UNDERWRITING AGREEMENT between GENERAL FINANCE CORPORATION and MORGAN JOSEPH & CO. INC. Dated: March [ l ], 2006
Exhibit 1.1
between
GENERAL FINANCE CORPORATION
and
XXXXXX XXXXXX & CO. INC.
Dated:
March [ l ], 2006
GENERAL FINANCE CORPORATION
Xxxxxx Xxxxxx & Co. Inc.
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and
Gentlemen:
The undersigned, General Finance Corporation, a Delaware corporation (“Company”),
hereby confirms its agreement with Xxxxxx Xxxxxx & Co. Inc.
(“Xxxxxx Xxxxxx & Co.”; Xxxxxx Xxxxxx
& Co. may also be referred to as “you,” or the “Representative”) and with the other
underwriters named on Schedule I hereto for which Xxxxxx Xxxxxx & Co. is acting as Representative (the Representative and the other underwriters being collectively called the
“Underwriters” or, individually, an “Underwriter”) as follows:
1. Purchase and Sale of Securities.
1.1 Firm Securities.
1.1.1 Purchase of Firm Units. On the basis of the representations and warranties
herein contained, but subject to the terms and conditions herein set forth, the Company agrees to
issue and sell, severally and not jointly, to the several
Underwriters, an aggregate of 7,500,000 units (“Firm Units”) of the Company, at an
initial purchase price (net of discounts and commissions)
of $7.44 per Firm Unit (the “Initial
Price”), subject to the delivery by the Underwriters of $0.16
per Firm Unit (the “Contingent Underwriting Discount”) to the Trustee to
be deposited into the Trust Account (as such terms are defined below)
to be held pending consummation by the Company of its initial
Business Combination (as defined in the Company’s Amended and
Restated Certificate of Incorporation). The Underwriters, severally and not jointly, agree to purchase from the
Company the number of Firm Units set forth opposite their respective names on Schedule I attached
hereto and made a part hereof at a purchase price (net of discounts
and commissions) of $7.44 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(s)”). The shares of Common Stock and the Warrants included in the Firm Units will
not be separately transferable until 90 days after the effective date of the Registration Statement
(as defined in Section 2.1.1 hereof) (“Effective
Date”) unless the Representative informs
the Company of its decision to allow earlier separate trading, but in no event will the
Representative allow separate trading until the preparation of an audited balance sheet of the
Company reflecting receipt by the Company of the proceeds of the Offering and the filing of a Form
8-K by the Company which includes such balance sheet. 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 initial Business Combination or one year from the Effective Date of
the Registration Statement and terminating on the four-year anniversary of the Effective Date.
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1.1.2 Payment and Delivery. Delivery and payment for the Firm Units shall be made
at 10:00 A.M., New York City local time, on the third business day following the effective date of
the Registration Statement (or the fourth business day following the effective date, if the
Registration Statement is declared effective after 4:30 p.m.) or at such earlier time as shall be
agreed upon by the Representative and the Company at the offices of the Representative or at such
other place as shall be agreed upon by the Representative and the Company. The hour and date of
delivery and payment for the Firm Units are called “Closing Date.” Payment for the Firm
Units shall be made on the Closing Date at the Representative’ election by wire transfer in
Federal (same day) funds or by certified or bank cashier’s check(s) in New York Clearing House
funds, payable as follows: $56,450,000 of the proceeds received by the Company for the Firm Units shall
be deposited in the trust account established by the Company with
Continental Stock Transfer & Trust Company (the
“Trustee”) for the benefit of the public
stockholders as described in the Registration Statement (the “Trust Account”) pursuant to the
terms of an Investment Management Trust Agreement (“Trust
Agreement”), of which $1,200,000 shall represent the
Contingent Underwriting Discount, and the remaining
proceeds shall be paid to the order of the Company upon delivery to you of certificates (in form
and substance satisfactory to the Underwriters) representing the Firm Units (or through the
facilities of the Depository Trust Company (“DTC”)) for the account of the Underwriters.
The Firm Units shall be registered in such name or names and in such authorized denominations as
the Representative may request in writing at least two full business days prior to the Closing
Date. The Company will permit the Representative to examine and package the Firm Units for
delivery, at least one full business day prior to the Closing Date. The Company shall not be
obligated to sell or deliver the Firm Units except upon tender of payment by the Representative
for all the Firm Units.
1.2 Over-Allotment Option.
1.2.1 Option Units. For the purposes of covering any over-allotments in
connection with the distribution and sale of the Firm Units, the Underwriters are hereby granted,
severally and not jointly, an option to purchase up to an additional
1,125,000 units from the
Company (“Over-allotment Option”). Such
additional 1,125,000 units are hereinafter referred
to as “Option Units.” The Firm Units and the Option Units are hereinafter collectively
referred to as the “Units,” and the Units, the shares of Common Stock and the Warrants
included in the Units and the shares of Common Stock issuable upon exercise of the Warrants are
hereinafter referred to collectively as the “Public Securities.” The purchase price to be
paid for the Option Units will be the same price per Option Unit as the price per Firm Unit set
forth in Section 1.1.1 hereof.
1.2.2 Exercise of Option. The Over-allotment Option granted pursuant to Section
1.2.1 hereof may be exercised by the Representative as to all (at any time) or any part (from time
to time) of the Option Units within 45 days after the Effective Date. The Underwriters will not be
under any obligation to purchase any Option Units prior to the exercise of the Over-allotment
Option. The Over-allotment Option granted hereby may be exercised by the giving of oral notice to
the Company by the Representative, which must be confirmed in writing by overnight mail or
facsimile transmission setting forth the number of Option Units to be purchased and the date and
time for delivery of and payment for the Option Units (the “Option Closing Date”), which
will not be later than five full business days after the date of the notice or such other time as
shall be agreed upon by the Company and the Representative, at the offices of the Representative
or at such other place as shall be agreed upon by the Company and the Representative. Upon
exercise of the Over-allotment Option, the Company will become obligated to convey to the
Underwriters, and, subject to the terms and conditions set forth herein, the Underwriters will
become obligated to purchase, the number of Option Units specified in such notice.
1.2.3 Payment
and Delivery. Payment for the Option Units shall be made on the
Option Closing Date at the Representative’s election by wire transfer in Federal (same day) funds
or by certified or bank cashier’s check(s) in New York Clearing House funds, payable as follows:
$7.60 per Option Unit, representing both the $7.44 Initial Price for
the Option Unit and the $0.16 Contingent Underwriting Discount for such Option Unit, shall be deposited in the Trust Account pursuant to the Trust Agreement and the
remaining proceeds shall be paid to the order of the Company upon delivery to you of certificates
(in form and substance satisfactory to the Underwriters) representing the Option Units (or through
the facilities of DTC) for the account of the Underwriters. The certificates representing the
Option Units to be delivered will be in such denominations and registered in such names as the
Representative requests not less than two full business days prior to the Closing Date or the
Option Closing Date, as the case may be, and will be made available to the Representative for
inspection, checking and packaging at the aforesaid office of the Company’s transfer agent or
correspondent not less than one full business day prior to such Closing Date.
1.3 Xxxxxx Xxxxxx & Co.’s Purchase Option.
1.3.1 Purchase Option. The Company hereby agrees to issue and sell to Xxxxxx
Xxxxxx & Co. (and/or its designees) on the consummation of the Offering, for an aggregate purchase price of $100, an option (“Xxxxxx Xxxxxx Purchase
Option”) to purchase an aggregate of 750,000 units (“Xxxxxx Xxxxxx Units”) at $10.00 per Xxxxxx Xxxxxx Unit. Each of the Xxxxxx Xxxxxx Units is identical to the Firm
Units, except that each of the warrants underlying the Xxxxxx Xxxxxx Purchase Option entitles the
holder to purchase one share of our Common Stock at a price of $7.20 (“Xxxxxx Xxxxxx
Warrants”). The Xxxxxx Xxxxxx Purchase Option shall be exercisable, in whole or in part,
commencing on the later of the consummation of a Business Combination or one year from the
Effective Date and expiring on the five-year anniversary of the Effective Date at an initial
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exercise
price per Xxxxxx Xxxxxx Units of $10.00, which is equal to one hundred twenty-five
percent (125%) of the initial public offering price of a Unit. The Xxxxxx Xxxxxx Purchase Option,
the Xxxxxx Xxxxxx Units, the Xxxxxx Xxxxxx Warrants and the shares of Common Stock issuable upon
exercise of the Xxxxxx Xxxxxx Warrants are hereinafter referred to collectively as the “Xxxxxx
Xxxxxx Securities.” The Public Securities and the Xxxxxx Xxxxxx Securities are hereinafter
referred to collectively as the “Securities.” Xxxxxx Xxxxxx understands and agrees that
there are significant restrictions against transferring the Xxxxxx Xxxxxx Purchase Option or its underlying securities during
the first year after the Effective Date, as set forth in Section 3 of the Xxxxxx Xxxxxx Purchase
Option including, but not limited to, the agreement of Xxxxxx Xxxxxx that it will not sell, transfer, assign, pledge or hypothecate
the Xxxxxx Xxxxxx Purchase Option, or its underlying securities, for a period of one year following the Effective
Date to anyone other than (i) Xxxxxx Xxxxxx or an underwriter or a selected dealer in
connection with the Offering, or (ii) a bona fide officer or partner of Xxxxxx Xxxxxx or of any such
underwriter or selected dealer, in accordance with the National
Association of Securities Dealers, Inc. (“NASD”) Conduct
Rule 2710(g)(1).
1.3.2 Payment and Delivery. Delivery and payment for the Xxxxxx Xxxxxx Purchase
Option shall be made on the Closing Date. The Company shall deliver to Xxxxxx Xxxxxx, upon payment
therefor, certificates for the Xxxxxx Xxxxxx Purchase Option in the name or names and in such
authorized denominations as Xxxxxx Xxxxxx may request.
2. Representations and Warranties of the Company. The Company represents and warrants
to the Underwriters as follows:
2.1 Filing of Registration Statement.
2.1.1 Pursuant to the Act. The Company has filed with the Securities and Exchange
Commission (“Commission”) a registration statement and an amendment or amendments thereto,
on Form S-1 (File No. 333-129830), including any related preliminary prospectus (“Preliminary
Prospectus”), for the registration of the Securities under the Securities Act of 1933, as
amended (“Act”), which registration statement and amendment or amendments have been
prepared by the Company in conformity with the requirements of the Act, and the rules and
regulations (“Regulations”) of the Commission under the Act. Except as the context may
otherwise require, such registration statement, as amended, on file with the Commission at the time
the registration statement becomes effective (including the prospectus, financial statements,
schedules, exhibits and all other documents filed as a part thereof or incorporated therein and all
information deemed to be a part thereof as of such time pursuant to paragraph (b) of Rule 430A of
the Regulations), is hereinafter called the “Registration Statement,” and the form of the
final prospectus dated the Effective Date included in the Registration Statement (or, if
applicable, the form of final prospectus filed with the Commission pursuant to Rule 424 of the
Regulations), is hereinafter called the “Prospectus.” The Registration Statement has been
declared effective by the Commission on the date hereof.
2.1.2 Pursuant to the Exchange Act. The Company has filed with the Commission a
Form 8-A (File Number [___]) providing for the registration under the Securities Exchange Act of
1934, as amended (“Exchange Act”), of the Units, the Common Stock and the Warrants. The
registration of the Units, Common Stock and Warrants under the Exchange Act has been declared
effective by the Commission on the date hereof.
2.2 No Stop Orders, Etc. Neither the Commission nor, to the best of the Company’s
knowledge, any state regulatory authority has issued any order or, to the best of the Company’s
knowledge, threatened to issue any order preventing or suspending the use of any Preliminary
Prospectus or has instituted or, to the best of the Company’s knowledge, threatened to institute
any proceedings with respect to such an order.
2.3 Disclosures in Registration Statement.
2.3.1 10b-5 Representation. At the time the Registration Statement became
effective and at all times subsequent thereto up to the Closing Date and the Option Closing Date,
if any, the Registration Statement and the Prospectus will contain all material statements that are
required to be stated therein in accordance with the Act and the Regulations, and will in all
material respects conform to the requirements of the Act and the Regulations; and neither the
Registration Statement nor the Prospectus, nor any amendment or supplement thereto, on such dates,
will contain any untrue statement of a material fact or omit to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the Registration Statement for the registration of the
Securities or any amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission, such Preliminary
Prospectus and any amendments thereof and supplements thereto complied or will comply in all
material respects with the applicable provisions of the Act and the Regulations and did not and
will not contain an untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The representation and warranty made in
this Section 2.3.1 does not apply to statements made or statements omitted in reliance upon and in
conformity with written information furnished to the Company with respect to the Underwriters by
the Representative expressly for use in the Registration Statement or Prospectus or any amendment
thereof or supplement thereto.
2.3.2 Disclosure of Agreements. The agreements and documents described in the
Registration Statement and the Prospectus conform to the descriptions thereof contained therein and
there are no agreements or other documents required to
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be described in the Registration Statement or the Prospectus or to be filed with the
Commission as exhibits to the Registration Statement, that have not been so described or filed.
Each agreement or other instrument (however characterized or described) to which the Company is a
party or by which its property or business is or may be bound or affected and (i) that is referred
to in the Prospectus, or (ii) is material to the Company’s business, has been duly and validly
executed by the Company, is in full force and effect and is enforceable against the Company and, to
the Company’s knowledge, the other parties thereto, in accordance with its terms, except (x) as
such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting creditors’ rights generally, (y) as enforceability of any indemnification or contribution
provision may be limited under the federal and state securities laws, and (z) that the remedy of
specific performance and injunctive and other forms of equitable relief may be subject to the
equitable defenses and to the discretion of the court before which any proceeding therefor may be
brought, and none of such agreements or instruments has been assigned by the Company, and neither
the Company nor, to the best of the Company’s knowledge, any other party is in breach or default
thereunder and, to the best of the Company’s knowledge, no event has occurred that, with the lapse
of time or the giving of notice, or both, would constitute a breach or default thereunder. To the
best of the Company’s knowledge, performance by the Company of the material provisions of such
agreements or instruments will not result in a violation of any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its assets or businesses, including, without
limitation, those relating to environmental laws and regulations.
2.3.3 Prior Securities Transactions. No securities of the Company have been sold
by the Company or by or on behalf of, or for the benefit of, any person or persons controlling,
controlled by, or under common control with the Company within the three years prior to the date
hereof, except as disclosed in the Registration Statement.
2.3.4 Regulations. The disclosures in the Registration Statement concerning the
effects of Federal, State and local regulation on the Company’s business purpose as currently
contemplated are correct in all material respects and do not omit to state a material fact.
2.4 Changes After Dates in Registration Statement.
2.4.1 No Material Adverse Change. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, except as otherwise
specifically stated therein, (i) there has been no material adverse change in the condition,
financial or otherwise, or business prospects of the Company, (ii) there have been no material
transactions entered into by the Company, other than as contemplated pursuant to this Agreement,
and (iii) no member of the Company’s management has resigned from any position with the Company.
2.4.2 Recent Securities Transactions, Etc. Subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus, and except as may
otherwise be indicated or contemplated herein or therein, the Company has not (i) issued any
securities or incurred any liability or obligation, direct or contingent, for borrowed money; or
(ii) declared or paid any dividend or made any other distribution on or in respect to its equity
securities.
2.5 Independent Accountants. XxXxx, Xxxxxxxx & XxXxxxxxx LLP (“LCM”),
whose report is filed with the Commission as part of the Registration
Statement, are an independent
public accounting firm with respect to the Company within the meaning
of the Act and the Regulations and the Public Company Accounting
Oversight Board Guidelines. LCM has not, during the periods covered by
the financial statements included in the Prospectus, provided to the Company any non-audit
services, as such term is used in Section 10A(g) of the Exchange Act.
2.6 Financial Statements. The financial statements, including the notes thereto
and supporting schedules included in the Registration Statement and Prospectus fairly present the
financial position, the results of operations and the cash flows of the Company at the dates and
for the periods to which they apply; such financial statements have been prepared in conformity
with generally accepted accounting principles, consistently applied throughout the periods
involved; and the supporting schedules included in the Registration Statement present fairly the
information required to be stated therein. The Registration Statement discloses all material
off-balance sheet transactions, arrangements, obligations (including contingent obligations), and
other relationships of the Company with unconsolidated entities or other persons that may have a
material current or future effect on the Company’s financial condition, changes in financial
condition, results of operations, liquidity, capital expenditures, capital resources, or
significant components of revenues or expenses.
2.7 Authorized Capital; Options; Etc. The Company had at the date or dates
indicated in the Prospectus duly authorized, issued and outstanding capitalization as set forth in
the Registration Statement and the Prospectus. Based on the assumptions stated in the Registration
Statement and the Prospectus, the Company will have on the Closing Date the adjusted stock
capitalization set forth therein. Except as set forth in, or contemplated by, the Registration
Statement and the Prospectus, on the Effective Date and on the Closing Date, there will be no
options, warrants, or other rights to purchase or otherwise acquire any authorized but unissued
shares of Common Stock of the Company or any security convertible into
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shares of Common Stock of the Company, or any contracts or commitments to issue or sell shares
of Common Stock or any such options, warrants, rights or convertible securities.
2.8 Valid Issuance of Securities; Etc.
2.8.1 Outstanding Securities. All issued and outstanding securities of the
Company have been duly authorized and validly issued and are fully paid and non-assessable; the
holders thereof have no rights of rescission with respect thereto, and are not subject to personal
liability by reason of being such holders; and none of such securities were issued in violation of
the preemptive rights of any holders of any security of the Company or similar contractual rights
granted by the Company. The authorized Common Stock conforms to all statements relating thereto
contained in the Registration Statement and the Prospectus. The offers and sales of the outstanding
Common Stock were at all relevant times either registered under the Act and the applicable state
securities or Blue Sky laws or, based in part on the representations and warranties of the
purchasers of such shares of Common Stock, exempt from such registration requirements.
2.8.2 Securities Sold Pursuant to this Agreement. The Securities have been duly
authorized and, when issued and paid for, will be validly issued, fully paid and non-assessable;
the holders thereof are not and will not be subject to personal liability by reason of being such
holders; the Securities are not and will not be subject to the preemptive rights of any holders of
any security of the Company or similar contractual rights granted by the Company; and all corporate
action required to be taken for the authorization, issuance and sale of the Securities has been
duly and validly taken. The Securities conform in all material respects to all statements with
respect thereto contained in the Registration Statement. When issued, the Xxxxxx Xxxxxx Purchase
Option, the Representative’ Warrant, and the Warrants will constitute valid and binding
obligations of the Company to issue and sell, upon exercise thereof and payment of the respective
exercise prices therefor, the number and type of securities of the Company called for thereby in
accordance with the terms thereof and such Xxxxxx Xxxxxx Purchase Option, the Xxxxxx Xxxxxx
Warrants, and Warrants are enforceable against the Company in accordance with their respective
terms, except (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization
or similar laws affecting creditors’ rights generally, (ii) as enforceability of any
indemnification or contribution provision may be limited under the federal and state securities
laws, and (iii) that the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to the equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
2.9 Registration Rights of Third Parties. Except as set forth in the Prospectus,
no holders of any securities of the Company or any rights exercisable for or convertible or
exchangeable into securities of the Company have the right to require the Company to register any
such securities of the Company under the Act or to include any such securities in a registration
statement to be filed by the Company.
2.10 Validity and Binding Effect of Agreements. This Agreement, the Warrant
Agreement (as defined in Section 2.20 hereof), the Trust Agreement, the Credit Agreement (as
defined in Section 3.7.2 hereof), the Private Placement
Agreement (as defined in Section 2.28 hereof) and the Escrow Agreement (as defined in Section 2.21.2 hereof)
have been duly and validly authorized by the Company and constitute, and the Xxxxxx Xxxxxx Purchase
Option has been duly and validly authorized by the Company and, when executed and delivered, will
constitute, the valid and binding agreements of the Company, enforceable against the Company in
accordance with their respective terms, except (i) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (ii)
as enforceability of any indemnification or contribution provision may be limited under the federal
and state securities laws, and (iii) that the remedy of specific performance and injunctive and
other forms of equitable relief may be subject to the equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
2.11 No Conflicts, Etc. The execution, delivery, and performance by the Company
of this Agreement, the Xxxxxx Xxxxxx Purchase Option, the Warrant
Agreement, the Private Placement Agreement, the Trust Agreement,
the Credit 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 referred to in
Section 2.23 hereof; (ii) result in any violation of the provisions of the Certificate of
Incorporation or the Bylaws of the Company; or (iii) violate any existing applicable law, rule,
regulation, judgment, order or decree of any governmental agency or court, domestic or foreign,
having jurisdiction over the Company or any of its properties or business.
2.12 No Defaults; Violations. No material default exists in the due performance
and observance of any term, covenant or condition of any material license, contract, indenture,
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
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Company is subject. The Company is not in violation of any term or provision of its
Certificate of Incorporation or Bylaws or in violation of any material franchise, license, permit,
applicable law, rule, regulation, judgment or decree of any governmental agency or court, domestic
or foreign, having jurisdiction over the Company or any of its properties or businesses.
2.13 Corporate Power; Licenses; Consents.
2.13.1 Conduct of Business. The Company has all requisite corporate power and
authority, and has all necessary authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory officials and bodies that it needs as of the date
hereof to conduct its business purpose as described in the Prospectus. The disclosures in the
Registration Statement concerning the effects of federal, state and local regulation on this
offering and the Company’s business purpose as currently contemplated are correct in all material
respects and do not omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which they were made, not
misleading.
2.13.2 Transactions Contemplated Herein. The Company has all corporate power and
authority to enter into this Agreement and to carry out the provisions and conditions hereof, and
all consents, authorizations, approvals and orders required in connection therewith have been
obtained. No consent, authorization or order of, and no filing with, any court, government agency
or other body is required for the valid issuance, sale and delivery, of the Securities and the
consummation of the transactions and agreements contemplated by this Agreement, the Warrant
Agreement, the Xxxxxx Xxxxxx Purchase Option, the Trust Agreement and the Escrow Agreement and as
contemplated by the Prospectus, except with respect to applicable federal and state securities
laws.
2.14 D&O Questionnaires. To the best of the Company’s knowledge, all information
contained in the questionnaires (“Questionnaires”) completed by each of the Company’s
stockholders immediately prior to the Offering (“Initial Stockholders”) and provided to the
Underwriters as an exhibit to his or her Insider Letter (as defined in Section 2.21.1) is true and
correct and the Company has not become aware of any information which would cause the information
disclosed in the questionnaires completed by each Initial Stockholder to become inaccurate and
incorrect.
2.15 Litigation; Governmental Proceedings. There is no action, suit, proceeding,
inquiry, arbitration, investigation, litigation or governmental proceeding pending or, to the best
of the Company’s knowledge, threatened against, or involving the Company which has not been disclosed in the Registration
Statement.
2.16 Good Standing. The Company has been duly organized and is validly existing
as a corporation and is in good standing under the laws of its state of incorporation, and is duly
qualified to do business and is in good standing as a foreign corporation in each jurisdiction in
which its ownership or lease of property or the conduct of business requires such qualification,
except where the failure to qualify would not have a material adverse effect on the Company.
2.17 Transactions Affecting Disclosure to NASD.
2.17.1 Finder’s Fees. Except as described in the Prospectus, there are no claims,
payments, arrangements, agreements or understandings relating to the payment of a finder’s,
consulting or origination fee by the Company or any Initial Stockholder with respect to the sale of
the Securities hereunder or any other arrangements, agreements or understandings of the Company or,
to the best of the Company’s knowledge, any Initial Stockholder that may affect the Underwriters’
compensation, as determined by the NASD.
2.17.2 Payments Within Twelve Months. The Company has not made any direct or
indirect payments (in cash, securities or otherwise) (i) to any person, as a finder’s fee,
consulting fee or otherwise, in consideration of such person raising capital for the Company or
introducing to the Company persons who raised or provided capital to the Company, (ii) to any NASD
member or (iii) to any person or entity that has any direct or indirect affiliation or association
with any NASD member, within the twelve months prior to the Effective Date, other than payments to
the Representative.
2.17.3 Use of Proceeds. None of the net proceeds of the Offering will be paid by
the Company to any participating NASD member or its affiliates, except as specifically authorized
herein and except as may be paid in connection with a Business Combination as contemplated by the
Prospectus.
2.17.4 Insiders’ NASD Affiliation. Based on 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. The Company will advise the Representative if it learns that
any officer, director or owner of at least 5% of the Company’s outstanding Common Shares is or
becomes an affiliate or associated person of an NASD member
participating in the offering prior to the Closing Date.
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2.18
Foreign Corrupt Practices Act. The Company has not, directly or indirectly, given
or agreed to give any money, gift or similar benefit (other than legal price concessions to
customers in the ordinary course of business) to any customer, supplier, employee or agent of a
customer or supplier, or official or employee of any governmental agency or instrumentality of any
government (domestic or foreign) or any political party or candidate for office (domestic or
foreign) or any political party or candidate for office (domestic or foreign) or other person who
was, is, or may be in a position to help or hinder the business of the Company (or assist it in
connection with any actual or proposed transaction) that (i) might subject the Company to any
damage or penalty in any civil, criminal or governmental litigation or proceeding, (ii) if not
given in the past, might have had a material adverse effect on the assets, business or operations
of the Company as reflected in any of the financial statements contained in the Prospectus or (iii)
if not continued in the future, might adversely affect the assets, business, operations or
prospects of the Company. The Company’s internal accounting controls and procedures are sufficient
to cause the Company to comply with the Foreign Corrupt Practices Act of 1977, as amended.
2.19 Officers’ Certificate. Any certificate signed by any duly authorized officer
of the Company and delivered to you or to your counsel shall be deemed a representation and
warranty by the Company to the Underwriters as to the matters covered thereby.
2.20 Warrant Agreement. The Company has entered into a warrant agreement with
respect to the Warrants and the Xxxxxx Xxxxxx Warrants with Continental Stock Transfer & Trust
Company substantially in the form filed as an exhibit to the Registration Statement (“Warrant
Agreement”).
2.21 Agreements With Initial Stockholders.
2.21.1 Letters. The Company has caused to be duly executed legally binding and
enforceable agreements (except (i) as such enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights generally, (ii) as enforceability of any
indemnification, contribution or noncompete provision may be limited under the federal and state
securities laws, and (iii) that the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to the equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought) annexed as
Exhibit 10.1 to the Registration Statement (“Insider Letter”),
pursuant to which each of the Initial Stockholders of the Company agree to certain matters,
including but not limited to, certain matters described as being agreed to by them under the
“Proposed Business” section of the Prospectus.
2.21.2
Escrow Agreement. The Initial Stockholders have entered
into an escrow agreement (“Escrow Agreement”) with Continental Stock Transfer & Trust
Company (“Escrow Agent”), substantially in
the form annexed as Exhibit 10.3 to the
Registration Statement, whereby the Common Stock owned by the Initial Stockholders will be held in
escrow by the Escrow Agent, until one year from the completion of a
Business Combination or the consummation of a transaction after the
consummation of the initial Business Combination which results in all
of the stockholders of the combined entity having the right to
exchange their shares of common stock for cash, securities or other
property. During such escrow
period, the Initial Stockholders shall be prohibited from selling or otherwise transferring such
shares (except to spouses and children of Initial Stockholders and trusts established for their
benefit and as otherwise set forth in the Escrow Agreement) but will retain the right to vote such
shares. To the Company’s knowledge, the Escrow Agreement is enforceable against each of the Initial
Stockholders and will not, with or without the giving of notice or the lapse of time or both,
result in a breach of, or conflict with any of the terms and provisions of, or constitute a default
under, any agreement or instrument to which any of the Initial Stockholders is a party. The Escrow
Agreement shall not be amended, modified or otherwise changed without the prior written consent of
the Representative.
2.22 No Fiduciary Relationship In Pricing. 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 and the several Underwriters, (ii) in connection
therewith and with the process leading to such transaction, each Underwriter is acting solely as a
principal and not the agent or fiduciary of the Company, (iii) no Underwriter has assumed an
advisory or fiduciary responsibility in favor of the Company with respect to the offering
contemplated hereby or the process leading thereto (irrespective of whether such 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 Underwriters, or any of them, has rendered advisory services
of any nature or respect, or owes a fiduciary or similar duty to the Company, in connection with
such transaction or the process leading thereto.
2.23 Investment Management Trust Agreement. The Company has entered into the
Trust Agreement with respect to certain proceeds of the Offering substantially in the form annexed
as Exhibit 10.2 to the Registration Statement.
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2.24 Covenants Not to Compete. No employee, officer or
director of the Company is subject to any noncompetition agreement or non-solicitation agreement
with any employer or prior employer which could materially affect his ability to be an employee, officer and/or director of the Company.
2.25 Investments. No more than 45% of the “value” (as defined in Section 2(a)(41)
of the Investment Company Act of 1940 (“Investment Company Act”)) of the Company’s total
assets consist of, and no more than 45% of the Company’s net income after taxes is derived from,
securities other than “Government securities” (as defined in Section 2(a)(16) of the Investment
Company Act).
2.26 Subsidiaries. The Company does not own an interest in any corporation,
partnership, limited liability company, joint venture, trust or other business entity.
2.27 Related Party Transactions. There are no business relationships or related
party transactions involving the Company or any other person required to be described in the
Prospectus that have not been described as required.
2.28
Private Placement. The Company has entered into a private
placement warrant purchase agreement (the “Private Placement
Agreement”) with certain initial stockholders, pursuant to which the
Company has agreed to issue to such initial stockholders in a private placement
transaction (the “Private Placement”) an
aggregate of 583,333 Warrants
(“Placement Warrants”), sold separately and not in combination with the
Common Stock in the form of Units, for a purchase price of $699,999.60.
The proceeds from the sale of the Placement Warrants will be deposited with Continental Stock Transfer & Trust Company to be
held pursuant to the terms of the Trust Agreement.
3. Covenants of the Company. The Company covenants and agrees as follows:
3.1 Amendments to Registration Statement. The Company will deliver to the
Representative, prior to filing, any amendment or supplement to the Registration Statement or
Prospectus proposed to be filed after the Effective Date and not file any such amendment or
supplement to which the Representative shall reasonably object in writing.
3.2 Federal Securities Laws.
3.2.1 Compliance. During the time when a Prospectus is required to be delivered
under the Act, the Company will use all reasonable efforts to comply with all requirements imposed
upon it by the Act, the Regulations and the Exchange Act and by the regulations under the Exchange
Act, as from time to time in force, so far as necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and the Prospectus. If at any
time when a Prospectus relating to the Securities is required to be delivered under the Act, any
event shall have occurred as a result of which, in the opinion of counsel for the Company or
counsel for the Underwriters, the Prospectus, as then amended or supplemented, includes an untrue
statement of a material fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they were made,
not misleading, or if it is necessary at any time to amend the Prospectus to comply with the Act,
the Company will notify the Representative promptly and prepare and file with the Commission,
subject to Section 3.1 hereof, an appropriate amendment or supplement in accordance with Section 10
of the Act.
3.2.2 Filing of Final Prospectus. The Company will file the Prospectus (in form
and substance satisfactory to the Representative) with the Commission pursuant to the requirements
of Rule 424 of the Regulations.
3.2.3 Exchange Act Registration. For a period of five years from the Effective
Date, or until such earlier time upon which the Company is required to be liquidated, the Company
will use its best efforts to maintain the registration of the Units, Common Stock and Warrants
under the provisions of the Exchange Act. For a period of five years from the Effective Date, the
Company will not deregister the Units, Common Stock and Warrants under the Exchange Act without the
prior written consent of the Representative (except in connection with a going private
transaction).
3.3 Blue Sky Filing.
Unless the Securities are listed or quoted, as the case may be, on the New York Stock Exchange, the American Stock
Exchange, or the Nasdaq National Market, the Company will endeavor in good faith, in cooperation with
the Representative, at or prior to the time the Registration Statement becomes effective, to
qualify the Securities for offering and sale under the securities laws of such jurisdictions as the
Representative may reasonably designate, provided that no such qualification shall be required in
any jurisdiction where, as a result thereof, the Company would be subject to service of general
process or to taxation as a foreign corporation doing business in such jurisdiction. In each
jurisdiction where such qualification shall be effected, the Company will, unless the
Representative agree that such action is not at the time necessary or advisable, use all
reasonable efforts to file and make such statements or reports at such times as are or may be
required by the laws of such jurisdiction.
3.4 Delivery to Underwriters of Prospectuses. The Company will deliver to each of
the several Underwriters, without charge, from time to time during the period when the Prospectus
is required to be delivered under the Act or the Exchange Act such number of copies of each
Preliminary Prospectus and the Prospectus as such Underwriters may reasonably request and, as soon
as the Registration Statement or any amendment or supplement thereto becomes effective, deliver to
you two original executed Registration Statements, including exhibits, and all post-effective
amendments thereto and copies of all exhibits filed therewith or incorporated therein by reference
and all original executed consents of certified experts.
3.5 Effectiveness and Events Requiring Notice to the Representative. The Company will
use its best efforts to cause the Registration Statement to remain effective and will notify the
Representative immediately and confirm the notice in writing
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(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
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 3.2.3 hereof that, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue or that requires the
making of any changes in the Registration Statement or the Prospectus in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. If
the Commission or any state securities commission shall enter a stop order or suspend such
qualification at any time, the Company will make every reasonable effort to obtain promptly the
lifting of such order.
3.6 Review of Financial Statements. For a period of five years from the Effective
Date, or until such earlier time upon which the Company is required to be liquidated, the Company,
at its expense, shall cause its regularly engaged independent certified public accountants to
review (but not audit) the Company’s financial statements for each of the first three fiscal
quarters prior to the announcement of quarterly financial information, the filing of the Company’s
Form 10-Q quarterly report and the mailing of quarterly financial information to stockholders.
3.7 Affiliated Transactions.
3.7.1 Business Combinations. The Company will not consummate a Business
Combination with any entity which is affiliated with any Initial Stockholder unless the Company
obtains an opinion from an independent investment banking firm that the Business Combination is
fair to the Company’s stockholders from a financial perspective.
3.7.2 Administrative Services. The Company has entered into a Revolving Line of Credit Agreement (“Credit
Agreement”) with Xxxxxx Xxxxxxx
(“Affiliate”) substantially in the form
annexed as Exhibit 10.4 to the Registration
Statement pursuant to which the Affiliate will make available to the Company up to a maximum amount
of $1,750,000.
3.7.3 Compensation. Except as set forth above in Section 3.7.2, the Company shall
not pay any Initial Stockholder or any of their affiliates any fees or compensation from the
Company, for services rendered to the Company prior to, or in connection with, the consummation of
a Business Combination; provided that the Initial Stockholders shall be entitled to reimbursement
from the Company for their reasonable out-of-pocket expenses incurred in connection with seeking
and consummating a Business Combination.
3.8 Secondary Market
Trading and Standard & Poor’s. Unless the Securities are listed or quoted, as the case may be, on the New York Stock Exchange, the American Stock
Exchange, or the Nasdaq National Market, the Company will apply to be
included in Standard & Poor’s Daily News and Corporation Records Corporate Descriptions for a
period of five years from the consummation of a Business Combination
and shall take such steps as may be necessary to obtain a
secondary market trading exemption for the Company’s securities in the State of California. Unless the Securities are listed or quoted, as the case may be, on the New York Stock Exchange, the American Stock
Exchange, or the Nasdaq National Market, the
Company shall also take such other action as may be reasonably requested by the Representative to
obtain a secondary market trading exemption in such other states as may be requested by the
Representative.
3.9 Intentionally Omitted.
3.10 Financial Public Relations Firm. Promptly after the execution of a
definitive agreement for a Business Combination, the Company shall
retain a financial public relations
firm acceptable to the Representative for a term to be agreed on by the Company and the Representative.
3.11 Reports to the Representative.
3.11.1 Periodic Reports, Etc. For a period of five years following the Effective
Date or until such earlier time upon which the Company is required to be liquidated, the Company
will furnish to the Representative and their counsel, as reasonably requested from time to time,
(i) copies of such financial statements and other periodic and special reports as the Company from
time to time furnishes generally to holders of any class of its securities and (ii) such
additional documents and information with respect to the Company and the affairs of any future
subsidiaries of the Company as the Representative may reasonably request.
3.11.2 Transfer Sheets. For a period of two years following the Effective Date or
until such earlier time upon which the Company is required to be liquidated, the Company shall
retain a transfer and warrant agent acceptable to the Representative (“Transfer Agent”)
and will furnish to the Underwriters at the Company’s sole cost and expense, for a period of one
year following the Effective Date, such transfer sheets of the Company’s securities as the
Representative may
9
request, including the daily and monthly consolidated transfer sheets of the Transfer Agent
and DTC. The Underwriters acknowledge that Continental Stock Transfer & Trust Company is an
acceptable Transfer Agent.
3.11.3
Secondary Market Trading Survey. Unless the Securities are
listed or quoted, as the case may be, on the New York Stock Exchange, the American Stock Exchange
or the Nasdaq National Market, until such earlier time upon which the Company is
required to be liquidated, XxXxxxxxx Will & Xxxxx LLP (“MWE”), for a one-time fee of $5,000
payable by the Representative on the Closing Date, or the date upon which the Securities cease to be listed or quoted,
shall deliver and update to the Underwriters on
a timely basis, but in any event on the Effective Date and at the beginning of each fiscal quarter,
a written report detailing those states in which the Securities may be traded in non-issuer
transactions under the Blue Sky laws of the fifty States (“Secondary Market Trading
Survey”).
3.12 Disqualification of Form S-1. For a period equal to four years from the date
hereof, the Company will not take any action or actions which may prevent or disqualify the
Company’s use of Form S-1 (or other appropriate form) for the registration of the Warrants under
the Act (except in connection with a going-private transaction).
3.13 Payment of Expenses.
3.13.1 General
Expenses Related to the Offering. The Company hereby agrees to pay
on each of the Closing Date and the Option Closing Date, if any, to the extent not paid at 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, printing, filing and mailing
(including the payment of postage with respect to such mailing) of the Registration Statement, the
Preliminary and Final Prospectuses and the printing and mailing of this Agreement and related
documents, including the cost of all copies thereof and any amendments thereof or supplements
thereto supplied to the Underwriters in quantities as may be required by the Underwriters, (ii) the
printing, engraving, issuance and delivery of the Units, the shares of Common Stock and the
Warrants included in the Units, including any transfer or other taxes payable thereon, (iii) filing fees, costs and expenses (including
disbursements for the Representative’s counsel) incurred in registering the Offering with the NASD,
(iv) fees and disbursements of the Transfer Agent, (v) the Company’s expenses associated with “due
diligence” meetings arranged by the Representative and (vi) 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 3.13. The Company also agrees that, if
requested by the Representative, it will engage and pay up to $5,000 or such greater amount as may
be mutually agreed to by the Representative and the Company for an investigative search firm of
the Representative’ choice to conduct an investigation of the principals of the Company as shall
be mutually selected by the Representative and the Company. The Representative may deduct from
the net proceeds of the Offering payable to the Company on the Closing Date, or the Option Closing
Date, if any, the expenses set forth in this Agreement to be paid by the Company to the
Representative and others. If the Offering contemplated by this Agreement is not consummated for
any reason whatsoever then the Company shall reimburse the Underwriters in full for their out of
pocket expenses in connection with this Agreement or the transactions contemplated herein,
including, without limitation, their legal fees and disbursements and “road show” and due diligence
expenses. The Representative shall pay the fees of it's legal
counsel from the funds received from commissions and
discounts in the Offering.
3.13.2
Fee on Business Combination. The Representative, on behalf of
itself and the other Underwriters, agrees that the Contingent
Underwriting Discount will be deposited in and held in the Trust
Account. Upon consummation of a Business Combination, the Company
further agrees that in addition to the expenses payable pursuant to
Section 3.13.1, it will pay to the Underwriters the Contingent
Underwriting Discount in respect to any IPO Shares (defined in
Section 8.8) which are not converted pursuant to Section 8.8
hereof. The Representative, on behalf of itself and the other
Underwriters, agrees that the several Underwriters shall forfeit any
rights or claims to the Contingent Underwriting Discount in respect of any IPO
Shares that are converted pursuant to Section 8.8 hereof. In
addition, in the event that the Company is unable to consummate a
Business Combination and Continental Stock Transfer & Trust
Company, the trustee of the Trust Account, commences liquidation of
the Trust Account as provided in the Trust Agreement, the
Representative, on behalf of itself and the other Underwriters,
agrees that (i) the several Underwriters shall forfeit any
rights or claims to the Contingent Underwriting Discount, and (ii) the Contingent Underwriting
Discount, together with all other amounts on deposit in the Trust Account,
and any accrued interest thereon (net of taxes payable), shall be
distributed on a pro-rata basis among the holders of the shares of
Common Stock included in the Units sold in the Offering.
3.14 Application of Net Proceeds. The Company will apply the net proceeds from
the Offering received by it in a manner consistent with the application described under the caption
“Use Of Proceeds” in the Prospectus.
3.15 Delivery of Earnings Statements to Security Holders. The Company will make
generally available to its security holders as soon as practicable, but not later than the first
day of the fifteenth full calendar month following the Effective Date, an earnings statement (which
need not be certified by independent public or independent certified public accountants unless
required by the Act or the Regulations, but which shall satisfy the provisions of Rule 158(a) under
Section 11(a) of the Act) covering a period of at least twelve consecutive months beginning after
the Effective Date.
3.16 Notice to NASD. In the event any person or entity (regardless of any NASD
affiliation or association) 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 to the Representative 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
10
why the person or entity providing the merger and acquisition services should not be
considered an “underwriter and related person” with respect to the Company’s initial public
offering, as such term is defined in Rule 2710 of the NASD’s Conduct Rules. The Company also agrees
that proper disclosure of such arrangement or potential arrangement will be made in the proxy
statement which the Company will file for purposes of soliciting stockholder approval for the
Business Combination.
3.17 Stabilization. Except with respect to the agreement between the
Representative, Xxxxxx Xxxxxxx and Xxxx Xxxxxxx (the “Warrant Purchase
Agreement”) annexed as Exhibit 10.6 to the Registration Statement, neither the Company, nor, to its knowledge, any of its
employees, directors or stockholders (without the consent of the Representative) has taken or will
take, directly or indirectly, any action designed to or that has constituted or that might
reasonably be expected to cause or result in, under the Exchange Act, or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate the sale or resale of the
Units.
3.18 Internal Controls. The Company will maintain a system of internal accounting
controls sufficient to provide reasonable assurances that: (i) transactions are executed in
accordance with management’s general or specific authorization, (ii) transactions are recorded as
necessary in order to permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain accountability for assets, (iii) access to assets is
permitted only in accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
3.19 Accountants. For a period of five years from the Effective Date or until
such earlier time upon which the Company is required to be liquidated, the Company shall retain LCM
or other independent public accountants reasonably acceptable to the Representative.
3.20 Form 8-K. The Company shall, on the date hereof, retain its independent
public accountants to audit the financial statements of the Company as of the Closing Date
(“Audited Financial Statements”) that reflect the receipt by the Company of the proceeds of
the initial public offering. As soon as the Audited Financial Statements become available, the
Company shall immediately file a Current Report on Form 8-K with the Commission, which Report shall
contain the Company’s Audited Financial Statements.
3.21 NASD. Until the completion of the distribution 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.
3.22 Corporate Proceedings. All corporate proceedings and other legal matters
necessary to carry out the provisions of this Agreement and the transactions contemplated hereby
shall have been done to the reasonable satisfaction to counsel for the Underwriters.
3.23 Investment Company. The Company shall cause the proceeds of the Offering to
be held in the Trust Account to be invested only in “government securities” with specific maturity
dates as set forth in the Trust Agreement and disclosed in the Prospectus. The Company will
otherwise conduct its business in a manner so that it will not become subject to the Investment
Company Act. Furthermore, once the Company consummates a Business Combination, it shall be engaged
in a business other than that of investing, reinvesting, owning, holding or trading securities.
3.24 Business Combination Announcement. Within five business days following the
consummation by the Company of a Business Combination, the Company shall cause an announcement
(“Business Combination Announcement”) to be placed, at its cost, in The Wall Street
Journal. Such announcement shall describe the consummation of the Business Combination and indicate
that the Representative were the managing underwriter in the Offering. The Company shall supply
the Representative with a draft of the Business Combination Announcement and provide the
Representative with a reasonable opportunity to comment thereon. The Company will not place the
Business Combination Announcement without the final approval of the Representative, such approval
not to be unreasonably withheld.
4. Conditions of Underwriters’ Obligations. The obligations of the several
Underwriters to purchase and pay for the Units, as provided herein, shall be subject to the
continuing accuracy of the representations and warranties of the Company as of the date hereof and
as of each of the Closing Date and the Option Closing Date, if any, to the accuracy of the
statements of officers of the Company made pursuant to the provisions hereof and to the performance
by the Company of its obligations hereunder and to the following conditions:
4.1 Regulatory Matters.
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4.1.1 Effectiveness of Registration Statement. The Registration Statement shall
have become effective not later than 5:00 P.M., New York City local time, on the date of this
Agreement or such later date and time as shall be consented to in writing by you, and, at each of
the Closing Date and the Option Closing Date, no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that 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 MWE.
4.1.2 NASD Clearance. By the Effective Date, the Representative shall have
received clearance from the NASD as to the amount of compensation allowable or payable to the
Underwriters as described in the Registration Statement.
4.1.3 No Blue Sky Stop Orders. No order suspending the sale of the Units in any
jurisdiction designated by you pursuant to Section 3.3 hereof shall have been issued on either on
the Closing Date or the Option Closing Date, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
4.2 Company Counsel Matters.
4.2.1 Effective
Date Opinion of Counsel. On the Effective Date, the
Representative shall have received the opinion of Xxxx & Xxxxx P.C. (“T&G”),
counsel to the Company, dated the Effective Date, addressed to the Representative and in form and
substance reasonably satisfactory to MWE covering the matters set
forth on Appendix A hereto.
12
4.2.2 Closing Date and Option Closing Date Opinion of Counsel. On each of the Closing
Date and the Option Closing Date, if any, the Representative shall have received the
opinion of T&G, dated the Closing Date or the Option Closing Date, as the case may be, addressed to
the Representative and in form and substance reasonably satisfactory to MWE, confirming as of the
Closing Date and, if applicable, the Option Closing Date, the statements made by T&G in their
opinion delivered on the Effective Date.
4.2.3 Reliance. In rendering such opinion, such counsel may rely (i) as to
matters involving the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems proper and to the extent
specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably
satisfactory to MWE) of other counsel reasonably acceptable to MWE, familiar with the applicable
laws, and (ii) as to all matters of fact, on representations by
the Company made in the Underwriting Agreement and on certificates or other
written statements of officers of the Company and officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing of the Company,
provided that copies of any such statements or certificates shall be delivered to the Underwriters’
counsel if requested. The opinion of counsel for the Company and any opinion relied upon by such
counsel for the Company shall include a statement to the effect that it may be relied upon by
counsel for the Underwriters in its opinion delivered to the Underwriters.
13
4.3 Cold Comfort Letter. At the time this Agreement is executed, and at each of
the Closing Date and the Option Closing Date, if any, you shall have received a letter, addressed
to the Representative and in form and substance satisfactory in all respects (including the
non-material nature of the changes or decreases, if any, referred to in clause (iii) below) to you
and to MWE from LCM dated, respectively, as of the date of this Agreement and as of the Closing
Date and the Option Closing Date, if any:
(i) Confirming that they are independent accountants with respect to the Company within
the meaning of the Act and the applicable Regulations and that they have not, during the periods
covered by the financial statements included in the Prospectus, provided to the Company any
non-audit services, as such term is used in Section 10A(g) of the Exchange Act;
(ii) Stating that in their opinion the financial statements of the Company included in
the Registration Statement and Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the published Regulations thereunder;
(iii) Stating that, on the basis of a limited review which included a reading of the
latest available unaudited interim financial statements of the Company (with an indication of the
date of the latest available unaudited interim financial statements), a reading of the latest
available minutes of the stockholders and board of directors and the various committees of the
board of directors, consultations with officers and other employees of the Company responsible for
financial and accounting matters and other specified procedures and inquiries, nothing has come to
their attention which would lead them to believe that (a) the unaudited financial statements of the
Company included in the Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Regulations or are not fairly
presented in conformity with generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial statements of the Company included in
the Registration Statement, (b) at a date not later than five days prior to the Effective Date,
Closing Date or Option Closing Date, as the case may be, there was any change in the capital stock
or long-term debt of the Company, or any decrease in the stockholders’ equity of the Company as
compared with amounts shown in the December 31, 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 October
14, 2005 to a specified date not later than five days prior to the Effective Date, Closing Date or
Option Closing Date, as the case may be, there was any decrease in revenues, net earnings or net
earnings per share of Common Stock, in each case as compared with the corresponding period in the
preceding year and as compared with the corresponding period in the preceding quarter, other than
as set forth in or contemplated by the Registration Statement, or, if there was any such decrease,
setting forth the amount of such decrease;
(iv) Setting forth, at a date not later than five days prior to the Effective Date, the
amount of liabilities of the Company (including a break-down of commercial papers and notes payable
to banks);
(v) Stating that they have compared specific dollar amounts, numbers of shares,
percentages of revenues and earnings, statements and other financial information pertaining to the
Company set forth in the Prospectus in each case to the extent that such amounts, numbers,
percentages, statements and information may be derived from the general accounting records,
including work sheets, of the Company and excluding any questions requiring an interpretation by
legal counsel, with the results obtained from the application of specified readings, inquiries and
other appropriate procedures (which procedures do not constitute an examination in accordance with
generally accepted auditing standards) set forth in the letter and found them to be in agreement;
(vi) Stating that they have not during the immediately preceding five year period brought
to the attention of the Company’s management any reportable condition related to internal
structure, design or operation as defined in the Statement on Auditing Standards No. 60
“Communication of Internal Control Structure Related Matters Noted in an Audit,” in the Company’s
internal controls; and
(vii) Statements as to such other matters incident to the transaction contemplated hereby
as you may reasonably request.
4.4 Officers’ Certificates.
4.4.1 Officers’ Certificate. At each of the Closing Date and the Option Closing
Date, if any, the Representative shall have received a certificate of the Company signed by the
Chief Executive Officer and the Secretary or Assistant Secretary of the Company, dated the Closing
Date or the Option Closing Date, as the case may be, respectively, to the effect that the Company
has performed all covenants and complied with all conditions required by this Agreement to be
performed or complied with by the Company prior to and as of the Closing Date, or the Option
Closing Date, as the case may be, and
14
that the conditions set forth in Section 4.5 hereof have been satisfied as of such date and
that, 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. In addition, the
Representative will have received such other and further certificates of officers of the Company
as the Representative may reasonably request.
4.4.2 Secretary’s Certificate. At each of the Closing Date and the Option Closing
Date, if any, the Representative shall have received a certificate of the Company signed by the
Secretary or Assistant Secretary of the Company, dated the Closing Date or the Option Closing Date,
as the case may be, respectively, certifying (i) that the Bylaws and Certificate of Incorporation
of the Company are true and complete, have not been modified and are in full force and effect, (ii)
that the resolutions relating to the public offering contemplated by this Agreement are in full
force and effect and have not been modified, (iii) all correspondence between the Company or its
counsel and the Commission, and (iv) as to the incumbency of the officers of the Company. The
documents referred to in such certificate shall be attached to such certificate.
4.5 No Material Changes. Prior to and on each of the Closing Date and the Option
Closing Date, if any, (i) there shall have been no material adverse change or development involving
a prospective material adverse change in the condition or prospects or the business activities,
financial or otherwise, of the Company from the latest dates as of which such condition is set
forth in the Registration Statement and Prospectus, (ii) no action suit or proceeding, at law or in
equity, shall have been pending or threatened against the Company or any Initial Stockholder before
or by any court or federal or state commission, board or other administrative agency wherein an
unfavorable decision, ruling or finding may materially adversely affect the business, operations,
prospects or financial condition or income of the Company, except as set forth in the Registration
Statement and Prospectus, (iii) no stop order shall have been issued under the Act and no
proceedings therefor shall have been initiated or threatened by the Commission, and (iv) the
Registration Statement and the Prospectus and any amendments or supplements thereto shall contain
all material statements which are required to be stated therein in accordance with the Act and the
Regulations and shall conform in all material respects to the requirements of the Act and the
Regulations, and neither the Registration Statement nor the Prospectus nor any amendment or
supplement thereto shall contain any untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
4.6 Delivery of Agreements. On the Effective Date, the Company shall have
delivered to the Representative executed copies of the Escrow Agreement, the Trust Agreement, the
Warrant Agreement, the Private Placement Agreement, the Warrant Purchase Agreement, the Credit Agreement and all of the Insider
Letters. On the Closing Date, the Company shall have delivered to the Representative executed
copies of the Xxxxxx Xxxxxx Purchase Option.
4.7 Opinion of Counsel for the Underwriters. All proceedings taken in connection
with the authorization, issuance or sale of the Securities as herein contemplated shall be
reasonably satisfactory in form and substance to you and to MWE and you shall have received from
such counsel a favorable opinion, dated the Closing Date and the Option Closing Date, if any, with
respect to such of these proceedings as you may reasonably require. On or prior to the Effective
Date, the Closing Date and the Option Closing Date, as the case may be, counsel for the
Underwriters shall have been furnished such documents, certificates and opinions as they may
reasonably require for the purpose of enabling them to review or pass upon the matters referred to
in this Section 4.7, or in order to evidence the accuracy, completeness or satisfaction of any of
the representations, warranties or conditions herein contained.
5. Indemnification.
5.1 Indemnification of Underwriters.
5.1.1 General. Subject to the conditions set forth below, the Company agrees to
indemnify and hold harmless each of the Underwriters, and each dealer selected by you that
participates in the offer and sale of the Securities (each a “Selected Dealer”) and each of
their respective directors, officers and employees and each person, if any, who controls any such
Underwriter (“controlling person”) within the meaning of Section 15 of the Act or Section 20(a) of
the Exchange Act, against any and all loss, liability, claim, damage and expense whatsoever
(including but not limited to any and all legal or other expenses reasonably incurred in
investigating, preparing or defending against any litigation, commenced or threatened, or any claim
whatsoever, whether arising out of any action between any of the Underwriters and the Company or
between any of the Underwriters and any third party or otherwise) to which they or any of them may
become subject under the Act, the Exchange Act or any other statute or at common law or otherwise
or under the laws of foreign countries, arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in (i) any Preliminary Prospectus, the
Registration Statement or the Prospectus (as from time to time each may be amended and
supplemented); (ii) any materials or information provided to investors by, or with the approval of,
the Company in connection with the marketing of
15
the offering of the Securities, including any “road show” or investor presentations made to
investors by the Company (whether in person or electronically); or (iii) any application or other
document or written communication (in this Section 5, collectively called “application”) executed
by the Company or based upon written information furnished by the Company in any jurisdiction in
order to qualify the Units under the securities laws thereof or filed with the Commission, any
state securities commission or agency, Amex or any securities exchange; or the omission or
alleged omission therefrom of a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were made, not
misleading, unless such statement or omission was made in reliance upon and in conformity with
written information furnished to the Company with respect to an Underwriter by or on behalf of such
Underwriter expressly for use in any Preliminary Prospectus, the Registration Statement or
Prospectus, or any amendment or supplement thereof, or in any application, as the case may be. With
respect to any untrue statement or omission or alleged untrue statement or omission made in the
Preliminary Prospectus, the indemnity agreement contained in this paragraph shall not inure to the
benefit of any Underwriter to the extent that any loss, liability, claim, damage or expense of such
Underwriter results from the fact that a copy of the Prospectus was not given or sent to the person
asserting any such loss, liability, claim or damage at or prior to the written confirmation of sale
of the Securities to such person as required by the Act and the Regulations, and if the untrue
statement or omission has been corrected in the Prospectus, unless such failure to deliver the
Prospectus was a result of non-compliance by the Company with its obligations under Section 3.4
hereof. The Company agrees promptly to notify the Representative of the commencement of any
litigation or proceedings against the Company or any of its officers, directors or controlling
persons in connection with the issue and sale of the Securities or in connection with the
Registration Statement or Prospectus.
5.1.2 Procedure. If any action is brought against an Underwriter, a Selected
Dealer or a controlling person in respect of which indemnity may be sought against the Company
pursuant to Section 5.1.1, such Underwriter or Selected Dealer shall promptly notify the Company in
writing of the institution of such action and the Company shall assume the defense of such action,
including the employment and fees of counsel (subject to the reasonable approval of such
Underwriter or Selected Dealer, as the case may be) and payment of actual expenses. Such
Underwriter, Selected Dealer or controlling person shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at the expense of such
Underwriter, Selected Dealer or controlling person unless (i) the employment of such counsel at the
expense of the Company shall have been authorized in writing by the Company in connection with the
defense of such action, or (ii) the Company shall not have employed counsel to have charge of the
defense of such action, or (iii) such indemnified party or parties shall have reasonably concluded
that there may be defenses available to it or them which are different from or additional to those
available to the Company (in which case the Company shall not have the right to direct the defense
of such action on behalf of the indemnified party or parties), in any of which events the
reasonable fees and expenses of not more than one additional firm of attorneys selected by the
Underwriter, Selected Dealer and/or controlling person shall be borne by the Company.
Notwithstanding anything to the contrary contained herein, if the Underwriter, Selected Dealer or
controlling person shall assume the defense of such action as provided above, the Company shall
have the right to approve the terms of any settlement of such action which approval shall not be
unreasonably withheld.
5.2 Indemnification of the Company. Each Underwriter, severally and not jointly,
agrees to indemnify and hold harmless the Company, its directors, officers and employees and agents
who control the Company within the meaning of Section 15 of the Act or Section 20 of the Exchange
Act against any and all loss, liability, claim, damage and expense described in the foregoing
indemnity from the Company to the several Underwriters, as incurred, but only with respect to
untrue statements or omissions, or alleged untrue statements or omissions made in any Preliminary
Prospectus, the Registration Statement or Prospectus or any amendment or supplement thereto or in
any application, in reliance upon, and in strict conformity with, written information furnished to
the Company with respect to such Underwriter by or on behalf of the Underwriter expressly for use
in such Preliminary Prospectus, the Registration Statement or Prospectus or any amendment or
supplement thereto or in any such application. In case any action shall be brought against the
Company or any other person so indemnified based on any Preliminary Prospectus, the Registration
Statement or Prospectus or any amendment or supplement thereto or any application, and in respect
of which indemnity may be sought against any Underwriter, such Underwriter shall have the rights
and duties given to the Company, and the Company and each other person so indemnified shall have
the rights and duties given to the several Underwriters by the provisions of Section 5.1.2.
5.3 Contribution.
5.3.1 Contribution Rights. In order to provide for just and equitable
contribution under the Act in any case in which (i) any person entitled to indemnification under
this Section 5 makes claim for indemnification pursuant hereto but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 5 provides for indemnification in
such case, or (ii) contribution under the Act, the Exchange Act or otherwise may be required on the
part of any such person in circumstances for which indemnification is provided under this Section
5, then, and in each such case, the Company and the Underwriters shall contribute to the
16
aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by said
indemnity agreement incurred by the Company and the Underwriters, as incurred, in such proportions
that the Underwriters are responsible for that portion represented by the percentage that the
underwriting discount appearing on the cover page of the Prospectus bears to the initial offering
price appearing thereon and the Company is responsible for the balance; provided, that, no person
guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
Notwithstanding the provisions of this Section 5.3.1, no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which the Public
Securities underwritten by it and distributed to the public were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay in respect of such
losses, liabilities, claims, damages and expenses. For purposes of this Section, each director,
officer and employee of an Underwriter or the Company, as applicable, and each person, if any, who
controls an Underwriter or the Company, as applicable, within the meaning of Section 15 of the Act
shall have the same rights to contribution as the Underwriters or the Company, as applicable.
5.3.2 Contribution Procedure. Within fifteen days after receipt by any party to
this Agreement (or its Representative) of notice of the commencement of any action, suit or
proceeding, such party will, if a claim for contribution in respect thereof is to be made against
another party (“contributing party”), notify the contributing party of the commencement thereof,
but the omission to so notify the contributing party will not relieve it from any liability which
it may have to any other party other than for contribution hereunder. In case any such action, suit
or proceeding is brought against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days, the contributing
party will be entitled to participate therein with the notifying party and any other contributing
party similarly notified. Any such contributing party shall not be liable to any party seeking
contribution on account of any settlement of any claim, action or proceeding effected by such party
seeking contribution on account of any settlement of any claim, action or proceeding effected by
such party seeking contribution without the written consent of such contributing party. The
contribution provisions contained in this Section are intended to supersede, to the extent
permitted by law, any right to contribution under the Act, the Exchange Act or otherwise available.
The Underwriters’ obligations to contribute pursuant to this Section 5.3 are several and not joint.
6. Default by an Underwriter.
6.1 Default Not Exceeding 10% of Firm Units or Option Units. If any Underwriter
or Underwriters shall default in its or their obligations to purchase the Firm Units or the Option
Units, if the over-allotment option is exercised, hereunder, and if the number of the Firm Units or
Option Units with respect to which such default relates does not exceed in the aggregate 10% of the
number of Firm Units or Option Units that all Underwriters have agreed to purchase hereunder, then
such Firm Units or Option Units to which the default relates shall be purchased by the
non-defaulting Underwriters in proportion to their respective commitments hereunder.
6.2 Default Exceeding 10% of Firm Units or Option Units. In the event that the
default addressed in Section 6.1 above relates to more than 10% of the Firm Units or Option Units,
you may in your discretion arrange for yourself or for another party or parties to purchase such
Firm Units or Option Units to which such default relates on the terms contained herein. If within
one business day after such default relating to more than 10% of the Firm Units or Option Units you
do not arrange for the purchase of such Firm Units or Option Units, then the Company shall be
entitled to a further period of one business day within which to procure another party or parties
satisfactory to you to purchase said Firm Units or Option Units on such terms. In the event that
neither you nor the Company arrange for the purchase of the Firm Units or Option Units to which a
default relates as provided in this Section 6, this Agreement will be terminated by you or the
Company without liability on the part of the Company (except as provided in Sections 3.13 and 5
hereof) or the several Underwriters (except as provided in Section 5 hereof); provided, however,
that if such default occurs with respect to the Option Units, this Agreement will not terminate as
to the Firm Units; and provided further that nothing herein shall relieve a defaulting Underwriter
of its liability, if any, to the other several Underwriters and to the Company for damages
occasioned by its default hereunder.
6.3 Postponement of Closing Date. In the event that the Firm Units or Option
Units to which the default relates are to be purchased by the non-defaulting Underwriters, or are
to be purchased by another party or parties as aforesaid, you or the Company shall have the right
to postpone the Closing Date or Option Closing Date for a reasonable period, but not in any event
exceeding five business days, in order to effect whatever changes may thereby be made necessary in
the Registration Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment to the Registration Statement or the Prospectus that
in the opinion of counsel for the Underwriters may thereby be made necessary. The term
“Underwriter” as used in this Agreement shall include any party substituted under this
Section 6 with like effect as if it had originally been a party to this Agreement with respect to
such Securities.
7.
Intentionally Omitted.
17
8. Additional Covenants.
8.1 Intentionally Omitted.
8.2 Additional Shares or Options. The Company hereby agrees that until the
Company consummates a Business Combination, 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.
8.3 Trust Account Waiver Acknowledgment. The Company hereby agrees that it will not
commence its due diligence investigation of any operating business which the Company seeks to
acquire (“Target Business”) or obtain the services of any vendor unless and until such
Target Business or vendor acknowledges in writing, whether through a letter of intent, memorandum
of understanding or other similar document (and subsequently acknowledges the same in any
definitive document replacing any of the foregoing), that (a) it has read the Prospectus and
understands that the Company has established the Trust Account 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, and with
respect to the Contingent Underwriting Discount to the Underwriters, after it consummates a Business Combination and
(b) for and in consideration of the Company (1) agreeing to evaluate such Target Business for
purposes of consummating a Business Combination with it or (2) agreeing to engage the services of
the vendor, as the case may be, such Target Business or vendor agrees that it does not have any
right, title, interest or claim of any kind in or to any monies in the Trust Account (“Claim”)
and waives any Claim it may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with the Company and will not seek recourse against the Trust Account for any
reason whatsoever.
8.4 Insider Letters. The Company shall not take any action or omit to take any
action which would cause a breach of any of the Insider Letters executed between each Initial
Stockholder, officer and director and the Representative and will not allow any amendments to, or
waivers of, such Insider Letters without the prior written consent of the Representative.
8.5 Certificate of Incorporation and Bylaws. The Company shall not take any
action or omit to take any action that would cause the Company to be in breach or violation of its
Certificate of Incorporation or Bylaws. Prior to the consummation of a Business Combination, the
Company will not amend its Certificate of Incorporation without the prior written consent of the
Representative.
8.6 Intentionally Omitted.
8.7 Intentionally Omitted.
8.8
Acquisition/Liquidation Procedure. The Company agrees: (i) that, prior to the
consummation of any Business Combination, it will submit such transaction to the Company’s
stockholders for their approval (“Business Combination Vote”) even if the nature of the
acquisition is such as would not ordinarily require stockholder approval under applicable state
law; and (ii) that, in the event that the Company does not effect a Business Combination within 18
months from the consummation of this Offering (subject to extension for an additional six-month
period, as described in the Prospectus), the Trust Account will be
liquidated and the Trustee will distribute to all
holders of IPO Shares (defined below) an aggregate sum equal to the Company’s “Liquidation Value.”
The Company’s “Liquidation Value” shall mean the Company’s book value, as determined by the
Company and approved by LCM. In no event, however, will the Company’s Liquidation Value be less
than the Trust Account, inclusive of any net interest income thereon
(net of taxes on such interest). Only holders of IPO Shares shall
be entitled to receive liquidating distributions and the Company shall pay no liquidating
distributions with respect to any other shares of capital stock of the Company. With respect to the
Business Combination Vote, the Company shall cause all of the Initial Stockholders to vote the
shares of Common Stock owned by them immediately prior to this Offering in accordance with the
18
vote of the holders of a majority of the IPO Shares present, in person or by proxy, at a
meeting of the Company’s stockholders called for such purpose. At the time the Company seeks
approval of any potential Business Combination, the Company will offer each holder of the Company’s
Common Stock issued in this Offering (“IPO Shares”) the right to convert their IPO Shares
at a per share price (“Conversion Price”) equal to the amount in the Trust Account (inclusive
of any interest income therein, net of taxes) calculated as of two business days prior to the consummation of the
proposed Business Combination divided by the total number of IPO Shares. If holders of less than
20% in interest of the Company’s IPO Shares elect to convert their IPO Shares, the Company may, but
will not be required to, proceed with such Business Combination. If the Company elects to so
proceed, it will convert shares, based upon the Conversion Price, from those holders of IPO Shares
who affirmatively requested such conversion and who voted against the Business Combination. If
holders of 20% or more in interest of the IPO Shares, who vote against approval of any potential
Business Combination, elect to convert their IPO Shares, the Company will not proceed with such
Business Combination and will not convert such shares.
8.9
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 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 “xxxxx stock” as defined in Rule 3a-51-1 under the
Exchange Act during such period.
8.10
Affiliated Transactions. The Company
shall cause each of the officers and directors to agree that, in order to minimize potential
conflicts of interest which may arise from multiple affiliations, the officers will present to the
Company for its consideration, prior to presentation to any other person or company, any suitable
opportunity to acquire an operating business, until the earlier of the consummation by the Company
of a Business Combination, the liquidation of the Company or until such time as the officers or
directors cease to be an officer or director of the Company, subject to any pre-existing fiduciary
obligations the officers or directors might have.
8.11 Target Net Assets. The Company agrees that the initial Target Business that
it acquires must have a fair market value equal to at least 80% of the Company’s net assets at the
time of such acquisition (excluding the Contingent Underwriting
Discount). The fair market value of such business must be determined by the Board of
Directors of the Company based upon standards generally accepted by the financial community, such
as actual and potential sales, earnings and cash flow and book value. If the Board of Directors of
the Company is not able to independently determine that the target business has a fair market value
of at least 80% of the Company’s fair market value at the time of such acquisition, the Company
will obtain an opinion from an unaffiliated, independent investment banking firm which is a member
of the NASD with respect to the satisfaction of such criteria. The Company is not required to
obtain an opinion from an investment banking firm as to the fair market value if the Company’s
Board of Directors independently determines that the Target Business does have sufficient fair
market value.
9. Representations and Agreements to Survive Delivery. Except as the context otherwise
requires, all representations, warranties and agreements contained in this Agreement shall be
deemed to be representations, warranties and agreements as of the Closing Date or the Option
Closing Date, if any, and such representations, warranties and agreements of the Underwriters and
Company, including the indemnity agreements contained in Section 5 hereof, shall remain operative
and in full force and effect regardless of any investigation made by or on behalf of any
Underwriter, the Company or any controlling person, and shall survive termination of this Agreement
or the issuance and delivery of the Securities to the several Underwriters until the earlier of the
expiration of any applicable statute of limitations and the seventh anniversary of the later of the
Closing Date or the Option Closing Date, if any, at which time the representations, warranties and
agreements shall terminate and be of no further force and effect.
10. Effective Date of This Agreement and Termination Thereof.
10.1 Effective Date. This Agreement shall become effective on the Effective Date
at the time the Registration Statement is declared effective by the Commission.
10.2 Termination. You shall have the right to terminate this Agreement at any
time prior to the Closing Date, (i) if any domestic or international event or act or occurrence has
materially disrupted, or in your opinion will in the immediate future materially disrupt, general
securities markets in the United States; or (ii) if trading on the New York Stock Exchange, the
American Stock Exchange, the Nasdaq Stock Market 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 and adversely impacts the United States
securities market, or (vi) if the Company shall have sustained a material loss by fire, explosion,
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
19
delivery of the Units, or (vii) if any of the Company’s representations, warranties or
covenants hereunder are breached, or (viii) if the Representative shall have become aware after
the date hereof of such a material adverse change in the conditions or prospects of the Company, or
such adverse material change in general market conditions, including without limitation as a result
of terrorist activities after the date hereof, as in the Representative’ judgment would make it
impracticable to proceed with the offering, sale and/or delivery of the Units or to enforce
contracts made by the Underwriters for the sale of the Public Securities.
10.3 Expenses. In the event that this Agreement shall not be carried out for any
reason whatsoever, within the time specified herein or any extensions thereof pursuant to the terms
herein, the obligations of the Company to pay the out of pocket expenses related to the
transactions contemplated herein shall be governed by Section 3.13 hereof.
10.4 Indemnification. Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement, and whether or not this
Agreement is otherwise carried out, the provisions of Section 5 shall not be in any way effected
by, such election or termination or failure to carry out the terms of this Agreement or any part
hereof.
11. Miscellaneous.
11.1 Notices. All communications hereunder, except as herein otherwise
specifically provided, shall be in writing and shall be mailed, delivered or telecopied and
confirmed and shall be deemed given when so delivered or telecopied and confirmed or if mailed, two
days after such mailing
If to the Representative:
Xxxxxx Xxxxxx & Co. Inc.
000 Xxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx
000 Xxxxx Xxxxxx 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx Xxxxxx
Copy to:
XxXxxxxxx Will & Xxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxxx, Esq.
Attn: Xxxxxx Xxxxxxxx, Esq.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxxx, Esq.
Attn: Xxxxxx Xxxxxxxx, Esq.
If to the Company:
General Finance Corporation
000 X. Xxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Chief Executive Officer
000 X. Xxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx, Chief Executive Officer
Copy to:
Xxxx & Xxxxx, P.C.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx, Esq.
11.2 Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning or interpretation of
any of the terms or provisions of this Agreement.
11.3 Amendment. This Agreement may only be amended by a written instrument
executed by each of the parties hereto.
20
11.4 Entire Agreement. This Agreement (together with the other agreements and
documents being delivered pursuant to or in connection with this Agreement) constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and thereof, and
supersede all prior agreements and understandings of the parties, oral and written, with respect to
the subject matter hereof.
11.5 Binding Effect. This Agreement shall inure solely to the benefit of and
shall be binding upon the Representative, the Underwriters, the Company and the controlling
persons, directors and officers referred to in Section 5 hereof, and their respective successors,
legal representative and assigns, and no other person shall have or be construed to have any legal
or equitable right, remedy or claim under or in respect of or by virtue of this Agreement or any
provisions herein contained.
11.6 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without giving effect to conflict of
laws. The Company hereby agrees that any action, proceeding or claim against it arising out of,
relating in any way to this Agreement shall be brought and enforced in the courts of the State of
New York of the United States of America for the Southern District of New York, and irrevocably
submits to such jurisdiction, which jurisdiction shall be exclusive. The Company hereby waives any
objection to such exclusive jurisdiction and that such courts represent an inconvenient forum. Any
such process or summons to be served upon the Company may be served by transmitting a copy thereof
by registered or certified mail, return receipt requested, postage prepaid, addressed to it at the
address set forth in Section 11.1 hereof. Such mailing shall be deemed personal service and shall
be legal and binding upon the Company in any action, proceeding or claim. The Company agrees that
the prevailing party(ies) in any such action shall be entitled to recover from the other party(ies)
all of its reasonable attorneys’ fees and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefor.
11.7
Execution in Counterparts. This Agreement may be executed in
two or more
counterparts, and by the different parties hereto in separate counterparts, each of which shall be
deemed to be an original, but all of which taken together shall constitute one and the same
agreement, and shall become effective when one or more counterparts has been signed by each of the
parties hereto and delivered to each of the other parties hereto.
11.8 Waiver, Etc. The failure of any of the parties hereto to at any time enforce
any of the provisions of this Agreement shall not be deemed or construed to be a waiver of any such
provision, nor to in any way affect 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 Underwriters and the
Company, please so indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement between us.
| Very truly yours, | ||||||
| GENERAL FINANCE CORPORATION | ||||||
By: |
||||||
| Name: Xxxxxx Xxxxxxx | ||||||
| Title: Chief Executive Officer | ||||||
| Accepted on the date first above written. | ||||||
| XXXXXX XXXXXX & CO. INC. | ||||||
By: |
||||||
| Name: | ||||||
| Title: | ||||||
21
SCHEDULE I
GENERAL FINANCE CORPORATION
7,500,000 Units
Underwriter Number of Firm Units to be
Purchased
Purchased
Xxxxxx Xxxxxx & Co. Inc.
