EXHIBIT 1.1
12,500,000 Units
NORTH AMERICAN INSURANCE LEADERS, INC.
FORM OF UNDERWRITING AGREEMENT
March [o], 2006
CRT Capital Group LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, North American Insurance Leaders, Inc., a Delaware
corporation ("Company"), hereby confirms its agreement with CRT Capital Group
LLC ("Underwriter") as follows:
1. PURCHASE AND SALE OF SECURITIES.
1.1 Firm Securities.
1.1.1 Purchase of Firm Units. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the
Underwriter, and the Underwriter, upon the basis of the representations and
warranties herein contained, but subject to the conditions hereinafter stated,
agrees to purchase from the Company, an aggregate of 12,500,000 units ("Firm
Units") of the Company, at a purchase price (net of all discounts and
commissions other than the Deferred Discount (as defined in Section 1.1.3
hereof)) of (A) $7.64 per Firm Unit (the "Initial Purchase Price") less (B) the
Deferred Discount, if any. As adjusted for the payment, if any, to the
Underwriter of the Deferred Discount pursuant to Section 1.1.3 hereof, the
purchase price will be no less than $7.44 per Firm Unit. The Firm Units are to
be offered initially to the public ("Offering") at the offering price of $8.00
per Firm Unit. Each Firm Unit consists of one share of the Company's common
stock, par value $.0001 per share ("Common Stock"), and one warrant ("Warrant").
The shares of Common Stock and the Warrants included in the Firm Units will not
be separately transferable until five days after the earlier to occur of (i) the
expiration or termination of the Over-Allotment Option (as defined in Section
1.2.1 hereof) or (ii) the exercise in full by the Underwriter of the
Over-Allotment Option, but in no event will separate trading begin before an
audited balance sheet has been prepared reflecting receipt by the Company of the
proceeds of the Offering and filed with the Securities and Exchange Commission
(the "Commission") under cover of a Current Report on Form 8-K. Each Warrant
entitles its holder to exercise it to purchase one share of Common Stock for
$6.00 during the period commencing on the later of the consummation by the
Company of its "Business Combination" or one year from the effective date
("Effective Date") of the Registration Statement (as defined in Section 2.1.1
hereof) and terminating on the four-year anniversary of the Effective Date, or
earlier upon redemption. "Business Combination" shall mean the initial merger,
capital stock exchange, asset acquisition, stock purchase and/or other similar
transaction with one or more insurance or insurance services businesses in North
America, collectively referred to as "insurance-related businesses" (as
described more fully in the Registration Statement).
1.1.2 Payment and Delivery. Delivery and payment for the Firm
Units shall be made at 1:00 P.M., New York time, on the third business day
following the date of this Agreement (or the fourth business day following the
date of this Agreement, if this Agreement is executed after 4:30 p.m. New York
time) or at such earlier time as shall be agreed upon by the Underwriter and the
Company at the offices of the Underwriter or at such other place as shall be
agreed upon by the Underwriter and the Company. The hour and date of delivery
and payment for the Firm Units is called the "Closing Date." Payment for the
Firm Units shall be made by the Underwriter on the Closing Date by wire transfer
in immediately available Federal funds of $95,500,000, representing the
aggregate purchase price for the Firm Units based on the Initial Purchase Price,
payable as follows: $93,925,000, shall be paid by the Underwriter to the Trust
Account established by the Company for the benefit of the holders of IPO Shares
(as defined below in Section 6.7) as described in the Registration Statement
("Trust
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Account") pursuant to the terms of the Trust Agreement (as defined below
in Section 2.22) and $1,575,000, less the amount owed by the Company to the
Underwriter for all expenses owed thereto incident to the performance of the
obligations of the Company under this Agreement as set forth in Sections 3.7
hereof, shall be paid to the order of the Company to a bank account established
by the Company, against delivery to the Underwriter of certificates (in form and
substance satisfactory to the Underwriter) representing the Firm Units (or
through the facilities of The Depository Trust Company ("DTC")) for the account
of the Underwriter. The Firm Units shall be registered in such name or names and
in such authorized denominations as the Underwriter may request in writing at
least two full business days prior to the Closing Date. The Company will permit
the Underwriter to examine and package the Firm Units for delivery, at least one
full business day prior to the Closing Date. The Company shall not be obligated
to sell or deliver the Firm Units except upon tender of payment by the
Underwriter for all the Firm Units.
1.1.3 Deferred Discount. Upon the consummation, if any, of
the Business Combination the Company will pay to the Underwriter a deferred
discount (the "Deferred Discount") in an amount equal to (A) 2.5% of the gross
proceeds (before giving effect to any discounts or commissions) from the sale of
the Units (as defined in section 1.2.1 hereof) less (B) $0.20 per share of
Common Stock converted to cash in connection with the Business Combination Vote
(as defined in Section 6.6 hereof), subject to Section 6.7 hereof. Payment of
the Deferred Discount will be made out of the proceeds of this Offering held in
the Trust Account at the consummation of the Business Combination. In no event
shall the Underwriter have any 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 a Business Combination within the
required time period set forth in the Prospectus, the Deferred Discount will not
be paid to the Underwriter. Any proceeds held in the Trust Account that would
have been paid to the Underwriter in respect of the Deferred Discount will,
instead, be included in the liquidation distribution of the proceeds held in the
Trust Account made to the holders of the IPO Shares (as defined in Section 6.6
hereof).
1.2 Over-Allotment Option.
1.2.1 Option Units. For the purposes of covering any
over-allotments in connection with the distribution and sale of the Firm Units,
the Underwriter is hereby granted an option to purchase up to an additional
1,875,000 units from the Company ("Over-Allotment Option"). Such additional
1,875,000 units are hereinafter referred to as "Option Units." Each Option Unit
shall be identical to a Firm Unit. The Firm Units and the Option Units are
hereinafter collectively referred to as the "Units," and the Units, the shares
of Common Stock and the Warrants included in the Units and the shares of Common
Stock issuable upon exercise of the Warrants are hereinafter referred to
collectively as the "Public Securities." The purchase price to be paid for the
Option Units will be the same price per Option Unit as the price per Firm Unit
set forth in Section 1.1.1 hereof.
1.2.2 Exercise of Option. Subject to Section 1.2.4 hereof,
the Over-Allotment Option granted pursuant to Section 1.2.1 hereof may be
exercised by the Underwriter as to all or any part of the Option Units within 30
days after the Effective Date, unless sooner terminated. The Underwriter will
not be under any obligation to purchase any Option Units prior to the exercise
of the Over-Allotment Option. The Over-Allotment Option granted hereby may be
exercised in whole at any time, or in part from time to time (consistent with
Section 1.2.4 hereof), by the giving of oral notice to the Company by the
Underwriter, which must be confirmed in writing by overnight mail or facsimile
transmission setting forth the number of Option Units to be purchased and the
date and time for delivery of and payment for the Option Units (each such date
and time, including, as the case may be, the Closing Date, is referred to herein
as an "Option Closing Date"), which will not be later than five full business
days after the date of the notice or such other time as shall be agreed upon by
the Company and the Underwriter, at the offices of the Underwriter or at such
other place as shall be agreed upon by the Company and the Underwriter. Upon any
exercise of the Over-Allotment Option, the Company will become obligated to
convey to the Underwriter, and, subject to the terms and conditions set forth
herein, the Underwriter will become obligated to purchase, the number of Option
Units specified in such notice.
1.2.3 Payment and Delivery. Payment for the Option Units
shall be made on each Option Closing Date by wire transfer in immediately
available Federal funds representing the purchase price for the Option Units,
based on the Initial Purchase Price, to the Trust Account, against delivery to
the Underwriter of certificates (in form and substance satisfactory to the
Underwriter) representing the Option Units (or through the facilities of DTC)
for the account of the Underwriter. The certificates representing the Option
Units to be delivered will be in such denominations and registered in such names
as the Underwriter requests not less than two full business days prior to
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the Option Closing Date, as the case may be, and will be made available to the
Underwriter for inspection, checking and packaging at the aforesaid office of
the Company's transfer agent or correspondent not less than one full business
day prior to such Closing Date.
1.2.4 Option Closing Dates. Notwithstanding anything to the
contrary contained herein, there shall be no more than [o] Option Closing Dates
after the Closing Date. The Over-Allotment Option shall automatically expire,
and the Company shall have no further obligation to convey to the Underwriter
any Option Units, after payment and delivery for any Option Units on the [o]
Option Closing Date following the Closing Date.
1.2.5 Termination of Option. If the Underwriter provides
notice in writing to the Company that the Underwriter is terminating the
Over-Allotment Option, then the Over-Allotment Option shall immediately
terminate and the Company shall have no further obligation to convey to the
Underwriter any Option Units for which the Underwriter has not yet given notice
of exercise.
1.3 Underwriter's Purchase Option.
1.3.1 Purchase Option. The Company hereby agrees to issue and
sell to the Underwriter (and/or its designees) on the Effective Date an option
("Underwriter's Purchase Option") for the purchase of up to an aggregate of
750,000 units ("Underwriter's Units") for an aggregate purchase price of $100.
Each of the Underwriter's Units is identical to the Firm Units except that the
Warrant included in the Underwriter's Units ("Underwriter's Warrants") shall
have an exercise price of $7.50 (125% of the exercise price of the Warrants
included in the Units sold to the public). The Underwriter's Purchase Option
shall be exercisable, in whole or in part, commencing on the later of (i) one
year from the Effective Date and (ii) the consummation of a Business Combination
and expiring on the four-year anniversary of the Effective Date at an initial
exercise price per Underwriter's Unit of $8.80, which is equal to one hundred
and ten percent (110%) of the initial public offering price of a Unit. The
Underwriter's Purchase Option, the Underwriter's Units, the Underwriter's
Warrants, the Common Stock included in the Underwriter's Units and the shares of
Common Stock issuable upon exercise of the Underwriter's Warrants are
hereinafter referred to collectively as the "Underwriter's Securities." The
Public Securities, Underwriter's Securities and the D&O Rights and D&O Warrants
(each as defined below in Section 2.11.8) are hereinafter referred to
collectively as the "Securities."
1.3.2 Payment and Delivery. Delivery and payment for the
Underwriter's Purchase Option shall be made on the Closing Date. The Company
shall deliver to the Underwriter, upon payment therefor, certificates for the
Underwriter's Purchase Option in the name or names and in such authorized
denominations as the Underwriter may request.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Underwriter as follows:
2.1 Compliance with Securities Act of 1933.
2.1.1 Pursuant to the Securities Act. The Company has filed
with the Commission on Form S-1 (File No. 333-127871) a registration statement,
including a prospectus, relating to the Offering, which registration statement
has been prepared in conformity with the requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the rules and regulations
("Regulations") of the Commission under the Securities Act. The registration
statement as amended at the time it becomes effective, including the information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Securities Act, is hereinafter
referred to as the "Registration Statement"; the prospectus in the form first
filed with the Commission pursuant to and within the time limits described in
Rule 424(b) is hereinafter referred to as the "Prospectus." If the Company has
filed an abbreviated registration statement to register additional Firm Units
pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration
Statement"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement. For purposes of
this Agreement, "Time of Sale" means [o] p.m., New York City time, on the date
of this Agreement. Prior to the Time of Sale, the Company prepared a preliminary
prospectus, dated February 28, 2006, for distribution by the Underwriter (the
"Preliminary Prospectus"). If, subsequent to the date of this Agreement, the
Company or the Underwriter have determined that the Preliminary Prospectus
included an untrue statement of a material fact or omitted a statement of
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading and the Underwriter has
agreed to provide an opportunity to purchasers of the Firm Units to terminate
their old purchase contracts and enter into new purchase contracts, then the
Preliminary Prospectus will be deemed to include any additional information
available to purchasers at the time of entry into the first such new purchase
contract.
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2.1.2 Pursuant to the Exchange Act. The Company has filed
with the Commission a Form 8-A (File Number 000-[_____]) providing for the
registration under the Securities Exchange Act of 1934, as amended ("Exchange
Act"), of the Units, the Common Stock and the Warrants. The Units, the Warrants
and the Common Stock have been duly listed, and admitted and authorized for
trading, 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.
2.2 No Stop Orders, Etc. Neither the Commission nor, to the Company's
knowledge, any state regulatory authority has issued any order or threatened to
issue any order preventing or suspending the effectiveness of the Registration
Statement or the use of the Preliminary Prospectus or the Prospectus, or has
instituted or, to the Company's knowledge, threatened to institute any
proceedings with respect to such an order.
2.3 Disclosures in Registration Statement.
2.3.1 10b-5 Representation. The Registration Statement has
been declared effective by the Commission on the date hereof. At the time the
Registration Statement became effective and at the Closing Date and the Option
Closing Date, if any, the Registration Statement contains or will contain, as
applicable, and the Prospectus when first filed with the Commission and at the
Closing Date and the Option Closing Date, if any, will contain, all material
statements that are required to be stated therein in accordance with the
Securities Act and the Regulations, and in all material respects conform or will
conform, as applicable, to the requirements of the Securities Act and the
Regulations; neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, on such dates, contains or will contain any
untrue statement of a material fact or omits or will omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
Preliminary Prospectus, when first filed with the Commission, at the Time of
Sale, and at the Closing Date and the Option Closing Date, if any, complied or
will comply, as applicable, in all material respects with the applicable
provisions of the Securities Act and the Regulations and did not and will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. No statement of material fact included in the Prospectus has been
omitted from the Preliminary Prospectus or the Registration Statement and no
statement of material fact included in the Preliminary Prospectus or
Registration Statement that is required to be included in the Prospectus has
been omitted therefrom. Nothing has come to the attention of the Company that
has caused the Company to believe that the statistical and market-related data
included in the Preliminary Prospectus, the Registration Statement and the
Prospectus is not based on or derived from sources that are reliable and
accurate in all material respects. The representations and warranties in this
subsection shall not apply to statements in or omissions from the Preliminary
Prospectus, the Registration Statement or the Prospectus made in reliance upon
and in conformity with written information furnished to the Company by the
Underwriter with respect to itself expressly for use in the Preliminary
Prospectus, the Registration Statement and the Prospectus.
2.3.2 Disclosure of Agreements. The agreements and documents
described in the Preliminary Prospectus, the Registration Statement and the
Prospectus conform in all material respects to the descriptions thereof
contained therein and there are no agreements or other documents required to be
described in the Preliminary Prospectus, the Registration Statement and the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, that have not been so described or filed.
2.3.3 Prior Securities Transactions. No securities of the
Company have been sold by the Company or by or on behalf of, or for the benefit
of, any person or persons controlling, controlled by, or under common control
with the Company since the formation of the Company, except as disclosed in the
Preliminary Prospectus, the Registration Statement and the Prospectus.
2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. Since the respective dates
as of which information is given in the Preliminary Prospectus, the Registration
Statement and the Prospectus, except as otherwise specifically stated therein,
(i) there has been no material adverse effect on the condition (financial or
otherwise), or business prospects of the Company (a "Material Adverse Effect"),
(ii) there have been no material transactions entered into
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by the Company, other than as contemplated pursuant to this Agreement, and (iii)
no member of the Company's management has resigned from any position with the
Company.
2.4.2 Recent Securities Transactions, Etc. Subsequent to the
respective dates as of which information is given in the Preliminary Prospectus,
the Registration Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made any other
distribution on or in respect to its equity securities.
2.5 Independent Accountants. BDO ▇▇▇▇▇▇▇, LLP ("BDO ▇▇▇▇▇▇▇"), whose
report is filed with the Commission as part of the Preliminary Prospectus, the
Registration Statement and the Prospectus, are independent accountants as
required by the Securities Act and the Regulations. BDO ▇▇▇▇▇▇▇ has not, during
the periods covered by the financial statements included in the Prospectus,
provided to the Company any non-audit services, as such term is used in Section
10A(g) of the Exchange Act.
2.6 ▇▇▇▇▇▇▇▇-▇▇▇▇▇. Solely to the extent that the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of
2002, as amended, and the rules and regulations promulgated by the Commission
and the American Stock Exchange thereunder (the "▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act") has been
applicable to the Company, there is and has been no failure on the part of the
Company to comply in all material respects with any provision of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Company has taken all necessary actions to ensure that
it is in compliance with all provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act that are in
effect and with which the Company is required to comply and is actively taking
steps to ensure that it will be in compliance with other provisions of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act not currently in effect or which will become applicable to
the Company.
2.7 Financial Statements. The financial statements, including the notes
thereto and supporting schedules included in the Preliminary Prospectus, the
Registration Statement and the Prospectus, fairly present the financial
position, the results of operations and the cash flows of the Company at the
dates and for the periods to which they apply; and such financial statements
have been prepared in conformity with generally accepted accounting principles
in the United States ("GAAP"), consistently applied throughout the periods
involved. The Preliminary Prospectus, the Registration Statement and the
Prospectus disclose all material off-balance sheet transactions, arrangements,
obligations (including contingent obligations), and other relationships of the
Company with unconsolidated entities or other persons that may have a material
current or future effect on the Company's financial condition, changes in
financial condition, results of operations, liquidity, capital expenditures,
capital resources, or significant components of revenues or expenses.
2.8 Authorized Capital; Options; Etc. The Company had at the date or
dates indicated in the Preliminary Prospectus, the Registration Statement and
the Prospectus duly authorized, issued and outstanding capital stock as set
forth under the captions "Capitalization" and "Description of Securities" in the
Preliminary Prospectus, the Registration Statement and the Prospectus. Based on
the assumptions stated in the Preliminary Prospectus, the Registration Statement
and the Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein under the caption "Capitalization" and
"Description of Securities". Except as set forth in, or contemplated by, the
Preliminary Prospectus, the Registration Statement and the Prospectus, on the
Effective Date and on the Closing Date, there will be no options, warrants, or
other rights to purchase or otherwise acquire any authorized but unissued shares
of Common Stock or any security convertible into shares of Common Stock, or any
contracts or commitments to issue or sell shares of Common Stock or any such
options, warrants, rights or convertible securities.
2.9 Valid Issuance of Securities; Etc.
2.9.1 Outstanding Securities. All issued and outstanding
securities of the Company as of the effective date have been duly authorized and
validly issued and are fully paid and non-assessable; the holders thereof have
no rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any holders of any security of
the Company or similar contractual rights granted by the Company. The authorized
Common Stock conforms in all material respects to all statements relating
thereto contained in the Preliminary Prospectus, the Registration Statement and
the Prospectus. The offers and sales of the outstanding Common Stock were at all
relevant times either registered under the Securities Act, the applicable state
securities and Blue Sky laws or, based
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in part on the representations and warranties of the purchasers of such shares
of Common Stock, exempt from such registration requirements.
2.9.2 Securities Sold Pursuant to this Agreement.
(i) 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 therefore by the Underwriter pursuant to this
Agreement, will be validly issued, fully paid and non-assessable;
(ii) The Common Stock included in the Underwriter's
Units has been duly authorized and, when executed by the Company and
countersigned, and issued and delivered against payment therefore pursuant to
the terms of the Underwriter's Purchase Option, will be validly issued, fully
paid and non-assessable;
(iii) The shares of Common Stock issuable upon
exercise of the Warrants and the Underwriter's Warrants have been duly
authorized and, when executed by the Company and countersigned and issued and
delivered against payment therefore pursuant to the Warrants and the Warrant
Agreement or the Underwriter's Warrant and the Underwriter's Warrant Agreement,
as the case may be, 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;
(iv) The Warrants, when executed by the Company and
countersigned, and issued and delivered against payment therefor by the
Underwriters in accordance with the terms of the Warrant Agreement will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law;
(v) The Underwriter's Purchase Option, when
executed by the Company and countersigned, and issued and delivered against
payment therefore in accordance with its terms, will constitute a valid and
binding obligation of the Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting enforcement of
creditors' rights generally and except as enforcement thereof is subject to
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law); and
(vi) The Underwriter's Warrants, when executed by
the Company and countersigned, and issued and delivered against payment therefor
in accordance with the terms of the Underwriter's Purchase Option, will
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law. The form of
certificate representing the Common Stock filed as an exhibit to the
Registration Statement is in due and proper form, satisfying the applicable
requirements of the Delaware General Corporation Law. Each of the Securities
conforms in all material respects to all statements with respect thereto
contained in the Registration Statement and the Prospectus.
2.9.3 Securities Sold Pursuant to the D&O Rights Agreement.
The shares of Common Stock issuable upon exercise of the D&O Warrants have been
duly authorized and, when executed by the Company and countersigned, and issued
and delivered against payment therefor pursuant to the terms of the D&O Warrants
and Share Purchase & Sale, D&O Rights and Company Call Right Agreement (the "D&O
Rights Agreement"), will be
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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. The D&O Warrants, when issued
upon conversion of the D&O Rights, will constitute valid and binding obligations
of the Company enforceable against the Company in accordance with their terms,
except s the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers),
reorganization, moratorium or similar laws affecting enforcement of creditors'
rights generally and except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is considered in a
proceeding in equity or at law. The D&O Rights executed by the Company and
countersigned, and issued and delivered against payment therefore pursuant to
the Share Purchase & Sale, D&O Rights and Company Call Right Agreement, will
constitute valid and binding of the Company enforceable against the Company in
accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
2.10 Registration Rights of Third Parties. Except as set forth in the
Preliminary Prospectus, the Registration Statement 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
Securities Act or to include any such securities in a registration statement to
be filed by the Company.
2.11 Validity and Binding Effect of Agreements.
2.11.1 Underwriting Agreement. This Agreement has been duly
and validly executed by the Company and constitutes the valid and binding
agreement of the Company.
2.11.2 Warrant Agreement. The Warrant Agreement with Mellon
Investor Services LLC, with respect to the Warrants substantially in the form
filed as Exhibit 4.4 to the Registration Statement (the "Warrant Agreement"),
has been duly and validly executed by the Company and constitutes the valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, subject to (i) the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally (including without limitation all laws relating to fraudulent
transfers), (ii) the effect of general principles of equity, including without
limitation concepts of materiality, reasonableness, good faith and fair dealing
(regardless of whether considered in a proceeding in equity or at law), (iii)
the limitations on the enforceability of any rights to indemnity and
contribution by federal and state securities laws and principles of public
policy and (iv) possible judicial action giving effect to governmental actions
or foreign laws affecting creditors' rights.
2.11.3 Transfer Agent Services Agreement. The Transfer Agent
Services Agreement with Mellon Investor Services LLC, substantially in the form
filed as Exhibit 10.13 to the Registration Statement (the "Transfer Agent
Services Agreement"), has been duly and validly executed by the Company and
constitutes the valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, subject to (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally (including without limitation all laws
relating to fraudulent transfers), (ii) the effect of general principles of
equity, including without limitation concepts of materiality, reasonableness,
good faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law), (iii) the limitations on the enforceability of any rights to
indemnity and contribution by federal and state securities laws and principles
of public policy and (iv) possible judicial action giving effect to governmental
actions or foreign laws affecting creditors' rights.
2.11.4 Trust Agreement. The Investment Management Trust
Agreement with JPMorgan Chase Bank, NA as trustee, with respect to certain
proceeds of the Offering and the D&O Rights Offering (as defined below),
substantially in the form filed as Exhibit 10.10 to the Registration Statement
(the "Trust Agreement"), has been duly and validly executed by the Company and
constitutes the valid and binding agreement of the Company,
7
enforceable in accordance with its terms, subject to (i) the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting creditors' rights generally (including without limitation all laws
relating to fraudulent transfers), (ii) the effect of general principles of
equity, including without limitation concepts of materiality, reasonableness,
good faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law), (iii) the limitations on the enforceability of any rights to
indemnity and contribution by federal and state securities laws and principles
of public policy and (iv) possible judicial action giving effect to governmental
actions or foreign laws affecting creditors' rights.
2.11.5 Escrow Agreement. The Stock Escrow Agreement with
JPMorgan Chase Bank, NA, substantially in the form filed as Exhibit 10.11 to the
Registration Statement (the "Escrow Agreement"), has been duly and validly
executed by the Company and constitutes the valid and binding agreement of the
Company, enforceable in accordance with its terms, subject to (i) the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally (including without limitation all
laws relating to fraudulent transfers), (ii) the effect of general principles of
equity, including without limitation concepts of materiality, reasonableness,
good faith and fair dealing (regardless of whether considered in a proceeding in
equity or at law), (iii) the limitations on the enforceability of any rights to
indemnity and contribution by federal and state securities laws and principles
of public policy and (iv) possible judicial action giving effect to governmental
actions or foreign laws affecting creditors' rights.
2.11.6 Insider Letters. Each of those certain letter
agreements, substantially in the forms filed as Exhibits 10.6 or 10.7 to the
Registration Statement, pursuant to which each of the Initial Stockholders
agrees to certain matters, including but not limited to, certain matters
described as being agreed to by them under the "Proposed Business" section of
the Prospectus ("Insider Letters"), have been duly and validly executed by the
Company and constitute valid and binding agreements of the Company, enforceable
in accordance with its terms, subject to (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally (including without limitation all laws relating to
fraudulent transfers), (ii) the effect of general principles of equity,
including without limitation concepts of materiality, reasonableness, good faith
and fair dealing (regardless of whether considered in a proceeding in equity or
at law), (iii) the limitations on the enforceability of any rights to indemnity
and contribution by federal and state securities laws and principles of public
policy and (iv) possible judicial action giving effect to governmental actions
or foreign laws affecting creditors' rights.
2.11.7 Underwriter's Purchase Option. The Underwriter's
Purchase Option has been duly and validly executed by the Company and
constitutes the valid and binding agreement of the Company, enforceable in
accordance with its terms, subject to (i) the effect of any applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally (including without limitation all laws relating to
fraudulent transfers), (ii) the effect of general principles of equity,
including without limitation concepts of materiality, reasonableness, good faith
and fair dealing (regardless of whether considered in a proceeding in equity or
at law), (iii) the limitations on the enforceability of any rights to indemnity
and contribution by federal and state securities laws and principles of public
policy and (iv) possible judicial action giving effect to governmental actions
or foreign laws affecting creditors' rights.
2.11.8 Share Purchase & Sale, D&O Rights and Company Call
Right Agreement. The Share Purchase & Sale, D&O Rights and Company Call Right
Agreement (the "Share Purchase & Sale, D&O Rights and Company Call Right
Agreement"), substantially in the form filed as Exhibit 10.10 to the
Registration Statement, pursuant to which (a) certain of the Initial
Stockholders agreed to sell a portion of their shares to E. Miles Prentice, III,
(b) each of the Company's Directors and Officers agrees to purchase from the
Company a certain number of rights (the "D&O Rights") convertible into Warrants
(the "D&O Warrants") in a registered offering concurrent with the Offering (the
"D&O Rights Offering") and (c) whereby the Company is granted the right to
purchase shares of Common Stock from the Initial Stockholders, has been duly and
validly executed by the Company and constitutes the valid and binding agreement
of the Company, enforceable in accordance with its terms, and subject to (i) the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally (including without limitation
all laws relating to fraudulent transfers), (ii) the effect of general
principles of equity, including without limitation concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law), (iii) the limitations on the enforceability
of
8
any rights to indemnity and contribution by federal and state securities laws
and principles of public policy and (iv) possible judicial action giving effect
to governmental actions or foreign laws affecting creditors' rights.
2.11.9 Office Administration Agreement. The Office
Administration Agreement with Ampton Investments, Inc., substantially in the
form filed as Exhibit 10.12 to the Registration Statement, has been duly and
validly executed by the Company and constitutes the valid and binding agreement
of the Company, enforceable in accordance with its terms, subject to (i) the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally (including without limitation
all laws relating to fraudulent transfers), (ii) the effect of general
principles of equity, including without limitation concepts of materiality,
reasonableness, good faith and fair dealing (regardless of whether considered in
a proceeding in equity or at law), (iii) the limitations on the enforceability
of any rights to indemnity and contribution by federal and state securities laws
and principles of public policy and (iv) possible judicial action giving effect
to governmental actions or foreign laws affecting creditors' rights.
2.12 No Conflicts, Etc. The execution, delivery, and performance by the
Company of this Agreement, the Warrant Agreement, the Transfer Agent Services
Agreement, the Trust Agreement, the Insider Letters, the Office Administration
Agreement, the Underwriter's Purchase Option, the Share Purchase & Sale, D&O
Rights and Company Call Right Agreement and the Escrow Agreement, the
consummation by the Company of the transactions herein and therein contemplated
and the compliance by the Company with the terms hereof and thereof do not and
will not, with or without the giving of notice or the lapse of time or both (i)
result in a breach of, or conflict with any of the terms and provisions of, or
constitute a default under, or result in the creation, modification, termination
or imposition of any lien, charge or encumbrance upon any property or assets of
the Company pursuant to the terms of any agreement or instrument to which the
Company is a party except pursuant to the Trust Agreement; (ii) result in any
violation of the provisions of the Amended and Restated Certificate of
Incorporation or the Bylaws of the Company; or (iii) violate any existing
applicable law, rule, regulation, judgment, order or decree of any governmental
agency or court, domestic or foreign, having jurisdiction over the Company or
any of its properties or business, except where such breach, conflict, or
violation would not have a Material Adverse Effect.
2.13 No Defaults; No Violations. No default that would have a Material
Adverse Effect exists in the due performance and observance of any term,
covenant or condition of any material license, contract, indenture, mortgage,
deed of trust, note, loan or credit agreement, or any other agreement or
instrument evidencing an obligation for borrowed money, or any other material
agreement or instrument to which the Company is a party or by which the Company
may be bound or to which any of the properties or assets of the Company is
subject. The Company is not in violation of any term or provision of its Amended
and Restated Certificate of Incorporation or Bylaws or in violation of any
material franchise, license, permit, applicable law, rule, regulation, judgment
or decree of any governmental agency or court, domestic or foreign, having
jurisdiction over the Company or any of its properties or businesses, except
where such violation would not have a Material Adverse Effect.
2.14 Corporate Power; Licenses; Ownership.
2.14.1 Conduct of Business. The Company has all requisite
corporate power and authority, and has all necessary authorizations, approvals,
orders, licenses, certificates and permits of and from all governmental
regulatory officials and bodies as of the date hereof to conduct its business as
described in the Preliminary Prospectus, the Registration Statement and the
Prospectus except where such violation would not have a Material Adverse Effect.
2.14.2 Transactions Contemplated Herein. The Company has all
corporate power and authority to enter into this Agreement and to carry out the
provisions and conditions hereof. All consents, authorizations, approvals and
orders required in connection therewith have been obtained, except where the
failure to obtain such consents, authorizations, approvals and orders would not
have a Material Adverse Effect. No consent, authorization or order of, and no
filing with, any court, government agency or other body is required for the
valid issuance, sale and delivery, of the Securities and the consummation of the
transactions and agreements contemplated by this Agreement, the Warrant
Agreement, the Transfer Agent Services Agreement, the Underwriter's Purchase
Option, the Share Purchase & Sale, D&O Rights and Company Call Right Agreement,
the Trust Agreement, the Insider Letters, the Office Administration Agreement
and the Escrow Agreement and as contemplated by the Preliminary
9
Prospectus, the Registration Statement and the Prospectus, except with respect
to applicable federal and state securities laws.
2.14.3 Ownership. Except as set forth in the Preliminary
Prospectus, the Registration Statement and the Prospectus, (a) the Company owns
or has valid leasehold interests in all material properties and assets required
for the operation of its business as now conducted or as presently proposed to
be conducted, none of which are required to be disclosed in the Preliminary
Prospectus, the Registration Statement and the Prospectus as being owned by it
and (b) all real property leases to which the Company is a party are valid,
subsisting and, to the knowledge of the Company, enforceable by the Company,
except where the failure to have such ownership or possession, as the case may
be, would not have a Material Adverse Effect. The Company owns or possesses, or
can acquire on a timely basis and on commercially reasonable terms, all
trademarks, trade names and other rights to inventions, know-how, patents,
copyrights, confidential information and other intellectual property necessary
for the Company's purpose as currently contemplated, except those for which the
absence of ownership or possession would not have a Material Adverse Effect.
2.15 D&O Questionnaires. To the Company's knowledge, all information
contained in the director and officer questionnaires and NASD supplemental
questionnaires ("Questionnaires") completed by each of the Company's
stockholders immediately prior to the Offering ("Initial Stockholders") and each
of the Company's officers and directors immediately prior to the offering
("Officers" and "Directors", respectively) and provided to the Underwriter as an
exhibit to his or her Insider Letter (as defined in Section 2.10.6) is true and
correct and the Company has not become aware of any information which would
cause the information disclosed in the questionnaires completed by each Initial
Stockholder to become inaccurate and incorrect.
2.16 Litigation; Governmental Proceedings. There is no action, suit,
proceeding, inquiry, arbitration, investigation, litigation or governmental
proceeding pending or, to the Company's knowledge, threatened against, or
involving the Company or, to the Company's knowledge, any Initial Stockholder,
Officer or Director that has not been disclosed in the Preliminary Prospectus,
the Registration Statement, the Prospectus and the Questionnaires, except for
actions, suits, proceedings, inquiries, arbitrations, investigations, litigation
or government proceedings pending against any Officer, Director or Initial
Stockholder that neither (i) relate to the business of the Company and would
reasonably be expected to have a Material Adverse Effect nor (ii) are required
to be disclosed in the Preliminary Prospectus, the Registration Statement and
the Prospectus or Questionnaires, as applicable.
2.17 Good Standing. The Company has been duly organized and is validly
existing as a corporation and is in good standing under the laws of the State of
Delaware, and is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction in which its ownership or lease of
property or the conduct of business requires such qualification, except where
the failure to qualify would not have a Material Adverse Effect.
2.18 Transactions Affecting Disclosure to NASD.
2.18.1 Finder's Fees. Except as described in the Preliminary
Prospectus, the Registration Statement and the Prospectus, there are no claims,
payments, arrangements, agreements or understandings relating to the payment of
a finder's, consulting or origination fee by the Company or any Initial
Stockholder with respect to the sale of the Securities hereunder or any other
arrangements, agreements or understandings of the Company or, to the Company's
knowledge, any Initial Stockholder that may affect the Underwriter's
compensation, as determined by the National Association of Securities Dealers,
Inc. ("NASD").
2.18.2 Payments Within Twelve Months. The Company has not
made any direct or indirect payments (in cash, securities or otherwise) (i) to
any person, as a finder's fee, consulting fee or otherwise, in consideration of
such person raising capital for the Company or introducing to the Company
persons who raised or provided capital to the Company, (ii) to any NASD member
or (iii) to any person or entity that has any direct or indirect affiliation or
association with any NASD member, within the twelve months prior to the
Effective Date, other than payments made or to be made by the Company to the
Underwriter as contemplated in the Registration Statement.
2.18.3 Use of Proceeds. None of the net proceeds of the
Offering will be paid by the Company to any participating NASD member or its
affiliates, except as specifically authorized herein and except as may be
10
paid in connection with a Business Combination as contemplated by the
Preliminary Prospectus, the Registration Statement and the Prospectus.
2.18.4 Insiders' NASD Affiliation. Based on the
Questionnaires distributed to such persons, except as set forth on Schedule
2.17.4, no officer, director or any beneficial owner of the Company's
unregistered securities has any direct or indirect affiliation or association
with any NASD member.
2.19 Foreign Corrupt Practices Act. Neither the Company nor (to the
Company's knowledge) any of the Initial Stockholders, Officers, Directors or any
other person acting on behalf of the Company has, directly or indirectly, taken
any action that would result in a violation of the Foreign Corrupt Practices Act
of 1977, as amended (the "FCPA"), including, without limitation, having given or
agreed to give any money, gift or similar benefit (other than legal price
concessions to customers in the ordinary course of business) to any customer,
supplier, employee or agent of a customer or supplier, or official or employee
of any governmental agency or instrumentality of any government (domestic or
foreign) or any political party or candidate for office (domestic or foreign) or
any political party or candidate for office (domestic or foreign) or other
person who was, is, or may be in a position to help or hinder the business of
the Company (or assist it in connection with any actual or proposed
transaction). The Company has instituted and maintains internal controls and
procedures that are sufficient to ensure that the Company complies with, and
will continue to comply with, the FCPA.
2.20 Officer's Certificate. Any certificate signed by any duly
authorized officer of the Company and delivered to the Underwriter or to the
Underwriter's counsel shall be deemed a representation and warranty by the
Company to the Underwriter as to the matters covered thereby.
2.21 Covenants Not to Compete. To the Company's knowledge, no Initial
Stockholder, employee, Officer or Director of the Company 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 an Initial
Stockholder, employee, officer and/or director of the Company, except as set
forth on Schedule 2.21.
2.22 Investment Company Act. The Company is not and, after giving
effect to the offering and sale of the Units and the D&O Rights contemplated
hereunder and the application of the net proceeds from such sale as described in
the Preliminary Prospectus, the Registration Statement and the Prospectus, will
not be an "investment company" within the meaning of such term under the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.
2.23 Subsidiaries. The Company does not own an interest in any
corporation, partnership, limited liability company, joint venture, trust or
other business entity.
2.24 Related Party Transactions. There are no business relationships or
related party transactions involving the Company or any other person required to
be described in the Preliminary Prospectus, the Registration Statement and the
Prospectus that have not been described as required.
2.25 Sarbanes Oxley Act. The Company has taken all necessary actions to
ensure that it is in compliance with all provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act
that are in effect and with which the Company is required to comply and Part 8
of the American Stock Exchange's "AMEX Company Guide," as amended. Further,
there is and has been no failure on the part of the Company or any of the
Company's directors or officers, in their capacities as such, to comply with (as
and when applicable), and immediately following the effectiveness of the
Registration Statement the Company will be in compliance with, all other
provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and the American Stock Exchange corporate
governance requirements set forth in the AMEX Company Guide, as amended.
2.26 Rule 419. Upon delivery and payment for the Firm Units on the
Closing Date, the Company should not be subject to Rule 419 under the Securities
Act and none of the Company's outstanding securities will be deemed to be a
"▇▇▇▇▇ stock" as defined in Rule 3a5101 under the Exchange Act.
11
3. COVENANTS OF THE COMPANY. The Company covenants and agrees as follows:
3.1 Amendments to Registration Statement. The Company will give notice
to the Underwriter of its intention to prepare and file, and will deliver to the
Underwriter a reasonable amount of time prior to the proposed date of such
filing, any amendment or supplement to the Registration Statement or Prospectus
proposed to be filed after the Effective Date and not file any such amendment or
supplement prior to review by the Underwriter.
3.2 Federal Securities Laws.
3.2.1 Compliance. During the time when a Prospectus (or in
lieu thereof the notice referred to under Rule 173(a) under the Securities Act)
is required to be delivered under the Securities Act, the Company will use all
reasonable efforts to comply with all requirements imposed upon it by the
Securities Act, the Regulations and the Exchange Act and by the regulations
under the Exchange Act, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Securities in accordance
with the provisions hereof and the Prospectus. If at any time when a Prospectus
(or in lieu thereof the notice referred to under Rule 173(a) under the
Securities Act) relating to the Securities is required to be delivered under the
Securities Act, any event shall have occurred as a result of which, in the
opinion of counsel for the Company or counsel for the Underwriter, the
Prospectus, as then amended or supplemented, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, or if it is necessary at any time to amend
the Prospectus to comply with the Securities Act, the Company will notify the
Underwriter as soon as practicable and prepare and file with the Commission,
subject to Section 3.1 hereof, an appropriate amendment or supplement in
accordance with Section 10 of the Securities Act.
3.2.2 Filing of Final Prospectus. The Company will file the
Prospectus (in form and substance satisfactory to the Underwriter) with the
Commission pursuant to the requirements of Rule 424 of the Regulations.
3.2.3 Exchange Act Registration. Until the earlier of five
years from the Effective Date or the date that the Company is liquidated, the
Company (i) will use its commercially reasonable efforts to maintain the
registration of the Units, Common Stock and Warrants under the provisions of the
Exchange Act and (ii) will not deregister the Units, Common Stock or Warrants
under the Exchange Act without the prior written consent of the Underwriter;
provided that the Company may terminate its Exchange Act registration, without
the prior written consent of the Underwriter, in the event all of the
outstanding voting stock of the Company is acquired by a third party.
3.2.4 ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and American Stock Exchange. The
Company will take all necessary actions to ensure, that, upon and at all times
after the effectiveness of the Registration Statement, it will be in compliance
with (i) all applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act and (ii) the
requirements of the American Stock Exchange's AMEX Company Guide. The Company
will use its commercially reasonable best efforts to effect and maintain the
listing of the Securities and the Underwriter's Securities on the American Stock
Exchange.
3.3 Delivery to the Underwriter of Prospectuses. The Company will
deliver to the Underwriter, without charge, from time to time during the period
when the Prospectus (or in lieu thereof the notice referred to under Rule 173(a)
under the Securities Act) is required to be delivered under the Securities Act
or the Exchange Act, such number of copies of the Prospectus as the Underwriter
may reasonably request and, as soon as the Registration Statement or any
amendment or supplement thereto becomes effective, deliver to the Underwriter an
original executed Registration Statement, including exhibits, and all
post-effective amendments thereto and copies of all exhibits filed therewith or
incorporated therein by reference and all original executed consents of
certified experts.
3.4 Effectiveness and Events Requiring Notice to the Underwriter. The
Company will use its commercially reasonable efforts to cause the Registration
Statement to remain effective until distribution of the Securities is complete
and will notify the Underwriter as soon as practicable and confirm the notice in
writing (i) of the effectiveness of the Registration Statement and any amendment
thereto, (ii) of the issuance by the Commission of any stop order or of the
initiation, or the threatening, of any proceeding for that purpose, (iii) of the
issuance by any state securities commission of any proceedings for the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction or of the initiation, or the threatening, of any proceeding for
that purpose, (iv) of
12
the mailing and delivery to the Commission for filing of any amendment or
supplement to the Registration Statement or Prospectus, (v) of the receipt of
any comments or request for any additional information from the Commission, and
(vi) of the happening of any event during the period described in Section 3.3
hereof that, in the judgment of the Company, makes any statement of a material
fact made in the Preliminary Prospectus, the Registration Statement and the
Prospectus untrue or that requires the making of any changes in the Preliminary
Prospectus, the Registration Statement and the Prospectus in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Commission or any state securities commission shall enter
a stop order or suspend such qualification during any such time, the Company
will make every reasonable effort to obtain promptly the lifting of such order.
3.5 Affiliated Transactions.
3.5.1 Business Combinations. The Company will not consummate
its Business Combination with a business affiliated with ▇▇. ▇▇▇▇▇▇▇▇▇▇ or any
other Director, Officer, Initial Stockholder or their affiliates, unless the
Company obtains an opinion from an independent investment banking, valuation or
appraisal firm regarding the fairness to the stockholders from a financial point
of view of such Business Combination.
3.5.2 Compensation. Except for payments made pursuant to the
Office Administration Agreement as disclosed in the Preliminary Prospectus, the
Registration Statement and the Prospectus, the Company shall not pay any Initial
Stockholder, Officer or Director or any of their affiliates any fees or
compensation from the Company, for services rendered to the Company prior to, or
in connection with, the consummation of a Business Combination; provided that
the Initial Stockholders, Officers, Directors and their affiliates shall be
entitled to reimbursement from the Company for their reasonable out-of-pocket
expenses incurred in connection with seeking and consummating a Business
Combination.
3.6 Reports to the Underwriter.
3.6.1 Periodic Reports, Etc. For a period of five years from
the Effective Date, or earlier if the Company terminates its Exchange Act
registration in accordance with Section 3.2.3 hereof, the Company will file all
documents required to be filed with the Commission within the periods required
by the Exchange Act and the Regulations and will notify the Underwriter of any
such filing reasonably promptly after the filing thereof.
3.7 Payment of Expenses. The Company hereby agrees to pay on each of
the Closing Date and the Option Closing Date, if any, to the extent not paid at
the Closing Date, all expenses incident to the performance of the obligations of
the Company under this Agreement, including but not limited to (i) the
preparation (exclusive of the fees and expenses of counsel to the Underwriter),
printing, filing and mailing (including the payment of postage with respect to
such mailing) of the Preliminary Prospectus, the Registration Statement and the
Prospectus, including the cost of all copies thereof and any amendments thereof
or supplements thereto supplied to the Underwriter in quantities as may be
required by the Underwriter, (ii) the printing, issuance and delivery of the
Units, the shares of Common Stock and the Warrants included in the Units and the
Underwriter's Purchase Option, including any transfer or other taxes payable
thereon, (iii) (a) the listing of the Securities on the American Stock Exchange
and (b) the qualification of the Securities under state securities or Blue Sky
laws, including the costs of preparing, printing and mailing the "Preliminary
Blue Sky Memorandum," and the "Final Blue Sky Memorandum," and the "Secondary
Market Trading Survey" (in the event a "Secondary Market Trading Survey" is
prepared), and the reasonable fees and disbursements of ▇▇▇▇▇▇▇ related thereto;
provided that the Company shall not be required to reimburse the Underwriter or
▇▇▇▇▇▇▇ for any amounts under this clause (iii)(b) in excess of $40,000, unless
▇▇▇▇▇▇▇ or the Underwriter have advanced filing fees with respect to the
qualification of the Securities under state or foreign securities or Blue Sky
laws, in which event the limitations on reimbursement under this clause (iii)(b)
shall not apply to such filing fees, (iv) filing fees, costs and expenses
(excluding fees and disbursements for the Underwriter's counsel) incurred in
registering the Offering with the NASD and the Commission, (v) fees and
disbursements of the Transfer Agent, (vi) expenses of the Company's personnel
and representatives, but not the Underwriter's personnel and representatives,
which are associated with "road show" meetings arranged by the Underwriter and
(vii) all other costs and expenses customarily borne by an issuer incident to
the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section 3.9 other than the costs and expenses
of (a) placing "tombstone" advertisements in the Wall Street Journal, The New
York Times or any other publication, (b) the preparation, binding and delivery
of transaction "bibles" and (c) the purchase and delivery of
13
lucite cubes or similar commemorative items. The Underwriter shall deduct from
the net proceeds of the Offering payable to the Company on the Closing Date, and
the Option Closing Date, if any, the expenses set forth in this Agreement to be
paid by the Company to the Underwriter.
3.8 Application of Net Proceeds. The Company will apply the net
proceeds from the Offering received by it in a manner consistent with the
application described under the caption "Use Of Proceeds" in the Preliminary
Prospectus, the Registration Statement and the Prospectus.
3.9 Delivery of Earnings Statements to Security Holders. The Company
will make generally available to its security holders as soon as practicable,
but not later than the first day of the 16th full calendar month following the
Effective Date, an earnings statement (which need not be certified by
independent public or independent certified public accountants unless required
by the Securities Act or the Regulations, but which shall satisfy the provisions
of Rule 158(a) under Section 11(a) of the Securities Act) covering a period of
at least 12 consecutive months beginning after the Effective Date.
3.10 Notice to NASD. In the event any person or entity (regardless of
any NASD affiliation or association) is engaged to assist the Company in its
search for a merger candidate or to provide any other merger and acquisition
services, the Company will provide the following to the NASD and the Underwriter
prior to the consummation of the Business Combination: (i) complete details of
all services and copies of agreements governing such services; and (ii)
justification as to why the person or entity providing the merger and
acquisition services should not be considered an "underwriter or related person"
with respect to the Company's initial public offering, as such term is defined
in Rule 2710(a)(6) of the NASD's Conduct Rules. The Company also agrees that
proper disclosure of such arrangement or potential arrangement will be made in
the proxy statement which the Company will file for purposes of soliciting
stockholder approval for the Business Combination.
3.11 Stabilization. Neither the Company, nor, to its knowledge, any of
its employees, directors or stockholders (without the consent of the
Underwriter) has taken or will take, directly or indirectly, any action designed
to or that has constituted or that might reasonably be expected to cause or
result in, under the Exchange Act, or otherwise, stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Units.
3.12 Internal Controls. During the Blue Sky Compliance Period, the
Company will maintain a system of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management's general or specific authorization, (ii) transactions are
recorded as necessary in order to permit preparation of financial statements in
accordance with 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 recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
3.13 Accountants. For a period of five years from the Effective Date or
until such earlier time upon which the Company is required to be liquidated, the
Company shall use its commercially reasonable efforts to retain BDO ▇▇▇▇▇▇▇ or
other nationally recognized independent registered public accountants.
3.14 Form 8-K. The Company shall, on the date hereof, retain its
independent public accountants to audit the financial statements of the Company
as of the Closing Date ("Audited Financial Statements") reflecting the receipt
by the Company of the proceeds of the initial public offering. As soon as the
Audited Financial Statements become available, the Company shall as soon as
practicable file a Current Report on Form 8-K with the Commission, which Report
shall contain the Company's Audited Financial Statements.
3.15 NASD. During the period of the distribution of the Securities, the
Company shall advise the NASD if it is aware that any 5% or greater stockholder
of the Company becomes an affiliate or associated person of an NASD member
participating in the distribution of the Company's Securities.
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3.16 Corporate Proceedings. All corporate proceedings and other legal
matters necessary to carry out the provisions of this Agreement and the
transactions contemplated hereby shall have been done to the reasonable
satisfaction to counsel for the Underwriter.
3.17 Investment Company. The Company shall cause the proceeds of the
Offering and the D&O Rights Offering to be held in the Trust Account to be
invested only in "government securities" with specific maturity dates or money
market funds meeting certain conditions under the Investment Company Act of 1940
and the rules and regulations thereunder, as set forth in the Trust Agreement
and disclosed in the Preliminary Prospectus, the Registration Statement 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. Once the Company
consummates a Business Combination, it will be engaged in a business other than
that of investing, reinvesting, owning, holding or trading securities.
3.18 Transfer and Warrant Agent. Until the earlier of the expiration of
the Warrants or the Company's liquidation, the Company shall retain a transfer
and warrant agent acceptable to the Underwriter ("Transfer Agent"). The
Underwriter acknowledges that Mellon Investor Services LLC is an acceptable
Transfer Agent.
4. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligations of the Underwriter
to purchase and pay for the Firm Units on the Closing Date and the Option Units,
if any, on any Option Closing Date, are subject to the condition that the
representations and warranties of the Company as of the date hereof and as of
the Closing Date or Option Closing Date, as the case may be, are true and
accurate in all material respects, and to the condition that the Company has
performed all of its covenants and obligations hereunder theretofore to be
performed, and to the following additional conditions:
4.1 Regulatory Matters.
4.1.1 Effectiveness of Registration Statement. The
Registration Statement shall have become effective not later than 5:00 P.M., New
York time, on the date of this Agreement or such later date and time as shall be
consented to in writing by the Underwriter, and, at each of the Closing Date and
the Option Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for the purpose
shall have been instituted or shall be pending or contemplated by the Commission
and any request on the part of the Commission for additional information shall
have been complied with to the reasonable satisfaction of ▇▇▇▇▇▇▇.
4.1.2 NASD Clearance. By the Effective Date, the Underwriter
shall have received clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriter as described in the Registration
Statement.
4.1.3 Listing of Units. The Firm Units and Option Units, if
any, have been duly listed, subject to notice of issuance, on the American Stock
Exchange.
4.2 Company Counsel Matters.
4.2.1 Closing Date Opinion of Counsel. On the Closing Date,
the Underwriter shall have received the favorable opinion of Shearman & Sterling
LLP, counsel to the Company, dated the as of the Closing Date, addressed to the
Underwriter and in the form attached hereto as Exhibit A. On the Option Closing
Date, if any, the Underwriter shall receive the favorable bring-down opinion of
Shearman & Sterling LLP, dated as of the Option Closing Date, addressed to the
Underwriter.
4.2.2 Reliance. In rendering such opinion, such counsel may
rely (i) as to matters involving the application of laws other than the laws of
the United States and jurisdictions in which they are admitted, to the extent
such counsel deems proper and to the extent specified in such opinion, if at
all, upon an opinion or opinions (in form and substance reasonably satisfactory
to ▇▇▇▇▇▇▇) of other counsel reasonably acceptable to ▇▇▇▇▇▇▇, familiar with the
applicable laws, and (ii) as to matters of fact, to the extent they deem proper,
on certificates or other written statements of officers of the Company and
officers of departments of various jurisdictions having
15
custody of documents respecting the corporate existence or good standing of the
Company, provided that copies of any such statements or certificates shall be
delivered to ▇▇▇▇▇▇▇ if requested.
4.3 Cold Comfort Letter. At the time this Agreement is executed, and at
each of the Closing Date and Option Closing Date, if any, the Underwriter shall
have received a letter, addressed to the Underwriter and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to the Underwriter and
to ▇▇▇▇▇▇▇ from BDO ▇▇▇▇▇▇▇ dated, respectively, as of the date of this
Agreement and as of the Closing Date and the Option Closing Date, if any:
(i) Confirming that they are independent
accountants with respect to the Company within the meaning of the Securities Act
and the applicable Regulations and that they have not, during the periods
covered by the financial statements included in the Preliminary Prospectus, the
Registration Statement and the Prospectus, provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange Act;
(ii) Stating that in their opinion the financial
statements of the Company included in the Preliminary Prospectus, the
Registration Statement and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Securities Act and
the published Regulations thereunder;
(iii) Stating that, on the basis of a limited
review which included a reading of the latest available unaudited interim
financial statements of the Company (with an indication of the date of the
latest available unaudited interim financial statements), a reading of the
latest available minutes of the stockholders and board of directors and the
various committees of the board of directors, consultations with officers and
other employees of the Company responsible for financial and accounting matters
and other specified procedures and inquiries, nothing has come to their
attention which would lead them to believe that (a) the unaudited financial
statements of the Company included in the Registration Statement do not comply
as to form in all material respects with the applicable accounting requirements
of the Securities Act and the Regulations or are not fairly presented in
conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements of the
Company included in the Registration Statement, (b) at a date not later than
five days prior to the Effective Date, Closing Date or Option Closing Date, as
the case may be, there was any change in the capital stock or long-term debt of
the Company, or any decrease in the stockholders' equity of the Company as
compared with amounts shown in the November 20, 2005 balance sheet included in
the Registration Statement, other than as set forth in or contemplated by the
Registration Statement, or, if there was any decrease, setting forth the amount
of such decrease, and (c) during the period from November 20, 2005 to a
specified date not later than five days prior to the Effective Date, Closing
Date or Option Closing Date, as the case may be, there was any decrease in
revenues, net earnings or net earnings per share of Common Stock, in each case
as compared with the corresponding period in the preceding year and as compared
with the corresponding period in the preceding quarter, other than as set forth
in or contemplated by the Registration Statement, or, if there was any such
decrease, setting forth the amount of such decrease;
(iv) Setting forth, at a date not later than five
days prior to the Effective Date, the amount of liabilities of the Company
(including a break-down of commercial papers and notes payable to banks);
(v) Stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and earnings, statements and
other financial information pertaining to the Company set forth in the
Preliminary Prospectus, the Registration Statement and the Prospectus in each
case to the extent that such amounts, numbers, percentages, statements and
information may be derived from the general accounting records, including work
sheets, of the Company and excluding any questions requiring an interpretation
by legal counsel, with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which procedures do not
constitute an examination in accordance with generally accepted auditing
standards) set forth in the letter and found them to be in agreement;
(vi) Stating that they have not during the
immediately preceding five year period brought to the attention of the Company's
management any reportable condition related to internal structure, design or
operation as defined in the Statement on Auditing Standards No. 60
"Communication of Internal Control Structure Related Matters Noted in an Audit,"
in the Company's internal controls; and
16
(vii) Statements as to such other matters incident
to the transaction contemplated hereby as the Underwriter may reasonably
request.
4.4 Officers' Certificates.
4.4.1 Officer's Certificate. At each of the Closing Date and
Option Closing Date, if any, the Underwriter shall have received a certificate
of the Company signed by the Chairman of the Board, the President or an
Executive Vice President of the Company, dated the Closing Date or the Option
Closing Date, as the case may be, respectively, to the effect that (i) the
Company has performed all covenants or agreements and satisfied all conditions
required by this Agreement to be performed or complied with by the Company prior
to and as of the Closing Date or Option Closing Date, as the case may be and
(ii) as of the Closing Date and the Option Closing Date, as the case may be, the
representations and warranties of the Company set forth in Section 2 hereof are
true and correct. Further, at each of the Closing Date and the Option Closing
Date, if any, the Company shall have furnished to the Underwriter such further
certificates and documents confirming the representations and warranties,
covenants and conditions contained herein and related matters as the Underwriter
may reasonably have requested.
4.4.2 Secretary's Certificate. At each of the Closing Date
and the Option Closing Date, if any, the Underwriter shall have received a
certificate of the Company signed by the Secretary or Assistant Secretary of the
Company, dated the Closing Date or the Option Closing Date, as the case may be,
respectively, certifying (i) that the Bylaws and Amended and Restated
Certificate of Incorporation of the Company are true and complete, have not been
modified and are in full force and effect, (ii) that the resolutions relating to
the public offering contemplated by this Agreement are in full force and effect
and have not been modified, (iii) all correspondence between the Company or its
counsel and the Commission, and (iv) as to the incumbency of the officers of the
Company. The documents referred to in such certificate shall be attached to such
certificate.
4.5 Delivery of Agreements. On the Effective Date, the Company shall
have delivered to the Underwriter executed copies of the Escrow Agreement, the
Trust Agreement, the Warrant Agreement, the Transfer Agent Services Agreement,
the Insider Letters and the Share Purchase & Sale, D&O Rights and Company Call
Right Agreement. On the Closing Date, the Company shall have delivered to the
Underwriter the Underwriter's Purchase Option and the Insider's D&O Rights to
the Insiders.
4.6 Opinion of Counsel for the Underwriter. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to the
Underwriter and to ▇▇▇▇▇▇▇ and the Underwriter shall have received from ▇▇▇▇▇▇▇
a favorable opinion, dated the Closing Date and the Option Closing Date, if any,
with respect to such of these proceedings as the Underwriter may reasonably
require. On or prior to the Effective Date, the Closing Date and the Option
Closing Date, as the case may be, ▇▇▇▇▇▇▇ shall have been furnished such
documents, certificates and opinions as they may reasonably require for the
purpose of enabling them to review or pass upon the matters referred to in this
Section 4.6, or in order to evidence the accuracy, completeness or satisfaction
of any of the representations, warranties or conditions herein contained.
4.7 Secondary Market Trading Survey. On the Closing Date, the
Underwriter shall have received the Secondary Market Trading Survey from
▇▇▇▇▇▇▇.
4.8 D&O Rights Offering. On the Closing Date, the Trustee shall have
confirmed to the Underwriter the Company's receipt of $1,700,000 in respect of
the D&O Rights Offering and the deposit of the entire proceeds of the D&O Rights
Offering in the Trust Account.
5. INDEMNIFICATION.
5.1 Indemnification of Underwriter.
5.1.1 General. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless the Underwriter and each of their
respective directors, officers and employees and each person, if any, who
controls the Underwriter ("controlling person") within the meaning of Section 15
of the Securities Act or
17
Section 20(a) of the Exchange Act, against any and all loss, liability, claim,
damage and expense whatsoever (including but not limited to any and all legal or
other expenses reasonably incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim whatsoever,
whether arising out of any action between the Underwriter and the Company or
between the Underwriter and any third party or otherwise) to which they or any
of them may become subject under the Securities Act, the Exchange Act or any
other statute or at common law or otherwise or under the laws of foreign
countries, arising out of, based upon or caused by any untrue statement or
alleged untrue statement of a material fact contained in (i) the Preliminary
Prospectus, the Registration Statement or the Prospectus and any amendments or
supplements thereto; (ii) any post effective amendment or amendments or any new
registration statement and prospectus in which is included securities of the
Company issued or issuable upon exercise of the Underwriter's Purchase Option;
or (iii) any application or other document or written communication (in this
Section 5 collectively called "application") executed by the Company or based
upon written information furnished by the Company in any jurisdiction in order
to qualify the Securities under the securities laws thereof or filed with the
Commission, any state securities commission or agency, Nasdaq or any securities
exchange; or the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company with respect to the
Underwriter by or on behalf of the Underwriter expressly for use in the
Preliminary Prospectus, the Registration Statement and the Prospectus, or any
amendment or supplement thereof, or in any application, as the case may be. The
Company agrees to notify the Underwriter as soon as practicable of the
commencement of any litigation or proceedings against the Company or any of its
officers, directors or controlling persons in connection with the issue and sale
of the Securities or in connection with the Preliminary Prospectus, the
Registration Statement and the Prospectus and any amendments or supplements
thereto.
5.1.2 Procedure. If any action is brought against the
Underwriter or a controlling person in respect of which indemnity may be sought
against the Company pursuant to Section 5.1.1, such Underwriter shall promptly
notify the Company in writing of the institution of such action and the Company
shall assume the defense of such action, including the employment and fees of
counsel (subject to the reasonable approval of the Underwriter) and payment of
actual expenses; provided, that the failure to give such notice shall not
relieve the Company from any liability it may have under Sections 5.1.1 or 5.1.2
hereof, except to the extent the Company has been materially prejudiced (through
forfeiture of substantive rights or defenses) by such failure and; provided
further, that the failure to notify the Company shall not relieve the Company
from any other liability that it may have to an indemnified party for
contribution or otherwise than on account of the provisions of Sections 5.1.1 or
5.1.2 hereof. Such Underwriter or controlling person shall have the right to
employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or controlling person
unless (i) the employment of such counsel at the expense of the Company shall
have been authorized in writing by the Company in connection with the defense of
such action, or (ii) the Company shall not have employed counsel to take charge
of the defense of such action, or (iii) such indemnified party or parties shall
have reasonably concluded that there may be defenses available to it or them
which are different from or additional to those available to the Company (in
which case the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
the reasonable fees and expenses of not more than one additional firm of
attorneys selected by the Underwriter and/or controlling person shall be borne
by the Company. Notwithstanding anything to the contrary contained herein, if
the Underwriter or controlling person shall assume the defense of such action as
provided above, the Company shall have the right to approve the terms of any
settlement of such action which approval shall not be unreasonably withheld.
5.2 Indemnification of the Company. The Underwriter agrees to indemnify
and hold harmless the Company, its directors, officers and employees and agents
who control the Company within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act against any and all loss, liability, claim,
damage and expense described in the foregoing indemnity from the Company to the
Underwriter, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions made in the Preliminary
Prospectus, the Registration Statement and the Prospectus or any amendment or
supplement thereto or in any application, in reliance upon, and in strict
conformity with, written information furnished to the Company with respect to
the Underwriter by or on behalf of the Underwriter expressly for use in the
Preliminary Prospectus, the Registration Statement and the Prospectus or any
amendment or supplement thereto or in any such application. In case any action
shall be brought against the Company or any other person so indemnified based on
the Preliminary Prospectus, the Registration Statement and the Prospectus or any
amendment or supplement thereto or any
18
application, and in respect of which indemnity may be sought against the
Underwriter, the Underwriter shall have the rights and duties given to the
Company, and the Company and each other person so indemnified shall have the
rights and duties given to the Underwriter by the provisions of Section 5.1.2.
5.3 Contribution.
5.3.1 Contribution Rights. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) any
person entitled to indemnification under this Section 5 makes claim for
indemnification pursuant hereto but it is judicially determined (by the entry of
a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Section 5 provides for indemnification in such case, or (ii)
contribution under the Securities Act, the Exchange Act or otherwise may be
required on the part of any such person in circumstances for which
indemnification is provided under this Section 5, then, and in each such case,
the Company and the Underwriter shall contribute to the aggregate losses,
liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and the Underwriter, as incurred, in
such proportions that the Underwriter is responsible for that portion
represented by the percentage that the underwriting discount appearing on the
cover page of the Prospectus bears to the initial offering price appearing
thereon and the Company is responsible for the balance; provided, that no person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Notwithstanding the provisions
of this Section 5.3.1, the Underwriter shall not be required to contribute any
amount in excess of the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that the Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section 5, each director, officer and employee of
the Underwriter or the Company, as applicable, and each person, if any, who
controls the Underwriter or the Company, as applicable, within the meaning of
Section 15 of the Securities Act shall have the same rights to contribution as
the Underwriter or the Company, as applicable.
5.3.2 Contribution Procedure. Within fifteen days after
receipt by any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding effected by such
party seeking contribution on account of any settlement of any claim, action or
proceeding effected by such party seeking contribution without the written
consent of such contributing party. The contribution provisions contained in
this Section 5 are intended to supersede, to the extent permitted by law, any
right to contribution under the Securities Act, the Exchange Act or otherwise
available.
6. ADDITIONAL COVENANTS.
6.1 Additional Shares or Options. The Company hereby agrees that until
the earlier of the consummation of a Business Combination or the distribution of
the Trust Account, it shall not issue any shares of Common Stock or any options
or other securities convertible into Common Stock, or any shares of Preferred
Stock which participate in any manner in the Trust Account or which vote as a
class with the Common Stock on a Business Combination.
6.2 Trust Account Waiver Acknowledgment. The Company hereby agrees that
prior to commencing its due diligence investigation of any insurance-related
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 best efforts to cause the Target Business or the vendor
to execute a waiver letter in the form attached hereto as Exhibit B and C,
respectively. It is understood that the Company may not be able to obtain such a
19
waiver letter in some or all circumstances, and in the event that a vendor or
Target Business refuses to enter into such a waiver letter, the Company may
engage such vendor or commence due diligence investigations of, or enter into
discussions with, such Target Business, provided the Company determines that it
would be unable to obtain, on a reasonable basis, substantially similar services
or opportunities from another entity willing to enter into such a waiver.
6.3 Escrow Agreement. The Company shall not take any action or omit to
take any action that would cause a breach of the Escrow Agreement executed
between each Initial Stockholder and the Company and will not allow any
amendments to, or waivers of any provisions of, such Escrow Agreement without
the prior written consent of the Underwriter.
6.4 Share Purchase & Sale, D&O Rights and Company Call Right Agreement.
The Company shall not take any action or omit to take any action that would
cause a breach of the Share Purchase & Sale, D&O Rights and Company Call Right
Agreement and will not allow any amendments to, or waivers of any provisions of,
such Share Purchase & Sale, D&O Rights and Company Call Right Agreement without
the prior written consent of the Underwriter.
6.5 Certificate of Incorporation and Bylaws. The Company shall not take
any action or omit to take any action that would cause the Company to be in
breach or violation of its Amended and Restated Certificate of Incorporation or
Bylaws.
6.6 Business Combination/Distribution Procedure. Subject to Section
6.8, the Company agrees: (i) that, prior to the consummation of the initial
Business Combination, it will submit such transaction to the Company's
stockholders for their approval ("Business Combination Vote") even if the nature
of the Business Combination is such as would not ordinarily require stockholder
approval under applicable state law; and (ii) that, in the event that the
Company does not effect a Business Combination within 18 months from the
consummation of this Offering (subject to extension for an additional 6-month
period, as described in the Prospectus), the Company will be liquidated and will
distribute to all holders of the Common Stock issued as a part of the Units in
this Offering ("IPO Shares") an aggregate sum equal to the Company's
"Liquidation Value." The Company's "Liquidation Value" shall mean the Company's
book value, as determined by the Company and approved by BDO ▇▇▇▇▇▇▇. In no
event, however, will the Company's Liquidation Value be less than the amount of
funds in the Trust Account (inclusive of any net interest income thereon not
released to the Company, including any net interest income earned on the portion
of the proceeds held in the Trust Account Representing the Deferred Discount
(less applicable taxes), the proceeds held in trust from this Offering and the
D&O Rights Offering and the 2.5% of the proceeds held in the Trust Account
representing the Deferred Discount). Only holders of IPO Shares shall be
entitled to receive liquidating distributions and the Company shall pay no
liquidating distributions with respect to any other shares of capital stock of
the Company. With respect to the initial Business Combination Vote, the Company
shall enforce the obligation of all of the Initial Stockholders to vote the
shares of Common Stock owned by them, whenever acquired, in accordance with the
vote of a majority of the shares voted by the Public Stockholders (as defined
below). At the time the Company seeks approval of the Business Combination, the
Company will offer each holder of IPO Shares other than the Initial Stockholders
(the "Public Stockholders") the right to convert their IPO Shares at a per share
conversion price, calculated as of two business days prior to the consummation
of such proposed Business Combination, equal to (A) the amount in the Trust
Account (inclusive of (x) any net interest income earned thereon not released to
the Company, including any net interest income earned on the portion of the
proceeds held in the Trust Account representing the Deferred Discount, less
applicable taxes, (y) the proceeds held in trust from this Offering and the D&O
Rights Offering and (z) the 2.5% of the proceeds held in the Trust Account
representing the Deferred Discount) divided by (B) the number of IPO Shares then
outstanding (the "Conversion Price"). If a majority of the shares voted by the
Public Stockholders are voted to approve the initial Business Combination, and
if Public Stockholders with less than 20% in interest of the Company's IPO
Shares vote against such approval of a Business Combination and elect to convert
their IPO Shares, the Company will proceed with such Business Combination. If
the Company consummates such Business Combination, 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 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 any
other shares of capital stock of the Company. If holders of 20% or more in
interest of the IPO Shares vote against approval of any potential Business
Combination and elect to convert their IPO Shares, the Company will not proceed
with such Business Combination and will not convert such shares. The
20
Company shall not subject any potential Business Combination to a Business
Combination Vote unless such transaction is structured so that the Business
Combination, if approved in accordance with this section 6.6, shall proceed and
may be consummated even if the maximum number of IPO Shares that Public
Stockholders could elect to convert to cash in connection with the Business
Combination Vote are in fact converted to cash.
6.7 Amendment to Amended and Restated Articles of Incorporation. The
Company agrees that prior to the consummation of the initial Business
Combination, in connection with any stockholder vote with respect to the
amendment of Article VI of the Company's Amended and Restated Articles of
Incorporation (a "Charter Amendment"): (i) any Charter Amendment must be
approved by the holders of at least 80%-in-interest of the Company's outstanding
Common Stock and (ii) the Company shall not propose any Charter Amendment or
have any vote thereon unless such Charter Amendment provides that each Public
Stockholder voting against the Charter Amendment, if such amendment is approved,
shall have the right to convert its IPO Shares to cash at a per share conversion
price, calculated as of the record date for the determination of shareholders
entitled to vote on the Charter Amendment, equal to the Conversion Price. The
Deferred Discount shall be reduced by $0.20 for each IPO Share converted to cash
in accordance with this Section 6.7.
6.8 Business Combination/Distribution Procedure Following Charter
Amendment. Prior to the consummation of the Company's initial Business
Combination, if one or more Charter Amendments are approved in accordance with
Section 6.7 hereof (any Charter Amendment so approved, a "Bona Fide Amendment"),
then the Company agrees to carry out the provisions of Section 6.6 as faithfully
as possible consistent with the terms of the Company's Amended and Restated
Certificate of Incorporation as amended by such Bona Fide Amendment(s).
6.9 Rule 419. The Company agrees that it will use its commercially
reasonable efforts to prevent the Company from becoming subject to Rule 419
under the Securities Act prior to the consummation of any Business Combination,
including but not limited to using its commercially reasonable 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.
6.10 Transaction Value. The Company agrees that the initial Business
Combination must have a Transaction Value (as defined in the Registration
Statement) equal to at least 80% of the Company's net assets at the time of such
Business Combination. The Transaction 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. If the Board of Directors of the Company is not able to
independently determine that the Transaction Value is at least 80% of the
Company's net assets at the time of such Business Combination, the Company will
obtain an opinion from an unaffiliated, nationally recognized independent
investment banking valuation or appraisal firm with respect to the satisfaction
of such criteria.
6.11 Company Call Right. In the event that the Underwriter does not
exercise all of its Over-Allotment Option, the Company agrees that within 20
days of the expiration of the Over-Allotment Option, the Company shall exercise
its right pursuant to the Company Call Agreement to purchase shares of Common
Stock at a price of $0.0056 per share from the Initial Stockholders in an amount
sufficient to cause the Initial Stockholders to maintain control over no more
than 20% of the Common Stock then-outstanding after giving effect to the
Offering and the exercise, if any, of the Over-Allotment Option.
21
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Time of Sale, the Closing Date or the Option Closing Date, and such
representations, warranties and agreements of the Underwriter and the Company,
including the indemnity agreements contained in Section 5 hereof, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter, the Company or any controlling person, and
shall survive the issuance and delivery of the Securities to the Underwriter and
the payment to the Company in respect thereof. The provisions of Section 5 shall
survive any termination, cancellation, or other failure to carry out the terms
of this Agreement or any part thereof.
8. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
8.1 Effective Date. This Agreement shall become effective upon its
execution and delivery.
8.2 Termination. The Underwriter shall have the right to terminate this
Agreement at any time prior to any Closing Date or Option Closing Date, (i) if
any domestic or international event or act or occurrence has materially
disrupted, or in your opinion will in the immediate future materially disrupt,
general securities markets in the United States; or (ii) if trading on the New
York Stock Exchange, the American Stock Exchange or on the NASD OTC Bulletin
Board (or successor trading market) shall have been suspended, or minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices
for securities shall have been fixed, or maximum ranges for prices for
securities shall have been required on the NASD OTC Bulletin Board or by order
of the Commission or any other government authority having jurisdiction, or
(iii) if the United States shall have become involved in a new war or an
increase in major hostilities, or (iv) if a banking moratorium has been declared
by a New York State or federal authority, or (v) if a moratorium on foreign
exchange trading has been declared which materially adversely impacts the United
States securities market, or (vi) if the Company shall have sustained a material
loss by fire, flood, accident, hurricane, earthquake, theft, sabotage or other
calamity or malicious act which, whether or not such loss shall have been
insured, will, in your opinion, make it inadvisable to proceed with the delivery
of the Units, (vii) if any of the Company's representations, warranties or
covenants hereunder are materially breached, or (viii) if the Underwriter shall
have become aware after the date hereof of such a material adverse change in the
conditions or prospects of the Company, or such adverse material change in
general market conditions, including without limitation as a result of terrorist
activities after the date hereof, as in the Underwriter's judgment would make it
impracticable to proceed with the offering, sale and/or delivery of the Units or
to enforce contracts made by the Underwriter for the sale of the Securities.
9. MISCELLANEOUS.
9.1 Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered by
hand or faxed and confirmed and shall be deemed given when so delivered or faxed
and confirmed or if mailed, two days after such mailing.
If to the Underwriter:
CRT Capital Group LLC
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
If to the Company:
22
North American Insurance Leaders, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. de Jonge
Copy to:
Shearman & Sterling LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
9.2 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
9.3 Amendment. This Agreement may only be amended by a written
instrument executed by each of the parties hereto.
9.4 Entire Agreement. This Agreement (together with the other
agreements and documents being delivered pursuant to or in connection with this
Agreement) constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and thereof, and supersede all prior agreements and
understandings of the parties, oral and written, with respect to the subject
matter hereof.
9.5 Binding Effect. This Agreement shall inure solely to the benefit of
and shall be binding upon the Underwriter, the Company and the controlling
persons, directors and officers referred to in Section 5 hereof, and their
respective successors and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained.
9.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York. The Company hereby agrees
that any action, proceeding or claim against it arising out of, relating in any
way to this Agreement shall be brought and enforced in the courts of the State
of New York of the United States of America located in the City and County of
New York, and irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company hereby waives any objection to such exclusive
jurisdiction and that such courts represent an inconvenient forum. Any such
process or summons to be served upon the Company may be served by transmitting a
copy thereof by registered or certified mail, return receipt requested, postage
prepaid, addressed to it at the address set forth in this Section 9. Such
mailing shall be deemed personal service and shall be legal and binding upon the
Company in any action, proceeding or claim. The Company agrees that the
prevailing party(ies) in any such action shall be entitled to recover from the
other party(ies) all of its reasonable attorneys' fees and expenses relating to
such action or proceeding and/or incurred in connection with the preparation
therefor.
9.7 No Fiduciary Duty. The Company acknowledges and agrees that (i) the
purchase and sale of the Units pursuant to this Agreement is an arm's-length
commercial transaction between the Company, on the one hand, and the
Underwriter, on the other, (ii) in connection therewith the Underwriter is
acting solely as a principal and not as the agent or fiduciary of the Company,
(iii) the Underwriter has not assumed an advisory or fiduciary responsibility in
favor of the Company with respect to the Offering (irrespective of whether the
Underwriter has advised or is currently advising the Company on other matters)
or any other obligation to the Company except the obligations expressly set
forth in this Agreement and (iv) the Company has consulted its own legal and
financial advisors to the extent it deemed appropriate. The Company agrees that
it will not claim that the Underwriter has rendered advisory services of any
nature or respect, or owes a fiduciary or similar duty to the Company in
connection with the Offering.
9.8 Execution in Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which
23
taken together shall constitute one and the same agreement, and shall become
effective when one or more counterparts has been signed by each of the parties
hereto and delivered to each of the other parties hereto.
9.9 Waiver, Etc. The failure of any of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way effect the
validity of this Agreement or any provision hereof or the right of any of the
parties hereto to thereafter enforce each and every provision of this Agreement.
No waiver of any breach, non-compliance or non-fulfillment of any of the
provisions of this Agreement shall be effective unless set forth in a written
instrument executed by the party or parties against whom or which enforcement of
such waiver is sought; and no waiver of any such breach, non-compliance or
non-fulfillment shall be construed or deemed to be a waiver of any other or
subsequent breach, non-compliance or non-fulfillment.
If the foregoing correctly sets forth the understanding between the
Underwriter and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement.
Very truly yours,
NORTH AMERICAN INSURANCE LEADERS,
INC.
By:_________________________________
Name: ▇▇▇▇▇▇▇ ▇. de Jonge
Title: President
Accepted on the date first
above written:
CRT CAPITAL GROUP LLC
By:_________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Managing Director
24
SCHEDULE 2.17.4
None.
SCHEDULE 2.20
[TO BE COMPLETED]
EXHIBIT A
FORM OF OPINION OF COMPANY COUNSEL
[TO COME]
EXHIBIT B
North American Insurance Leaders, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Prospectus of North American Insurance
Leaders, Inc. (the "Company"), dated _____________, 2006 (the "Prospectus").
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Prospectus.
We have read the Prospectus and understand that the Company has
established the trust account at JPMorgan Chase Bank, NA, maintained by JPMorgan
Chase Bank, NA acting as trustee (the "Trust Account"), initially in the amount
of $117,829,500, for the benefit of the Public Stockholders and that the Company
may disburse monies from the Trust Account only (i) to the Public Stockholders
in the event of the conversion of their shares or the liquidation of the Company
or (ii) to the Company after it consummates an initial Business Combination.
For and in consideration of the Company agreeing to evaluate the
undersigned for purposes of consummating an initial Business Combination with
it, the undersigned hereby agrees that it does not have any right, title,
interest or claim of any kind in or to any monies in the Trust Account ("Claim")
and hereby waives any Claim it may have in the future as a result of, or arising
out of, any negotiations, contracts or agreements with the Company and will not
seek recourse against the Trust Account for any reason whatsoever.
_______________________________________
Print Name of Target Business
_______________________________________
Authorized Signature of Target Business
EXHIBIT C
North American Insurance Leaders, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Reference is made to the Prospectus of North American Insurance
Leaders, Inc. (the "Company"), dated _____________, 2006 (the "Prospectus").
Capitalized terms used and not otherwise defined herein shall have the meanings
assigned to them in the Prospectus.
We have read the Prospectus and understand that the Company has
established the trust account at JPMorgan Chase Bank, NA, maintained by JPMorgan
Chase Bank, NA acting as trustee (the "Trust Account"), initially in the amount
of $117,829,500, for the benefit of the Public Stockholders and that the Company
may disburse monies from the Trust Account only (i) to the Public Stockholders
in the event of the conversion of their shares or the liquidation of the Company
or (ii) to the Company after it consummates an initial Business Combination.
For and in consideration of the Company engaging the services of the
undersigned, the undersigned hereby agrees that it does not have any right,
title, interest or claim of any kind in or to any monies in the Trust Account
("Claim") and hereby waives any Claim it may have in the future as a result of,
or arising out of, any negotiations, contracts or agreements with the Company
and will not seek recourse against the Trust Account for any reason whatsoever.
_______________________________________
Print Name of Vendor/Lender
_______________________________________
Authorized Signature of Vendor/Lender
