UNDERWRITING AGREEMENT between CROSSFIRE CAPITAL CORPORATION and FERRIS, BAKER WATTS INCORPORATED Dated: _______ __, 2006
between
CROSSFIRE
CAPITAL CORPORATION
and
XXXXXX,
XXXXX XXXXX
INCORPORATED
Dated:
_______ __, 2006
CROSSFIRE
CAPITAL CORPORATION
Baltimore,
Maryland
___________
__, 2006
Xxxxxx,
Xxxxx Xxxxx, Inc.
000
Xxxxx
Xxxxxx
Xxxxxxxxx,
XX 00000
Dear
Sirs:
The
undersigned, Crossfire Capital Corporation, a Delaware corporation
(“Company”),
hereby confirms its agreement with Xxxxxx, Xxxxx Xxxxx, Inc. (hereinafter
referred to as “you,”
“FBW”
or
the
“Representative”)
and
with the other underwriters named on
Schedule I
hereto
for which FBW is acting as Representative (the Representative and the other
Underwriters being collectively called the “Underwriters”
or,
individually, an “Underwriter”)
as
follows:
1.
Purchase and Sale of Securities.
1.1 Firm
Securities.
1.1.1 Purchase
of Firm Securities.
On the
basis of the representations and warranties herein contained, but subject to
the
terms and conditions herein set forth, the Company agrees to issue and sell,
severally and not jointly, to the several Underwriters, an aggregate of
10,000,000 units,
each
unit (“Unit”) consisting of one share of the Company's common stock par value
$.0001 per share (the “Common Stock”) and two Common Stock purchase warrants
(“Warrants”) (“Firm
Units”)
of the
Company at a purchase price (net of a 5% discount and 2.25% non-accountable
expense allowance) of $5.565 per Firm Unit. The Underwriters, severally and
not
jointly, agree to purchase from the Company the number of Firm Units
set
forth opposite their respective names on
Schedule I
attached
hereto and made a part hereof at a purchase price (net of a 5% discount and
2.25% non-accountable expense allowance) of $5.565 per Firm
Unit.
The Firm
Units
are to be offered initially to the public (the “Offering”) at the offering price
set forth on the cover page of the Prospectus (as defined in Section 2.1.1
hereof). 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 of
the
Registration Statement (as defined in Section 2.1.1 hereof)
(the“Effective
Date”)
unless
FBW informs the Company of its decision to allow earlier separate trading,
but
in no event will FBW allow separate trading until the preparation and
filing with the Securities and Exchange Commission (the“Commission”)
of
an
audited balance sheet of the Company reflecting receipt by the Company of the
proceeds of the Offering. Each Warrant entitles the
holder
thereof
to
purchase one share of Common Stock for $5.00 during the period commencing on
the
later of the consummation by the Company of a“Business
Combination” or one year from the Effective Date
and
terminating on the five-year anniversary of the Effective Date. “Business
Combination”
shall
mean any merger, capital stock exchange, asset acquisition or other similar
business combination consummated by the Company with an operating entity in
a
selected industry (as described more fully in the Registration
Statement).
1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 10:00 A.M.,
Eastern
time, on
the third business day following the Effective Date (or
the
fourth business day following the Effective Date, if the Registration Statement
is declared effective after 4:30 p.m.) or at such earlier time as shall be
agreed upon by the Representative and the Company at the offices of counsel to the
Underwriters
or at
such other place as shall be agreed upon by the
Representative and the Company. The hour and date of delivery and payment for
the Firm Units is called the “Closing
Date.”
Payment for the Firm Units shall be made on the Closing Date by
wire
transfer in Federal (same day) funds,
payable
as follows: $57,750,000 of the proceeds received by the Company for the Firm
Units shall be deposited in the trust fund established by the Company for the
benefit of the public stockholders as described in the Registration Statement
(“Trust
Fund”)
pursuant to the terms of an Investment Management Trust Agreement (“Trust
Agreement”)
against
electronic delivery to you of certificates (in form and substance satisfactory
to the Underwriters) representing the Firm Units (or through the facilities
of
the Depository Trust Company (“DTC”))
for
the account of the Underwriters. The Firm Units shall be registered in such
name
or names and in such authorized denominations as the Representative may request
in writing at least two full business days prior to the Closing Date.
The
Company will permit the Representative to examine and package the Firm Units
for
delivery, at least one full business day prior to the Closing Date. The Company
shall not be obligated to sell or deliver the Firm Units except upon tender
of
payment by the Representative for all the Firm Units.
1.1.3 Escrow
of Underwriters’ Expense Allowance.
On the
Closing Date, the Underwriters agree to deposit into the Trust Fund two and
twenty-five hundredths percent (2.25%) of the gross proceeds of the Offering
(attributable to the Underwriters’ non-accountable
expense allowance),
or $1,350,000
(the“Escrowed
Fees”)
until
the earlier of the completion of a Business Combination or the liquidation
of
the Trust Fund. Upon the consummation of a Business Combination, the
Underwriters shall promptly receive the Escrowed Fees along with any interest
accrued thereon. In the event that the Company is unable to consummate a
Business Combination and the
Trust
Fund
is
liquidated, the Underwriters shall
forfeit
any rights or claims to the Escrowed Fees and any interest accrued
thereon
and the
Escrowed Fees shall be distributed on a pro-rata basis among the holders of
the
Public Securities (defined below) along with any interest accrued
thereon.
1.2 Over-Allotment
Option.
1.2.1 Option
Units.
For the
purposes of covering any over-allotments in connection with the distribution
and
sale of the Firm Units, the Underwriters are hereby granted, severally and
not
jointly, an option to purchase up to an additional 1,500,000 Units
from the
Company (the “Over-allotment
Option”).
Such
additional 1,500,000 Units
are
hereinafter referred to as “Option
Units.”
The
Firm Units and the Option Units are hereinafter collectively referred to as
the
“Public
Units,”
and
the Public
Units,
the shares of Common Stock and the Warrants included in the Public 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 full business days after the date of the notice or such other time as
shall
be agreed upon by the Company and the Representative, at the offices of the
counsel
to the Underwriters 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 will be at
the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in Clearing House funds, payable to the
Trust Fund at the offices of the Representative or at such other place as shall
be agreed upon by the Representative and the Company upon delivery
to you of certificates representing such securities (or through the facilities
of DTC) for the account of the Underwriters. The certificates representing
the
Option Units to be delivered will be in such denominations and registered in
such names as the Representative requests not less than two full business days
prior to the Closing Date or the Option Closing Date, as the case may be, and
will be made available to
the
Representative for inspection, checking and packaging at the aforesaid office
of
the Company’s transfer agent or correspondent not less than one full business
day prior to such Closing Date.
1.3 Representative’s
Purchase Option.
1.3.1 Purchase
Option.
The
Company hereby agrees to issue and sell to the Representative (and/or
its
designees) on the Effective Date an option (“Representative’s
Purchase Option”)
for
the purchase of an aggregate of 500,000 Units
(the
“Representative’s
Units”)
(5% of
the total number of Firm Units sold in the Offering) for an aggregate purchase
price of $100.00. Each of the Representative’s Unit
shall be
identical to the Public
Units,
except that the Warrants included in the Representative’s Units ( the
“Representative’s
Warrants”)
will have
an
exercise price of $6.25 (125% of the exercise price of the Warrants included
in
the Units).
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
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 $7.50,
which is equal to one hundred and twenty five percent (125%) of the initial
public offering price of a Public
Unit.
The Representative’s Purchase Option, the Representative’s Units, 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 Representative,
and/or its designees,
upon
payment therefor, certificates for
the
Representative’s Purchase Option in the name or names and in such authorized
denominations as the Representative
may request.
2.
Representations
and Warranties of the Company.
The
Company represents and warrants to the Underwriters as of the Applicable Time
and as of the Closing Date and as of each Option Closing Date, if any, 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
a
registration statement and an amendment or amendments thereto, on Form S-1
(File
No. 333-133447), including any related preliminary prospectus or
prospectuses (“Preliminary
Prospectus”),
for
the registration of the Public Securities under the Securities Act of 1933,
as
amended (the “Act”).
Except
as
the context may otherwise require, such registration statement on file with
the
Commission at the time the registration statement becomes effective
(including the prospectus, financial statements, schedules, exhibits and all
other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as
of the
Effective Date
pursuant
to paragraph
(b) of Rule 430A
of the
Regulations), is hereinafter called the “Registration
Statement.” The
final
prospectus in the form first furnished to the Underwriters for use in the
Offering is hereinafter called the “Prospectus.”
“Statutory Prospectus” as of any time means the preliminary prospectus included
in the Registration Statement immediately prior to the Effective Date.
The
Registration Statement has been declared effective by the Commission on the
date
hereof. “Applicable
Time”
means:
[n]:
[a./p.]m. (Eastern time) on [
, 2006]
or such other time as agreed by the Company and FBW.
2.1.2
Pursuant
to the Exchange Act.
The
Company has filed with the Commission a Form 8-A (File Number 000-______)
providing for the registration under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”),
of
the Units, Common
Stock and Warrants,
which
registration has
been
declared effective by the Commission on the Effective
Date.
2.2 No
Stop
Orders, Etc
.
The Commision has not
issued
any stop order suspending
the effectiveness of the Registration Statement and no proceedings for that
purpose have been instituted or are pending or
to the
best of the Company’s knowledge, are
contemplated by the Commission.
2.3
Disclosures
in Registration Statement.
2.3.1 10b-5
Representation.
At the
respective times the Registration Statement, and
any
post-effective amendments thereto become effective and at Closing
Date and the Option Closing Date, if any, the Registration Statement,
and
any
post-effective amendments thereto, did
not
and will not contain an untrue statement of a material fact or omit to state
a
material fact
required
to be stated therein or
necessary to make the statements therein not misleading,
and
will in all material respects comply
with
the
requirements of the Act and the Regulations; neither the Prospectus,
nor any amendment or supplement thereto, as
of its
date, the Closing Date and the Option Closing Date, if any, contained 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. As of the Applicable Time, the
Statutory Prospectus (hereafter referred to as the “Disclosure Package”)
did
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 representations
and
warranties
made in
this Section 2.3.1 do
not
apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to
the
Underwriters by the Representative expressly for use in the Registration
Statement or Prospectus or any amendment thereof or supplement thereto.
2.3.2 Disclosure
of Agreements.
The
agreements and documents described in the Preliminary Prospectus, 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 Preliminary
Prospectus, 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 it
is or
may be bound and
(i)
that is referred to in the Prospectus
or (ii)
is material to the Company’s business, has been duly authorized and
validly executed by the Company, is in full force and effect in all material
respects and is enforceable against the Company and, to the Company’s knowledge,
the other parties thereto, in accordance with its terms, except (x) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the federal
and
state securities laws, and (z) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought, and none of such agreements or instruments has been assigned
by
the Company, and neither the Company nor, to the best of the Company’s
knowledge, any other party is in default thereunder and, to the best of the
Company’s knowledge, no event has occurred that, with the lapse of time or the
giving of notice, or both, would constitute a default thereunder except
for such defaults or prospective defaults that would not have a material adverse
effect on the condition, financial or otherwise, business affairs or business
prospects of the Company (a “Material Adverse Effect”).
To the
best of the Company’s knowledge, performance by the Company of the material
provisions of such agreements or instruments will not result in a violation
of
any existing applicable law, rule, regulation, judgment, order or decree of
any
governmental agency or court, domestic or foreign, having jurisdiction over
the
Company or any of its assets or businesses, including, without limitation,
those
relating to environmental laws and regulations.
2.3.3 Prior
Securities Transactions.
No
securities of the Company have been sold by the Company or by or on behalf
of,
or for the benefit of, any person or persons controlling, controlled by, or
under common control with the Company within the three years prior to the date
hereof, except as disclosed in the Registration Statement.
2.4 Changes
After Dates in Registration Statement.
2.4.1 No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise specifically stated therein:
(i) there has been no material adverse change in the condition, financial or
otherwise, or business prospects of the Company; (ii) there have been no
material transactions entered into by the Company, other than as contemplated
pursuant to this Agreement; and (iii) no member of the Company’s management has
resigned from any position with the Company.
2.4.2 Recent
Securities Transactions, Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not: (i) issued
any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its capital stock.
2.5 Independent
Accountants.
To the
knowledge of the Company, Xxxxxx & Xxxxxx, PC (“M&B”),
whose
report is filed with the Commission as part of the Registration Statement,
are
independent public
accountants as required by the Act and the Regulations. M&B has not, during
the periods covered by the financial statements included in the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act.
2.6 Financial
Statements.
The
financial statements, including the notes thereto and supporting
schedules,
included
in the Registration Statement and Prospectus present
fairly
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 (“GAAP”),
consistently applied throughout the periods involved; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. The Registration Statement discloses all material
off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of the Company with unconsolidated
entities or other persons that may have a material current or future effect
on
the Company’s financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources, or significant
components of revenues or expenses.
2.7 Authorized
Capital; Options, Etc.
The
Company
had at the date or dates indicated in the Prospectus duly authorized,
issued and outstanding capitalization as
set
forth in the Registration Statement and the Prospectus.
Based
on the assumptions stated in the Registration Statement and the Prospectus,
the
Company will have on the Closing Date the adjusted stock capitalization set
forth therein.
Except
as
set forth in, or contemplated by, the Registration Statement and the Prospectus,
on the Effective Date and on the Closing Date, there will be no options,
warrants, or other rights to purchase or otherwise acquire any authorized,
but
unissued shares of Common Stock of the Company or any security convertible
into
shares of Common Stock of the Company, or any contracts or commitments to issue
or sell shares of Common Stock or any such options, warrants, rights or
convertible securities.
2.8 Valid
Issuance of Securities, Etc.
2.8.1 Outstanding
Securities.
All
issued and outstanding shares
of the
Common
Stock
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 Common
Stock conforms to all
statements relating thereto
contained in the Registration Statement and the Prospectus. The offers and
sales
of the outstanding Common Stock were at all relevant times either registered
under the Act and any
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
shares
of
Common Stock included in the
Securities
have been duly authorized and, when issued and paid for, will be validly issued,
fully paid and non-assessable; 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.
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
will
be
enforceable against the Company in accordance with their respective terms,
except: (i) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally; (ii) as
enforceability of any indemnification or contribution provision may be limited
under the federal and state securities laws; and (iii) that the remedy of
specific performance and injunctive and other forms of equitable relief may
be
subject to the equitable defenses and to the discretion of the court before
which any proceeding therefor may be brought.
2.9 Registration
Rights of Third Parties
.
Except
as set forth in the Prospectus, no holders of any securities of the Company
or
any rights exercisable for or convertible or exchangeable into securities of
the
Company have the right to require the Company to register any such securities
of
the Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity
and Binding Effect of Agreements.
This
Agreement has
been
duly authorized, executed and delivered by the Company. The Warrant
Agreement (as defined in Section 2.21 hereof), the Trust Agreement, the Services
Agreement (as defined in Section 3.7.2 hereof) and the Escrow Agreement (as
defined in Section 2.22.2 hereof) have been duly authorized,
executed and delivered
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 and
delivery
by the
Company of this Agreement, the Warrant Agreement, the Representative’s Purchase
Option, the Trust Agreement, the Services Agreement and the Escrow
Agreement do
not,
and the performance by the Company of its obligations hereunder and
thereunder
will
not, with or without the giving of notice or the lapse of time or both: (i)
result in a
breach
of, or constitute
a
default
under, or result in the creation, modification, termination or imposition of
any
lien, charge or encumbrance upon any property or assets of the Company pursuant
to the terms of,
any
agreement or instrument to which the Company is a party,
except
pursuant to the Trust Agreement referred to in Section 2.23 hereof
except
for any such breach or default that would not have a Material Adverse Effect,
(ii) result in any violation of the provisions of the Articles of Incorporation
or the By-Laws of the Company; or (iii) violate any existing applicable law,
rule, regulation, judgment, order or decree of any governmental agency or court,
domestic or foreign, having jurisdiction over the Company or any of its
properties or business constituted as of the date hereof.
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 except
for any such default that would not have a Material Adverse Effect.
The
Company is not in violation of its
Articles of Incorporation,
or
Bylaws or in violation of any 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
except
for any such violation that would not have a Material Adverse Effect.
2.13 Corporate
Power; Licenses; Consents.
2.13.1 Conduct
of Business.
Except
as described in the Prospectus, the Company has all
requisite corporate power and authority, and has all necessary authorizations,
approvals, orders, licenses, certificates and permits of and from all
governmental regulatory officials and bodies that it needs as of the date
hereof
to
conduct its business
purpose
as
described in the Prospectus. The
disclosures in the Registration Statement concerning the effects of federal,
state, local and foreign regulation on this offering and the Company’s business
purpose as currently contemplated are correct in all material respects and
do
not omit to state a material fact required to be stated therein or necessary
in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
2.13.2 Transactions
Contemplated Herein.
The
Company has all
corporate power and
authority to
enter
into this Agreement
and to
carry out the provisions and conditions hereof, and all consents,
authorizations, approvals and orders required in connection therewith have
been
obtained.
No
consent, 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 and
the
rules and regulations of the NASD.
2.14 D&O
Questionnaires.
To the
Company’s knowledge, all information contained in the questionnaires (the
“Questionnaires”)
completed by each of the Company’s stockholders immediately prior to the
Offering (the “Initial
Stockholders”)
and
provided to the Underwriters as an exhibit to his or her Insider Letter (as
defined in Section 2.22.1) is true and correct in all respects 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.
Other
than as set forth in the Prospectus, 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, Xxxxxx Xxxxxx, which has
not been disclosed in the Registration Statement.
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 as of the date
hereof, 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 so qualify or to be in good standing would not have a
Material Adverse Effect.
2.17 Transactions
Affecting Disclosure to NASD.
2.17.1 Finder’s
Fees.
Except
as described in the Prospectus, there are no claims, payments, arrangements,
agreements or understandings relating to the payment of a finder’s, consulting
or origination fee by the Company or any Initial Stockholder
with
respect to the sale of the Securities hereunder.
2.17.2 Payments
Within Twelve Months.
The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise,
in consideration of such person raising capital for the Company or introducing
to the Company persons who raised or provided capital to the Company,
(ii) to
any NASD member;
or
(iii) to any person or entity that has any direct or indirect affiliation or
association with any NASD member,
within
the twelve months prior to the Effective Date.
2.17.3 Use
of
Proceeds.
None of
the net proceeds of the Offering will be paid by the Company to any
participating NASD member or its affiliates, except as specifically authorized
herein
and
except as may be paid in connection with a Business Combination as contemplated
by the Prospectus.
2.17.4 Initial
Stockholders’ NASD Affiliation.
Based
on
questionnaires distributed to such persons, no officer, director or any
beneficial owner of the Company’s unregistered securities has any direct or
indirect affiliation or association with any NASD member. The
Company will advise the Representative and its counsel if it learns that any
officer, director or owner of at least 5% of the Company’s outstanding
shares
of Common
Stock
is or
becomes an affiliate or associated person of an NASD member participating in
the
offering.
2.18 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 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,
except
for such payments or inducements as were lawful under applicable laws, rules
and
regulations.
The
Company’s internal accounting controls and procedures are sufficient to cause
the Company to comply with the Foreign Corrupt Practices Act of 1977, as
amended.
2.19 Officers’
Certificate.
Any
certificate signed by any duly authorized officer of the Company and delivered
to you or to your counsel shall be deemed a representation and warranty by
the
Company to the Underwriters as to the matters covered thereby.
2.20 Warrant
Agreement.
The
Company has entered into a warrant agreement with respect to the Warrants and
the Representative’s Warrants with American Stock Transfer & Trust Company
substantially in the form filed as an exhibit to the Registration Statement
(the
“Warrant
Agreement”).
2.21 Agreements
With Initial Stockholders.
2.21.1
Insider
Letters.
The
Company has caused to be duly executed legally binding and enforceable
agreements (except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors’ rights
generally, (ii) as enforceability of any indemnification, contribution or
noncompete provision may be limited under the federal and state securities
laws,
and (iii) that the remedy of specific performance and injunctive and other
forms
of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought)
annexed as Exhibits _________, to the Registration Statement (the “Insider
Letters”),
pursuant to which each of
the
Initial Stockholders of
the
Company agree to certain matters, including but not limited to, certain matters
described as being agreed to by them under the “Proposed Business” Section of
the Prospectus.
2.21.2 Escrow
Agreement.
The
Initial
Stockholders have
entered
into an
escrow agreement (the “Escrow
Agreement”)
with
American Stock Transfer & Trust Company (the “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 the Escrow Agent, until
six
months after the consummation of a Business Combination. 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
Escrow Agreement shall not be amended, modified or otherwise changed without
the
prior written consent of FBW.
2.22 Investment
Management Trust Agreement.
The
Company has entered into the Trust Agreement with respect to certain proceeds
of
the Offering
in
form
and
substance satisfactory to the Underwriters.
2.23 Covenants
Not to Compete.
To
the
Company’s knowledge, no
Initial
Stockholder of the Company is subject to any noncompetition agreement with
any
current
or prior
employer which could materially affect his ability to be an Initial Stockholder,
employee, officer and/or director of the Company.
2.24 Financial
Advisory Agreement.
Intentionally
Omitted.
2.25 Investments.
No more
than 45% of the “value” (as defined in Section 2(a)(41) of the Investment
Company Act of 1940 (the “Investment
Company Act”))
of
the Company’s total assets consist of, and no more than 45% of the Company’s net
income after taxes has
been
derived
from, securities other than “Government Securities”
(as
defined in Section 2(a)(16) of the Investment Company Act).
2.26 Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.27 Related
Party Transactions.
There
are no business relationships or related party transactions involving the
Company or any
other
person required to be described
in the Prospectus that have not been described as required
2.28
Board
of Directors.
The
Board of Directors of the Company is comprised of the persons set forth on
Schedule 2.28. The qualifications of the persons serving as Board members and
the overall composition of the Board comply with the Xxxxxxxx-Xxxxx Act of
2002
and the rules promulgated thereunder. At least one member of the Board qualifies
as a “financial expert” as such term is defined under the Xxxxxxxx-Xxxxx Act of
2002 and the rules promulgated thereunder.
2.28
Xxxxxxxx-Xxxxx
Compliance.
2.28.1
Disclosure
Controls.
The
Company has developed and currently maintains disclosure controls and procedures
that will comply with Rule 13a-15 or 15d-15 of the Exchange Act, and such
controls and procedures are effective to ensure that all material information
concerning the Company will be made known on a timely basis to the individuals
responsible for the preparation of the Company’s Exchange Act filings and other
public disclosure documents.
2.28.2 Compliance.
The
Company is, or on the Effective Date will be, in material compliance
with the provisions of the Xxxxxxxx-Xxxxx Act of 2002 applicable to
it.
3.
Covenants of the Company.
The
Company covenants and agrees as follows:
3.1 Amendments
to Registration Statement.
The
Company will deliver to the Representative, prior to filing, any amendment
or
supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and not file any such amendment or supplement to which
the Representative shall reasonably object in writing.
3.2
Federal Securities Laws.
3.2.1
Compliance.
During
the time when a Prospectus is required to be delivered under the Act,
the
Company
will use its best 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 it
is
necessary,
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 with
the
Commission pursuant to the requirements of Rule 424 of the
Regulations.
3.2.3
Exchange
Act Registration.
For a
period of five years from the Effective Date, or 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
FBW.
3.2.4
Free
Writing Prospectuses.
The
Company represents and agrees that unless
it
obtains the prior consent of FBW, and each Underwriter represents and agrees
that, unless it obtains the prior consent of FBW and the Company, it
has
not made and will not make any offer relating to the Public Securities that
would constitute an issuer free writing prospectus, as defined in Rule 433
of
the Regulations
or that would otherwise constitute a free writing prospectus as defined in
Rule
405 of the Regulations.
Any such
free writing prospectus consented to by FBW or
the
Company, as the case may be, is
hereinafter referred to as a “Permitted
Free Writing Prospectus”.
The
Company represents that it will
treat each Permitted Free Writing Prospectus as an “issuer free writing
prospectus”
as
defined in Rule 433, and has complied and will comply with the applicable
requirements of Rule 433 of the 1933 Act, including timely Commission filing
where required, legending and record keeping.
3.3
Blue
Sky
Filing.
Intentionally
Omitted.
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 such
number of copies of each Preliminary Prospectus and the Prospectus as such
Underwriters may reasonably request and, as soon as the Registration Statement
or any amendment or supplement thereto becomes effective, deliver to you two
original executed Registration Statements, including exhibits, and all
post-effective amendments thereto and copies of all exhibits filed therewith
or
incorporated therein by reference and all original executed consents of
certified experts.
3.5
Effectiveness and Events
Requiring Notice to the Representative.
The
Company will
use
its best efforts to cause the Registration Statement to remain effective
andwill
notify the Representative immediately and confirm the notice in writing: (i)
of
the effectiveness of any
post-effective amendment to the
Registration Statement;
(ii) of
the issuance by the Commission of any stop order or of the initiation, or the
threatening, of any proceeding for that purpose; and
(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 3.5
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
shall
enter a stop order
or
suspend such qualification at any time,
the
Company will make every reasonable effort to obtain promptly the lifting of
such
order.
3.6
Review
of Financial Statements.
For a
period of five years from the Effective Date, or until such earlier date upon
which the Company is required to be liquidated, the Company, at its expense,
shall cause its regularly engaged independent certified public accountants
to
review (but not audit) the Company’s financial statements for each of the first
three fiscal quarters prior to the announcement of quarterly financial
information, the filing of the Company’s Form 10-Q quarterly report and the
mailing of quarterly financial information to stockholders.
3.7
Transactions.
3.7.1
Business
Combinations.
The
Company will not consummate a Business Combination with any entity which is
affiliated with any Initial Stockholder unless the Company obtains an opinion
from an independent investment banking firm that the Business Combination is
fair to the Company’s stockholders from a financial perspective.
3.7.2
Administrative
Services.
The
Company has entered into an agreement (the “Services
Agreement”)
with
FL Administration Inc. (the “Provider”),
pursuant to which the Provider will make available to the Company general and
administrative services including office space, utilities and secretarial
support for an amount equal to $7,500.00 per month.
3.7.3
Affiliate
Compensation.
The
Company shall not pay any Initial Stockholder or any of their affiliates any
fees or compensation from the Company, for services rendered to the Company
prior to, or in connection with, the consummation of a Business
Combination;
provided that
the
Initial Stockholders shall be entitled to reimbursement from the Company for
their out-of-pocket expenses incurred in connection with seeking and
consummating a Business Combination.
3.8
Warrant
Solicitation Fees
.
Intentionally
omitted.
3.9
Reports
to the Representative.
3.9.1
Periodic
Reports, Etc.
For a
period of five years from the Effective Date or until such earlier time upon
which the Company is required to be liquidated, the Company will furnish to
the
Representative (Attn: Xxxxx
Xxxx, Vice President)
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 (collectively, the “Reports”),
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) copies of each Form SR; (iv)
a
copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared
by the Company; (v) five copies of each Registration Statement; (vi) 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 (vii) 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, however, that the Company shall not be required to furnish to the
Representative any Reports which are readily obtainable via the Commission’s
XXXXX filing service.
3.9.2
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 Representative 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. American Stock Transfer & Trust Company is acceptable to the
Underwriters.
3.9.3
Secondary
Market Trading Survey.
Intentionally
Omitted.
3.9.4
Trading
Reports.
During
such time as the Public Securities are listed on the American Stock Exchange
(the “AMEX”),
the
Company shall provide to the Representative, at its expense, such reports
published by the AMEX relating to price trading of the Public Securities, as
the
Representative shall reasonably request.
3.10
Disqualification
of Form S-1.
For a
period equal to seven 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.
3.11
Payment
of Expenses.
3.11.1
General
Expenses Related to the Offering.
The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at the Closing Date, all expenses incident
to the performance of the obligations of the Company under this Agreement,
including, but not limited to: (i) the preparation, printing, filing and mailing
(including the payment of postage with respect to such mailing) of the
Registration Statement, the Preliminary Prospectus
and
the
Prospectus
and the
printing and mailing of this Agreement and related documents, including the
cost
of all copies thereof and any amendments thereof or supplements thereto supplied
to the Underwriters in quantities as may be required
by the Underwriters; (ii) the printing, issuance
and delivery of certificates
for
the
shares of Common Stock and the Warrants included in the Public
Units
and the Representative’s Purchase Option, including any transfer or other taxes
payable thereon; (iii) filing fees
incurred
in registering the Offering with the NASD; (iv) filing fees, costs and expenses
incurred in listing the Public
Units and the shares of Common Stock and Warrants included therein
on the
AMEX; (v) costs and expenses of Representative’s counsel up to a maximum of
$75,000; (vi) fees
and
disbursements of the transfer and warrant agent; and
(vii)
all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section
3.11.1 including, without limitation, “road-show” expenses (up to a maximum of
$25,000)
and
expenses incurred in hiring an
investigative search firm of the Representative’s choice to conduct an
investigation of the principals of the Company as shall be mutually selected
by
the Representative and the Company. The
Representative may deduct from the net proceeds of the Offering payable to
the
Company on the Closing Date, or the Option Closing Date, if any, the expenses
set forth herein to be paid by the Company to the Representative and
others.
3.11.2
Nonaccountable
Expenses.
The
Company further agrees that, in addition to the expenses payable pursuant to
Section 3.11.1, on the Closing Date it will pay to the Representative a
nonaccountable expense allowance equal to two and twenty-five hundredths of
a
percent (2.25%) of the gross proceeds from
the
sale of the Firm Units by deduction from the proceeds of the Offering
contemplated herein;
provided,
however, that the such proceeds shall be deposited into the Trust Fund pursuant
to Section 1.1.3 of this Agreement and shall be released upon the earlier of
a
Business Combination or the liquidation of the Trust Fund.
3.12
Application
of Net Proceeds.
The
Company will apply the net proceeds from the Offering received by it in a manner
consistent with the application described under the caption “Use Of Proceeds” in
the Prospectus.
3.13
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.
3.14
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 Representative’s counsel prior to the consummation of the Business
Combination: complete details of all services and copies of agreements governing
such services. The Company also agrees that, if required under the Regulations,
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.
3.15
Stabilization.
Neither
the Company, nor, to its knowledge, any of its employees, directors or
stockholders (without the consent of FBW) has taken or will take, directly
or
indirectly, any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under the Exchange Act, or
otherwise, stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Public Units.
3.16
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.
3.17
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 M&B
or other independent public accountants reasonably acceptable to
FBW.
3.18
Form
8-K.
Promptly
following completion of the Offering, the
Company
shall
retain
its independent public accountants to audit the balance
sheet
of the
Company as of the Closing Date (the “Audited
Balance
Sheet”)
reflecting the receipt by the Company of the proceeds of the Offering.
As soon
as the Audited Balance
Sheet
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 Balance
Sheet.
3.19
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.
3.20
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 of counsel for the
Underwriters.
3.21
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” as
provided in
the
Trust Agreement and disclosed in the Prospectus. The Company will otherwise
conduct its business in a manner so that it will not be
required to register under
the
Investment Company Act.
3.22
No
Fiduciary Duties.
The
Company acknowledges and agrees that the Underwriters’ responsibility to the
Company is solely contractual in nature and that none of the Underwriters or
their affiliates shall be acting in a fiduciary capacity, or otherwise owe
any
fiduciary duty to the company in connection with the Offering and the other
transactions contemplated by this Agreement.
4. Conditions
of Underwriters’ Obligations.
The
obligations of the several Underwriters to purchase and pay for the Public
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.,
Eastern
time, on the date of this Agreement or such later date and time as shall be
consented to in writing by you, and, at each of the Closing Date and the Option
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for the purpose shall have
been instituted or shall be pending or contemplated by the Commission and any
request on the part of the Commission for additional information shall have
been
complied with to the reasonable satisfaction of Xxxxxxx Xxxxxx LLP (“Xxxxxxx
Savage”)
4.1.2
American
Stock Exchange Clearance.
On the
Effective Date, the Company’s Public
Units,
Common
Stock and Warrants
shall
have been approved for listing on the American Stock Exchange.
4.2 Company
Counsel Matters.
4.2.1
Closing
Date Opinion of Counsel.
On the
Closing Date, the Representative shall have received the favorable opinion
of
Davies Xxxx Xxxxxxxx & Xxxxxxxx LLP (“Davies”),
counsel to the Company, dated the Closing Date, addressed to the Representative
and in form and substance satisfactory
to counsel
to the
Underwriters
to the
effect that:
(i)
The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of its state of incorporation. The Company
is
duly qualified and licensed and in good standing as a foreign corporation in
the
State
of New York or in such other 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 shares of Common Stock 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 shares were issued in violation of the preemptive rights of any
stockholder of the Company arising
by operation of law or
under
the Articles of Incorporation or Bylaws of the Company.
The
offers and sales of the outstanding Common Stock were at all relevant times
either registered under the Act and the applicable state securities or Blue
Sky
Laws or exempt from such registration requirements.
The
authorized and outstanding capital stock of the Company is
as
set
forth in
the
Prospectus.
(iii)
The
shares
of
Common Stock included in 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 shares
of
Common Stock included in or underlying 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
Articles of Incorporation or Bylaws of the Company.
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 shares
of
Common Stock
are in
due and proper form under the Delaware General Corporation Law.
(iv)
This
Agreement,
the
Warrant
Agreement, the Services Agreement, the Trust Agreement,
the
Escrow Agreement and
the
Representative’s Purchase Option,
have
each
been
duly and
validly authorized,
executed and delivered by
the
Company, and 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.
(v)
The
execution and delivery
of
this
Agreement, the Warrant Agreement, the Representative’s Purchase Option, the
Escrow Agreement and
the
Trust Agreement do not,
and the
performance by the Company of its obligations hereunder and
thereunder
will
not
(a) to
such counsel’s knowledge,
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 document filed as an exhibit to the Registration Statement, (b) violate
the
Articles of Incorporation or the By-Laws of the Company, or (c) to such
counsel’s knowledge, violate any statute or any judgment, order or decree, rule
or regulation applicable to the Company of any court, domestic or foreign,
or of
any federal, state or other regulatory authority or other governmental body
having jurisdiction over the Company, its properties or assets.
(vi)
The
Registration Statement, the Preliminary Prospectus and the Prospectus and any
post-effective amendments or supplements thereto (other than the financial
statements included therein, as to which no opinion need be rendered) each
as of
their respective dates complied as to form in all material respects with the
requirements of the Act and Regulations. The Securities conform in all material
respects to the description thereof contained in the Registration Statement
and
the Prospectus. No United States or state statute or regulation required to
be
described in the Prospectus is not described as required (except as to the
Blue
Sky laws of the various states, as to which such counsel expresses no opinions),
nor are any
contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement not so described or filed as required (except for the
contracts and documents described in the “Underwriting” section of the
Registration Statement, as to which such counsel expresses no
opinion).
(vii)
Counsel has participated in conferences with officers and other representatives
of the Company, representatives of the independent public accountants for the
Company and representatives of the Underwriters at which the contents of the
Preliminary Prospectus, 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 Preliminary Prospectus, 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
Preliminary Prospectus, the Registration Statement as of the Effective Date,
or
the Prospectus or any amendment or supplement thereto, as of its respective
date
and as of the Closing Date, 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 Preliminary Prospectus, the
Registration Statement or Prospectus).
(viii)
Based
solely on a telephone conversation with the Staff of the Commission, the
Registration Statement has become
effective under the Act. To such counsel’s knowledge, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or threatened
under the Act
or
applicable state securities laws.
(ix)
To
such
counsel’s knowledge, there is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, now pending, or
threatened against the Company that is required to be described in the
Registration Statement that is not so described.
In
rendering such opinion, Davies may rely as to matters governed by the laws
of
states other than New York, the General Corporation Law of the State of Delaware
or Federal laws, on local counsel in such jurisdictions provided that in each
case Davies shall state that they believe that they and the Underwriters are
justified in relying on such other counsel. In addition to the matters set
forth
above, such opinion shall also include a statement to the effect that nothing
has come to the attention of such counsel that leads them to believe that (i)
the Registration Statement, at the time it became effective under the Act
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading; (ii) that the Disclosure Package [Statutory Prospectus] as
of
the Applicable Time, contained any untrue statement of a material fact or
omitted to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading (except that such counsel need express no view as to financial
statement, financial schedules and other financial data); and (iii) the
Prospectus, or any supplement thereto, on the date it was filed pursuant to
the
Act and as of the Closing Date or the Option Closing Date, if any, contained
an
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements, in the light of the circumstances
under which they are made, not misleading (except that such counsel need express
no view as to financial statements, financial schedules and other financial
data). Such opinion shall also include a statement to the effect that the
Registration Statement, the Prospectus and each amendment or supplement thereto,
comply as to form in all material respects with the requirements of the Act
and
the Regulations (except that such counsel need express no view as to financial
statements, financial schedules and other financial data). With respect to
such
statements, Davies may state that their belief is based upon the procedures
set
forth therein, but is without independent check and verification, except
customary due diligence.
4.2.2
Option
Closing Date Opinion of Counsel.
On the
Option Closing Date, if any, the Representative shall have received the
favorable opinion of Davies, dated the Option Closing Date, addressed to the
Representative and in form and substance reasonably satisfactory to the
Representative, confirming as of the Option Closing Date, the statements made
by
Davies in their respective opinions delivered on the Closing Date.
4.3
Cold
Comfort Letter
.
At
the
time
this
Agreement
is
executed, and at each of the
Closing Date and the Option Closing Date, if any, you shall have received a
letter, addressed to the Representative and in form and substance satisfactory
in all respects (including
the non-material nature of the changes or decreases, if any, referred to in
clause (iii) below) to you and to Xxxxxxx Xxxxxx
from
M&B 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 public 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 _________, 2006 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 _________, 2006 to a specified
date not later than five days prior to the Effective Date, Closing Date or
Option Closing Date, as the case may be, there was any decrease in revenues,
net
earnings or net earnings per share of Common Stock, in each case as compared
with the corresponding period in the preceding year and as compared with the
corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv)
Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a breakdown of commercial papers
and notes payable to banks);
(v)
Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the extent that
such
amounts, numbers, percentages, statements and information may be derived from
the general accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal counsel, with
the
results obtained from the application of specified readings, inquiries and
other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi)Stating
that they have not during the immediately preceding five year period brought
to
the attention of the Company’s management any reportable condition related to
internal structure, design or operation as defined in the Statement on Auditing
Standards No. 60 “Communication of Internal Control Structure Related Matters
Noted in an Audit,” in the Company’s internal controls; and
(vii)
Statements
as to such other matters incident to the transaction contemplated hereby as
you
may reasonably request.
4.4
Officers’
Certificates.
4.4.1
Officers’
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Chairman of
the
Board or the Chief Financial Officer and the Secretary or Assistant Secretary
of
the Company, dated the Closing Date or the Option Closing Date, as the case
may
be, respectively, to the effect that the Company has performed all covenants
and
complied with all conditions required by this Agreement to be performed or
complied with by the Company prior to and as of the Closing Date, or the Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.5 hereof have been satisfied as of such date and that, as of Closing Date
and
the Option Closing Date, as the case may be, the representations and warranties
of the Company set forth in Section 2 hereof are true and correct.
In
addition, the Representative will have received such other and further
certificates of officers of the Company as the Representative may reasonably
request.
4.4.2
Secretary’s
Certificate.
At each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received a certificate of the Company signed by the Secretary or
Assistant Secretary of the Company, dated the Closing Date or the Option Date,
as the case may be, respectively, certifying: (i) that the By-Laws and Articles
of Incorporation of the Company are true and complete, have not been modified
and are in full force and effect; (ii) that the resolutions of
the
board of directors of the Company 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 information
is set
forth in the Registration Statement and Prospectus;
and
(ii) no action suit or proceeding, at law or in equity, shall have been pending
or threatened against the Company or any Initial Stockholder before or by any
court or federal or state commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding may have a Material Adverse
Effect, except as set forth in the Registration Statement and
Prospectus.
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.
4.7
Opinion
of Counsel for the Underwriters
.
All
proceedings taken in connection with the authorization, issuance or sale of
the
Securities as herein contemplated shall be reasonably satisfactory in form
and
substance to you and to Gersten,
Savage,
counsel
to the Underwriters
and you
shall have received from such counsel a favorable opinion, dated the Closing
Date and the Option Closing Date, if any, with respect to such of these
proceedings as you may reasonably require. On
or
prior to the Effective Date, the Closing Date and the Option Closing Date,
as
the case may be, counsel for the Underwriters shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this
Section 4.7, or in order to evidence the accuracy, completeness or satisfaction
of any of the representations, warranties or conditions herein
contained.
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, their respective directors, officers and
employees and each person, if any, who controls any such Underwriter
(“controlling
person”)
within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act,
against any and all loss, liability, claim, damage and expense whatsoever
(including but not limited to any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever,
whether
arising out of any action between any of the Underwriters and the Company or
between any of the Underwriters and any third party or otherwise)
to
which they or any of them may become subject under the Act, the Exchange Act
or
any other statute or at common law or otherwise or under the laws of foreign
countries, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in (i) any Preliminary Prospectus, the
Registration Statement or the Prospectus (as from time to time each may be
amended and supplemented);
or
(ii) in
any post-effective amendment or amendments or any new registration statement
and
prospectus in which is included securities of the Company issued or issuable
upon exercise of the 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 American Stock Exchange; or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, unless such statement
or omission was made in reliance upon and in conformity with written information
furnished to the Company with
respect to an Underwriter by
or on
behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration
Statement or Prospectus, or any amendment or supplement thereof, or in any
application, as the case may be. With respect to any untrue statement or
omission or alleged untrue statement or omission made in the
Preliminary Prospectus, the indemnity agreement contained in this paragraph
shall not inure to the benefit of any Underwriter to the extent that any loss,
liability, claim, damage or expense of such Underwriter results from the fact
that a copy of the Prospectus was not given or sent to the person asserting
any
such loss, liability, claim or damage at or prior to the written confirmation
of
sale of the Securities to such person as required by the Act and the
Regulations, and if the untrue statement or omission has been corrected in
the
Prospectus, unless such failure to deliver the Prospectus was a result of
non-compliance by the Company with its obligations under Section 3.4 hereof.
The
Company agrees promptly to notify the Representative of the commencement of
any
litigation or proceedings against the Company or any of its officers, directors
or controlling persons in connection with the issue and sale of the Securities
or in connection with the Registration Statement or Prospectus.
5.1.2
Procedure.
If any
action is brought against an Underwriter or controlling person in respect of
which indemnity may be sought against the Company pursuant to Section 5.1.1,
such Underwriter shall promptly notify the Company in writing of the institution
of such action and the Company shall assume the defense of such action,
including the employment and fees of counsel (subject to the reasonable approval
of such Underwriter) and payment of actual expenses. Such Underwriter or
controlling person shall have the right to employ its or their own counsel
in
any such case, but the fees and expenses of such counsel shall be at the expense
of such Underwriter or such controlling person unless: (i) the employment of
such counsel at the expense of the Company shall have been authorized in writing
by the Company in connection with the defense of such action; (ii) the Company
shall not have employed counsel to have charge of the defense of such action;
or
(iii) such
indemnified party or parties shall have reasonably concluded that there may
be
defenses available to it or them which are different from or additional to
those
available to the Company (in which case the Company shall not have the right
to
direct the defense of such action on behalf of the indemnified party or
parties), in any of which events the reasonable fees and expenses of not more
than one additional firm of attorneys selected by the Underwriter and/or
controlling person shall be borne by the Company. Notwithstanding anything
to
the contrary contained herein, if
the
Underwriter or controlling person shall assume the defense of such action as
provided above, the
Company shall have
the
right to approve the terms of
any
settlement of such
action which approval
shall
not be unreasonably withheld.
5.2
Indemnification
of the Company.
Each
Underwriter, severally and not jointly, agrees to indemnify and hold harmless
the Company, its directors, officers and employees and agents who
control the Company within the meaning of Section 15 of the Act or Section
20 of
the Exchange Act against any and all loss, liability, claim, damage and expense
described in the
foregoing indemnity from the Company to the several Underwriters,
as
incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions made in any Preliminary Prospectus, the
Registration Statement or Prospectus or any amendment or supplement
thereto
or in
any application,
in
reliance upon, and in strict conformity with, written information furnished
to
the Company with respect to such Underwriter by or on behalf of the Underwriter
expressly for use in such Preliminary Prospectus, the Registration Statement
or
Prospectus or any amendment or supplement thereto or in any such application.
In
case any action shall be brought against the Company or any other person so
indemnified based on any Preliminary Prospectus, the Registration Statement
or
Prospectus or any amendment or supplement thereto or any application, and in
respect of which indemnity may be sought against any Underwriter, such
Underwriter shall have the rights and duties given to the Company, and the
Company and each other person so indemnified shall have the rights and duties
given to the several Underwriters by the provisions of Section
5.1.2.
5.3
Contribution.
5.3.1
Contribution
Rights.
In
order to provide for just and equitable contribution under the Act in any case
in which (i) any person entitled to indemnification under this Section 5 makes
claim for indemnification pursuant hereto but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and
the expiration of time to appeal or the denial of the last right of appeal)
that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Act, the Exchange Act or otherwise may be required on
the
part of any such person in circumstances for which indemnification is provided
under this Section 5, then, and in each such case, the Company and the
Underwriters shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred,
in such
proportions that the Underwriters are responsible for that portion represented
by the percentage that the underwriting discount appearing on the cover page
of
the Prospectus bears to the initial offering price appearing thereon (to the
extent that it shall have actually been paid from the Trust Fund to the
Underwriters as of each date a contribution obligation is payable hereunder;
otherwise, the Underwriters’ contribution shall be limited to the underwriting
discount paid on the Closing Date) ( the“Underwriters’
Contribution
Percentage”)
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,
provided, further,
that
upon consummation of a Business Combination and delivery of the Escrowed Fees
to
the Underwriters, the Underwriters’ Contribution Percentage shall be increased
by the percentage that the Escrowed Fees bears to the initial offering price
(the“Final
Contribution Percentage”)
and the
Final Contribution Percentage shall hereafter be applicable only to new claims
for contribution by the Company.
Notwithstanding the provisions of this Section 5.3.1, no Underwriter shall
be
required to contribute any amount in excess of the amount by which the total
price at which the Public Securities underwritten by it and distributed to
the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay in respect of such losses,
liabilities, claims, damages and expenses. For purposes of this Section, each
director, officer and employee of an Underwriter or the Company, as applicable,
and each person, if any, who controls an Underwriter or the Company, as
applicable, within the meaning of Section 15 of the Act shall have the same
rights to contribution as the Underwriters or the Company, as
applicable.
5.3.2
Contribution
Procedure.
Within
fifteen days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is to be made
against another party (“contributing party”), notify the contributing party of
the commencement thereof, but the omission to so notify the contributing party
will not relieve it from any liability which it may have to any other party
other than for contribution hereunder. In case any such action, suit or
proceeding is brought against any party, and such party notifies a contributing
party or its representative of the commencement thereof within the aforesaid
fifteen days, the contributing party will be entitled to participate therein
with the notifying party and any other contributing party similarly notified.
Any such contributing party shall not be liable to any party seeking
contribution on account of any settlement of any claim, action or proceeding
effected by such party seeking contribution without the written consent of
such
contributing party. The contribution provisions contained in this Section are
intended to supersede, to the extent permitted by law, any right to contribution
under the Act, the Exchange Act or otherwise available. The Underwriters’
obligations to contribute pursuant to this Section 5.3 are several and not
joint.
6.
Default
by an Underwriter.
6.1
Default
Not Exceeding 10% of Firm Units or Option Units.
If any
Underwriter or Underwriters shall default in its or their obligations to
purchase the Firm Units or the Option Units, if the over-allotment option is
exercised, hereunder, and if the number of the Firm Units or Option Units with
respect to which such default relates does not exceed in the aggregate 10%
of
the number of Firm Units or Option Units that all Underwriters have agreed
to
purchase hereunder, then such Firm Units or Option Units to which the default
relates shall be purchased by the non-defaulting Underwriters in proportion
to
their respective commitments hereunder.
6.2
Default
Exceeding 10% of Firm Units or Option Units.
In the
event that such default relates to more than 10% of the Firm Units or Option
Units, you may in your discretion arrange for yourself or for another party
or
parties to purchase such Firm Units or Option Units to which such default
relates on the terms contained herein. If within one business day after such
default relating to more than 10% of the Firm Units or Option Units you do
not
arrange for the purchase of such Firm Units or Option Units, then the Company
shall be entitled to a further period of one business day within which to
procure another party or parties satisfactory
to you to purchase said Firm Units or Option Units on such terms. In the event
that neither you nor the Company arrange for the purchase of the Firm Units
or
Option Units to which a default relates as provided in this Section 6, this
Agreement will automatically be terminated without liability on the part of
the
Company (except
as provided in Sections 3.13 and 5 hereof) or
the
several Underwriters (except as provided in Section 5 hereof) ;
provided,
however,
that if
such default occurs with respect to the Option Units, this Agreement will not
terminate as to the Firm Units; and
provided further
that
nothing herein shall relieve a defaulting Underwriter of its liability, if
any,
to the other several Underwriters and to the Company for damages occasioned
by
its default hereunder.
6.3
Postponement
of Closing Date.
In the
event that the Firm Units or Option Units to which the default relates are
to be
purchased by the non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, you or the Company shall have the right to
postpone the Closing Date or Option Closing Date for a reasonable period, but
not in any event exceeding five business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus or in any other documents and arrangements, and the Company agrees
to
file promptly any amendment to the Registration Statement or the Prospectus
that
in the
opinion of counsel for the Underwriter
may
thereby be made necessary. The term “Underwriter” as used in this Agreement
shall include any party substituted under this Section 6 with like effect as
if
it had originally been a party to this Agreement with respect to such
Securities.
7.
Right
to
Appoint Representative.
For a
period of two years from the Effective Date, upon notice from FBW to the
Company, FBW shall have the right to send a representative (who need not be
the
same individual from meeting to meeting) to observe each meeting of the Board
of
Directors of the Company; provided that such representative shall sign a
Regulation FD-compliant confidentiality agreement which is reasonably acceptable
to FBW and its counsel in connection with such representative’s attendance at
meetings of the Board of Directors; and provided further that upon written
notice to FBW, the Company may exclude the representative from meetings where,
in the opinion
of counsel for the Company, the representative’s presence would destroy the
attorney-client privilege. The Company agrees to give FBW written notice of
each
such meeting and to provide FBW with an agenda and minutes of the meeting no
later than it gives such notice and provides such items to
the
directors of
the
Company
and to
reimburse the representative of FBW for its reasonable out-of-pocket expenses
incurred in connection with its attendance at the meeting, including but not
limited to, food, lodging and transportation.
8. Additional
Covenants.
8.1
Board
Composition and Board Designations.
For a
period of five years from the Effective Date, the Company shall ensure that
(i)
the qualifications of the persons serving as board members and the overall
composition of the board comply with the Xxxxxxxx-Xxxxx Act of 2002 and the
rules promulgated thereunder and with the listing requirements of the Nasdaq
or
any other national securities exchange or national securities association (as
the case may be in the event the Company seeks to have its Public Securities
listed on another exchange or quoted on an automated quotation system), and
(ii)
if applicable, at least one member of the board of directors qualifies as a
“financial expert” as such term is defined under the Xxxxxxxx-Xxxxx Act of 2002
and the rules promulgated thereunder [need
to check if this is AMEX requirement].
8.2
Additional
Shares or Options.
The
Company hereby agrees that until the Company consummates a Business
Combination,
it
shall not issue any shares of Common Stock or any options or other securities
convertible into Common Stock, or any shares of Preferred Stock which
participate in any manner in the Trust Fund or which vote as a class with the
Common Stock on a Business Combination.
8.3 Trust
Fund Waiver Letters.
The
Company hereby agrees that it will not commence its due diligence investigation
of any operating business which the Company seeks to acquire (“Target
Business”)
or
obtain the services of any vendor unless and until the Target Business or the
vendor executes a waiver letter in the form attached hereto as
Exhibit A
and
B,
respectively. Furthermore, each officer and director of the Company shall
execute a waiver letter in the form attached hereto as
Exhibit C.
8.4
Insider
Letters.
The
Company shall not take any action or omit to take any action which would cause
a
breach of any of the Insider Letters executed between each Initial Stockholder
and FBW and will not allow any amendments to, or waivers of, such Insider
Letters without the prior written consent of FBW.
8.5
Articles
of Incorporation and By-Laws.
The
Company shall not take any action or omit to take any action that would cause
the Company to be in breach or violation of its Articles of Incorporation or
By-Laws.
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, net of working capital
and taxes payable) 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
M&B. 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, 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, the Company will not proceed with such Business
Combination and will not convert such shares.
8.7
Target
Net Assets.
The
Company agrees that the initial Target Business that it acquires must have
a
fair market value equal to at least 80% of the Company’s net assets at the time
of such acquisition. The fair market value of such business must be determined
by the Board of Directors of the Company based upon standards generally accepted
by the financial community, such as actual and potential sales, earnings and
cash flow and book value. If the Board of Directors of the Company is not able
to independently determine that the Target Business has a fair market value
of
at least 80% of the Company’s fair market value at the time of such acquisition,
the Company will obtain an opinion from an unaffiliated, independent 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 unaffiliated independent
firm as to the fair market value if the Company’s Board of Directors
independently determines that the Target Business does have sufficient fair
market value.
8.8
Representations
and Agreements to Survive Delivery.
Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at the Closing Dates and such representations,
warranties and agreements of the Underwriters and Company, including the
indemnity agreements contained in Section 5 hereof, shall remain operative
and
in full force and effect regardless of any investigation made by or on behalf
of
any Underwriter, the Company or any controlling person, and shall survive
termination of this Agreement or the issuance and delivery of the Securities
to
the several Underwriters until the earlier of the expiration of any applicable
statute of limitations and the seventh anniversary of the later of the Closing
Date or the Option Closing Date, if any, at which time the representations,
warranties and agreements shall terminate and be of no further force and
effect.
9.
Effective
Date of this Agreement and Termination Thereof.
9.1
Effective
Date.
This
Agreement shall become effective on the Effective Date at the time the
Registration Statement is declared effective by the Commission.
2.29
9.2
Termination.
You
shall have the right to terminate this Agreement at any time prior to any
Closing Date, (i) if any domestic or international event or act or
occurrence, including any new war or increase in major hostilities, has
materially disrupted, or in your opinion will in the immediate future materially
disrupt, general securities markets in the United States; or (ii) if
trading on the New York Stock Exchange, the American Stock Exchange, the Boston
Stock Exchange or on the NASD OTC Bulletin Board (or successor trading market)
shall have been suspended or materially limited, or minimum or maximum prices
for trading shall have been fixed, or maximum ranges for prices for securities
shall have been fixed, or maximum ranges for prices for securities shall have
been required on the NASD OTC Bulletin Board or by order of the Commission
or
any other government authority having jurisdiction, or (iii) if a banking
moratorium has been declared by a New York State or federal authority, or
(iv) if a moratorium on foreign exchange trading has been declared which
materially adversely impacts the United States securities markets, or
(v) if the Company shall have sustained a material loss by fire, flood,
accident, hurricane, earthquake, theft, sabotage or other calamity or malicious
act which, whether or not such loss shall have been insured, will, in your
opinion, make it inadvisable to proceed with the delivery of the Units, or
(vi) if any of the Company’s representations, warranties or covenants
hereunder are breached, or (vii) if the Representative shall have become
aware after the date hereof of such a material adverse change in the conditions
or prospects of the Company, or such adverse material change in general market
conditions as in the Representative’s judgment would make it impracticable to
proceed with the Offering or to enforce contracts made by the Underwriters
for
the sale of the Public Units.
9.3
Expenses.
In the
event that this Agreement shall not be carried out for any reason whatsoever,
other than a breach by the Representative, 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 then due and payable.
9.4
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.
10.
Miscellaneous.
10.1
Notices
.
All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed (registered
or certified mail, return receipt requested), personally
delivered or telecopied and confirmed and shall be deemed given when so
delivered or telecopied and confirmed or if mailed, two days after such
mailing
If
to the
Representative:
Xxxxxx,
Xxxxx Xxxxx, Inc.
000
Xxxxx
Xxxxxx
Xxxxxxxxx,
XX 00000
Attn:
Xxxxx Xxxx, Vice-President
Copy
to:
Xxxxxxx
Xxxxxx LLP
000
Xxxxxxxxx Xxxxxx, 0xx
Xxxxx
Xxx
Xxxx,
XX
00000
Attn:
Xxxxxx X. Xxxxxx, Esq.
If
to the
Company:
Crossfire
Capital Corporation
000
Xxxxx
Xxxxxx,
Xxxxx
0000
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxxx, President
Copy
to:
Davies
Xxxx Xxxxxxxx & Xxxxxxxx
LLP
000
Xxxxxxx Xxxxxx,
00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attn:
Xxxxx Xxxxx, Esq.
10.2
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.
10.3
Amendment.
This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
10.4
Entire
Agreement.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersedes all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
10.5
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.
10.6
Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of Maryland, without giving effect to conflict of laws. The
Company hereby agrees that any action, proceeding or claim against it arising
out of, relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of Maryland of the United States of America for the
District of Maryland, Baltimore Division, and irrevocably submits to such
jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives
any objection to such exclusive jurisdiction and that such courts represent
an
inconvenient forum. Any such process or summons to be served upon the Company
may be served by transmitting a copy thereof by registered or certified mail,
return receipt requested, postage prepaid, addressed to it at the address set
forth in Section 9 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the Company in any action, proceeding or
claim. The Company agrees that the prevailing party(ies) in any such action
shall be entitled to recover from the other party(ies) all of its reasonable
attorneys’ fees and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefor.
10.7
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.
10.8
Waiver,
Etc.
The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
If
the
foregoing correctly sets forth the understanding between the Underwriters and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
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Very
truly yours,
CROSSFIRE
CAPITAL CORPORATION
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By:
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Name:
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Xxxxxx
Xxxxxx
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Title:
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President
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Accepted
on the date first above
written.
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XXXXXX,
XXXXX XXXXX, INCORPORATED
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By:
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Name:
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Xxxxx
Xxxx
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Title:
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Vice-President
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SCHEDULE
I
CROSSFIRE
CAPITAL CORPORATION
10,000,000
Units
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Number
of Firm Units
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Underwriter
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to
be Purchased
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Xxxxxx,
Xxxxx Xxxxx, Incorporated
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Ladenburg
Thallman & Co. Inc.
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________________
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10,000,000
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SCHEDULE
2.28
CROSSFIRE
CAPITAL CORPORATION
Board
of Directors
Xxxxxx
Xxxxxx
Xxxxx
X.
Xxxxxxxxx
Xxx
X.X.
Xxxxxxx
Xxxxxxx
X. Xxxxxxx
Xxxxx
X.
Xxxxxx
EXHIBIT
A
Crossfire
Capital Corporation
000
Xxxxx
Xxxxxx
Xxxxx
0000
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxxx, President
Gentlemen:
Reference
is made to the Final Prospectus of Crossfire Capital Corporation (“Crossfire”),
dated ,
2006
(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 Crossfire has established the Trust
Fund, initially in an amount of $
for the
benefit of the Public Stockholders and that Crossfire 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 Crossfire or (ii) to Crossfire
after it consummates a Business Combination.
For
and
in consideration of Crossfire 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 Crossfire and will not seek
recourse against the Trust Fund for any reason whatsoever.
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Print
Name of Target Business
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Authorized
Signature of Target Business
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EXHIBIT
B
Crossfire
Capital Corporation
000
Xxxxx
Xxxxxx
Xxxxx
0000
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxxx, President
Gentlemen:
Reference
is made to the Final Prospectus of Crossfire Capital Corporation (“Crossfire”),
dated ,
2006
(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 Crossfire has established the Trust
Fund, initially in an amount of $
for the
benefit of the Public Stockholders and that Crossfire 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 Crossfire; or (ii) to Crossfire
after it consummates a Business Combination.
For
and
in consideration of Crossfire 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 Crossfire and will not seek recourse
against the Trust Fund for any reason whatsoever.
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Print
Name of Service Provider
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Signature
of Service Provider
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EXHIBIT
C
Crossfire
Capital Corporation
000
Xxxxx
Xxxxxx
Xxxxx
0000
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxx Xxxxxx, President
Gentlemen:
The
undersigned officer or director of Crossfire Capital Corporation (“Crossfire”)
hereby
acknowledges that Crossfire has established the Trust Fund, initially in an
amount of $___ for the benefit of the Public Stockholders and that Crossfire
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 Crossfire or
(ii)
to Crossfire 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 Crossfire 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 after the initial public offering by the
Company of its securities.
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Print
Name of Officer
or Director
|
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Signature
of Officer
or Director
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