6,875,000 Units CHARDAN 2008 CHINA ACQUISITION CORP. UNDERWRITING AGREEMENT
Exhibit
1.1
________
__, 2008
Xxxxx
Xxxxxx, Carret & Co., LLC
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxx X. XxXxxxxxx
Maxim
Group LLC
000
Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxxxx X. Xxxxxx
Xxxx
Capital Partners, LLC
00
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Attn.:
Xxx Xxxx
As
Representatives of the Underwriters
named
on Schedule
A
hereto
Ladies
and Gentlemen:
Chardan
2008 China Acquisition Corp., a British Virgin Islands company with limited
liability (the “Company”),
hereby confirms its agreement with Xxxxx Xxxxxx, Carret & Co., LLC
(“BMC”),
Maxim
Group LLC and Xxxx Capital Partners, LLC (collectively, the “Representatives”)
and
with the other underwriters named on Schedule
A
hereto,
for which the Representatives are acting as representatives and co-managers
(the
Representatives, with such other underwriters being collectively referred to
herein as the “Underwriters”
or,
individually, an “Underwriter”)
as
follows:
1. Purchase
and Sale of Securities.
1.1.Firm
Securities.
1.1.1. Purchase
of Firm Units.
1.1.1.1. 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
to
the several Underwriters, severally and not jointly, an aggregate of 6,875,000
units (the “Firm
Units”)
of the
Company’s securities at a purchase price (net of discounts and commissions,
$0.32 of which shall be deposited into the Trust Account (as defined below))
of
$7.52 per Firm Unit. The Underwriters, severally and not jointly, agree to
purchase from the Company the number of Firm Units set forth opposite their
respective names on Schedule A
attached
hereto and made a part hereof at a purchase price (net of discounts and
commissions ($0.32 of which shall be deposited into the Trust Account pursuant
to Section 1.5)) of $7.52 per Firm Unit. The Company previously advanced
$25,000 to BMC (the “Advance”)
towards the Underwriters discounts and commissions not being held in the Trust
Account, which shall be credited against such underwriting discounts and
commissions at the Closing.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page
2 of
32
1.1.1.2. The
Firm
Units are to be offered initially to the public (the “Offering”)
at the
offering price of $8.00 per Firm Unit. Each Firm Unit consists of one share
of
the Company’s ordinary shares, par value $0.0001 per share (the “Ordinary
Shares”),
and
one warrant to purchase one Ordinary Share (the “Warrant(s)”).
The Ordinary Shares and the Warrants included in the Firm Units will not be
separately transferable until the tenth (10th)
Business Day (as defined below) after the date of the Prospectus (as defined
herein), unless the Representatives determine that an earlier date is
acceptable, subject to the Company’s having filed the Report of Foreign Private
Issuer on Form 6-K and having issued a press release announcing when such
separate trading will begin. In no event will the Ordinary Shares and Warrants
be traded separately until the Company has filed a Report of Foreign Private
Issuer on Form 6-K with the Securities and Exchange Commission (the
“Commission”)
containing an audited balance sheet reflecting its receipt of the gross proceeds
of the Offering. The Company will file the Report of Foreign Private Issuer
on
Form 6-K promptly upon the consummation of the Offering, which is anticipated
to
take place within four (4) Business Days from the date of the Prospectus. As
used herein, the term “Business
Day”
shall
mean any day other than a Saturday, Sunday or any day on which national banks
in
New York, New York are not open for business
1.1.1.3. Each
Warrant shall entitle its holder to purchase one Ordinary Share for $5.00 per
share during the period commencing on the later of: (i) the consummation by
the
Company of a Business Combination (as defined below) or (ii) one year from
the
effective date (the “Effective
Date”)
of the
Registration Statement (as defined below) and terminating on the four-year
anniversary of the Effective Date. As used herein, the term “Business
Combination”
shall
mean the Company’s acquisition of one or more assets or operating businesses
having primary operations in the People’s Republic of China, including the Hong
Kong and Macau Special Administrative Regions, but not Taiwan through a capital
merger, share exchange, asset or share acquisition, exchangeable share
transaction, contractual control arrangement or other similar business
combination. The Company has the right to redeem the Warrants, in whole but
not
in part, upon not less than thirty (30) days’ prior written notice at a price of
$0.01 per Warrant at any time after the Warrants become exercisable; provided,
however, that the last sale price of the Ordinary Shares has been at least
$10.00 for any twenty (20) trading days within a thirty (30) trading day period
ending on the third (3rd)
Business Day prior to the day on which notice is delivered.
1.1.2. Payment
and Delivery.
Delivery and payment for the Firm Units shall be made at 10:00 A.M., New York
time, on the third (3rd)
Business Day following the Effective Date (or the fourth (4th)
Business Day following the Effective Date, if the Registration Statement is
declared effective after 4:30 p.m.) or at such earlier time as shall be agreed
upon by the Representatives and the Company at the offices of the
Representatives or at such other place as shall be agreed upon by the
Representatives and the Company. The closing of the Offering is referred
to herein as the “Closing”
and
the
hour and date of delivery and payment for the Firm Units is referred to herein
as the “Closing
Date.”
Payment for the Firm Units shall be made on the Closing Date through the
facilities of BMC by wire transfer in Federal (same day) funds. An aggregate
of
$54,300,000 of the proceeds received by the Company for the Firm Units and
the
Private Placement (as defined in Section 1.4) shall be deposited into the trust
account (the “Trust
Account”)
established by the Company for the benefit of the Public Shareholders (as
defined below) and the Underwriters, as described in the Registration Statement
and pursuant to the terms of an Investment Management Trust Agreement (the
“Trust
Agreement”),
which
amount includes up to $2,200,000 ($0.32 per Firm Unit), payable to the
Underwriters as deferred compensation upon consummation of a Business
Combination (subject to Section 1.5 hereof). The remaining proceeds (less
commissions, expense allowance and actual expense payments or other fees payable
pursuant to this Agreement), if any, shall be paid to the order of the Company
upon delivery to the Representatives of certificates (in form and substance
satisfactory to the Underwriters) representing the Firm Units (or through the
facilities of the Depository Trust Company (the “DTC”))
for
the account of the Underwriters. The Firm Units shall be registered in
such name or names and in such authorized denominations as the Representatives
may request in writing at least two (2) Business Days prior to the Closing
Date. The Company will permit the Representatives to examine and package
the Firm Units for delivery, at least one (1) 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 Representatives for all the
Firm
Units. As used herein, the term “Public
Shareholders”
means
the holders
of Ordinary Shares sold as part of the Units in the Offering or acquired in
the
aftermarket, including any Company shareholder prior to the Offering to the
extent they acquire such Ordinary Shares in the aftermarket (and solely with
respect to such Ordinary Shares).
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 3 of
32
1.2. Representatives’
Purchase Option.
The
Company hereby agrees to issue and sell to the Representatives (and/or their
designees) on the Closing Date an option (“Representatives’
Purchase Option”)
to
purchase up to an aggregate of 137,500 units (the “Representatives’
Units”)
for an
aggregate purchase price of $100.00. The Representatives’ Purchase Option
shall be exercisable, in whole or in part, commencing on the later of the
consummation of a Business Combination or six months from the Effective Date
and
expiring on the five-year anniversary of the Effective Date at an initial
exercise price per Representatives’ Unit of $8.80, which is equal to one hundred
ten percent (110%) of the initial public offering price of a Unit. The
Company shall deliver to the Representatives, upon payment therefor,
certificates for the Representatives’ Purchase Option in the name or names and
in such denominations as the Representatives may request. The Representatives’
Purchase Option, the Representatives’ Units, the Ordinary Shares (the
“Representatives’
Shares”)
and
the Warrants (the “Representatives’
Warrants”)
included in the Representatives’ Units and the Ordinary Shares issuable upon
exercise of the Representatives’ Warrants are hereinafter referred to
collectively as the “Representatives’
Securities.”
The
Public Securities, the Representatives’ Securities, the Placement Securities and
the Insider Securities (as defined in Section 1.3.1) are hereinafter referred
to
collectively as the “Securities.”
1.3. Previous
Private Placements.
1.3.1. On
_______, 2008, the
Company issued to certain persons and entities referenced in Part II, Item
7 of
the Registration Statement (collectively, the “Insider
Shareholders”),
for
aggregate consideration of $25,000, 2,291,666 units (the “Insider
Units”)
in a
private placement (the “Insider
Private Placement”)
intended to be exempt from registration under Section 4(2) of the Securities
Act
of 1933, as amended (the “Act”).
Each
Insider Unit consists of one Ordinary Share and one warrant (the “Insider
Warrants”)
to
purchase an Ordinary Share (such Ordinary Shares and such Insider Warrants,
collectively with the Insider Units, each as described in the Registration
Statement, are referred to herein as the “Insider
Securities”).
No
underwriting discounts, commissions or placement fees have been or will be
payable in connection with the Insider Private Placement. None of the Insider
Securities may be sold, assigned or transferred by the Insider Shareholders
until the earlier of: (i) one year after consummation of a Business Combination,
or (ii) thirty (30) months from the Effective Date (or thirty-six (36) months
if
the Extended Period (as defined in Section 7.6.2) is approved. The Insider
Shareholders shall have no right to any liquidation distributions with respect
to any portion of the Insider Securities in the event the Company fails to
consummate a Business Combination. The Insider Shareholders shall not have
redemption rights with respect to the Insider Securities.
1.3.2. Prior
to
the Effective Date, certain directors and officers of the Company and their
affiliates (collectively, the “Placement
Investors”)
purchased from the Company pursuant to the Subscription Agreement (as defined
in
Section 2.25.2 hereof), 2,000,000 warrants (the “Placement
Warrants”)
at a
purchase price of $0.50 per Placement Warrant in a private placement (the
“Private
Placement”)
intended to be exempt from registration under the Act. The Placement Warrants
and Ordinary Shares issuable upon exercise of the Placement Warrants are
hereinafter referred to collectively as the “Placement
Securities.”
No
underwriting discounts, commissions or placement fees have been or will be
payable in connection with the Private Placement. None of the Placement
Securities may be sold, assigned or transferred by the Placement Investors
until
after consummation of a Business Combination. The Placement Investors shall
have
no right to any liquidation distributions with respect to any portion of the
Placement Securities in the event the Company fails to consummate a Business
Combination. The Placement Investors shall not have redemption rights with
respect to the Placement Securities.
1.4. Deferred
Portion of Underwriters’ Discount.
The
Representatives, on behalf of itself and the other Underwriters, agrees that
2%
of the gross proceeds from the sale of the Firm Units ($1,100,000) (the
“Deferred
Discount”)
and an
additional 2% of the gross proceeds from the sale of the Firm Units
($1,100,000), representing the Representatives’ Non-Accountable Expense
Allowance (as defined in Section 1.6 below, and together with the Deferred
Discount, the “Deferred
Payments”)
will
be deposited in and held in the Trust Account and payable to the
Representatives, in respect of any IPO Shares (defined in Section 7.6 hereof)
not redeemed pursuant to Section 7.6 hereof upon the consummation of a Business
Combination. The Representatives, on behalf of itself and the other
Underwriters, agrees that the several Underwriters shall forfeit any rights
or
claims to the Deferred Payments in respect of any IPO Shares that are redeemed
pursuant to Section 7.6 hereof. In addition, in the event that the Company
is
unable to consummate a Business Combination and Continental Stock Transfer
&
Trust Company (in this context, the “Trustee”),
the
trustee of the Trust Account, commences liquidation of the Trust Account as
provided in the Trust Agreement, the Representatives, on behalf of itself and
the other Underwriters, agrees that: (i) the several Underwriters shall forfeit
any rights or claims to the Deferred Payments; and (ii) the Deferred Payments,
together with all other amounts on deposit in the Trust Account, shall be
distributed on a pro-rata basis among the holders of the IPO Shares.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 4 of
32
1.5.
Working
Capital; Interest on Trust.
1.5.1. Working
Capital.
Upon
consummation of the Offering, $100,000, of the net proceeds of the Private
Placement will be released to the Company to fund the working capital
requirements of the Company.
1.5.2. Interest
Income.
Prior
to the Company’s consummation of a business combination or the Company’s
liquidation, interest earned on the Trust Account may be released (i) to the
Company to pay any taxes incurred by the Company, (ii) to redeeming shareholders
voting against the Extended Period (as defined in Section 7.6.2), as more fully
described in the Prospectus, and (iii) to the Company, from time to time, to
fund its working capital and general corporate requirements, as more fully
described in the Prospectus.
1.6. Non-Accountable
Expense Allowance.
As
additional consideration for the services to be provided hereunder, the Company
shall pay to the Representatives, in cash, a
non-accountable expense allowance equal to two percent (2%) of the gross
proceeds of the Offering (the “Non-Accountable
Expense Allowance”).
The
Non-Accountable
Expense Allowance will be held in and paid to the Representatives from the
Trust
Account as provided for in Section 1.4 hereof.
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 F-1 (File No. 333-152623), including
any related preliminary prospectus (the “Preliminary
Prospectus”,
including any prospectus that is included in the Registration Statement
immediately prior to the effectiveness of the Registration Statement), for
the
registration of the Public Securities and the Representatives’ Securities under
the 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 (the “Regulations”)
of the
Commission under the Act. The conditions for use of Form F-1 to register
the Offering under the Act, as set forth in the General Instructions to such
Form, have been satisfied. 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 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
containing information permitted to be omitted at the time of effectiveness
by
Rule 430A of the Regulations filed with the Commission pursuant to Rule 424
of
the Regulations), is hereinafter called the “Prospectus.”
For
purposes of this Agreement, “Time
of Sale”,
as
used in the Act, means 5:00 p.m., New York City time, on the date of this
Agreement. Prior to the Time of Sale, the Company prepared preliminary
prospectuses, dated July 30, 2008 for distribution by the Underwriters
(together the “Sale
Preliminary Prospectus”).
If
the
Company has filed, or is required pursuant to the terms hereof to file, a
registration statement pursuant to Rule 462(b) under the Act registering
additional Securities of any type (a “Rule
462(b) Registration Statement”),
then,
unless otherwise specified, any reference herein to the term “Registration
Statement”
shall
be deemed to include such Rule 462(b) Registration Statement. Other than a
Rule
462(b) Registration Statement, which, if filed, becomes effective upon filing,
no other document with respect to the Registration Statement has heretofore
been
filed with the Commission. All of the Public Securities have been registered
under the Act pursuant to the Registration Statement or, if any Rule 462(b)
Registration Statement is filed, will be duly registered under the Securities
Act with the filing of such Rule 462(b) Registration Statement. The
Registration Statement has been declared effective by the Commission on the
date
hereof.
If,
subsequent to the date of this Agreement, the Company or the Representatives
have determined that at the Time of Sale the Sale Preliminary Prospectus
included an untrue statement of a material fact or omitted a statement of
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and have agreed to
provide an opportunity to purchasers of the Firm Units to terminate their old
purchase contracts and enter into new purchase contracts, then the Sale
Preliminary Prospectus will be deemed to include any additional information
available to purchasers at the time of entry into the first such new purchase
contract.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 5 of
32
2.1.2. Pursuant
to the Exchange Act.
The Company has filed with the Commission a Form 8-A (File Number 000-_________)
providing for the registration under the Securities Exchange Act of 1934, as
amended (the “Exchange
Act”),
of
the Units, the Ordinary Shares and the Warrants. The registration of the
Units, Ordinary Shares 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 Company’s knowledge, any foreign or state
regulatory authority has issued any order or threatened to issue any order
preventing or suspending the use of any Sale Preliminary Prospectus or
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 of effectiveness of the Registration Statement (or at the time
any
post-effective amendment to the Registration Statement) and at all times
subsequent thereto up to the Closing Date, the Registration Statement, the
Sale
Preliminary Prospectus and the Prospectus contained or will contain all material
statements that are required to be stated therein in accordance with the Act
and
the Regulations, and did or will, in all material respects, conform to the
requirements of the Act and the Regulations. Neither the Registration Statement,
the Sale Preliminary Prospectus nor any Preliminary Prospectus or the Prospectus
contained therein, nor any amendment or supplement thereto, on their respective
dates, nor the Sale Preliminary Prospectus as of the Time of Sale did or will
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
(in light of the circumstances under which they were made), not
misleading. When any Preliminary Prospectus or Sale 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 or Sale Preliminary Prospectus and any amendments thereof and
supplements thereto complied or will have been corrected in the Sale Preliminary
Prospectus and the Prospectus to comply in all material respects with the
applicable provisions of the Act and the Regulations and did not and will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The representation and warranty made in this Section 2.3.1 does
not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to
the
Underwriters by the Representatives expressly for use in the Registration
Statement, the Sale Preliminary Prospectus or Prospectus or any amendment
thereof or supplement thereto,
which
information, it is agreed, shall consist solely of the names of the several
Underwriters and the subsections captioned “Pricing
of Securities” and“Foreign
Regulatory Restrictions on Purchase of the Units” contained
in the section of the Prospectus entitled “Underwriting.”
2.3.2. Disclosure
of Agreements.
The agreements and documents described in the Registration Statement, the Sale
Preliminary Prospectus 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, the Sale Preliminary Prospectus 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 Registration Statement or attached as an exhibit
thereto, or (ii) is material to the Company’s business, has been duly and
validly executed by the Company, is in full force and effect in all material
respects and is enforceable against the Company and, to the Company’s knowledge,
the other parties thereto, in accordance with its terms, except (x) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the foreign,
federal and state securities laws, and (z) that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject
to
the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought, and none of such agreements or instruments
has been assigned by the Company, and neither the Company nor, to the Company’s
knowledge, any other party is in breach or default thereunder and, to the
Company’s knowledge, no event has occurred that, with the lapse of time or the
giving of notice, or both, would constitute a breach or default
thereunder. To the Company’s knowledge, performance by the Company of the
material provisions of such agreements or instruments will not result in a
violation of any existing applicable law, rule, regulation, judgment, order
or
decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its assets or businesses, including,
without limitation, those relating to environmental laws and
regulations.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 6 of
32
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 date of the Company’s formation,
except as disclosed in the Registration Statement.
2.3.4. Regulations.
The
disclosures in the Registration Statement, the Sale Preliminary Prospectus
and
the Prospectus concerning the effects of foreign, federal, state and local
regulation on the Company’s business as currently contemplated are correct in
all material respects and do not omit to state a material fact necessary to
make
the statements therein, in light of the circumstances in which they were made,
not misleading.
2.4. Changes
After Dates in Registration Statement.
2.4.1. No
Material Adverse Change.
Since
the
respective dates as of which information is given in the Registration Statement,
the Sale Preliminary Prospectus 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; (iii) no member of the
Company’s board of directors or management has resigned from any position with
the Company and (iv) no event or occurrence has taken place which materially
impairs, or would likely materially impair, with the passage of time, the
ability of the members of the Company’s board of directors or management to act
in their capacities with the Company as described in the Registration Statement,
the
Sale
Preliminary Prospectus
and the
Prospectus.
2.4.2. Recent
Securities Transactions, etc. Subsequent
to the respective dates as of which information is given in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus
and
except as may otherwise be indicated or contemplated herein or therein, the
Company has not: (i) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money; or (ii) declared or
paid any dividend or made any other distribution on or in respect to its capital
stock.
2.5. Independent
Accountants.
Jewett,
Schwartz, Xxxxx & Associates (“Xxxxxx”),
whose
report is filed with the Commission as part of the Registration Statement and
included in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus, are independent registered public accountants as required by the
Act, the Regulations and the Public Company Accounting Oversight Board
(including
the rules and regulations promulgated by such entity, the “PCAOB”).
To
the Company’s knowledge, Xxxxxx is duly registered and in good standing with the
PCAOB. Xxxxxx
has not, during the periods covered by the financial statements included in
the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus,
provided to the Company any non-audit services, as such term is used in
Section 10A(g) of the Exchange Act.
2.6. Financial
Statements; Statistical Data.
2.6.1. Financial
Statements.
The
financial statements, including the notes thereto and supporting schedules
included in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus, fairly present the financial position and the results of operations
of the Company at the dates and for the periods to which they apply; and such
financial statements have been prepared in conformity with the Regulations,
consistently applied throughout the periods involved; and the supporting
schedules included in the Registration Statement present fairly the information
required to be stated therein in conformity with the Regulations.
No
other
financial statements or supporting schedules are required to be included or
incorporated by reference in the Registration Statement, the
Sale
Preliminary Prospectus or the Prospectus.
The
Registration Statement, the Sale Preliminary Prospectus and the Prospectus
disclose all material off-balance sheet transactions, arrangements, obligations
(including contingent obligations), and other relationships of the Company
with
unconsolidated entities or other persons that may have a material current or
future effect on the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures, capital
resources, or significant components of revenues or expenses. There
are
no pro forma or as adjusted financial statements which are required to be
included in
the
Registration Statement, the
Sale
Preliminary Prospectus or the Prospectus
in
accordance with Regulation
S-X of the Regulations which have not been included as so required.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 7 of
32
2.6.2. Statistical
Data.
The
statistical, industry-related and market-related data included in the
Registration Statement, the Sale Preliminary Prospectus and/or the Prospectus
are based on or derived from sources which the Company reasonably and in good
faith believes are reliable and accurate, and such data agree with the sources
from which they are derived.
2.7. Authorized
Capital; Options, etc.
The Company had at the date or dates indicated in each of the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus, as the case
may
be, duly authorized, issued and outstanding capitalization as set forth in
the
Registration Statement, the Sale Preliminary Prospectus and the
Prospectus. Based on the assumptions stated in the Registration Statement,
the Sale Preliminary Prospectus 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, the Sale Preliminary
Prospectus 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 Ordinary Shares or any security convertible
into Ordinary Shares, or any contracts or commitments to issue or sell Ordinary
Shares 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 Ordinary Shares 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 outstanding Ordinary Shares conform to the descriptions thereof
contained in the Registration Statement, the Sale Preliminary Prospectus and
the
Prospectus. All offers, sales and any transfers of the outstanding Ordinary
Shares of the Company were at all relevant times either registered under the
Act
and the applicable state securities or Blue Sky laws or exempt from such
registration requirements.
2.8.2. Securities
Sold.
The
Securities have been duly authorized and reserved for issuance and when issued
and paid for, will be validly issued, fully paid and non-assessable; the holders
thereof are not and will not be subject to personal liability by reason of
being
such holders; the Securities are not and will not be subject to the preemptive
rights of any holders of any security of the Company or similar contractual
rights granted by the Company; and all corporate action required to be taken
for
the authorization, issuance and sale of the Securities has been duly and validly
taken. The Securities conform in all material respects to the descriptions
thereof contained in the Registration Statement, the Sale Preliminary Prospectus
and the Prospectus, as the case may be. When issued, the Representatives’
Purchase Option, the Representatives’ Warrants and the Warrants will constitute
valid and binding obligations of the Company to issue and sell, upon exercise
thereof and payment of the respective exercise prices therefor, the number
and
type of securities of the Company called for thereby in accordance with the
terms thereof and such Representatives’ Purchase Option, Representatives’
Warrants and 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 foreign, federal and state securities laws;
and
(iii) that the remedy of specific performance and injunctive and other forms
of
equitable relief may be subject to the equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought. The Ordinary
Shares issuable upon exercise of the Representatives’ Purchase Option, the
Representatives’ Warrants and the Warrants have been reserved for issuance upon
the exercise of the Warrant upon payment of the consideration therefore, and
when issued in accordance with the terms thereof, will be duly and validly
authorized, 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.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 8 of
32
2.8.3. Insider
and Placement Warrants.
The
Insider Warrants and Placement Warrants 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
Insider Warrants and Placement 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 foreign, federal and state
securities laws; and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The Ordinary Shares issuable upon exercise of the Insider
Warrants and the Placement Warrants have been reserved and, when issued in
accordance with the terms of the Insider Warrants and the Placement Warrants,
will be duly and validly authorized, validly issued, fully paid and
non-assessable, and the holders thereof are not and will not be subject to
personal liability by reason of being such holders.
2.8.4. No
Integration.
Neither
the Company nor any of its affiliates has, prior to the date hereof, made any
offer or sale of any securities which are required to be “integrated” pursuant
to the Act or the Regulations with the offer and sale of the Securities pursuant
to the Registration Statement.
2.9. Registration
Rights of Third Parties.
Except as set forth in the Registration Statement, the Sale Preliminary
Prospectus and 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 2.24 hereof),
the Trust Agreement, the Services Agreement (as defined in Section 3.7.2
hereof), the Subscription Agreement (as defined in Section 2.25.2 hereof),
the
Representatives’ Purchase Option (as defined in Section 1.2), the Escrow
Agreements (as defined in Section 2.25.3 hereof) and the Registration
Rights Agreement by and among the Company and the Insider Shareholders(the
“Registration
Rights Agreement”)
have
been duly and validly authorized, executed and delivered by the Company and
constitute 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 foreign,
federal and state 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 Trust Agreement, the Services Agreement, the Subscription
Agreement, the Representatives’ Purchase Option, the Escrow Agreement and the
Registration Rights Agreement, the consummation by the Company of the
transactions herein and therein contemplated and the compliance by the Company
with the terms hereof and thereof do not and will not, with or without the
giving of notice or the lapse of time or both: (i) result in a breach or
violation 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, obligation, condition, covenant
or instrument to which the Company is a party or bound or to which its property
is subject except pursuant to the Trust Agreement; (ii) result in any violation
of the provisions of the Amended and Restated Memorandum and Articles of
Association or the Bylaws of the Company; or (iii) violate any existing
applicable statute, 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.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 9 of
32
2.12. No
Defaults; Violations.
No material default or violation exists in the due performance and observance
of
any term, covenant or condition of any material license, contract, indenture,
mortgage, deed of trust, note, loan or credit agreement, or any other agreement
or instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its Amended
and Restated Memorandum and Articles of Association 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 for the purposes described in the
Registration Statement, the Sale Preliminary Prospectus and the
Prospectus. The disclosures in the Registration Statement, the Sale
Preliminary Prospectus and the Prospectus concerning the effects of foreign,
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. Since its formation, the Company has conducted
no business and has incurred no liabilities other than in connection with and
in
furtherance of the Offering.
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, foreign or domestic, 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 Trust Agreement, the Subscription Agreement, the Services
Agreement, the Representatives’ Purchase Option, the Registration Rights
Agreement and the Escrow Agreement and as contemplated by the Registration
Statement, the Sale Preliminary Prospectus and Prospectus, except with respect
to applicable foreign, federal and state securities laws and the rules and
regulations promulgated by the Financial Industry Regulatory Authority, Inc.
(“FINRA”).
2.14. D&O
Questionnaires.
All
information contained in the questionnaires (the “Questionnaires”)
completed by each of the Company’s officers and directors (the “Directors/Officers”)
immediately prior to the Offering and provided to the Representatives as well
as
the biographies attached as exhibits to each person’s Insider Letter (as defined
in Section 2.25.1) is true and correct in all material respects and the
Company has not become aware of any information which would cause the
information disclosed in the questionnaires completed by the Directors/Officers
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 of the Directors/Officers or any of the Insider Shareholders
which has not been disclosed in the Registration Statement, the Questionnaires,
the Sale Preliminary Prospectus and the Prospectus.
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 jurisdiction of incorporation and
is
duly qualified to do business and is in good standing as a foreign corporation
in each jurisdiction in which its ownership or lease of property or the conduct
of business requires such qualification, except where the failure to qualify
would not have a material adverse effect on the condition (financial or
otherwise), validity of the Trust Account, directors, officers, prospects (as
such prospects are described in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus), business or properties of the Company (a
“Material
Adverse Effect”).
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 10 of
32
2.17. No
Contemplation of a Business Combination.
Prior
to the date hereof, no Company Affiliate (as hereinafter defined) has, and
as of
the Closing, the Company and such Company Affiliates will not have: (a) had
any
specific Business Combination under consideration or contemplation; (b) directly
or indirectly, contacted any potential operating assets, business or businesses
which the Company may seek to acquire (each, a “Target
Business”)
or any
owner, officer, director, manager, agent or representative thereof or had any
substantive discussions, formal or otherwise, with respect to effecting any
potential Business Combination with the Company or taken any measure, directly
or indirectly to locate a Target Business; or (c) engaged or retained any agent
or other representative to identify or locate any Target Business for the
Company.
2.18. Transactions
Affecting Disclosure to FINRA.
2.18.1. Except
as
described in the Registration Statement, the Sale Preliminary Prospectus and
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 Company Affiliate with respect to the sale of the
Securities hereunder or any other arrangements, agreements or understandings
of
the Company or, to the Company’s knowledge, any Initial Shareholder that may
affect the Underwriters’ compensation, as determined by FINRA.
2.18.2. The
Company has not made any direct or indirect payments (in cash, securities or
otherwise) to: (i) any person, as a finder’s fee, consulting fee or otherwise,
in consideration of such person raising capital for the Company or introducing
to the Company persons who raised or provided capital to the Company; (ii)
to
any FINRA member; or (iii) to any person or entity that has any direct or
indirect affiliation or association with any FINRA member, within the twelve
months prior to the Effective Date, other than payments to the Representatives
in connection with the Offering.
2.18.3. To
the
Company’s knowledge, other than Xxxxx Xxxxxxx and Xxxxx Xxxxxx, no Officer or
Director or any direct or indirect beneficial owner of any class of the
Company’s securities, including the Insider Shareholders and holders of
securities purchased in the Private Placement (whether debt or equity,
registered or unregistered, regardless of the time acquired or the source from
which derived) (any such individual or entity, a “Company
Affiliate”)
is a
member, a person associated, or affiliated with a member of FINRA.
2.18.4. To
the
Company’s knowledge, other than Xxxxx Xxxxxxx and Xxxxx Xxxxxx, no Company
Affiliate is an owner of stock or other securities of any member of FINRA (other
than securities purchased on the open market).
2.18.5. To
the
Company’s knowledge, no Company Affiliate has made a subordinated loan to any
member of FINRA.
2.18.6. No
proceeds from the sale of the Public Securities (excluding underwriting
compensation), the Representatives’ Securities, the Placement Securities or the
Insider Securities will be paid to any FINRA member, or any persons associated
or affiliated with a member of FINRA, except as specifically authorized herein.
2.18.7. Except
with respect to the Representatives, the Company has not issued any warrants
or
other securities, or granted any options, directly or indirectly to anyone
who
is a potential underwriter in the Offering or a related person (as defined
by
FINRA rules) of such an underwriter within the 180-day period prior to the
initial filing date of the Registration Statement.
2.18.8. To
the
Company’s knowledge no person to whom securities of the Company have been
privately issued within the 180-day period prior to the initial filing date
of
the Registration Statement has any relationship or affiliation or association
with any member of FINRA.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 11 of
32
2.18.9. No
FINRA
member intending to participate in the Offering has a conflict of interest
with
the Company. For this purpose, a “conflict of interest” exists when a member of
FINRA and/or its associated persons, parent or affiliates in the aggregate
beneficially own 10% or more of the Company’s outstanding subordinated debt or
common equity, or 10% or more of the Company’s preferred equity. “Members
participating in the Offering” include managing agents, syndicate group members
and all dealers which are members of FINRA.
2.18.10. Except
with respect to the Representatives in connection with the Offering, the Company
has not entered into any agreement or arrangement (including, without
limitation, any consulting agreement or any other type of agreement) during
the
180-day period prior to the initial filing date of the Registration Statement,
which arrangement or agreement provides for the receipt of any item of value
and/or the transfer or issuance of any warrants, options, or other securities
from the Company to a FINRA member, any person associated with a member (as
defined by FINRA rules), any potential underwriters in the Offering and/or
any
related persons.
2.19. Taxes.
2.19.1.
There
are no transfer taxes or other similar fees or charges under British Virgin
Islands law, U.S. federal law or the laws of any U.S. state or any political
subdivision thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance or sale by the Company of the
Securities.
2.19.2.
The
Company has filed all non-U.S., U.S. federal, state and local tax returns that
are required to be a filed or has requested extensions thereof, except in any
case in which the failure to so file would not have a Material Adverse Effect,
and has paid all taxes required to be paid by it and any other assessment,
fine
or penalty levied against it, to the extent that any of the foregoing in due
and
payable, except for any such assessment, fine or penalty that is currently
being
contested in good faith or as would not have a Material Adverse Effect.
2.20. Foreign
Corrupt Practices Act.
Neither the Company nor any of the Company Affiliates or any other person acting
on behalf of the Company is aware of or has taken any action, directly or
indirectly, that: (i) would result in a violation by such persons of the Foreign
Corrupt Practices Act of 1977, as amended, and the rules and regulations
thereunder (the “FCPA”)
or
otherwise subject the Company to any damage or penalty in any civil, criminal
or
governmental litigation or proceeding; (ii) if not done in the past, might
have
had a Material Adverse Effect or (iii) if not continued in the future, might
adversely affect the assets, business, operations or prospects of the Company,
including, without limitation, given or agreed to give any money, gift or
similar benefit (other than legal price concessions to customers in the ordinary
course of business) to any customer, supplier, employee or agent of a customer
or supplier, or official or employee of any governmental agency or
instrumentality of any government (domestic or foreign) or any political party
or candidate for office (domestic or foreign) or any political party or
candidate for office (domestic or foreign) or other person who was, is, or
may
be in a position to help or hinder the business of the Company (or assist it
in
connection with any actual or proposed transaction). 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.
2.21. Currency
and Foreign Transactions Reporting Act.
The
operations of the Company are and have been conducted at all times in compliance
with applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transaction Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the
“Money
Laundering Laws”)
and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending or, to the best knowledge of the Company,
threatened.
2.22. Patriot
Act.
To the
Company’s knowledge, neither the Company
nor any Company Affiliate has violated: (i) the Bank Secrecy Act, as amended,
or
(iii) the Uniting and Strengthening of America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001,
and/or the rules and regulations promulgated under any such law, or any
successor law.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 12 of
32
2.23. Officers’
Certificate.
Any certificate signed by any duly authorized officer of the Company and
delivered to the Representatives or to its counsel shall be deemed a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
2.24. Warrant
Agreement.
The Company has entered into a warrant agreement with respect to the Warrants,
the Insider Warrants and the Placement Warrants with Continental Stock Transfer
& Trust Company substantially in the form filed as an exhibit to the
Registration Statement (the “Warrant
Agreement”).
2.25. Agreements
With Company Affiliates.
2.25.1. 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
non-compete provision may be limited under foreign, federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and
other
forms of equitable relief may be subject to the equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought)
annexed as exhibits to the Registration Statement (the “Insider
Letter”),
pursuant to which each of the Company Affiliates agrees to certain matters,
including but not limited to, the voting of Ordinary Shares held by them and
certain matters described as being agreed to by them under the “Proposed
Business” Section of the Registration Statement, the Sale Preliminary
Prospectus and Prospectus.
2.25.2. Subscription
Agreement.
The
Placement Investors have executed and delivered a subscription agreement,
annexed as an exhibit to the Registration Statement (the “Subscription
Agreement”),
pursuant to which the Placement Investors have, among other things, purchased
2,000,000 Placement Warrants in the Private Placement. Pursuant to the
Subscription Agreement, the Placement Investors have waived any and all rights
and claims they may have to any proceeds, and any interest thereon, held in
the
Trust Account in respect of the Placement Securities in the event that a
Business Combination is not consummated and the Trust Account is liquidated
in
accordance with the terms of the Trust Agreement.
2.25.3. Escrow
Agreement.
The Company has caused the Insider Shareholders, to the extent they own Insider
Securities prior to the Offering, to enter into escrow agreements (the
“Escrow
Agreements”)
with
Continental Stock Transfer & Trust Company (the “Escrow
Agent”)
substantially in the form filed as an exhibit to the Registration Statement
whereby the Ordinary Shares and Warrants owned by such parties prior to the
Offering will be held in escrow by the Escrow Agent for a period (the
“Escrow
Period”)
commencing on the Effective Date and (i) for the Insider Securities, expiring
on
the earlier of: (A) one year after the consummation of a Business Combination
or
(B) thirty (30) months from the date of this prospectus (or thirty-six (36)
months if the Extended Period (as defined in Section 7.6.2) is approved); and
(ii) for the Placement Warrants, expiring upon consummation of the Business
Combination. During the Escrow Period, such parties shall be prohibited
from selling or otherwise transferring such securities, except: (a)(i) to the
Company or any of the Company’s Officers, Directors and employees, or any
affiliates or family members of such individuals, (ii) by gift to an affiliate
or a member of the Insider Shareholder’s immediate family or to a trust or other
entity, the beneficiary of which is one of its officers or directors or a member
of their respective immediate families, (iii) by virtue of the laws of descent
and distribution upon death of any Insider Shareholder, (iv) pursuant to a
qualified domestic relations order, or (v) with respect to limited liability
companies and partnerships to their respective members or partners; provided,
however, that such transfers may be implemented only upon the respective
transferee’s written agreement to be bound by the terms and conditions of the
Escrow Agreement, or (b) after the consummation of a Business Combination
in a transaction whereby all the outstanding Ordinary Shares of the Company
are
exchanged or converted into cash or another entity’s securities; provided,
however,
such
Insider Shareholders shall retain the right to vote such Ordinary Shares, as
applicable. To the Company’s knowledge, the Escrow Agreement is
enforceable against each of the Insider Shareholders 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, an agreement or instrument to which any of the Insider
Shareholders is a party. The Escrow Agreement shall not be amended, modified
or
otherwise changed without the prior written consent of the Representatives,
such
consent not to be unreasonably withheld.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 13 of
32
2.25.4.
No
Director/Officer (as defined below) is subject to any non-competition agreement
or non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be and act in the capacity of a
Director/Officer of the Company.
2.26. Investment
Management Trust Agreement.
The Company has entered into the Trust Agreement with respect to certain
proceeds of the Offering and the Private Placement substantially in the form
filed as an exhibit to the Registration Statement.
2.27. Covenants
Not to Compete.
No Company Affiliate is subject to any noncompetition agreement or
non-solicitation agreement with any employer or prior employer which could
materially affect his ability to be a director, officer or employee of the
Company.
2.28. Investments.
No more than 45% of the “value” (as defined in Section 2(a)(41) of the
Investment Company Act of 1940 (“Investment
Company Act”))
of
the Company’s total assets (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 Government Securities.
2.29. Investment
Company Act.
The
Company is not required, and upon the issuance and sale of the Securities as
herein contemplated and the application of the net proceeds therefrom as
described in the Prospectus will not be required, to register as an “investment
company” under the Investment Company Act.
2.30. Subsidiaries.
The Company does not own an interest in any corporation, partnership, limited
liability company, joint venture, trust or other business entity.
2.31. Related
Party Transactions.
No relationship, direct or indirect, exists between or among any of the Company
or any Company Affiliate, on the one hand, and any director, officer,
shareholder, customer or supplier of the Company or any Company Affiliate,
on
the other hand, which is required by the Act, the Exchange Act or the
Regulations to be described in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus which is not so described as required. There
are
no outstanding loans, advances (except normal advances for business expenses
in
the ordinary course of business) or guarantees of indebtedness by the Company
to
or for the benefit of any of the officers or directors of the Company or any
of
their respective family members, except as disclosed in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus. The Company
has
not extended or maintained credit, arranged for the extension of credit, or
renewed an extension of credit, in the form of a personal loan to or for any
director or officer of the Company.
2.32. No
Influence.
The
Company has not offered, or caused the Underwriters to offer, the Firm Units
to
any person or entity with the intention of unlawfully influencing: (a) a
customer or supplier of the Company or any affiliate of the Company to alter
the
customer’s or supplier’s level or type of business with the Company or such
affiliate or (b) a journalist or publication to write or publish favorable
information about the Company or any such affiliate.
2.33. Xxxxxxxx-Xxxxx.
The
Company is in material compliance with the provisions of the Xxxxxxxx-Xxxxx
Act
of 2002, as amended, and the rules and regulations promulgated thereunder and
related or similar rules and regulations promulgated by any governmental or
self
regulatory entity or agency, that are applicable to it as of the date hereof.
2.34. Quotation
of the Public Securities on the Nasdaq Capital Market.
As of
the Effective Date, the Public Securities have been authorized for quotation
on
the Nasdaq Capital Market and, to the Company’s knowledge, no proceedings have
been instituted or threatened which would effect, and no event or circumstance
has occurred as of the Effective Date which is reasonably likely to effect,
the
quotation of the Public Securities on the Nasdaq Capital Market.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 14 of
32
2.35. Definition
of “Knowledge”.
As
used
in herein, the term “knowledge
of the Company”
(or
similar language) shall mean the knowledge of the officers and directors of
the
Company who are named in the Sale Preliminary Prospectus and Prospectus, with
the assumption that such officers and directors shall have made reasonable
and
diligent inquiry of the matters presented.
3. Covenants
of the Company.
The Company covenants and agrees as follows:
3.1. Amendments
to Registration Statement.
The Company will deliver to the Representatives, prior to filing, any amendment
or supplement to the Registration Statement or Prospectus proposed to be filed
after the Effective Date and shall not file any such amendment or supplement
to
which the Representatives shall reasonably object in writing.
3.2. Federal
Securities Laws.
3.2.1. Compliance.
During the time when a prospectus is required to be delivered under the Act,
the
Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary
to
permit the continuance of sales of or dealings in the Public Securities in
accordance with the provisions hereof and the Prospectus. If at any time
when a Prospectus relating to the Public Securities is required to be delivered
under the Act, any event shall have occurred as a result of which, in the
opinion of counsel for the Company or counsel for the Underwriters, the Sale
Preliminary Prospectus and 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 during such period to amend the Registration Statement or amend
or supplement the Sale Preliminary Prospectus and Prospectus to comply with
the
Act, the Company will notify the Representatives promptly and prepare and file
with the Commission, subject to Section 3.1 hereof, an appropriate
amendment to the Registration Statement or amendment or supplement to the Sale
Preliminary Prospectus and Prospectus (at the expense of the Company) so as
to
correct such statement or omission or effect such compliance.
3.2.2. Filing
of Final Prospectus.
The Company will file the Prospectus (in form and substance satisfactory to
the
Representatives) with the Commission pursuant to the requirements of Rule 424
of
the Regulations.
3.2.3. Exchange
Act Registration.
For a period of five years from the Effective Date, or until such earlier time
upon which the Company is required to be liquidated and dissolved, the Company
will use its best efforts to maintain the registration of the Units, Ordinary
Shares and Warrants (in the case of the Units and the Warrants, until the
Warrants expire and are no longer exercisable or have been exercised in full)
under the provisions of the Exchange Act. The Company will not deregister
the Units, Ordinary Shares or Warrants under the Exchange Act without the prior
written consent of the Representatives.
3.2.4. Exchange
Act Filings.
From
the Effective Date until the earlier of the Company’s initial Business
Combination, or its liquidation and dissolution, the Company shall timely file
with the Commission via the Electronic Data Gathering, Analysis and Retrieval
System (“XXXXX”)
such
statements and reports as are required to be filed by a company registered
under
Section 12(b) of the Exchange Act, as if the Company were a company incorporated
in the United States (it being agreed, however, that with respect to quarterly
and annual financial information, the Company may furnish such information
on
Form 6-K or Form 20-F, as the case may be, and with respect to proxy
solicitation materials a preliminary proxy statement shall not be required
to be
filed with the Commission or delivered to the Company’s
shareholders).
3.2.5. Xxxxxxxx-Xxxxx
Compliance.
As soon
as it is legally required to do so, the
Company shall take all actions necessary to obtain and thereafter maintain
material compliance with each applicable provision of the Xxxxxxxx-Xxxxx Act
of
2002 and the rules and regulations promulgated thereunder and related or similar
rules and regulations promulgated by any other governmental or self regulatory
entity or agency with jurisdiction over the Company.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 15 of
32
3.3. Blue
Sky Filing.
Unless the Securities are listed or quoted, as the case may be, on the New
York
Stock Exchange, the Nasdaq Stock Market or the American Stock Exchange
(“AMEX”),
the
Company will endeavor in good faith, in cooperation with the Representatives,
at
or prior to the time the Registration Statement becomes effective, to qualify
the Public Securities for offering and sale under the securities laws of such
jurisdictions as the Representatives may reasonably designate, provided that
no
such qualification shall be required in any jurisdiction where, as a result
thereof, the Company would be subject to service of general process or to
taxation as a foreign corporation doing business in such jurisdiction. In
each jurisdiction where such qualification shall be effected, the Company will,
unless the Representatives agrees that such action is not at the time necessary
or advisable, use all reasonable efforts to file and make such statements or
reports at such times as are or may be required by the laws of such
jurisdiction.
3.4. Delivery
of Materials to Underwriters.
The Company will deliver to each of the several Underwriters, without charge
and
from time to time during the period when a prospectus is required to be
delivered under the Act or the Exchange Act, such number of copies of each
Sale
Preliminary Prospectus, the Prospectus and all amendments and supplements to
such documents as such Underwriters may reasonably request and, as soon as
the
Registration Statement or any amendment or supplement thereto becomes effective,
deliver to the Representatives two manually 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 manually
executed consents of certified experts.
3.5. Effectiveness
and Events Requiring Notice to the Representatives.
The Company will use its best efforts to cause the Registration Statement to
remain effective and will notify the Representatives immediately and confirm
the
notice in writing: (i) of the effectiveness of the Registration Statement
and any amendment thereto; (ii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, or any
post-effective amendment thereto or preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or of the initiation, or the
threatening, of any proceeding for that purpose; (iii) of the issuance by any
foreign or 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 or its counsel,
makes any statement of a material fact made in the Registration Statement,
the
Sale Preliminary Prospectus or the Prospectus untrue or that requires the making
of any changes in the Registration Statement, the Sale Preliminary Prospectus
and Prospectus in order to make the statements therein, (with respect to the
Prospectus and the Sale Preliminary Prospectus and in light of the circumstances
under which they were made), not misleading. If the Commission or any
foreign or 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.
Until the earlier of five years from the Effective Date, or until such earlier
time upon which the Company is required to be liquidated and dissolved, 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 and the filing of the Company’s Report on Form
6-K with respect to its quarterly results.
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 Company Affiliate unless the Company obtains an opinion
from
an independent investment banking firm that the Business Combination is fair
to
the Company’s shareholders from a financial perspective.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 16 of
32
3.7.2. Administrative
Services.
The Company has entered into an agreement (the “Services
Agreement”)
with
Chardan Capital LLC, in the form filed as an exhibit to the Registration
Statement pursuant to which Chardan Capital LLC will make available to the
Company general and administrative services including office space, utilities,
receptionist and secretarial support for the Company’s use for $7,500 per
month.
3.7.3. Compensation.
Except as otherwise set forth in this Section 3.7, the Company shall not
pay any Initial Shareholder or Company Affiliate or any of their affiliates
any
fees or compensation from the Company, for services rendered to the Company
prior to, or in connection with, this Offering or the consummation of a Business
Combination; provided
that
the
Company’s directors and officers shall be entitled to reimbursement from the
Company for their out-of-pocket expenses incurred on the Company’s behalf, and
other expenses incurred by them in connection with seeking and consummating
a
Business Combination.
3.8. Secondary
Market Trading and Standard & Poor’s.
In the
event the Public Securities are not listed on the New York Stock Exchange,
the
Nasdaq Stock Market or AMEX: (a) the Company will apply to be included in
Standard and Poor’s Daily News and Corporation Records Corporate Descriptions
for a period commencing on the Effective Date and expiring on the fifth
anniversary of the consummation of a Business Combination, (b) the Company
shall
take such steps as may be necessary to obtain a secondary market trading
exemption for the Company’s securities in such jurisdictions as may be requested
by the Representatives; provided, however, no qualification shall be required
in
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction. The Company shall also take such other action
as
may be reasonably requested by the Representatives to obtain a secondary market
trading exemption in such other states as may be requested by the
Representatives.
3.9. 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 Representatives for a term to be agreed upon by
the
Company and the Representatives.
3.10. Reports
to the Representatives.
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 and dissolved, the Company
will furnish to the Representatives and its counsel copies of such financial
statements and other periodic and special reports as the Company from time
to
time furnishes generally to holders of any class of its securities, and promptly
furnish to the Representatives: (i) a copy of each periodic report the Company
shall be required to file with the Commission; (ii) a copy of every press
release and every news item and article with respect to the Company or its
affairs which was released by the Company; (iii) a copy of each Report of
Foreign Private Issuer on Form 6-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 Representatives
may from time to time reasonably request; provided that the Representatives
shall sign, if requested by the Company, a Regulation FD compliant
confidentiality agreement which is reasonably acceptable to the Representatives
and its counsel in connection with the Representatives’ receipt of such
information. Documents filed with the Commission pursuant to XXXXX shall be
deemed to have been delivered to the Representatives pursuant to this
section.
3.10.2. Secondary
Market Trading Survey.
So long
as the Public Securities are not listed or quoted, as the case may be, on the
New York Stock Exchange, the Nasdaq Stock Market or AMEX, or until such earlier
time upon which the Company is required to be liquidated, the Company shall
engage Ellenoff Xxxxxxxx & Schole LLP (“EG&S”),
for a
one-time fee of $5,000 payable on the Closing Date, to deliver and update to
the
Underwriters on a timely basis, but in any event on the Effective Date and
at
the beginning of each fiscal quarter a written report detailing those states
in
which the Public Securities may be traded in non-issuer transactions under
the
Blue Sky laws of the fifty States (the “Secondary
Market Trading Survey”).
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 17 of
32
3.11. Disqualification
of Form F-1 and F-3 and/or S-1 and S-3.
For a period equal to seven
years from the date hereof, the Company will not take any action or actions
which may prevent or disqualify the Company’s use of Form F-1 or F-3 and/or Form
S-1 and S-3 (or other appropriate form) for the registration of the 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 the Closing Date all fees and 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 Sale Preliminary Prospectus, and the final
Prospectus 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 Ordinary Shares and the Warrants included in the Units, including any
transfer or other taxes payable thereon; (iii) filing fees, costs and expenses
(excluding the Representatives counsel fees) incurred in registering the
Offering with FINRA (including all COBRADesk fees); (iv) fees and disbursements
of the transfer and warrant agent; (v) the preparation and delivery of
transaction lucite cubes or similar commemorative items in a style and quantity
as reasonably requested by the Representatives; (vi) all costs and expenses
of
the Company associated with “road show” marketing and “due diligence” trips for
the Company’s management to meet with prospective investors, including without
limitation, all travel, food and lodging expenses associated with such trips
incurred by the Company or such management; and (vi) all other reasonable costs
and expenses incident to the performance of its obligations hereunder which
are
not otherwise specifically provided for in this Section 3.12.1. The
Representatives may deduct from the net proceeds of the Offering payable to
the
Company on the Closing Date the expenses set forth above (which shall be
mutually agreed upon between the Company and the Representatives prior to
Closing) to be paid by the Company to the Representatives and others. If the
Offering is not consummated for any reason whatsoever, then the Company shall
reimburse the Representatives in full for their respective out of pocket
accountable expenses actually incurred through such date, less the Advance,
including, without limitation, fees of counsel to the Representatives (which
legal fees shall not exceed $150,000). If the Offering is not completed for
any
reason, BMC shall return such portion of the Advance that exceeds the
Representatives’ actual accountable out of pocket expenses
incurred.
3.12.2. Deferred
Payments
on
Business Combination.
Upon
consummation of a Business Combination, the Company further agrees that in
addition to the expenses payable pursuant to Sections 3.12.1, it will pay to
the
Underwriters the Deferred Payments, subject to Section 1.5 hereof.
3.13. Application
of Net Proceeds.
The Company will apply the net proceeds from the Private Placement and this
Offering received by it in a manner substantially consistent with the
application described under the caption “Use of Proceeds” in the
Prospectus.
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 FINRA.
3.15.1. Business
Combination.
In the
event any person or entity (regardless of any FINRA affiliation or association)
is engaged to assist the Company in its search for a Business Combination
candidate or to provide any similar Business Combination-related services,
the
Company will provide the following information (the “Business
Combination Information”)
to
FINRA and the Representatives within no less than thirty (30) days prior to
the
consummation of the Business Combination: (i) complete details of all
services and copies of agreements governing such services; and
(ii) justification as to why the person or entity providing the Business
Combination-related 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 FINRA’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 shareholder approval for the Business Combination. Upon the Company’s
delivery of the Business Combination Information to the Representatives, the
Company hereby expressly authorizes the Representatives to provide such
information directly to FINRA as a result of representations the Representatives
have made to FINRA in connection with the Offering.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 18 of
32
3.15.2. Broker/Dealer.
In the
event the Company intends to register as a broker/dealer, merge with or acquire
a registered broker/dealer, or otherwise become a member of FINRA, it shall
promptly notify FINRA.
3.16. Stabilization. Neither
the Company, nor, to its knowledge, any of its employees, directors or
shareholders (without the consent of the Representatives) has taken or will
take, directly or indirectly, any action designed to or that has constituted
or
that might reasonably be expected to cause or result in, under the Exchange
Act,
or otherwise, stabilization or manipulation of the price of any security of
the
Company to facilitate the sale or resale of the Units.
3.17. Internal
Controls.
From and after the Closing Date, 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.
For a period of five years from the Effective Date or until such earlier time
upon which the Company is required to be liquidated, the Company shall retain
Xxxxxx or other independent public accountants reasonably acceptable to the
Representatives.
3.19. Form
6-K’s.
The Company shall, on the date hereof, retain its independent public accountants
to audit the financial statements of the Company as of the Closing Date (the
“Audited
Financial Statements”)
reflecting the receipt by the Company of the proceeds of the Offering and
Private Placement. Within three (3) business days of the Closing Date, the
Company shall file a Report of Foreign Private Issuer on Form 6-K (or Form
6-K,
if applicable) with the Commission, which Report shall contain the Company’s
Audited Financial Statements.
3.20. FINRA.
The Company shall advise FINRA if it is aware that any 5% or greater shareholder
of the Company becomes an affiliate or associated person of a FINRA member
participating in the distribution of the 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 the proceeds of the Offering to be held in the Trust Account
to be invested only in “government securities” with specific maturity dates or
in money market funds meeting certain conditions under Rule 2a-7 promulgated
under the Investment Company Act as set forth in the Trust Agreement and
disclosed in the Prospectus. The Company will otherwise conduct its business
in
a manner so that it will not become subject to the Investment Company Act.
Furthermore, once the Company consummates a Business Combination, it will be
engaged in a business other than that of investing, reinvesting, owning, holding
or trading securities.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 19 of
32
3.23. Press
Releases.
The
Company agrees that it will not issue press releases or engage in any other
publicity, without the Representatives’ prior written consent (not to be
unreasonably withheld), for a period of ninety (90) days after the Closing
Date.
3.24. Insurance. The
Company will maintain insurance of the types and in the amounts which are
customary for companies engaged in similar businesses, including, but not
limited to: (i) directors’ and officers’ insurance (including insurance covering
the Company, its directors and officers for liabilities or losses arising in
connection with this Offering, including, without limitation, liabilities or
losses arising under the Act, the Exchange Act, the Rules and Regulations and
applicable foreign securities laws), (ii) insurance covering real and personal
property owned or leased by the Company against theft, damage, destruction,
acts
of vandalism and all other risks customarily insured against, and (iii) business
interruption insurance. The Company has not been refused any insurance coverage
sought or applied for, and the Company has no reason to believe that it will
not
be able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be necessary
to continue its business at a cost that would not have a Material Adverse
Effect. The Company shall be the sole beneficiary of each such policy.
3.25. Electronic
Prospectus. The
Company shall cause to be prepared and delivered to the Representatives, at
its
expense, within one (1) Business Day from the effective date of this Agreement,
an Electronic Prospectus
to be used by the Underwriters in connection with the Offering. As used herein,
the term “Electronic
Prospectus”
means
a
form of prospectus, and any amendment or supplement thereto, that meets each
of
the following conditions: (i) it shall be encoded in an electronic format,
satisfactory to the Representatives, that may be transmitted electronically
by
the other Underwriters to offerees and purchasers of the Units for at least
the
period during which a Prospectus relating to the Units is required to be
delivered under the Securities Act; (ii) it shall disclose the same information
as the paper prospectus and prospectus filed pursuant to XXXXX, except to the
extent that graphic and image material cannot be disseminated electronically,
in
which case such graphic and image material shall be replaced in the electronic
prospectus with a fair and accurate narrative description or tabular
representation of such material, as appropriate; and (iii) it shall be in or
convertible into a paper format or an electronic format, satisfactory to the
Representatives, that will allow recipients thereof to store and have
continuously ready access to the prospectus at any future time, without charge
to such recipients (other than any fee charged for subscription to the Internet
as a whole and for on-line time). The Company hereby confirms that it has
included or will include in the Prospectus filed pursuant to XXXXX or otherwise
with the Commission and in the Registration Statement at the time it was
declared effective an undertaking that, upon receipt
of a request by an investor or his or her Representatives within the period
when
a prospectus relating to the Units is required to be delivered under the
Securities Act, the Company shall transmit or cause to be transmitted promptly,
without charge, a paper copy of the Prospectus.
3.26. Reservation
of Shares.
The
Company will reserve and keep available that maximum number of its authorized
but unissued securities which are issuable upon exercise of the Warrants, the
Insider Warrants, the Placement Warrants and the Representatives’ Securities
outstanding from time to time.
3.27. Private
Placement Proceeds.
Immediately prior to the Effective Date, the Private Placement shall be
consummated and prior to the Closing Date, the Placement Investors shall deposit
the full purchase price of $2,000,000 into the Trust Account and shall provide
the Representatives with evidence of the same.
3.28. No
Amendment to Charter. The
Company covenants and agrees that it will not seek to amend or modify Articles
24.1 through 24.5 of its Amended and Restated Memorandum and Articles of
Association during the Target Business Acquisition Period (as such term is
defined in the Amended and Restated Memorandum and Articles of Association).
3.28.1. The
Company acknowledges that the purchasers of the Firm Units in the Offering
shall
be deemed to be third party beneficiaries of this Section 3.28.
3.28.2. The
Representatives and the Company specifically agree that, except pursuant to
its
own terms, this Section 3.28 shall not be modified or amended in any
way.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 20 of
32
3.29. Future
Financings.
The
Company agrees that neither it, nor any successor or subsidiary of the Company,
will consummate any public or private equity or debt financing prior to or
in
connection with the consummation of a Business Combination, unless all investors
in such financing expressly waive, in writing, any rights in or claims against
the Trust Account.
3.30. Content
of Business Combination Notice.
In
connection with seeking the approval by vote of Public Shareholders for a
proposed Business Combination as contemplated by the Prospectus, the Company
will furnish to all Public Shareholders all notices of such vote required by
British Virgin Islands law and all other applicable laws, rules and regulations.
Such notice shall contain, among other matters: (i) a description of the
operations and management of the Target Business, (ii) the regulatory
environment in which such Target Business operates, (iii) a recitation of risk
factors associated with the Target Business and the proposed Business
Combination and (iv) audited or unaudited, as appropriate, historical financial
statements of the Target Business. Such notice and all such information shall
be
presented in a manner substantially similar in form and content to notices
and
proxy statements that would be provided to Public Shareholders if the proposed
Business Combination vote were governed by the proxy rules of the United States
federal securities laws.
3.31. Purchases
of Ordinary Shares by the Company.
In the
event that, prior to the Business Combination, the Company enters into privately
negotiated transactions to acquire Company securities from Public Shareholders
who have elected to redeem their Ordinary Shares for a pro rata cash portion
of
the Trust Account as contemplated by Section 7.6.2 hereof in order to change
such shareholders’ vote in connection with the Business Combination, the Company
agrees that it shall only pay to the applicable Public Shareholders funds up
to
the per share redemption price set forth in the Prospectus. Negotiated premiums,
if any, to such per share redemption price may not be paid by the
Company.
3.32. Listing
on the Nasdaq Capital Market.
The
Company will use its best efforts to maintain the quotation of the Public
Securities on the Nasdaq Capital Market or a national securities exchange for
a
period of at least five (5) years from the date of this Agreement.
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
the Closing Date to the accuracy of the statements of officers of the Company
made pursuant to the provisions hereof and to the performance by the Company
of
its obligations hereunder and to the following conditions:
4.1. Regulatory
Matters.
4.1.1. Effectiveness
of Registration Statement.
The Registration Statement shall have become effective not later than 5:00
p.m.,
New York time, on the date of this Agreement or such later date and time as
shall be consented to in writing by the Representatives, and, at the Closing
Date, no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for the purpose shall have been
instituted or shall be pending or contemplated by the Commission and any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of EG&S, as counsel to the
Underwriters.
4.1.2. FINRA
Clearance.
By the Effective Date, the Representatives shall have received clearance from
FINRA as to the amount of compensation allowable or payable to the Underwriters
as described in the Registration Statement.
4.1.3. No
Commission Stop Order.
At the
Closing Date, the Commission has not issued any order or threatened to issue
any
order preventing or suspending the use of any Preliminary Prospectus, the
Prospectus or any part thereof, and has not instituted or threatened to
institute any proceedings with respect to such an order.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 21 of
32
4.1.4. No
Blue Sky Stop Orders.
No order suspending the sale of the Units in any jurisdiction designated by
the
Representatives pursuant to Section 3.3 hereof shall have been issued on
the Closing Date, and no proceedings for that purpose shall have been instituted
or shall be contemplated.
4.1.5. Nasdaq
Capital Market Listing.
The
Public Securities shall have been approved for listing on the Nasdaq Capital
Market.
4.2. Company
Counsel Matters.
4.2.1. Closing
Date Opinion of Counsel.
On the Closing Date, the Representatives shall have received the favorable
opinions of Xxxxxxxxxx & Xxxxx LLP and Xxxxxx & Calder, each dated as of
the Closing Date, addressed to the Representatives and in forms attached as
Exhibits
A
and
B
hereto,
respectively.
4.2.2 Reliance.
In rendering such opinion, such counsel may rely: (i) as to matters involving
the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance reasonably satisfactory to the
Representatives) of other counsel reasonably acceptable to the Representatives,
familiar with the applicable laws; and (ii) as to matters of fact, to the
extent they deem proper, on certificates or other written statements of officers
of the Company and officers of departments of various jurisdiction having
custody of documents respecting the corporate existence or good standing of
the
Company, provided that copies of any such statements or certificates shall
be
delivered to the Underwriters’ counsel if requested. The opinion of
counsel for the Company and any opinion relied upon by such counsel for the
Company shall include a statement to the effect that it may be relied upon
by
counsel for the Underwriters in its opinion delivered to the
Underwriters.
4.3. Cold
Comfort Letter.
At the time this Agreement is executed, and at the Closing Date, the
Representatives shall have received a letter, addressed to the Representatives
and in form and substance satisfactory in all respects (including the
non-material nature of the changes or decreases, if any, referred to in clause
(iii) below) to the Representatives and to EG&S from Xxxxxx dated,
respectively, as of the date of this Agreement and as of the Closing
Date:
(i) Confirming
that they are independent accountants with respect to the Company within the
meaning of the Act and the applicable Regulations and that they have not, during
the periods covered by the financial statements included in the Registration
Statement, the Sale Preliminary Prospectus and 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 the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act and the
published Regulations thereunder;
(iii) Stating
that, on the basis of a limited review which included a reading of the latest
available unaudited interim financial statements of the Company (with an
indication of the date of the latest available unaudited interim financial
statements), a reading of the latest available minutes of the shareholders
and
board of directors and the various committees of the board of directors,
consultations with officers and other employees of the Company responsible
for
financial and accounting matters and other specified procedures and inquiries,
nothing has come to their attention which would lead them to believe that:
(a)
the unaudited financial statements of the Company included in the Registration
Statement, the Sale Preliminary Prospectus and the Prospectus do not comply
as
to form in all material respects with the applicable accounting requirements
of
the Act and the Regulations or are not fairly presented in conformity with
generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements of the Company included
in the Registration Statement, the Sale Preliminary Prospectus and the
Prospectus; or (b) at a date not later than five days prior to the Effective
Date or Closing Date, as the case may be, there was any change in the capital
stock or long-term debt of the Company, or any decrease in the shareholders’
equity of the Company as compared with amounts shown in the March 31, 2008
balance sheet included in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus, other than as set forth in or contemplated by
the
Registration Statement, the Sale Preliminary Prospectus and the Prospectus,
or,
if there was any decrease, setting forth the amount of such decrease, and (c)
during the period from January 1, 2008 to a specified date not later than two
(2) days prior to the Effective Date or Closing Date, as the case may be, there
was any decrease in revenues, net earnings or net earnings per Ordinary Share,
in each case as compared with the corresponding period in the preceding year
and
as compared with the corresponding period in the preceding quarter, other than
as set forth in or contemplated by the Registration Statement and the
Prospectus, or, if there was any such decrease, setting forth the amount of
such
decrease;
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 22 of
32
(iv) Setting
forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company;
(v) Stating
that they have compared specific dollar amounts, numbers of shares, percentages
of revenues and earnings, statements and other financial information pertaining
to the Company set forth in the Registration Statement, the Sale Preliminary
Prospectus and the Prospectus in each case to the extent that such amounts,
numbers, percentages, statements and information may be derived from the general
accounting records, including work sheets, of the Company and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries and other
appropriate procedures (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in the letter
and found them to be in agreement;
(vi) Stating
that they have not during the immediately preceding five year period brought
to
the attention of the Company’s management any reportable condition related to
internal structure, design or operation as defined in the Statement on Auditing
Standards No. 60 “Communication of Internal Control Structure Related Matters
Noted in an Audit,” in the Company’s internal controls; and
(vii) Statements
as to such other matters incident to the transaction contemplated hereby as
the
Representatives may reasonably request.
4.4. Officers’
Certificates.
4.4.1. Officers’
Certificate.
As of the Closing Date, the Representatives shall have received a certificate
of
the Company signed by the Chairman of the Board or the President and the
Secretary or Assistant Secretary of the Company, 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 and that the conditions set forth in
Section 4.5 hereof have been satisfied as of such date and that, as of
Closing Date, the representations and warranties of the Company set forth in
Section 2 hereof are true and correct. In addition, the
Representatives will have received such other and further certificates of
officers of the Company as the Representatives may reasonably
request.
4.4.2. Secretary’s
Certificate.
As of the Closing Date, the Representatives shall have received a certificate
of
the Company signed by the Secretary or Assistant Secretary of the Company,
respectively, certifying: (i) that the Amended and Restated Memorandum and
Articles of Association of the Company are true and complete, have not been
modified and are in full force and effect; (ii) that the resolutions relating
to
the public offering contemplated by this Agreement are in full force and effect
and have not been modified; (iii) all correspondence between the Company or
its
counsel and the Commission; and (iv) as to the incumbency of the officers of
the
Company. The documents referred to in such certificate shall be attached
to such certificate.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 23 of
32
4.5. No
Material Changes.
Prior to the Closing Date: (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, the Sale Preliminary Prospectus and Prospectus; (ii)
no
action suit or proceeding, at law or in equity, shall have been pending or
threatened against the Company or any Company Affiliate before or by any court
or foreign, 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, the Sale
Preliminary Prospectus and Prospectus; (iii) no stop order shall have been
issued under the Act and no proceedings therefor shall have been initiated
or
threatened by the Commission; and (iv) the Registration Statement, the Sale
Preliminary Prospectus 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 none
of the Registration Statement, the Sale Preliminary Prospectus or the
Prospectus, or 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 the case of
the
Sale Preliminary Prospectus and Prospectus, 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 Representatives
executed copies of the Escrow Agreement, the Trust Agreement, the Warrant
Agreement, the Services Agreement and all of the Insider Letters.
4.6.2. Closing
Date Deliveries.
On the Closing Date, the Company shall have delivered to the Representatives,
the Representatives’ Purchase Option.
5. Indemnification.
5.1. Indemnification
of Underwriters.
5.1.1. General.
Subject to the conditions set forth below, the Company agrees to indemnify
and
hold harmless each of the Underwriters and each dealer selected by the
Representatives that participates in the offer and sale of the Units (each
a
“Selected
Dealer”)
and
each of their respective directors, officers and employees and each person,
if
any, who controls any such Underwriter or Selected Dealer (“controlling
person”)
within
the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act, and its counsel, against any and all loss, liability, claim, damage and
expense whatsoever (including but not limited to any and all legal or other
expenses reasonably incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, whether
arising out of any action between any of the Underwriters and the Company or
between any of the Underwriters and any third party or otherwise) to which
they
or any of them may become subject under the Act, the Exchange Act or any other
foreign, federal, state or local statute, law, rule, regulation or ordinance
or
at common law or otherwise or under the laws, rules and regulation 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 relating to any the securities
of
the Company described herein; or (iii) any application or other document or
written communication (in this Section 5 collectively called “application”)
executed by the Company or based upon written information furnished by the
Company in any jurisdiction in order to qualify the Units under the securities
laws thereof or filed with the Commission, any foreign or state securities
commission or agency, the Nasdaq Stock Market, the AMEX, the OTC Bulletin Board
or any securities exchange; or the omission or alleged omission therefrom of
a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance upon and
in
conformity with written information furnished to the Company with respect to
an
Underwriter by or on behalf of such Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement the Prospectus or any
amendment or supplement thereof, or in any application, as the case may be,
which furnished written information, it is expressly agreed, consists solely
of
the information described in the last sentence of Section 2.3.1. With
respect to any untrue statement or omission or alleged untrue statement or
omission made in the Preliminary Prospectus, the indemnity agreement contained
in this paragraph shall not inure to the benefit of any Underwriter to the
extent that any loss, liability, claim, damage or expense of such Underwriter
results from the fact that a copy of the Prospectus was not given or sent to
the
person asserting any such loss, liability, claim or damage at or prior to the
written confirmation of sale of the Securities to such person as required by
the
Act and the Regulations, and if the untrue statement or omission has been
corrected in the Prospectus, unless such failure to deliver the Prospectus
was a
result of non-compliance by the Company with its obligations under Section
3.4
hereof. The Company agrees promptly to notify the Representatives of the
commencement of any litigation or proceedings against the Company or any of
its
officers, directors or controlling persons in connection with the issue and
sale
of the Securities or in connection with the Preliminary Prospectus, the
Registration Statement or the Prospectus.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 24 of
32
5.1.2. Procedure.
If any action is brought against an Underwriter or controlling person in respect
of which indemnity may be sought against the Company pursuant to
Section 5.1.1, such Underwriter shall promptly notify the Company in
writing of the institution of such action and the Company shall assume the
defense of such action, including the employment and fees of counsel (subject
to
the reasonable approval of such Underwriter) and payment of actual
expenses. Such Underwriter or controlling person shall have the right to
employ its or their own counsel in any such case, but the fees and expenses
of
such counsel shall be at the expense of such Underwriter or such controlling
person unless: (i) the employment of such counsel at the expense of the Company
shall have been authorized in writing by the Company in connection with the
defense of such action; (ii) the Company shall not have employed counsel to
have
charge of the defense of such action; or (iii) such indemnified party or parties
shall have reasonably concluded that there may be defenses available to it
or
them which are different from or additional to those available to the Company
(in which case the Company shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events the reasonable fees and expenses of not more than one additional firm
of
attorneys selected by the Underwriter and/or controlling person shall be borne
by the Company. Notwithstanding anything to the contrary contained herein,
if the Underwriter or controlling person shall assume the defense of such action
as provided above, the Company shall have the right to approve the terms of
any
settlement of such action which approval shall not be unreasonably
withheld.
5.2. Indemnification
of the Company.
Each Underwriter, severally and not jointly, agrees to indemnify and hold
harmless the Company, its directors, officers, and employees and agents who
control the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and its counsel, 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 the Registration Statement, any Preliminary Prospectus, the 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 Registration Statement, Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or in any such application, which furnished
written information, it is expressly agreed, consists solely of the information
described in the last sentence of Section 2.3.1. In case any action shall
be brought against the Company or any other person so indemnified based on
any
Preliminary Prospectus, the Registration Statement, the 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. 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.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 25 of
32
5.3.2. Contribution
Procedure.
Within fifteen days after receipt by any party to this Agreement (or its
representatives) 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 representatives 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.
If any Underwriter or Underwriters shall default in its or their obligations
to
purchase the Firm Units and if the number of the Firm Units with respect to
which such default relates does not exceed in the aggregate 10% of the number
of
Firm Units that all Underwriters have agreed to purchase hereunder, then such
Firm 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.
In the event that the default addressed in Section 6.1 above relates to more
than 10% of the Firm Units, the Representatives may, in their discretion,
arrange for the Representatives or for another party or parties to purchase
such
Firm Units to which such default relates on the terms contained herein. If
within one (1) Business Day after such default relating to more than 10% of
the
Firm Units the Representatives do not arrange for the purchase of such Firm
Units, then the Company shall be entitled to a further period of one (1)
Business Day within which to procure another party or parties satisfactory
to
the Representatives to purchase said Firm Units on such terms. In the
event that neither the Representatives nor the Company arrange for the purchase
of the Firm Units to which a default relates as provided in this Section 6,
this Agreement may be terminated by the Representatives or the Company without
liability on the part of the Company (except as provided in Sections 3.12 and
5
hereof) or the several Underwriters (except as provided in Section 5
hereof); provided
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 to which the default relates are to be
purchased by the non-defaulting Underwriters, or are to be purchased by another
party or parties as aforesaid, the Representatives or the Company shall have
the
right to postpone the Closing Date for a reasonable period, but not in any
event
exceeding five (5) Business Days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement and/or the Prospectus,
as the case may be, or in any other documents and arrangements, and the Company
agrees to file promptly any amendment to, or to supplement, the Registration
Statement and/or the Prospectus, as the case may be, 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.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 26 of
32
7. Additional
Covenants.
7.1. Additional
Shares or Options.
The Company hereby agrees that until the Company consummates a Business
Combination, it shall not issue any Ordinary Shares or any options or other
securities convertible into Ordinary Shares or any shares of Preferred Stock
which participate in any manner in the Trust Account or which vote as a class
with the Ordinary Shares on a Business Combination.
7.2. Trust
Account Waiver Acknowledgments.
The
Company hereby agrees that it will not commence its due diligence investigation
of any 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 Account, initially in an amount of $54,300,000
for the benefit of the Public Shareholders and that, except for the interest
earned on the amounts held in the Trust Account, the Company may disburse monies
from the Trust Account only: (i) to the Public Shareholders in the event of
the
redemption of their shares or the dissolution and liquidation of the Trust
Account as part of the Company’s plan of dissolution and liquidation or (ii) to
the Company after it consummates a Business Combination and (b) for and in
consideration of the Company (1) agreeing to evaluate such Target Business
for
purposes of consummating a Business Combination with it or (2) agreeing to
engage the services of the vendor, as the case may be, such Target Business
or
vendor agrees that it does not have any right, title, interest or claim of
any
kind in or to any monies of the Trust Account (“Claim”)
and
waives any Claim it may have in the future as a result of, or arising out of,
any negotiations, contracts or agreements with the Company and will not seek
recourse against the Trust Account for any reason whatsoever. The
foregoing letters shall substantially be in the form attached hereto
as Exhibit
C
and D,
respectively.
7.3. Insider
Letters.
The Company shall not take any action or omit to take any action which would
cause a breach of any of the Insider Letters executed between each Company
Affiliate and the Representatives and will not allow any amendments to, or
waivers of, such Insider Letters without the prior written consent of the
Representatives.
7.4. Amended
and Restated Memorandum and Articles of Association.
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 Amended and Restated
Memorandum and Articles of Association. Prior to the consummation of a
Business Combination, the Company will not amend its Amended and Restated
Memorandum and Articles of Association without the prior written consent of
the
Representatives.
7.5. Proxy
and Other Information.
The Company shall provide the Representatives with copies of all proxy and
other
information and all related material sent to Public Shareholders in connection
with a Business Combination.
7.6. Acquisition/Liquidation
Procedure.
7.6.1. The
Company agrees: (i) that, prior to the consummation of any Business Combination,
it will submit such transaction to the Company’s shareholders for their approval
(“Business
Combination Vote”)
even
if the nature of the acquisition is such as would not ordinarily require
shareholder approval under applicable law; and (ii) that, in the event that
the
Company does not effect a Business Combination by the termination date of the
Company’s corporate existence (the “Termination
Date”),
the
Company shall take all action necessary to dissolve the Company and liquidate
the Trust Account to holders of IPO Shares as soon as reasonably practicable,
subject to the requirements of the laws of the British Virgin Islands. Upon
liquidation of the Trust Account, the Company will distribute to all holders
of
IPO Shares (defined below) an aggregate sum equal to $7.89 per unit (plus any
remaining portion of the interest income earned on the Trust Account but net
of:
(i) taxes payable on interest income earned on the Trust Account; (ii) amounts
to be paid to any redeeming shareholders voting against the Extended Period
(as
defined below) provided the Extended Period is approved by the Company’s
shareholders; and (iii) amounts released to the Company, from time to time,
to
fund its working capital and general corporate requirements plus a pro rata
share of any remaining net assets, subject to any valid claims by creditors
that
are not covered by amounts held in the Trust Account or the indemnities provided
by the Company’s directors and officers. Only holders of IPO Shares (as defined
below) 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, including the Insider Securities and the Placement
Warrants. With respect to any vote for any plan of dissolution and liquidation
recommended by the Company’s Board of Directors, if any, the Company shall use
its reasonable best efforts to cause all of the Company Affiliates to vote
the
Ordinary Shares owned by them in favor of such plan of dissolution and
liquidation.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 27 of
32
7.6.2. With
respect to the Business Combination Vote or any vote to extend the period of
time to consummate a Business Combination by an additional 6 months (the
“Extended
Period”),
the
Company shall use its reasonable best efforts to cause all of the Insider
Shareholders to vote the Ordinary Shares owned by them immediately prior to
this
Offering in accordance with the majority of the IPO Shares. In addition, the
Company shall use its reasonable best efforts to cause the Insider Shareholders
to vote Ordinary Shares they acquire in the IPO or in the aftermarket in favor
of the Business Combination and in favor of the Extended Period. At the time
the
Company seeks approval of any potential Business Combination or Extended Period,
the Company will offer each of the holders of the Company’s Ordinary Shares
issued in this Offering (the “IPO
Shares”)
the
right to convert their IPO Shares at a per share price equal to $7.89 (the
“Redemption
Price”).
If
holders of up to one share less than 35% in interest of the Company’s IPO
Shares, on a cumulative basis together with those shareholders voting against
the Extended Period, vote against such approval of a Business Combination,
the
Company may, but will not be required to, proceed with such Business
Combination. If the Company elects to so proceed, it will redeem shares,
based upon the Redemption Price, from those holders of IPO Shares who
affirmatively requested such conversion and who voted against the Business
Combination. If holders of 35% or more in interest of the IPO Shares,
on a cumulative basis together with those shareholders voting against the
Extended Period and electing to redeem their IPO Shares, vote against approval
of any potential Business Combination and elect to redeem their IPO Shares,
the
Company will not proceed with such Business Combination and will not convert
such shares. 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.
7.7. Rule
419.
The
Company agrees that it will use its best efforts to prevent the Company from
becoming subject to Rule 419 under the Act prior to the consummation of any
Business Combination, including, but not limited to, using its best efforts
to
prevent any of the Company’s outstanding securities from being deemed to be a
“xxxxx stock” as defined in Rule 3a-51-1 under the Exchange Act during such
period.
7.8. Presentation
of Potential Target Businesses.
The Company shall cause each of the Company Affiliates to agree that, in order
to minimize potential conflicts of interest which may arise from multiple
affiliations, the Company Affiliates will present to the Company for its
consideration, prior to presentation to any other person or company, any
suitable opportunity to acquire an operating business, until the earlier of
the
consummation by the Company of a Business Combination, the liquidation of the
Company or until such time as the Company Affiliates cease to be affiliates
of
the Company, subject to any pre-existing fiduciary obligations the Company
Affiliates might have.
7.9. Target
Net Assets.
The
Company agrees that the initial Target Business that it acquires must have
a
fair market value equal to at least 80% of the Company’s net assets held in the
Trust Account prior to the exercise of shareholder redemption rights described
herein (net of: (i) taxes paid or reserved for and (ii) interest earned on
the
Trust Account and excluding the Deferred Payments) at the time of the execution
of definitive documentation relating to the Business Combination (the
“80%
Net Asset Threshold”).
The
fair market value of such Target 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 the 80% Net Asset Threshold, the Company will obtain an opinion from
an
unaffiliated, independent investment banking firm which is a member of FINRA
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 fair market value of the Target Business meets the 80% Net Asset
Threshold.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 28 of
32
8. Representations
and Agreements to Survive Delivery.
Except as the context otherwise requires, all representations, warranties and
agreements contained in this Agreement shall be deemed to be representations,
warranties and agreements at the Closing Date, 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 (7th) anniversary of
the
later of the Closing Date, at which time the representations, warranties and
agreements shall terminate and be of no further force and effect.
9. Effective
Date of This Agreement and Termination Thereof.
9.1. Effective
Date.
This Agreement shall become effective on the Effective Date at the time the
Registration Statement is declared effective by the Commission.
9.2. Termination.
The Representatives 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 the Representatives’ sole 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 AMEX,
the Nasdaq Stock Market or on the 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 OTC Bulletin Board or by order of the Commission or any other government
authority having jurisdiction, or (iii) if the United States shall have become
involved in a war or an increase in existing major hostilities, or (iv) if
a
banking moratorium has been declared by a New York State or federal authority,
or (v) if a moratorium on foreign exchange trading has been declared which
materially adversely impacts the United States securities market, or (vi) if
the
Company shall have sustained a material loss by fire, flood, accident,
hurricane, earthquake, theft, sabotage or other calamity or malicious act which,
whether or not such loss shall have been insured, will, in the Representatives’
sole opinion, make it inadvisable to proceed with the delivery of the Units,
or
(vii) if any of the Company’s representations, warranties or covenants hereunder
are breached, or (viii) if the Representatives shall have become aware after
the
date hereof of such a material adverse change in the conditions or prospects
of
the Company, or such adverse material change in general market conditions,
including, without limitation, as a result of terrorist activities after the
date hereof, as in the Representatives’ sole judgment would make it
impracticable to proceed with the offering, sale and/or delivery of the Units
or
to enforce contracts made by the Underwriters for the sale of the
Units.
9.3. 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 3.12.1 hereof.
9.4. Indemnification.
Notwithstanding any contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 shall not
be in any way effected by, such election or termination or failure to carry
out
the terms of this Agreement or any part hereof.
10. Miscellaneous.
10.1. Notices.
All communications hereunder, except as herein otherwise specifically provided,
shall be in writing and shall be mailed, delivered by hand or reputable
overnight courier or delivered by facsimile transmission (with printed
confirmation of receipt) and confirmed and shall be deemed given when so mailed,
delivered or faxed (or if mailed, two days after such mailing):
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 29 of
32
If
to the
Representatives:
Xxxxx
Xxxxxx, Carret & Co., LLC
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No.:
(000) 000-0000
Attn:
Xxxxxxx X. XxXxxxxxx
and:
Maxim
Group LLC
000
Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No.:
(000) 000-0000
Attn:
Xxxxxxxx X. Xxxxxx
and
Xxxx
Capital Partners, LLC
00
Xxxxxxxxx Xxxxx
Xxxxxxx
Xxxxx, Xxxxxxxxxx 00000
Fax
No.:
(000) 000-0000
Attn.:
Xxx Xxxx
With
a
copy (which shall not constitute notice) to:
Ellenoff
Xxxxxxxx & Schole, LLP
000
Xxxx
00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No.:
(000) 000-0000
Attn:
Xxxxxxxx X. Xxxxxxxxxx, Esq.
|
If
to the Company, to:
|
Chardan
0000 Xxxxx Acqusition Corp.
Suite
18E, Tower A
Oriental
Kenzo Plaza
00
Xxxxxxxxxxxxx Xxxxxx
Xxxxxxx,
000000, Xxxxx
Fax
No.:
00-00-00000000
Attn:
Xxxxxxxx Xxxxx
With
a
copy (which shall not constitute notice) to:
Xxxxxxxxxx
& Xxxxx LLP
000
Xxxxxxxxx Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Fax
No.:
(000) 000-0000
Attn:
Xxxx X. Xxxxxxx, Esq.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 30 of
32
10.2. Headings.
The headings contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
10.3. Amendment.
This Agreement may only be amended by a written instrument executed by each
of
the parties hereto.
10.4. Entire
Agreement.
This Agreement (together with the other agreements and documents being delivered
pursuant to or in connection with this Agreement) 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.
10.5. Binding
Effect.
This Agreement shall inure solely to the benefit of and shall be binding upon
the Representatives, the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 5 hereof, and their
respective successors, legal representatives and assigns, and no other person
shall have or be construed to have any legal or equitable right, remedy or
claim
under or in respect of or by virtue of this Agreement or any provisions herein
contained.
10.6. Governing
Law, Venue, etc.
10.6.1. 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 the conflict of laws
principles thereof. Each of the Representatives and the Company (and any
individual signatory hereto): (i) agrees that any legal suit, action or
proceeding arising out of or relating to this agreement and/or the transactions
contemplated hereby shall be instituted exclusively in New York Supreme Court,
County of New York, or in the United States District Court for the Southern
District of New York, (ii) waives any objection which such party may have or
hereafter to the venue of any such suit, action or proceeding and (iii)
irrevocably and exclusively consents to the jurisdiction of the New York Supreme
Court, County of New York, and the United States District Court for the Southern
District of New York in any such suit, action or proceeding.
10.6.2. Each
of
the Representatives and the Company (and any individual signatory hereto)
further agrees to accept and acknowledge service of any and all process which
may be served in any such suit, action or proceeding in the New York Supreme
Court, County of New York, or in the United States District Court for the
Southern District of New York and agrees that service of process upon the
Company or any such individual mailed by certified mail to the Company’s address
shall be deemed in every respect effective service of process upon the Company
or any such individual in any such suit, action or proceeding, and service
of
process upon the Representatives mailed by certified mail to the
Representatives’ address shall be deemed in every respect effective service
process upon the Representatives, in any such suit, action or proceeding.
10.6.3. The
Company hereby irrevocably appoints Xxxxxxxxxx & Xxxxx LLP, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax No.: (000) 000-0000, Attn: Xxxx X.
Xxxxxxx, Esq. as
its
authorized agent in the Borough of Manhattan in The City of New York upon which
process may be served in any suit or proceeding contemplated by this Section
10.6, and agrees that service of process upon such agent, and written notice
of
said service to the Company by the person serving the same to the address
provided above shall be deemed in every respect effective service of process
upon the Company in any such suit or proceeding. The Company further agrees
to
take any and all action as may be necessary to maintain such designation and
appointment of such agent in full force and effect for a period of seven years
from the date of the Effective Date.
10.6.4. THE
COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY LAW, ON
BEHALF OF ITS EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING OUT OF OR IN CONNECTION
WITH
THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, THE
REGISTRATION STATEMENT AND THE PROSPECTUS.
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 31 of
32
10.6.5. The
Company agrees that the prevailing party(ies) in any such action shall be
entitled to recover from the other party(ies) all of its reasonable attorneys’
fees and expenses relating to such action or proceeding and/or incurred in
connection with the preparation therefor.
10.7. Execution
in Counterparts.
This Agreement may be executed in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which shall be deemed to be
an
original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been
signed by each of the parties hereto and delivered to each of the other parties
hereto. Delivery of a signed counterpart of this Agreement by fax or email/.pdf
transmission shall constitute valid and sufficient delivery
thereof.
10.8. Waiver,
etc.
The failure of any of the parties hereto to at any time enforce any of the
provisions of this Agreement shall not be deemed or construed to be a waiver
of
any such provision, nor to in any way effect the validity of this Agreement
or
any provision hereof or the right of any of the parties hereto to thereafter
enforce each and every provision of this Agreement. No waiver of any
breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
10.9. No
Fiduciary Relationship.
The
Company hereby acknowledges that the Underwriters are acting solely as
underwriters in connection with the offering of the Company's securities. The
Company further acknowledges that the Underwriters are acting pursuant to a
contractual relationship created solely by this Agreement entered into on an
arm's length basis and in no event do the parties intend that the Underwriters
act or be responsible as a fiduciary to the Company, its management,
shareholders, creditors or any other person in connection with any activity
that
the Underwriters may undertake or have undertaken in furtherance of the offering
of the Company's securities, either before or after the date hereof. The
Underwriters hereby expressly disclaim any fiduciary or similar obligations
to
the Company, either in connection with the transactions contemplated by this
Agreement or any matters leading up to such transactions, and the Company hereby
confirms its understanding and agreement to that effect. The Company and the
Underwriters agree that they are each responsible for making their own
independent judgments with respect to any such transactions, and that any
opinions or views expressed by the Underwriters to the Company regarding such
transactions, including but not limited to any opinions or views with respect
to
the price or market for the Company's securities, do not constitute advice
or
recommendations to the Company. The Company hereby waives and releases, to
the
fullest extent permitted by law, any claims that the Company may have against
the Underwriters with respect to any breach or alleged breach of any fiduciary
or similar duty to the Company in connection with the transactions contemplated
by this Agreement or any matters leading up to such transactions.
[Signature
Page Follows]
Xxxxx
Xxxxxx, Carret & Co, LLC, et al
________,
__ 2008
Page 32 of
32
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,
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
Agreed
to and accepted
|
|
|
as
of the date first written above:
|
|
|
XXXXX
XXXXXX, CARRET & CO., LLC,
as
Representative of the several Underwriters
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
MAXIM
GROUP LLC,
as
Representative of the several Underwriters
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
XXXX
CAPITAL PARTNERS, LLC,
as
Representative of the several Underwriters
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
[Signature
Page to Underwriting Agreement, dated _______ __, 2008]
SCHEDULE
A
CHARDAN
0000 XXXXX ACQUISITION CORP.
6,875,000
Units
|
Underwriter
|
Number of Firm Units
to
be Purchased
|
|||
|
Xxxxx
Xxxxxx Carret & Co., LLC
|
||||
|
Maxim
Group LLC
|
||||
|
Xxxx
Capital Partners, LLC
|
||||
|
Xxxxx
& Company
|
||||
|
6,875,000
|
||||
EXHIBIT
A
FORM
OF OPINION OF XXXXXXXXXX & XXXXX LLP
EXHIBIT
B
FORM
OF OPINION OF XXXXXX & CALDER
EXHIBIT
C
Form
of Target Business Letter
Chardan
0000 Xxxxx Acquisition Corp.
Suite
18E, Tower A
Oriental
Kenzo Plaza
00
Xxxxxxxxxxxxx Xxxxxx
Xxxxxxx,
000000, Xxxxx
Gentlemen:
Reference
is made to the Final Prospectus of Chardan
2008 China Acquisition Corp.
(the
“Company”),
dated
______ __, 2008 (the “Prospectus”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We
have
read the Prospectus and understand that the
Company has
established the Trust Account, initially in an amount of at least $54,300,000
for the benefit of the Public Shareholders and the underwriters of the Company’s
initial public offering (the “Underwriters”)
and
that, except for the interest earned on the amounts held in the Trust Account,
the
Company
may
disburse monies from the Trust Account only: (i) to the Public Shareholders
in
the event of the redemption of their shares or the dissolution and liquidation
of the Company; or (ii) to the
Company and the Underwriters
after it
consummates a Business Combination.
For
and
in consideration of the
Company agreeing
to evaluate the undersigned for purposes of consummating a Business Combination
with it, the undersigned hereby agrees that it does not have any right, title,
interest or claim of any kind in or to any monies in the Trust Account (each,
a
“Claim”)
and
hereby waives any Claim it may have in the future as a result of, or arising
out
of, any negotiations, contracts or agreements with the
Company and
will
not seek recourse against the Trust Account for any reason
whatsoever.
|
Print
Name of Target Business
|
|
|
Authorized
Signature of Target Business
|
EXHIBIT
D
Form
of Vendor Letter
Suite
18E, Tower A
Oriental
Kenzo Plaza
00
Xxxxxxxxxxxxx Xxxxxx
Xxxxxxx,
000000, Xxxxx
Gentlemen:
Reference
is made to the Final Prospectus of Chardan
2008 China Acquisition Corp.
(the
“Company”),
dated
_________ __, 2008 (the “Prospectus”).
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in Prospectus.
We
have
read the Prospectus and understand that the
Company
has
established the Trust Account, initially in an amount of at least $54,300,000
for the benefit of the Public Shareholders and the underwriters of the Company’s
initial public offering (the “Underwriters”)
and
that, except for the interest earned on the amounts held in the Trust Account
(which interest may, prior to the consummation of a business combination or
the
Company’s liquidation, be released (i) to the Company to pay taxes it has
incurred, (ii) to redeeming shareholders voting against the Extended Period,
as
described in the Prospectus and (iii) to the Company, from time to time, to
fund
its working capital and general corporate requirements), the
Company
may
disburse monies from the Trust Account only: (i) to the Public Shareholders
in
the event of the redemption of their shares or the dissolution and liquidation
of the Company; or (ii) to the
Company and the Underwriters
after it
consummates a Business Combination.
For
and
in consideration of the
Company
agreeing
to use the services of the undersigned, the undersigned hereby agrees that
it
does not have any right, title, interest or claim of any kind in or to any
monies in the Trust Account (each, a “Claim”)
and
hereby waives any Claim it may have in the future as a result of, or arising
out
of, any services provided to the
Company
and will
not seek recourse against the Trust Account for any reason
whatsoever.
|
Print
Name of Vendor
|
|
|
Authorized
Signature of Vendor
|
