UNITY FIRST ACQUISITION CORP.
UNDERWRITING AGREEMENT
New York, New York
___________, 1996
GKN Securities Corp.
61 Broadway
New York, New York 10006
Dear Sirs:
The undersigned, Unity First Acquisition Corp., a Delaware corporation
("Company"), hereby confirms its agreement with GKN Securities Corp.
("Underwriter") as follows:
1. PURCHASE AND SALE OF SECURITIES.
1.1 FIRM SECURITIES.
1.1.1 PURCHASE OF FIRM SECURITIES. On the basis of the
representations and warranties herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to issue and sell to the
Underwriter and the Underwriter agrees to purchase 1,250,000 units ("Firm
Units"); at a purchase price of $5.52 per Unit. Each Firm Unit consists of one
share of the Company's common stock, par value $.0001 per share ("Common
Stock"), and one Class A Redeemable Common Stock Purchase Warrant ("Class A
Warrants") and one Class B Redeemable Common Stock Purchase Warrant ("Class B
Warrants"), referred to together as the "Warrants." The shares of Common Stock
and the Warrants included in the Firm Units will not be separately transferable
until the consummation of a Business Combination. "Business Combination" shall
have the meaning ascribed to it in the Registration Statement (as defined in
Section 2.1.1. hereof). One Class A Warrant and one Class B Warrant each
entitle the holder to exercise it to purchase one share of Common Stock for
$5.50 and $7.50, respectively, commencing on the later of (i) the consummation
by the Company of a Business Combination, or (ii) one year from the effective
date ("Effective Date") of the Registration Statement and terminating on the
six-year anniversary of the Effective Date.
1.1.2 PAYMENT AND DELIVERY. Delivery and payment for the Firm
Units shall be made at 10:00 A.M., New York time, on or before the third
business day following the Effective Date or at such earlier time as the
Underwriter shall determine, or at such other time as shall be agreed upon by
the Underwriter and the Company at the offices of Underwriter or at such other
place as shall be agreed upon by the Underwriter and the Company. The hour and
date of delivery and payment for the Firm Units are called "Closing Date."
Payment for the Firm Units shall be made on the Closing Date at the
Underwriter's election by certified or bank cashier's check(s) in New York
Clearing House funds, payable as follows: 90% of the proceeds received by the
Company for the Firm Units (after deduction of the underwriting discounts and
commissions and the Underwriter's nonaccountable expense allowance) 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 ("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 Underwriter)
representing the Firm Units for the account of the Underwriter. The Firm Units
shall be registered in such name or names and in such authorized denominations
as the Underwriter may request in writing at least two full business days prior
to the Closing Date. The Company will permit the Underwriter to examine and
package the Firm Units for delivery, at least one full business day prior to the
Closing Date. The Company shall not be obligated to sell or deliver the Firm
Units except upon tender of payment by the Underwriter for all the Firm Units.
1.2 OVER-ALLOTMENT OPTION.
1.2.1 OPTION UNITS. For the purposes of covering any over-
allotments in connection with the distribution and sale of the Firm Units, the
Underwriter is hereby granted an option to purchase up to an additional 187,500
Firm Units from the Company ("Over-allotment Option"). Such additional 187,500
units are hereinafter referred to as "Option Units." The Firm Units and the
Option Units are hereinafter collectively referred to as "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 "Public Securities." The purchase price to be paid for the
Option Units will be the same price per Option Unit as the price per 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 Underwriter 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 Underwriter will not be under any obligation to
purchase any Option Units prior to the exercise of the Over-allotment Option.
The Over-allotment Option granted hereby may be exercised by the giving of oral
notice to the Company from Underwriter, which must be confirmed by a letter or
telecopy setting forth the number of Option Units to be purchased and the date
and time for delivery of and payment for the Option Units. If such notice is
given two full business days prior to the Closing Date, the date set forth
therein for such delivery and payment will be the Closing Date. If such notice
is given thereafter, the date set forth therein for such delivery and payment
will not be earlier than five full business days after the date of the notice.
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 "Option Closing Date"). Upon exercise of the
Over-allotment Option, the Company will become obligated to convey to the
Underwriter, and, subject to the terms and conditions set forth herein, the
Underwriter will become obligated to purchase, the number of Option Units
specified in such notice.
1.2.3 PAYMENT AND DELIVERY. Payment for the Option Units will be
at the Underwriter's election by certified or bank cashier's check(s) in New
York Clearing House funds, payable to the Trust Fund and to the Company in the
same manner as set forth in Section 1.1.2 hereof at the offices of Underwriter
or at such other place as shall be agreed upon by the Underwriter and the
Company upon delivery to you of certificates representing such securities for
the account of the Underwriter. The certificates representing the Option Units
to be delivered will be in such denominations and registered in such names as
the Underwriter request 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 Underwriter for inspection, checking and packaging at the
aforesaid office of the Company's transfer agent or correspondent not less than
one full business day prior to such Closing Date.
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1.3 UNDERWRITER'S PURCHASE OPTION.
1.3.1 PURCHASE OPTION. The Company hereby agrees to issue and
sell to the Underwriter (and/or its designees) on the Effective Date an option
("Underwriter's Purchase Option") for the purchase of an aggregate of 125,000
units ("Underwriter's Units") for an aggregate purchase price of $100. Each of
the Underwriter's Units is identical to the Units except that the Warrants
included in the Underwriter's Units ("Underwriter's Warrants") expire five years
from the Effective Date. The Underwriter's Purchase Option, the Underwriter's
Units, the Underwriter's Warrants and the shares of Common Stock issuable upon
exercise of the Underwriter's Warrants are hereinafter referred to collectively
as "Underwriter's Securities." The Public Securities and the Underwriter's
Securities are hereinafter referred to collectively as "Securities."
1.3.2 PAYMENT AND DELIVERY. Delivery and payment for the
Underwriter's Purchase Option shall be made on the Closing Date. The Company
shall deliver to the Underwriter, upon payment therefor, certificates for the
Underwriter's Purchase Option in the name or names and in such authorized
denominations as the Underwriter may request. The Underwriter's Purchase Option
shall be exercisable for a period of four years commencing one year from the
Effective Date at an initial exercise price per Underwriter's Unit of $6.60,
which is equal to one hundred and ten percent (110%) of the initial public
offering price of a Unit.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to the Underwriter 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. 33-_______), including
any related preliminary prospectus ("Preliminary Prospectus"), for the
registration of the Public 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
"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 "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 0-_______) 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.
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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.
2.3.1 SECURITIES ACT AND EXCHANGE ACT REPRESENTATION. At the time
the Registration Statement became effective and at all times subsequent thereto
up to and including the Closing Date and the Option Closing Date, if any, the
Registration Statement and the Prospectus and any amendment or supplement
thereto contained and will contain all material statements which are required to
be stated therein in accordance with the Act and the Regulations, and conformed
and will conform in all material respects to the requirements of the Act and the
Regulations; neither the Registration Statement nor the Prospectus, nor any
amendment or supplement thereto, during such time period and on such dates,
contained or will contain any untrue statement of a material fact or omitted or
will omit to state any material fact required to be stated therein or necessary
to make the statements therein not misleading, nor did they or will they contain
any untrue statement of a material fact or did they or will they 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 at the time such filing was made
complied in all material respects with the applicable provisions of the Act and
the Regulations. 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 Underwriter expressly for use in the Registration Statement
or Prospectus or any amendment thereof or supplement thereto.
2.3.2 DISCLOSURE OF AGREEMENTS. The contracts and other 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 be described in the Registration Statement or the
Prospectus or to be filed with the Commission as exhibits to the Registration
Statement, which have not been so described or filed. Each contract 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)
which 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 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 (i) as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally, (ii) as enforceability of any indemnification 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, and none of such contracts 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 default thereunder
and no event has occurred which, with the lapse of time or the giving of notice,
or both, would constitute a default thereunder. The performance by the Company
of the material provisions of such contracts 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 having jurisdiction over the Company
or any
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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.
2.4 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 capital stock.
2.5 INDEPENDENT ACCOUNTANTS. Arthur Andersen & Co. LLP, whose report is
filed with the Commission as part of the Registration Statement, are independent
accountants as required by the Act and the Regulations.
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 and the results of operations
of the Company at the dates and for the periods to which they apply; and such
financial statements have been prepared in conformity with generally accepted
accounting principles, consistently applied throughout the periods involved; and
the supporting schedules included in the Registration Statement present fairly
the information required to be stated therein.
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 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
5
preemptive rights of any holders of any security of the Company or similar
contractual rights granted by the Company. The outstanding warrants to purchase
shares of Common Stock constitute the valid and binding obligations of the
Company, enforceable in accordance with their 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 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. The authorized Common Stock and outstanding warrants to
purchase shares of Common Stock conform to all statements relating thereto
contained in the Registration Statement and the Prospectus. The offers and
sales of the outstanding Common Stock and warrants to purchase shares of 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
and warrants, 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. When issued, the
Underwriter's Purchase Option, the Underwriter's Warrants and the Warrants will
constitute valid and binding obligations of the Company to issue and sell, upon
exercise thereof and payment therefor, the number and type of securities of the
Company called for thereby in accordance with the terms thereof and such
Underwriter's Purchase Option, the Underwriter'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 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 2.24 hereof), the Trust Agreement and
the Escrow Agreement (as defined in Section 2.25.2 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 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.
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2.11 NO CONFLICTS, ETC. The execution, delivery, and performance by the
Company of this Agreement, the Warrant Agreement (as defined in Section 2.24
hereof), the Trust Agreement and the Escrow Agreement (as defined in
Section 2.25.2 hereof) the consummation by the Company of the transactions
herein and therein contemplated and the compliance by the Company with the terms
hereof and thereof have been duly authorized by all necessary corporate action
and 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 2.27 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. The Company is not in default in the due
performance and observance of any term or condition of any material contract or
other agreement to which the Company is a party. The Company is not in
violation of any term or provision of its Certificate of Incorporation or By-
Laws.
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 which it needs as of the date hereof to conduct
its business purpose as described in 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 pursuant to this Agreement, the Warrant Agreement (as hereinafter
defined) and the Underwriter's Purchase Option, 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 Questionnaire completed by each Initial Stockholder
and provided to the Underwriter as an exhibit to his Insider Letter (as defined
in Section 2.25.1) 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 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 or the Questionnaires.
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. The Company is qualified to do business and is in good standing
under the laws of each state in which it is
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currently required to be so qualified, except where the failure to qualify would
not have a material adverse effect on the Company.
2.17 [Reserved]
2.18 STOP ORDERS. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or Prospectus or any part
thereof.
2.19 TRANSACTIONS AFFECTING DISCLOSURE TO NASD.
2.19.1 FINDER'S FEES. Except as described in the Prospectus, there
are no claims, payments, issuances, arrangements, agreements or understandings
for services in the nature of a finder's 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 with respect to the Company
or, to the best of the Company's knowledge, any Initial Stockholder that may
affect the Underwriter's compensation, as determined by the National Association
of Securities Dealers, Inc. ("NASD").
2.19.2 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 date on which the
Registration Statement was filed with the Commission or thereafter other than
payments to Underwriter.
2.19.3 USE OF PROCEEDS. None of the net proceeds of the offering
will be paid by the Company to any participating NASD member or any affiliate or
associate of any NASD member, except as specifically authorized herein and
except as may be paid in connection with a Business Combination as contemplated
by the Prospectus.
2.19.4 INSIDERS' NASD AFFILIATION. Based on questionnaires
distributed to such persons, except as set forth on Schedule 2.19.4, no officer,
director or any beneficial owner of the Company's unregistered securities has
any direct or indirect affiliation or association with any NASD member.
2.20 [Reserved]
2.21 [Reserved]
2.22 [Reserved]
2.23 [Reserved]
2.24 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 Underwriter as to the matters
covered thereby.
2.25 WARRANT AGREEMENT. The Company has entered into a warrant agreement
with respect to the Warrants and the Underwriter's Warrants with American Stock
Transfer & Trust Company substantially in the form filed as an exhibit to the
Registration Statement ("Warrant
8
Agreement"), providing for, among other things, the payment of a warrant
solicitation fee as contemplated by Section 3.10 hereof.
2.26 AGREEMENTS WITH INITIAL STOCKHOLDERS.
2.26.1 INSIDER LETTERS. The Company has caused to be duly executed
a legally binding and enforceable agreement (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 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 10.2 to the Registration Statement ("Insider
Letter"), pursuant to which all of the Initial Stockholders of the Company agree
to certain matters.
2.26.2 ESCROW AGREEMENT. The Company has caused the Initial
Stockholders to enter into an escrow agreement ("Escrow Agreement") with
American Stock Transfer & Trust Company ("Escrow Agent") in form and substance
satisfactory to the Underwriter, whereby the Common Stock owned by the Initial
Stockholders will be held in escrow by the Escrow Agent, until after a Business
Combination (or six months thereafter in certain instances). 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) but will retain the right to vote such
shares. The Escrow Agreement shall not be amended, modified or otherwise
changed without the prior written consent of Underwriter.
2.27 INVESTMENT MANAGEMENT TRUST AGREEMENT. The Company has entered into
the Trust Agreement with respect to certain proceeds of the offering in form and
substance satisfactory to the Underwriter.
2.28 UNDERWRITER'S PURCHASE OPTION. The Company has executed and delivered
the Underwriter's Purchase Option substantially in the form filed as an exhibit
to the Registration Statement.
2.29 COVENANTS NOT TO COMPETE. No Initial Stockholder of the Company is
subject to any non-competition 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. COVENANTS OF THE COMPANY. The Company covenants and agrees as follows:
3.1 AMENDMENTS TO REGISTRATION STATEMENT. The Company will deliver to the
Underwriter, 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 Underwriter 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
9
the Act, any event shall have occurred as a result of which, in the opinion of
counsel for the Company or counsel for the Underwriter, the Prospectus, as then
amended or supplemented, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to amend the Prospectus
to comply with the Act, the Company will notify the Underwriter 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 Underwriter) 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.
3.3 BLUE SKY FILING. The Company will endeavor in good faith, in
cooperation with the Underwriter, 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 Underwriter 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 Underwriter 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 UNDERWRITER OF PROSPECTUSES. The Company will deliver to
the Underwriter, 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 the
Underwriter 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 UNDERWRITER. The Company
will use its best efforts to cause the Registration Statement to remain
effective and will notify the Underwriter 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 which, in the judgment of the Company, makes any statement
of a material fact made in the Registration Statement or the Prospectus untrue
or which 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
10
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 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. The Company will not consummate a Business
Combination (as defined in the Registration Statement) with any entity which is
affiliated with any Initial Stockholder.
3.8 SECONDARY MARKET TRADING AND STANDARD & POOR'S. The Company will
apply to be included in Standard and Poor's Daily News and Corporation Records
Corporate Descriptions for a period of five years from the consummation of a
Business Combination. Promptly after the consummation of the offering, the
Company 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. The
Company shall also take such other action as may be reasonably requested by the
Underwriter to obtain a secondary market trading exemption in such other states
as may be requested by the Underwriter.
3.9 NASDAQ MAINTENANCE. The Company will use its reasonable best efforts
to have the Public Securities quoted on the Nasdaq SmallCap or National Market
and will follow the Underwriter's reasonable instructions in that regard. In
the event that the Units, Common Stock and Warrants are quoted on Nasdaq, the
Company will use its best efforts to maintain such quotation by Nasdaq of the
Units, the Common Stock and, if outstanding, the Warrants and, if the Company
satisfies the initial listing standards for inclusion on the Nasdaq National
Market ("NM"), to apply for and maintain quotations by the NM of such securities
until ______________ or such earlier time upon which the Company is required to
be liquidated.
3.10 WARRANT SOLICITATION FEES. The Company hereby engages the
Underwriter, on a non-exclusive basis, as its agent for the solicitation of the
exercise of the Warrants. The Company, at its cost, will (i) assist the
Underwriter with respect to such solicitation, if requested by the Underwriter,
and (ii) at the Underwriter's request, provide the Underwriter, and direct the
Company's transfer and warrant agent to provide to the Underwriter, at the
Company's cost, lists of the record and, to the extent known, beneficial owners
of, the Warrants. Commencing one year from the Effective Date, the Company will
pay Underwriter a commission of five percent of the exercise price of the
Warrants for each Warrant exercised, payable on the date of such exercise, on
the terms provided for in the Warrant Agreement, only if permitted under the
rules and regulations of the NASD and only if the Underwriter has provided bona-
fide services to the Company in connection with the exercise of Warrants. The
Underwriter may engage sub-agents in its solicitation efforts. The Company
agrees to disclose the arrangement to pay such solicitation fees to Underwriter
in any prospectus used by the Company in connection with the registration of the
shares of Common Stock underlying the Warrants.
3.11 [Reserved]
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3.12 REPORTS TO THE UNDERWRITER.
3.12.1 PERIODIC REPORTS, ETC. 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 furnish to Underwriter (Attn: Deborah Schondorf
Novick, Senior Vice President, Investment Banking) and its counsel 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 promptly furnish to Underwriter (i) a copy of each periodic report the
Company shall be required to file with the Commission, (ii) a copy of every
press release and every news item and article with respect to the Company or its
affairs which was released by the Company, (iii) copies of each Form SR, (iv) a
copy of each Form 8-K or Schedules 13D, 13G, 14D-1 or 13E-4 received or prepared
by the Company, (v) five copies of each Registration Statement, (vi) a copy of
monthly statements, if any, setting forth such information regarding the
Company's results of operations and financial position (including balance sheet,
profit and loss statements and data regarding outstanding purchase orders) as is
regularly prepared by management of the Company and (vii) such additional
documents and information with respect to the Company and the affairs of any
future subsidiaries of the Company as Underwriter may from time to time
reasonably request.
3.12.2 TRANSFER SHEETS. For a period of five years from the
Closing 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 Underwriter ("Transfer Agent") and will furnish to the Underwriter at the
Company's sole expense such transfer sheets of the Company's securities as the
Underwriter may request, including the daily and monthly consolidated transfer
sheets of the Transfer Agent and Depository Trust Co.
3.12.3 SECONDARY MARKET TRADING SURVEY. Until such time as the
Public Securities are listed or quoted, as the case may be, on the NYSE, the
AMEX or NM, or until such earlier time upon which the Company is required to be
liquidated, the Company shall engage Graubard Mollen & Miller, for a one-time
fee of $5,000 payable on the Closing Date referred to below, to update and
deliver to the Underwriter on a timely basis, but in any event at the beginning
of each fiscal quarter, a written report detailing those states in which the
Public Securities may be traded in non-issuer transaction under the Blue Sky
laws of the fifty States ("Secondary Market Trading Survey").
3.13 OTC REPORTS. During such time as the Public Securities are quoted on
the OTC Bulletin Board and no other automated quotation system, the Company
shall provide to the Underwriter, at its expense, such reports published by the
NASD relating to price trading of the Public Securities, as the Underwriter
shall reasonably request.
3.14 DISQUALIFICATION OF FORM S-1. For a period equal to seven 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 and the Underwriter's Warrants under the
Act.
3.15 PAYMENT OF EXPENSES.
3.15.1 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 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, delivery and mailing
(including the payment of postage with respect to such mailing) of the
Registration Statement, the Prospectus and the Preliminary Prospectuses and the
printing and mailing of this Agreement, the Underwriter's Memorandum and related
documents, including the cost of all copies thereof and any
12
amendments thereof or supplements thereto supplied to the Underwriter in
quantities as may be required by the Underwriter, (ii) the printing, engraving,
issuance and delivery of the Units, the shares of Common Stock and the Warrants
included in the Units and the Underwriter's Purchase Option, including any
transfer or other taxes payable thereon, (iii) the qualification of the Public
Securities under state or foreign securities or Blue Sky laws, including the
filing fees under such Blue Sky laws, the costs of printing and mailing
"Preliminary Blue Sky Memorandum," and all amendments and supplements thereto,
fees and disbursements for the Underwriter's counsel and fees and disbursements
of local counsel, if any, retained for such purpose (such fees shall be capped
at $20,000 in the aggregate (of which $10,000 has previously been paid)), and a
one-time fee of $5,000 payable to Underwriter's counsel for the preparation of
the Secondary Market Trading Survey, (iv) filing fees, costs and expenses
(including fees of $5,000 and disbursements for the Underwriter's counsel)
incurred in registering the offering with the NASD, (v) costs of placing
"tombstone" advertisements in THE WALL STREET JOURNAL, THE NEW YORK TIMES and a
third publication to be selected by the Underwriter, (vi) fees and disbursements
of the transfer and warrant agent, (vii) the preparation, binding and delivery
of six transaction "bibles", in form and style reasonably satisfactory to the
Underwriter and transaction lucite cubes or similar commemorative items in a
style and quantity as reasonably requested by the Underwriter, (viii) the
Company's expenses associated with "due diligence" meetings arranged by the
Underwriter, (ix) any listing of the Public Securities on Nasdaq, and (x) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this Section
3.15.1. The Underwriter 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 herein to be paid by the Company to the Underwriter
and/or to third parties.
3.15.2 NONACCOUNTABLE EXPENSES. The Company further agrees that,
in addition to the expenses payable pursuant to Section 3.15.1, it will pay to
the Underwriter a nonaccountable expense allowance equal to three percent (3%)
of the gross proceeds received by the Company from the sale of the Public
Securities, of which $25,000 has been paid to date, and the Company will pay the
balance on the Closing Date and any additional balance on the Option Closing
Date by certified or bank cashier's check or, at the election of the
Underwriter, by deduction from the proceeds of the offering contemplated herein.
If the offering contemplated by this Agreement is not consummated for any reason
whatsoever then the Company's liability for payment to the Underwriter of the
nonaccountable expense allowance shall be equal to the sum of the Underwriter's
actual out-of-pocket expenses (including, but not limited to, counsel fees,
"road-show" and due diligence expenses). The "road-show" and due diligence
expenses incurred by the Underwriter are only payable out of the Underwriter's
non-accountable expense allowance. The Underwriter shall retain such part of
the nonaccountable expense allowance previously paid as shall equal such actual
out-of-pocket expenses and refund the balance. If the amount previously paid is
insufficient to cover such actual out-of-pocket expenses, the Company shall
remain liable for and promptly pay any other actual out-of-pocket expenses.
3.15.3 EXPENSES RELATED TO BUSINESS COMBINATION. The Company
further agrees that, in the event the Underwriter assist the Company in trying
to obtain approval of a proposed Business Combination, the Company agrees to
reimburse the Underwriter for all out-of-pocket expenses, including, but not
limited to, "road-show" expenses.
3.16 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.
13
3.17 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.
3.18 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 prior to the consummation of
the Business Combination: (i) complete details of all services and copies of
agreements governing such services; and (ii) justification as to why the person
or entity providing the merger and acquisition services should not be considered
an "underwriter and related person" with respect to the Company's initial public
offering, as such term is defined in Part III, Section 44 of the Rules of Fair
Practice. 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.
3.19 STABILIZATION. Neither the Company, nor, to its knowledge, any of its
employees, directors or stockholders (without the consent of Underwriter) has
taken or will take, directly or indirectly, any action designed to or which has
constituted or which 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.
3.20 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.
3.21 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 Arthur Andersen & Co. LLP, any "Big 6" accounting firm, or
other independent public accountants reasonably acceptable to Underwriter.
3.22 [Reserved]
3.23 [Reserved]
3.24 FORM 8-K. The Company shall, on the date hereof, retain its
independent public accountants to audit the financial statements of the Company
as of the Closing Date ("Audited Financial Statements") reflecting the receipt
by the Company of the proceeds of the initial public offering. As soon as the
Audited Financial Statements become available, the Company shall immediately
file a Current Report on Form 8-K with the Commission, which Report shall
contain the Company's Audited Financial Statements. Additionally, the Company
shall, within 15 days of the execution of a letter of intent for a Business
Combination, file a Form 8-K reflecting the terms of such transaction and shall
as promptly as possible thereafter, file such pro forma financial statements as
may be required by the Exchange Act.
14
3.25 NASD. 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 Public
Securities.
4. CONDITIONS OF UNDERWRITER'S OBLIGATIONS. The obligations of the
Underwriter 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.
4.1.1 EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement shall have become effective not later than 5:00 P.M., New York time,
on the date of this Agreement or such later date and time as shall be consented
to in writing by 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 the purpose shall have been
instituted or shall be pending or contemplated by the Commission and any request
on the part of the Commission for additional information shall have been
complied with to the reasonable satisfaction of Graubard Mollen & Miller,
counsel to the Underwriter.
4.1.2 NASD CLEARANCE. By the Effective Date, the Underwriter
shall have received clearance from the NASD as to the amount of compensation
allowable or payable to the Underwriter as described in the Registration
Statement.
4.1.3 NO BLUE SKY STOP ORDERS. No order suspending the sale of
the Securities 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 Underwriter shall have received the favorable opinion of Parker Duryee
Rosoff & Haft, counsel to the Company, dated the Effective Date, addressed to
the Underwriter and in form and substance satisfactory to Graubard Mollen &
Miller, counsel to the Underwriter, to the effect that:
(i) 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. The Company is duly qualified and licensed and in good standing
as a foreign corporation in each jurisdiction in which its ownership or leasing
of any properties or the character of its operations requires such qualification
or licensing, except where the failure to qualify would not have a material
adverse effect on the Company.
(ii) 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 outstanding options and warrants to purchase shares of Common
Stock constitute the valid and binding obligations of the Company, enforceable
in accordance with their terms. The authorized
15
capital stock and outstanding options and warrants to purchase shares of Common
Stock conform to all statements relating thereto contained in the Registration
Statement and the Prospectus. The offers and sales of the outstanding Common
Stock and options and warrants to purchase shares of Common Stock were at all
relevant times either registered under the Act and the applicable state
securities or Blue Sky Laws or exempt from such registration requirements. The
authorized and outstanding capital stock of the Company is as set forth in the
Prospectus.
(iii) 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, to the best
of such counsel's knowledge after due inquiry, similar contractual rights
granted by the Company. All corporate action required to be taken for the
authorization, issuance and sale of the Securities has been duly and validly
taken. When issued, the Underwriter's Purchase Option, the Underwriter's
Warrants and the Warrants will constitute valid and binding obligations of the
Company to issue and sell, upon exercise thereof and payment therefor, the
number and type of securities of the Company called for thereby and such
Warrants, the Underwriter's Purchase Option, and the Underwriter's Warrants,
when issued, in each case, are enforceable against the Company in accordance
with their respective terms, except (a) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (b) as enforceability of any indemnification provision may be
limited under the federal and state securities laws, and (c) 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. The certificates representing the
Securities are in due and proper form.
(iv) To the best of such counsel's knowledge, after due inquiry,
except as set forth in the Prospectus, no holders of any securities of the
Company or of any options, warrants or securities of the Company 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.
(v) This Agreement, the Warrant Agreement, the Underwriter's
Purchase Option, the Trust Agreement and the Escrow Agreement have each been
duly and validly authorized and, when executed and delivered by the Company,
constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, and, to such counsel's
knowledge, the Insider Letters have each been duly and validly executed and
constitute the valid and binding obligations of the individual signatories
thereto, enforceable against the Initial Stockholder in accordance with its
respective terms, except (a) as such enforceability may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally, (b) as enforceability of any indemnification provisions may be
limited under the federal and state securities laws, and (c) 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.
(vi) The execution, delivery and performance of this Agreement,
the Underwriter's Purchase Option, the Warrant Agreement, the Escrow Agreement,
and the Trust Agreement, the issuance and sale of the Securities, the
consummation of the transactions contemplated hereby and thereby, and compliance
by the Company with the terms and provisions hereof and thereof, do not and will
not, with or without the giving of notice or the lapse of time, or both, (a) to
the best of such counsel's knowledge, conflict with, or result in a breach of,
any of the
16
terms or provisions of, or constitute a default under, or result in the creation
or modification of any lien, security interest, charge or encumbrance upon any
of the properties or assets of the Company pursuant to the terms of, any
material mortgage, deed of trust, note, indenture, loan, contract, commitment or
other material agreement or instrument, to which the Company is a party or by
which the Company or any of its properties or assets may be bound, (b) result in
any violation of the provisions of the Certificate of Incorporation or the By-
Laws of the Company, or (c) to the best of such counsel's knowledge, violate any
statute or any judgment, order or decree, rule or regulation applicable to the
Company of any court, domestic or foreign, or of any federal, state or other
regulatory authority or other governmental body having jurisdiction over the
Company, its properties or assets.
(vii) The Registration Statement, each Preliminary Prospectus
and the Prospectus and any post-effective amendments or supplements thereto
(other than the financial statements included therein, as to which no opinion
need be rendered) comply as to form in all material respects with the
requirements of the Act and Regulations. The Securities and all other
securities issued or issuable by the Company conform in all material respects to
the description thereof contained in the Registration Statement and the
Prospectus. No statute or regulation or legal or governmental proceeding
required to be described in the Prospectus is not described as required, nor are
any contracts or documents of a character required to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement not so described or filed as required.
(viii) Counsel has participated in conferences with officers
and other representatives of the Company, representatives of the independent
public accountants for the Company and representatives of the Underwriter at
which the contents of the Registration Statement, the Prospectus and related
matters were discussed and although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and Prospectus (except as
otherwise set forth in this opinion), no facts have come to the attention of
such counsel which lead them to believe that either the Registration Statement
or the Prospectus or any amendment or supplement thereto, as of the date of such
opinion contained any untrue statement of a material fact or omitted to state a
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 (it being understood that such counsel need express no opinion with
respect to the financial statements and schedules and other financial and
statistical data included in the Registration Statement or Prospectus).
(ix) The Registration Statement is effective under the Act, and,
to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and proceedings for
that purpose have been instituted or are pending or threatened under the Act or
applicable state securities laws.
(x) To the best of such counsel's knowledge, there is no action,
suit or proceeding before or by any court of governmental agency or body,
domestic or foreign, now pending, or threatened against the Company, which might
result in any material and adverse change in the condition (financial or
otherwise), business or prospects of the Company, or might materially and
adversely affect the properties or assets thereof.
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 Underwriter
shall have received the favorable opinion of Parker Duryee Rosoff & Haft,
counsel to the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriter and in form and substance
reasonably satisfactory to Graubard Mollen & Miller, counsel to the Underwriter,
confirming as of
17
the Closing Date and, if applicable, the Option Closing Date, the statements
made by Parker Duryee Rosoff & Haft, 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
Underwriter's counsel) of other counsel reasonably acceptable to Underwriter's
counsel, familiar with the applicable laws, and (ii) as to matters of fact, to
the extent they deem proper, on certificates or other written statements of
officers of the Company and officers of departments of various jurisdiction
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 Underwriter's 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 Underwriter in its opinion delivered to the Underwriter.
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 Underwriter and in form and substance
satisfactory in all respects (including the non-material nature of the changes
or decreases, if any, referred to in clause (iii) below) to you and to Graubard
Mollen & Miller, counsel for the Underwriter, from Arthur Andersen & Co., LLP
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;
(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 June 30, 1996 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 June 30, 1996 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,
18
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 Underwriter shall have received a certificate
of the Company signed by the Chairman of the Board or the President and the
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 that the conditions set
forth in Section 4.5 hereof have been satisfied as of such date and that, as of
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 Underwriter will have received such other
and further certificates of officers of the Company as the Underwriter may
reasonably request.
4.4.2 SECRETARY'S CERTIFICATE. At each of the Closing Date and
the Option Closing Date, if any, the Underwriter shall have received a
certificate of the Company signed by the Secretary of the Company, dated the
Closing Date or the Option Date, as the case may be, respectively, certifying
(i) that the By-Laws and Certificate of Incorporation, as amended, 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
19
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 Underwriter executed copies of the Underwriter's Purchase
Option, the Escrow Agreement and the Trust Agreement.
4.7 OPINION OF COUNSEL FOR THE UNDERWRITER. All proceedings taken in
connection with the authorization, issuance or sale of the Securities as herein
contemplated shall be reasonably satisfactory in form and substance to you and
to Graubard Mollen & Miller, counsel to the Underwriter, 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 Underwriter 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.
4.8 SECONDARY MARKET TRADING SURVEY. On the Effective Date, the
Underwriter shall have received the Secondary Market Trading Survey from
Graubard Mollen & Miller.
5. INDEMNIFICATION.
5.1 INDEMNIFICATION OF THE UNDERWRITER.
5.1.1 GENERAL. Subject to the conditions set forth below, the
Company agrees to indemnify and hold harmless the Underwriter, its directors,
officers, agents and employees and each person, if any, who controls the
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 the Underwriter and the
Company or between the Underwriter and any third party or otherwise) to which
they or any of them may become subject under the 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
20
amended and supplemented); (ii) in any post-effective amendment or amendments or
any new registration statement and prospectus in which is included securities of
the Company issued or issuable upon exercise of the Underwriter's Purchase
Option; or (iii) any application or other document or written communication (in
this Section 5 collectively called "application") executed by the Company or
based upon written information furnished by the Company in any jurisdiction in
order to qualify the Securities under the securities laws thereof or filed with
the Commission, any state securities commission or agency, Nasdaq or any
securities exchange; or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
unless such statement or omission was made in reliance upon and in conformity
with written information furnished to the Company with respect to the
Underwriter by or on behalf of the Underwriter expressly for use in any
Preliminary Prospectus, the Registration Statement or Prospectus, or any
amendment or supplement thereof, or in any application, as the case may be. The
Company agrees promptly to notify the Underwriter 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 the Underwriter
or controlling person in respect of which indemnity may be sought against the
Company pursuant to Section 5.1.1, such Underwriter shall promptly notify the
Company in writing of the institution of such action and the Company shall
assume the defense of such action, including the employment and fees of counsel
(subject to the reasonable approval of the Underwriter) and payment of actual
expenses. The Underwriter or controlling person shall have the right to employ
its or their own counsel in any such case, but the fees and expenses of such
counsel shall be at the expense of the Underwriter or such 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 and/or controlling person shall be borne
by the Company. Notwithstanding anything to the contrary contained herein, if
the Underwriter or controlling person shall assume the defense of such action as
provided above, the Company shall have the right to approve the terms of any
settlement of such action which approval shall not be unreasonably withheld.
5.2 INDEMNIFICATION OF THE COMPANY. The Underwriter agrees to indemnify
and hold harmless the Company, its directors, officers and employees and agents
who control the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any and all loss, liability, claim,
damage and expense described in the foregoing indemnity from the Company to the
Underwriter, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions directly relating to the
transactions effected by the Underwriter in connection with this Offering 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 the 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
21
sought against the 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 Underwriter by the
provisions of Section 5.1.2.
5.3 CONTRIBUTION.
5.3.1 CONTRIBUTION RIGHTS. In order to provide for just and
equitable contribution under the 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 Underwriter shall
contribute to the aggregate losses, liabilities, claims, damages and expenses of
the nature contemplated by said indemnity agreement incurred by the Company and
the Underwriter, as incurred, in such proportions that the Underwriter is
responsible for that portion represented by the percentage that the underwriting
discount appearing on the cover page of the Prospectus bears to the initial
offering price appearing thereon and the Company is responsible for the balance;
provided, that, no person guilty of a fraudulent misrepresentation (within the
meaning of Section 11(f) of the 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, the Underwriter shall not 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 which 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 the Underwriter or the Company, as applicable, within the
meaning of Section 15 of the Act shall have the same rights to contribution as
the Underwriter or the Company, as applicable.
5.3.2 CONTRIBUTION PROCEDURE. Within fifteen days after receipt
by any party to this Agreement (or its representative) of notice of the
commencement of any action, suit or proceeding, such party will, if a claim for
contribution in respect thereof is to be made against another party
("contributing party"), notify the contributing party of the commencement
thereof, but the omission to so notify the contributing party will not relieve
it from any liability which it may have to any other party other than for
contribution hereunder. In case any such action, suit or proceeding is brought
against any party, and such party notifies a contributing party or its
representative of the commencement thereof within the aforesaid fifteen days,
the contributing party will be entitled to participate therein with the
notifying party and any other contributing party similarly notified. Any such
contributing party shall not be liable to any party seeking contribution on
account of any settlement of any claim, action or proceeding which was 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.
6. [Reserved]
22
7. ADDITIONAL COVENANTS.
7.1 ATTENDANCE AT BOARD MEETINGS. For a period of three years from the
Effective Date, the Underwriter shall be permitted to select a designee to
attend all meetings of the Board of Directors, but who will not be entitled to
vote at such meetings. The Company agrees to give the Underwriter written
notice of each such meeting and to provide to the Underwriter with an agenda and
minutes of the meeting no later than it gives such notice and provides such
items to the other directors. The Company shall reimburse the designee of the
Underwriter for its out-of-pocket expenses incurred in connection with its
attendance at the Company's Board meetings, including, but not limited to, food,
lodging, transportation and any fees paid to directors for attending such
meetings.
7.2 ADDITIONAL SHARES OR OPTIONS. The Company hereby agrees that until
the Company consummates a Business Combination (as such term is defined in the
Registration Statement), 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 Fund or which vote
as a class with the Common Stock on a Business Combination.
7.3 TRUST FUND WAIVER LETTERS. The Company hereby agrees that it will
not commence its due dilligence investigation of any Target Business (as such
term is defined in the Registration Statement) or obtain the services of any
vendor unless and until the Target Business or the vendor executes a waiver
letter in the form attached hereto as Exhibit A and B, respectively.
Furthermore, each officer and director of the Company shall execute a waiver
letter in the form attached hereto as EXHIBIT C.
7.4 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 and Underwriter.
7.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. The Company shall not take
any action or omit to take any action which would cause the Company to be in
breach or violation of its Certificate of Incorporation or By-Laws.
7.6 BLUE SKY REQUIREMENTS. The Company shall provide counsel to the
Underwriter with ten copies of all proxy information and all related material
filed with the Commission in connection with a Business Combination concurrently
with such filing with the Commission. In addition, the Company shall furnish
any other state in which its initial public offering was registered, such
information as may be requested by such state.
7.7 FINDER'S FEES AND OTHER COMPENSATION. Except as provided in the
Prospectus, the Company shall not pay any of the Initial Stockholders or their
affiliates a finder's fee or other compensation in consideration of originating
a Business Combination. In addition, the Company will not remit to any Initial
Stockholder or its affiliates any compensation at any time for services rendered
to the Company prior to or concurrently with the consummation of a Business
Combination.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. Except as the context
otherwise requires, all representations, warranties and agreements contained in
this Agreement shall be deemed to be representations, warranties and agreements
at the Closing Dates and such representations, warranties and agreements of the
Underwriter and Company, including the indemnity agreements contained in Section
5 hereof, shall remain operative and in full force and
23
effect regardless of any investigation made by or on behalf of the Underwriter,
the Company or any controlling person, and shall survive termination of this
Agreement or the issuance and delivery of the Units to the Underwriter 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.
9. EFFECTIVE DATE OF THIS AGREEMENT AND TERMINATION THEREOF.
9.1 EFFECTIVE DATE. This Agreement shall become effective on the
Effective Date at the time the Registration Statement is declared effective by
the Commission.
9.2 TERMINATION. You shall have the right to terminate this Agreement at
any time prior to any 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 Boston Stock Exchange or in the over-the-counter 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 over-the-
counter market by the NASD 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 war or major hostilities, or (iv) if a banking moratorium has been
declared by a New York State or federal authority, or (v) if a moratorium on
foreign exchange trading has been declared which materially adversely impacts
the United States securities market, or (vi) if the Company shall have sustained
a material loss by fire, flood, accident, hurricane, earthquake, theft, sabotage
or other calamity or malicious act which, whether or not such loss shall have
been insured, will, in your opinion, make it inadvisable to proceed with the
delivery of the Securities, or (vii) if Lawrence Burstein shall no longer serve
the Company in his present capacity, or (viii) if any of the Company's
representations, warranties or covenants hereunder are breached, or (ix) if
Underwriter shall have become aware after the date hereof of such a material
adverse change in the conditions or prospects of the Company, or such adverse
material change in general market conditions as in the Underwriter's judgment
would make it impracticable to proceed with the offering, sale and/or delivery
of the Securities or to enforce contracts made by the Underwriter for the sale
of the Securities.
9.3 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
expenses related to the transactions contemplated herein shall be governed by
Section 3.15 hereof.
9.4 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 affected by, such election or termination or
failure to carry out the terms of this Agreement or any part hereof.
10. MISCELLANEOUS.
10.1 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:
24
If to the Underwriter:
GKN Securities Corp.
61 Broadway, 12th Floor
New York, New York 10006
Attn: David M. Nussbaum, Chairman
Copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, New York 10016
Attn: David Alan Miller, Esq.
If to the Company:
Unity First Acquisition Corp.
245 Fifth Avenue, Suite 1500
New York, New York 10016
Attn: Lawrence Burstein, President
Copy to:
Parker Duryee Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attn: Ira I. Roxland, Esq.
10.2 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.
10.3 AMENDMENT. This Agreement may only be amended by a written instrument
executed by each of the parties hereto.
10.4 ENTIRE AGREEMENT. This Agreement (together with the other agreements
and documents being delivered pursuant to or in connection with this Agreement)
constitutes 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.
10.5 BINDING EFFECT. This Agreement shall inure solely to the benefit of
and shall be binding upon the Underwriter, the Company and the controlling
persons, directors and officers referred to in Section 5 hereof, and their
respective successors, legal representatives 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.
10.6 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
25
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 10 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.
10.7 EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which shall be deemed to be an original, but all of which 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.
10.8 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 effect the validity of
this Agreement or any provision hereof or the right of any of the parties hereto
to thereafter enforce each and every provision of this Agreement. No waiver of
any breach, non-compliance or non-fulfillment of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument executed
by the party or parties against whom or which enforcement of such waiver is
sought; and no waiver of any such breach, non-compliance or non-fulfillment
shall be construed or deemed to be a waiver of any other or subsequent breach,
non-compliance or non-fulfillment.
If the foregoing correctly sets forth the understanding between the
Underwriter and the Company, please so indicate in the space provided below for
that purpose, whereupon this letter shall constitute a binding agreement between
us.
Very truly yours,
UNITY FIRST ACQUISITION CORP.
By:
-------------------------------
Lawrence Burstein
President
Accepted on the date first
above written.
GKN SECURITIES CORP.
By:
--------------------------------------
Deborah L. Schondorf
Senior Vice President
26
EXHIBIT A TO UNDERWRITING AGREEMENT
Unity First Acquisition Corp.
245 Fifth Avenue, Suite 1502
New York, New York 10016
Attn: Lawrence Burstein
President
Gentlemen:
Reference is made to the Final Prospectus of Unity First Acquisition
Corp. ("Unity"), dated _____________, 1996 ("Prospectus"). Capitalized terms
used and not otherwise defined herein shall have the meanings assigned to them
in Prospectus.
We have read the Prospectus and understand that Unity has established
the Trust Fund, initially in an amount of $___________ for the benefit of the
Public Stockholders and that Unity may disburse monies from the Trust Fund only
(i) to the Public Stockholders in the event of the redemption of their shares or
the liquidation of Unity or (ii) to Unity after it consummates a Business
Combination.
For and in consideration of Unity agreeing to evaluate the undersigned
for purposes of consummating a Business Combination with it, the undersigned
hereby agrees that it does not have any right, title, interest or claim of any
kind in or to any monies in the Trust Fund ("Claim") and hereby waives any Claim
it may have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with Unity and will not seek recourse against the Trust
Fund for any reason whatsoever.
---------------------------------------
Print Name of Target Business
---------------------------------------
Authorized Signature of Target Business
EXHIBIT B TO UNDERWRITING AGREEMENT
Unity First Acquisition Corp.
245 Fifth Avenue, Suite 1502
New York, New York 10016
Attn: Lawrence Burstein
President
Gentlemen:
Reference is made to the Final Prospectus of Unity First Acquisition
Corp. ("Unity"), dated __________, 1996 ("Prospectus"). Capitalized terms used
and not otherwise defined herein shall have the meanings assigned to them in
Prospectus.
We have read the Prospectus and understand that Unity has established
the Trust Fund, initially in an amount of $__________ for the benefit of the
Public Stockholders and that Unity may disburse monies from the Trust Fund only
(i) to the Public Stockholders in the event of the redemption of their shares or
the liquidation of Unity or (ii) to Unity after it consummates a Business
Combination.
For and in consideration of Unity engaging the services of the
undersigned, the undersigned hereby agrees that it does not have any right,
title, interest or claim of any kind in or to any monies in the Trust Fund
("Claim") and hereby waives any Claim it may have in the future as a result of,
or arising out of, any contracts or agreements with Unity and will not seek
recourse against the Trust Fund for any reason whatsoever.
----------------------------------
Print Name of Vendor
----------------------------------
Authorized Signature of Vendor
EXHIBIT C TO UNDERWRITING AGREEMENT
Unity First Acquisition Corp.
245 Fifth Avenue, Suite 1502
New York, New York 10016
Attn: Lawrence Burstein
President
Gentlemen:
The undersigned officer or director of Unity First Acquisition Corp.
("Unity") hereby acknowledges that Unity has established the Trust Fund,
initially in an amount of $________ for the benefit of the Public Stockholders
and that Unity may disburse monies from the Trust Fund only (i) to the Public
Stockholders in the event of the redemption of their shares or the liquidation
of Unity or (ii) to Unity after it consummates a Business Combination.
The undersigned hereby agrees that it does not have any right, title,
interest or claim of any kind in or to any monies in the Trust Fund ("Claim")
and hereby waives any Claim it may have in the future as a result of, or arising
out of, any contracts or agreements with Unity and will not seek recourse
against the Trust Fund for any reason whatsoever.
Notwithstanding the foregoing, such waiver shall not apply to any
shares acquired by the undersigned in the public market.
__________________________________
Print Name of Officer/Director
__________________________________
Authorized Signature of Officer/Director