FERRIS, BAKER WATTS,
INCORPORATED
LADENBURG THALMANN & CO., INC.
MAXIM GROUP LLC
Ferris, Baker
Watts, Incorporated
Ladenburg Thalmann & Co., Inc.
Maxim Group LLC
c/o Ferris, Baker Watts, Incorporated
100 Light Street
Baltimore, Maryland 21202
Dear Ladies and
Gentlemen:
The
undersigned, JK Acquisition Corp., a Delaware corporation (“
Company ”), hereby confirms its agreement with Ferris,
Baker Watts, Incorporated (hereinafter referred to as “
you ,” “ FBW ” or the “
Representative ”) as representative of the
underwriters named on Schedule I hereto (the
Representative and the other underwriters being collectively called
the “ Underwriters ” or, individually, an
“ Underwriter ”) as follows:
1. Purchase
and Sale of Securities .
1.1.1
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 9,666,666 units (“ Firm Units ”) of
the Company at a purchase price (net of discounts and commissions
but before the non-accountable expense allowance of $0.135 per unit
described in Section 3.26) of Five Dollars Seventy Cents
($5.70) 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 but before the nonaccountable expense
allowance of $0.135 per unit described in Section 3.26) of
$5.70 per Firm Unit. The Firm Units are to be offered initially to
the public (the “ Offering ”) at the offering
price set forth on the cover page of the Prospectus (as defined in
Section 2.1.1 hereof). Each Firm Unit consists of one share of
the Company’s common stock, par value $0.0001 per share (the
“ 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 90 days after the effective date (the
“ Effective Date ”) of the Registration
Statement (as defined in Section 2.1.1 hereof) unless FBW
informs the Company of its decision to allow earlier separate
trading, but in no event will FBW 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 a filing
of a Form 8-K by the Company that includes such audited balance
sheet. 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 of the
Registration Statement and terminating on the four-year anniversary
of the Effective Date unless earlier redeemed as provided in the
Warrant Agreement (as defined in Section 2.21 hereof). “
Business Combination ” shall mean any merger, capital
stock exchange, asset acquisition or other similar business
combination consummated by the Company with an operating company
(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 10:00 A.M., Baltimore, Maryland 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 is called the “ Closing
Date .” Payment for the Firm Units in the total amount of
$55,099,996 representing gross proceeds of the offering prior to
the payment of offering expenses of $750,100 working capital of
$100,000 not held in trust and the non-accountable expense
allowance of $1,305,000 referred to in Section 3.26 hereof)
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, as follows: $54,249,896 (representing net proceeds of
the offering after payment of offering expenses of $750,100 and
working capital of $100,000 not held in trust, but including the
non-accountable expense allowance of $1,305,000 and without giving
effect to the over-allotment option) of the proceeds received by
the Company for the Firm Units shall be deposited in the trust fund
established by the Company for the benefit of the public
stockholders as described in the Registration Statement (“
Trust Fund ”) pursuant to the terms of an Investment
Management Trust Agreement (the “ Trust Agreement
”) and the remaining $850,100 of the proceeds (representing
$100,000 for working capital not held in trust and $750,100 for
offering expenses) 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 (the “ DTC
”)) for the account of the Underwriters. The Firm Units shall
be registered in such name or names and in such authorized
denominations as the 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 1,450,000 units
from the Company (the “ Over-allotment Option
”). Such additional 1,450,000 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
$5.70 per Option Unit (for avoidance of doubt, such amount does not
include any nonaccountable expense allowance).
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 from 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, 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. If such
delivery and payment for the Option Units does not occur on the
Closing Date, the date and time of the closing for such Option
Units will be as set forth in the notice (hereinafter the “
Option Closing Date ”). 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 will 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: $5.70 per Option Unit shall be
deposited in the Trust Fund pursuant to the Trust Agreement 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) for the account of the Underwriters. The
certificates representing the Option Units to be delivered will be
in such
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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 or Option Closing Date, as the case may be.
1.3
Representative’s Purchase Option .
1.3.1
Purchase Option . The Company hereby agrees to issue and
sell to the Representative (and/or their designees) on the
Effective Date an option (“ Representative’s
Purchase Option ”) for the purchase of an aggregate of
700,000 units (the “ Representative’s Units
”) for an aggregate purchase price of $100.00. 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, which is equal to one hundred and
twenty-five (125%) percent of the exercise price of warrants sold
to the public. The Representative’s 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 four-year anniversary of the
Effective Date at an initial exercise price per
Representative’s Unit of $7.50, which is equal to one hundred
and twenty five (125%) percent 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 .” Except
pursuant to one or more of the exceptions set forth in
Rule 2710(g)(2) of the Conduct Rules of the National
Association of Securities Dealers, the Representative’s
Purchase Option shall not be sold, transferred, assigned, pledged
or hypothecated, or be the subject of any hedging, short sale,
derivative, put or call transaction that would result in the
effective economic disposition of the Representative’s
Purchase Option by the holder(s) thereof, for a period of one
hundred eighty (180) days immediately following the date the
Registration Statement (as hereinafter defined) is declared
effective by the Commission (as hereinafter defined).
1.3.2
Delivery and Payment . 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.
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 amendments thereto, on Form
S-1 (File No. 333-125211), including any related preliminary
prospectus (the “ Preliminary Prospectus ”), for
the registration of the Public Securities under the Securities Act
of 1933, as amended (“ Act ”), which
registration statement and 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 .” “ Statutory Prospectus
” as of any time means the Preliminary Prospectus included in
the Registration Statement immediately prior to the Time of Sale.
“Time of Sale” means __ [a/ p]m Eastern time on the
date of this Agreement. The Registration Statement has been
declared effective by the Commission on the date hereof. The
Company has complied with all requests of the Commission for
additional or supplemental information. The Company has not
distributed and will not distribute any prospectus or other
offering material in connection with the offering and sale of the
Securities other than any Preliminary Prospectus, Statutory
Prospectus or Prospectus.
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The
Company has delivered to the Representative a complete manually
signed copy of the Registration Statement and of each consent and
certificate of experts filed as a part thereof and has delivered to
the Representative conformed copies of the Registration Statement
(without exhibits) and Preliminary Prospectuses and the Prospectus,
as amended or supplemented, in such quantities and at such places
as the Representative has reasonably requested. Each Preliminary
Prospectus used by the Underwriters pursuant to Rule 430A and
the Prospectus, when filed, complied in all material respects with
the Securities Act and, as filed by electronic transmission
pursuant to EDGAR (except as may be permitted by
Regulation S-T under the Securities Act), was identical to the
copy thereof delivered to the Underwriters for use in connection
with the offer and sale of the Public Securities.
2.1.2
Pursuant to the Exchange Act . The Company has filed with
the Commission a Form 8-A (File Number 001-32574) providing for the
registration under the Securities Exchange Act of 1934, as amended
(the “ Exchange Act ”), of the Securities. The
registration of the Securities 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 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, Statutory Prospectus and
Preliminary Prospectus .
2.3.1
10b-5 Representation . At the time the Registration
Statement becomes 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; neither
the Registration Statement nor the Prospectus, nor any amendment or
supplement thereto, on such dates, do or will contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading. When any Preliminary Prospectus 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 Statutory Prospectus does not include and did
not include as of the Time of Sale any untrue statement of a
material fact and does not omit and did not omit as of the Time of
Sale to state any material fact 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, the Statutory Prospectus or Prospectus or
any amendment thereof or supplement thereto.
2.3.2
Disclosure of Agreements . The agreements and documents
described in the Registration Statement, the Statutory 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 Statutory
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 Statutory Prospectus or 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 in all material respects and is enforceable
against the Company and, to the Company’s knowledge, the
other parties thereto, in accordance with its terms, except
(x) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting
creditors’ rights generally, (y) as enforceability of any
indemnification or contribution provision may be limited under the
federal and state securities laws, and (z) that the remedy of
specific performance and
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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,
the Statutory Prospectus and the Prospectus concerning the effects
of federal, state and local regulation on this Offering and the
Company’s business as currently contemplated are correct in
all material respects and do not omit to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
2.4
Changes After Dates in Registration Statement .
2.4.1
No Material Adverse Change . Since the respective dates as
of which information is given in the Registration Statement, the
Statutory 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 or agreements 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, the Statutory Prospectus and the
Prospectus, except as otherwise specifically stated therein or in
this Agreement, the Company has not: (i) issued any securities
or incurred any liability or obligation, direct or contingent, for
borrowed money; or (ii) declared or paid any dividend or made
any other distribution on or in respect to its capital
stock.
2.5
Independent Accountants . To the knowledge of the Company,
Malone & Bailey, P.C. (“ Malone & Bailey
”), whose report is filed with the Commission as part of the
Registration Statement, are registered independent accountants as
required by the Act and the Regulations. Malone & Bailey 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, the Statutory Prospectus and Prospectus
fairly present the financial position, results of operations and
cash flows of the Company at the dates and for the periods to which
they apply; such financial statements comply with the applicable
accounting requirements of the Act and the Regulations; 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, if any, 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.
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2.7
Authorized Capital; Options, Etc. The Company had at the
date or dates indicated in the Registration Statement, the
Statutory Prospectus and the Prospectus duly authorized, issued and
outstanding capitalization as set forth in the Registration
Statement the Statutory Prospectus and the Prospectus. Based on the
assumptions stated in the Registration Statement the Statutory
Prospectus and the Prospectus, the Company will have on the Closing
Date the adjusted stock capitalization set forth therein. Except as
set forth in, or contemplated by, the Registration Statement the
Statutory 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.
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 the Statutory 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.
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, the Statutory Prospectus and the Prospectus. 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, Representative’s
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 Registration Statement, the Statutory Prospectus and the
Prospectus, no holders of any securities of the Company or any
rights exercisable for or convertible or exchangeable into
securities of the Company have the right to require the Company to
register any such securities of the Company under the Act or to
include any such securities in a registration statement to be filed
by the Company.
2.10
Validity and Binding Effect of Agreements . This Agreement,
the Warrant Agreement (as defined in Section 2.21 hereof), the
Trust Agreement, the Services Agreement (as defined in
Section 3.7.2 hereof), the Escrow Agreement (as defined in
Section 2.22.2 hereof) and the Unit Placement Agreement (as
defined in Section 2.22.3 hereof) have been duly and validly
authorized by the Company and constitute, and the
Representative’s 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
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(iii) that
the remedy of specific performance and injunctive and other forms
of equitable relief may be subject to the equitable defenses and to
the discretion of the court before which any proceeding therefor
may be brought.
2.11
No Conflicts, Etc. The execution, delivery, and performance
by the Company of this Agreement, the Warrant Agreement, the
Representative’s Purchase Option, the Trust Agreement, the
Service Agreement, the Escrow Agreement and the Unit Placement
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 material 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 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.
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 Company is subject. The Company is not
in violation of any term or provision of its Certificate of
Incorporation (as may be amended from time to time) or By-Laws (as
may be amended from time to time) 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 . Except as described in the Prospectus,
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 Statutory Prospectus and
the Prospectus.
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
Representative’s Purchase Option, the Trust Agreement, the
Services Agreement and the Escrow Agreement and as contemplated by
the Statutory Prospectus and 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 (the
“ Questionnaires ”) completed by each of the
Company’s directors and stockholders immediately prior to the
Offering (the “ Initial Stockholders ”) and
provided to the Underwriters as an exhibit to his or her Insider
Letter (as defined in Section 2.22.1) 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 director and 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 or, to the best of the Company’s knowledge, any
Initial Stockholder, which has not been disclosed in the
Registration Statement the Statutory Prospectus and the Prospectus
or the Questionnaires.
7
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
Stop Orders . The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus or
Prospectus or any part thereof.
2.18
Transactions Affecting Disclosure to NASD .
2.18.1
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 National Association of Securities Dealers,
Inc. (the “ NASD ”).
2.18.2
Payments Within Twelve Months . The Company has not made any
direct or indirect payments (in cash, securities or otherwise) to:
(i) any person, as a finder’s fee, consulting fee or
otherwise, in consideration of such person raising capital for the
Company or introducing to the Company persons who raised or
provided capital to the Company; (ii) to any 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
FBW.
2.18.3
Use of Proceeds . None of the net proceeds of the Offering
will be paid by the Company to any participating NASD member or its
affiliates, except as specifically authorized herein and except as
may be paid in connection with a Business Combination as
contemplated by the Statutory Prospectus and the
Prospectus.
2.18.4
Initial Stockholders’ NASD Affiliation . Based on
Questionnaires distributed to such persons, 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 Stock is or becomes and
affiliate or associated person of an NASD member participating in
the Offering.
2.19
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.
2.20.
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.
8
2.21
Warrant Agreement . The Company has entered into a warrant
agreement with respect to the Warrants and the
Representative’s Warrants with Continental Stock Transfer
& Trust Company substantially in the form filed as an exhibit
to the Registration Statement (the “ Warrant Agreement
”).
2.22
Agreements With Initial Stockholders .
2.22.1
Insider Letters . The Company has caused to be duly executed
legally binding and enforceable agreements (except (i) as such
enforceability may be limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors’ rights
generally, (ii) as enforceability of any indemnification,
contribution or 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 Exhibits 10.1 through 10.4 to the Registration
Statement (the “ 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.
2.22.2
Escrow Agreement . The Company has caused the Initial
Stockholders to enter into an escrow agreement (the “
Escrow Agreement ”) with Continental Stock Transfer
& Trust Company (the “ Escrow Agent ”)
substantially in the form of Exhibit 10.6 to the Registration
Statement, whereby the Common Stock owned by each of the Initial
Stockholders (other than shares of Common Stock included in Units
purchased pursuant to the Unit Placement Agreement) will be held in
escrow by the Escrow Agent, until the date that is six
(6) months after the date a Business Combination is
consummated. 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 FBW.
2.22.3
Unit Placement Agreement . The Initial Stockholders and the
Company have entered to a Unit Placement Agreement, substantially
in the form of Exhibit 10.11 to the Registration Statement,
pursuant to which the Initial Stockholders agreed to purchase
333,334 Units at a price of $6.00 per unit ($2,000,004 in
the aggregate) (the “Unit Placement Agreement”). The
Units issued and sold pursuant to the Unit Placement Agreement are
identical in all respects to the Units offered in the Offering. The
issuance and sale of the Units pursuant to the Unit Placement
Agreement are exempt from registration pursuant to
Section 4(2) of the Act.
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 of Exhibit 10.5 to the
Registration Statement, which Trust Agreement shall not be amended,
modified or otherwise changed without the prior written consent of
FBW.
2.24
Covenants Not to Compete . No Initial Stockholder, employee,
officer or director of the Company is subject to any
non-competition 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.
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
Rule 419 . Upon delivery and payment for the Firm Units
on the Closing Date, the Company will not be subject to
Rule 419 under the Act and none of the Company’s
outstanding securities will be deemed to be a “penny
stock” as defined in Rule 3a-51-1 under the Exchange
Act.
9
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
Public Securities in accordance with the provisions hereof and the
Prospectus. If at any time when a Prospectus relating to the Public
Securities is required to be delivered under the Act, any event
shall have occurred as a result of which, in the opinion of counsel
for the Company or counsel for the Underwriters, the 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 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 Securities under the provisions of
the Exchange Act. For a period of five years from the Effective
Date, or such earlier time upon which the Company is required to be
liquidated, the Company will not deregister the Units under the
Exchange Act without the prior written consent of FBW.
3.3
Blue Sky Filing . Where required, 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 Public 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 agrees
that such action is not at the time necessary or advisable, use all
reasonable efforts to file and make such statements or reports at
such times as are or may be required by the laws of such
jurisdiction.
3.4
Delivery 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
10
immediately and
confirm the notice in writing: (i) of the effectiveness of the
Registration Statement and any amendment thereto; (ii) of the
issuance by the Commission of any stop order 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
Public Securities for offering or sale in any jurisdiction or of
the initiation, or the threatening, of any proceeding for that
purpose; (iv) of the mailing and delivery to the Commission
for filing of any amendment or supplement to the Registration
Statement or Prospectus; (v) of the receipt of any comments or
request for any additional information from the Commission; and
(vi) of the happening of any event during the period described
in Section 3.4 hereof that, in the judgment of the Company,
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. The Company shall not
file any amendment of the Registration Statement or supplement to
the Prospectus or any document incorporated by reference in the
Registration Statement unless the Company has furnished the
Representative with a copy for review prior to filing and shall not
file any such proposed amendment or supplement to which the
Representative reasonable objects. 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 date 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.
3.7.1
Affiliate 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
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