UNDERWRITING AGREEMENT

 

UNDERWRITING AGREEMENT

between

HIGHBURY FINANCIAL INC.

and

THINKEQUITY PARTNERS LLC

 

Dated: January    , 2006

 

HIGHBURY FINANCIAL INC.

UNDERWRITING AGREEMENT

January    , 2006

The undersigned, Highbury Financial Inc., a Delaware corporation (“Company”), hereby confirms its agreement with ThinkEquity Partners LLC (being referred to herein variously as “you,” “TEP” or the “Representative”) and with the other underwriters named on Schedule I hereto for which TEP is acting as Representative (the Representative and the other Underwriters being collectively called the “Underwriters” or, individually, an “Underwriter”) as follows:

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 6,733,333 units (“Firm Units”) of the Company, at a purchase price (net of discounts and commissions) of $5.69 per Firm Unit. The Underwriters, severally and not jointly, agree to purchase from the Company the number of Firm Units set forth opposite their respective names on Schedule I attached hereto and made a part hereof at a purchase price (net of discounts and commissions) of $5.69 per Firm Unit. The Firm Units are to be offered initially to the public (“Offering”) at the offering price of $6.00 per Firm Unit. Each Firm Unit consists of one share of the Company’s common stock, par value $.0001 per share (“Common Stock”), and two warrants (“Warrant(s)”). The shares of Common Stock and the Warrants included in the Firm Units will not be separately transferable until the earlier to occur of (i) the expiration of the Underwriter’s Over-allotment Option (as defined in Section 1.2.1 hereof) or (ii) 20 days after the exercise in full by the Underwriters of the Over-allotment Option, but in no event will separate trading occur before an audited balance sheet has been prepared reflecting receipt by the Company of the proceeds of the Offering and filed with the Securities and Exchange Commission (the “Commission”) with a Current Report on Form 8-K. Each Warrant entitles its holder to exercise it to purchase one share of Common Stock for $5.00 during the period commencing on the later of the consummation by the Company of its “Business Combination” or one year from the effective date (“Effective Date”) of the Registration Statement (as defined in Section 3.1.1 hereof) and terminating on the four-year anniversary of the Effective Date. “Business Combination” shall mean the Company acquiring, or acquiring control of, through a merger, capital stock exchange, asset acquisition, stock purchase or other similar business combination, one or more financial services businesses (as described more fully in the Registration Statement).

1.1.2   Payment and Delivery . Delivery and payment for the Firm Units shall be made at 1:00 P.M., New York time, on the third business day following the date of this Agreement (or the fourth business day following the date of this Agreement, if this Agreement is executed after 4:30 p.m., New York time) or at such earlier time as shall be agreed upon by the 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 is called the “Closing Date.” Payment for the Firm Units shall be made on the Closing Date at the Representative’s election by wire transfer in Federal (same day) funds or by certified or bank cashier’s check(s) in New York Clearing House funds, payable as follows: $36,542,665   of the proceeds received by the Company for the Firm Units shall be deposited in the trust account established by the Company for the benefit of the public stockholders and the Underwriters as described in the Registration Statement (“Trust Fund”) pursuant to the terms of an Investment Management Trust Agreement (as defined in Section 3.22 hereof) 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 1,010,000   units from the Company (“Over-allotment Option”). Such additional 1,010,000   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 to the Trust Fund at the offices of the Representative or at such other place as shall be agreed upon by the Representative and the Company upon delivery to you of certificates representing such securities (or through the facilities of DTC). 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   Private Placement to the Initial Stockholders . The Company’s stockholders immediately prior to the Offering (“Initial Stockholders”) purchased from the Company pursuant to the Placement Unit Purchase Agreement (as defned in Section 3.23 hereof) an aggregate of 166,667 units identical to the Units (“Placement Units”) at a purchase price of $6.00 per Placement Unit in a private placement that occurred immediately prior to the entering into of this agreement (“Private Placement”). The Placement Units, the shares of Common Stock and Warrants included in the Placement Units (“Placement Warrants”) and the shares of Common Stock issuable upon exercise of the Placement Warrants are hereinafter referred to collectively as the “Placement Securities.”

1.4   Representative’s Purchase Option .

1.4.1   Purchase Option. The Company hereby agrees to issue and sell to the Representative (and/or its designees) on the Effective Date an option (“Representative’s Purchase Option”) for the purchase of up to an aggregate of 336,667 units (“Representative’s Units”) for an aggregate purchase price of $100. Each of the Representative’s Units is identical to the Firm Units except that the Warrants included in the Representative’s Units (“Representative’s Warrants”) have an exercise price of $6.25 (125% of the exercise price of the Warrants included in the Units sold to the public). The Representative’s Purchase Option shall be exercisable, in whole or in part, commencing on the later of (i) one year from the Effective Date and (ii) the consummation of a Business Combination, and expiring on the four-year anniversary of the Effective Date at an exercise price per Representative’s Unit of $7.50, which is equal to one hundred twenty five percent (125%)   of the initial public offering price of a Unit. The Representative’s Purchase Option, the Representative’s Units, the Representative’s Warrants and the shares of Common Stock issuable upon exercise of the Representative’s Warrants are hereinafter referred to collectively as the “Representative’s Securities.” The Public Securities and the Representative’s Securities are hereinafter referred to collectively as the “Securities.”

1.4.2   Payment and Delivery . Delivery and payment for the Representative’s Purchase Option shall be made on the Closing Date. The Company shall deliver to the Underwriters, upon payment therefor, certificates for the Representative’s Purchase Option in the name or names and in such authorized denominations as the Representative may request.

2.2.1 Such QIU constitutes a "qualified independent underwriter" within the meaning of Rule 2720(b)(15);

 

2.2.2 Such QIU has participated in the preparation of the Registration Statement and the Prospectus and has exercised the usual standards of "due diligence" in respect thereto;

 

2.2.3 Such QIU has undertaken the legal responsibilities and liabilities of an underwriter under the Securities Act of 1933, as amended (“Act”) specifically including those inherent in Section 11 thereof;

 

2.2.4 Such QIU recommends, as of the date of the execution and delivery of this Agreement, a maximum initial public offering price per Firm Unit of $6.00 for each Firm Unit; and

 

2.2.5 Subject to the provisions of Section 5 hereof, such QIU will furnish to the Underwriters at the Closing Date a letter, dated the Closing Date, in form and substance satisfactory to the Underwriters, to the effect of clauses 2.2.1 through 2.2.4 above.

 

2.3   The Company, the Underwriters and the QIU severally agree to comply in all material respects with all of the requirements of Rule 2720 applicable to them in connection with the offering and sale of the Firm Units. The Company agrees to cooperate with the Underwriters and the QIU to enable the Underwriters to comply with Rule 2720 and the QIU to perform the services contemplated by this Agreement.

 

3.1   Filing of Registration Statement .

3.1.1   Pursuant to the Act . The Company has filed with the Commission a registration statement and an amendment or amendments thereto, on Form S-1 (File No. 333-127272), including the preliminary prospectus dated as of January 20, 2006 (the “Sale Preliminary Prospectus”), and any other related preliminary prospectus (collectively, the “Preliminary Prospectus”), for the registration of the Public Securities under the Act, which registration statement and amendment or amendments, including the Sale Preliminary Prospectus, 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.

3.1.2   Pursuant to the Exchange Act . The Company has filed with the Commission a Form 8-A (File Number 000-51682) 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 is effective on the date hereof.

3.2   No Stop Orders, Etc. Neither the Commission nor, to the best of the Company’s knowledge, any state regulatory authority has issued any order or threatened to issue any order preventing or suspending the effectiveness of the Registration Statement or the use of the Preliminary Prospectus or Prospectus or any part thereof or has instituted or, to the best of the Company’s knowledge, threatened to institute any proceedings with respect to such an order.

3.3   Disclosures in Registration Statement .

3.3.2   Disclosure of Agreements . The agreements and documents described in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus conform to the descriptions thereof contained therein and there are no agreements or other documents required to be described in the Registration Statement, the Sale Preliminary Prospectus or the Prospectus or to be filed with the Commission as exhibits to the Registration Statement, that have not been so described or filed. Each agreement or other instrument (however characterized or described) to which the Company is a party or by which its property or business is or may be bound or affected and (i) that is referred to in the 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.

3.3.3   Prior Securities Transactions . No securities of the Company have been sold by the Company or by or on behalf of, or for the benefit of, any person or persons controlling, controlled by, or under common control with the Company since the formation of the Company, except as disclosed in the Registration Statement.

3.3.4   Regulations . The disclosures in the Registration Statement concerning the effects of Federal, State and local regulation on the Company’s business as currently contemplated are correct in all material respects and do not omit to state a material fact necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.

3.4   Changes After Dates in Registration Statement .

3.4.1   No Material Adverse Change. Since the respective dates as of which information is given in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus, except as otherwise specifically stated therein, (i) there has been no material adverse change in the condition, financial or otherwise, or business prospects of the Company, (ii) there have been no material transactions entered into by the Company, other than as contemplated pursuant to this Agreement, and (iii) no member of the Company’s management has resigned from any position with the Company.

3.4.2   Recent Securities Transactions, Etc. Subsequent to the respective dates as of which information is given in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus, and except as may otherwise be indicated or contemplated herein or therein, the Company has not (i) issued any securities or incurred any liability or obligation, direct or contingent, for borrowed money; or (ii) declared or paid any dividend or made any other distribution on or in respect to its equity securities.

3.5   Independent Accountants. Goldstein Golub Kessler LLP (“GGK”), whose report is filed with the Commission as part of the Registration Statement, are independent accountants as required by the Act and the Regulations. GGK 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.

3.6   Financial Statements. The financial statements, including the notes thereto and supporting schedules included in the Registration Statement, the Sale Preliminary Prospectus and the Prospectus, fairly present the financial position, the results of operations and the cash flows of the Company at the dates and for the periods to which they apply; and such financial statements have been prepared in conformity with United States generally accepted accounting principles (“GAAP”), consistently applied throughout the periods involved. 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.

3.7   Authorized Capital; Options; Etc. The Company had at the date or dates indicated in the Sale Preliminary Prospectus and the Prospectus duly authorized, issued and outstanding capital stock as set forth in the, Registration Statement, the Sale Preliminary Prospectus 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, the Sale Preliminary Prospectus and the Prospectus, on the Effective Date and on the Closing Date, there will be no options, warrants, or other rights to purchase or otherwise acquire any authorized but unissued shares of Common Stock of the Company or any security convertible into shares of Common Stock of the Company, or any contracts or commitments to issue or sell shares of Common Stock or any such options, warrants, rights or convertible securities.

3.8   Valid Issuance of Securities; Etc.

3.8.1   Outstanding Securities. All issued and outstanding securities of the Company (including, without limitation the Placement Securities) 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, the Sale Preliminary Prospectus 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.

3.8.2   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 Representative’s Purchase Option, the Representative’s Warrants and the Warrants will constitute valid and binding obligations of the Company to issue and sell, upon exercise thereof and payment of the respective exercise prices therefor, the number and type of securities of the Company called for thereby in accordance with the terms thereof and such Representative’s Purchase Option, the Representative’s Warrants and the Warrants are enforceable against the Company in accordance with their respective terms, except (i) as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally, (ii) as enforceability of any indemnification or contribution provision may be limited under the federal and state securities laws, and (iii) that the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

3.9   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.

3.10   Validity and Binding Effect of Agreements . This Agreement, the Warrant Agreement (as defined in Section 3.21 hereof), the Trust Agreement (as defined in Section 3.22 hereof), those certain letter agreements (each substantially in the forms filed as Exhibit 10.7 to the Registration Statement), pursuant to which each of the Initial Stockholders agrees to certain matters, including but not limited to, certain matters described as being agreed to by them under the “Proposed Business” section of the Prospectus (“Insider Letters”), the Placement Unit Purchase Agreement (as defined in Section 3.23 hereof), the Stock Escrow Agreement between the Company and Continental Stock Transfer & Trust Company (substantially in the form filed as Exhibit 10.9 to the Registration Statement (“Stock Escrow Agreement”) the Representative’s Purchase Option (as defined in Section 1.4.1 hereof) and the Services Agreement (as defined in Section 3.28 hereof) have been duly and validly authorized by the Company and 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 equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

3.11   No Conflicts, Etc . The execution, delivery, and performance by the Company of this Agreement, the Warrant Agreement, the Representative’s Purchase Option, the Trust Agreement, the Insider Letters, the Placement Unit Purchase Agreement the Services Agreement and the Stock 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 3.22 hereof; (ii) result in any violation of the provisions of the Restated Certificate of Incorporation or the By-laws 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.

3.12   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 Company is subject. The Company is not in violation of any term or provision of its Restated Certificate of Incorporation or By-laws 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.

3.13   Corporate Power; Licenses; Ownership .

3.13.1   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 and to consummate a Business Combination as described in the Sale Preliminary Prospectus and the Prospectus. The disclosures in the Registration Statement and in the Sale Preliminary Prospectus 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.

3.13.2   Transactions Contemplated Herein . The Company has all corporate power and authority to enter into this Agreement and to carry out the provisions and conditions hereof, and all consents, authorizations, approvals and orders required in connection therewith have been obtained. No consent, authorization or order of, and no filing with, any court, government agency or other body is required for the valid issuance, sale and delivery, of the Securities and the consummation of the transactions and agreements contemplated by this Agreement, the Warrant Agreement, the Representative’s Purchase Option, the Trust Agreement, the Insider Letters, the Services Agreement, the Stock Escrow Agreement and the Placement Unit Purchase Agreement and as contemplated by the Prospectus, except with respect to applicable federal and state securities laws.

3.13.3   Ownership . Except as set forth in the Sale Preliminary Prospectus and the Prospectus, the Company owns or has valid leasehold interests in all material properties and assets required for the operation of its business as now conducted, including those described in the Registration Statement and the Prospectus as being owned by it; and the Company has good and marketable title to all properties and assets owned by it material to its business in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by the Company. All real property leases to which the Company or any of its subsidiaries is a party are valid, subsisting and, to the knowledge of the Company, enforceable by the Company or such subsidiary, in each case with no exceptions that would materially interfere with the use made or to be made thereof by the Company or its subsidiaries and each of the Company and its subsidiaries enjoys peaceful and undisturbed possession under all such leases to which it is a party as lessee.

 

3.14   D&O Questionnaires . To the best of the Company’s knowledge, all information contained in the director and officer questionnaires and NASD supplemental questionnaires (“Questionnaires”) completed by each of the Initial Stockholders and provided to the Underwriters as an exhibit to his or her Insider Letters 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.

3.15   Litigation; Governmental Proceedings . There is no action, suit, proceeding, inquiry, arbitration, investigation, litigation or governmental proceeding pending or, to the best of the Company’s knowledge, threatened against, or involving the Company or, to the best of the Company’s knowledge, any Initial Stockholder, which has not been disclosed in the, Registration Statement, the Sale Preliminary Prospectus or the Questionnaires, except for actions, suits, proceedings, inquiries, arbitrations, investigations, litigation or government proceedings pending against any Initial Stockholder that would not individually or in the aggregate have a material adverse effect on such Initial Stockholder, the Company or the Offering.

3.16   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.

3.17   Transactions Affecting Disclosure to NASD .

3.17.1   Finder’s Fees . Except as described in the Sale Preliminary Prospectus and the Prospectus, there are no claims, payments, arrangements, agreements or understandings relating to the payment of a finder’s, consulting or origination fee by the Company or any 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.

3.17.2   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.

3.17.3   Use of Proceeds . None of the net proceeds from the sale of the Securities or the Placement Securities will be paid by the Company to any participating NASD member or its affiliates, except as specifically authorized or contemplated herein and in the Placement Unit Purchase Agreement and except as may be paid in connection with a Business Combination as contemplated by the Sale Preliminary Prospectus and the Prospectus.

 

3.17.4   Insiders’ NASD Affiliation. Based on the Questionnaires distributed to such persons, except as set forth on Schedule 3.17.4, 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 and its counsel 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.

 

3.18   Foreign Corrupt Practices Act . Neither the Company nor any of the Initial Stockholders or any other person acting on behalf of the Company has, directly or indirectly, given or agreed to give any money, gift or similar benefit (other than legal price concessions to customers in the ordinary course of business) to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who 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.

3.19   Patriot Act . Neither the Company nor any officer, director or Initial Stockholder has violated: (i) the Bank Secrecy Act, as amended; (ii) the Money Laundering Control Act of 1986, as amended; or (iii) the Uniting and Strengthening of America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, and/or the rules and regulations promulgated under any such law, or any successor law.  

3.20   Officers’ Certificate . Any certificate signed by any duly authorized officer of the Company and delivered to you or to your counsel shall be deemed a representation and warranty by the Company to the Underwriters as to the matters covered thereby.

3.21   Warrant Agreement . The Company has entered into a warrant agreement with respect to the Warrants , the Representative’s Warrants and the Placement Warrants with Continental Stock Transfer & Trust Company substantially in the form filed as Exhibit 4.4 to the Registration Statement (“Warrant Agreement”).

3.22   Investment Management Trust Agreement . The Company has entered into the Investment Management Trust Agreement with respect to certain proceeds of the Offering substantially in the form filed as Exhibit 10.10 to the Registration Statement (“Trust Agreement”).

3.23   Placement Unit Purchase Agreement . The Initial Stockholders have executed and delivered an agreement, annexed as Exhibit 10.19 to the Registration Statement (“Placement Unit Purchase Agreement”), pursuant to which such parties have, among other things, purchased an aggregate of 166,667 Placement Units in the Private Placement. Pursuant to the Placement Unit Purchase Agreement, (i) $1,000,002 of the proceeds from the sale of the Placement Units will be deposited by the Company in the Trust Fund in accordance with the terms of the Trust Agreement prior to the Closing Date, and (ii) the purchasers of the Placement Units have waived any and all rights and claims they may have to any proceeds, and any interest thereon, held in the Trust Fund in respect of the shares of Common Stock included in such Placement Units in the event that a Business Combination is not consummated and the Trust Fund is liquidated in accordance with the terms of the Trust Agreement.

3.24   Covenants Not to Compete . No Initial Stockholder, employee, officer or director of the Company is subject to any noncompetition agreement or non-solicitation agreement with any employer or prior employer which could materially affect his ability to be an Initial Stockholder, employee, officer and/or director of the Company.

3.25   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).

3.26   Subsidiaries . The Company does not own an interest in any corporation, partnership, limited liability company, joint venture, trust or other business entity.

3.27   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