Exhibit 1.1
UNDERWRITING AGREEMENT
BETWEEN
INTER-ATLANTIC FINANCIAL, INC.
AND
XXXXXX XXXXXX & CO. INC.
DATED: ____________, 2007
INTER-ATLANTIC FINANCIAL, INC.
UNDERWRITING AGREEMENT
New York, New York
____________, 2007
Xxxxxx Xxxxxx & Co. Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
The undersigned, Inter-Atlantic Financial, Inc., a Delaware
corporation ("Company"), hereby confirms its agreement with Xxxxxx Xxxxxx & CO.
Inc. (being referred to herein variously as "you," "MJ" or the "Representative")
and with the other underwriters named on Schedule I hereto for which MJ is
acting as Representative (the Representative and the other Underwriters being
collectively called the "Underwriters" or, individually, an "Underwriter") as
follows:
1. Purchase and Sale of Securities.
1.1 Firm Securities.
1.1.1 Purchase of Firm Units. On the basis of the representations and
warranties herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to issue and sell, severally and not jointly, to the
several Underwriters, an aggregate of 7,500,000 units ("Firm Units") of the
Company, at a purchase price (net of discounts and commissions) of $7.60 per
Firm Unit (including discounts and commissions of $0.16 that will not be paid to
the Underwriters unless and until a Business Combination (as defined below) has
been consummated by the Company). The Underwriters, severally and not jointly,
agree that they will not seek payment of the discounts and commissions of $0.16
referred to in the preceding sentence unless and until a Business Combination
has been consummated by the Company, and the Company agrees that it shall pay
such discounts and commissions only upon consummation of such Business
Combination. The Underwriters, severally and not jointly, agree to purchase from
the Company the number of Firm Units set forth opposite their respective names
on Schedule I attached hereto and made a part hereof at a purchase price (net of
discounts and commissions) of $7.60 per Firm Unit (including discounts and
commissions of $0.16 that will not be paid to the Underwriters unless and until
a Business Combination has been consummated by the Company). The Firm Units are
to be offered initially to the public ("Offering") at the offering price of
$8.00 per Firm Unit. Each Firm Unit consists of one share of the Company's
common stock, par value $.0001 per share ("Common Stock"), and one warrant
("Warrant(s)"). The shares of Common Stock and the Warrants included in the Firm
Units will not be separately transferable until 90 days after the effective date
("Effective Date") of the Registration Statement (as defined below) unless MJ
informs the Company of its decision to allow earlier separate trading, but in no
event will MJ allow separate trading until the preparation of an audited balance
sheet of the Company reflecting receipt by the Company of the proceeds of the
Offering and the filing of a Current
Report on Form 8-K with the Securities and Exchange Commission (the
"Commission") by the Company which includes such balance sheet and the
Over-allotment Option (as defined below) has either expired or been exercised.
Each Warrant entitles its holder to exercise it to purchase one share of Common
Stock for $6.00 during the period commencing on the later of the consummation by
the Company of its "Business Combination" or one year from the Effective Date
and terminating on the four-year anniversary of the Effective Date. "Business
Combination" shall mean any merger, capital stock exchange, asset acquisition or
other similar business combination consummated by the Company with an operating
business (as described more fully in the Registration Statement).
1.1.2 Payment and Delivery. Delivery and payment for the Firm Units
shall be made at 10:00 A.M., New York time, on the third business day following
commencement of trading of the Firm Units 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 and the Company. The hour and date of delivery and payment for
the Firm Units are called "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: $56,400,000 of the proceeds received
by the Company for the Firm Units shall be deposited in the trust fund
established by the Company for the benefit of the public stockholders as
described in the Registration Statement ("Trust Fund") pursuant to the terms of
an Investment Management Trust Agreement ("Trust Agreement") and the remaining
proceeds shall be paid (subject to Section 3.13 hereof) to the order of the
Company upon delivery to you of certificates (in form and substance satisfactory
to the Underwriters) representing the Firm Units (or through the facilities of
American Stock Transfer & Trust Company ("AST")) 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.
1.2 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 1,125,000 units from the Company ("Over-allotment Option"). Such
additional 1,125,000 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
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(from time to time) of the Option Units within 45 days after the Effective Date.
The Underwriters will not be under any obligation to purchase any Option Units
prior to the exercise of the Over-allotment Option. The Over-allotment Option
granted hereby may be exercised by the giving of oral notice to the Company by
the Representative, which must be confirmed in writing by overnight mail or
facsimile transmission setting forth the number of Option Units to be purchased
and the date and time for delivery of and payment for the Option Units (the
"Option Closing Date"), which will not be later than five full business days
after the date of the notice or such other time 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. Upon
exercise of the Over-allotment Option, the Company will become obligated to
convey to the Underwriters, and, subject to the terms and conditions set forth
herein, the Underwriters will become obligated to purchase, the number of Option
Units specified in such notice.
1.2.3 Payment and Delivery. Payment for the Option Units shall be made
on the Option Closing Date at the Representative's election by wire transfer in
Federal (same day) funds or by certified or bank cashier's check(s) in New York
Clearing House funds, payable as follows: approximately $7.60 per Option Unit
(including discounts and commissions of $0.16 that will not be paid to the
Underwriters unless and until a Business Combination has been consummated by the
Company) shall be deposited in the Trust Fund pursuant to the Trust Agreement
upon delivery to you of certificates (in form and substance satisfactory to the
Underwriters) representing the Option Units (or through the facilities of AST)
for the account of the Underwriters. The certificates representing the Option
Units to be delivered will be in such denominations and registered in such names
as the Representative requests not less than two full business days prior to the
Closing Date or the Option Closing Date, as the case may be, and will be made
available to the Representative for inspection, checking and packaging at the
aforesaid office of the Company's transfer agent or correspondent not less than
one full business day prior to such Closing Date.
1.3 Representative's Purchase Option.
1.3.1 Purchase Option. The Company hereby agrees to issue and sell to
the Representative (and/or its designees) on the Effective Date an option
("Representative's Purchase Option") for the purchase of an aggregate of 525,000
units ("Representative's Units") for an aggregate purchase price of $100. 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 and one
year from the Effective Date and expiring on the four-year anniversary of the
Effective Date at an initial exercise price per Representative's Unit of $10.00
(125% 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 ("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.
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1.3.2 Payment and Delivery. Delivery and payment for the
Representative's Purchase Option shall be made on the Closing Date. The Company
shall deliver to the Representative, upon payment therefor, certificates for the
Representative's Purchase Option in the name or names and in such authorized
denominations as the Representative may request.
2. Representations and Warranties of the Company. The Company represents and
warrants to the Underwriters as follows:
2.1 Filing of Registration Statement.
2.1.1 Pursuant to the Act. The Company has filed with the Commission a
registration statement and an amendment or amendments thereto, on Form S-1 (File
No. 333-_______), including any related preliminary prospectus ("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.
2.1.2 Pursuant to the Exchange Act. The Company has filed with the
Commission a Form 8-A (File Number 001-______) providing for the registration
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), of the
Units, the Common Stock and the Warrants. The registration of the Units, Common
Stock and Warrants under the Exchange Act has been declared effective by the
Commission on the date hereof.
2.2 No Stop Orders, Etc. Neither the Commission nor, to the best of the
Company's knowledge, any state regulatory authority has issued any order or
threatened to issue any order preventing or suspending the use of any
Preliminary Prospectus or has instituted or, to the best of the Company's
knowledge, threatened to institute any proceedings with respect to such an
order.
2.3 Disclosures in Registration Statement.
2.3.1 10b-5 Representation. At the time the Registration Statement
became effective and at all times subsequent thereto up to the Closing Date and
the Option Closing Date, if any, the Registration Statement and the Prospectus
does and 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,
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on such dates, does or will contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the
registration of the Securities or any amendment thereto or pursuant to Rule
424(a) of the Regulations) and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied or will 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 and is
enforceable against the Company and, to the Company's knowledge, the other
parties thereto, in accordance with its terms, except (x) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the federal and
state securities laws, and (z) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought, and none of such agreements or instruments has been assigned by
the Company, and neither the Company nor, to the best of the Company's
knowledge, any other party is in breach or default thereunder and, to the best
of the Company's knowledge, no event has occurred that, with the lapse of time
or the giving of notice, or both, would constitute a breach or default
thereunder. To the best of the Company's knowledge, performance by the Company
of the material provisions of such agreements or instruments will not result in
a violation of any existing applicable law, rule, regulation, judgment, order or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its assets or businesses, including,
without limitation, those relating to environmental laws and regulations.
2.3.3 Prior Securities Transactions. No securities of the Company have
been sold by the Company or by or on behalf of, or for the benefit of, any
person or persons controlling, controlled by, or under common control with the
Company since the Company's formation, except as disclosed in the Registration
Statement.
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2.3.4 Regulations. The disclosures in the Registration Statement
concerning the effects of Federal, State and local regulation on the Company's
business as currently contemplated are correct in all material respects and do
not omit to state a material fact.
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 equity securities.
2.5 Independent Accountants. Xxxxxxxxx Xxxx & Co., P.C. ("RKC"), whose
report is filed with the Commission as part of the Registration Statement, are
independent accountants as required by the Act and the Regulations. RKC has not,
during the periods covered by the financial statements included in the
Prospectus, provided to the Company any non-audit services, as such term is used
in Section 10A(g) of the Exchange Act.
2.6 Financial Statements. The financial statements, including the notes
thereto and supporting schedules included in the Registration Statement and
Prospectus fairly present the financial position, the results of operations and
the cash flows of the Company at the dates and for the periods to which they
apply; and such financial statements have been prepared in conformity with
United States 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 summary financial data included in the Registration Statement and
the Prospectus present fairly the information shown thereon and have been
compiled on a basis consistent with the audited financial statements presented
therein. No other financial statements or schedules are required to be included
in the Registration Statement or the Prospectus. 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
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Statement and the Prospectus, the Company will have on the Closing Date the
adjusted stock capitalization set forth therein. Except as set forth in, or
contemplated by, the Registration Statement and the Prospectus, on the Effective
Date and on the Closing Date, there will be no options, warrants, or other
rights to purchase or otherwise acquire any authorized but unissued shares of
Common Stock of the Company or any security convertible into shares of Common
Stock of the Company, or any contracts or commitments to issue or sell shares of
Common Stock or any such options, warrants, rights or convertible securities.
2.8 Valid Issuance of Securities; Etc.
2.8.1 Outstanding Securities. All issued and outstanding securities of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable; the holders thereof have no rights of rescission with respect
thereto, and are not subject to personal liability by reason of being such
holders; and none of such securities were issued in violation of the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company. The authorized Common Stock conforms 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 are exempt from such registration requirements.
2.8.2 Securities Sold Pursuant to this Agreement. The Securities have
been duly authorized and, when issued and paid for in accordance with this
Agreement, will be validly issued, fully paid and non-assessable; the holders
thereof are not and will not be subject to personal liability by reason of being
such holders; the Securities are not and will not be subject to the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to be taken for
the authorization, issuance and sale of the Securities has been duly and validly
taken. The Securities conform in all material respects to all statements with
respect thereto contained in the Registration Statement. When issued, the
Representative's Purchase Option, the Representative's Warrants and the Warrants
will constitute valid and binding obligations of the Company to issue and sell,
upon exercise thereof and payment of the respective exercise prices therefor,
the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Representative's Purchase Option, the
Representative's Warrants and the Warrants are enforceable against the Company
in accordance with their respective terms, except (i) as such enforceability may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (ii) as enforceability of any indemnification or
contribution provision may be limited under the federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
2.8.3 Founders' Warrants. Messrs. ______, ______ and ______
(collectively, the "Founder Purchasers") have committed to purchase, immediately
prior to the consummation of the Offering, an aggregate of 1,800,000 Warrants
(the "Founders' Warrants" and together with the shares of Common Stock
underlying the Founders' Warrants, collectively referred to as the "Founders'
Securities") at $1.00 per Warrant (for an aggregate purchase price of
$1,800,000) from the Company upon consummation of the Offering. The Founders'
Securities have been
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duly authorized and, when issued and paid for in accordance with the
subscription agreements (the "Subscription Agreements") the Founders' Warrants
will be validly issued, fully paid and non-assessable and the shares of Common
Stock underlying the Founders' Warrants when issued and paid for in accordance
with their terms 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 Founders' 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 Founders'
Securities has been duly and validly taken.
2.9 Registration Rights of Third Parties. Except as set forth in the
Prospectus, no holders of any securities of the Company or any rights
exercisable for or convertible or exchangeable into securities of the Company
have the right to require the Company to register any such securities of the
Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity and Binding Effect of Agreements. This Agreement, the Warrant
Agreement (as defined in Section 2.21 hereof), the Trust Agreement, the Services
Agreement (as defined in Section 2.29 hereof), the Subscription Agreements, the
Escrow Agreement (as defined in Section 2.22.2 hereof), the Registration Rights
Agreement (as defined in Section 2.22.3 hereof) and the Representative's
Purchase Option have been duly and validly authorized by the Company and, when
executed and delivered, will constitute, the valid and binding agreements of the
Company, enforceable against the Company in accordance with their respective
terms, except (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (ii) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (iii)
that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
2.11 No Conflicts, Etc. The execution, delivery, and performance by the
Company of this Agreement, the Warrant Agreement, the Representative's Purchase
Option, the Trust Agreement, the Services Agreement, the Subscription Agreements
and the Escrow Agreements, the consummation by the Company of the transactions
herein and therein contemplated and the compliance by the Company with the terms
hereof and thereof do not and will not, with or without the giving of notice or
the lapse of time or both (i) result in a breach of, or conflict with any of the
terms and provisions of, or constitute a default under, or result in the
creation, modification, termination or imposition of any lien, charge or
encumbrance upon any property or assets of the Company pursuant to the terms of
any agreement or instrument to which the Company is a party except pursuant to
the Trust Agreement referred to in Section 2.24 hereof; (ii) result in any
violation of the provisions of the Certificate of Incorporation or the Bylaws of
the Company; or (iii) violate any existing applicable law, rule, regulation,
judgment, order or decree of any governmental agency or court, domestic or
foreign, having jurisdiction over the Company or any of its properties or
business.
2.12 No Defaults; Violations. No material default exists in the due
performance and observance of any term, covenant or condition of any material
license, contract, indenture,
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mortgage, deed of trust, note, loan or credit agreement, or any other agreement
or instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its
Certificate of Incorporation or Bylaws or in violation of any material
franchise, license, permit, applicable law, rule, regulation, judgment or decree
of any governmental agency or court, domestic or foreign, having jurisdiction
over the Company or any of its properties or businesses.
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. The Company has all requisite corporate
power and authority, and has all necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies that it needs as of the date hereof to conduct its business
purpose as described in the Prospectus. The disclosures in the Registration
Statement concerning the effects of federal, state and local regulation on this
offering and the Company's business purpose as currently contemplated are
correct in all material respects and do not omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
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
and the Escrow Agreement and as contemplated by the Prospectus, except with
respect to applicable federal and state securities laws.
2.14 Questionnaires. To the best of the Company's knowledge, all
information contained in the questionnaires ("Questionnaires") completed by each
of the Company's stockholders immediately prior to the Offering ("Initial
Stockholders") and provided to the Underwriters as an exhibit to his, her or its
Insider Letter (as defined in Section 2.22.1) is true and correct and the
Company has not become aware of any information which would cause the
information disclosed in the questionnaires completed by each Initial
Stockholder to become inaccurate and incorrect.
2.15 Litigation; Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding pending or, to the best of the Company's knowledge, threatened
against, or involving the Company or, to the best of the Company's knowledge,
any Initial Stockholder, which has not been disclosed, that is required to be
disclosed, in the Registration Statement or the Questionnaires.
2.16 Good Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of its state of
incorporation, and is duly
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qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which its ownership or lease of property or the conduct of
business requires such qualification, except where the failure to qualify would
not have a material adverse effect on the assets, business or operations of the
Company.
2.17 Stop Orders. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or any part
thereof and has not threatened to issue any such order.
2.18 Transactions Affecting Disclosure to NASD.
2.18.1 Finder's Fees. Except as described in the Prospectus, there are
no claims, payments, arrangements, agreements or understandings relating to the
payment of a finder's, consulting or origination fee by the Company or any
Initial Stockholder with respect to the sale of the Securities hereunder or any
other arrangements, agreements or understandings of the Company or, to the best
of the Company's knowledge, any Initial Stockholder that may affect the
Underwriters' compensation, as determined by the National Association of
Securities Dealers, Inc. ("NASD").
2.18.2 Payments Within Twelve Months. The Company has not made any
direct or indirect payments (in cash, securities or otherwise) (i) to any
person, as a finder's fee, consulting fee or otherwise, in consideration of such
person raising capital for the Company or introducing to the Company persons who
raised or provided capital to the Company (ii) to any NASD member or (iii) to
any person or entity that has any direct or indirect affiliation or association
with any NASD member, within the twelve months prior to the Effective Date,
other than payments to MJ.
2.18.3 Use of Proceeds. None of the net proceeds of the Offering will
be paid by the Company to any participating NASD member or its affiliates,
except as specifically authorized herein and except as may be paid in connection
with a Business Combination as contemplated by the Prospectus.
2.18.4 Insiders' NASD Affiliation. Based on the Questionnaires, except
as set forth on Schedule 2.18.4, 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 beneficial owner of at
least 5% of the Company's outstanding Common Stock is or becomes an affiliate or
associated person of an NASD member.
2.19 Foreign Corrupt Practices Act. Neither the Company nor any of the
Initial Stockholders or any other person acting on behalf of the Company has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or any political party or candidate for office
(domestic or foreign) or other person who
10
was, is, or may be in a position to help or hinder the business of the Company
(or assist it in connection with any actual or proposed transaction) that (i)
might subject the Company to any damage or penalty in any civil, criminal or
governmental litigation or proceeding, (ii) if not given in the past, might have
had a material adverse effect on the assets, business or operations of the
Company as reflected in any of the financial statements contained in the
Prospectus or (iii) if not continued in the future, might adversely affect the
assets, business, operations or prospects of the Company. The Company's internal
accounting controls and procedures are sufficient to cause the Company to comply
with the Foreign Corrupt Practices Act of 1977, as amended.
2.20 Officers' Certificate. Any certificate signed by any duly authorized
officer of the Company and delivered to you or to your counsel shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
2.21 Warrant Agreement. The Company has entered into a warrant agreement
with respect to the Warrants, the Insider Warrants and the Representative's
Warrants with AST substantially in the form annexed as Exhibit 4.4 to the
Registration Statement ("Warrant Agreement").
2.22 Agreements With Initial Stockholders.
2.22.1 Insider Letters. The Company has caused to be duly executed
legally binding and enforceable agreements (except (i) as such enforceability
may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally, (ii) as enforceability of any
indemnification, contribution or noncompete provision may be limited under the
federal and state securities laws, and (iii) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought) substantially in the form annexed as Exhibit
10.1 to the Registration Statement ("Insider Letters"), pursuant to which each
of the Initial Stockholders of the Company agrees to certain matters, including
but not limited to, certain matters described as being agreed to by them under
the "Proposed Business" section of the Prospectus.
2.22.2 Escrow Agreement.
(i) The Company and the Initial Stockholders have entered into an
escrow agreement ("Escrow Agreement") with AST ("Escrow Agent") substantially
in the form annexed as Exhibit 10.3 to the Registration Statement, whereby the
Common Stock owned by the Initial Stockholders will be held in escrow by the
Escrow Agent, until one year 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. To the Company's knowledge, the Escrow Agreement is enforceable against
each of the Initial Stockholders and will not, with or without the giving of
notice or the lapse of time or both, result in a breach of, or conflict with any
of the terms and provisions of, or constitute a default under, any agreement or
instrument to which any of the Initial Stockholders is a party. The Escrow
Agreement shall not be amended, modified or otherwise changed without the prior
written consent of MJ.
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2.22.3 Registration Rights Agreement. The Company and the Initial
Stockholders have entered into a registration rights agreement ("Registration
Rights Agreement") substantially in the form annexed as Exhibit 10.4 to the
Registration Statement, whereby the Initial Stockholders will be entitled to
certain registration rights as set forth in such Registration Rights Agreement
and described more fully in the Registration Statement.
2.22.4 Subscription Agreement. The Company and the Founder Purchasers
have entered into Subscription Agreements substantially in the form annexed as
Exhibit 10.__ to the Registration Statement to purchase the Founders' Warrants.
Pursuant to the Subscription Agreements, the Founder Purchasers have placed the
purchase price for the Founders' Warrants in escrow prior to the date hereof.
Simultaneously with the consummation of the Offering, such purchase price shall
be deposited into the Trust Fund pursuant to the Trust Agreement.
2.22.5 Revolving Line of Credit. The Company and Inter-Atlantic
Management Services LLC (the "Affiliate") have entered into a subordinated
revolving line of credit facility (the "Credit Facility"), the form of which is
annexed as Exhibit 10.__ to the Registration Statement whereby the Affiliate has
agreed to provide the Company with a revolving line of credit under which the
Company may have up to $500,000 of outstanding borrowings at any time. The
Credit Facility terminates upon the earlier of the completion of a Business
Combination or the Company's dissolution and liquidation. The Credit Facility
bears interest at the rate of __% per annum. [Principal and interest owed by the
Company under the Credit Facility will be payable only if it consummates a
Business Combination.]
2.23 Xxxxxxxx-Xxxxx. There is and has been no failure on the part of the
Company or any of the Company's directors or officers, in their capacities as
such, to comply with (as and when applicable), and immediately following the
effectiveness of the Registration Statement the Company will be in compliance
with, Sections 301, 402, 802 and 1102 of the Xxxxxxxx-Xxxxx Act of 2002, as
amended, and the rules and regulations promulgated by the Commission and the
American Stock Exchange ("AMEX") thereunder (the "Xxxxxxxx-Xxxxx Act"), and Part
8 of the AMEX's "AMEX Company Guide," as amended. Further, there is and has been
no failure on the part of the Company or any of the Company's directors or
officers, in their capacities as such, to comply with (as and when applicable),
and immediately following the effectiveness of the Registration Statement the
Company will be in compliance with, all other applicable provisions of the
Xxxxxxxx-Xxxxx Act and the AMEX corporate governance requirements set forth in
the AMEX Company Guide, as amended.
2.24 Investment Management Trust Agreement. The Company has entered into
the Trust Agreement with respect to certain proceeds of the Offering
substantially in the form annexed as Exhibit 10.2 to the Registration Statement.
2.25 Covenants Not to Compete. No Initial Stockholder, employee, officer or
director of the Company is subject to any noncompetition agreement or
non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be an Initial Stockholder, employee, officer
and/or director of the Company.
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2.26 Investment Company Act; Investments. The Company has been advised
concerning the Investment Company Act of 1940, as amended (the "Investment
Company Act"), and the rules and regulations thereunder and has in the past
conducted, and intends in the future to conduct, its affairs in such a manner as
to ensure that it will not become an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act and such rules and regulations. The Company is not, nor will the
Company become upon the sale of the Units and the application of the proceeds
therefore as described in the Registration Statement and the Prospectus under
the caption "Use of Proceeds", an "investment company" or a person controlled by
an "investment company" within the meaning of the Investment Company Act. No
more than 45% of the "value" (as defined in Section 2(a)(41) of the Investment
Company Act) of the Company's total assets (exclusive of cash items and
"Government Securities" (as defined in Section 2(a)(16) of the Investment
Company Act) consist of, and no more than 45% of the Company's net income after
taxes is derived from, securities other than the Government Securities.
2.27 Subsidiaries. The Company does not own an interest in any corporation,
partnership, limited liability company, joint venture, trust or other business
entity.
2.28 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 Preliminary Prospectus or the Prospectus that have not been
described as required.
2.29 Administrative Services. The Company has entered into an agreement
("Services Agreement") with the Affiliate substantially in the form annexed as
Exhibit 10.5 to the Registration Statement pursuant to which the Affiliate will
make available to the Company general and administrative services including
office space, utilities, administrative, technology and secretarial services for
the Company's use for $7,500 per month for up to 24 months.
2.30 Loans. The Affiliate has made a loan to the Company in the aggregate
amount of $250,000 (the "Insider Loan") substantially in the form annexed as
Exhibit 10.7 to the Registration Statement. The Insider Loan does not bear any
interest and is to be repaid by the Company out of the proceeds of the Offering
not being deposited in the Trust Fund.
2.31 American Stock Exchange Eligibility. As of the Effective Date, the
Public Securities have been approved for listing on the AMEX. There is and has
been no failure on the part of the Company or any of the Company's directors or
officers, in their capacities as such, to comply with (as and when applicable),
and immediately following the effectiveness of the Registration Statement the
Company will be in compliance with, Part 8 of the AMEX's AMEX Company Guide, as
amended.
2.32 Rule 419 Under the Act. Upon delivery and payment for the Firm Units
on the Closing Date, the Company will not be subject to Rule 419 under the Act
and none of the Company's outstanding securities will be deemed to be a "xxxxx
stock" as defined in rule 3a-51-1 under the Exchange Act.
3. Covenants of the Company. The Company covenants and agrees as follows:
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3.1 Amendments to Registration Statement. The Company will deliver to the
Representative, prior to filing, any amendment or supplement to the Registration
Statement or Prospectus proposed to be filed after the Effective Date and not
file any such amendment or supplement to which the Representative shall
reasonably object in writing.
3.2 Federal Securities Laws.
3.2.1 Compliance. During the time when a Prospectus is required to be
delivered under the Act, the Company will use all reasonable efforts to comply
with all requirements imposed upon it by the Act, the Regulations and the
Exchange Act and by the regulations under the Exchange Act, as from time to time
in force, so far as necessary to permit the continuance of sales of or dealings
in the Public Securities in accordance with the provisions hereof and the
Prospectus. If at any time when a Prospectus relating to the Public Securities
is required to be delivered under the Act, any event shall have occurred as a
result of which, in the opinion of counsel for the Company or counsel for the
Underwriters, the Prospectus, as then amended or supplemented, includes an
untrue statement of a material fact or omits to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company will notify the Representative promptly and prepare and file with the
Commission, subject to Section 3.1 hereof, an appropriate amendment or
supplement in accordance with Section 10 of the Act.
3.2.2 Filing of Final Prospectus. The Company will file the Prospectus
(in form and substance satisfactory to the Representative) with the Commission
pursuant to the requirements of Rule 424 of the Regulations.
3.2.3 Exchange Act Registration. 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 for a period of five years from the Effective
Date, or until the Company is required to be liquidated if earlier, or, in the
case of the Warrants, until the Warrants expire and are no longer exercisable.
The Company will not deregister the Units under the Exchange Act without the
prior written consent of MJ.
3.2.4 Ineligible Issuer. At the time of filing the Registration
Statement and at the date hereof, the Company was and is an "ineligible issuer,"
as defined in Rule 405 under the Securities Act. The Company has not made and
will not make any offer relating to the Public Securities that would constitute
an "issuer free writing prospectus," as defined in Rule 433, or that would
otherwise constitute a "free writing prospectus," as defined in Rule 405.
3.2.5 Xxxxxxxx-Xxxxx Act. The Company (i) has taken all necessary
actions to ensure that it is in compliance with all provisions of the
Xxxxxxxx-Xxxxx Act that are in effect and with which the Company is required to
comply, (ii) will take all necessary actions to ensure that, upon and at all
times after the effectiveness of the Registration Statement, it will be in
compliance with all applicable provisions of the Xxxxxxxx-Xxxxx Act not
currently in effect upon the effectiveness of such provisions and (iii) will
take all necessary actions to ensure that, upon and at all times after the
effectiveness of the Registration Statement, it will be in compliance with the
requirements of the AMEX's AMEX Company Guide, as amended.
14
3.3 American Stock Exchange Listing. The Company will use its best efforts
to effect and maintain the listing of the Securities on the American Stock
Exchange.
3.4 Delivery to Underwriters of Prospectuses. The Company will deliver to
each of the several Underwriters, without charge, from time to time during the
period when the Prospectus is required to be delivered under the Act or the
Exchange Act, such number of copies of each Preliminary Prospectus and the
Prospectus as such Underwriters may reasonably request and, as soon as the
Registration Statement or any amendment or supplement thereto becomes effective,
deliver to you two original executed Registration Statements, including
exhibits, and all post-effective amendments thereto and copies of all exhibits
filed therewith or incorporated therein by reference and all original executed
consents of certified experts.
3.5 Effectiveness and Events Requiring Notice to the Representative. The
Company will use its best efforts to cause the Registration Statement to remain
effective and will notify the Representative immediately and confirm the notice
in writing (i) of the effectiveness of the Registration Statement and any
amendment thereto, (ii) of the issuance by the Commission of any stop order or
of the initiation, or the threatening, of any proceeding for that purpose, (iii)
of the issuance by any state securities commission of any proceedings for the
suspension of the qualification of the Public Securities for offering or sale in
any jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of the mailing and delivery to the Commission for filing of
any amendment or supplement to the Registration Statement or Prospectus, (v) of
the receipt of any comments or request for any additional information from the
Commission, and (vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Commission or
any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to
obtain promptly the lifting of such order.
3.6 Review of Financial Statements. For a period of five years from the
Effective Date, or until such earlier time upon which the Company is required to
be liquidated, the Company, at its expense, shall cause its regularly engaged
independent certified public accountants to review (but not audit) the Company's
financial statements for each of the first three fiscal quarters prior to the
announcement of quarterly financial information, the filing of the Company's
Form 10-Q quarterly report and the mailing of quarterly financial information to
stockholders.
3.7 Affiliated Transactions.
3.7.1 Business Combinations. The Company will not consummate a
Business Combination with any entity which is affiliated with any Initial
Stockholder unless the Company obtains an opinion from an independent investment
banking firm that the Business Combination is fair to the Company's stockholders
from a financial perspective.
3.7.2 Compensation. Except for payments made pursuant to the Services
Agreement, the repayment of the Insider Loan and any interest payments made
under the Credit
15
Facility, the Company shall not pay any Initial Stockholder or any of their
affiliates any fees or compensation, 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 reasonable
out-of-pocket expenses incurred in connection with seeking and consummating a
Business Combination.
3.8 Secondary Market Trading and Standard & Poor's. If the Company does not
maintain the listing of the Public Securities on the AMEX or another national
securities exchange, the Company will apply to be included in Standard & 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 commercially
reasonable steps as may be necessary to obtain a secondary market trading
exemption for the Company's securities in the State of California. The Company
shall also take such other action as may be reasonably requested by the
Representative to obtain a secondary market trading exemption in such other
states as may be requested by the Representative.
3.9 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.
3.10 Reports to the Representative.
3.10.1 Periodic Reports, Etc. For a period of five years from the
Effective Date or until such earlier time upon which the Company is required to
be liquidated, the Company will furnish to the Representative (Attn: Xxxxxxx
Xxxxxx) and its counsel copies of such financial statements and other periodic
and special reports as the Company from time to time furnishes generally to
holders of any class of its securities, and promptly furnish to the
Representative (i) a copy of each periodic report the Company shall be required
to file with the Commission, (ii) a copy of every press release and every news
item and article with respect to the Company or its affairs which was released
by the Company, (iii) a copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or
13E-4 received or prepared by the Company, (iv) five copies of each registration
statement filed by the Company with the Commission under the Securities Act and
(v) 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.
3.10.2 Transfer Sheets. For a period of two years following the
Effective Date or until such earlier time upon which the Company is required to
be liquidated, the Company shall retain a transfer and warrant agent acceptable
to the Representative ("Transfer Agent"). For a period of one year following the
Effective Date, the Company 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. Continental Stock Transfer &
Trust Company is acceptable to the Underwriters.
16
3.11 Disqualification of Form S-1. Until the earlier of seven years from
the date hereof or until the Warrants have expired and are no longer
exercisable, the Company will not take any action or actions which may prevent
or disqualify the Company's use of Form S-1 (or other appropriate form) for the
registration of the Warrants and the Representative's Warrants under the Act.
3.12 Payment of Expenses.
3.12.1 General Expenses Related to the Offering. The Company hereby
agrees to pay on each of the Closing Date and the Option Closing Date, if any,
to the extent not paid at Closing Date, all expenses incident to the performance
of the obligations of the Company under this Agreement, including but not
limited to (i) the preparation, printing, filing and mailing (including the
payment of postage with respect to such mailing) of the Registration Statement,
the Preliminary 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) if necessary, the qualification
of the Public Securities under state or foreign securities or Blue Sky laws,
(iv) filing fees, costs and expenses (including fees and disbursements of the
Representative's counsel) incurred in registering the Offering with the NASD,
(v) fees and disbursements of the transfer and warrant agent, (vi) the Company's
expenses associated with "due diligence" meetings arranged by the Representative
and (vii) all other costs and expenses customarily borne by an issuer incident
to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 3.12.1. The Company also agrees that,
if requested by the Representative, it will engage and pay up to $5,000 per
principal of the Company 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 in this Agreement to be paid by the Company to the Representative and
others. If the Offering contemplated by this Agreement is not consummated for
any reason whatsoever then the Company shall reimburse the Underwriters in full
for their actual accountable out of pocket expenses, including, without
limitation, its legal fees (up to a maximum of $100,000) and disbursements and
"road show" and due diligence expenses.
3.12.2 Deferred Compensation. Upon the consummation of a Business
Combination, the Company shall pay the Underwriters discounts and commissions of
$0.16 per Unit sold in the Offering, minus the pro rata amount of such deferred
compensation attributable to the Common Stock redeemed by those public
stockholders that vote against the Business Combination and exercise their
redemption right. These payments shall be made by wire transfer to an account
designated by the Representative on the closing date of the Business
Combination.
3.13 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.
17
3.14 Delivery of Earnings Statements to Security Holders. The Company will
make generally available to its security holders as soon as practicable, but not
later than the first day of the fifteenth full calendar month following the
Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Act or the Regulations, but which shall satisfy the provisions of Rule
158(a) under Section 11(a) of the Act) covering a period of at least twelve
consecutive months beginning after the Effective Date.
3.15 Notice to NASD. For a period of ninety days following the Effective
Date, in the event any person or entity (regardless of any NASD affiliation or
association) is engaged to assist the Company in its search for a merger
candidate or to provide any other merger and acquisition services, the Company
will provide the following to the NASD and MJ prior to the consummation of the
Business Combination: (i) complete details of all services and copies of
agreements governing such services (which details or agreements may be
appropriately redacted to account for privilege or confidentiality concerns);
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.
3.16 Stabilization. Neither the Company, nor, to its knowledge, any of its
employees, directors or stockholders (without the consent of MJ) 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.
3.17 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.
3.18 Accountants. Until the earlier of five years from the Effective Date
or until such earlier time upon which the Company is required to be liquidated,
the Company shall retain RKC or another independent public accountant.
3.19 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 ("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.
18
3.20 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.
3.21 Corporate Proceedings. All corporate proceedings and other legal
matters necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby shall have been done to the reasonable
satisfaction to counsel for the Underwriters.
3.22 Investment Company. The Company shall cause a portion of the proceeds
of the Offering to be deposited and held in the Trust Fund, to be invested only
as set forth in the Trust Agreement and as more fully described 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.
3.23 Founders' Warrants Purchase Price. Immediately prior to the
consummation of the Offering, the Company shall cause the purchase price to be
paid for the Founders' Warrants by the Founder Purchasers to be deposited in the
Trust Fund.
3.24 Expenses Related to Business Combination. In the event the
Representative is engaged by the Company to assist the Company in trying to
obtain stockholder approval of a proposed Business Combination, the Company
agrees to reimburse the Representative for all reasonable out-of-pocket
expenses, including, but not limited to, "road show" and due diligence expenses.
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 Xxxxxxxx & Xxxxxxxx LLP, counsel
for the Underwriters ("MF").
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.
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4.1.3 No Blue Sky Stop Orders. No order suspending the sale of the
Units in any jurisdiction shall have been issued on either of 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 DLA Piper US LLP
("DLA"), dated the Effective Date, addressed to the Representative and in form
and substance satisfactory to MF to the effect that:
(a) 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 assets, business or operations of the Company.
(b) All issued and outstanding securities of the Company have
been duly authorized and validly issued and are fully paid and non-assessable;
the holders thereof are not subject to personal liability by reason of being
such holders; and none of such securities were issued in violation of the
preemptive rights of any stockholder of the Company arising by operation of law
or under the Certificate of Incorporation or Bylaws of the Company. The offers
and sales of the outstanding Common Stock were at all relevant times either
registered under the Act or exempt from such registration requirements. The
authorized and, to such counsel's knowledge, outstanding capital stock of the
Company is as set forth in the Prospectus.
(c) The Securities and Founders' 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 and Founders'
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, the Founders'
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 Founders' 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 federal and
state securities laws, and (c) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The certificates representing the Securities are in due and
proper form.
20
(d) This Agreement, the Warrant Agreement, the Services
Agreement, the Trust Agreement, the Subscription Agreement, the Escrow
Agreement, the Credit Facility and the Registration Rights Agreement have each
been duly and validly authorized, executed and delivered by the Company and
constitute, and the Representative's Purchase Option has been duly and validly
authorized by the Company and, when executed and delivered, will constitute, the
valid and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except (a) as such enforceability may be
limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally, (b) as enforceability of any indemnification or
contribution provisions may be limited under the federal and state securities
laws, and (c) that the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
(e) The execution, delivery and performance of this Agreement,
the Warrant Agreement, the Representative's Purchase Option, the Escrow
Agreement, the Trust Agreement, the Subscription Agreement, the Services
Agreement, the Credit Facility and the Registration Rights Agreement and
compliance by the Company with the terms and provisions hereof and thereof and
the consummation of the transactions contemplated hereby and thereby, and the
issuance and sale of the Securities, 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 Bylaws of the
Company, or (c) to such counsel's knowledge, violate any United States statute
or any judgment, order or decree, rule or regulation applicable to the Company
of any court, United States federal, state or other regulatory authority or
other governmental body having jurisdiction over the Company, its properties or
assets.
(f) The Registration Statement, the Preliminary Prospectus and
the Prospectus and any post-effective amendments or supplements thereto (other
than the financial statements included therein, as to which no opinion need be
rendered) each as of their respective dates complies as to form in all material
respects with the requirements of the Act and Regulations. The Securities and
all other securities issued or issuable by the Company conform in all material
respects to the description thereof contained in the Registration Statement and
the Prospectus. The descriptions in the Registration Statement and in the
Prospectus, insofar as such statements constitute a summary of statutes, legal
matters, contracts, documents or proceedings referred to therein, fairly present
in all material respects the information required to be shown with respect to
such statutes, legal matters, contracts, documents and proceedings, and such
counsel does not know of any statutes or legal or governmental proceedings
required to be described in the Prospectus that are not described in the
Registration Statement or the Prospectus or included as exhibits to the
Registration Statement that are not described or included as required.
(g) The Registration Statement is effective under the Act. To
such counsel's knowledge, no stop order suspending the effectiveness of the
Registration Statement
21
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.
(h) The Public Securities have been duly listed, subject to
notice of issuance, on the American Stock Exchange.
(i) 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.
The opinion of counsel shall further include a statement to the
effect that such counsel has participated in conferences with officers and other
representatives of the Company, the Underwriters and the independent public
accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus contained therein 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 the Prospectus contained
therein (except as otherwise set forth in the foregoing opinion), solely on the
basis of the foregoing without independent check and verification, no facts have
come to the attention of such counsel which lead them to believe that the
Registration Statement or any amendment thereto, at the time the Registration
Statement or amendment became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading or the Prospectus or
any amendment or supplement thereto, at the time they were filed pursuant to
Rule 424(b) or at the date of such counsel's opinion, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statement therein, in light of the
circumstances under which they were made, not misleading (except that such
counsel need express no opinion with respect to the financial information and
statistical data and information included in the Registration Statement or the
Prospectus).
4.2.2 Closing Date and Option Closing Date Opinion of Counsel. On each
of the Closing Date and the Option Closing Date, if any, the Representative
shall have received the favorable opinion of DLA, dated the Closing Date or the
Option Closing Date, as the case may be, addressed to the Representative and in
form and substance reasonably satisfactory to MF, confirming as of the Closing
Date and, if applicable, the Option Closing Date, the statements made by DLA in
its opinion delivered on the Effective Date.
4.2.3 Reliance. In rendering such opinion, such counsel may rely (i)
as to matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the extent such
counsel deems proper and to the extent specified in such opinion, if at all,
upon an opinion or opinions (in form and substance reasonably satisfactory to
MF) of other counsel reasonably acceptable to MF, 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
22
relied upon by such counsel for the Company shall include a statement to the
effect that it may be relied upon by counsel for the Underwriters in its opinion
delivered to the Underwriters.
4.3 Cold Comfort Letter. At the time this Agreement is executed, and at
each of the Closing Date and the Option Closing Date, if any, you shall have
received a letter, addressed to the Representative and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to the Representative
and to MF from RKC 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 an independent registered public
accounting firm 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 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,
they have been advised by the Company officials that (a) the unaudited financial
statements of the Company included in the Registration Statement comply as to
form in all material respects with the applicable accounting requirements of the
Act and the Regulations or are 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 and (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 no 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 __________ __, 2007 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;
(iv) 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
23
constitute an examination in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in agreement;
(v) Stating that they have not provided the Company's management
with any written communication in accordance with Statement on Auditing
Standards No. 60 "Communication of Internal Control Structure Related Matters
Noted in an Audit;" and
(vi) Statements as to such other matters incident to the
transaction contemplated hereby as you may reasonably request.
4.4 Officers' Certificates.
4.4.1 Officers' Certificate. At each of the Closing Date and the
Option Closing Date, if any, the Representative shall have received a
certificate of the Company signed by the Chairman of the Board or the President
and the Secretary or Assistant Secretary of the Company (in their capacities as
such), dated the Closing Date or the Option Closing Date, as the case may be,
respectively, to the effect that the Company has performed all covenants and
complied with all conditions required by this Agreement to be performed or
complied with by the Company prior to and as of the Closing Date, or the Option
Closing Date, as the case may be, and that the conditions set forth in Section
4.5 hereof have been satisfied as of such date and that, as of Closing Date and
the Option Closing Date, as the case may be, the representations and warranties
of the Company set forth in Section 2 hereof are true and correct. In addition,
the Representative will have received such other and further certificates of
officers (in their capacities as such) 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 Bylaws 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, (iv) all correspondence between the Company or its counsel and AMEX
concerning the listing of the Securities on AMEX and (v) 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
24
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,
the Credit Facility, the Subscription Agreements and all of the Insider Letters.
4.6.2 Closing Date Deliveries. On the Closing Date, the Company shall
have delivered to the Representative executed copies of the Representative's
Purchase Option.
4.7 Opinion of Counsel for the Underwriters. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to MF 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 American Stock Exchange Listing. The Public Securities have been duly
listed, subject to notice of issuance, on the American Stock Exchange.
4.9 Founder Securities. On the Closing Date, the Founder Purchasers shall
have purchased the Founders' Warrants and the purchase price for such Founders'
Warrants shall be deposited into the Trust Fund.
5. Indemnification.
5.1 Indemnification of Underwriters.
5.1.1 General. Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless each of the Underwriters, and each dealer
selected by you that participates in the offer and sale of the Securities (each
a "Selected Dealer") and each of their respective directors, officers and
employees and each person, if any, who controls any such Underwriter
("controlling person") within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim, damage
and expense whatsoever
25
(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 collectively
called "application") executed by the Company or based upon written information
furnished by the Company in any jurisdiction in order to qualify the Securities
under the securities laws thereof or filed with the Commission, any state
securities commission or agency, Nasdaq, Amex or any other 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 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, a
Selected Dealer or a controlling person in respect of which indemnity may be
sought against the Company pursuant to Section 5.1.1, such Underwriter or
Selected Dealer 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 or Selected Dealer, as the case may be) and payment of
actual expenses. Such Underwriter, Selected Dealer 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,
Selected Dealer or 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, or (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
26
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, Selected Dealer and/or controlling person shall be
borne by the Company. Notwithstanding anything to the contrary contained herein,
if the Underwriter, Selected Dealer or controlling person shall assume the
defense of such action as provided above, the Company shall have the right to
approve the terms of any settlement of such action which approval shall not be
unreasonably withheld.
5.2 Indemnification of the Company. Each Underwriter, severally and not
jointly, agrees to indemnify and hold harmless the Company, its directors,
officers and employees and agents who control the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act against any and all
loss, liability, claim, damage and expense described in the foregoing indemnity
from the Company to the several Underwriters, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions
made in any Preliminary Prospectus, the Registration Statement or Prospectus or
any amendment or supplement thereto or in any application, in reliance upon, and
in strict conformity with, written information furnished to the Company with
respect to such Underwriter by or on behalf of the Underwriter expressly for use
in such Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
any Preliminary Prospectus, the Registration Statement or Prospectus or any
amendment or supplement thereto or any application, and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have the
rights and duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the several Underwriters
by the provisions of Section 5.1.2.
5.3 Contribution.
5.3.1 Contribution Rights. In order to provide for just and equitable
contribution under the Act in any case in which (i) any person entitled to
indemnification under this Section 5 makes claim for indemnification pursuant
hereto but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for
indemnification in such case, or (ii) contribution under the Act, the Exchange
Act or otherwise may be required on the part of any such person in circumstances
for which indemnification is provided under this Section 5, then, and in each
such case, the Company and the Underwriters shall contribute to the aggregate
losses, liabilities, claims, damages and expenses of the nature contemplated by
said indemnity agreement incurred by the Company and the Underwriters, as
incurred, in such proportions that the Underwriters are responsible for that
portion represented by the percentage that the underwriting discount appearing
on the cover page of the Prospectus bears to the initial offering price
appearing thereon and the Company is responsible for the balance; provided,
that, no person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. If the allocation provided
by the immediately preceding sentence is unavailable for any reason, the Company
and the Underwriters shall contribute in such
27
proportion as is appropriate to reflect the relative fault of the Company and
the Underwriters in connection with the actions or omissions which resulted in
such loss, claim, damage, liability or action, as well as any other relevant
equitable considerations. The relative fault of the Company and the Underwriters
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
Notwithstanding the provisions of this Section 5.3.1, 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
the default addressed in Section 6.1 above relates to more than 10% of the Firm
Units or Option
28
Units, you may in your discretion arrange for yourself or for another party or
parties to purchase such Firm Units or Option Units to which such default
relates on the terms contained herein. If within one business day after such
default relating to more than 10% of the Firm Units or Option Units you do not
arrange for the purchase of such Firm Units or Option Units, then the Company
shall be entitled to a further period of one business day within which to
procure another party or parties satisfactory to you to purchase said Firm Units
or Option Units on such terms. In the event that neither you nor the Company
arrange for the purchase of the Firm Units or Option Units to which a default
relates as provided in this Section 6, this Agreement will be terminated without
liability on the part of the Company (except as provided in Sections 3.13 and 5
hereof) or the several Underwriters (except as provided in Section 5 hereof);
provided, however, that if such default occurs with respect to the Option Units,
this Agreement will not terminate as to the Firm Units; and provided further
that nothing herein shall relieve a defaulting Underwriter of its liability, if
any, to the other several Underwriters and to the Company for damages occasioned
by its default hereunder.
6.3 Postponement of Closing Date. In the event that the Firm Units or
Option Units to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party or parties
as aforesaid, you or the Company shall have the right to postpone the Closing
Date or Option Closing Date for a reasonable period, but not in any event
exceeding five business days, in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus or in any other
documents and arrangements, and the Company agrees to file promptly any
amendment to the Registration Statement or the Prospectus that in the opinion of
counsel for the Underwriters may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any party substituted
under this Section 6 with like effect as if it had originally been a party to
this Agreement with respect to such Securities.
7. Right to Appoint Observer. Until the consummation of a Business Combination,
upon notice from MJ to the Company, MJ 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 MJ 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 MJ, 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 MJ written notice of each such meeting and
to provide MJ with an agenda and minutes of the meeting no later than it gives
such notice and provides such items to the other directors and to reimburse the
representative of MJ 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 Intentionally Omitted.
8.2 Additional Shares or Options. The Company hereby agrees that until the
consummation of a Business Combination, it shall not issue any shares of Common
Stock or any
29
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 Acknowledgment.
(a) Underwriters/Representative. Except with respect to the
underwriting discounts and commissions due to the Underwriters only upon
successful consummation of a Business Combination, each of the Underwriters and
the Representative hereby agree that it does not have any right, title, interest
or claim of any kind in or to any monies in the Trust Fund ("Claim") and waive
any Claim it may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever.
(b) Target Businesses and Vendors. The Company hereby agrees that
it will not commence its due diligence investigation of any operating business
which the Company seeks to acquire (each a "Target Business") or obtain the
services of any vendor unless and until such Target Business or vendor
acknowledges in writing, whether through a letter of intent, memorandum of
understanding or other similar document (and subsequently acknowledges the same
in any definitive document replacing any of the foregoing), that (a) it has read
the Prospectus and understands that the Company has established the Trust Fund
for the benefit of the public stockholders and that the Company may disburse
monies from the Trust Fund only (i) to the public stockholders in the event they
elect to convert their IPO Shares (as defined below), (ii) to the public
stockholders upon the liquidation of the Company if the Company fails to
consummate a Business Combination or (iii) to the Company after, or concurrently
with, the consummation of a Business Combination and (b) for and in
consideration of the Company (1) agreeing to evaluate such Target Business for
purposes of consummating a Business Combination with it or (2) agreeing to
engage the services of the vendor, as the case may be, such Target Business or
vendor agrees that it does not have any Claim of any kind in or to any monies in
the Trust Fund and waives any Claim it may have in the future as a result of, or
arising out of, any negotiations, contracts or agreements with the Company and
will not seek recourse against the Trust Fund for any reason whatsoever.
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 and will not
allow any amendments to, or waivers of, such Insider Letters without the prior
written consent of MJ.
8.5 Certificate of Incorporation and Bylaws. 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 Bylaws. Prior to the
consummation of a Business Combination, the Company will not amend its
Certificate of Incorporation without the prior written consent of MJ.
8.6 Acquisition/Liquidation Procedure. The Company agrees: (i) that, prior
to the consummation of any Business Combination, it will submit such transaction
to the Company's stockholders for their approval ("Business Combination Vote")
even if the nature of the acquisition is such as would not ordinarily require
stockholder approval under applicable state
30
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
(as defined below) an aggregate sum equal to the Company's "Liquidation Value."
The Company's "Liquidation Value" shall mean the Company's book value, as
determined by the Company and approved by RKC. In no event, however, will the
Company's Liquidation Value be less than the Trust Fund, inclusive of any net
interest income thereon then remaining in the Trust Fund. 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. With respect to the Business Combination Vote, the
Company shall cause all of the Initial Stockholders to vote (i) the shares of
Common Stock owned by them immediately prior to this Offering in accordance with
the vote of the holders of a majority of the IPO Shares present, in person or by
proxy, at a meeting of the Company's stockholders called for such purpose and
(ii) the shares of Common Stock acquired by them in connection with or following
this Offering in favor of any Business Combination, at a meeting of the
Company's Stockholders called for such purpose. At the time the Company seeks
approval of any potential Business Combination, the Company will offer each
holder of Common Stock issued in this Offering ("IPO Shares") the right to
convert their IPO Shares at a per share price ("Conversion Price") equal to the
amount in the Trust Fund (inclusive of any interest income therein) calculated
as of two business days prior to the consummation of the proposed Business
Combination divided by the total number of IPO Shares. If a majority of the
holders of IPO Shares present and entitled to vote on the Business Combination
vote in favor of such Business Combination and holders of less than 20% in
interest of the Company's IPO Shares elect to convert their IPO Shares, the
Company may, but will not be required to, proceed with such Business
Combination. If the Company elects to so proceed, it will convert shares, based
upon the Conversion Price, from those holders of IPO Shares who affirmatively
requested such conversion and who voted against the Business Combination. If
holders of 20% or more in interest of the IPO Shares, who vote against approval
of any potential Business Combination, elect to convert their IPO Shares, the
Company will not proceed with such Business Combination and will not convert
such shares. The provisions of this Section __ may not be modified, amended or
deleted under any circumstances.
8.7 Proxy Materials. 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.
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
31
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 or contractual obligations the [Initial
Stockholders] might have.
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 (all of the Company's assets, including the funds held in
the Trust Fund, less the Company's liabilities) at the time of such acquisition.
The fair market value of such business must be determined by the Board of
Directors of the Company based upon standards generally accepted by the
financial community, such as actual and potential sales, earnings and cash flow
and book value. If the Board of Directors of the Company is not able to
independently determine that the target business has a fair market value of at
least 80% of the Company's net assets at the time of such acquisition, the
Company will obtain an opinion from an unaffiliated, independent investment
banking firm which is a member of the NASD reasonably acceptable to MJ 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 American Stock
Exchange, the Boston Stock Exchange or on the NASD OTC Bulletin Board (or
successor trading market) shall have been suspended, or minimum or maximum
prices for trading shall have been fixed, or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for securities
shall have been required on the NASD OTC Bulletin Board or by order of the
Commission or any other government authority having jurisdiction, or (iii) if
the United States shall have become involved in a new war or an increase in
major hostilities, or (iv) if a banking moratorium has been declared by a New
York State or federal authority, or (v) if a moratorium on foreign exchange
trading has been declared which materially
32
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, including without
limitation as a result of terrorist activities after the date hereof, as in the
Representative's judgment would make it impracticable to proceed with the
offering, sale and/or delivery of the Units or to enforce contracts made by the
Underwriters for the sale of the Securities.
10.3 Expenses. In the event that this Agreement shall not be carried out
for any reason whatsoever, within the time specified herein or any extensions
thereof pursuant to the terms herein, the obligations of the Company to pay the
out of pocket expenses related to the transactions contemplated herein shall be
governed by Section 3.12 hereof.
10.4 Indemnification. Notwithstanding any contrary provision contained in
this Agreement, any election hereunder or any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the provisions of
Section 5 shall not be in any way effected by, such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
11. Miscellaneous.
11.1 Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or
telecopied and confirmed and shall be deemed given when so delivered or
telecopied and confirmed or if mailed, two days after such mailing.
If to the Representative:
Xxxxxx Xxxxxx & Co. Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx
Copy to:
Xxxxxxxx & Xxxxxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
If to the Company:
Inter-Atlantic Financial, Inc.
000 Xxxxxxx Xxxxxx
00
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxx
Copy to:
DLA Piper US LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxx, 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. Except for Section 8.6 (which may not be amended under any
circumstances), this Agreement may only be amended by a written instrument
executed by each of the parties hereto.
11.4 Entire Agreement. This Agreement (together with the other agreements
and documents being delivered pursuant to or in connection with this Agreement)
constitute the entire agreement of the parties hereto with respect to the
subject matter hereof and thereof, and supersede all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
11.5 Binding Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Representative, the Underwriters, the Company and
the controlling persons, directors and officers referred to in Section 5 hereof,
and their respective successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provisions
herein contained.
11.6 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving
effect to conflicts of law principles that would result in the application of
the substantive laws of another jurisdiction. The Company hereby agrees that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York 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 11.1 hereof. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys' fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
34
11.7 Execution in Counterparts. This Agreement may be executed in one or
more original or facsimile 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.
11.9 No Fiduciary Duty. The Company acknowledges and agrees that neither
the Representative, the Underwriters nor the controlling persons of any of them
shall have any fiduciary or advisory duty to the Company or any of its
controlling persons arising out of, or in connection with, this Agreement or the
offer and sale of the Securities.
35
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,
INTER-ATLANTIC FINANCIAL, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Accepted on the date first
above written.
XXXXXX XXXXXX & CO. INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
36
SCHEDULE I
INTER-ATLANTIC FINANCIAL, INC.
7,500,000 UNITS
Number of Firm Units
Underwriter to be Purchased
----------- --------------------
Xxxxxx Xxxxxx & Co. Inc. 7,500,000
