Highlands Acquisition Corp.
10,000,000 Units (1)
Common Stock
Warrants
UNDERWRITING AGREEMENT
New York, New York
, 2007
Citigroup Global Markets Inc.
As Representative of the several Underwriters,
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Highlands Acquisition Corp., a corporation organized under the
laws of Delaware (the "Company"), proposes to sell to the several underwriters
named in Schedule I hereto (the "Underwriters"), for whom you (the
"Representative") are acting as sole representative, an aggregate of 10,000,000
units (the "Units") of the Company (said Units to be issued and sold by the
Company being hereinafter called the "Underwritten Securities"). The Company
also proposes to grant to the Underwriters an option to purchase up to 1,500,000
additional units to cover over-allotments, if any (the "Option Securities"; the
Option Securities, together with the Underwritten Securities, being hereinafter
called the "Securities"). To the extent there are no additional Underwriters
listed on Schedule I other than you, the term Representative as used herein
shall mean you, as Underwriter, and the term Underwriter shall mean either the
singular or plural as the context requires. Certain capitalized terms used
herein and not otherwise defined are defined in Section 20 hereof.
Each Unit consists of one share of the Company's common stock,
par value $.0001 per share (the "Common Stock"), and one warrant to purchase one
share of Common Stock (the "Warrant(s)"). The shares of Common Stock and
Warrants included in the Units will not trade separately until the forty-fifth
(45th) day after the date of the Prospectus unless the Representative determines
that an earlier date is acceptable, subject to (a) the Company's preparation of
an audited balance sheet reflecting the receipt by the Company of the proceeds
of the offering of the Securities and (b) the filing of such audited balance
sheet with the Commission on a Form 8-K or similar form by the Company which
includes such balance sheet. Each Warrant entitles its holder, upon exercise, to
purchase one share of Common Stock for $7.50 during the period commencing on the
later of the completion of an initial "Business Combination" or 15 months from
the date of the Prospectus and terminating on the five-year anniversary of the
date of the Prospectus or earlier upon redemption or Liquidation. As used
herein, the term "Business Combination" (as described more fully in the
Registration Statement) shall mean any acquisition, through a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or other
similar business combination with one or more operating businesses or assets.
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(1) Plus an option to purchase from the Company, up to 1,500,000 additional
Units to cover over-allotments.
The Company has entered into an Investment Management Trust
Agreement, dated as of the date hereof, with Continental Stock Transfer & Trust
Company ("CST&T"), as trustee, in substantially the form filed as an exhibit to
the Registration Statement (the "Trust Agreement"), pursuant to which certain
proceeds of the offering will be deposited and held in a trust account (the
"Trust Account") for the benefit of the Company, the Underwriters and the
holders of the Underwritten Securities and the Option Securities, if and when
issued.
The Company has entered into a Warrant Agreement, dated as of
the date hereof, with CST&T, as warrant agent, in substantially the form filed
as an exhibit to the Registration Statement (the "Warrant Agreement") pursuant
to which CST&T will act as warrant agent in connection with the issuance,
registration, transfer, exchange, redemption, and exercise of the Warrants,
Founders' Warrants, Sponsors' Warrants and Co-Investment Warrants.
The Company has entered into offer letters, dated as of May 1,
2007 (collectively, the "Securities Purchase Agreement"), with each of Highland
Equity LLC, Fieldpoint Capital LLC, Ivy Healthcare Capital II, L.P., ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ (each a "Founder" and,
collectively, the "Founders"), pursuant to which the Founders have purchased an
aggregate of 2,500,000 units (the "Founders' Units"), each consisting of one
share of Common Stock (the "Founders' Common Stock") and one warrant to purchase
one share of Common Stock (the "Founders' Warrants"), for an aggregate purchase
price of $25,000. The Founders' Common Stock and Founders' Warrants that
comprise the Founders' Units are identical to the Common Stock and Warrants,
respectively, included in the Units except (i) each Founder has agreed to place
its Founders' Common Stock in escrow until one year after the initial Business
Combination and to place its Founders' Warrants in escrow until they become
exercisable, provided the Founders' Common Stock and Founders' Warrants will be
released from escrow earlier if, following the Business Combination, (A) the
last sales price of the Common Stock equals or exceeds $20.00 per share for any
20 trading days within any 30-trading day period beginning 90 days after the
Business Combination or (B) the Company consummates a subsequent liquidation,
merger, stock exchange or other similar transaction that results in all of the
Company's stockholders having the right to exchange their Common Stock for cash,
securities or other property, (ii) each Founder has agreed not to sell or
otherwise transfer the Founders' Common Stock and Founders' Warrants until they
are released from escrow, other than to Permitted Transferees, (iii) the
Founders' Warrants will become exercisable after the consummation of our initial
Business Combination if and when the last sales price of our Common Stock
exceeds $14.25 per share for any 20 trading days within any 30-trading day
period beginning 90 days after the Business Combination, (iv) the Founders have
agreed to vote the Founders' Common Stock in the same manner as the shares cast
by a majority of the public stockholders in connection with the vote required to
approve our initial Business Combination, (v) the Founders will not be able to
exercise conversion rights with respect to the Founders' Common Stock, (vi) the
Founders have agreed to waive their rights to participate in the Liquidation
distribution with respect to the Founders' Common Stock, and (vii) the Founder's
Warrants are non-redeemable so long as they are held by the Founders or their
Permitted Transferees. For purposes of this agreement, "Permitted Transferees"
has the meaning set forth in (A) the Securities Purchase Agreement with respect
to the Founders' Units, Founders' Common Stock and Founders' Warrants, (B) the
Warrant Subscription Agreement with respect to the Sponsors' Warrants, and (C)
the Co-Investment Subscription Agreement with respect to the Co-Investment
Units, Co-Investment Common Stock and Co-Investment Warrants.
The Company has entered into a Warrant Subscription Agreement,
dated as of May 31, 2007 (the "Warrant Subscription Agreement"), with Kanders &
Company, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ivy Healthcare Capital II, L.P., ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ and Fieldpoint Capital, LLC (each a "Sponsor" and,
collectively, the "Sponsors"), pursuant to which the Sponsors have agreed to
purchase
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an aggregate of 3,250,000 warrants, each entitling the holder to purchase one
share of Common Stock (the "Sponsors' Warrants"), for $1.00 per Sponsors'
Warrant. The Sponsors' Warrants are identical to the Warrants included in the
Units, except (i) the Sponsors' Warrants will not be transferable or salable by
the Sponsors (subject to limited exceptions more fully described in the Warrant
Subscription Agreement) until after the Company completes the Business
Combination, (ii) the Sponsors' Warrants will be non-redeemable so long as they
are held by the Sponsors or their Permitted Transferees and (iii) commencing 30
days after the consummation of the Company's initial Business Combination, the
holders of the Sponsors' Warrants and the underlying Common Stock will be
entitled to registration rights with respect to such securities under an
agreement to be signed on or before the date of the Prospectus.
The Company has entered into a Co-Investment Subscription
Agreement, dated as of May 31, 2007 (the "Co-Investment Subscription
Agreement"), with Kanders & Company, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Ivy Healthcare Capital
II, L.P., ▇▇▇▇▇▇ ▇. ▇'▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ and Fieldpoint Capital, LLC
(each a "Co-Investment Purchaser" and, collectively, the "Co-Investment
Purchasers"), pursuant to which the Co-Investment Purchasers have agreed to
purchase an aggregate of 1,000,000 units (the "Co-Investment Units"), each
consisting of one share of Common Stock (the "Co-Investment Common Stock") and
one warrant to purchase one share of Common Stock (the "Co-Investment
Warrants"), for $10.00 per unit. The Co-Investment Common Stock and
Co-Investment Warrants are identical to the Common Stock and Warrants,
respectively, included in the Units, except (i) the proceeds from the sale of
the Co-Investment Units will not be received by the Company until immediately
prior to the consummation of a Business Combination and, therefore, will not be
deposited into the Trust Account or available for distribution to the public
stockholders upon the Liquidation, (ii) commencing 30 days after the
consummation of the Company's initial Business Combination, the holders of the
Co-Investment Units and the underlying Common Stock will be entitled to
registration rights with respect to such securities pursuant to a registration
rights agreement and (iii) the Co-Investment Units, Common Stock and Warrants
are not transferable until one year after the initial Business Combination,
subject to certain exceptions more fully described in the Co-Investment
Subscription Agreement.
The Company has entered into an Escrow Agreement, dated as of
the date hereof (the "Escrow Agreement"), with CST&T and the Founders, pursuant
to which the Founders have agreed to place the Founders' Units, Founders' Common
Stock and Founders' Warrants into escrow until one year after the consummation
of the initial Business Combination, subject to the terms, conditions and
exceptions more fully described in the Escrow Agreement.
The Company has entered into a Registration Rights Agreement,
dated as of the date hereof, with the Founders, Sponsors and Co-Investment
Purchasers, in substantially the form filed as an exhibit to the Registration
Statement (the "Registration Rights Agreement"), pursuant to which the Company
has granted certain registration rights in respect of the Founders' Units,
Founders' Common Stock, Founders' Warrants and the underlying shares of Common
Stock, the Sponsors' Warrants and the underlying shares of Common Stock, and the
Co-Investment Units, Co-Investment Common Stock and Co-Investment Warrants and
underlying shares of Common Stock.
The Company has caused to be duly executed and delivered
letters by the Founders and each of the Company's officers and directors
(collectively, the "Insiders"), each in substantially the form filed as an
exhibit to the Registration Statement (the "Insider Letters").
The Company has entered into a letter agreement, dated as of
the date hereof (the "Services Agreement"), with Kanders & Company, Inc. and Ivy
Capital Partners, pursuant to which the Company will pay Kanders & Company and
Ivy Capital Partners, subject to the terms of the Services Agreement, an
aggregate monthly fee of $10,000 for general and administrative services,
including office
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space, utilities and secretarial support from the date hereof until the earlier
of (i) the consummation of a Business Combination or (ii) the Liquidation.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, each Underwriter as set forth below in this
Section 1.
(a) The Company has prepared and filed with the Commission a
registration statement (file number 333-143599) on Form S-1, including a related
preliminary prospectus, for registration under the Act of the offering and sale
of the Securities. Such Registration Statement, including any amendments thereto
filed prior to the Execution Time, has become effective. The Company may have
filed one or more amendments thereto, including a related preliminary
prospectus, each of which has previously been furnished to you. The Company will
file with the Commission a final prospectus in accordance with Rule 424(b). As
filed, such final prospectus shall contain all information required by the Act
and, except to the extent the Representative shall agree in writing to a
modification, shall be in all substantive respects in the form furnished to you
prior to the Execution Time or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other changes
(beyond that contained in the latest Preliminary Prospectus) as the Company has
advised you, prior to the Execution Time, will be included or made therein. The
Company has complied to the Commission's satisfaction with all requests of the
Commission for additional or supplemental information.
(b) On the Effective Date, the Registration Statement did, and
when the Prospectus is first filed in accordance with Rule 424(b) and on the
Closing Date (as defined herein) and on any date on which Option Securities are
purchased, if such date is not the Closing Date (a "settlement date"), the
Prospectus (and any supplement thereto) will, comply in all material respects
with the applicable requirements of the Act; on the Effective Date and at the
Execution Time, the Registration Statement did not and will not contain any
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 not
misleading; and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date and any settlement date, the Prospectus (together with any
supplement thereto) will not include any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration Statement, or the
Prospectus (or any supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representative specifically for inclusion in the
Registration Statement or the Prospectus (or any supplement thereto), it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section 8 hereof.
(c) The Statutory Prospectus does not contain any untrue
statement of a material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding sentence does not apply to
statements in or omissions from the Statutory Prospectus based upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representative specifically for use therein, it being understood and
agreed that the only such information furnished by or on behalf of any
Underwriter consists of the information described as such in Section 8 hereof.
(d) The Company has filed with the Commission a Form 8-A (file
number [o]) providing for the registration under the Exchange Act of the
Securities, which registration is currently effective on the date hereof. The
Securities have been duly listed, and admitted and authorized for trading
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subject only to official notice of issuance, on the American Stock Exchange, and
the Company knows of no reason or set of facts which is likely to adversely
affect such approval.
(e) The Commission has not issued any order or, to the
Company's knowledge, threatened to issue any order preventing or suspending the
effectiveness of the Registration Statement or the use of any Preliminary
Prospectus, the Prospectus or any part thereof, and has not instituted or, to
the Company's knowledge, threatened to institute any proceedings with respect to
such an order.
(f) (i) At the time of filing the Registration Statement and
(ii) as of the Execution Time, the Company was and is an Ineligible Issuer (as
defined in Rule 405).
(g) The Company has not prepared or used a Free Writing
Prospectus.
(h) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction in
which it is chartered or organized with full corporate power and authority to
own or lease, as the case may be, and to operate its properties and conduct its
business as described in the Statutory Prospectus and the Prospectus, and is
duly qualified to do business as a foreign corporation and is in good standing
under the laws of each jurisdiction which requires such qualification.
(i) There are no subsidiaries of the Company as defined by Rule 1-02 of
Regulation S-X.
(j) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or Prospectus,
or to be filed as an exhibit thereto, which is not described or filed as
required (and the Statutory Prospectus contains in all material respects the
same description of the foregoing matters contained in the Prospectus); and the
statements in the Statutory Prospectus and the Prospectus under the headings
"Principal Stockholders," "Certain Relationships and Related Transactions,"
"Description of Securities" and "Taxation" insofar as such statements summarize
legal matters, agreements, documents or proceedings discussed therein, are
accurate and fair summaries of such legal matters, agreements, documents or
proceedings. There are no business relationships or related party transactions
involving the Company or any other person required by the Act to be described in
the Registration Statement or Prospectus that have not been described as
required.
(k) The Company's authorized equity capitalization is as set
forth in the Statutory Prospectus and the Prospectus.
(l) All issued and outstanding securities of the Company have
been duly and validly authorized and issued and are fully paid and
nonassessable; 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 offers and sales of the outstanding Common
Stock and Warrants were at all relevant times either registered under the Act,
the applicable state securities and Blue Sky laws or, based in part on the
representations and warranties of the purchasers of such shares of Common Stock
and Warrants, exempt from such registration requirements. The holders of
outstanding shares of capital stock of the Company are not entitled to
preemptive or other rights to subscribe for the Securities; and, except as set
forth in the Statutory Prospectus and the Prospectus, no options, warrants or
other rights to purchase, agreements or other obligations to issue, or rights to
convert any obligations into or exchange any securities for, shares of capital
stock of or ownership interests in the Company are outstanding.
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(m) The Common Stock included in the Units has been duly
authorized and, when executed by the Company and countersigned, and issued and
delivered against payment for the Securities by the Underwriters pursuant to
this Agreement, will be validly issued, fully paid and non-assessable.
(n) The Warrants included in the Units, when executed,
authenticated, issued and delivered in the manner set forth in the Warrant
Agreement against payment for the Securities by the Underwriters pursuant to
this Agreement, will be duly executed, authenticated, issued and delivered, and
will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally from time to time in effect and by equitable
principles of general applicability.
(o) The shares of Common Stock issuable upon exercise of the
Warrants included in the Units have been duly authorized and, when issued and
delivered against payment therefor pursuant to the Warrants and the Warrant
Agreement, will be validly issued, fully paid and non-assessable. The holders of
such Common Stock are not and will not be subject to personal liability by
reason of being such holders; such Common Stock is not and will not be subject
to any preemptive or other similar contractual rights granted by the Company;
and all corporate action required to be taken for the authorization, issuance
and sale of such Common Stock (other than such execution, countersignature and
delivery at the time of issuance) has been duly and validly taken.
(p) The certificates for the Common Stock are in valid and
sufficient form.
(q) Except as set forth in the Statutory 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.
(r) 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 from its inception
through and including the date hereof, except as disclosed in the Registration
Statement.
(s) 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 with the offer and sale of the
Underwritten Securities pursuant to the Registration Statement.
(t) The Founders' Common Stock included in the Founders' Units
is duly authorized, validly issued, fully paid and non-assessable.
(u) The Founders' Warrants have been duly executed,
authenticated, issued and delivered, and constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally from time to
time in effect and by equitable principles of general applicability.
(v) The shares of Common Stock issuable upon exercise of the
Founders' Warrants included in the Founders' Units have been duly authorized
and, when executed by the Company and countersigned and issued and delivered
against payment therefor pursuant to the Founders' Warrants and the Warrant
Agreement, will be validly issued, fully paid and non-assessable.
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(w) The entire $3,250,000 of proceeds from the sale of the
Sponsors' Warrants has been deposited with ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in accordance with
the terms of the Warrant Subscription Agreement and will be deposited in the
Trust Account upon the consummation of the offering of the Securities.
(x) The Sponsors' Warrants, when delivered upon the
consummation of this offering, will be duly executed, authenticated and issued,
and will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, or similar laws affecting
creditors' rights generally from time to time in effect and by equitable
principles of general applicability.
(y) The Co-Investment Common Stock included in the
Co-Investment Units will be duly authorized, validly issued, fully paid and
non-assessable when delivered against payment to the Co-Investment Purchasers in
connection with the consummation of a Business Combination.
(z) The Co-Investment Warrants will be duly executed,
authenticated, issued and delivered when delivered against payment upon the
consummation of a Business Combination, and will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally from time to
time in effect and by equitable principles of general applicability.
(aa) The shares of Common Stock issuable upon exercise of the
Co-Investment Warrants included in the Co-Investment Units will be duly
authorized and, when executed by the Company and countersigned and issued and
delivered against payment therefor pursuant to the Co-Investment Subscription
Agreement and the Warrant Agreement, will be validly issued, fully paid and
non-assessable.
(bb) This Agreement has been duly authorized, executed and delivered by the
Company.
(cc) The Trust Agreement has been duly authorized, executed and delivered by the
Company and is a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms except as the enforceability thereof
may be limited by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally from time to time in effect and by equitable principles of
general applicability.
(dd) The Warrant Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms except as
the enforceability thereof may be limited by bankruptcy, insolvency, or similar
laws affecting creditors' rights generally from time to time in effect and by
equitable principles of general applicability.
(ee) The Securities Purchase Agreement has been duly
authorized, executed and delivered by the Company and the Founders, and is a
valid and binding agreement of the Company and the Founders, enforceable against
the Company and the Founders, respectively, in accordance with its terms except
as the enforceability thereof may be limited by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally from time to time in effect
and by equitable principles of general applicability.
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(ff) The Warrant Subscription Agreement has been duly
authorized, executed and delivered by the Company and the Sponsors, and is a
valid and binding agreement of the Company and the Sponsors, enforceable against
the Company and the Sponsors, respectively, in accordance with its terms except
as the enforceability thereof may be limited by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally from time to time in effect
and by equitable principles of general applicability.
(gg) The Co-Investment Subscription Agreement has been duly
authorized, executed and delivered by the Company and the Co-Investment
Purchasers, and is a valid and binding agreement of the Company and the
Co-Investment Purchasers, enforceable against the Company and the Co-Investment
Purchasers, respectively, in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally from time to time in effect and by
equitable principles of general applicability.
(hh) The Escrow Agreement has been duly authorized, executed
and delivered by the Company and, to the Company's knowledge, the Founders, and
is a valid and binding agreement of the Company and, to the Company's knowledge,
the Founders, enforceable against the Company and, to the Company's knowledge,
the Founders, respectively, in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally from time to time in effect and by
equitable principles of general applicability.
(ii) The Services Agreement has been duly authorized, executed
and delivered by the Company and is a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms except as
the enforceability thereof may be limited by bankruptcy, insolvency, or similar
laws affecting creditors' rights generally from time to time in effect and by
equitable principles of general applicability.
(jj) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and is a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms except as the enforceability thereof may be limited by bankruptcy,
insolvency, or similar laws affecting creditors' rights generally from time to
time in effect and by equitable principles of general applicability.
(kk) To the Company's knowledge, each of the Insider Letters
has been duly authorized, executed and delivered by the Founders and each of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(each an "Independent Director" and, collectively, the "Independent Directors")
and is a valid and binding agreement of the Company, and, to the Company's
knowledge, the Founders and each of the Independent Directors, enforceable
against them in accordance with its terms except as the enforceability thereof
may be limited by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally from time to time in effect and by equitable principles of
general applicability.
(ll) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds thereof
as described in the Statutory Prospectus and the Prospectus, will not be an
"investment company" as defined in the Investment Company Act of 1940, as
amended.
(mm) No consent, approval, authorization, filing with or order
of any court or governmental agency or body is required in connection with the
transactions contemplated herein or in the Trust Agreement, the Warrant
Agreement, the Securities Purchase Agreement, the Warrant
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Subscription Agreement, the Co-Investment Subscription Agreement, the Escrow
Agreement, the Services Agreement, the Registration Rights Agreement, or the
Insider Letters, except such as have been obtained under the Act and such as may
be required under the blue sky laws of any jurisdiction in connection with the
purchase and distribution of the Securities by the Underwriters in the manner
contemplated herein and in the Statutory Prospectus and the Prospectus.
(nn) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof or of the Trust Agreement, the Warrant
Agreement, the Securities Purchase Agreement, the Warrant Subscription
Agreement, the Co-Investment Subscription Agreement, the Escrow Agreement, the
Services Agreement, the Registration Rights Agreement, or the Insider Letters
will conflict with, result in a breach or violation of, or imposition of any
lien, charge or encumbrance upon any property or assets of the Company pursuant
to, (i) the charter or by-laws of the Company, (ii) the terms of any indenture,
contract, lease, mortgage, deed of trust, note agreement, loan agreement or
other agreement, obligation, condition, covenant or instrument to which the
Company is a party or bound or to which its property is subject, or (iii) any
statute, law, rule, or regulation, judgment, order or decree applicable to the
Company of any court, regulatory body, administrative agency, governmental body,
arbitrator or other authority having jurisdiction over the Company or any of its
properties.
(oo) Except as set forth in the Statutory Prospectus and
Prospectus, no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement.
(pp) The historical financial statements and schedules of the
Company included in the Statutory Prospectus, the Prospectus and the
Registration Statement present fairly in all material respects the financial
condition, results of operations and cash flows of the Company as of the dates
and for the periods indicated, comply as to form with the applicable accounting
requirements of the Act and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as otherwise noted therein). The summary financial data
set forth under the caption "Summary Financial Data" in the Statutory
Prospectus, Prospectus and Registration Statement fairly present in all material
respects, on the basis stated in the Statutory Prospectus, Prospectus and
Registration Statement, the information included therein. The Company is not
party to any off-balance sheet transactions, arrangements, obligations
(including contingent obligations), or other relationships 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. The statistical, industry-related and
market-related data included in the Registration Statement, the Statutory
Prospectus and the Prospectus are based on or derived from sources which the
Company reasonably and in good faith believes are reliable and accurate, and
such data agree with the sources from which they are derived. All such data was
derived from publicly available sources.
(qq) No action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or, to the Company's knowledge, the Founders, or the property of any of them is
pending or, to the knowledge of the Company, threatened that (i) could
reasonably be expected to have a material adverse effect on the performance of
this Agreement or the consummation of any of the transactions contemplated
hereby by the Company or (ii) could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise), prospects, earnings,
business or properties of the Company, whether or not arising from transactions
in the ordinary course of business, except as set forth in or contemplated in
the Statutory Prospectus and the Prospectus (exclusive of any supplement
thereto).
9
(rr) The Company owns or leases all such properties as are
necessary to the conduct of its operations as presently conducted.
(ss) The Company is not in violation or default of (i) any
provision of its charter or bylaws, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement, loan agreement or other
agreement, obligation, condition, covenant or instrument to which it is a party
or bound or to which its property is subject, in any material respects, or (iii)
any (x) in any material respects, statute, law, rule, regulation, or (y)
judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company.
(tt) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇"),
who have certified certain financial statements of the Company and delivered
their report with respect to the audited financial statements and schedules
included in the Statutory Prospectus and the Prospectus, are independent public
accountants with respect to the Company within the meaning of the Act and the
applicable published rules and regulations thereunder.
(uu) The Company maintains (i) effective internal control over
financial reporting and (ii) a system of internal accounting controls sufficient
to provide reasonable assurance that (A) transactions are executed in accordance
with management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain asset
accountability; (C) access to assets is permitted only in accordance with
management's general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(vv) The Company maintains effective "disclosure controls and
procedures" (as defined under Rule 13a-15(e) under the Exchange Act) that are
designed to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in the Commission's
rules and forms, including controls and procedures designed to ensure that such
information is accumulated and communicated to the Company's management as
appropriate to allow timely decisions regarding required disclosure.
(ww) There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any 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.
(xx) The Company has filed all tax returns that are required
to be filed by it or has requested extensions thereof (except in any case in
which the failure so to file would not have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties
of the Company, taken as a whole, whether or not arising from transactions in
the ordinary course of business) 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 is 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 on the condition (financial or otherwise),
prospects, earnings, business or properties of the Company, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Statutory Prospectus and the Prospectus
(exclusive of any supplement thereto).
10
(yy) The Company possesses all licenses, certificates, permits
and other authorizations issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business, and the Company has
not received any notice of proceedings relating to the revocation or
modification of any such license, certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the condition (financial or
otherwise), prospects, earnings, business or properties of the Company, whether
or not arising from transactions in the ordinary course of business, except as
set forth in or contemplated in the Statutory Prospectus and the Prospectus
(exclusive of any supplement thereto).
(zz) There is and has been no failure on the part of the
Company and any of the Company's directors or officers, in their capacities as
such, to comply with any applicable provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002
and the rules and regulations promulgated in connection therewith (the
"▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act"), including Section 402 relating to loans and Sections 302
and 906 relating to certifications.
(aaa) There is and has been no failure on the part of the
Company or, to the Company's knowledge, any of the Company's officers or
directors, in their capacities as such, to comply with (as and when applicable),
and immediately following the Effective Date the Company will be in compliance
with, (a) Part 8 of the American Stock Exchange's "AMEX Company Guide," as
amended and (b) all other provisions of the American Stock Exchange corporate
governance requirements set forth in the AMEX Company Guide, as amended.
(bbb) Neither the Company, nor to the Company's knowledge, any
Insider, officer, agent, employee, or affiliate is aware of or has taken any
action, directly or indirectly, that 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"), including, without limitation, making use
of the mails or any means or instrumentality of interstate commerce corruptly in
furtherance of an offer, payment, promise to pay or authorization of the payment
of any money, or other property, gift, promise to give, or authorization of the
giving of anything of value to any "foreign official" (as such term is defined
in the FCPA) or any foreign political party or official thereof or any candidate
for foreign political office, in contravention of the FCPA; and the Company, the
Founders and, to the knowledge of the Company, its affiliates have conducted
their businesses in compliance with the FCPA and have instituted and maintain
policies and procedures designed to ensure, and which are reasonably expected to
continue to ensure, continued compliance therewith.
(ccc) The operations of the Company are and have been
conducted in compliance with applicable financial recordkeeping and reporting
requirements and the money laundering statutes and 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.
(ddd) Neither the Company, nor, after due inquiry, to the
Company's knowledge, the Founders or any director, officer, agent, employee,
affiliate is currently subject to any sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department ("OFAC"); and the Company
will not directly or indirectly use the proceeds of the offering, or lend,
contribute or otherwise make available such proceeds to any subsidiary, joint
venture partner or other person or entity, for the purpose of financing the
activities of any person currently subject to any sanctions administered by
OFAC.
11
(eee) Neither the Company, nor, after due inquiry, to the
Company's knowledge, the Founders or any officer or director of the Company has
violated: (a) the Bank Secrecy Act, as amended, (b) the Money Laundering Laws,
or (c) the Uniting and Strengthening of America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001,
and/or the rules and regulations promulgated under any such law, or any
successor law.
(fff) Except as disclosed in the Registration Statement, the
Statutory Prospectus and the Prospectus, the Company (i) does not have any
material lending or other relationship with any bank or lending affiliate of
Citigroup Global Markets Holdings Inc. and (ii) does not intend to use any of
the proceeds from the sale of the Securities hereunder to repay any outstanding
debt owed to any affiliate of Citigroup Global Markets Holdings Inc.
(ggg) To the Company's knowledge, all information contained in
the questionnaires (the "Questionnaires") completed by the Insiders and provided
to the Underwriters 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 Founders and the Company's
other officers, directors and special advisors to become inaccurate and
incorrect.
(hhh) Except as disclosed in the Registration Statement, the
Statutory Prospectus and the Prospectus, prior to the date hereof, none of the
Company, the Founders, the Company's officers and directors or any affiliate
thereof had, and as of the Closing Date, the Company, and such officers and
directors, the Founders and their affiliates will have had: (a) any specific
Business Combination under consideration or contemplation or (b) any
interactions or discussions with any target business relating to a possible
Business Combination.
(iii) Except as described in the Registration Statement, the
Statutory Prospectus and the Prospectus, there are no claims, payments,
arrangements, contracts, agreements or understandings relating to the payment of
a brokerage commission or finder's, consulting, origination or similar fee by
the Company or the Founders with respect to the sale of the Securities hereunder
or any other arrangements, agreements or understandings of the Company or, the
Founders that may affect the Underwriters' compensation, as determined by the
Financial Industry Regulatory Authority ("FINRA").
(jjj) 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
Underwriters.
(kkk) Except as disclosed in the FINRA Questionnaires provided
to the Representative, no officer, director, or beneficial owner of any class of
the Company's securities (whether debt or equity, registered or unregistered,
regardless of the time acquired or the source from which derived) (any such
individual or entity, a "Company Affiliate") is a member of, or a person
associated or affiliated with a member of, FINRA.
(lll) Except as disclosed in the FINRA Questionnaires, no
Company Affiliate is an owner of stock or other securities of any member of
FINRA (other than securities purchased on the open market).
12
(mmm) To the Company's knowledge, no Company Affiliate has
made a subordinated loan to any member of FINRA.
(nnn) No proceeds from the sale of the Underwritten Securities
(excluding underwriting compensation as disclosed in the Statutory Prospectus
and the Prospectus) will be paid to any FINRA member, or any persons associated
or affiliated with a member of FINRA.
(ooo) 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.
(ppp) Except as disclosed in the FINRA Questionnaires, 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.
(qqq) To the Company's knowledge, 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. "FINRA member participating in the
Offering" includes any associated person of an FINRA member that is
participating in the Offering, any members of such associated person's immediate
family, and any affiliate of an FINRA member that is participating in the
Offering.
(rrr) The Company has not taken, directly or indirectly, any
action designed to or that would constitute 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 Securities.
(sss) None of the Company's officers or directors 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 an employee, officer, director or special advisor of the Company or
a Founder, Sponsor, or Co-Investment Purchaser.
(ttt) The Company does not own an interest in any corporation,
partnership, limited liability company, joint venture, trust or other entity.
(uuu) No relationship, direct or indirect, exists between or
among any of the Company or any affiliate of the Company, on the one hand, and
any director, officer, shareholder, customer or supplier of the Company or any
affiliate of the Company, on the other hand, which is required by the Act or the
Exchange Act to be described in the Statutory Prospectus or the Prospectus which
is not 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, Statutory 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.
(vvv) The Company has not offered, or caused the Underwriters
to offer, the Underwritten Securities to any person or entity with the intention
of unlawfully influencing: (a) a
13
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.
(www) Upon delivery and payment for the Units on the Closing
Date and the filing of audited financial statements on Form 8-K with the
Commission, the Company will not be subject to Rule 419 under the Act and none
of the Company's outstanding securities will be deemed to be a "▇▇▇▇▇ stock" as
defined in Rule 3a51-1 under the Exchange Act.
Any certificate signed by any officer of the Company and
delivered to the Representative or counsel for the Underwriters in connection
with the offering of the Securities shall be deemed a representation and
warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. (a) Subject to the terms and conditions
and in reliance upon the representations and warranties herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
$9.60 per Unit, the amount of the Underwritten Securities set forth opposite
such Underwriter's name in Schedule I hereto. Notwithstanding the foregoing, the
Underwriters shall purchase from the Company, at a purchase price of $10.00 per
Unit, the amount of Underwritten Securities, if any, purchased from the
Underwriters by Kanders & Company, up to a maximum of 500,000 Units (such Units,
the "Kanders Units").
(b) Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth, the Company hereby grants
an option to the several Underwriters to purchase, severally and not jointly, up
to 1,500,000 Option Securities at the same purchase price per Unit as the
Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time on or before the 30th day after the date of the Prospectus upon
written notice by the Representative to the Company setting forth the number of
Option Securities as to which the several Underwriters are exercising the option
and the settlement date. The number of Option Securities to be purchased by each
Underwriter shall be the same percentage of the total number of shares of the
Option Securities to be purchased by the several Underwriters as such
Underwriter is purchasing of the Underwritten Securities, subject to such
adjustments as the Representative in its absolute discretion shall make to
eliminate any fractional shares.
(c) In addition to the discount from the public offering price
represented by the Purchase Price set forth in the first sentence of Section
2(a) of this Agreement, the Company hereby agrees to pay to the Underwriters a
deferred discount of $0.30 per Unit (including both Underwritten Securities
(other than any Kanders Units) and Option Securities) purchased hereunder (the
"Deferred Discount"). The Deferred Discount will be payable from amounts on
deposit in the Trust Account if and when the Company consummates a Business
Combination. The Underwriters hereby agree that if no Business Combination is
consummated within the time period provided in the Trust Agreement and the funds
held under the Trust Agreement are distributed to the holders of the Common
Stock sold pursuant to this Agreement (the "Public Stockholders"), (i) the
Underwriters will forfeit any rights or claims to the Deferred Discount and (ii)
the trustee under the Trust Agreement is authorized to distribute the Deferred
Discount to the Public Stockholders on a pro rata basis.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the third Business
Day prior to the Closing Date) shall be made at 10:00 AM, New York City
14
time, on [o], 2007, or at such time on such later date not more than three
Business Days after the foregoing date as the Representative shall designate,
which date and time may be postponed by agreement between the Representative and
the Company or as provided in Section 9 hereof (such date and time of delivery
and payment for the Securities being herein called the "Closing Date"). Delivery
of the Securities shall be made to the Representative for the respective
accounts of the several Underwriters against payment by the several Underwriters
through the Representative of the purchase price thereof by wire transfer
payable in same-day funds to an account specified by the Company and to the
Trust Account as described below in this Section 3. Delivery of the Underwritten
Securities and the Option Securities shall be made through the facilities of The
Depository Trust Company ("DTC") unless the Representative shall otherwise
instruct.
(a) Payment for the Underwritten Securities shall be made as
follows: $9.60 per Underwritten Security other than the Kanders Units, and
$10.00 per Kanders Unit, shall be deposited in the Trust Account pursuant to the
terms of the Trust Agreement and $600,000 shall be paid to the order of the
Company upon delivery to the Representative of certificates (in form and
substance satisfactory to the Representative) (or through the facilities of DTC)
for the account of the Underwriters representing the Underwritten Securities.
The Underwritten Securities shall be registered in such name or names and in
such authorized denominations as the Representative may request in writing at
least two Business Days prior to the Closing Date. The Company will permit the
Representative to examine and package the Underwritten Securities for delivery,
at least one Business Day prior to the Closing Date. The Company shall not be
obligated to sell or deliver the Underwritten Securities except upon tender of
payment by the Representative for all the Underwritten Securities.
(b) Payment for the Option Securities shall be made as
follows: $9.60 per Option Security shall be deposited in the Trust Account
pursuant to the terms of the Trust Agreement upon delivery to the Representative
of certificates (in form and substance satisfactory to the Representative) (or
through the facilities of DTC) for the account of the Underwriters representing
the Option Securities. The certificates representing the Option Securities to be
delivered will be in such denominations and registered in such names as the
Representative requests not less than two Business Days prior to the Closing
Date and will be made available to the Representative for inspection, checking
and packaging at the aforesaid office of the Company's transfer agent or
correspondent not less than one Business Day prior to such Closing Date.
If the option provided for in Section 2(b) hereof is exercised
after the third Business Day prior to the Closing Date, the Company will deliver
the Option Securities (at the expense of the Company) to the Representative, at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ the date specified by the
Representative (which shall be within three Business Days after exercise of said
option) for the respective accounts of the several Underwriters, against payment
by the several Underwriters through the Representative of the purchase price
thereof to the Trust Account as described above in Section 3(b). If settlement
for the Option Securities occurs after the Closing Date, the Company will
deliver to the Representative on the settlement date for the Option Securities,
and the obligation of the Underwriters to purchase the Option Securities shall
be conditioned upon receipt of, supplemental opinions, certificates and letters
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus (the "Offering").
15
5. Agreements. The Company agrees with the several
Underwriters that:
(a) Prior to the termination of the offering of the
Securities, the Company will not file any amendment of the Registration
Statement or supplement to the Prospectus or any Rule 462(b) Registration
Statement unless the Company has furnished you a copy for your review prior to
filing and will not file any such proposed amendment or supplement to which you
reasonably object. The Company will cause the Prospectus, properly completed,
and any supplement thereto to be filed in a form approved by the Representative
with the Commission pursuant to the applicable paragraph of Rule 424(b) within
the time period prescribed and will provide evidence satisfactory to the
Representative of such timely filing. The Company will promptly advise the
Representative (i) when the Prospectus, and any supplement thereto, shall have
been filed (if required) with the Commission pursuant to Rule 424(b) or when any
Rule 462(b) Registration Statement shall have been filed with the Commission,
(ii) when, prior to termination of the offering of the Securities, any amendment
to the Registration Statement shall have been filed or become effective, (iii)
of any request by the Commission or its staff for any amendment of the
Registration Statement, or any Rule 462(b) Registration Statement, or for any
supplement to the Prospectus or for any additional information, (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any notice objecting to its use or the institution
or threatening of any proceeding for that purpose and (v) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the institution or threatening
of any proceeding for such purpose. The Company will use its commercially
reasonable efforts to prevent the issuance of any such stop order or the
occurrence of any such suspension or objection to the use of the Registration
Statement and, upon such issuance, occurrence or notice of objection, to obtain
as soon as reasonably possible the withdrawal of such stop order or relief from
such occurrence or objection, including, if necessary, by filing an amendment to
the Registration Statement or a new registration statement and using its
commercially reasonable efforts to have such amendment or new registration
statement declared effective as soon as practicable.
(b) If, at any time prior to the filing of the Prospectus
pursuant to Rule 424(b), any event occurs as a result of which the Statutory
Prospectus would include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein in the light of
the circumstances under which they were made at such time not misleading, the
Company will (i) notify promptly the Representative so that any use of the
Statutory Prospectus may cease until it is amended or supplemented; (ii) amend
or supplement the Statutory Prospectus to correct such statement or omission;
and (iii) supply any amendment or supplement to you in such quantities as you
may reasonably request.
(c) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act (including in circumstances
where such requirement may be satisfied pursuant to Rule 172), any event occurs
as a result of which the Prospectus as then supplemented would include any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein in the light of the circumstances under which
they were made or the circumstances then prevailing not misleading, or if it
shall be necessary to amend the Registration Statement or supplement the
Prospectus to comply with the Act or the rules thereunder, the Company promptly
will (i) notify the Representative of any such event; (ii) prepare and file with
the Commission, subject to the second sentence of paragraph (a) of this Section
5, an amendment or supplement which will correct such statement or omission or
effect such compliance; and (iii) supply any supplemented Prospectus to you in
such quantities as you may reasonably request.
(d) As soon as practicable, the Company will make generally
available to its security holders and to the Representative an earnings
statement or statements of the Company and its subsidiaries which will satisfy
the provisions of Section 11(a) of the Act and Rule 158.
16
(e) The Company will not make any offer relating to the Units
that constitutes or would constitute a Free Writing Prospectus or a portion
thereof required to be filed by the Company with the Commission or retained by
the Company under Rule 433 of the Securities Act.
(f) The Company will furnish to the Representative and counsel
for the Underwriters, without charge, signed copies of the Registration
Statement (including exhibits thereto) and to each other Underwriter a copy of
the Registration Statement (without exhibits thereto) and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the Act
(including in circumstances where such requirement may be satisfied pursuant to
Rule 172), as many copies of each Preliminary Prospectus, the Prospectus and any
supplement thereto as the Representative may reasonably request. The Company
will pay the expenses of printing or other production of all documents relating
to the offering.
(g) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such jurisdictions as
the Representative may designate and will maintain such qualifications in effect
so long as required for the distribution of the Securities; provided that in no
event shall the Company be obligated to qualify to do business in any
jurisdiction where it is not now so qualified or to take any action that would
subject it to service of process in suits, other than those arising out of the
offering or sale of the Securities, in any jurisdiction where it is not now so
subject.
(h) Except as set forth below, the Company will not, without
the prior written consent of the Representative, (i) offer, sell, contract to
sell, pledge, hypothecate, grant any option to purchase or otherwise dispose of
or transfer (or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the Company or any affiliate of the Company or any person in
privity with the Company or any affiliate of the Company), directly or
indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act with respect to,
any other Units, shares of Common Stock, Warrants or any securities convertible
into, or exercisable, or exchangeable for, shares of Common Stock or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Units, Common Stock
or Warrants, Common Stock issuable upon exercise of the Warrants or any
securities convertible into or exercisable or exchangeable for Common Stock or
Warrants or other rights to purchase Common Stock or any such securities,
whether any such transaction is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise; or publicly announce an intention
to effect any such transaction in (i) or (ii), during the period commencing on
the date hereof and ending 180 days after the date of this Agreement, provided,
however, that if (1) during the last 17 days of the 180-day restricted period
the Company issues an earnings release or material news or a material event
relating to the Company occurs, or (2) prior to the expiration of the 180-day
restricted period, the Company announces that it will release earnings results
during the 16-day period beginning on the last day of the 180-day restricted
period, then the foregoing restrictions shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event; provided
further, however, that the Company may (i) issue and sell the Sponsors' Warrants
and Co-Investment Units and may issue and sell the Option Securities on exercise
of the option provided for in Section 2(b) hereof and (ii) may contract to sell,
and issue, shares of Common Stock in connection with the consummation of its
initial Business Combination. The Company will provide the Representative and
any co-managers and each individual subject to the restricted period pursuant to
the lockup letters in the form attached as Exhibit B with prior notice of any
such announcement that gives rise to an extension of the restricted period.
17
(i) The Company will not take, directly or indirectly, any
action designed to or that would constitute or that could 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 Securities.
(j) The Company agrees to pay the costs and expenses relating
to the following matters: (i) the preparation, printing or reproduction and
filing with the Commission of the Registration Statement (including financial
statements and exhibits thereto), each Preliminary Prospectus, the Prospectus
and each amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the Registration Statement, each
Preliminary Prospectus, the Prospectus and all amendments or supplements to any
of them, as may, in each case, be reasonably requested for use in connection
with the offering and sale of the Securities; (iii) the preparation, printing,
authentication, issuance and delivery of certificates for the Securities,
including any stamp or transfer taxes in connection with the original issuance
and sale of the Securities; (iv) the printing (or reproduction) and delivery of
this Agreement and all other agreements or documents printed (or reproduced) and
delivered in connection with the offering of the Securities; (v) the
registration of the Securities under the Exchange Act and the listing of the
Securities on the American Stock Exchange; (vi) any registration or
qualification of the Securities for offer and sale under the securities or blue
sky laws of the several states (including filing fees and the reasonable fees
and expenses of counsel for the Underwriters relating to such registration and
qualification); (vii) any filings required to be made with FINRA (including
filing fees and the reasonable fees and expenses of counsel for the Underwriters
relating to such filings); (viii) 50% of the cost of privately chartered
airplanes incurred in connection with presentations to prospective purchasers of
the Securities; (ix) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company; and (x) all other costs and expenses incident to the performance by the
Company of its obligations hereunder.
(k) For a period of at least five years from the Effective
Date, or until such earlier time upon which the Company is required to be
liquidated or ceases to be subject to public company reporting obligations, the
Company will use its best efforts to maintain the registration of the Units,
Common Stock and Warrants under the provisions of the Exchange Act. The Company
will not deregister the Units, Common Stock or Warrants under the Exchange Act
(except in connection with a going private transaction after the completion of
the Business Combination) without the prior written consent of the
Representative.
(l) The Company shall have, by the date hereof, retained its
registered independent public accountants to audit the financial statements of
the Company as of the Closing Date (the "Audited Financial Statements")
reflecting the receipt by the Company of the proceeds of the initial public
offering. As soon as the Audited Financial Statements become available, the
Company shall promptly (but in any event within four business days after the
Closing Date) file a Current Report on Form 8-K with the Commission, which
Report shall contain the Company's Audited Financial Statements. Additionally,
upon the Company's receipt of the proceeds from the exercise of all or any
portion of the option provided for in Section 2(b) hereof, the Company shall
promptly (but in any event within four business days after the Closing Date for
the sale of the Option Securities) file a Current Report on Form 8-K with the
Commission, which report shall disclose the Company's sale of the Option
Securities and its receipt of the proceeds therefrom.
(m) For a period of at least five years from the Effective
Date or until such earlier time that the Company is required to be liquidated or
ceases to be subject to public company reporting obligations, the Company, at
its expense, shall cause its regularly engaged registered independent
18
certified public accountants to review (but not audit) the Company's financial
statements for each of the first three fiscal quarters prior to the announcement
of quarterly financial information, the filing of the Company's Form 10-Q
quarterly report and the mailing, if any, of quarterly financial information to
stockholders.
(n) For a period of five years from the Effective Date or
until such earlier time that the Company is required to be liquidated or ceases
to be subject to public company reporting obligations, the Company will furnish
to the Representative such copies of 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 (provided that by filing such financial
statements and other periodic and special reports with the Commission via ▇▇▇▇▇
the Company shall be deemed to have delivered such items to the Representative)
and such additional documents and information with respect to the Company as the
Representative may from time to time reasonably request.
(o) For a period of at least five years from the Effective
Date or until such earlier time that the Company is required to be liquidated or
ceases to be subject to public company reporting obligations, the Company shall
retain a transfer and warrant agent.
(p) Until consummation of the initial Business Combination, in
no event will the fees payable under the Services Agreement be more than $10,000
per month in the aggregate. Upon the consummation of the initial Business
Combination, the Services Agreement shall terminate.
(q) Except as set forth in this subsection and the Services
Agreement, the Company shall not pay the Founders, Kanders & Company, Inc., Ivy
Capital Partners or any of the Company's officers or directors or any of their
affiliates any fees or compensation for services rendered to the Company prior
to, or in connection with, the consummation of a Business Combination; provided
however, that officers, directors and affiliates may receive reimbursement for
out-of-pocket expenses incurred by them in connection with an initial Business
Combination to the extent that such expenses do not exceed the amount of
available proceeds not deposited in the Trust Account and the amount of interest
income that may be released from the Trust Account as described in the
Registration Statement; provided further, however, that if the initial Business
Combination is consummated, to the extent that such out-of-pocket expenses were
not reimbursed due to the operation of the immediately preceding proviso, the
Company may reimburse such out-of-pocket expenses.
(r) The Company will apply the net proceeds from the offering
received by it in a manner consistent with the applications described under the
caption "Use of Proceeds" in the Statutory Prospectus and the Prospectus.
(s) 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
merger candidate or to provide any other merger and acquisition services, the
Company will provide the following to (A) FINRA for a period of ninety days
following the date of the Prospectus and (B) the Representative at any time
prior to the consummation of a Business Combination: (i) complete details of all
services and copies of agreements governing such services; and (ii)
justification as to why the person or entity providing the merger and
acquisition services should not be considered an "underwriter and related
person" with respect to the Company's initial public offering, as such term is
defined in Rule 2710 of 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
stockholder approval for the Business Combination.
19
(t) The Company shall advise FINRA if it is aware that any 5%
or greater stockholder of the Company becomes an affiliate or associated person
of an FINRA member participating in the distribution of the Company's
Securities.
(u) The Company shall cause the proceeds of the offering to be
held in the Trust Account to be invested only in United States "government
securities," within the meaning of Section 2(a)(16) of the Investment Company
Act, having maturity of 180 days or less, or in one or more money market funds
meeting the conditions specified in Rule 2a-7 of the Investment Company Act, as
set forth in the Trust Agreement and disclosed in the Statutory Prospectus and
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.
(v) During the period prior to the Company's initial Business
Combination, the Company may instruct the trustee under the Trust Agreement that
up to an aggregate of $1,750,000 of interest income (after appropriate reserve
for payment of taxes) be released to the Company solely for the purposes
described in the "Use of Proceeds" section of the Registration Statement under
the caption "Use of net proceeds not held in trust and up to $1,750,000 of the
interest earned on the Trust Account that may be released to us to cover our
working capital requirements". After an aggregate of $1,750,000 is released to
the Company, any interest income earned on the amounts held in the Trust Account
(net of taxes payable thereon) will remain in the Trust Account until the
earlier of the consummation of the Company's initial Business Combination or the
Liquidation.
(w) The Company will reserve and keep available that maximum
number of its authorized but unissued securities which are issuable upon
exercise of any of the Warrants, Founders' Warrants, Sponsors' Warrant and
Co-Investment Warrants outstanding from time to time.
(x) Prior to the consummation of a Business Combination or the
Liquidation, the Company shall not issue any shares of Common Stock, Warrants or
any options or other securities convertible into Common Stock, or any shares of
preferred stock which participate in any manner in the Trust Account or which
vote as a class with the Common Stock on a Business Combination.
(y) Prior to the consummation of a Business Combination or the
Liquidation, the Company shall cause its audit committee to review and approve
all expense reimbursements made to its officers, directors and affiliates and
any expense reimbursements payable to members of the Company's audit committee
will be reviewed and approved by the Company's board of directors, with any
interested directors abstaining from such review and approval.
(z) 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 "▇▇▇▇▇ stock" as defined in Rule 3a-51-1 under the Exchange
Act during such period.
(aa) The Company will maintain "disclosure controls and
procedures" (as defined under Rule 13A-15(e) under the Exchange Act) and 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 GAAP
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
20
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(bb) The Company will use its best efforts to effect and
maintain the listing of the Units, Common Stock and Warrants on the American
Stock Exchange.
(cc) As soon as legally required to do so, the Company and its
directors and officers, in their capacities as such, shall take all actions
necessary to comply with any provision of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the
rules and regulations promulgated in connection therewith (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act"), including Section 402 related to loans and Sections 302 and 906 related
to certifications.
(dd) The Company and any of the Company's directors or
officers, in their capacities as such, shall take all actions necessary to
comply with any provision of the (i) Part 8 of the AMEX Company Guide and (b)
all other provisions of the American Stock Exchange corporate governance
requirements set forth in the AMEX Company Guide.
(ee) 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 Certificate of Incorporation, as amended, or Bylaws, as amended.
Except in connection with the consummation of a Business Combination, the
Company will not amend its Amended and Restated Certificate of Incorporation
without the prior written consent of the Representative, which consent shall not
be unreasonably withheld.
(1) The Company hereby agrees that prior to commencing its due
diligence investigation of any operating business which the Company seeks
to acquire for its initial Business Combination ("Target Business") or
obtaining the services of any vendor, it will use its commercially
reasonable efforts to cause the Target Business or vendor to execute a
waiver letter in the form attached hereto as Exhibit A.
(2) Prior to the consummation of the initial Business
Combination, the Company will submit such transaction to the Company's
stockholders for their approval ("Business Combination Vote") even if the
nature of the acquisition is such as would not ordinarily require
stockholder approval under applicable state law; and in the event that the
Company does not effect a Business Combination by twenty-four (24) months
from the date of the Prospectus, the Company will be liquidated and will
distribute to all Public Stockholders an aggregate sum equal to the
Company's "Liquidation Value." The Company's "Liquidation Value" shall mean
the greater of (i) the Company's book value, as determined by the Company
and agreed by ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ or the independent registered public
accounting firm then engaged by the Company pursuant to an audit, or (ii)
the amount of funds in the Trust Account (including (a) the proceeds held
in the Trust Account from the Offering and the sale of the Sponsors'
Warrants, (b) the amount held in the Trust Account representing the
Deferred Discount and (c) any interest income earned on the funds held in
the Trust Account, net of taxes payable thereon, that are not released to
the Company to cover its operating expenses in accordance with Section
5(v)). Only Public Stockholders holding shares of Common Stock shall be
entitled to receive liquidating distributions and the Company shall pay no
liquidating distributions with respect to any other shares of Common Stock
of the Company. With respect to the initial Business Combination Vote, the
Founders have agreed to vote all of their Founders' Common Stock in
accordance with the vote cast by a majority of the shares of Common Stock
held by the Public Stockholders and any other shares of Common Stock held
by them, whenever and however acquired, in favor of such Business
Combination. At the time the Company seeks approval of the initial Business
Combination, the Company will offer to each Public Stockholder holding
shares of Common
21
Stock the right to convert its shares at a per share conversion price (the
"Conversion Price") equal to (A) the amount in the Trust Account, inclusive
of (x) the proceeds from this offering held in the Trust Account, including
the proceeds from the sale of the Sponsors' Warrants, (y) the amount held
in the Trust Account representing the Deferred Discount and (z) any
interest income earned on the funds held in the Trust Account, net of taxes
payable thereon, that are not released to the Company to cover its
operating expenses in accordance with Section 5(v), divided by (B) the
total number of Units sold in the offering. If a majority of the shares
voted by the Public Stockholders are voted to approve the initial Business
Combination, and if Public Stockholders holding less than 30% of the shares
of Common Stock sold in the Offering vote against such approval of a
Business Combination and elect to convert their shares of Common Stock, the
Company will proceed with such Business Combination. If the Company elects
to so proceed, it will convert shares, based upon the Conversion Price,
from those Public Stockholders who affirmatively requested such conversion
and who voted against the Business Combination. Only Public Stockholders
holding shares of Common Stock other than those derived from the Kanders
Units shall be entitled to receive distributions from the Trust Account in
connection with the approval of an initial Business Combination, and the
Company shall pay no distributions with respect to any other holders or
shares of capital stock of the Company. If Public Stockholders holding 30%
or more vote against approval of a potential Business Combination and elect
to convert their shares, the Company will not proceed with such Business
Combination and will not convert such shares.
(3) The Company agrees that the initial Target Business(es) or
any portion(s) thereof that it acquires in a Business Combination must have
an aggregate fair market value equal to at least 80% of the amount in the
Trust Account (excluding the Underwriters' Deferred Discount) at the time
of such acquisition. Fair market value 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 and the Board of Directors shall be permitted to rely
upon the advice of the Company's financial advisors in connection
therewith. If the Board of Directors of the Company is not able to
independently determine that the initial Target Business(es) or any
portion(s) thereof has a fair market value of at least 80% of the Trust
Account at the time of such Business Combination, 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
firms as to the fair market value of the target business if the Company's
Board of Directors independently determines that the target business does
have sufficient fair market value.
(4) Within five Business Days following the consummation by
the Company of a Business Combination, the Company shall cause an
announcement ("Business Combination Announcement") to be placed, at its
cost, in The Wall Street Journal, The New York Times and a third national
publication to be selected by the Representative announcing the
consummation of the Business Combination and indicating that the
Underwriters were the underwriters in the offering. The Company shall
supply the Representative with a draft of the Business Combination
Announcement and provide the Representative with a reasonable advance
opportunity to comment thereon. The Company will not place the Business
Combination Announcement without the final approval of the Representative,
which approval will not be unreasonably withheld or delayed.
(ff) Upon the consummation of the initial Business
Combination, the Company will pay to the Representative, on behalf of the
Underwriters, the Deferred
22
Discount. Payment of the Deferred Discount will be made out of the proceeds
of this offering held in the Trust Account. The Underwriters shall have no
claim to payment of any interest earned on the portion of the proceeds held
in the Trust Account representing the Deferred Discount. If the Company
fails to consummate its initial Business Combination within the required
time period set forth in the Registration Statement, the Deferred Discount
will not be paid to the Representative and will, instead, be included in
the Liquidation distribution of the proceeds held in the Trust Account made
to the Public Stockholders. In connection with any such Liquidation, the
Underwriters forfeit any rights or claims to the Deferred Discount,
including any accrued interest thereon.
6. Conditions to the Obligations of the Underwriters. The
obligations of the Underwriters to purchase the Underwritten Securities and
the Option Securities, as the case may be, shall be subject to the accuracy
of the representations and warranties on the part of the Company contained
herein as of the Execution Time, the Closing Date and any settlement date
pursuant to Section 3 hereof, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) The Prospectus, and any supplement thereto, have been
filed in the manner and within the time period required by Rule 424(b); and
no stop order suspending the effectiveness of the Registration Statement or
any notice objecting to its use shall have been issued and no proceedings
for that purpose shall have been instituted or threatened.
(b) The Company shall have requested and caused ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, counsel for the Company, to have furnished to the Representative
their opinion, dated the Effective Date and addressed to the Representative
in the form attached as Exhibit C. In rendering such opinion, such counsel
may rely (A) as to matters involving the application of laws of any
jurisdiction other than the Delaware General Corporation Law, the State of
New York, and the Federal laws of the United States, to the extent they
deem proper and specified in such opinion, upon the opinion of other
counsel of good standing whom they believe to be reliable and who are
reasonably satisfactory to counsel for the Underwriters, and (B) as to
matters of fact, to the extent they deem proper, on certificates of
responsible officers of the Company and public officials. References to the
Prospectus in this paragraph (b) shall also include any supplements thereto
at the Closing Date.
(c) The Representative shall have received from ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters, such opinion or opinions,
dated the Closing Date and addressed to the Representative, with respect to
the issuance and sale of the Securities, the Registration Statement, the
Statutory Prospectus, the Prospectus (together with any supplement thereto)
and other related matters as the Representative may reasonably require, and
the Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(d) The Company shall have furnished to the Representative a
certificate of the Company, signed by the Chief Executive Officer and the
principal financial or accounting officer of the Company, dated the Closing
Date, to the effect that the signers of such certificate have carefully
examined the Registration Statement each Preliminary Prospectus, the
Prospectus and any amendment or supplement thereto, and this Agreement and
that:
(i) the representations and warranties of the Company
in this Agreement are true and correct on and as of the Closing Date
with the same effect as if made on the Closing Date and the Company
has complied with all the agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to the Closing
Date;
23
(ii) no stop order suspending the effectiveness of the
Registration Statement or any notice objecting to its use has been
issued and no proceedings for that purpose have been instituted or, to
the Company's knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Statutory Prospectus and the Prospectus
(exclusive of any supplement thereto), there has been no material
adverse effect on the condition (financial or otherwise), prospects,
earnings, business or properties of the Company, whether or not
arising from transactions in the ordinary course of business, except
as set forth in or contemplated in the Statutory Prospectus and the
Prospectus (exclusive of any supplement thereto).
(e) The Company shall have requested and caused ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ to have furnished to the Representative, at the Execution Time and
at the Closing Date, letters, dated respectively as of the Execution Time and as
of the Closing Date, in form and substance reasonably satisfactory to the
Representative, confirming that they are registered independent accountants
within the meaning of the Act and the Exchange Act and the applicable rules and
regulations adopted by the Commission thereunder and that they have performed a
review of the unaudited interim financial information of the Company for the [
]-month period ended [ ] and as at [ ], in accordance with Statement on Auditing
Standards No. 100 and stating in effect that:
(i) in their opinion the audited financial statements
and financial statement schedules included in the Registration
Statement, the Statutory Prospectus and the Prospectus and reported on
by them comply as to form with the applicable accounting requirements
of the Act and the related rules and regulations adopted by the
Commission;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company; their limited
review, in accordance with standards established under Statement on
Auditing Standards No. 100, of the unaudited interim financial
information for the -month period ended [ ] and as at [ ] [,as
indicated in their report dated ] ; carrying out certain specified
procedures (but not an examination in accordance with generally
accepted auditing standards) which would not necessarily reveal
matters of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings, if any, of the
stockholders, directors and audit, governance and nominating
committees of the Company; and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters
of the Company and its subsidiaries as to transactions and events
subsequent to [ ], nothing came to their attention which caused them
to believe that:
(1) any unaudited financial statements included in the
Registration Statement, the Statutory Prospectus and the Prospectus do not
comply as to form with applicable accounting requirements of the Act and
with the related rules and regulations adopted by the Commission with
respect to registration statements on Form S-1; and said unaudited
financial statements are not in conformity with generally accepted
accounting principles applied on a basis substantially consistent with that
of the audited financial statements included in the Registration Statement,
the Statutory Prospectus and the Prospectus; and
(2) with respect to the period subsequent to [ ], there were
any changes, at a specified date not more than five days prior to the date
of the letter, in the long-term debt of the Company or capital stock of the
Company or decreases in the stockholders' equity of the Company net loss or
loss before income taxes or in total or per share amounts of net loss to
the Company as compared with the amounts shown on the [ ] [insert same date
as above]
24
balance sheet included in the Registration Statement, the Statutory
Prospectus and the Prospectus, or for the period from [ ] [insert date one
day after the date inserted above] to such specified date there were any
decreases, as compared with [ ] [insert the appropriate comparative period;
e.g.: the corresponding period in the preceding year; or, the corresponding
period in the preceding quarter; or, if no appropriate period exists,
insert dollar amounts for each item] in [net revenues or income before
income taxes or in total or per share amounts of net income of the Company
and its subsidiaries] [add to the list of items in brackets above any other
appropriate income statement items; e.g.: operating income; net interest
income; net interest income after provision for loan losses], except in all
instances for changes or decreases set forth in such letter, in which case
the letter shall be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed necessary by the
Representative;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which
is limited to accounting, financial or statistical information derived
from the general accounting records of the Company) set forth in the
Registration Statement, the Statutory Prospectus and the Prospectus,
including the information set forth under the captions "Dilution" and
"Capitalization" in the Statutory Prospectus and the Prospectus,
agrees with the accounting records of the Company, excluding any
questions of legal interpretation.
References to the Prospectus in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the dates
as of which information is given in the Registration Statement (exclusive of any
amendment thereof), the Statutory Prospectus and the Prospectus (exclusive of
any supplement thereto), there shall not have been (i) any change or decrease
specified in the letter or letters referred to in paragraph (e) of this Section
6 or (ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company, whether or not arising from transactions in the
ordinary course of business, except as set forth in or contemplated in the
Statutory Prospectus and the Prospectus (exclusive of any supplement thereto)
the effect of which, in any case referred to in clause (i) or (ii) above, is, in
the sole judgment of the Representative, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Registration Statement (exclusive of any
amendment thereof), the Statutory Prospectus and the Prospectus (exclusive of
any supplement thereto).
(g) Prior to the Closing Date, the Company shall have
furnished to the Representative such further information, certificates and
documents as the Representative may reasonably request.
(h) FINRA shall not have raised any objection with respect to
the fairness or reasonableness of the underwriting or other arrangements of the
transactions contemplated hereby.
(i) The Securities shall be duly listed, subject to notice of
issuance, on the American Stock Exchange, satisfactory evidence of which shall
have been provided to the Representative.
(j) On the Effective Date, the Company shall have delivered to
the Representative executed copies of the Trust Agreement, the Warrant
Agreement, the Securities Purchase Agreement, the Warrant Subscription
Agreement, the Co-Investment Subscription Agreement, the Escrow Agreement, the
Services Agreement, and each of the Insider Letters.
25
(k) At the Execution Time, the Company shall have furnished to
the Representative a letter substantially in the form of Exhibit B hereto from
each officer and director of the Company and the Founders addressed to the
Representative.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as provided in this Agreement, or if any of the
opinions and certificates mentioned above or elsewhere in this Agreement shall
not be reasonably satisfactory in form and substance to the Representative and
counsel for the Underwriters, this Agreement and all obligations of the
Underwriters hereunder may be canceled at, or at any time prior to, the Closing
Date by the Representative. Notice of such cancellation shall be given to the
Company in writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, unless otherwise
indicated herein, on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 10 hereof or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision hereof other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally through the Representative on demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
reasonably incurred by them in connection with the proposed purchase and sale of
the Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers, employees
and agents of each Underwriter and each person who controls any Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any
Preliminary Prospectus or the Prospectus or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and agrees to reimburse
each such indemnified party, as incurred, for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representative
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly agrees to
indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement, and each person who controls the
Company within the meaning of either the Act or the Exchange Act, to the same
extent as the foregoing indemnity from the Company to each Underwriter, but only
with reference to written information relating to such Underwriter furnished to
the Company by or on behalf of such Underwriter through the Representative
specifically for inclusion in the documents referred to in the
26
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company acknowledges
that the statements set forth (i) in the last paragraph of the cover page
regarding delivery of the Securities and, under the heading "Underwriting", (ii)
the list of Underwriters and their respective participation in the sale of the
Securities, (iii) the sentences related to concessions and reallowances and (iv)
the paragraph related to stabilization, syndicate covering transactions and
penalty bids in the Preliminary Prospectus and the Prospectus constitute the
only information furnished in writing by or on behalf of the several
Underwriters for inclusion in the Preliminary Prospectus or the Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to appoint
counsel to represent the indemnified party in an action, the indemnified party
shall have the right to employ separate counsel (including local counsel), and
the indemnifying party shall bear the reasonable fees, costs and expenses of
such separate counsel if (i) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party authorizes (in its sole discretion) the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties (which
consent shall not be unreasonably withheld or delayed), settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a),
(b) or (c) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company and the Underwriters severally
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending the same) (collectively "Losses") to which the
Company and one or more of the Underwriters may be subject in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and by the Underwriters on the other from the offering of the
Securities; provided, however, that in no case shall any Underwriter (except as
may be provided in any agreement among underwriters relating to the offering of
the Securities) be responsible for any amount in excess of
27
the underwriting discount or commission applicable to the Securities purchased
by such Underwriter hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the
Underwriters severally shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Underwriters on the other in connection with
the statements or omissions which resulted in such Losses as well as any other
relevant equitable considerations. Benefits received by the Company shall be
deemed to be equal to the total net proceeds from the offering (before deducting
expenses) received by it, and benefits received by the Underwriters shall be
deemed to be equal to the total underwriting discounts and commissions, in each
case as set forth on the cover page of the Prospectus. Relative fault shall be
determined by reference to, among other things, whether any untrue or any
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information provided by the Company on the
one hand or the Underwriters on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of 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. For purposes of
this Section 8, each person who controls an Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
five Business Days, as the Representative shall determine in order that the
required changes in the Registration Statement and the Prospectus or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any defaulting Underwriter of its liability, if any, to
the Company and any nondefaulting Underwriter for damages occasioned by its
default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representative, by notice given to
the Company prior to delivery of and payment for the Securities, if at any time
prior to such delivery and payment (i) trading in the Company's Units, Common
Stock or Warrants shall have been suspended by the Commission or the American
Stock Exchange or trading in securities generally on the New York Stock Exchange
or the American Stock Exchange shall have been suspended or limited or minimum
prices shall have been established on either of such
28
exchanges, (ii) a banking moratorium shall have been declared either by Federal
or New York State authorities or (iii) there shall have occurred any outbreak or
escalation of hostilities, declaration by the United States of a national
emergency or war, or other calamity or crisis the effect of which on financial
markets is such as to make it, in the sole judgment of the Representative,
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Statutory Prospectus or the Prospectus
(exclusive of any supplement thereto).
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriters set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing
and effective only on receipt, and, if sent to the Representative, will be
mailed, delivered or telefaxed to the Citigroup Global Markets Inc. General
Counsel (fax no.: (▇▇▇) ▇▇▇-▇▇▇▇) and confirmed to the General Counsel,
Citigroup Global Markets Inc., at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇▇▇, Attention: General Counsel; or, if sent to the Company, will be mailed,
delivered or telefaxed to (▇▇▇) ▇▇▇-▇▇▇▇ and confirmed to it at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, telefaxed to (203)
428-2022, Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
13. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
14. No Fiduciary Duty. The Company hereby acknowledges that
(a) the purchase and sale of the Securities pursuant to this Agreement is an
arm's-length commercial transaction between the Company, on the one hand, and
the Underwriters and any affiliate through which it may be acting, on the other,
(b) the Underwriters are acting as principal and not as an agent or fiduciary of
the Company and (c) the Company's engagement of the Underwriters in connection
with the offering and the process leading up to the offering is as independent
contractors and not in any other capacity. Furthermore, the Company agrees that
it is solely responsible for making its own judgments in connection with the
offering (irrespective of whether any of the Underwriters has advised or is
currently advising the Company on related or other matters). The Company agrees
that it will not claim that the Underwriters have rendered advisory services of
any nature or respect, or owe an agency, fiduciary or similar duty to the
Company, in connection with such transaction or the process leading thereto.
15. Integration. This Agreement supersedes all prior
agreements and understandings (whether written or oral) between the Company and
the Underwriters, or any of them, with respect to the subject matter hereof.
16. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed within the State of New York.
29
17. Waiver of Jury Trial. The Company hereby irrevocably
waives, to the fullest extent permitted by applicable law, any and all right to
trial by jury in any legal proceeding between the Company and the Underwriters
arising out of or relating to this Agreement or the transactions contemplated
hereby.
18. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement.
19. Headings. The section headings used herein are for
convenience only and shall not affect the construction hereof.
20. Definitions. The terms that follow, when used in this
Agreement, shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York City [or ].
"Commission" shall mean the Securities and Exchange
Commission.
"Effective Date" shall mean each date and time that the
Registration Statement, any post-effective amendment or amendments thereto and
any Rule 462(b) Registration Statement became or becomes effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Free Writing Prospectus" shall mean a free writing
prospectus, as defined in Rule 405.
"Liquidation" shall mean the distributions of the Trust
Account to the Public Stockholders if the Company fails to consummate a Business
Combination.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph 1(a) above and any preliminary prospectus included in
the Registration Statement at the Effective Date that omits Rule 430A
Information.
"Prospectus" shall mean the prospectus relating to the
Securities that is first filed pursuant to Rule 424(b) after the Execution Time.
"Registration Statement" shall mean the registration statement
referred to in paragraph 1(a) above, including exhibits and financial statements
and any prospectus supplement relating to the Securities that is filed with the
Commission pursuant to Rule 424(b) and deemed part of such registration
statement pursuant to Rule 430A, as amended at the Execution Time and, in the
event any post-effective amendment thereto or any Rule 462(b) Registration
Statement becomes effective prior to the Closing
30
Date, shall also mean such registration statement as so amended or such Rule
462(b) Registration Statement, as the case may be.
"Rule 158", "Rule 163", "Rule 164", "Rule 172", "Rule 405",
"Rule 415", "Rule 424", "Rule 430A" and "Rule 433" refer to such rules under the
Act.
"Rule 430A Information" shall mean information with respect to
the Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration
statement and any amendments thereto filed pursuant to Rule 462(b) relating to
the offering covered by the registration statement referred to in Section 1(a)
hereof.
"Statutory Prospectus" shall mean the Preliminary Prospectus
dated ___________, 2007, relating to the Securities that was first filed as part
of Registration Statement with the Commission on ___________, 2007.
31
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
Highlands Acquisition Corp.
By:
----------------------------------------
Name:
Title:
32
Citigroup Global Markets Inc.
By:
--------------------------------------------------
Name:
Title:
For itself and the other several Underwriters named in Schedule I to the
foregoing Agreement.
33
SCHEDULE I
Number of Underwritten Securities
Underwriters to be Purchased
------------ ---------------
Citigroup Global Markets Inc..............
▇▇▇▇▇▇▇ ▇▇▇▇▇
==========
Total............................ 10,000,000
34
EXHIBIT A
FORM OF TRUST CLAIM WAIVER LETTER
[Letterhead of prospective vendor or target business.]
[Address]
Ladies and Gentlemen:
Reference is made to the Prospectus of Highlands Acquisition
Corp. (the "Company"), dated __________________, 2007 (the "Prospectus").
We acknowledge that we have read the Prospectus and understand
that the Company has established a Trust Account for the benefit of the
Company's public stockholders at [ ], maintained by Continental Stock Transfer &
Trust Company acting as trustee (the "Trust Account") and that the Company may
disburse monies from the Trust Account only:
(a) in the event the Company consummates a "business combination" (as such term
is used in the Prospectus), to any public stockholders who exercise their
conversion rights, to the Underwriters in respect of their deferred underwriting
discounts and commissions and to the Company in the amount remaining in the
Trust Account following such payments to the public stockholders and the
Underwriters; or
(b) in the event of the Company's liquidation, to the public stockholders.
For and in consideration of the Company [AGREEING TO EVALUATE
US FOR PURPOSES OF CONSUMMATING AN INITIAL BUSINESS COMBINATION][ENGAGING OUR
SERVICES], we hereby agree that we do not have any right, title, interest or
claim of any kind in or to any monies in the Trust Account ("Claim") and hereby
waive any Claim we 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.
Very truly yours,
[NAME]
By:
---------------------------------------
Name:
Title:
EXHIBIT B
FORM OF LOCK-UP AGREEMENT
[Letterhead of officer, director or major shareholder of
Highlands Acquisition Corp.]
Highlands Acquisition Corp.
Public Offering of Common Stock
, 2007
Citigroup Global Markets Inc.
As Representative of the several Underwriters,
c/o Citigroup Global Markets Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This Lock-Up Agreement (this "Lock-Up Agreement") is being
delivered to you in connection with the proposed Underwriting Agreement (the
"Underwriting Agreement"), between Highlands Acquisition Corp., a Delaware
corporation (the "Company"), and you as representative of a group of
Underwriters named therein, relating to an underwritten public offering of Units
consisting of one share of Common Stock and one warrant (the "Units"), of the
Company.
In order to induce you and the other Underwriters to enter
into the Underwriting Agreement, the undersigned will not, without the prior
written consent of Citigroup Global Markets Inc., (i) offer, sell, contract to
sell, pledge, hypothecate, grant any option to purchase or otherwise dispose of
or transfer or enter into any transaction which is designed to, or might
reasonably be expected to, result in the disposition (whether by actual
disposition or effective economic disposition due to cash settlement or
otherwise) by the undersigned or any affiliate of the undersigned or any person
in privity with the undersigned or any affiliate of the undersigned), directly
or indirectly, including the filing (or participation in the filing) of a
registration statement with the Commission in respect of, or establish or
increase a put equivalent position or liquidate or decrease a call equivalent
position within the meaning of Section 16 of the Exchange Act with respect to,
any other Units, shares of Common Stock, Warrants or any securities convertible
into, or exercisable, or exchangeable for, shares of Common Stock or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the Units, Common Stock
or Warrants, Common Stock issuable upon exercise of the Warrants or any
securities convertible into or exercisable or exchangeable for Common Stock or
Warrants or other rights to purchase Common Stock or any such securities,
whether any such transaction is to be settled by delivery of Common Stock or
such other securities, in cash or otherwise; or publicly announce an intention
to effect any such transaction in (i) or (ii), during the period commencing on
the date hereof and ending 180 days after the date hereof, other than shares of
Common Stock disposed of as bona fide gifts approved in writing and in advance
by Citigroup Global Markets Inc.
If (i) during the last 17 days of the 180-day restricted
period, the Company issues an earnings release or material news, or a material
event relating to the Company occurs, or (ii) prior to the expiration of the
180-day restricted period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the 180-day
restricted period, then the foregoing
2
restrictions imposed by this Lock-Up Agreement shall continue to apply until the
expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event, unless
Citigroup Global Markets Inc. waives, in writing, such extension. The
undersigned hereby acknowledges that the Company has agreed in the Underwriting
Agreement to provide written notice of any event that would result in an
extension of the 180-day restricted period and agrees that any such notice
properly delivered will be deemed to have given to, and received by, the
undersigned.
If for any reason the Underwriting Agreement shall be
terminated prior to the Closing Date (as defined in the Underwriting Agreement),
the agreement set forth above shall likewise be terminated.
Yours very truly,
[SIGNATURE OF OFFICER, DIRECTOR OR MAJOR STOCKHOLDER]
[NAME AND ADDRESS OF OFFICER, DIRECTOR OR MAJOR
STOCKHOLDER]
3
