6,000,000 Units KEY HOSPITALITY ACQUISITION CORPORATION UNDERWRITING AGREEMENT
EXHIBIT
1.1
6,000,000
Units
October
25, 2005
Maxim
Group LLC
As
Representative of the Underwriters
named
on Schedule
A
hereto
000
Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx,
XX 00000
Dear
Sirs:
The
undersigned, Key Hospitality Acquisition Corporation, a Delaware corporation
(the “Company”),
hereby confirms its agreement with Maxim Group LLC (“Maxim”
or the
“Representative”)
and
with the other underwriters named on Schedule
A
hereto
for which Maxim is acting as representative (the Representative and such
other
underwriters being collectively referred to herein as 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
6,000,000 units (the “Units”
and
such 6,000,000 Units, the “Firm
Units”)
of the
Company at a purchase price (net of discounts and commissions of $0.40 per
Unit
(the “Underwriting
Discount”))
of
$7.60 per 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
A
attached
hereto and made a part hereof at a purchase price (net of the Underwriting
Discount) of $7.60 per Unit. The Firm Units are to be offered initially to
the
public (the “Offering”)
at the
offering price of $8.00 per Firm Unit. Each Unit consists of one (1) share
of
the Company’s common stock, par value $.001 per share (the “Common
Stock”),
and
one (1) warrant to purchase one (1) share of Common Stock (the “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 Maxim
informs
the Company of its decision to allow earlier separate trading, but in no
event
will Maxim allow separate trading until the preparation of an audited balance
sheet of the Company reflecting receipt by the Company of the proceeds of
the
Offering and the filing of 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, upon exercise, 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. As used herein, the term “Business
Combination”
(as
described more fully in the Registration Statement) shall mean any merger,
capital stock exchange, asset pr stock acquisition or other similar business
combination consummated by the Company with one or more related or unrelated
operating business(es) or asset(s) in the hospitality industry.
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 (3rd) Business Day following the date
that
the Units are initially traded on the OTC Bulletin Board, or at such earlier
time as shall be agreed upon in writing by the Representative and the Company,
at the offices of the Representative or at such other place and in such a
manner
as shall be agreed upon by the Representative and the Company. The hour and
date
of delivery and payment for the Firm Units is herein called the “Closing
Date.”
Payment for the Firm Units shall be made on the Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $43,495,000
(or
$7.25 per Unit) 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 (less commissions, expense allowances and actual expense
payments or other fees) shall be paid to the order of the Company upon delivery
to the Representative of certificates (in form and substance satisfactory
to the
Underwriters) representing the Firm Units (or through the facilities of the
Depository Trust Company (the “DTC”)
for
the account of the Underwriters). The Firm Units shall be registered in such
name or names and in such authorized denominations as the Representative
may
request in writing at least two (2) Business Days prior to the Closing Date.
The
Company will permit the Representative to examine and package the Firm Units
for
delivery, at least one (1) Business Day prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Units except upon tender
of
payment by the Representative for all the Firm Units. As used herein, the
term
“Business
Day”
shall
mean any day other than a Saturday, Sunday or any day on which national banks
in
New York, New York are not open for business.
1.1.3. Deferred
Underwriting Discount.
It is
agreed by the Underwriters that an amount equal to thirty-five percent of
the
Underwriting Discount (or $0.14 per Unit or one
and
seventy-five one hundredths percent (1.75%) of the gross proceeds raised
in the
Offering), including any proceeds receives as a result of the exercise of
the
Over-allotment Option, shall be deposited in the Trust Fund and shall be
paid to
the Underwriters only upon the Consummation of the Business
Combination.
-2-
1.2. Over-Allotment
Option.
1.2.1. Option
Units.
For the
purposes of covering any over-allotments in connection with the distribution
and
sale of the Firm Units, the Underwriters are hereby granted, severally and
not
jointly, an option to purchase up to an additional 900,000 units from the
Company (the “Over-allotment
Option”).
Such
additional 900,000 units are hereinafter referred to as “Option
Units.”
The
Firm Units and the Option Units are hereinafter collectively referred to
as the
“Units,”
and
the Units, the shares of Common Stock and the Warrants included in the Units
and
the shares of Common Stock issuable upon exercise of the Warrants are
hereinafter referred to collectively as the “Public
Securities.”
The
purchase price to be paid for the Option Units will be the same price per
Option
Unit as the price per Firm Unit set forth in Section 1.1.1 hereof.
1.2.2. Exercise
of Option.
The
Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised
by the Representative as to all (at any time) or any part (from time to time)
of
the Option Units within 45 days after the Effective Date. The Underwriters
will
not be under any obligation to purchase any Option Units prior to the exercise
of the Over-allotment Option. The Over-allotment Option granted hereby may
be
exercised by the giving of oral notice to the Company from the Representative,
which must be confirmed in writing by overnight mail or facsimile transmission
setting forth the number of Option Units to be purchased and the date and
time
for delivery of and payment for the Option Units, which will not be later
than
five (5) Business Days after the date of the notice or such other time as
shall
be agreed upon by the Company and the Representative, at the offices of the
Representative or at such other place as shall be agreed upon by the Company
and
the Representative. If such delivery and payment for the Option Units does
not
occur on the Closing Date, the date and time of the closing for such Option
Units will be as set forth in the notice (hereinafter the “Option
Closing Date”).
Upon
exercise of the Over-allotment Option, the Company will become obligated
to
convey to the Underwriters, and, subject to the terms and conditions set
forth
herein, the Underwriters will become obligated to purchase, the number of
Option
Units specified in such notice.
1.2.3. Payment
and Delivery.
Payment
for the Option Units shall be made on the Option Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $7.25 per Option Unit shall be deposited in the Trust Fund pursuant
to the Trust Agreement and the remaining proceeds (less commissions, expense
allowances and actual expense payments or other fees) shall be paid to the
order
of the Company upon delivery to the Representative of certificates (in form
and
substance satisfactory to the Underwriters) representing the Option Units
(or
through the facilities of DTC) for the account of the Underwriters. The
certificates representing the Option Units to be delivered will be in such
denominations and registered in
such
names as the Representative requests not less than two (2) Business Days
prior
to the Closing Date or the Option Closing Date, as the case may be, and will
be
made available to the Representative for inspection, checking and packaging
at
the aforesaid office of the Company’s transfer agent or correspondent not less
than one (1) Business Day prior to such Closing Date.
-3-
1.3. Representative’s
Purchase Option.
1.3.1. Purchase
Option.
The
Company hereby agrees to issue and sell to the Representative (and/or their
designees) on the Effective Date an option (“Representative’s
Purchase Option”)
for
the purchase of an aggregate of 300,000 units (the “Representative’s
Units”)
for an
aggregate purchase price of $100.00. Each of the Representative’s Units is
identical to the Firm Units, except that the Warrants included in the
Representative’s Units (“Representative’s
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 Representative’s Purchase Option shall be
exercisable, in whole or in part, commencing on the later of the consummation
of
a Business Combination or one (1) year from the Effective Date and expiring
on
the five-year anniversary of the Effective Date at an initial exercise price
per
Representative’s Unit of $8.80, which is equal to one hundred and ten percent
(110%) of the initial public offering price of the Units. The Representative’s
Purchase Option, the Representative’s Units (including the shares of Common
Stock included therein), the Representative’s Warrants and the shares of Common
Stock issuable upon exercise of the Representative’s Warrants are hereinafter
referred to collectively as the “Representative’s
Securities.”
The
Public Securities and the Representative’s Securities are hereinafter referred
to collectively as the “Securities.”
The
Representative understands and agrees that there are significant restrictions
against transferring the Representative’s Purchase Option during the first year
after the Effective Date, as set forth in Section 3 of the Representative’s
Purchase Option.
1.3.2. Delivery
and Payment.
Delivery and payment for the Representative’s Purchase Option shall be made on
the Closing Date. The Company shall deliver to the Underwriters, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the 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 (the “Commission”)
a
registration statement on Form S-1 (File
No.
333-125009),
and amendments thereto, and related preliminary prospectuses for the
registration under the Securities Act of 1933, as amended (the “Act”),
for
the Securities, which registration statement, as so amended (including
post-effective amendments, if any), has been declared effective by the
Commission and copies of which have heretofore been delivered to the
Underwriters. The conditions for use of Form S-1 to register the Offering
under
the Act, as set forth in the General Instructions to such Form, have been
satisfied. The registration statement, as amended at the time it became
effective, including the prospectus, financial statements, schedules, exhibits
and other information (if any) deemed to be part of the registration statement
at the time of effectiveness pursuant to Rule 430A under the Act, is hereinafter
referred to as the “Registration
Statement.”
If the
Company has filed or is required pursuant to the terms hereof to file a
registration statement pursuant to Rule 462(b) under the Securities Act
registering additional Securities of any type (a “Rule
462(b) Registration Statement”),
then,
unless otherwise specified, any reference herein to the term “Registration
Statement” shall be deemed to include such Rule 462(b) Registration Statement.
Other than a Rule 462(b) Registration Statement, which, if filed, becomes
effective upon filing, no other document with respect to the Registration
Statement has heretofore been filed with the Commission. All of the Securities
have been registered under the Securities Act pursuant to the Registration
Statement or, if any Rule 462(b) Registration Statement is filed, will be
duly
registered under the Act with the filing of such Rule 462(b) Registration
Statement. The Company, if required by the Securities Act and the rules and
regulations of the Commission (the “Regulations”),
proposes to file the Prospectus with the Commission pursuant to Rule 424(b)
under the Securities Act (“Rule
424(b)”).
The
prospectus, in the form in which it is to be filed with the Commission pursuant
to Rule 424(b), or, if the prospectus is not to be filed with the Commission
pursuant to Rule 424(b), the prospectus in the form included as part of the
Registration Statement at the time the Registration Statement became effective,
is hereinafter referred to as the “Prospectus,”
except
that if any revised prospectus or prospectus supplement shall be provided
to the
Underwriters by the Company for use in connection with the Offering which
differs from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company pursuant to
Rule
424(b)), the term “Prospectus” shall also refer to such revised prospectus or
prospectus supplement, as the case may be, from and after the time it is
first
provided to the Underwriters for such use. Any preliminary prospectus or
prospectus subject to completion included in the Registration Statement or
filed
with the Commission pursuant to Rule 424 under the Act is hereafter called
a
“Preliminary
Prospectus.”
Any
reference herein to the Registration Statement, any Preliminary Prospectus
or
the Prospectus shall be deemed to refer to and include the exhibits incorporated
by reference therein pursuant to the Regulations on or before the effective
date
of the Registration Statement, the date of such Preliminary Prospectus or
the
date of the Prospectus, as the case may be. Any reference herein to the terms
“amend”, “amendment” or “supplement” with respect to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and
include: (i) the filing of any document under the Securities Exchange Act
of
1934, as amended, and together with the Rules and Regulations promulgated
thereunder (the “Exchange
Act”)
after
the effective date of the Registration Statement, the date of such Preliminary
Prospectus or the date of the Prospectus, as the case may be, which is
incorporated therein by reference, and (ii) any such document so filed. All
references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus and the Prospectus, or any
amendments or supplements to any of the foregoing shall be deemed to include
any
copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System (“XXXXX”).
-4-
2.1.2. Pursuant
to the Exchange Act.
The
Company has filed with the Commission a Form 8-A (File No. )
providing for the registration under the Securities Exchange Act of 1934,
as
amended (the “Exchange
Act”),
of
the Securities. The registration of the Securities under the Exchange Act
has
been declared effective by the Commission on the date hereof.
2.2. No
Stop Orders, etc.
Neither
the Commission nor, to 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, the Prospectus or any part thereof,
or
has instituted or, to 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 of effectiveness of the Registration Statement (or
the
time of any post-effective amendment to the Registration Statement)
and at
all times subsequent thereto up to the Closing Date and the Option Closing
Date,
if any, the Registration Statement and the Prospectus will contain all material
statements that are required to be stated therein in accordance with the
Act and
the Regulations, and will, in all material respects, conform to the requirements
of the Act and the Regulations. Neither the Registration Statement nor any
Preliminary Prospectus or final Prospectus contained therein, nor any amendment
or supplement thereto, on their respective dates, did or will contain any
untrue
statement of a material fact or omit to state any material fact required
to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. When any Preliminary
Prospectus 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 information furnished in writing to the Company by the
Representative or its representatives with respect to the Underwriters expressly
for use in the Registration Statement or Prospectus or any amendment thereof
or
supplement thereto, which information, it is agreed, shall consist solely
of the
subsections captioned “State Blue Sky Information,”“Pricing
of Securities” and“Regulatory
Restrictions on Purchase of Securities” contained
in the section of the Prospectus entitled “Underwriting.”
2.3.2. Disclosure
of Agreements.
The
agreements and documents described in the Registration Statement and the
Prospectus conform to the descriptions thereof contained therein and there
are
no agreements or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits
to
the Registration Statement that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which
the
Company is a party or by which its property or business is or may be bound
or
affected and (i) that is referred to in the Prospectus or attached as an
exhibit
thereto, or (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 Company’s knowledge, any other
party is in breach or default thereunder and, to 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 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.
-5-
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 (3) 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, any Preliminary Prospectus and/or 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; (iii) no member of the
Company’s board of directors or management has resigned from any position with
the Company and (iv) no event or occurrence has taken place which materially
impairs, or would likely materially impair, with the passage of time, the
ability of the members of the Company’s board of directors or management to act
in their capacities with the Company as described in the Registration Statement
and the Prospectus.
-6-
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.
Xxxxxxxxx, Kass and Company, P.C. (“RK”),
whose
report is filed with the Commission as part of the Registration Statement,
are
independent registered public accountants as required by the Act, the
Regulations and the Public Company Accounting Oversight Board (including
the
rules and regulations promulgated by such entity, the “PCAOB”).
RK is
duly registered and in good standing with the PCAOB. RK 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; Statistical Data.
2.6.1. The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement and Prospectus, fairly present the
financial position and the results of operations of the Company at the dates
and
for the periods to which they apply. Such financial statements have been
prepared in conformity with generally accepted accounting principles of the
United States, consistently applied throughout the periods involved, and
the
supporting schedules included in the Registration Statement present fairly
the
information required to be stated therein. No
other
financial statements or supporting schedules are required to be included
in the
Registration Statement.
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. There are no pro forma or as adjusted financial statements which
are required to be included in
the
Registration Statement and
the
Prospectus in accordance with Regulation
S-X which have not been included as so required.
2.6.2. The
statistical, industry-related and market-related data included in the
Registration Statement and the Prospectus are based on or derived from sources
which the Company reasonably and in good faith believes are reliable and
accurate, and such data agree with the sources from which they are derived.
2.7. Authorized
Capital; Options, etc.
The
Company had at the date or dates indicated in the 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.
-7-
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
Securities conform to the descriptions thereof 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, and 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. All corporate action required to be taken for the authorization,
issuance and sale of the Securities has been duly and validly taken. The
Securities conform in all material respects to all statements with respect
thereto contained in the Registration Statement. When issued, the
Representative’s Purchase Option, the Representative’s Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and
sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representative’s Purchase Option, the
Representative’s Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except: (i) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally; (ii) as enforceability of any
indemnification or contribution provision may be limited under the federal
and
state securities laws; and (iii) that the remedy of specific performance
and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The
shares of Common Stock issuable upon exercise of the Warrants and included
in
the Representative’s Purchase Option (and the shares of Common Stock issuable
upon exercise of the Representative’s Warrants) have been reserved for issuance
upon the exercise of the Warrants, the Representative’s Purchase Option and the
Representative’s Warrants and, when issued in accordance with the terms of such
securities, will be duly and validly authorized, validly issued, fully paid
and
non-assessable, and the holders thereof are not and will not be subject to
personal liability by reason of being such holders.
-8-
2.8.3. No
Integration.
Neither
the Company nor any of its affiliates has, prior to the date hereof, made
any
offer or sale of any securities which are required to be “integrated” pursuant
to the Act or the Regulations with the offer and sale of the Public Securities
pursuant to the Registration Statement.
2.9. Registration
Rights of Third Parties.
Except
as set forth in the 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 2.22 hereof), the
Trust
Agreement, the Services Agreement (as defined in Section 3.7.2 hereof) and
the
Escrow Agreement (as defined in Section 2.23.2 hereof) have been duly and
validly authorized by the Company and constitute, and the Representative’s
Purchase Option, has been duly and validly authorized by the Company and,
when
executed and delivered, will constitute, the valid and binding agreements
of the
Company, enforceable against the Company in accordance with their respective
terms, except: (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally; (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws; and
(iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
2.11. No
Conflicts, etc.
The
execution, delivery, and performance by the Company of this Agreement, the
Warrant Agreement, the Representative’s Purchase Option, the Trust Agreement,
the Services Agreement 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
(other than the Trust Agreement ); (ii) result in any violation of the
provisions of the Amended and Restated Certificate of Incorporation (the
“Company
Certificate”)
or the
Bylaws of the Company (the “Bylaws”);
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 the Company Certificate or the 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.
-9-
2.13. Corporate
Power; Licenses; Consents.
2.13.1. Conduct
of Business.
The
Company has all requisite corporate power and authority, and has all necessary
authorizations, approvals, orders, licenses, certificates and permits of
and
from all governmental regulatory officials and bodies that it needs as of
the
date hereof to conduct its business as described in the Prospectus. The
disclosures in the Registration Statement concerning the effects of federal,
state and local regulation on this offering and the Company’s business purpose
as currently contemplated are correct in all material respects and do not
omit
to state a material fact required to be stated therein or necessary in order
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading.
2.13.2. Transactions
Contemplated Herein.
The
Company has all corporate power and authority to enter into this Agreement
and
to carry out the provisions and conditions hereof, and all consents,
authorizations, approvals, licenses and orders required in connection therewith
have been obtained. No
consent,
authorization or order of, and no filing with, any court, government agency
or
other body is required for the valid issuance, sale and delivery, of the
Securities and the consummation of the transactions and agreements contemplated
by this Agreement, the Warrant Agreement, the Representative’s Purchase Option,
the Trust Agreement, the 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.
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 2.23.1) 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 Company’s knowledge, threatened
against, or involving the Company or, to the Company’s knowledge, any Initial
Stockholder which has not been disclosed in the Registration Statement or
the
Questionnaires.
-10-
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. No
Contemplation of a Business Combination.
Prior
to the date hereof, neither the Company, its officers and directors nor the
Initial Stockholders had, and as of the Closing, the Company and such officers
and directors and Initial Stockholders will not have had: (a) any specific
Business Combination under consideration or contemplation or (b) any substantive
interactions or discussions with any target business regarding a possible
Business Combination.
2.18. Transactions
Affecting Disclosure to NASD.
2.18.1. Except
as
described in the Prospectus, there are no claims, payments, arrangements,
contracts, agreements or understandings relating to the payment of a brokerage
commission or finder’s, consulting, origination or similar 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 any
Initial Stockholder that may affect the Underwriters’ compensation, as
determined by the National Association of Securities Dealers, Inc. (the
“NASD”).
2.18.2. The
Company has not made any direct or indirect payments (in cash, securities
or
otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise,
in consideration of such person raising capital for the Company or introducing
to the Company persons who raised or provided capital to the Company; (ii)
to
any NASD member; or (iii)to any person or entity that has any direct or indirect
affiliation or association with any NASD member, within the twelve months
prior
to the Effective Date, other than payments to Maxim.
2.18.3. No
officer, director, or beneficial owner of any class of the Company’s securities
(whether debt or equity, registered or unregistered, regardless of the time
acquired or the source from which derived) (any such individual or entity,
a
“Company
Affiliate”)
is a
member, a person associated, or affiliated with a member of the NASD.
2.18.4. No
Company Affiliate is an owner of stock or other securities of any member
of the
NASD (other than securities purchased on the open market).
2.18.5. No
Company Affiliate has made a subordinated loan to any member of the
NASD.
2.18.6. No
proceeds from the sale of the Public Securities (excluding including
underwriting compensation) will be paid to any NASD member, or any persons
associated or affiliated with a member of the NASD.
-11-
2.18.7. Except
with respect to Maxim, the Company has not issued any warrants or other
securities, or granted any options, directly or indirectly to anyone who
is a
potential underwriter in the Offering or a related person (as defined by
NASD
rules) of such an underwriter within the 180-day period prior to the initial
filing date of the Registration Statement.
2.18.8. No
person
to whom securities of the Company have been privately issued within the 180-day
period prior to the initial filing date of the Registration Statement has
any
relationship or affiliation or association with any member of the NASD.
2.18.9. No
NASD
member intending to participate in the Offering has a conflict of interest
with
the Company. For this purpose, a “conflict of interest” exists when a member of
the NASD and/or its associated persons, parent or affiliates in the aggregate
beneficially own 10% or more of the Company’s outstanding subordinated debt or
common equity, or 10% or more of the Company’s preferred equity. “Members
participating in the Offering” include managing agents, syndicate group members
and all dealers which are members of the NASD.
2.18.10. Except
with respect to Maxim, the Company has not entered into any agreement or
arrangement (including, without limitation, any consulting agreement or any
other type of agreement) during the 180-day period prior to the initial filing
date of the Registration Statement, which arrangement or agreement provides
for
the receipt of any item of value and/or the transfer of any warrants, options,
or other securities from the Company to an NASD member, any person associated
with a member (as defined by NASD rules), any potential underwriters in the
Offering and/or any related persons.
2.19. Foreign
Corrupt Practices Act.
Neither
the Company nor any of the Initial Stockholders or any other person acting
on
behalf of the Company has, directly or indirectly, given or agreed to give
any
money, gift or similar benefit (other than legal price concessions to customers
in the ordinary course of business) to any customer, supplier, employee or
agent
of a customer or supplier, or official or employee of any governmental agency
or
instrumentality of any government (domestic or foreign) or any political
party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist
it in
connection with any actual or proposed transaction) that: (i) might subject
the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company
as
reflected in any of the financial statements contained in the Prospectus
or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the 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.
-12-
2.20. Patriot
Act.
Neither
the Company
nor any officer, director or Initial Stockholder has violated: (a) the Bank
Secrecy Act, as amended, (b) the Money Laundering Control Act of 1986, as
amended, or (c) the Uniting and Strengthening of America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT
ACT)
Act of 2001, and/or the rules and regulations promulgated under any such
law, or
any successor law.
2.21. Officers’
Certificate.
Any
certificate signed by any duly authorized officer of the Company and delivered
to the Representative or its counsel shall be deemed a representation and
warranty by the Company to the Underwriters as to the matters covered
thereby.
2.22. Warrant
Agreement.
The
Company has entered into a warrant agreement with respect to the Warrants
and
the Representative’s Warrants with Continental Stock Transfer & Trust
Company (“CST”)
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.
2.23. Agreements
With Initial Stockholders.
2.23.1. 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 Exhibits10.1 through 10.11, to the Registration Statement (as
the
same may be amended or supplemented from time to time, 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 relating to
the
voting of shares of Common Stock by them and certain other matters described
as
being agreed to by them under the “Proposed Business” Section of the
Prospectus.
2.23.2. Escrow
Agreement.
The
Company has caused the Initial Stockholders to enter into an escrow agreement
(the “Escrow
Agreement”)
with
CST, as escrow agent, in form and substance satisfactory to the Underwriters,
whereby the Common Stock owned by the Initial Stockholders will be held in
escrow by CST 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.
The
Company warrants that the Escrow Agreement shall not be amended, modified
or
otherwise changed without the prior written consent of Maxim.
2.23.3. Investment
Management Trust Agreement.
The
Company has entered into the Trust Agreement with respect to certain proceeds
of
the Offering in substantially the form filed as an exhibit to the Registration
Statement.
-13-
2.23.4. 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 and act in the capacity of an Initial
Stockholder, employee, officer and/or director of the Company.
2.24. 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).
2.25. Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other entity.
2.26. Related
Party Transactions.
No
relationship, direct or indirect, exists between or among any of the Company
or
any affiliate of the Company, on the one hand, and any director, officer,
shareholder, customer or supplier of the Company or any affiliate of the
Company, on the other hand, which is required by the Act, the Exchange Act
or
the Regulations to be described in the Registration Statement or the Prospectus
which is not so described and described as required. There are no outstanding
loans, advances (except normal advances for business expenses in the ordinary
course of business) or guarantees of indebtedness by the Company to or for
the
benefit of any of the officers or directors of the Company or any of their
respective family members, except as disclosed in the Registration Statement
and
the Prospectus. The Company has not extended or maintained credit, arranged
for
the extension of credit, or renewed an extension of credit, in the form of
a
personal loan to or for any director or officer of the Company.
2.27. No
Influence.
The
Company has not offered, or caused the Underwriters to offer, the Firm Units
to
any person or entity with the intention of unlawfully influencing: (a) a
customer or supplier of the Company or any affiliate of the Company to alter
the
customer’s or supplier’s level or type of business with the Company or such
affiliate or (b) a journalist or publication to write or publish favorable
information about the Company or any such affiliate.
2.28. Definition
of “Knowledge.” As
used
in herein, the term “knowledge
of the Company”
(or
similar language) shall mean the knowledge of the officers and directors
of the
Company who are named in the Prospectus, with the assumption that such officers
and directors shall have made reasonable and diligent inquiry of the matters
presented.
3. Covenants
and Additional Agreements of the Company.
The
Company covenants and agrees as follows:
-14-
3.1. Amendments
to Registration Statement.
The
Company will deliver to the Representative, prior to filing, any amendment
or
supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and not file any such amendment or supplement to
which
the Representative shall reasonably object in writing.
3.2. Federal
Securities Laws.
3.2.1. Compliance.
During
the time when a Prospectus is required to be delivered under the Act, the
Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary
to
permit the continuance of sales of or dealings in the Public Securities in
accordance with the provisions hereof and the Prospectus. If at any time
when a
Prospectus relating to the Public Securities is required to be delivered
under
the Act, any event shall have occurred as a result of which, in the opinion
of
counsel for the Company or counsel for the Underwriters, the Prospectus,
as then
amended or supplemented, includes an untrue statement of a material fact
or
omits to state any material fact required to be stated therein or necessary
to
make the statements therein, in light of the circumstances under which they
were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Representative promptly
and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment or supplement in accordance with Section 10 of the
Act.
3.2.2. Filing
of Final Prospectus.
The
Company will file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule
424 of
the Regulations.
3.2.3. Exchange
Act Registration.
For a
period of five (5) 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. The Company will not
deregister the Units under the Exchange Act without the prior written consent
of
Maxim.
3.2.4. Xxxxxxxx-Xxxxx
Compliance.
As soon
as it is legally required to do so, the
Company shall take all actions necessary to obtain and thereafter maintain
material compliance with each applicable provision of the Xxxxxxxx-Xxxxx
Act of
2002 and the rules and regulations promulgated thereunder and related or
similar
rules and regulations promulgated by any other governmental or self regulatory
entity or agency with jurisdiction over the Company.
3.3. Blue
Sky Filing.
The
Company will endeavor in good faith, in cooperation with the Representative,
at
or prior to the time the Registration Statement becomes effective, to qualify
the Public Securities for offering and sale under the securities laws of
such
jurisdictions as the Representative may reasonably designate, provided that
no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. In
each
jurisdiction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time
necessary
or
advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
-15-
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 the Representative two (2) original executed
Registration Statements, including exhibits, and all post-effective amendments
thereto and copies of all exhibits filed therewith or incorporated therein
by
reference and all original executed consents of certified experts.
3.5. Effectiveness
and Events Requiring Notice to the Representative.
The
Company will use its best efforts to cause the Registration Statement to
remain
effective and will notify the Representative immediately and confirm the
notice
in writing: (i)of the effectiveness of the Registration Statement and any
amendment thereto; (ii) of the issuance by the Commission of any stop order
or
of the initiation, or the threatening, of any proceeding for that purpose;
(iii)
of the issuance by any state securities commission of any proceedings for
the
suspension of the qualification of the Public Securities for offering or
sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding
for
that purpose; (iv) of the mailing and delivery to the Commission for filing
of
any amendment or supplement to the Registration Statement or Prospectus;
(v) of
the receipt of any comments or request for any additional information from
the
Commission; and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement
or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission
or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort
to
obtain promptly the lifting of such order.
3.6. Review
of Financial Statements.
For a
period of five (5) years from the Effective Date, or until such earlier time
that 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.
-16-
3.7. Transactions.
3.7.1. Affiliate
Combinations.
The
Company will not consummate a Business Combination with any entity which
is
affiliated with any Initial Stockholder unless the Company obtains 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. Services.
The
Company has entered into an agreement (the “Services
Agreement”)
with
Millennium 3 Capital, Inc., an entity affiliated with Xxx
Xxxxxxxx,
the
President of the Company, pursuant to which the Company will pay up
to
$7,500 for general and administrative services, including office space,
utilities and secretarial support. In no event will such fees be more than
$7,500 per month in the aggregate and all such arrangements will be arm’s-length
transactions.
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 and Poor’s Daily News and
Corporation Records Corporate Descriptions for a period of five (5) years
from
the consummation of a Business Combination. 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 Representative to obtain a secondary market trading exemption
in such other states as may be requested by the Representative.
3.9. Warrant
Solicitation Fees.
The
Company hereby engages Maxim, on a non-exclusive basis, as its agent for
the
solicitation of the exercise of the Warrants. The Company will: (i) assist
Maxim
with respect to such solicitation, if requested by Maxim, and (ii) at Maxim’s
request, provide Maxim, and direct the Company’s transfer and warrant agent to
provide to Maxim, 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 Maxim a commission of three percent
(3%) of
the cash proceeds received upon exercise 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 Maxim solicited his exercise. Maxim
may engage sub-agents in its solicitation efforts. The Company agrees to
disclose the arrangement to pay such solicitation fees to Maxim in any
prospectus used by the Company in connection with the registration of the
shares
of Common Stock underlying the Warrants.
-17-
3.10. Financial
Public Relations Firm.
Promptly after the execution of a definitive agreement for a Business
Combination, the Company shall retain a financial public relations firm
reasonably acceptable to the Representative for a term to be agreed upon
by the
Company and the Representative.
3.11. Reports
to the Representative.
3.11.1. Periodic
Reports, etc. For
a
period of five years from the Effective Date or until such earlier time upon
which the Company is required to be liquidated, the Company will furnish
to the
Representative (Attention: Xxxxxxxx X. Xxxxxx, Managing Director) and its
counsel copies of such financial statements and other periodic and special
reports as the Company from time to time furnishes generally to holders of
any
class of its securities, and promptly furnish to the Representative: (i)
a copy
of each periodic report the Company shall be required to file with the
Commission; (ii) a copy of every press release and every news item and article
with respect to the Company or its affairs which was released by the Company;
(iii) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received
or
prepared by the Company; (iv) five (5) 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 Representative
may
from time to time reasonably request;
provided that the Representative shall sign, if requested by the Company,
a
Regulation FD compliant confidentiality agreement which is reasonably acceptable
to the Representative and its counsel in connection with the Representative’s
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 required to be liquidated, the Company shall retain
a
transfer and warrant agent acceptable to the Representative (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. CST is acceptable to the Underwriters.
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 Ellenoff Xxxxxxxx & Schole LLP
(“EG&S”),
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 transaction under
the
Blue Sky laws of the fifty States (the “Secondary
Market Trading Survey”).
-18-
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 Representative shall reasonably
request. In
addition to the requirements of the preceding sentence, for a period of two
(2)
years from the Closing Date, the Company, at its expense, shall provide the
Representative a subscription to the Company’s weekly Depository Transfer
Company Security Position Reports.
3.12. Disqualification
of Form S-1.
For a
period equal to seven (7) years from the date hereof, the Company will not
take
any action or actions which may prevent or disqualify the Company’s use of Form
S-1 (or other appropriate form) for the registration of the Warrants and
the
Representative’s Warrants under the Act.
3.13. Payment
of Expenses.
3.13.1. General
Expenses Related to the Offering.
The
Company hereby agrees to pay on or prior to 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) Company
legal and accounting fees and disbursements;
(ii) 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 and all “XXXXX” preparation and filing
costs;
(iii) the
printing, engraving, issuance and delivery of the Units, the shares of Common
Stock and the Warrants included in the Units and the Representative’s Purchase
Option, including any transfer or other taxes payable thereon;
(iv) 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 Representative’s 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;
-19-
(v)
filing
fees, costs and expenses (including fees of Representative’s counsel and
disbursements for the Representative’s counsel) incurred in registering the
Offering with the NASD;
(vi)
all
Company costs and expenses associated with “road
show” marketing and “due diligence” trips for the Company’s management to meet
with prospective investors including, without limitation, all travel, food
and
lodging expenses associated with such trips;
(vii) costs
of
placing “tombstone” advertisements in
The
Wall Street Journal, The New York Times
and a
third publication to be selected by the Representative;
(viii)
fees
and
disbursements of CST, whether it is acting in the capacity of transfer or
warrant agent or as trustee of the Trust Account or otherwise;
(ix)
the
preparation, binding and delivery of transaction closing “bibles” and the
preparation and delivery of transaction Lucite cubes or similar commemorative
items, in each case in a form, style and quantity as reasonably requested
by the
Representative; and
(x) all
other
costs and expenses incident to the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section 3.13.1.
The
Representative may deduct from the net proceeds of the Offering payable to
the
Company on the Closing Date, or the Option Closing Date, if any, the expenses
set forth herein to be paid by the Company to the Representative and others.
If
the
Offering contemplated by this Agreement is not consummated for any reason
whatsoever, except to the extent such event is demonstrated by a court of
competent jurisdiction to have occurred directly and primarily as a result
of a
material breach or default by the Representative or any Underwriter of their
respective obligations described in this Agreement, then the Company shall
reimburse the Representative in full for their out of pocket accountable
expenses actually incurred by the Representative,
including, without limitation, its legal fees (up to a maximum of
$60,000).
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 Maxim a
nonaccountable expense allowance equal to one and one-quarter percent (1.25%)
of
the gross proceeds received by the Company from the sale of the Firm Units
(less
$40,000 previously advanced by the Company) 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.
-20-
3.15. Delivery
of Earnings Statements to Security Holders.
The
Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full calendar
month following the Effective Date, an earnings statement (which need not
be
certified by independent public or independent certified public accountants
unless required by the Act or the Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Act) covering a period
of
at least twelve consecutive months beginning after the Effective
Date.
3.16. Notice
to NASD.
In the
event any person or entity (regardless of any NASD affiliation or association)
is engaged to assist the Company in its search for a merger candidate or
to
provide any other merger and acquisition services, the Company will provide
the
following to the NASD and Representative prior to the consummation of the
Business Combination: (i) complete details of all services and copies of
agreements governing such services; and (ii) justification as to why the
person
or entity providing the merger and acquisition services should not be considered
an “underwriter and related person” with respect to the Company’s initial public
offering, as such term is defined in Rule 2710 of the NASD’s Conduct Rules. The
Company also agrees that proper disclosure of such arrangement or potential
arrangement will be made in the proxy statement which the Company will file
for
purposes of soliciting stockholder approval for the Business
Combination.
3.17. Stabilization.
Except
with respect to the agreements certain agreements between Maxim and certain
Company Affiliates (which agreements have been filed as exhibits to the
Registration Statement), neither the Company, nor, to its knowledge, any
of its
employees, directors or stockholders (without the consent of Maxim) 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
RK or
other independent public accountants reasonably acceptable to
Maxim.
-21-
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. Press
Releases.
The
Company will not issue press releases or engage in any other publicity, without
Maxim’s prior written consent, for a period ending at 5:00 p.m., New York City
time, on the first Business Day following the fortieth (40th) day following
the
Closing Date.
3.22. 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.
3.23. Corporate
Proceedings.
All
corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall
have
been done to the reasonable satisfaction to counsel for the
Underwriters.
3.24. Investment
Company.
The
Company shall cause the proceeds of the Offering to be held in the Trust
Fund to
be invested only in “government securities” with specific maturity dates,
or
in
money market funds meeting certain conditions under Rule 2a-7 promulgated
under
the Investment Company Act of 1940,
as set
forth in the Trust Agreement and disclosed in the Prospectus. The Company
will
otherwise conduct its business in a manner so that it will not become subject
to
the Investment Company Act. Furthermore, once the Company consummates a Business
Combination, it will be engaged in a business other than that of investing,
reinvesting, owning, holding or trading securities.
3.25. Business
Combination Announcement.
Within
five (5) Business Days following the consummation by the Company of a
Business
Combination, the Company shall
cause an announcement (“Business
Combination
Announcement”)
to be
placed, at its cost, in The Wall Street Journal, The New York Times and a
third
publication to be selected by Maxim announcing the consummation of the
Business
Combination
and
indicating that Maxim was the managing underwriter in the Offering. The Company
shall supply Maxim with a draft of the Business
Combination
Announcement and provide Maxim with a reasonable advance opportunity to comment
thereon. The Company will not place the Business
Combination
Announcement without the final approval of Maxim, which approval will not
be
unreasonably withheld.
3.26. 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.
-22-
3.27. Offerings
following the Business Combination.
For
a
period of eighteen (18) months from the closing of a Business Combination,
the
Company or any successor to or subsidiary of the Company
shall
not undertake
any public or private offerings of any equity securities of the Company
(including equity-linked securities) without
the prior written consent of Maxim, which consent shall not be unreasonably
withheld.
3.28. Electronic
Prospectus.
The
Company shall cause to be prepared and delivered to the Representative, at
its
expense, within one (1) Business Day from the effective date of this Agreement,
an Electronic Prospectus
to be used by the Underwriters in connection with the Offering. As used herein,
the term “Electronic
Prospectus”
means a
form of Prospectus, and any amendment or supplement thereto, that meets each
of
the following conditions: (i) it shall be encoded in an electronic format,
satisfactory to the Representative, that may be transmitted electronically
by
the other Underwriters to offerees and purchasers of the Units for at least
the
period during which a Prospectus relating to the Units is required to be
delivered under the Securities Act; (ii) it shall disclose the same information
as the paper prospectus and prospectus filed pursuant to XXXXX, except to
the
extent that graphic and image material cannot be disseminated electronically,
in
which case such graphic and image material shall be replaced in the electronic
prospectus with a fair and accurate narrative description or tabular
representation of such material, as appropriate; and (iii) it shall be in
or
convertible into a paper format or an electronic format, satisfactory to
the
Representative, that will allow recipients thereof to store and have
continuously ready access to the prospectus at any future time, without charge
to such recipients (other than any fee charged for subscription to the Internet
as a whole and for on-line time). The Company hereby confirms that it has
included or will include in the Prospectus filed pursuant to XXXXX or otherwise
with the Commission and in the Registration Statement at the time it was
declared effective an undertaking that, upon receipt
of a request by an investor or his or her representative within the period
when
a prospectus relating to the Units is required to be delivered under the
Securities Act, the Company shall transmit or cause to be transmitted promptly,
without charge, a paper copy of the Prospectus.
3.29. Reservation
of Shares.
The
Company will reserve and keep available that maximum number of its authorized
but unissued securities which are issuable upon exercise of any of the
Securities outstanding from time to time.
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 the Representative, 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 EG&S.
-23-
4.1.2. NASD
Clearance.
By the
Effective Date, the Representative shall have received clearance from the
NASD
as to the amount of compensation allowable or payable to the Underwriters
as
described in the Registration Statement.
4.1.3. No
Commission Stop Order.
As of
either on the Closing Date or the Option Closing Date, the Commission has
not
issued any order or threatened to issue any order preventing or suspending
the
use of any Preliminary Prospectus, the Prospectus or any part thereof, and
has
not instituted or threatened to institute any proceedings with respect to
such
an order.
4.1.4. No
Blue Sky Stop Orders.
No
order preventing or suspending the sale of the Units in any jurisdiction
designated by the Representative pursuant to Section 3.3 hereof shall have
been
issued on either as of the Closing Date or the Option Closing Date, and no
proceedings for that purpose shall have been instituted or shall have been
threatened.
4.2. Company
Counsel Matters.
4.2.1. Effective
Date Opinion of Counsel.
On the
Effective Date, the Representative shall have received the favorable opinion
of
Xxxxx Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx, P.C. (“Xxxxx
Xxxxx”),
counsel to the Company, dated the Effective Date, addressed to the
Representative and in form and substance satisfactory to the Representative
to
the effect that:
(i) The
Company has been duly organized and is validly existing as a corporation
and is
in good standing under the laws of Delaware.
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.
(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 Company
Certificate or Bylaws. 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 described in
the
Prospectus. The Public Securities and the Representative’s Securities conform to
the descriptions thereof contained in the Registration Statement and the
Prospectus.
-24-
(iii) The
Securities have been duly authorized and, when issued and paid for, will
be
validly issued, fully paid and non-assessable; the holders thereof are not
and
will not be subject to personal liability by reason of being such holders.
The
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company arising by operation of law or under
the
Company Certificate or Bylaws or, to such counsel’s knowledge, under similar
rights that entitle or will entitle any person to acquire any security from
the
Company upon issuance or sale thereof.
When
issued, the Representative’s Purchase Option, the Representative’s Warrants and
the Warrants will constitute valid and binding obligations of the Company
to
issue and sell, upon exercise thereof and payment therefor, the number and
type
of securities of the Company called for thereby and such Warrants, the
Representative’s Purchase Option, and the Representative’s Warrants, when
issued, in each case, are enforceable against the Company in accordance with
their respective terms, except: (a) as such enforceability may be limited
by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’
rights generally; (b) as enforceability of any indemnification or contribution
provision may be limited under the United States 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. A sufficient number of shares of Common
Stock have been reserved for issuance upon exercise of the Warrants and the
Representative’s Warrants. The shares of Common Stock underlying the Warrants
and the Representative’s Warrant will, upon exercise of the Warrants and the
Representative’s Warrant and payment of the exercise price thereof, be duly and
validly issued, fully paid and non-assessable and will not have been issued
in
violation of or subject to preemptive or, to such counsel’s knowledge, similar
rights that entitle or will entitle any person to acquire any securities
from
the Company upon issuance thereof.
(iv) The
Company has full right, power and authority to execute and deliver this
Agreement, the Warrant Agreement, the Services Agreement, the Trust Agreement,
the Escrow Agreement and the Representative’s Purchase Option and to perform its
obligations thereunder, and all corporate action required to be taken for
the
due and proper authorization, execution and delivery of this Agreement, the
Warrant Agreement, the Services Agreement, the Trust Agreement, the Escrow
Agreement and the Representative’s Purchase Option and consummation of the
transactions contemplated by the Underwriting Agreement, the Registration
Statement and the Prospectus and as described in the Registration Statement
and
the Prospectus have been duly and validly taken.
-25-
(v) This
Agreement, the Warrant Agreement, the Services Agreement, the Trust Agreement
and the Escrow Agreement have each been duly and validly authorized and,
when
executed and delivered by the Company, constitute, and the Representative’s
Purchase Option has been duly and validly authorized by the Company and,
when
executed and delivered, will constitute, the valid and binding obligations
of
the Company, enforceable against the Company in accordance with their respective
terms, except: (a) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally; (b) as enforceability of any indemnification or contribution
provisions may be limited under the United States 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.
(vi) The
execution, delivery and performance of this Agreement, the Warrant Agreement,
the Representative’s Purchase Option, the Escrow Agreement, the Trust Agreement
and the Services Agreement, the issuance and sale of the Securities, the
consummation of the transactions contemplated hereby and thereby, and compliance
by the Company with the terms and provisions hereof and thereof, do not and
will
not, with or without the giving of notice or the lapse of time, or both,
(a) to
such counsel’s knowledge, conflict with, or result in a breach of, any of the
terms or provisions of, or constitute a default under, or result in the creation
or modification of any lien, security interest, charge or encumbrance upon
any
of the properties or assets of the Company pursuant to the terms of, any
mortgage, deed of trust, note, indenture, loan, contract, commitment or other
agreement or instrument filed as an exhibit to the Registration Statement,
(b)
result in any violation of the provisions of the Company Certificate or By-Laws,
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.
(vii) 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.
-26-
(viii) Counsel
has participated in conferences with officers and other representatives of
the
Company, representatives of the independent public accountants for the Company
and representatives of the Underwriters at which the contents of the
Registration Statement, the Prospectus and related matters were discussed
and
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in
the
Registration Statement and Prospectus (except as otherwise set forth in this
opinion), no facts have come to the attention of such counsel which lead
them to
believe that either the Registration Statement or the Prospectus or any
amendment or supplement thereto, as of the date of such opinion contained
any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light
of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements and schedules and other financial and statistical data
included in the Registration Statement or Prospectus).
(ix) 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.
(x) 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.
(xi) The
statements under the captions “Comparison to offerings of blank check companies”
and “Description of Securities” and Item 14 of Part II of the Registration
Statement, insofar as such statements constitute a summary of the legal matters
or documents referred to therein, fairly present the information called for
with
respect to such legal matters or documents.
4.2.2. Closing
Date and Option Closing Date Opinion of Counsel.
On each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received the favorable opinion of Xxxxx Xxxxx, dated the Closing
Date
or the Option Closing Date, as the case may be set forth above, addressed
to the
Representative and in form and substance reasonably satisfactory to the
Representative, confirming as of the Closing Date and, if applicable, the
Option
Closing Date, the statements made by Xxxxx Xxxxx in its opinion delivered
on the
Effective Date.
4.2.3. Reliance.
In
rendering such opinion, such counsel may rely: (i) as to matters involving
the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to
the
extent specified in such opinion, if at all, upon an opinion or opinions
(in
form and substance reasonably satisfactory to the Representative) of other
counsel reasonably acceptable to the Representative, familiar with the
applicable laws; and (ii)as to matters of fact, to the extent they deem proper,
on certificates or other written statements of officers of the Company and
officers of departments of various jurisdiction having custody of documents
respecting the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to
the
Underwriters’ counsel if requested. The opinion of counsel for the Company and
any opinion relied upon by such counsel for the Company shall include a
statement to the effect that it may be relied upon by counsel for the
Underwriters in its opinion delivered to the Underwriters.
-27-
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, the Representative shall have received a letter, addressed
to the Representative and in form and substance satisfactory in all respects
(including the non-material nature of the changes or decreases, if any, referred
to in clause (iii) below) to the Representative and to EG&S from RK 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 June
30, 2005 balance sheet included in the Registration Statement, other than
as set
forth in or contemplated by the Registration Statement, or, if there was
any
decrease, setting forth the amount of such decrease, and (c) during the period
from June 30, 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;
-28-
(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 the
Representative may reasonably request.
4.4. Officers’
Certificates.
4.4.1. Officers’
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Chairman of
the
Board or the President and the Secretary or Assistant Secretary of the Company,
dated the Closing Date or the Option Closing Date, as the case may be,
respectively, to the effect that the Company has performed all covenants
and
complied with all conditions required by this Agreement to be performed or
complied with by the Company prior to and as of the Closing Date, or the
Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.5 hereof have been satisfied as of such date and that, as of Closing Date
and
the Option Closing Date, as the case may be, the representations and warranties
of the Company set forth in Section 2 hereof are true and correct. In addition,
the Representative will have received such other and further certificates
of
officers of the Company as the Representative may reasonably
request.
-29-
4.4.2. Secretary’s
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Secretary
or
Assistant Secretary of the Company, dated the Closing Date or the Option
Date,
as the case may be, respectively, certifying: (i) that the By-Laws and Company
Certificate 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.
4.6. Delivery
of Agreements.
4.6.1. Effective
Date Deliveries.
On the
Effective Date, the Company shall have delivered to the Representative executed
copies of the Escrow Agreement, the Trust Agreement, the Warrant Agreement,
the
Services Agreement and all of the Insider Letters.
4.6.2. Closing
Date Deliveries.
On the
Closing Date, the Company shall have delivered to the Representative executed
copies of the Representative’s Purchase Option.
4.6.3. Secondary
Market Trading Survey.
On the
Closing Date, the Representative shall have received the Secondary Market
Trading Survey from EG&S.
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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 the Representative
that participates in the offer and sale of the Units (each a “Selected
Dealer”)
and
each of their respective directors, officers, employees, agents and
representatives, 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
(collectively, including all controlling persons, the “Indemnitees”),
against any and all loss, liability, claim, charge, 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 Indemnitee may become
subject
under the Act, the Exchange Act or any other federal, state or local statute,
law, rule, regulation or ordinance or at common law or otherwise. or under
the
laws, rules and regulations of foreign countries or political subdivisions
thereof, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in: (i) any Preliminary Prospectus,
the
Registration Statement or the Prospectus (as from time to time each may be
amended and supplemented); (ii) in any post-effective amendment or amendments
or
any new registration statement and prospectus in which is included securities
of
the Company issued or issuable upon exercise of the Representative’s Purchase
Option; or (iii) any application or other document or written communication
(in
this Section 5 collectively called “application”)
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Units under the securities
laws thereof or filed with the Commission, any state securities commission
or
agency, the NASD or OTC Bulletin Board 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, which furnished written information, it
is
expressly agreed, consists solely of the subsections captioned “State Blue Sky
Information,”“Pricing
of Securities” and“Regulatory
Restrictions on Purchase of Securities” contained
in the section of the Prospectus entitled “Underwriting.” 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 Indemnitee to the extent that any loss,
liability, claim, damage or expense of such Indemnitee results from the fact
that a copy of the Prospectus was not given or sent to the person asserting
any
such loss, liability, claim or damage at or prior to the written confirmation
of
sale of the Securities to such person as required by the Act and the
Regulations, and if the untrue statement or omission has been corrected in
the
Prospectus, unless such failure to deliver the Prospectus was a result of
non-compliance by the Company with its obligations under Section 3.4 hereof.
The
Company agrees promptly to notify the Representative of the commencement
of any
litigation or proceedings against the Company or any of its officers, directors
or controlling persons in connection with the issue and sale of the Securities
or in connection with the Registration Statement or Prospectus.
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5.1.2. Procedure.
If any
action is brought against an Indemnitee in respect of which indemnity may
be
sought against the Company pursuant to Section 5.1.1, such Indemnitee shall
promptly notify the Company in writing of the institution of such action
and the
Company shall assume the defense of such action, including the employment
and
fees of counsel (subject to the reasonable approval of the applicable
Indemnitee) and payment of actual expenses. Such Indemnitee 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 Indemnitee 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 Indemnitee(s) 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
applicable Indemnittees), in any of which events the reasonable fees and
expenses of not more than one additional firm of attorneys selected by the
applicable Indemnitee shall be borne by the Company. Notwithstanding anything
to
the contrary contained herein, if the applicable Indemnitee shall assume
the
defense of such action as provided above, the Company shall have the right
to
approve the terms of any settlement of such action which approval shall not
be
unreasonably withheld.
5.2. Indemnification
of the Company.
Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, officers and employees and agents who control
the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any and all loss, liability, claim, damage and expense
described in the foregoing indemnity from the Company to the several
Underwriters, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in any Preliminary
Prospectus, the Registration Statement or
Prospectus or any amendment or supplement thereto or in any application,
in
reliance upon, and in strict conformity with, written information furnished
to
the Company with respect to such Underwriter by or on behalf of the Underwriter
expressly for use in such Preliminary Prospectus, the Registration Statement
or
Prospectus or any amendment or supplement thereto or in any such application,
which furnished written information, it is expressly agreed, consists solely
of
the subsections captioned “State Blue Sky Information,”“Pricing
of Securities” and“Regulatory
Restrictions on Purchase of Securities” contained
in the section of the Prospectus entitled “Underwriting.” 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,
on the
one hand,
and the
Underwriters, on the other hand, shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the applicable parties, 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 (15) 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.
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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, the Representative may, in its discretion,
arrange for the Representative 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 (1) Business Day after such default relating to more
than
10% of the Firm Units or Option Units, the Representative does not arrange
for
the purchase of such Firm Units or Option Units, then the Company shall be
entitled to a further period of one (1) Business Day within which to procure
another party or parties satisfactory to the Representative to purchase said
Firm Units or Option Units on such terms. In the event that neither the
Representative or the Company can arrange for the purchase of the Firm Units
or
Option Units to which a default relates as provided in this Section 6, this
Agreement may be terminated by the Representative 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, the Representative 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 (5) 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.
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7. Right
to Appoint Observer.
For a
period of two (2) years from the Effective Date, upon notice from Maxim to
the
Company, Maxim shall have the right to send a representative (who need not
be
the same individual from meeting to meeting) to observe each meeting of the
Board of Directors of the Company; provided
that
such representative shall sign a Regulation FD compliant confidentiality
agreement which is reasonably acceptable to Maxim and its counsel in connection
with such representative’s attendance at meetings of the Board of Directors;
and
provided further
that
upon written notice to Maxim, the Company may exclude the representative
from
meetings where, in the written opinion of counsel for the Company, the
representative’s presence would destroy the attorney-client privilege. The
Company agrees to give Maxim written notice of each such meeting and to provide
Maxim 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 Maxim 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. The
Company further agrees that, during said two (2) year period, it shall schedule
no less than four (4) meetings of its Board of Directors in each such year
at
which meetings a representative of Maxim shall be permitted to attend or
otherwise participate as set forth herein. Such meetings shall be held quarterly
each year and ten (10) days advance notice of such meetings shall be given
to
Maxim. Further, during such two (2) year period, the Company shall give prompt
written notice to Maxim of any proposed Business Combinations or other
acquisitions, mergers, reorganizations or similar transactions.
8. Additional
Covenants and Agreements.
8.1. Additional
Shares or Options.
The
Company hereby agrees that until the Company consummates a Business Combination,
it shall not issue any shares of Common Stock or any options or other securities
convertible into Common Stock, or
any
shares of Preferred Stock which participate in any manner in the Trust Fund
or
which vote as a class with the Common Stock on a Business
Combination.
8.2. 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 effect a Business
Combination (a “Target
Business”)
or
obtain the services of any vendor unless and until such Target Business or
vendor acknowledges in writing, whether through a letter of intent, memorandum
of understanding or other similar document (and subsequently acknowledges
the
same in any definitive document replacing any of the foregoing), that: (a)
it
has read the Prospectus and understands that the Company has established
the
Trust Fund, initially in an amount of $43,495,000 (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 of the conversion of their shares
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 B,
respectively. Furthermore, each officer and director of the Company shall
execute a waiver letter in the form attached hereto as Exhibit
C.
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8.3. Insider
Letters.
The
Company shall not take any action or omit to take any action which would
cause a
breach of any of the Insider Letters executed between each Initial Stockholder
and Maxim and will not allow any amendments to, or waivers of, such Insider
Letters without the prior written consent of Maxim.
8.4. 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 the Company Certificate or the
By-Laws. Prior to the consummation of a Business Combination, the Company
will
not amend the Company Certificate or Bylaws without the prior written consent
of
Maxim.
8.5. Blue
Sky Requirements.
The
Company shall provide counsel to the Representative with ten copies of all
proxy
information and all related material filed with the Commission in connection
with a Business Combination concurrently with such filing with the Commission.
In addition, the Company shall furnish any other state in which its initial
public offering was registered, such information as may be requested by such
state.
8.6. 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. At the time the Company seeks approval of any potential Business
Combination, the Company will offer each of holders of the Company’s Common
Stock issued in this Offering (the “IPO
Shares”)
the
right to convert their IPO Shares at a per share price equal to the amount
in
the Trust Fund (inclusive of any interest income therein) on the record date
(the “Conversion
Price”)
for
determination of stockholders entitled to vote upon the proposal to approve
such
Business Combination (the “Record
Date”)
divided by the total number of IPO Shares. The Company’s “Liquidation Value”
shall mean the Company’s book value, as determined by the Company and audited by
RK. 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 vote against such approval of a
Business Combination and
elect
to convert their IPO Shares into a pro rata portion of the Trust
Fund,
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 vote against approval of any potential Business Combination
and
elect
to convert their IPO Shares into a pro rata portion of the Trust
Fund,
the
Company will not proceed with such Business Combination and will not convert
such shares.
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8.7. 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.
8.8. Affiliated
Transactions.
The
Company shall cause each of the Initial Stockholders to agree that, in order
to
minimize potential conflicts of interest which may arise from multiple
affiliations, the Initial Stockholders will present to the Company for its
consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire an operating business, until the earlier
of the
consummation by the Company of a Business Combination, the liquidation of
the
Company or until such time as the Initial Stockholders cease to be an officer
or
director of the Company, subject to any pre-existing fiduciary obligations
the
Initial Stockholders might have.
8.9. 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 net assets at the time of such acquisition, the
Company will obtain an opinion from an unaffiliated, independent investment
banking firm which is a member of the NASD with respect to the satisfaction
of
such criteria. The Company is not required to obtain an opinion from an
investment banking firm as to the fair market value if the Company’s Board of
Directors independently determines that the Target Business does have sufficient
fair market value.
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8.10. Purchases
by Maxim.
Subject
in all instances to the requirements of applicable laws, rules and regulations,
following the completion of the purchase of the warrants by the initial
stockholders of the Company and within the first
forty trading days beginning the later of: (a) the date separate trading
of the
Warrants has commenced or (b) sixty (60) calendar days after the end of the
“restricted period” under Regulation M
promulgated by the Commission, Maxim agrees that it (together with the other
Underwriters listed on Schedule
A
hereto),
shall purchase up to $250,000 of Warrants for its own account in the open
market
at a price not to exceed $1.20 per Warrant. Maxim and such Underwriters
shall
purchase such Warrants pursuant to agreements in accordance with the guidelines
specified by Rule 10b5-1 under the Exchange Act through an independent
broker-dealer registered under Section 15 of the Exchange Act, which is not
affiliated with us nor part of the underwriting or selling group in connection
with the Offering.
8.11. Redemption
of Warrants.
In
accordance with the terms of the Warrant Agreement, the Company shall have
the
right to call the Warrants, with Maxim’s prior written consent, for a redemption
price of $.01 per Warrant at any time if notice of not less than 30 days
is
given and the last sale price of the Common Stock has been at least $11.50
for
any 20 trading days within a 30 trading day period ending on the third day
prior
to the day on which notice is given.
9. Representations
and Agreements to Survive Delivery.
Except
as the context otherwise requires, all representations, warranties, covenants
and agreements contained in this Agreement shall be deemed to be
representations, warranties, covenants and agreements at the Closing Date
or the
Option Closing Date, if any, and such representations, warranties, covenants
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.
Maxim
shall have the right to terminate this Agreement at any time prior to any
Closing Date if: (i) any domestic or international event or act or occurrence
has materially disrupted, or in the Representative’s sole opinion will, in the
immediate future, materially disrupt, general securities markets in the United
States; or (ii) 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)
the
United States shall have become involved in a new war or an increase in major
hostilities, or (iv) a banking moratorium has been declared by a New York
State
or federal authority, or (v) a moratorium on foreign exchange trading has
been
declared which materially adversely impacts the United States securities
market,
or (vi) 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 the
Representative’s sole opinion, make it inadvisable to proceed with the delivery
of the Units, or (vii) any of the Company’s representations, warranties,
covenants or agreements hereunder are breached, or (viii) any Underwriter
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 Maxim’s judgment would make it
impracticable to proceed with the offering, sale and/or delivery of the Units
or
to enforce contracts made by the Underwriters for the sale of the
Units.
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10.3. Expenses.
In the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the
terms
herein, the obligations of the Company to pay the out of pocket expenses
related
to the transactions contemplated herein shall be governed by Section 3.13
hereof.
10.4. Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 shall not
be in
any way effected by, such election or termination or failure to carry out
the
terms of this Agreement or any part hereof.
11. Miscellaneous.
11.1. Notices.
All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered by hand or reputable
overnight courier or delivered by facsimile transmission (with printed
confirmation of receipt) and confirmed and shall be deemed given when so
mailed,
delivered or faxed (or if mailed, two days after such mailing):
If
to the
Representative:
Maxim
Group LLC
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxxx X. Xxxxxx
Fax
No.:
(000) 000-0000
-39-
With
a
copy (which shall not constitute notice) to:
Ellenoff
Xxxxxxxx & Schole LLP
000
Xxxxxxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
Xxx Xxxx, 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Esq.
Fax
No.:
(000) 000-0000
If
to the
Company:
0
Xxxxxx
Xxxx Xxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Co-Chairman and Chief Executive Officer
Fax
No.:
(000) 000-0000
With
a
copy (which shall not constitute notice) to:
Xxxxx
Xxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxx, P.C.
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. Xxxx, Esq.
Fax
No.:
(000)
000-0000
11.2. Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of
any of
the terms or provisions of this Agreement.
11.3. Amendment.
This
Agreement may only be amended by a written instrument executed by each of
the
parties hereto.
11.4. Entire
Agreement.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof
and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
11.5. Binding
Effect.
This
Agreement shall inure solely to the benefit of and shall be binding upon
the
Representative, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their respective
successors, legal representatives and assigns, and no other person shall
have or
be construed to have any legal or equitable right, remedy or claim under
or in
respect of or by virtue of this Agreement or any provisions herein
contained.
-40-
11.6. Governing
Law, Venue, etc.
11.6.1. This
Agreement shall be deemed to have been executed and delivered in New York
and
both this Agreement and the transactions contemplated hereby shall be governed
as to validity, interpretation, construction, effect, and in all other respects
by the laws of the State of New York, without regard to the conflicts of
laws
principals thereof (other than Section 5-1401 of The New York General
Obligations Law). Each
of
the Representative and the Company: (i) agrees that any legal suit, action
or
proceeding arising out of or relating to this engagement letter and/or the
transactions contemplated hereby shall be instituted exclusively in New York
Supreme Court, County of New York, or in the United States District Court
for
the Southern District of New York, (ii) waives any objection which such party
may have or hereafter to the venue of any such suit, action or proceeding
and
(iii) irrevocably and exclusively consents to the jurisdiction of the New
York
Supreme Court, County of New York, and the United States District Court for
the
Southern District of New York in any such suit, action or
proceeding.
11.6.2. Each
of
the Representative and the Company further agrees to accept and acknowledge
service of any and all process which may be served in any such suit, action
or
proceeding in the New York Supreme Court, County of New York, or in the United
States District Court for the Southern District of New York and agrees that
service of process upon the Company mailed by certified mail to the Company’s
address shall be deemed in every respect effective service of process upon
the
Company in any such suit, action or proceeding, and service of process upon
the
Representative mailed by certified mail to the Representative’s address shall be
deemed in every respect effective service process upon the Representative,
in
any such suit, action or proceeding.
11.6.3. THE
COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW,
ON
BEHALF OF ITS EQUITY HOLDERS AND CREDITORS) HEREBY WAIVE ANY RIGHT TO A TRIAL
BY
JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION
WITH
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE
REGISTRATION STATEMENT AND THE PROSPECTUS.
11.6.4. The
Company agrees that the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of its reasonable attorneys’
fees and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
11.7. Execution
in Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to
be an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto. Delivery
of a signed counterpart of this Agreement by facsimile or e-mail/.pdf
transmission shall constitute valid and sufficient delivery
thereof.
-41-
11.8. Waiver,
etc.
The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
11.9. Time
is of the Essence.
Time
shall be of the essence of this Agreement.
[Signature
Page Follows]
-42-
|
Very
Truly Yours,
|
||
| KEY HOSPITALITY ACQUISITION CORPORATION | ||
| |
|
|
| By: | /s/ Xxxxxxx X. Xxxxxxxx | |
|
|
||
|
Name:
Xxxxxxx X. Xxxxxxxx
Title:
Co-Chairman and Chief Executive
Officer
|
||
as
of the date first written above:
MAXIM
GROUP LLC, as Representative
of
the
several Underwriters
By:
/s/
Xxxxxxxx X. Xxxxxx
Name:
Xxxxxxxx X. Xxxxxx
Title:
Managing Director
[Signature
Page to Underwriting Agreement, dated October 25, 2005]
-43-
SCHEDULE
A
6,000,000
Units
|
Underwriter
|
Number
of Firm Units
to
be Purchased
|
|||
|
Maxim
Group LLC
|
3,800,000
|
|||
|
Broadband
Capital Management LLC
|
1,000,000
|
|||
|
Wedbush
Xxxxxx Securities Inc.
|
900,000
|
|||
|
I-Bankers
Securities, Inc.
|
300,000
|
|||
|
6,000,000
|
||||
EXHIBIT
A
0
Xxxxxx
Xxxx Xxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Chief Executive Officer
Gentlemen:
Reference
is made to the Final Prospectus of Key
Hospitality Acquisition Corporation
(“Key”),
dated
October 20, 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 Key
has
established the Trust Fund, initially in an amount of $43,495,000
for the
benefit of the Public Stockholders and that Key
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 Key
or (ii)
to Key
after it
consummates a Business Combination.
For
and
in consideration of Key
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 Key
and will
not seek recourse against the Trust Fund for any reason whatsoever.
|
Print
Name of Target Business
|
|
|
Authorized
Signature of Target Business
|
-2-
EXHIBIT B
Form
of Vendor Letter
0
Xxxxxx
Xxxx Xxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Chief Executive Officer
Gentlemen:
Reference
is made to the Final Prospectus of Key
Hospitality Acquisition Corporation
(“Key”),
dated
October 20, 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 Key has established the Trust Fund,
initially in an amount of $43,495,000
for the
benefit of the Public Stockholders and that Key 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 Key; or (ii) to Key after it consummates
a
Business Combination.
For
and
in consideration of Key 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 Key and will not seek recourse against
the
Trust Fund for any reason whatsoever.
|
Print
Name of Vendor
|
|
|
Authorized
Signature of Vendor
|
0
Xxxxxx
Xxxx Xxxx
Xxxxxxxx,
Xxx Xxxxxx 00000
Attn:
Xxxxxxx X. Xxxxxxxx, Chief Executive Officer
Gentlemen:
The
undersigned officer or director of Key
Hospitality Acquisition Corporation
(“Key”)
hereby
acknowledges that Key has established the Trust Fund, initially in an amount
of
$43,495,000
for the
benefit of the Public Stockholders and that Key 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 Key or (ii) to Key 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 Key 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
|
