the Company's representations, warranties or
covenants hereunder are breached, or (viii) if the Representatives 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 Representatives' judgment
would make it impracticable to proceed with the offering, sale and/or delivery
of the Units or to enforce contracts made by the Underwriters for the sale of
the Units.
10.3 Expenses. In the event that this Agreement shall not be carried out
for any reason whatsoever, within the time specified herein or any extensions
thereof pursuant to the terms herein, the obligations of the Company to pay the
out of pocket expenses related to the transactions contemplated herein shall be
governed by Section 3.13 hereof.
10.4 Indemnification. Notwithstanding any contrary provision contained in
this Agreement, any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way effected by, such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
27
11. Miscellaneous.
11.1 Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telecopied and confirmed and shall be deemed given when so delivered or
telecopied and confirmed or if mailed, two days after such mailing
If to the Representatives:
Casimir Capital, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxx, CEO
Xxxxxx Xxxxxxxxxx & Co.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx, Global Head of Investment Banking
Copy to:
Xxxxxxx Xxxxxx LLP
000 Xxxxx Xxxxxx, 00 xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxx, Esq.
Xxxxxx X. Xxxxxxx, Esq.
If to the Company:
Platinum Energy Resources, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, Chairman of the Board
Copy to:
Xxxxx Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx, P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxx, Esq.
11.2 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
11.3 Amendment. This Agreement may only be amended by a written instrument
executed by each of the parties hereto.
11.4 Entire Agreement. This Agreement (together with the other agreements
and documents being delivered pursuant to or in connection with this Agreement)
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof, and supersede all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
28
11.5 Binding Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representatives, the Underwriters, the Company and
the controlling persons, directors and officers referred to in Section 5 hereof,
and their respective successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provisions
herein contained.
11.6 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving
effect to conflict of laws. The Company hereby agrees that any action,
proceeding or claim against it arising out of, relating in any way to this
Agreement shall be brought and enforced in the courts of the State of New York
of the United States of America for the Southern District of New York, and
irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive.
The Company hereby waives any objection to such exclusive jurisdiction and that
such courts represent an inconvenient forum. Any such process or summons to be
served upon the Company may be served by transmitting a copy thereof by
registered or certified mail, return receipt requested, postage prepaid,
addressed to it at the address set forth in Section 10 hereof. Such mailing
shall be deemed personal service and shall be legal and binding upon the Company
in any action, proceeding or claim. The Company agrees that the prevailing
party(ies) in any such action shall be entitled to recover from the other
party(ies) all of its reasonable attorneys' fees and expenses relating to such
action or proceeding and/or incurred in connection with the preparation
therefor.
11.7 Execution in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement, and shall become effective when one
or more counterparts has been signed by each of the parties hereto and delivered
to each of the other parties hereto.
11.8 Waiver, Etc. The failure of any of the parties hereto to at any time
enforce any of the provisions of this Agreement shall not be deemed or construed
to be a waiver of any such provision, nor to in any way effect the validity of
this Agreement or any provision hereof or the right of any of the parties hereto
to thereafter enforce each and every provision of this Agreement. No waiver of
any breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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,
PLATINUM ENERGY RESOURCES, INC.
By: ______________________
Xxxx Xxxxxxxxx
Chairman
Accepted on the date first above written:
29
CASIMIR CAPITAL L.P.
By: ________________
Xxxxxxx Xxxxx
CEO
CANTOR XXXXXXXXXX & CO.
By: ________________
Xxxx Xxxxxx
Global Head of Investment Banking
30
SCHEDULE I
PLATINUM ENERGY RESOURCES, INC.
18,000,000 Units
Underwriter Number of Firm
Units to be
Purchased
Casimir Capital, X.X.
Xxxxxx Xxxxxxxxxx & Co.
18,000,000
31
EXHIBIT A
Platinum Energy Resources, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, Chairman
Gentlemen:
Reference is made to the Final Prospectus of Platinum Energy Resources, Inc.
("Platinum"), dated , 2005 (the "Prospectus"). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
We have read the Prospectus and understand that Platinum has established the
Trust Fund, initially in an amount of $131,760,000 the benefit of the Public
Stockholders and that Platinum may disburse monies from the Trust Fund only (i)
to the Public Stockholders in the event of the redemption of their shares or the
liquidation of Platinum or (ii) to Platinum after it consummates a Business
Combination.
For and in consideration of Platinum agreeing to evaluate the undersigned for
purposes of consummating a Business Combination with it, the undersigned hereby
agrees that it does not have any right, title, interest or claim of any kind in
or to any monies in the Trust Fund (the "Claim") and hereby waives any Claim it
may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with Platinum and will not seek recourse against the
Trust Fund for any reason whatsoever.
Print Name of Target Business
Authorized Signature of Target Business
32
EXHIBIT B
Platinum Energy Resources, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, Chairman
Gentlemen:
Reference is made to the Final Prospectus of Platinum Energy Resources, Inc.
("Platinum"), dated , 2005 (the "Prospectus"). Capitalized
terms used and not otherwise defined herein shall have the meanings assigned to
them in Prospectus.
We have read the Prospectus and understand that Platinum has established the
Trust Fund, initially in an amount of $131,760,000 for the benefit of the Public
Stockholders and that Mineral may disburse monies from the Trust Fund only: (i)
to the Public Stockholders in the event of the redemption of their shares or the
liquidation of Platinum; or (ii) to Platinum after it consummates a Business
Combination.
For and in consideration of Platinum engaging the services of the undersigned,
the undersigned hereby agrees that it does not have any right, title, interest
or claim of any kind in or to any monies in the Trust Fund (the "Claim") and
hereby waives any Claim it may have in the future as a result of, or arising out
of, any contracts or agreements with Platinum and will not seek recourse against
the Trust Fund for any reason whatsoever.
Print Name of Vendor
Authorized Signature of Lender
33
EXHIBIT C
Platinum Energy Resources, Inc.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxxxx, Chairman
Gentlemen:
The undersigned officer or director of Platinum Energy resources, Inc.
("Platinum") hereby acknowledges that Platinum has established the Trust Fund,
initially in an amount of $131,760,000 for the benefit of the Public
Stockholders and that Platinum may disburse monies from the Trust Fund only (i)
to the Public Stockholders in the event of the redemption of their shares or the
liquidation of Platinum or (ii) to Platinum after it consummates a Business
Combination.
The undersigned hereby agrees that it does not have any right, title, interest
or claim of any kind in or to any monies in the Trust Fund (the "Claim") and
hereby waives any Claim it may have in the future as a result of, or arising out
of, any contracts or agreements with Platinum and will not seek recourse against
the Trust Fund for any reason whatsoever.
Notwithstanding the foregoing, such waiver shall not apply to any shares
acquired by the undersigned in the public market.
Print Name of Officer/Director
Authorized Signature of
Officer/Director
34
