UNDERWRITING AGREEMENT between PHOENIX INDIA ACQUISITION CORP. and RODMAN & RENSHAW, LLC Dated: ___________, 2005
EXHIBIT
1.1
between
and
XXXXXX
& XXXXXXX, LLC
Dated:
___________, 2005
__________
2005
Xxxxxx
& Xxxxxxx, LLC
0000
Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Dear
Sirs:
The
undersigned, Phoenix India Acquisition Corp., a Delaware corporation
(“Company”),
hereby confirms its agreement with Xxxxxx & Xxxxxxx, LLC (hereinafter
referred to as “you,”“Xxxxxx”
or the
“Representative”)
and
with the other underwriters named on Schedule
I
hereto
for which Xxxxxx 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
12,500,000 units (“Firm
Units”)
of the
Company at a purchase price (net of discounts and commissions) of $7.44 per
Firm
Unit. The Underwriters, severally and not jointly, agree to purchase from the
Company the number of Firm Securities set forth opposite their respective names
on Schedule
I
attached
hereto and made a part hereof at a purchase price (net of discounts and
commissions) of $7.44 per share. The 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). Each Firm Unit consists of one share of the
Company’s common stock, par value $.0001 per share (the “Common
Stock”),
and
one warrant (“Warrant(s)”).
The
shares of Common Stock and the Warrants included in the Firm Units will not
be
separately transferable until 20 days after the effective date (the
“Effective
Date”)
of the
Registration Statement (as defined in Section 2.1.1 hereof) following the
earlier to occur of the expiration of the Over-allotment Option (defined below)
or its exercise in full, unless Xxxxxx informs the Company of its decision
to
allow earlier separate trading, but in no event xxxx Xxxxxx allow separate
trading until the preparation of an audited balance sheet of the Company
reflecting receipt by the Company of the proceeds of the Offering. The Warrant
entitles its holder to exercise it to purchase one share of Common Stock for
$6.00 during the period commencing on the later of the consummation by the
Company of its “Business Combination” or one year from the Effective Date of the
Registration Statement and terminating on the 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 a company which has its
primary operations located in India (as
described more fully in the Registration Statement).
1.1.2 Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 10:00 A.M., New York
time, on the third business day following the Effective Date of the Registration
Statement (or the fourth business day following the Effective Date, if the
Registration Statement is declared effective after 4:30 p.m.) or at such earlier
time as shall be agreed upon by the Representative and the Company at the
offices of the Representative or at such other place as shall be agreed upon
by
the Representative
1
and
the
Company. The hour and date of delivery and payment for the Firm Units is called
the “Closing
Date.”
Payment for the Firm Units shall be made on the Closing Date at the
Representative’s election by wire transfer in Federal (same day) funds or by
certified or bank cashier’s check(s) in New York Clearing House funds, payable
as follows: $_____________ of the proceeds received by the Company for the
Firm
Units shall be deposited in the trust fund established by the Company for the
benefit of the public stockholders as described in the Registration Statement
(“Trust
Fund”)
pursuant to the terms of an Investment Management Trust Agreement (the
“Trust
Agreement”)
and
the remaining proceeds shall be paid to the order of the Company upon delivery
to you of certificates (in form and substance satisfactory to the Underwriters)
representing the Firm Units (or through the facilities of the Depository Trust
Company (the “DTC”))
for
the account of the Underwriters. The Firm Units shall be registered in such
name
or names and in such authorized denominations as the Representative may request
in writing at least two 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’ Discount.
On the
Closing Date, the Underwriters agree to deposit into the Trust Fund a portion
of
the discount equal to $0.16 per Firm Unit in the Offering (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 (if any, net of taxes payable). In the event that the Company
is
unable to consummate a Business Combination and American Stock Transfer &
Trust Company, the trustee of the Trust Fund, commences liquidation of the
Trust
Fund, the Underwriters hereby agree to the following: (i) forfeit any rights
or
claims to the Escrowed Fees and any interest accrued thereon; and (ii) that
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 1,875,000 units from the
Company (the “Over-allotment
Option”).
Such
additional 1,875,000 units are hereinafter referred to as “Option
Units.”
The
Firm Units and the Option Units are hereinafter collectively referred to as
the
“Units,”
and
the Units, the shares of Common Stock and the Warrants included in the Units
and
the shares of Common Stock issuable upon exercise of the Warrants are
hereinafter referred to collectively as the “Public
Securities.”
The
purchase price to be paid for the Option Units will be the same price per Option
Unit as the price per Firm Unit set forth in Section 1.1.1 hereof.
1.2.2 Exercise
of Option.
The
Over-allotment Option granted pursuant to Section 1.2.1 hereof may be
exercised by the Representative as to all (at any time) or any part (from time
to time) of the Option Units within 45 days after the Effective Date. The
Underwriters will not be under any obligation to purchase any Option Units
prior
to the exercise of the Over-allotment Option. The Over-allotment Option granted
hereby may be exercised by the giving of oral notice to the Company from the
Representative, which must be confirmed in writing by overnight mail or
facsimile transmission setting forth the number of Option Units to be purchased
and the date and time for delivery of and payment for the Option Units, which
will not be later than five 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 Representative
or at such other place as shall be agreed upon by the Company and the
Representative. If such delivery and payment for the Option Units does not
occur
on the Closing Date, the date and time of the closing for such Option Units
will
be as set forth in the notice (hereinafter the “Option
Closing Date”).
Upon
exercise of the Over-allotment Option, the Company will become obligated to
convey to the Underwriters, and, subject to the terms and conditions set forth
herein, the Underwriters will become obligated to purchase, the number of Option
Units specified in such notice.
2
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 New
York 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 their
designees) on the Effective Date an option (“Representative’s
Purchase Option”)
for
the purchase of an aggregate of 875,000 units (the “Representative’s
Units”)
for an
aggregate purchase price of $100.00. Each of the Representative’s Units is
identical to the Firm Units.
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 $8.80,
which is equal to one hundred and ten percent (110%) of the initial public
offering price of a Unit. The Representative’s Purchase Option, the
Representative’s Units, the Warrants included in 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 Underwriters, upon payment
therefor, certificates for the Representative’s Purchase Option in the name or
names and in such authorized denominations as the Underwriters may request.
2. Representations
and Warranties of the Company.
The
Company represents and warrants to the Underwriters as follows:
2.1 Filing
of Registration Statement.
2.1.1 Pursuant
to the Act.
The
Company has filed with the Securities and Exchange Commission (“Commission”)
a
registration statement and an amendment or amendments thereto, on Form S-1
(File No. 333-_______), including any related preliminary prospectus (the
“Preliminary
Prospectus”),
for
the registration of the Public Securities under the Securities Act of 1933,
as
amended (“Act”),
which
registration statement and amendment or amendments have been prepared by the
Company in conformity with the requirements of the Act, and the rules and
regulations (“Regulations”)
of the
Commission under the Act. Except as the context may otherwise require, such
registration statement, as amended, on file with the Commission at the time
the
registration statement becomes effective (including the prospectus, financial
statements, schedules, exhibits and all other documents filed as a part thereof
or incorporated therein and all information deemed to be a part thereof as
of
such time pursuant to paragraph (b) of Rule 430A of the Regulations), is
hereinafter called the “Registration
Statement,”
and
the form of the final prospectus dated the Effective Date included in the
Registration Statement (or, if applicable, the form of final prospectus filed
with the Commission pursuant to Rule 424 of the Regulations), is hereinafter
called the “Prospectus.”
The
Registration Statement has been declared effective by the Commission on the
date
hereof.
3
2.1.2 Pursuant
to the Exchange Act.
The
Company has filed with the Commission a Form 8-A (File
Number 000-__________) providing for the registration under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”),
of
the Units, the Common Stock and the Warrants. The registration of the Units,
Common Stock and Warrants under the Exchange Act has been declared effective
by
the Commission on the date hereof.
2.2 No
Stop Orders, Etc.
Neither
the Commission nor, to the best of the Company’s knowledge, any state regulatory
authority has issued any order preventing or suspending the use of any
Preliminary Prospectus or has instituted or, to the best of the Company’s
knowledge, threatened to institute any proceedings with respect to such an
order.
2.3 Disclosures
in Registration Statement.
2.3.1 10b-5
Representation.
At the
time the Registration Statement becomes effective and at all times subsequent
thereto up to the Closing Date and the Option Closing Date, if any, the
Registration Statement and the Prospectus will contain all material statements
that are required to be stated therein in accordance with the Act and the
Regulations, and will in all material respects conform to the requirements
of
the Act and the Regulations; neither the Registration Statement nor the
Prospectus, nor any amendment or supplement thereto, on such dates, will contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein,
in
light of the circumstances under which they were made, not misleading. When
any
Preliminary Prospectus was first filed with the Commission (whether filed as
part of the Registration Statement for the registration of the Securities or
any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
such Preliminary Prospectus and any amendments thereof and supplements thereto
complied or will comply in all material respects with the applicable provisions
of the Act and the Regulations and did not and will not contain an untrue
statement of a material fact or omit to state any material fact required to
be
stated therein or necessary in order to make the statements therein, in light
of
the circumstances under which they were made, not misleading. The representation
and warranty made in this Section 2.3.1 does not apply to statements made or
statements omitted in reliance upon and in conformity with written information
furnished to the Company with respect to the Underwriters by the 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 Registration Statement and the
Prospectus conform to the descriptions thereof contained therein and there
are
no agreements or other documents required to be described in the Registration
Statement or the Prospectus or to be filed with the Commission as exhibits
to
the Registration Statement, that have not been so described or filed. Each
agreement or other instrument (however characterized or described) to which
the
Company is a party or by which its property or business is or may be bound
or
affected and (i) that is referred to in the Prospectus, or (ii) is material
to
the Company’s business, has been duly and validly executed by the Company, is in
full force and effect 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, and none of such agreements or instruments has been
assigned by the Company, and neither the Company nor any other party is in
default thereunder and no event has occurred that, with the lapse of time or
the
giving of notice, or both, would constitute a default thereunder. 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,
4
or
under
common control with the Company within the three years prior to the date hereof,
except as disclosed in the Registration Statement.
2.3.4 Regulations.
The
disclosures in the Registration Statement concerning the effects of Federal,
State and local regulation and any foreign regulation on the Company’s business
as currently contemplated are correct in all material respects and do not omit
to state a material fact necessary to make the statements therein, in light
of
the circumstances in which they were made, not misleading.
2.4 Changes
After Dates in Registration Statement.
2.4.1 No
Material Adverse Change.
Since
the respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise specifically stated therein:
(i) there has been no material adverse change in the condition, financial or
otherwise, or business prospects of the Company; (ii) there have been no
material transactions entered into by the Company, other than as contemplated
pursuant to this Agreement; and (iii) no member of the Company’s management has
resigned from any position with the Company.
2.4.2 Recent
Securities Transactions, Etc.
Subsequent to the respective dates as of which information is given in the
Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not: (i) issued
any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its capital stock.
2.5 Independent
Accountants.
To the
knowledge of the Company, Xxxxxx, Xxxxx Consulting Group LLP (“MECG”),
whose
report is filed with the Commission as part of the Registration Statement,
are
independent accountants as required by the Act and the Regulations. MECG has
not, during the periods covered by the financial statements included in the
Prospectus, provided to the Company any non-audit services, as such term is
used
in Section 10A(g) of the Exchange Act.
2.6 Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement and Prospectus fairly present the
financial position and the results of operations of the Company at the dates
and
for the periods to which they apply; and such financial statements have been
prepared in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein. The Registration Statement discloses all material
off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of the Company with unconsolidated
entities or other persons that may have a material current or future effect
on
the Company’s financial condition, changes in financial condition, results of
operations, liquidity, capital expenditures, capital resources or significant
components of revenues or expenses.
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.
5
2.8 Valid
Issuance of Securities, Etc.
2.8.1 Outstanding
Securities.
All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of any security
of
the Company or similar contractual rights granted by the Company. The authorized
Common Stock conforms to all statements relating thereto contained in the
Registration Statement and the Prospectus. The offers and sales of the
outstanding Common Stock were at all relevant times either registered under
the
Act and the applicable state securities or Blue Sky laws or, based in part
on
the representations and warranties of the purchasers of such shares of Common
Stock, exempt from such registration requirements.
2.8.2 Securities
Sold Pursuant to this Agreement.
The
Public 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 Public Securities are not and will not be subject to the preemptive rights
of any holders of any security of the Company or similar contractual rights
granted by the Company; and all corporate action required to be taken for the
authorization, issuance and sale of the Public Securities has been duly and
validly taken. The Public Securities conform in all material respects to all
statements with respect thereto contained in the Registration Statement. When
issued, the Representative’s Purchase Option, the Representative’s Warrants and
the Warrants will constitute valid and binding obligations of the Company to
issue and sell, upon exercise thereof and payment of the respective exercise
prices therefor, the number and type of securities of the Company called for
thereby in accordance with the terms thereof and such Representative’s Purchase
Option, the Representative’s Warrants and the Warrants are enforceable against
the Company in accordance with their respective terms.
2.9 Registration
Rights of Third Parties.
Except
as set forth in the Prospectus, no holders of any securities of the Company
or
any rights exercisable for or convertible or exchangeable into securities of
the
Company have the right to require the Company to register any such securities
of
the Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity
and Binding Effect of Agreements.
This
Agreement, the Warrant Agreement (as defined in Section 2.20 hereof), the Trust
Agreement, the Services Agreement (as defined in Section 3.7.2 hereof) and
the
Escrow Agreement (as defined in Section 2.21.2 hereof) have been duly
and
validly authorized by the Company and constitute, and the Representative’s
Purchase Option, has been duly and validly authorized by the Company and, when
executed and delivered, will constitute, the valid and binding agreements of
the
Company, enforceable against the Company in accordance with their respective
terms.
2.11 No
Conflicts, Etc.
The
execution, delivery, and performance by the Company of this Agreement, the
Warrant Agreement, the Representative’s Purchase Option, the Trust Agreement,
the Service Agreement and the Escrow Agreement, the consummation by the Company
of the transactions herein and therein contemplated and the compliance by the
Company with the terms hereof and thereof do not and will not, with or without
the giving of notice or the lapse of time or both: (i) result in a material
breach of, or conflict with any of the terms and provisions of, or constitute
a
material 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 2.22 hereof; (ii) result in any violation of the provisions
of the
Certificate of Incorporation or the By-Laws of the Company; or (iii) violate
any
existing applicable law, rule, regu-lation, 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.
6
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
any obligation for borrowed money, or any other material agreement or instrument
to which the Company is a party or by which the Company may be bound or to
which
any of the properties or assets of the Company is subject. The Company is not
in
violation of any term or provision of its Certificate of Incorporation or
By-Laws, as either may be amended from time to time, 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.
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.
2.14 D&O
Questionnaires.
All
information contained in the questionnaires
(the “Questionnaires”)
completed by each of the Company’s stockholders immediately prior to the
Offering (the “Initial
Stockholders”)
and
provided to the Underwriters as an exhibit to his or her Insider Letter (as
defined in Section 2.21.1) is true and correct in all material 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.
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 any Initial Stockholder which has not
been
disclosed in the Registration Statement or the Questionnaires.
2.16 Good
Standing.
The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of its state of incorporation 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.
7
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 or any other arrangements, agreements or
understandings of the Company or, to the best of the Company’s knowledge, any
Initial Stockholder that may affect the Underwriters’ compensation, as
determined by the National Association of Securities Dealers, Inc. (the
“NASD”).
2.17.2 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, other than payments to Xxxxxx.
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 Common Shares 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 any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist it
in
connection with any actual or proposed transaction) that (i) might subject
the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, might have had a
material adverse effect on the assets, business or operations of the Company
as
reflected in any of the financial statements contained in the Prospectus or
(iii) if not continued in the future, might adversely affect the assets,
business, operations or prospects of the Company. The Company’s internal
accounting controls and procedures are sufficient to cause the Company to comply
with the Foreign Corrupt Practices Act of 1977, as amended.
2.19. 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”),
providing for, among other things, the payment of a warrant solicitation fee
as
contemplated by Section 3.9 hereof.
8
2.21 Agreements
With Initial Stockholders.
2.21.1 Insider
Letters.
The
Company has caused to be duly executed legally binding and enforceable
agreements annexed as Exhibits 10.1 - 10.5, to the Registration Statement
(the “Insider
Letter”),
pursuant to which each of the Initial Stockholders of the Company agree to
certain matters, including but not limited to, certain matters described as
being agreed to by them under the “Proposed Business” Section of the
Prospectus.
2.21.2 Escrow
Agreement.
The
Company has caused the Initial Stockholders to enter into an escrow agreement
(the “Escrow
Agreement”)
with
American Stock Transfer & Trust Company (the “Escrow
Agent”)
in
form and substance reasonably satisfactory to the Underwriters, whereby the
Common Stock owned by the Initial Stockholders will be held in escrow by the
Escrow Agent, until 12 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 Xxxxxx.
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 reasonably satisfactory to the
Underwriters.
2.23 Covenants
Not to Compete.
No
Initial Stockholder of the Company is subject to any noncompetition agreement
with any employer or prior employer which could materially affect his ability
to
be an Initial Stockholder, employee, officer and/or director of the
Company.
2.24 Investments.
No more
than 40% 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 40% of the Company’s net
income after taxes is derived from, securities other than “Government
securities” (as defined in Section 2(a)(16) of the Investment Company
Act).
2.25 Subsidiaries.
The
Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.26 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.
2.27 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 and each of its directors and its senior financial officers has
consulted with the Company’s independent auditors and outside counsel with
respect to, and is familiar in all material respects with, the requirements
of
the Xxxxxxxx-Xxxxx Act of
9
2002.
The
Company is in, or will be on the Effective Date, compliance with the provisions
of the Xxxxxxxx-Xxxxx Act of 2002 applicable to it, and has implemented or
will
implement such programs and taken reasonable steps to ensure the Company’s
future compliance (not later than the relevant statutory and regulatory
deadlines therefore) with all the provisions of the Xxxxxxxx-Xxxxx Act of
2002.
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, in the opinion of counsel for
the Company or counsel for the Underwriters, the Prospectus, as then amended
or
supplemented, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend the Prospectus to
comply with the Act, the Company will notify the Representative promptly and
prepare and file with the Commission, subject to Section 3.1 hereof, an
appropriate amendment or supplement in accordance with Section 10 of the
Act.
3.2.2 Filing
of Final Prospectus.
The
Company will file the Prospectus (in form and substance satisfactory to the
Representative) with the Commission pursuant to the requirements of Rule 424
of
the Regulations.
3.2.3 Exchange
Act Registration.
For a
period of five 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
Xxxxxx.
3.3 Blue
Sky Filing.
The
Company will endeavor in good faith, in cooperation with the Representative,
at
or prior to the time the Registration Statement becomes effective, to qualify
the Public Securities for offering and sale under the securities laws of such
jurisdictions as the Representative may reasonably designate, provided that
no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will,
unless the Representative agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
3.4 Delivery
to Underwriters of Prospectuses.
The
Company will deliver to each of the several Underwriters, without charge, from
time to time during the period when the Prospectus is required to be delivered
under the Act or the Exchange Act such number of copies of each Preliminary
Prospectus and the Prospectus as such Underwriters may reasonably request and,
as soon as the Registration Statement or any amendment or supplement thereto
becomes effective, deliver to you two original executed Registration Statements,
including exhibits, and all post-effective amendments thereto and
10
copies
of
all exhibits filed therewith or incorporated therein by reference and all
original executed consents of certified experts.
3.5 Effectiveness
and Events Requiring Notice to the Representative.
The
Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representative immediately and confirm the notice
in writing: (i) of the effectiveness of the Registration Statement and
any
amendment thereto; (ii) of the issuance by the Commission of any stop order
or
of the initiation, or the threatening, of any proceeding for that purpose;
(iii)
of the issuance by any state securities commis-sion of any proceedings for
the
suspension of the qualification of the Public Securities for offering or sale
in
any jurisdiction or of the initiation, or the threatening, of any proceeding
for
that purpose; (iv) of the mailing and delivery to the Commission for filing
of
any amendment or supplement to the Registration Statement or Prospectus; (v)
of
the receipt of any comments or request for any additional information from
the
Commission; and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or
the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission
or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review
of Financial Statements.
For a
period of five years from the Effective Date, or until such earlier 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 Affiliate
Combinations.
The
Company will not consummate a Business Combination with any entity which is
affiliated with any Initial Stockholder unless the Company obtains an opinion
from an independent investment banking firm that the Business Combination is
fair to the Company’s stockholders from a financial perspective.
3.7.2 Administrative
Services.
The
Company has entered into an agreement (the “Services
Agreement”)
with
Phoenix Capital Partners and RKP Capital, Inc. (each, a “Provider”
and
collectively, the “Providers”),
pursuant to which the Providers shall make available to the Company general,
technology, secretarial 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 Secondary
Market Trading and Standard & Poor’s.
The
Company will apply to be included in Standard and Poor’s Daily News and
Corporation Records Corporate Descriptions for a period of five years from
the
consummation of a Business Combination. Promptly after the consummation of
the
Offering, the Company shall take such steps as may be necessary to obtain a
secondary market trading exemption for the Company’s securities in the State of
California. The Company shall also take such other action as may be reasonably
requested by the Representative to obtain a secondary market trading exemption
in such other states as may be requested by the Representative.
11
3.9 Warrant
Solicitation Fees.
The
Company hereby engages Xxxxxx, on a non-exclusive basis, as its agent for the
solicitation of the exercise of the Warrants. The Company will (i) assist
Xxxxxx with respect to such solicitation, if requested by Xxxxxx, and
(ii) at Xxxxxx’x request, provide Xxxxxx, and direct the Company’s transfer
and warrant agent to provide to Xxxxxx, at the Company’s cost, lists of the
record and, to the extent known, beneficial owners of, the Warrants. Commencing
one year from the Effective Date, the Company will pay Xxxxxx a commission
of
five percent (5%) of the exercise price of the Warrants for each Warrant
exercised for cash, payable on the date of such exercise, on the terms provided
for in the Warrant Agreement, only if permitted under the rules and regulations
of the NASD and only to the extent that an investor who exercises his Warrants
specifically designates, in writing, that Xxxxxx solicited his exercise. Xxxxxx
may engage sub-agents in its solicitation efforts. The Company agrees to
disclose the arrangement to pay such solicitation fees to Xxxxxx in any
prospectus used by the Company in connection with the registration of the shares
of Common Stock underlying the Warrants.
3.10 Financial
Public Relations Firm.
Promptly after the execution of a definitive agreement for a Business
Combination, the Company shall retain a financial public relations firm
reasonably acceptable to the Representative for a term to be agreed upon by
the
Company and the Representative.
3.11 Reports
to the Representative.
3.11.1 Periodic
Reports, Etc.
For a
period of five years from the Effective Date or until such earlier time upon
which the Xxx Xxxxx) and its counsel copies of such financial statements and
other periodic and special reports as the Company from time to time (if not
readily available via the XXXXX service) furnishes generally to holders of
any
class of its securities, and promptly furnish to the Representative: (i) a
copy
of each periodic report the Company shall be required to file with the
Commission; (ii) a copy of every press release and every news item and article
with respect to the Company or its affairs which was released by the Company;
(iii) 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 Xxxxxx shall sign, if requested by the Company, a Regulation
FD
compliant confidentiality agreement which is reasonably acceptable to the mutual
satisfaction of the Company, Xxxxxx and their respective counsels in connection
with Xxxxxx’x receipt of such information.
3.11.2 Transfer
Sheets.
For a
period of five years following the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company shall retain
a
transfer and warrant agent acceptable to the Representative (the “Transfer
Agent”)
and
will furnish to the Underwriters at the Company’s sole cost and expense such
transfer sheets of the Company’s securities as the Representative may request,
including the daily and monthly consolidated transfer sheets of the Transfer
Agent and DTC. American Stock Transfer & Trust Company is acceptable to the
Underwriters.
3.11.3 Secondary
Market Trading Survey.
Until
such time as the Public Securities are listed or quoted, as the case may be,
on
the New York Stock Exchange, the American Stock Exchange or quoted on the Nasdaq
National Market, or until such earlier time upon which the Company is required
to be liquidated, the Company shall engage Xxxxxxx Savage LLP (“Xxxxxxx
Xxxxxx”),
for a
one-time fee of $5,000 payable on the Closing Date, to deliver and update to
the
Underwriters on a timely basis, but in any event on the Effective Date and
at
the beginning of each fiscal quarter, a written report detailing those states
in
which the Public Securities may be traded in non-issuer transaction under the
Blue Sky laws of the fifty States (the “Secondary
Market Trading Survey”).
12
3.11.4 Trading
Reports.
During
such time as the Public Securities are quoted on the NASD OTC Bulletin Board
(or
any successor trading market such as the Bulletin Board Exchange) or the Pink
Sheets, LLC (or similar publisher of quotations) and no other automated
quotation system, the Company shall provide to the Representative, at its
expense, such reports published by the NASD or the Pink Sheets, LLC relating
to
price trading of the Public Securities, as the Representative shall reasonably
request.
3.12 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.
3.13 Payment
of Expenses.
3.13.1 General
Expenses Related to the Offering.
The
Company hereby agrees to pay on each of the Closing Date and the Option Closing
Date, if any, to the extent not paid at Closing Date, all expenses incident
to
the performance of the obligations of the Company under this Agreement,
including, but not limited to: (i) the preparation, printing, filing and mailing
(including the payment of postage with respect to such mailing) of the
Registration Statement, the Preliminary and final Prospectuses and the printing
and mailing of this Agreement and related documents, including the cost of
all
copies thereof and any amendments thereof or supplements thereto supplied to
the
Underwriters in quantities as may be required by the Underwriters; (ii) the
printing, engraving, issuance and delivery of the Units, the shares of Common
Stock and the Warrants included in the Units and the Representative’s Purchase
Option, including any transfer or other taxes payable thereon; (iii) the
qualification of the Public Securities under state or foreign securities or
Blue
Sky laws, including the costs of printing and mailing the “Preliminary Blue Sky
Memorandum,” and all amendments and supplements thereto, fees and disbursements
for the Representative’s counsel retained for such purpose (such fees shall be
capped at $35,000 in the aggregate of which $10,000 has previously been paid),
and a one-time fee of $5,000 payable to the Representative’s counsel for the
preparation of the Secondary Market Trading Survey; (iv) filing fees,
costs
and expenses (including disbursements for the Representative’s counsel) incurred
in registering the Offering with the NASD; (v) costs of placing “tombstone”
advertisements in The
Wall Street Journal,
The
New York Times
and a
third publication to be selected by the Representative; (vi) fees and
disbursements of the transfer and warrant agent; (vii) the Company’s expenses
associated with “due diligence” meetings arranged by the Representative; (viii)
the preparation, binding and delivery of transaction “bibles,” in form and style
reasonably satisfactory to the Representative and transaction lucite cubes
or
similar commemorative items in a style and quantity as reasonably requested
by
the Representative; and (ix) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 3.13.1. The Company also agrees that, if requested
by the Representative, it will engage and pay for 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. If the Company elects not to proceed with the Offering contemplated
by
this Agreement, then the Company shall reimburse the Underwriters in full for
their out of pocket accountable expenses actually incurred by the Underwriters,
including, without limitation, its legal fees (up to a maximum of $25,000)
and
disbursements.
3.14 Application
of Net Proceeds.
The
Company will apply the net proceeds from the Offering received by it in a manner
consistent with the application described under the caption “Use Of Proceeds” in
the Prospectus.
13
3.15 Delivery
of Earnings Statements to Security Holders.
The
Company will make generally available to its security holders as soon as
practicable, but not later than the first day of the fifteenth full calendar
month following the Effective Date, an earnings statement (which need not be
certified by independent public or independent certified public accountants
unless required by the Act or the Regulations, but which shall satisfy the
provisions of Rule 158(a) under Section 11(a) of the Act) covering a period
of
at least twelve consecutive months beginning after the Effective
Date.
3.16 Notice
to NASD.
In the
event any person or entity (regardless of any NASD affiliation or association)
other than Xxxxxx is engaged to assist the Company in its search for a merger
candidate or to provide any other merger and acquisition services, the Company
will provide the following to the NASD prior to the consummation of the Business
Combination: (i) complete details of all services and copies of agreements
governing such services; and (ii) justification as to why the person
or
entity providing the merger and acquisition services should not be considered
an
“underwriter and related person” with respect to the Company’s initial public
offering, as such term is defined in Rule 2710 of the NASD’s Conduct Rules. The
Company also agrees that proper disclosure of such arrangement or potential
arrangement will be made in the proxy statement which the Company will file
for
purposes of soliciting stockholder approval for the Business
Combination.
3.17 Stabilization.
Except
with respect to the agreement among Xxxxx Xxxxxxxxxx, Xxxxxx Xxxxxx, Xxxx
Xxxxxxxx and Xxxxxxx Xxxxxxx and the Representative annexed as Exhibit 10.11
to
the Registration Statement, neither the Company, nor any of its employees,
directors or stockholders (without the consent of Xxxxxx) has taken or will
take, directly or indirectly, any action designed to or that has constituted
or
that might reasonably be expected to cause or result in, under the Exchange
Act,
or otherwise, stabilization or manipulation of the price of any security of
the
Company to facilitate the sale or resale of the Units.
3.18 Internal
Controls.
The
Company will maintain a system of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary in order to permit preparation of financial statements
in
accordance with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
3.19 Accountants.
For a
period of five years from the Effective Date or until such earlier time upon
which the Company is required to be liquidated, the Company shall retain MECG
or
other independent public accountants reasonably acceptable to
Xxxxxx.
3.20 Form
8-K.
The
Company shall, on the date hereof, retain its independent public accountants
to
audit the financial statements of the Company as of the Closing Date (the
“Audited
Financial Statements”)
reflecting the receipt by the Company of the proceeds of the initial public
offering. As soon as the Audited Financial Statements become available, the
Company shall immediately file a Current Report on Form 8-K with the
Commission, which Report shall contain the Company’s Audited Financial
Statements. In the event the Over-allotment Option is exercised after the
initial filing of the Form 8-K, the Company agrees to file an amendment to
the
Form 8-K to provide updated financial information to reflect the exercise of
the
Over-allotment Option.
3.21 NASD.
The
Company shall advise the NASD if it is aware that any 5% or greater stockholder
of the Company becomes an affiliate or associated person of an NASD member
participating in the distribution of the Company’s Public
Securities.
3.22 Corporate
Proceedings.
All
corporate proceedings and other legal matters necessary to carry out the
provisions of this Agreement and the transactions contemplated hereby shall
have
been done to the reasonable satisfaction to counsel for the
Underwriters.
14
3.23 Investment
Company.
The
Company shall cause the proceeds of the Offering to be held in the Trust Fund
to
be invested only in “government securities” with specific maturity dates as set
forth in the Trust Agreement and disclosed in the Prospectus. The Company will
otherwise conduct its business in a manner so that it will not become subject
to
the Investment Company Act. Furthermore, once the Company consummates a Business
Combination, it will be engaged in a business other than that of investing,
reinvesting, owning, holding or trading securities.
3.24 Colorado
Trust Filing.
In the
event the Securities are registered in the State of Colorado, the Company will
cause a Colorado Form ES to be filed with the Commissioner of the State of
Colorado no less than
10
days prior to the distribution of the Trust Fund in connection with a Business
Combination and will do all things necessary to comply with Section 00-00-000
and Rule 51-3.4 of the Colorado Securities Act.
4. Conditions
of Underwriters’ Obligations.
The
obligations of the several Underwriters to purchase and pay for the Units,
as
provided herein, shall be subject to the continuing accuracy of the
representations and warranties of the Company as of the date hereof and as
of
each of the Closing Date and the Option Closing Date, if any, to the accuracy
of
the statements of officers of the Company made pursuant to the provisions hereof
and to the performance by the Company of its obligations hereunder and to the
following conditions:
4.1 Regulatory
Matters.
4.1.1 Effectiveness
of Registration Statement.
The
Registration Statement shall have become effective not later than 5:00 P.M.,
New
York time, on the date of this Agreement or such later date and time as shall
be
consented to in writing by you, and, at each of the Closing Date and the Option
Closing Date, no stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for the purpose shall have
been instituted or shall be pending or contemplated by the Commission and any
request on the part of the Commission for additional information shall have
been
complied with to the reasonable satisfaction of Xxxxxxx Savage.
4.1.2 NASD
Clearance.
By the
Effective Date, the Representative shall have received clearance from the NASD
as to the amount of compensation allowable or payable to the Underwriters as
described in the Registration Statement.
4.1.3 No
Blue Sky Stop Orders.
No
order suspending the sale of the Units in any jurisdiction designated by you
pursuant to Section 3.3 hereof shall have been issued on either on the Closing
Date or the Option Closing Date, and no proceedings for that purpose shall
have
been instituted or shall be contemplated.
4.2 Company
Counsel Matters.
4.2.1 Effective
Date Opinion of Counsel.
On the
Effective Date, the Representative shall have received the favorable opinion
of
Loeb & Loeb LLP (“Loeb”),
counsel to the Company, dated the Effective Date, addressed to the
Representative and in form and substance satisfactory to the Representative
to
the effect that:
(i) The
Company has been duly organized and is validly existing as a corporation and
is
in good standing under the laws of its state of incorporation. The Company
is
duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties or the
character of its operations requires such qualification or licensing, except
where the failure to qualify would not have a material adverse effect on the
Company.
(ii) All
issued and outstanding securities of the Company have been duly authorized
and
validly issued and are fully paid and non-assessable; the holders thereof are
not subject to
15
personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any stockholder of the Company
arising by operation of law or under the Certificate of Incorporation or Bylaws
of the Company. The offers and sales of the outstanding Common Stock were at
all
relevant times either registered under the Act and the applicable state
securities or Blue Sky Laws or exempt from such registration requirements.
The
authorized and outstanding capital stock of the Company is as set forth in
the
Prospectus.
(iii) The
Securities have been duly authorized and, when issued and paid for, will be
validly issued, fully paid and non-assessable; the holders thereof are not
and
will not be subject to personal liability by reason of being such holders.
The
Securities are not and will not be subject to the preemptive rights of any
holders of any security of the Company arising by operation of law or under
the
Certificate 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
Securities are in due and proper form.
(iv) This
Agreement, the Warrant Agreement, the Representative’s Purchase Option, the
Services Agreement, the Trust Agreement and the Escrow Agreement have each
been
duly and validly authorized and, when executed and delivered by the Company
will
constitute, the valid and binding obligations of the Company, enforceable
against the Company in accordance with their respective terms, except: (a)
as
such enforceability may be limited by bankruptcy, insolvency, reorganization
or
similar laws affecting creditors’ rights generally; (b) as enforceability of any
indemnification or contribution provisions may be limited under the United
States and state securities laws; and (c) that the remedy of specific
performance and injunc-tive and other forms of equitable relief may be subject
to the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(v) The
execution, delivery and performance of this Agreement, the Warrant Agreement,
the Representative’s Purchase Option, the Escrow Agreement, the Trust Agreement
and the Services Agreement, the issuance and sale of the Securities, the
consummation of the transactions contemplated hereby and thereby, and compliance
by the Company with the terms and provisions hereof and thereof, do not and
will
not, with or without the giving of notice or the lapse of time, or both, (a)
to
such counsel’s knowledge, conflict with, or result in a breach of, any of the
terms or provisions of, or constitute a default under, or result in the creation
or modification of any lien, security interest, charge or encumbrance upon
any
of the properties or assets of the Company pursuant to the terms of, any
mortgage, deed of trust, note, indenture, loan, contract, commitment or other
agreement or instrument filed as an exhibit to the Registration Statement,
(b)
result in any violation of the provisions of the Certificate of Incorporation
or
the By-Laws of the Company, or (c) to such counsel’s knowledge, violate any
statute or any judgment, order or decree, rule or regulation applicable to
the
Company of any court, domestic or foreign, or of any federal, state or other
regulatory authority or other governmental body having jurisdiction over the
Company, its properties or assets.
(vi) The
Registration Statement, each Preliminary Prospectus and the Prospectus and
any
post-effective amendments or supplements thereto (other than the financial
statements included therein, as to which no opinion need be rendered) each
as of
their respective dates complied as to form in all material respects with the
requirements of the Act and Regulations. The Securities 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
16
as
required (except as to the Blue Sky laws of the various states, as to which
such
counsel expresses no opinion), nor are any contracts or documents of a character
required to be described in the Registration Statement or the Prospectus or
to
be filed as exhibits to the Registration Statement not so described or filed
as
required (except for the contracts and documents described in the “Underwriting”
section of the Registration Statement, as to which such counsel expresses no
opinions).
(vii) Counsel
has participated in conferences with officers and other representatives of
the
Company, representatives of the independent public accountants for the Company
and representatives of the Underwriters at which the contents of the
Registration Statement, the Prospectus and related matters were discussed and
although such counsel is not passing upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement and Prospectus, no facts have come to the attention
of
such counsel which lead them to believe that either the Registration Statement
or the Prospectus or any amendment or supplement thereto, as of the date of
such
opinion contained any untrue statement of a material fact or omitted to state
a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no opinion with
respect to (i) any disclosures relating to the laws, rules, statutes or
regulations of India (it being understood that the Underwriters are relying
on
the opinion of [______________] (defined below) with respect to such matters)
or
(ii) the financial statements and schedules and other financial and statistical
data included in the Registration Statement or Prospectus).
(viii) The
Registration Statement is effective under the Act. No stop order suspending
the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are pending or threatened under the
Act
or applicable state securities laws.
(ix) To
such
counsel’s knowledge, there is no action, suit or proceeding before or by any
court of governmental agency or body, domestic or foreign, now pending, or
threatened against the Company that is required to be described in the
Registration Statement.
4.2.2 Effective
Date Opinion of Indian Counsel.
On the
Effective Date, the Underwriters shall have received the favorable opinion
of
_____________ (“__________”),
Indian counsel to the Company, dated the Effective Date, addressed to the
Underwriters and in form and substance satisfactory to the
Representative.
4.2.3 Closing
Date and Option Closing Date Opinion of Counsel.
On each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received the favorable opinion of Loeb and ________, dated the
Closing Date or the Option Closing Date, as the case may be set forth above,
addressed to the Representative and in form and substance reasonably
satisfactory to the Representative, confirming as of the Closing Date and,
if
applicable, the Option Closing Date, the statements made by Loeb and _______
in
their respective opinions delivered on the Effective Date.
4.2.4 Reliance.
In
rendering such opinion, such counsel may rely: (i) as to matters involving
the
application of laws other than the laws of the United States and jurisdictions
in which they are admitted, to the extent such counsel deems proper and to
the
extent specified in such opinion, if at all, upon an opinion or opinions (in
form and substance reasonably satisfactory to the Representative) of other
counsel reasonably acceptable to the Representative, familiar with the
applicable laws; and (ii) as to matters of fact, to the extent they
deem
proper, on certificates or other written statements of officers of the Company
and officers of departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company, provided
that copies of any such statements or certificates shall be delivered to the
Underwriters’ counsel if requested. The opinion of counsel for the Company and
any opinion relied upon by such counsel for the Company shall include a
statement to the effect that it may be relied upon by counsel for the
Underwriters in its opinion delivered to the Underwriters.
17
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 MECG dated, respectively,
as of the date of this Agreement and as of the Closing Date and the Option
Closing Date, if any:
(i) Confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations and that they have not, during
the periods covered by the financial statements included in the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act;
(ii) Stating
that in their opinion the financial statements of the Company included in the
Registration Statement and Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act and the published
Regulations thereunder;
(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the stockholders
and
board of directors and the various committees of the board of directors,
consultations with officers and other employees of the Company responsible
for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that:
(a)
the unaudited financial statements of the Company included in the Registration
Statement do not comply as to form in all material respects with the applicable
accounting requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting principles applied
on
a basis substantially consistent with that of the audited financial statements
of the Company included in the Registration Statement; (b) at a date not later
than five days prior to the Effective Date, Closing Date or Option Closing
Date,
as the case may be, there was any change in the capital stock or long-term
debt
of the Company, or any decrease in the stockholders’ equity of the Company as
compared with amounts shown in the __________, 2005 balance sheet included
in
the Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any decrease, setting forth the amount
of such decrease, and (c) during the period from ________, 2005 to a specified
date not later than five days prior to the Effective Date, Closing Date or
Option Closing Date, as the case may be, there was any decrease in revenues,
net
earnings or net earnings per share of Common Stock, in each case as compared
with the corresponding period in the preceding year and as compared with the
corresponding period in the preceding quarter, other than as set forth in or
contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a break-down of commercial
papers and notes payable to banks);
(v) Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Prospectus in each case to the extent that
such
amounts, numbers, percentages, statements and information may be derived from
the general accounting records, including work sheets, of the Company and
excluding any questions requiring an interpretation by legal counsel, with
the
results obtained from the application of specified readings, inquiries and
other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi) Stating
that they have not during the immediately preceding five year period brought
to
the attention of the Company’s management any reportable condition related to
internal
18
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
Certificate of Incorporation of the Company are true and complete, have not
been
modified and are in full force and effect; (ii) that the resolutions relating
to
the public offering contemplated by this Agreement are in full force and effect
and have not been modified; (iii) all correspondence between the Company or
its
counsel and the Commission; and (iv) as to the incumbency of the officers of
the
Company. The documents referred to in such certificate shall be attached to
such
certificate.
4.5 No
Material Changes.
Prior
to and on each of the Closing Date and the Option Closing Date, if any: (i)
there shall have been no material adverse change or development involving a
prospective material adverse change in the condition or prospects or the
business activities, financial or otherwise, of the Company from the latest
dates as of which such condition is set forth in the Registration Statement
and
Prospectus; (ii) no action suit or proceeding, at law or in equity, shall have
been pending or threatened against the Company or any Initial Stockholder before
or by any court or federal or state commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding may materially
adversely affect the business, operations, prospects or financial condition
or
income of the Company, except as set forth in the Registration Statement and
Prospectus; (iii) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or threatened by the Commission;
and (iv) the Registration Statement and the Prospectus and any amendments or
supplements thereto shall contain all material statements which are required
to
be stated therein in accordance with the Act and the Regulations and shall
conform in all material respects to the requirements of the Act and the
Regulations, and neither the Registration Statement nor the Prospectus nor
any
amendment or supplement thereto shall contain any untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
4.6 Delivery
of Agreements.
4.6.1 Effective
Date Deliveries.
On the
Effective Date, the Company shall have delivered to the Representative executed
copies of the Escrow Agreement, the Trust Agreement, the Warrant Agreement,
the
Services Agreement and all of the Insider Letters.
19
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 Xxxxxxx Savage and you shall have received from such
counsel a favorable opinion, dated the Closing Date and the Option Closing
Date,
if any, with respect to such of these proceedings as you may reasonably require.
On or prior to the Effective Date, the Closing Date and the Option Closing
Date,
as the case may be, counsel for the Underwriters shall have been furnished
such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in
this
Section 4.7, or in order to evidence the accuracy, completeness or satisfaction
of any of the representations, warranties or conditions herein
contained.
4.8 Secondary
Market Trading Survey.
On the
Closing Date, the Representative shall have received the Secondary Market
Trading Survey from Xxxxxxx Xxxxxx.
4.9 Quotation
on the NASD OTC Bulletin Board.
On the
Closing Date, the Company’s Units shall have been approved for quotation on the
NASD OTC Bulletin Board.
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); (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 collec-tively
called “application”)
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Units under the securities
laws thereof or filed with the Commission, any state securities commission
or
agency, Nasdaq or any securities exchange; or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make
the statements therein, in the light of the circumstances under which they
were
made, not misleading, unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company with
respect to an Underwriter by or on behalf of such Underwriter expressly for
use
in any Preliminary Prospectus, the Registration Statement or Prospectus, or
any
amendment or supplement thereof, or in any application, as the case may be.
With
respect to any untrue statement or omission or alleged untrue statement or
omission made in the Preliminary Prospectus, the indemnity agreement contained
in this paragraph shall not inure to the benefit of any Underwriter to the
extent that any loss, liability, claim, damage or expense of such Underwriter
results from the fact that a copy of the Prospectus was not given or sent to
the
person asserting any such loss, liability, claim or damage at or prior to the
written confirmation of sale of the Securities to such person as required by
the
Act and the Regulations, and if the untrue statement or omission has been
corrected in the Prospectus, unless such failure to deliver the Prospectus
was a
result of non-compliance by the Company with its obligations under Section
3.4
hereof. The Company agrees promptly to notify the Representative of the
20
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 contri-bute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Underwriters, as incurred, in such proportions
that the Underwriters are responsible for that portion represented by the
percentage that the underwriting discount appearing on the cover page of the
Prospectus bears to the initial offering price appearing thereon and the Company
is responsible for the balance; provided, that, no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
21
entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. Notwithstanding the provisions of this Section 5.3.1, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Public Securities underwritten by it
and
distributed to the public were offered to the public exceeds the amount of
any
damages that such Underwriter has otherwise been required to pay in respect
of
such losses, liabilities, claims, damages and expenses. For purposes of this
Section, each director, officer and employee of an Underwriter or the Company,
as applicable, and each person, if any, who controls an Underwriter or the
Company, as applicable, within the meaning of Section 15 of the Act shall have
the same rights to contribution as the Underwriters or the Company, as
applicable.
5.3.2 Contribution
Procedure.
Within
fifteen days after receipt by any party to this Agreement (or its
representative) of notice of the commencement of any action, suit or proceeding,
such party will, if a claim for contribution in respect thereof is to be made
against another party (“contributing party”), notify the contributing party of
the commencement thereof, but the omission to so notify the contributing party
will not relieve it from any liability which it may have to any other party
other than for contribution hereunder. In case any such action, suit or
proceeding is brought against any party, and such party notifies a contributing
party or its representative of the commencement thereof within the aforesaid
fifteen days, the contributing party will be entitled to participate therein
with the notifying party and any other contributing party similarly notified.
Any such contributing party shall not be liable to any party seeking
contribution on account of any settlement of any claim, action or proceeding
effected by such party seeking contribution on account of any settlement of
any
claim, action or proceeding effected by such party seeking contribution without
the written consent of such contributing party. The contribution provisions
contained in this Section are intended to supersede, to the extent permitted
by
law, any right to contribution under the Act, the Exchange Act or otherwise
available. The Underwriters’ obligations to contribute pursuant to this Section
5.3 are several and not joint.
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 may be terminated by
you
or the Company without liability on the part of the Company (except as provided
in Sections 3.15 and 5 hereof) or the several Underwriters (except as provided
in Section 5 hereof); provided,
however,
that if
such default occurs with respect to the Option Units, this Agreement will not
terminate as to the Firm Units; and provided
further
that
nothing herein shall relieve a defaulting Underwriter of its liability, if
any,
to the other several Underwriters and to the Company for damages occasioned
by
its default hereunder.
6.3 Postponement
of Closing Date.
In the
event that the Firm Units or Option Units to which the default relates are
to be
purchased by the non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, you or the Company shall have the right to
postpone the Closing Date or Option Closing Date for a reasonable period, but
not in any event exceeding five business days, in
22
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 Xxxxxx to the
Company, Xxxxxx shall have the right to send a representative (who need not
be
the same individual from meeting to meeting) to observe each meeting of the
Board of Directors of the Company; provided that such representative shall
sign
a Regulation FD compliant confidentiality agreement which is reasonably
acceptable to Xxxxxx and its counsel in connection with such representative’s
attendance at meetings of the Board of Directors; and provided further that
upon
written notice to Xxxxxx, the Company may exclude the representative from
meetings where, in the written opinion of counsel for the Company, the
representative’s presence would destroy the attorney-client privilege. The
Company agrees to give Xxxxxx written notice of each such meeting and to provide
Xxxxxx with an agenda and minutes of the meeting no later than it gives such
notice and provides such items to the other directors, and reimburse the
representative of Xxxxxx 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 Nasdaq, AMEX
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.
8.2 Additional
Shares or Options.
The
Company hereby agrees that until the Company consummates a Business Combination
(as such term is defined in the Registration Statement), it shall not issue
any
shares of Common Stock or any options or other securities convertible into
Common Stock, or any shares of Preferred Stock which participate in any manner
in the Trust Fund or which vote as a class with the Common Stock on a Business
Combination.
8.3 Trust
Fund Waiver Letters.
The
Company hereby agrees that it will not commence its due diligence investigation
of any operating business which the Company seeks to acquire (“Target
Business”)
or
obtain the services of any vendor unless and until 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 Xxxxxx and will not allow any amendments to, or waivers of, such Insider
Letters without the prior written consent of Xxxxxx.
8.5 Certificate
of Incorporation and By-Laws.
The
Company shall not take any action or omit to take any action that would cause
the Company to be in breach or violation of its Certificate of Incorporation
or
By-Laws.
23
8.6 Blue
Sky Requirements.
The
Company shall provide counsel to the Representative with ten copies of all
proxy
information and all related material filed with the Commission in connection
with a Business Combination concurrently with such filing with the Commission.
In addition, the Company shall furnish any other state in which its initial
public offering was registered, such information as may be requested by such
state.
8.7 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 in accordance
with
the vote of the holders of a majority of the IPO Shares present, in person,
or
by proxy, at a meeting of the Company’s Stockholders. At the time the Company
seeks approval of any potential Business Combination, the Company will offer
each holder of the Company’s Common Stock issued in this Offering (the
“IPO
Shares”)
the
right to convert their IPO Shares at a per share price equal to the amount
in
the Trust Fund (exclusive of the Escrowed Fees and accrued interest thereon,
and
inclusive of any interest income accruing with respect to the net proceeds
attributable to the IPO Shares, net of 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 (including the Escrowed Fees and interest
accrued thereon, net of taxes payable), as determined by the Company and audited
by MECG. In no event, however, will the Company’s Liquidation Value be less than
the Trust Fund, inclusive of any net interest income accruing with respect
to
the net proceeds attributable to the IPO Shares. 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 upon the consummation of a Business Combination, 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.
8.8 Rule
419.
The
Company agrees that it will use its best efforts to prevent the Company from
becoming subject to Rule 419 under the Act prior to the consummation of any
Business Combination, including, but not limited to, using its best efforts
to
prevent any of the Company’s outstanding securities from being deemed to be a
“xxxxx stock” as defined in Rule 3a-51-1 under the Exchange Act during such
period.
8.9 Affiliated
Transactions.
The
Company shall cause each of the Initial Stockholders to agree that, in order
to
minimize potential conflicts of interest which may arise from multiple
affiliations, the Initial Stockholders will present to the Company for its
consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire an operating business, until the earlier of
the
consummation by the Company of a Business Combination, the liquidation of the
Company or until such time as the Initial Stockholders cease to be an officer
or
director of the Company, subject to any pre-existing fiduciary obligations
the
Initial Stockholders might have or new fiduciary obligations related to or
affiliated with entities to whom the Initial Stockholders have pre-existing
fiduciary obligations, including, but not limited to, fiduciary obligations
to
next generation, follow-on or successor entities to any entities to which the
Initial Stockholders have pre-existing obligations.
24
8.10 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 (exclusive
of the Escrowed Fees) at the time of such acquisition. The fair market value
of
such business must be determined by the Board of Directors of the Company based
upon standards generally accepted by the financial community, such as actual
and
potential sales, earnings and cash flow and book value. If the Board of
Directors of the Company is not able to independently determine that the target
business has a fair market value of at least 80% of the Company’s net assets
(exclusive of the Escrowed Fees) at the time of such acquisition, the Company
will obtain an opinion from an unaffiliated, independent investment banking
firm
which is a member of the NASD with respect to the satisfaction of such criteria.
The Company is not required to obtain an opinion from an investment banking
firm
as to the fair market value if the Company’s Board of Directors independently
determines that the Target Business does have sufficient fair market
value.
9. Representations
and Agreements to Survive Delivery.
Except
as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements 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.
10. Effective
Date of This Agreement and Termination Thereof.
10.1 Effective
Date.
This
Agreement shall become effective on the Effective Date at the time the
Registration Statement is declared effective by the Commission.
10.2 Termination.
You
shall have the right to terminate this Agreement at any time prior to any
Closing Date, (i) if any domestic or international event or act or occurrence
has materially disrupted, or in your opinion will in the immediate future
materially disrupt, general securities markets in the United States; or (ii)
if
trading on the New York Stock Exchange, the Nasdaq Stock Market, the American
Stock Exchange, the Boston Stock Exchange or on the NASD OTC Bulletin Board
(or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the NASD OTC Bulletin Board or by order of the
Commission or any other government authority having jurisdiction, or (iii)
if
the United States shall have become involved in a war or major hostilities;
or
(iv) if a banking moratorium has been declared by a New York State or federal
authority, or (v) if a moratorium on foreign exchange trading has been declared
which materially adversely impacts the United States securities market, or
(vi)
if the Company shall have sustained a material loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act which,
whether or not such loss shall have been insured, will, in your opinion, make
it
inadvisable to proceed with the delivery of the Units, or (vii) if any of the
Company’s representations, warranties or covenants hereunder are breached, or
(viii) if the 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, sale and/or delivery of the Units or to enforce contracts made by
the
Underwriters for the sale of the Units.
10.3 Expenses.
In the
event that this Agreement shall not be carried out for any reason whatsoever,
within the time specified herein or any extensions thereof pursuant to the
terms
herein, the obligations of the Company to pay the out of pocket expenses related
to the transactions contemplated herein shall be governed by Section 3.13.1
hereof.
25
10.4 Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termina-tion of this Agreement, and whether or not this
Agreement is other-wise carried out, the provisions of Section 5 shall not
be in
any way effected by, such election or termination or failure to carry out the
terms of this Agreement or any part hereof.
11. Miscellaneous.
11.1 Notices.
All
communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered or telecopied and confirmed
and shall be deemed given when so delivered or telecopied and confirmed or
if
mailed, two days after such mailing
If
to the
Representative:
Xxxxxx
& Xxxxxxx, LLC
1270
Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn: Xxxxxx
Xxxxx, CFO
Copy
to:
Xxxxxxx
Xxxxxx LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn: Xxxxxx
X.
Xxxxxx, Esq.
If
to the
Company:
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn: Xxxxxx
Xxxxxx, President and Chief Strategy Officer
Copy
to:
Loeb
& Loeb LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn: Xxxxxxxx
Xxxxxxxx, Esq.
11.2 Headings.
The
headings contained herein are for the sole purpose of convenience of reference,
and shall not in any way limit or affect the meaning or interpretation of any
of
the terms or provisions of this Agreement.
11.3 Amendment.
This
Agreement may only be amended by a written instrument executed by each of the
parties hereto.
11.4 Entire
Agreement.
This
Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings of the parties,
oral and written, with respect to the subject matter hereof.
11.5 Binding
Effect.
This
Agreement shall inure solely to the benefit of and shall be binding upon the
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,
26
and
no
other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained.
11.6 Governing
Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of New York, without giving effect to conflict of laws. The
Company hereby agrees that any action, proceeding or claim against it arising
out of, relating in any way to this Agreement shall be brought and enforced
in
the courts of the State of New York of the United States of America for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. The Company hereby waives any objection
to such exclusive jurisdiction and that such courts represent an inconvenient
forum. Any such process or summons to be served upon the Company may be served
by transmitting a copy thereof by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
10 hereof. Such mailing shall be deemed personal service and shall be legal
and
binding upon the Company in any action, proceeding or claim. The Company agrees
that the prevailing party(ies) in any such action shall be entitled to recover
from the other party(ies) all of its reasonable attorneys’ fees and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
11.7 Execution
in Counterparts.
This
Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be
an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto.
11.8 Waiver,
Etc.
The
failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any breach,
non-compliance or non-fulfillment of any of the provisions of this Agreement
shall be effective unless set forth in a written instrument executed by the
party or parties against whom or which enforcement of such waiver is sought;
and
no waiver of any such breach, non-compliance or non-fulfillment shall be
construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
27
If
the
foregoing correctly sets forth the understanding between the Underwriters and
the Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between
us.
| Very truly yours, | ||
| PHOENIX INDIA ACQUISITION CORP. | ||
| |
|
|
| By: | /s/ | |
|
Name: Xxxxxx Xxxxxx |
||
| Title: President and Chief Strategy Officer | ||
Accepted
on the date first
above
written.
XXXXXX
& XXXXXXX, LLC
By:
______________________________
Name:
Xxxx X. Xxxxx III
Title:
President and Senior Managing Director
28
SCHEDULE
I
12,500,000
Units
|
Underwriter
|
Number
of Firm Units
to
be Purchased
|
|
|
Xxxxxx
& Xxxxxxx, LLC
|
||
|
___________
|
||
|
12,500,000
|
SCHEDULE
2.28
Board
of Directors
Xxxx
Xxxxxxxx
Xxxxxx
Xxxxxx
Xxxxxxx
Xxxxxxx
Xxxxx
Xxxxxxxxxx
EXHIBIT
A
Attn.:
Xxxxxx Xxxxxx
000
Xxxxx
Xxxxxx, Xxxxx 000
Xxx
Xxxx,
Xxx Xxxx 00000
Gentlemen:
Reference
is made to the Final Prospectus of Phoenix India Acquisition Corp.
(“Phoenix”),
dated
___________, 2005 (the “Prospectus”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We
have
read the Prospectus and understand that Phoenix has established the Trust Fund,
initially in an amount of $____________ for the benefit of the Public
Stockholders and that Phoenix 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 Phoenix or (ii) to Phoenix after it consummates a Business
Combination.
For
and
in consideration of Phoenix 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 Phoenix and will not seek
recourse against the Trust Fund for any reason whatsoever.
|
__________________________________
Print
Name of Target Business
|
|
|
__________________________________
Authorized
Signature of Target Business
|
|
EXHIBIT
B
Attn.:
Xxxxxx Xxxxxx
000
Xxxxx
Xxxxxx, Xxxxx 000
Xxx
Xxxx,
Xxx Xxxx 00000
Gentlemen:
Reference
is made to the Final Prospectus of Phoenix India Acquisition Corp.
(“Phoenix”),
dated
___________, 2005 (the “Prospectus”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We
have
read the Prospectus and understand that Phoenix has established the Trust Fund,
initially in an amount of $____________ for the benefit of the Public
Stockholders and that Phoenix 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 Phoenix; or (ii) to Phoenix after it consummates a Business
Combination.
For
and
in consideration of Phoenix 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 Phoenix and will not seek recourse against
the Trust Fund for any reason whatsoever.
|
__________________________________
Print
Name of Lender
|
|
|
__________________________________
Authorized
Signature of Lender
|
|
EXHIBIT
C
Phoenix
India Acquisition Corp.
Attn.:
Xxxxxx Xxxxxx
000
Xxxxx
Xxxxxx, Xxxxx 000
Xxx
Xxxx,
Xxx Xxxx 00000
Gentlemen:
The
undersigned officer or director of Phoenix India Acquisition Corp.
(“Phoenix”)
hereby
acknowledges that Phoenix has established the Trust Fund, initially in an amount
of $___________ for the benefit of the Public Stockholders and that Phoenix
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 Phoenix or (ii)
to
Phoenix 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 Phoenix and will not seek recourse against
the Trust Fund for any reason whatsoever.
Notwithstanding
the foregoing, such waiver shall not apply to any shares acquired by the
undersigned in the public market.
|
__________________________________
Print
Name of Officer/Director
|
|
|
__________________________________
Authorized
Signature of Officer/Director
|
|
