<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 29, 1996
REGISTRATION NO. 33-80647
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 3
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ORION ACQUISITION CORP. I
(Name of small business issuer as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 6799 (A BLANK CHECK COMPANY) 13-3853272
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employee
of
incorporation or organization) Classification Code Number) Identification
Number)
</TABLE>
375 PARK AVENUE, NEW YORK, NEW YORK 10022 (212) 593-4747
(Address, including zip code, and telephone number, including area code, of
small business issuer's principal executive offices)
ARTHUR H. GOLDBERG, ORION ACQUISITION CORP. I, 375 PARK AVENUE, NEW YORK, NEW
YORK 10022 (212) 593-4747
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------------------------
COPIES TO:
<TABLE>
<S> <C>
W. Raymond Felton, Esq. James M. Jenkins, Esq.
Greenbaum, Rowe, Smith, Ravin, Davis & Harter, Secrest & Emery
Himmel
P.O. Box 5600 700 Midtown Tower
Woodbridge, New Jersey 07095-0988 Rochester, New York 14604
(908) 549-5600 (716) 232-6500
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------------------------------
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. / /
----------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED
AMOUNT MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE
SECURITIES TO BE REGISTERED REGISTERED (1) PER UNIT (1)
<S> <C> <C>
Units consisting of one share of Common Stock, $.01 par value, and one Class A Warrant
to purchase one share of Common Stock (2)(3)......................................... 920,000 $ 10.00
Common Stock, $.01 par value (4)...................................................... 920,000 $ 9.00
Class B Warrants to purchase one Unit (5)............................................. 368,000 $ 5.75
Units, issuable upon exercise of the Class B Warrants, consisting of one share of
Common Stock, $.01 par value, and one Class A Warrant to purchase one share of Common
Stock (3)(6)......................................................................... 368,000 $ .125
Common Stock, $.01 par value (6)...................................................... 368,000 $ 9.00
Representative's Warrants to purchase Units........................................... 80,000
Units, issuable upon exercise of the Representative's Warrants, consisting of one
share of Common Stock, $.01 par value, and one Class A Warrant to purchase one share
of Common Stock (8).................................................................. 80,000 $ 11.00
Common Stock, $.01 par value (4)...................................................... 80,000 $ 9.00
Representative's Warrants to purchase Class B Warrants................................ 32,000 $ .001
Class B Warrants, issuable upon exercise of the Representative's Warrants (8)......... 32,000 $ 5.775
Units, issuable upon exercise of the Class B Warrants, consisting of one share of
Common Stock, $.01 par value, and one Class A Warrant to purchase one share of Common
Stock (8)............................................................................ 32,000 $ .25
Common Stock, $.01 par value (4)...................................................... 32,000 $ 9.00
Total.................................................................................
<CAPTION>
PROPOSED
MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF OFFERING REGISTRATION
SECURITIES TO BE REGISTERED PRICE (1) FEE
<S> <C> <C>
Units consisting of one share of Common Stock, $.01 par value, and one Class A Warrant
to purchase one share of Common Stock (2)(3)......................................... $ 9,200,000 $ 3,172.41
Common Stock, $.01 par value (4)...................................................... $ 8,280,000 $ 2,855.17
Class B Warrants to purchase one Unit (5)............................................. $ 2,116,000 $ 729.66
Units, issuable upon exercise of the Class B Warrants, consisting of one share of
Common Stock, $.01 par value, and one Class A Warrant to purchase one share of Common
Stock (3)(6)......................................................................... $ 46,000 $ 15.86
Common Stock, $.01 par value (6)...................................................... $ 3,312,000 $ 1,142.07
Representative's Warrants to purchase Units........................................... $ 5 (7)
Units, issuable upon exercise of the Representative's Warrants, consisting of one
share of Common Stock, $.01 par value, and one Class A Warrant to purchase one share
of Common Stock (8).................................................................. $ 880,000 $ 303.45
Common Stock, $.01 par value (4)...................................................... $ 720,000 $ 248.28
Representative's Warrants to purchase Class B Warrants................................ $ 5 (7)
Class B Warrants, issuable upon exercise of the Representative's Warrants (8)......... $ 184,800 $ 63.72
Units, issuable upon exercise of the Class B Warrants, consisting of one share of
Common Stock, $.01 par value, and one Class A Warrant to purchase one share of Common
Stock (8)............................................................................ $ 8,000 $ 2.76
Common Stock, $.01 par value (4)...................................................... $ 288,000 $ 99.31
Total................................................................................. $ 8,632.69 *
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(b).
(2) Includes 120,000 Units which the Underwriters have the option to purchase to
cover over-allotments.
(3) Together with such indeterminate number of additional securities as may be
issued pursuant to the anti-dilution provisions of the Class A Warrants and
the Class B Warrants pursuant to Rule 416(a).
(4) Issuable upon exercise of the Class A Warrants.
(5) Includes 48,000 Class B Warrants which the Underwriters have the option to
purchase to cover over-allotments.
(6) Issuable upon exercise of the Class B Warrants.
(7) No registration fee required pursuant to Rule 457(g).
(8) Together with such indeterminate number of additional securities as may be
issued pursuant to the anti-dilution provisions of the Representative's
Warrants pursuant to Rule 416(a).
* $8,585.11 previously paid.
----------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
SUBJECT TO COMPLETION, DATED AUGUST 29, 1996
ORION ACQUISITION CORP. I
800,000 UNITS, AT $10.00 PER UNIT, EACH UNIT CONSISTING OF ONE SHARE OF COMMON
STOCK
AND ONE REDEEMABLE CLASS A WARRANT ENTITLING THE HOLDER THEREOF TO PURCHASE,
UPON CONSUMMATION
OF A BUSINESS COMBINATION, ONE SHARE OF COMMON STOCK AT A PRICE OF $9.00
320,000 REDEEMABLE CLASS B UNIT PURCHASE WARRANTS, AT $5.75 PER CLASS B WARRANT,
EACH CLASS B WARRANT ENTITLING THE HOLDER THEREOF TO PURCHASE, UPON THE
CONSUMMATION OF A BUSINESS COMBINATION, ONE UNIT AT A PRICE OF $.125
Orion Acquisition Corp. I, a Delaware corporation (the "Company"), hereby
offers in a Specialized Merger and Acquisition Allocated Risk TransactionSM
("SMA(2)RTSM") 800,000 Units (the "Units"), each consisting of one share of
Common Stock, par value $.01 per share (the "Common Stock"), and one Redeemable
Class A Common Stock Purchase Warrant (the "Class A Warrants"), and 320,000
Redeemable Class B Unit Purchase Warrants (the "Class B Warrants"), each
entitling the holder thereof to purchase one Unit for $.125 at the time of a
Business Combination, as defined. The Units and the Class B Warrants, which are
being offered in the same offering, will be sold and traded separately. The
Common Stock and the Class A Warrants will become separable and transferable at
such time as H.J. Meyers & Co., Inc. (the "Representative") may determine, but
in no event will the Representative allow separate trading of the securities
comprising the Units until the preparation of an audited balance sheet of the
Company reflecting receipt by the Company of the proceeds of this offering and
the filing by the Company with the Securities and Exchange Commission of a
Current Report on Form 8-K which includes such audited balance sheet (the
"Separation Date"). The Representative will act as representative of the several
underwriters (the "Underwriters"). Each Class A Warrant will entitle the holder
thereof to purchase one share of Common Stock at a price per share of $9.00,
commencing upon the consummation of a Business Combination, as defined, until
the fifth anniversary of the date of this Prospectus. Each Class B Warrant will
entitle the holder thereof to purchase one Unit at a price per Unit of $.125
commencing upon the consummation of a Business Combination until the first
anniversary of such date. (The Class A Warrants and the Class B Warrants are
sometimes hereinafter collectively referred to as the "Warrants.") Furthermore,
the Warrants are redeemable, each as a class, in whole and not in part, at the
option of the Company, at a price of $.05 per Warrant at any time, upon not less
than 30 days' prior written notice to the registered holders thereof, provided
that the Company has consummated a Business Combination, as defined, and that
the last sale price of the Common Stock, if the Common Stock is listed for
trading on an exchange or interdealer quotation system which provides last sale
prices, or, the average of the closing bid and asked quotes for the Common
Stock, if the Common Stock is listed for trading on an interdealer quotation
system which does not provide last sale prices, on all 10 of the trading days
ending on the day immediately prior to the day on which the Company gives notice
of redemption, has been $11.00 or higher.
Prior to this offering, there has been no public market for the Units, the
shares of Common Stock or the Warrants and there can be no assurance that such a
market will develop for any of such securities after the completion of this
offering. The offering prices of the Units and the Class B Warrants and the
exercise prices and terms of the Warrants have been arbitrarily determined by
the Company and the Representatives, and bear no relationship to the Company's
assets, book value, or other generally accepted criteria of value. For
additional information regarding the factors considered in determining the
initial public offering prices of the Units and the Class B Warrants and the
exercise prices and the terms of the Warrants, see "Risk Factors" and
"Underwriting." The Company anticipates that the Units, the Common Stock, the
Class A Warrants and the Class B Warrants will be quoted on the OTC Bulletin
Board under the symbols "ORIOU," "ORIO," "ORIOW" and "ORIOL," respectively.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL
DILUTION AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. SEE "RISK
FACTORS" (PAGE 15) AND
"DILUTION."
THIS OFFERING WILL NOT BE CONDUCTED IN ACCORDANCE WITH RULE 419 OF REGULATION C
OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). RULE 419 OF THE ACT WAS
DESIGNED, TO STRENGTHEN REGULATION OF SECURITIES OFFERINGS BY BLANK CHECK
COMPANIES WHICH CONGRESS HAS FOUND TO HAVE BEEN A COMMON VEHICLE FOR
FRAUD AND MANIPULATION IN THE PENNY STOCK MARKET. THE COMPANY IS A BLANK
CHECK COMPANY BUT IS NOT SUBJECT TO RULE 419 OF THE ACT BECAUSE THE
COMPANY'S NET TANGIBLE ASSETS AFTER ITS RECEIPT OF THE PROCEEDS OF
THIS OFFERING WILL EXCEED $5,000,000. ACCORDINGLY, INVESTORS IN
THIS OFFERING WILL NOT RECEIVE THE SUBSTANTIVE PROTECTION PROVIDED
BY RULE 419 OF THE ACT. SEE "RISK
FACTORS." (PAGE 15)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS (1) COMPANY (2)(3)
<S> <C> <C> <C>
Per Unit.................................................... $10.00 $.600 $9.400
Per Class B Warrant......................................... $5.75 $.575 $5.175
Total (4)................................................... $9,840,000 $664,000 $9,176,000
</TABLE>
(FOOTNOTES ON NEXT PAGE)
The Units and the Class B Warrants are being offered by the Underwriters,
subject to prior sale, when, as and if delivered to and accepted by the
Underwriters, and subject to its right to withdraw, cancel or modify this
offering and to reject any order in whole or in part. It is expected that
delivery of certificates will be made at the offices of H.J. Meyers & Co., Inc.,
1895 Mount Hope Avenue, Rochester, New York 14620, on or about September ,
1996.
H.J. MEYERS & CO., INC.
------------------
THE DATE OF THIS PROSPECTUS IS AUGUST , 1996.
<PAGE>
- ------------------------
(1) Does not include additional compensation to the Representative in the form
of a non-accountable expense allowance of 3% of the gross proceeds of this
offering. For indemnification arrangements with the Underwriters and
additional compensation payable to the Representative, see "Underwriting."
(2) Before deducting estimated offering expenses, including the Representatives'
non-accountable expense allowance of $295,200 payable by the Company.
(3) Used as a basis for calculating the underwriting discounts with respect to
the Units. A portion of the net proceeds from the sale of the Class B
Warrants equal to the discounts and the Representative's non-accountable
expense allowance attributable to the sale of the Units will be deposited
into escrow with the Proceeds Escrow Agent (as defined). See "The Company --
Escrow of Offering Proceeds."
(4) The Company has granted the Underwriters a 30-day option to purchase up to
120,000 additional Units and/or 48,000 additional Class B Warrants upon the
same terms and conditions as set forth above, solely to cover
over-allotments, if any. If such over-allotment option is exercised in full,
the total Price to Public, Underwriting Discounts and Proceeds to Company
will be $11,316,000, $763,600, and $10,552,400, respectively. See
"Underwriting."
"SMA(2)RTSM" AND "SPECIALIZED MERGER AND ACQUISITION ALLOCATED RISK
TRANSACTIONSM" ARE SERVICEMARKS OF BRIGHT LICENSING CORP. ("BRIGHT"). BRIGHT HAS
GRANTED THE COMPANY, PURSUANT TO A LICENSE AGREEMENT EXECUTED BY BRIGHT AND THE
COMPANY, A NON-EXCLUSIVE LICENSE TO USE, FOR PURPOSES OF MARKETING THIS
OFFERING, THE SMA(2)RTSM AND SPECIALIZED MERGER AND ACQUISITION ALLOCATED RISK
TRANSACTIONSM SERVICEMARKS.
THE SMA(2)RTSM SERVICEMARK HAS BEEN LICENSED TO THE COMPANY FOR PURPOSES OF
MARKETING THIS OFFERING AND IS BEING USED AS AN ACRONYM TO DESCRIBE THE RISK
ALLOCATION FEATURE OF THIS OFFERING. USE OF THE SMA(2)RTSM SERVICEMARK, HOWEVER,
SHOULD IN NO WAY BE CONSTRUED BY AN INVESTOR AS AN ENDORSEMENT OF THE MERITS OF
THIS OFFERING.
INVESTORS SHOULD BE ADVISED THAT A SMA(2)RTSM, OR SPECIALIZED MERGER AND
ACQUISITION ALLOCATED RISK TRANSACTIONSM, IS IN NO WAY RELATED OR SIMILAR TO A
SPACSM, OR SPECIFIED PURPOSE ACQUISITION COMPANYSM (WHICH ARE SERVICEMARKS OF
GKN SECURITIES CORP.), AND INVESTORS SHOULD NOT CONSTRUE A SMA(2)RTSM AS BEING
SIMILAR TO A SPACSM OR A SPECIFIED PURPOSE ACQUISITION COMPANYSM. NONE OF THE
OFFICERS, DIRECTORS OR CONTROLLING PERSONS OF THE COMPANY OR THE REPRESENTATIVES
ARE AFFILIATED WITH ANY OF THE OFFICERS, DIRECTORS OR CONTROLLING PERSONS OF THE
OWNERS OF THE SPACSM AND SPECIFIED PURPOSE ACQUISITION COMPANYSM SERVICEMARKS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE UNITS, THE
COMMON STOCK OR THE WARRANTS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL
IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
THE COMPANY HAS REGISTERED THE SECURITIES, OR AN EXEMPTION FROM REGISTRATION
HAS BEEN OBTAINED (OR IS OTHERWISE AVAILABLE), ONLY IN THE STATES OF COLORADO,
DELAWARE, FLORIDA, HAWAII, ILLINOIS, LOUISIANA, MARYLAND, NEW YORK, RHODE
ISLAND, SOUTH CAROLINA AND THE DISTRICT OF COLUMBIA (THE "PRIMARY DISTRIBUTION
STATES") AND INITIAL SALES MAY ONLY BE MADE IN SUCH JURISDICTIONS. MORE
SPECIFICALLY, THE COMPANY HAS REGISTERED THE SECURITIES BY FILING IN COLORADO,
BY COORDINATION IN DELAWARE, ILLINOIS, MARYLAND, RHODE ISLAND AND SOUTH CAROLINA
ii
<PAGE>
AND BY NOTIFICATION IN FLORIDA, LOUISIANA AND NEW YORK. EXEMPTIONS FROM
REGISTRATION HAVE BEEN OBTAINED (OR ARE OTHERWISE AVAILABLE) IN HAWAII AND THE
DISTRICT OF COLUMBIA. PURCHASERS OF SECURITIES IN THIS OFFERING MUST BE
RESIDENTS OF THE PRIMARY DISTRIBUTION STATES. THE SECURITIES WILL BE IMMEDIATELY
AVAILABLE FOR RESALE IN EACH OF THE PRIMARY DISTRIBUTION STATES AND IN THE
COMMONWEALTH OF PENNSYLVANIA. UNLESS AN APPLICABLE EXEMPTION IS AVAILABLE,
PURCHASERS OF SECURITIES EITHER IN THIS OFFERING OR IN ANY SUBSEQUENT TRADING
MARKET WHICH MAY DEVELOP MUST BE RESIDENTS OF SUCH JURISDICTIONS. THE COMPANY
WILL AMEND THIS PROSPECTUS FOR THE PURPOSE OF DISCLOSING ADDITIONAL STATES, IF
ANY, IN WHICH THE COMPANY'S SECURITIES WILL BE ELIGIBLE FOR RESALE IN THE
SECONDARY TRADING MARKET.
FLORIDA RESIDENTS:
FLORIDA RESIDENTS WHO PURCHASE CLASS B WARRANTS WILL BE UNABLE TO EXERCISE
THESE WARRANTS TO PURCHASE UNITS UNLESS AND UNTIL THE UNITS ISSUABLE UPON
EXERCISE OF THE CLASS B WARRANTS HAVE BEEN REGISTERED FOR SALE IN FLORIDA OR ARE
ESTABLISHED TO BE EXEMPT FROM THE REQUIREMENT OF SUCH REGISTRATION. FLORIDA LAW
GENERALLY PRECLUDES THE REGISTRATION OF SECURITIES THAT ARE NOT LISTED ON A
SECURITIES EXCHANGE OR THE NASDAQ SYSTEM WHEN THE OFFERING PRICE OF SUCH
SECURITIES IS $5.00 OR LESS PER SHARE. BECAUSE THE "EXERCISE PRICE" OF CLASS B
WARRANTS IS $.25, THE "OFFERING PRICE" OF THE UNITS ISSUABLE UPON EXERCISE OF
THE CLASS B WARRANTS COULD BE CONSIDERED NOT GREATER THAN $5.00 IF THE OFFERING
PRICE OF THE CLASS B WARRANTS IS NOT ADDED TO ITS EXERCISE PRICE IN MAKING THAT
DETERMINATION. FOR THIS REASON, NO PERMIT TO SELL THE UNITS ISSUABLE UPON
EXERCISE OF THE CLASS B WARRANTS IN FLORIDA HAS BEEN OBTAINED. THERE CAN BE NO
ASSURANCE THAT THE UNITS ISSUABLE UPON EXERCISE OF THE CLASS B WARRANTS WILL
EVER BE REGISTERED IN FLORIDA OR ESTABLISHED TO BE EXEMPT FROM THE REQUIREMENT
OF SUCH REGISTRATION.
iii
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED IN THIS
PROSPECTUS AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION AND
FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING ELSEWHERE IN THIS
PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION IN THIS PROSPECTUS
ASSUMES THAT THE OVER-ALLOTMENT OPTION GRANTED TO THE UNDERWRITERS IS NOT
EXERCISED. INVESTORS SHOULD CONSIDER CAREFULLY THE INFORMATION SET FORTH IN THIS
PROSPECTUS UNDER THE HEADING "RISK FACTORS."
THE COMPANY
BUSINESS OBJECTIVES
The Company, which is a "blank check" or "blind pool" company, was formed on
August 9, 1995 to serve as a vehicle to effect a merger, exchange of capital
stock, asset acquisition or other business combination (a "Business
Combination") with an operating business (a "Target Business"). The business
objective of the Company is to effect a Business Combination with a Target
Business which the Company believes has significant growth potential. The
Company intends to utilize the net proceeds of this offering, equity securities,
debt securities, bank borrowings or a combination thereof in effecting a
Business Combination.
The Company will seek to acquire a Target Business without limiting itself
to a particular industry. Most likely, the Target Business will be primarily
located in the United States, although the Company reserves the right to acquire
a Target Business primarily located outside the United States. In seeking a
Target Business, the Company will consider, without limitation, businesses which
(i) offer or provide services or develop, manufacture or distribute goods in the
United States or abroad, including, without limitation, in the following areas:
health care and health products, educational services, environmental services,
consumer-related products and services (including amusement and/ or recreational
services), personal care services, voice and data information processing and
transmission and related technology development or (ii) is engaged in wholesale
or retail distribution. The Company will not acquire a Target Business unless
the fair market value of such business, as determined by the Company based upon
standards generally accepted by the financial community, including revenues,
earnings, cash flow and book value (the "Fair Market Value"), is at least 80% of
the net assets of the Company at the time of the consummation of a Business
Combination (the "Fair Market Value Test"). If the Company determines that the
financial statements of a proposed Target Business do not clearly indicate that
the Fair Market Value Test has been satisfied, the Company will obtain an
opinion from an investment banking firm that is a member of the National
Association of Securities Dealers, Inc. (the "NASD") with respect to the
satisfaction of such criteria. The Company has not had any contact or
discussions with any entity or representatives of any entity regarding a
Business Combination. While the Company may, under certain circumstances, seek
to effect Business Combinations with more than one Target Business, in all
likelihood, as a result of its limited resources, the Company will have the
ability to effect only a single Business Combination with a Target Business. The
Company does not intend to register as a broker-dealer, merge with or acquire a
registered broker-dealer, or otherwise become a member of the NASD.
BUSINESS EXPERIENCE OF PRINCIPALS
The executive officers and the other directors of the Company have business
experience which has provided them with skills which the Company believes will
be helpful in evaluating potential Target Businesses and negotiating a Business
Combination.
RETENTION OF INDEPENDENT INVESTMENT BANKER
At some time following the completion of this offering, the Company will
engage an independent investment banking firm which is a member in good standing
of the NASD to assist the Company in identifying, evaluating, structuring and
negotiating potential Business Combinations.
ESCROW OF INITIAL PUBLIC OFFERING PROCEEDS
Upon completion of this offering, an aggregate of $8,000,000 (or $9,200,000
if the Underwriters' over-allotment option is exercised in full), representing
an amount equal to the gross proceeds from
<PAGE>
the sale of the Units, will be placed in an escrow account maintained by
Citibank, N.A. (the "Proceeds Escrow Agent"), subject to release upon the
earlier of (1) receipt by the Proceeds Escrow Agent of: (i) written notice from
the Company of the Company's completion of a transaction or series of
transactions in which at least 50% of the gross proceeds from this offering are
committed to a specific line of business as a result of a Business Combination
(including any redemption payments), (ii) a written opinion of counsel of the
Company, reasonably acceptable to the Proceeds Escrow Agent, that a Business
Combination was approved by a vote of two-thirds of the shares of Common Stock
of the Company, as required by this Prospectus, and that the holders of more
than 20% of the Common Stock of the Company have not elected to redeem their
Common Stock, as required by this Prospectus, and (iii) a written certification
from the Company that the fair market value (as determined by the Company, based
upon standards generally accepted by the financial community, including
revenues, earnings, cash flow, and book value) of the Target Business exceeds
80% of the net value of the assets of the Company and that all other actions
required by the Company for the release of the escrow proceeds have been met, or
(2) either (i) after 18 months of the date of effectiveness of this offering (or
24 months if the Proceeds Escrow Agent has received notice within the initial 18
month period that the Extension Criteria, as herein defined, have been
satisfied) if the Proceeds Escrow Agent has not received written notice from the
Company of the Company's completion of a transaction or series of transactions
in which at least 50% of the gross proceeds from this offering are committed to
a specific line of business as a result of a Business Combination, or (ii)
receipt by the Proceeds Escrow Agent of written notification to distribute the
escrow proceeds in connection with a liquidation of the Company to the holders
of Common Stock purchased as part of the Units sold in this offering or in the
open market thereafter, or (iii) receipt by the Proceeds Escrow Agent of written
notification to distribute part of the escrow proceeds to the holders of record
of Common Stock purchased as part of the Units sold in this offering or in the
open market thereafter who elected to have their shares redeemed in accordance
with the terms set forth in this Prospectus. The Company will notify the
Representative and the NASD prior to the release of funds from the escrow
account. All proceeds held in the escrow account will be invested, until
released, in short-term United States government securities, including treasury
bills, cash and cash equivalents. Except as noted below, the proceeds to the
Company from the sale of the Class B Warrants will not be placed in escrow.
Rather, these proceeds will be used (i) to repay indebtedness, (ii) to pay the
balance of a $100,000 license fee, or $90,000, to Bright pursuant to a license
agreement executed by Bright and the Company, (iii) to cover all the expenses
incurred by the Company in this offering, including the Underwriters' discounts
and the Representative's non-accountable expense allowance, and (iv) to fund the
Company's operating expenses, including investment banking fees and the costs of
business, legal and accounting due diligence on prospective Target Businesses,
until the consummation of a Business Combination. In addition, a portion of the
net proceeds from the sale of the Class B Warrants equal to the Underwriters'
discounts and the Representative's non-accountable expense allowance with
respect to the Units, as noted in clause (iii) above, will be placed in the
above mentioned escrow account for the benefit of purchasers of Common Stock as
part of the Units sold in this offering and in the open market thereafter.
Management is unaware of any circumstance under which this policy, through
management's own initiative, may be changed.
STOCKHOLDER APPROVAL OF BUSINESS COMBINATIONS
The Company, prior to the consummation of any Business Combination, will
submit such transaction to the Company's stockholders for their approval, even
if the nature of the Business Combination is such as would not ordinarily
require stockholder approval under applicable state law. In connection with such
request, the Company intends to provide stockholders with disclosure
documentation in accordance with the proxy solicitation regulations under the
Securities Exchange Act of 1934, as amended (the "Proxy Rules"), including
audited financial statements, concerning a Target Business. All of the Company's
present stockholders, including all directors and the Company's executive
officers, have agreed to vote all of their respective shares of Common Stock in
accordance with the vote of the majority of the shares voted by all other
stockholders of the Company ("non-affiliated public stockholders") with respect
to any such Business Combination. A Business Combination will not be consummated
unless approved by a vote of two-thirds of the shares of Common Stock voted by
the
2
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stockholders (in person or by proxy). In addition, the Delaware General
Corporation Law requires approval of certain mergers and consolidations by a
majority of the outstanding stock entitled to vote. Holders of Warrants who
otherwise do not own any shares of Common Stock will not be entitled to vote on
any Business Combination.
REDEMPTION RIGHTS
At the time the Company seeks stockholder approval of any potential Business
Combination, the Company will offer (the "Redemption Offer") to each of the
non-affiliated public stockholders of the Company the right, for a specified
period of time of not less than 20 calendar days, to redeem his shares of Common
Stock at a price equal to the Liquidation Value (as defined below) of such
shares as of the record date established for determining the stockholders
entitled to vote with respect to the approval of a Business Combination (the
"Record Date"). The Redemption Offer will be described in the disclosure
documentation relating to the proposed Business Combination. The "Liquidation
Value" for each share of Common Stock will be determined as of the Record Date
by dividing (A) the greater of (i) the Company's net worth as reflected in the
Company's then current financial statements as audited by the Company's
independent accountants, or (ii) the amount of the proceeds of the Company in
the escrow account (including interest earned thereon) by (B) the number of
shares held by non-affiliated public stockholders; however, in no event will the
Liquidation Value of each share of Common Stock be less than $10.00 plus
interest earned thereon. In connection with the Redemption Offer, if
non-affiliated public stockholders holding 20% or less of the shares of Common
Stock elect to redeem their shares, the Company may, but will not be required
to, proceed with such Business Combination and, if the Company elects to so
proceed, will redeem such shares at their Liquidation Value as of the Record
Date. In any case, if non-affiliated public stockholders holding more than 20%
of the Common Stock elect to redeem their shares, the Company will not proceed
with such potential Business Combination and will not redeem such shares. All
holders of Common Stock and all holders of Warrants prior to the date of this
Prospectus will be allowed to participate in a Redemption Offer only if they
purchase shares of Common Stock in this offering or on the open market
thereafter, and only as to any shares of Common Stock so purchased.
ESCROW OF OUTSTANDING SHARES
All of the shares of Common Stock and Series A Preferred Stock (the
"Escrowed Stock") outstanding immediately prior to the date of this Prospectus
have been placed in escrow with Greenbaum, Rowe, Smith, Ravin, Davis & Himmel
(the "Share Escrow Agent"), until the earlier of (i) the occurrence of the
consummation of the first Business Combination or (ii) 18 months from the date
of this Prospectus provided that such 18-month period will be extended by six
months to 24 months from the date of this Prospectus if, prior to the expiration
of the 18-month period, the Company has become a party to a letter of intent or
a definitive agreement to effect a Business Combination (the "Extension
Criteria"). During the escrow period, the holders of the Escrowed Stock will not
be able to sell or otherwise transfer their respective shares of Escrowed Stock
(with the exceptions described below), but will retain all other rights as
stockholders of the Company, including, without limitation, the right to vote
escrowed shares of Common Stock, subject to their agreement to vote all of their
shares in accordance with the vote of a majority of the non-affiliated public
stockholders with respect to a consummation of a Business Combination or
liquidation proposal, but excluding the right to request the redemption of
Escrowed Stock pursuant to a Redemption Offer. Subject to compliance with
applicable securities laws, any such holder may transfer his, her or its
Escrowed Stock to a family member or to a trust established for the benefit of
himself, herself, or a family member or to another affiliated entity (with the
consent of the Representative which will not be unreasonably withheld) or, in
the event of the holder's death, by will or operation of law, or in the case of
its dissolution or merger, provided that any such transferee must agree as a
condition to such transfer to be bound by the restrictions on transfer
applicable to the original holder and, in the case of present stockholders other
than the holders of the Placement Shares, that the transferor (except in the
case of death) or successsor will continue to be deemed the beneficial owner (as
defined in Regulation 13d-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) of such transferred shares.
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Each of the executive officers and the other directors of the Company has
agreed to surrender his shares to the Company at the purchase price at which
such shares were acquired ($.10 per share) if he resigns prior to the
consummation of the first Business Combination.
RESTRICTIONS ON SALE OF OUTSTANDING SHARES
All of the shares of Common Stock outstanding prior to the date of this
Prospectus other than 20,000 shares of Common Stock issued in a private
placement by the Company in November 1995 (the "Placement Shares") and the
shares of Common Stock issuable upon the exercise of options granted to the
Company's officers and directors and the exercise of warrants included in the
units issuable upon exercise of such options are referred to herein as
"Founders' Shares". The Founders' Shares are subject to an agreement with the
holders of the Founders' Shares not to sell or otherwise transfer such shares
for a period of 24 months from the date the currently outstanding Founders'
Shares were originally issued (August 18, 1995), but in no event earlier than
120 days following the consummation of the first Business Combination. However,
subject to compliance with applicable securities laws, any such holder may
transfer Founders' Shares to a family member or to a trust established for the
benefit of himself, herself, or to a family member or to another affiliated
entity (with the consent of the Representative which will not be unreasonably
withheld) or in the event of the holder's death by will or operation of law, or
its dissolution or merger, provided that any such transferee or successor must
agree as a condition to such transfer to be bound by the restrictions on
transfer applicable to the original holder and that the transferor or its
principals, if the transferor is an entity (except in the case of death) will
continue to be deemed the beneficial owner (as defined in Regulation 13d-3
promulgated under the Exchange Act) of such transferred shares. The certificates
representing the Founders' Shares will bear a restrictive legend with respect to
such restrictions and the Company's transfer agent will note such restrictions
on the Company's transfer books and records. See "Management -- Options to
Purchase Units."
The Placement Shares are subject to an agreement with the holders of the
Placement Shares not to sell or otherwise transfer such shares for a period
ending the earlier of 24 months from the date such shares were issued (November
15, 1995) or 60 days following the consummation of the first Business
Combination.
The Company has outstanding 94 shares of Series A Preferred Stock which are
held by CDIJ Capital Partners, L.P. ("CDIJ"), an indirect affiliate of Bright.
The shares are convertible to Common Stock on the basis of one thousand shares
of Common Stock for each share of Series A Preferred Stock for a one year period
commencing upon the consummation of a Business Combination. The 94,000 shares of
Common Stock issuable upon conversion of the Company's outstanding Series A
Preferred Stock will be offered by a Prospectus at the time of a Business
Combination and thereafter will be freely tradable under applicable securities
laws. However, the holders of such shares have agreed not to sell or otherwise
transfer such shares until 60 days following the consummation of the first
Business Combination and to limit the volume of such sales to the amount that is
permitted by Rule 144 ("Rule 144") promulgated under the Securities Act of 1933,
as amended. Subject to other conditions, Rule 144 permits sales, within any
three-month period, of a number of shares that does not exceed the greater of 1%
of the total number of outstanding shares of the same class or, if the shares
are quoted on an exchange or on NASDAQ, the average weekly trading volume during
the four calendar weeks preceding the sale. See "Risk Factors -- Shares Eligible
for Future Sale."
POSSIBLE LIQUIDATION OF THE COMPANY IF NO BUSINESS COMBINATION
If the Company does not effect a Business Combination within 18 months from
the date of this Prospectus, or 24 months from the date of this Prospectus if
the Extension Criteria have been satisfied, the Company will submit for
stockholder consideration a proposal to liquidate the Company and distribute to
the then holders of Common Stock acquired as part of the Units sold in this
offering or in the open market thereafter, the amounts in the interest bearing
escrow account. Thereafter, all remaining assets available for distribution will
be distributed to the non-affiliated public stockholders of the Company after
payment of liabilities and after redemption of the Company's outstanding
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Series A Preferred Stock at its liquidation value, $9,400. Since the proceeds to
the Company from the sale of the Class B Warrants will be used (i) to repay
indebtedness, (ii) to pay the balance of a $100,000 license fee, or $90,000, due
to Bright pursuant to a license agreement executed by Bright and the Company,
(iii) to cover all the expenses incurred by the Company in this offering,
including the Underwriters' discounts and the Representative's non-accountable
expense allowance, and (iv) to fund the Company's operating expenses, including
investment banking fees and the costs of business, legal and accounting due
diligence on prospective Target Businesses, until the consummation of a Business
Combination, the amount per share remaining for distribution, in the event of a
liquidation of the Company, to the holders of Common Stock acquired as part of
the Units sold in this offering or in the open market thereafter, and exclusive
of any income earned on the proceeds held in the escrow account, will be
approximately equal to the initial public offering price per Unit in this
offering of $10.00 per Unit (assuming no value is attributed to the Warrants
included in the Units offered hereby). All of the present stockholders,
including the Company's executive officers and other directors and their
affiliates, are required by the escrow agreement to which their stock is subject
to vote their shares of Common Stock in accordance with the vote of the majority
of all non-affiliated public stockholders of the Company with respect to any
liquidation proposal. See "The Company -- Escrow of Outstanding Shares." Holders
of Warrants, however, will only be entitled to vote on any liquidation proposal,
and allowed to participate in any liquidation distribution, if they purchase
shares of Common Stock in this offering or on the open market thereafter, but
only as to any shares of Common Stock so purchased. Present stockholders,
including officers, directors and their affiliates, will not participate in any
liquidation distribution with respect to the shares of Common Stock owned by
them as of the date of this Prospectus.
THE OFFERING
<TABLE>
<S> <C>
Securities offered to the
public............................ 800,000 Units, at $10.00 per Unit and 320,000 Class B
Warrants, at $5.75 per Class B Warrant. Each Unit
consists of one share of Common Stock and one Class A
Warrant entitling the holder thereof to purchase one
share of Common Stock at a price of $9.00. Each Class B
Warrant entitles the holder thereof to purchase one Unit
for $.125 per Unit at the time of a Business
Combination. The Units and the Class B Warrants, which
are being offered in the same offering, will be sold and
traded separately. The securities comprising the Units
will become separable and transferable at such time as
the Representative may determine, but in no event will
the Representative allow separate trading of the
securities comprising the Units until the preparation of
an audited balance sheet of the Company reflecting
receipt by the Company of the proceeds of this offering
and the filing by the Company with the Commission of a
Current Report on Form 8-K which includes such audited
balance sheet. See "Description of Securities" and
"Principal Stockholders."
Proposed OTC Bulletin Board
Symbols........................... Units -- ORIOU
Common Stock -- ORIO
Class A Warrants -- ORIOW
Class B Warrants -- ORIOL
Common Stock outstanding prior to
the offering...................... 106,000 shares.
Common Stock to be outstanding
after the offering (1)............ 906,000 shares.
</TABLE>
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<TABLE>
<S> <C>
Warrants:
Number of Class A and Class B
Warrants to be outstanding after
the offering (2)................ 800,000 Class A Warrants and 320,000 Class B Warrants.
Exercise price of Class A War-
rants and Class B Warrants...... The exercise price of each Class A Warrant is $9.00 per
share of Common Stock and the exercise price of each
Class B Warrant is $.125 per Unit, each subject to
adjustment in certain circumstances. See "Description of
Securities."
Exercise period................. The exercise period of the Class A Warrants will
commence upon the consummation of a Business Combination
and will expire at 5:00 p.m., New York City time, on the
fifth anniversary of the date of this Prospectus. The
exercise period of the Class B Warrants will commence
upon the consummation of a Business Combination and will
expire at 5:00 p.m., New York City time, on the first
anniversary of the date of a Business Combination.
Redemption...................... The Warrants are redeemable by the Company, each as a
class, in whole and not in part, at the option of the
Company, at a price of $.05 per Warrant at any time,
upon not less than 30 days' prior written notice to the
registered holders thereof, provided that the Company
has consummated a Business Combination and that the last
sale price of the Common Stock, if the Common Stock is
listed for trading on an exchange or interdealer
quotation system which provides last sale prices, or,
the average of the closing bid and asked quotes for the
Common Stock, if the Common Stock is listed for trading
on an interdealer quotation system which does not
provide last sale prices, on all 10 of the trading days
ending on the day immediately prior to the day on which
the Company gives notice of redemption, has been $11.00
or higher.
</TABLE>
(1) Excludes a total of 2,294,000 shares of Common Stock, consisting of: (i)
800,000 shares of Common Stock reserved for issuance upon the exercise of
the Class A Warrants, (ii) 320,000 shares of Common Stock reserved for
issuance upon exercise of the Units underlying the Class B Warrants, (iii)
320,000 shares of Common Stock reserved for issuance upon exercise of the
Class A Warrants comprising a part of the Units underlying the Class B
Warrants, (iv) 120,000 shares of Common Stock included in the Units subject
to the Underwriters' over-allotment option, (v) 120,000 shares of Common
Stock reserved for issuance upon the exercise of the Class A Warrants
included in the Units subject to the Underwriters' over-allotment option,
(vi) 48,000 shares of Common Stock reserved for issuance upon exercise of
the Units underlying the Class B Warrants subject to the Underwriters'
over-allotment option, (vii) 48,000 shares of Common Stock reserved for
issuance upon exercise of the Class A Warrants comprising a part of the
Units underlying the Class B Warrants subject to the Underwriters'
over-allotment option, (viii) 200,000 shares of Common Stock reserved for
issuance upon exercise of options to purchase Units granted to executive
officers and directors of the Company, (ix) 94,000 shares of Common Stock
reserved for issuance upon conversion of the Company's outstanding Series A
Preferred Stock, (x) 80,000 shares of Common Stock included in the Units
reserved for issuance upon exercise of warrants to purchase 80,000 Units,
exercisable over a period of four years commencing one year from the date of
this Prospectus, being sold to the Representative (the "Representative's
Unit Purchase Warrants"), (xi) 80,000 shares of Common Stock reserved for
issuance upon the exercise of the Class A Warrants included in the Units
reserved for issuance upon exercise of the
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<PAGE>
Representative's Unit Purchase Warrants, (xii) 32,000 shares of Common Stock
included in the Units reserved for issuance upon exercise of a warrant to
purchase 32,000 Class B Warrants, exercisable over a period of four years
commencing one year from the date of this Prospectus, being sold to the
Representative's (the "Representative's Class B Warrants"), and (xiii)
32,000 shares of Common Stock reserved for issuance upon exercise of Class A
Warrants comprising a part of the Units underlying the Representative's
Class B Warrants. See "Management," "Underwriting" and "Certain
Transactions."
(2) Excludes (i) 100,000 Class A Warrants comprising part of the Units issuable
upon exercise of options granted to executive officers and directors of the
Company; (ii) 120,000 Class A Warrants and 48,000 Class B Warrants included
in the Units and Class B Warrants subject to the Underwriters'
over-allotment option, (iii) an additional 48,000 Class A Warrants
comprising a part of the Units underlying the Class B Warrants subject to
the Underwriters' over-allotment option, (iv) 80,000 Class A Warrants
included in the Units reserved for issuance upon exercise of the
Representative's Unit Purchase Warrants, (v) 32,000 Class B Warrants
underlying the Representative's Class B Warrants and (vi) 32,000 Class A
Warrants underlying the Units underlying the Representative's Class B
Warrants. See "Management" and "Underwriting."
THE SMA(2)RTSM STRUCTURE
Essentially, a Specialized Merger and Acquisition Allocated Risk
TransactionSM (SMA(2)RTSM) provides an investor in this offering with an
opportunity to purchase Units for $10.00 each, the proceeds of which will be
placed into escrow for the benefit of stockholders and will be returned if the
Company does not effect a Business Combination; and/or Class B Warrants (which
are exercisable into Units) for $5.875 each (the $5.75 purchase price plus the
$.125 exercise price), the proceeds of which will not be placed in escrow, but
rather will be used (i) to repay indebtedness, (ii) to pay the balance of a
$100,000 license fee, or $90,000, due to Bright pursuant to a license agreement
executed by Bright and the Company, (iii) to cover all of the Company's expenses
incurred in this offering, including the Underwriters' discounts and the
Representative's non-accountable expense allowance, and (iv) to fund the
Company's operating expenses, including investment banking fees and the costs of
business, legal and accounting due diligence on prospective Target Businesses.
Consequently, if the Class B Warrants were exercised, holders of Class B
Warrants would pay substantially less for the Units issuable upon exercise of
such Class B Warrants than holders of Units and, accordingly, may realize a
higher return on their investment. Holders of Class B Warrants, however, risk
the loss of their investment if the Company fails to effect a Business
Combination, while holders of shares of Common Stock comprising part of the
Units benefit from the Company's escrow of an amount equal to the gross proceeds
from the sale of the Units in this offering.
RISK FACTORS
The securities offered in this Specialized Merger and Acquisition Allocated
Risk TransactionSM (SMA(2)RTSM) involve a high degree of risk and immediate
substantial dilution and should not be purchased by investors who cannot afford
the loss of their entire investment. Prior to this offering there has been no
public market for the Units, the Common Stock, the Class A Warrants or the Class
B Warrants and there can be no assurance that such a market will develop after
completion of this offering. Such risk factors include, among others, the
following: the Company's lack of operating history and limited resources;
discretionary use of proceeds; no escrow security for the purchasers of the
Warrants; intense competition in selecting a Target Business and effecting a
Business Combination; and, because of the Company's limited resources, the
possibility that the Company's due diligence investigation of a potential
Business Combination will be restricted, especially in the case of a Target
Business outside the United States. Investors will incur immediate substantial
dilution. See "Risk Factors," "Dilution" and "Use of Proceeds."
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<PAGE>
USE OF PROCEEDS
The Company intends to use substantially all of the net proceeds of the
offering, together with the interest earned thereon, to attempt to effect a
Business Combination, including selecting and evaluating potential Target
Businesses and structuring, negotiating and consummating a Business Combination
(including possible payment of finder's fees or other compensation to persons or
entities which provide assistance or services to the Company). Approximately 81%
of the gross proceeds of the offering by the Company (representing an amount
equal to the $8,000,000 gross proceeds from the sale of the Units as a
percentage of the gross proceeds of this offering) will be held in an escrow
account maintained by the Proceeds Escrow Agent, until the earlier of written
notification by the Company to the Proceeds Escrow Agent (i) of the Company's
completion of a transaction or series of transactions in which at least 50% of
the gross proceeds from this offering is committed to a specific line of
business as a result of a consummation of a Business Combination (including any
redemption payments), or (ii) to distribute the escrowed proceeds, in connection
with a liquidation of the Company, to the then holders of the Common Stock
purchased as part of the Units sold in this offering or acquired in the open
market thereafter. All proceeds held in the escrow account will be invested,
until released, in short-term United States government securities, including
treasury bills, cash and cash equivalents.
Except as noted below, the proceeds to the Company from the sale of the
Class B Warrants will not be placed in escrow. Rather, these proceeds will be
used (i) to repay indebtedness, (ii) to pay the balance of a $100,000 license
fee, or $90,000, due to Bright pursuant to a license agreement executed by
Bright and the Company, (iii) to cover all of the expenses incurred by the
Company in this offering, including the Underwriters' discounts and the
Representative's non-accountable expense allowance, and (iv) to fund the
Company's operating expenses, including investment banking fees and the costs of
business, legal and accounting due diligence on prospective Target Businesses,
until the Company effects a Business Combination. See "Proposed Business --
Servicemark License." However, in addition, a portion of the net proceeds from
the sale of the Class B Warrants equal to the Underwriters' discounts and the
Representative's non-accountable expense allowance with respect to the Units
will be placed in the above-mentioned escrow account for the benefit of
purchasers of Common Stock as part of the Units sold in this offering and in the
open market thereafter. In addition, proceeds from the sale of the Class B
Warrants will be used for the general administrative expenses of the Company,
including legal and accounting fees and administrative support expenses in
connection with the Company's reporting obligations under the Exchange Act. The
Company may seek to issue additional securities if it requires additional funds
to meet its operating and administrative expenses. The Company has agreed with
the Representative that it will not issue (other than pursuant to this offering)
any securities or grant options or Warrants to purchase any securities of the
Company without the consent of the Representative for a period of 18 months from
the date of this Prospectus and for up to six additional months if the Extension
Criteria have been satisfied.
To the extent that the Company's securities are used as consideration to
effect a Business Combination, the balance of the net proceeds of this offering
not expended will be used to finance the operations (including the possible
repayment of debt) of the Target Business. No cash compensation will be paid to
any officer or director until after the consummation of the first Business
Combination. Since the role of the Company's current directors and executive
officers after a consummation of a Business Combination is uncertain, the
Company has no ability to determine what remuneration, if any, will be paid to
such persons after such consummation of a Business Combination.
8
<PAGE>
SUMMARY FINANCIAL INFORMATION
The summary financial information set forth below is derived from the more
detailed financial statements appearing elsewhere in this prospectus. Such
information should be read in conjunction with such financial statements,
including the notes thereto.
<TABLE>
<CAPTION>
JUNE 30, 1996
---------------------------
ACTUAL AS ADJUSTED(1)
----------- --------------
<S> <C> <C>
Balance Sheet Data:
Total assets............................................................. $ 211,270 $ 8,547,279
Total liabilities........................................................ 185,023 --
Deficit accumulated during development stage............................. (27,353) (47,929)
Series A preferred stock................................................. 1 1
Stockholders' equity and common stock subject to redemption.............. 26,247 8,547,279
</TABLE>
- ------------------------
(1) Gives effect to the sale of the Units at the initial public offering price
of $10.00 per Unit, the sale of the Class B Warrants at the initial public
offering price of $5.75 per Class B Warrant and initial application of the
estimated net proceeds (after the payment of all estimated offering
expenses, including the Representative's non-accountable expense allowance)
of $8,710,000 therefrom. See "Use of Proceeds". Assumes no exercise of the
Underwriters' over-allotment option or the Representative's Warrants. See
"Underwriting".
(2) In the event the Company consummates a Business Combination, the redemption
rights afforded to the non-affiliated public stockholders may result in the
conversion into cash of up to 20% of the aggregate number of shares held by
the non-affiliated public stockholders, amounting to 160,000 shares, at a
per share redemption price equal to (A) the greater of (i) the Company's net
worth or (ii) the amount of proceeds of the Company in the escrow account
(including income earned thereon) divided by (B) the number of shares held
by non-affiliated public stockholders, but not less than $10.00 per share
plus interest earned thereon.
9
<PAGE>
THE COMPANY
BUSINESS OBJECTIVE
The Company, which is a "blank check" or "blind pool" company, was formed in
August 1995 to serve as a vehicle to effect a Business Combination with a Target
Business which the Company believes has significant growth potential. The
Company intends to utilize the net proceeds of this offering, equity securities,
debt securities, bank borrowings or a combination thereof in effecting a
Business Combination. The Company will seek to acquire a Target Business without
limiting itself to a particular industry. Most likely, the Target Business will
be primarily located in the United States, although the Company reserves the
right to acquire a Target Business primarily located outside the United States.
In seeking a Target Business, the Company will consider, without limitation,
businesses which (i) offer or provide services or develop, manufacture or
distribute goods in the United States or abroad, including, without limitation,
in the following areas: health care and health products, educational services,
environmental services, consumer related products and services (including
amusement and/or recreational services), personal care services, voice and data
information processing and transmission and related technology development or
(ii) is engaged in wholesale or retail distribution. The Company will not effect
a Business Combination with a Target Business unless the Fair Market Value of
such business is at least 80% of the net assets of the Company at the time of
consummation of such Business Combination. If the Company determines that the
financial statements of a Proposed Target Business do not clearly indicate that
the Fair Market Value Test has been satisfied, the Company will obtain an
opinion from an investment banking firm that is a member in good standing of the
NASD with respect to the satisfaction of such criteria. The Company has not had
any contact or discussions with representatives of any Target Business regarding
a consummation of a Business Combination. While the Company may, under certain
circumstances, seek to effect Business Combinations with more than one Target
Business, in all likelihood, as a result of its limited resources, the Company
will have the ability to effect only a single Business Combination. The Company
does not intend to register as a broker-dealer, merge with or acquire a
registered broker-dealer, or otherwise become a member of the NASD.
BUSINESS EXPERIENCE OF PRINCIPALS
The executive officers and the other directors of the Company have business
experience which has provided them with skills which the Company believes will
be helpful in evaluating potential Target Businesses and negotiating and
consummating a Business Combination. Prior to their involvement with the
Company, none of the directors or the executive officers of the Company has been
involved in any "blind pool" or "blank check" offerings. See "Management."
RETENTION OF INDEPENDENT INVESTMENT BANKER
The Company will engage an independent investment banking firm to aid in
identifying, evaluating, structuring, negotiating and consummating a Business
Combination.
ESCROW OF OFFERING PROCEEDS
Upon completion of the offering by the Company, approximately 81% of the
gross proceeds therefrom (representing an amount equal to the $8,000,000 gross
proceeds from the sale of the Units as a percentage of the gross proceeds of
this offering) will be placed in an escrow account maintained by the Proceeds
Escrow Agent, subject to release upon the earlier of (1) receipt by the Proceeds
Escrow Agent of: (i) written notice from the Company of the Company's completion
of a transaction or series of transactions in which at least 50% of the gross
proceeds from this offering are committed to a specific line of business as a
result of a Business Combination (including any redemption payments), (ii) a
written opinion of counsel of the Company, reasonably acceptable to the Proceeds
Escrow Agent, that a Business Combination was approved by a vote of two-thirds
of the shares of Common Stock of the Company, as required by this Prospectus,
and that the holders of more than 20% of the Common Stock of the Company have
not elected to redeem their Common Stock, as required by this Prospectus, and
(iii) a written confirmation from the Company, that the fair market value (as
determined by the Company, based upon standards generally accepted by the
financial community, including revenues,
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<PAGE>
earnings, cash flow, and book value) of the Target Business exceeds 80% of the
net value of the assets of the Company, and that all other actions required by
the Company for the release of the escrow proceeds have been met, or (2) either
(i) after 18 months of the date of effectiveness of this offering (or 24 months
if the Proceeds Escrow Agent has received notice within the initial 18 month
period that the Extension Criteria, as herein defined, have been satisfied) if
the Proceeds Escrow Agent has not received written notice from the Company of
the Company's completion of a transaction or series of transactions in which at
least 50% of the gross proceeds from this offering are committed to a specific
line of business as a result of a Business Combination, or (ii) receipt by the
Proceeds Escrow Agent of written notification to distribute the escrow proceeds
in connection with a liquidation of the Company to the holders of Common Stock
purchased as part of the Units sold in this offering or in the open market
thereafter, or (iii) receipt by the Proceeds Escrow Agent of written
notification to distribute part of the escrow proceeds to the holders of record
of Common Stock purchased as part of the Units sold in this offering or in the
open market thereafter who elected to have their shares redeemed in accordance
with the terms set forth in this Prospectus. All proceeds held in the escrow
account will be invested, until released, in short-term United States government
securities, including treasury bills, cash and cash equivalents. Except as noted
below, the proceeds to the Company from the sale of the Class B Warrants will
not be placed in escrow. Rather, these proceeds will be used (i) to repay
indebtedness, (ii) to pay the balance of a $100,000 license fee, or $90,000, due
to Bright pursuant to a license agreement executed by Bright and the Company,
and (iii) to cover all of the expenses incurred by the Company in this offering,
including the Underwriters' discounts and the Representative's non-accountable
expense allowance, (iv) to fund the Company's operating expenses, including
investment banking fees and the costs of business, legal and accounting due
diligence on prospective Target Businesses until the Company effects a Business
Combination. In addition, a portion of the net proceeds from the sale of the
Class B Warrants equal to the Underwriters' discounts and the Representative's
non-accountable expense allowance payable with respect to the Units, as noted in
clause (iii) above, will be placed in the above-mentioned escrow account for the
benefit of purchasers of Common Stock as part of the Units sold in this offering
and in the open market thereafter. As a result, if the escrowed funds are paid
to the holders of Units, the payment will equal the gross purchase price for the
Unit (plus any interest earned thereon), notwithstanding that the Company paid
the Underwriters' discount and the Representative's non-accountable expense
allowance out of such gross proceeds. To the extent that the proceeds from the
sale of the Class B Warrants are less than the expenses the Company incurs
seeking to effect a Business Combination, the Company would need additional
financing. There can be no assurance that the Company would be able to arrange
any such additional financing. Management is unaware of any circumstances under
which this policy, through management's own initiative, may be changed. See "Use
of Proceeds."
STOCKHOLDER APPROVAL OF BUSINESS COMBINATIONS
The Company, prior to the consummation of any Business Combination, will
submit such transaction to the Company's stockholders for their approval, even
if the nature of the Business Combination is such as would not ordinarily
require stockholder approval under applicable state law. In connection with such
request, the Company intends to provide stockholders with disclosure
documentation in accordance with the Proxy Rules, including audited financial
statements, concerning a Target Business. All of the Company's present
stockholders, including all directors and its executive officers, have agreed as
part of the escrow agreement to which their stock is subject to vote their
respective shares of Common Stock in accordance with the vote of the majority of
the shares voted by all non-affiliated public stockholders of the Company with
respect to any consummation of such Business Combination. See "The Company --
Escrow of Outstanding Shares." A Business Combination will not be consummated
unless approved by a vote of two-thirds of the shares of Common Stock (in person
or by proxy). In addition, the Delaware General Corporation Law requires
approval of certain mergers and consolidations by a majority of the outstanding
stock entitled to vote thereon. Holders of Warrants who otherwise do not own any
shares of Common Stock will not be entitled to vote on any Business Combination.
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REDEMPTION RIGHTS
At the time the Company seeks stockholder approval of any potential Business
Combination, the Company will offer to each of the non-affiliated public
stockholders of the Company the right, for a specified period of time of not
less than 20 days, to redeem his shares of Common Stock at a price equal to the
Liquidation Value of such shares as of the Record Date. The Redemption Offer
will be described in the disclosure documentation relating to the proposed
Business Combination. See "Proposed Business -- 'Blind Pool' -- Offering." The
Liquidation Value for each share of Common Stock will be determined as of the
Record Date by dividing (A) the greater of (i) the Company's net worth as
reflected in the Company's financial statements and audited by the Company's
independent accountants or (ii) the amount of the proceeds of the Company in the
escrow account (including all interest earned thereon) by (B) the number of
shares held by non-affiliated public stockholders; however, in no event will the
Liquidation Value of each share of Common Stock be less than $10.00 plus
interest earned thereon. In connection with the Redemption Offer, if
non-affiliated public stockholders holding 20% or less of the shares of Common
Stock elect to redeem their shares, the Company may, but will not be required
to, proceed with such Business Combination and, if the Company elects to so
proceed, will redeem such shares at their Liquidation Value as of the Record
Date. In any case, if non-affiliated public stockholders holding more than 20%
of the Common Stock elect to redeem their shares, the Company will not proceed
with such potential Business Combination and will not redeem such shares. All
holders of Common Stock and all holders of Warrants prior to the date of this
Prospectus will be allowed to participate in a Redemption Offer only if they
purchase shares of Common Stock in this offering or on the open market
thereafter, and only as to any shares of Common Stock so purchased.
ESCROW OF OUTSTANDING SHARES
All of the shares of Escrowed Stock outstanding immediately prior to the
date of this Prospectus have been placed in escrow with the Shares Escrow Agent
until the earlier of (i) the occurrence of the first Business Combination, (ii)
18 months from the date of this Prospectus provided that such 18-month period
will be extended by six months to 24 months from the date of this Prospectus if
the Extension Criteria has been satisfied. During the escrow period, the holders
of the Escrowed Stock will not be able to sell or otherwise transfer their
respective shares of the Escrowed Stock (with certain exceptions), but will
retain all other rights as stockholders of the Company, including, without
limitation, the right to vote escrowed shares of Common Stock, subject to their
agreement to vote their shares in accordance with a vote of a majority of the
non-affiliated public stockholders with respect to a consummation of a Business
Combination or liquidation proposal, but excluding the right to request the
redemption of Escrowed Stock pursuant to a Redemption Offer. Subject to
compliance with applicable securities laws, any such holder may transfer his,
her or its Escrowed Stock to a family member or to a trust established for the
benefit of himself, herself, or a family member or to another affiliated entity
(with the consent of the Representative which will not be unreasonably withheld)
or, in the event of the holder's death, by will or operation of law, or in the
case of its dissolution or merger, provided that any such transferee must agree
as a condition to such transfer to be bound by the restrictions on transfer
applicable to the original holder and, in the case of present stockholders other
than the holders of the Placement Shares, that the transferor (except in the
case of death) or successor will continue to be deemed the beneficial owner (as
defined in Regulation 13d-3 promulgated under the Exchange Act of such
transferred shares.
Each executive officer and director has also agreed to surrender his shares
to the Company at the purchase price at which such shares were acquired ($.10
per share) if he resigns prior to the occurrence of the first Business
Combination.
RESTRICTION ON SALE OF OUTSTANDING SHARES
All of the Founders' Shares are subject to an agreement with the holders of
the Founders' Shares not to sell or otherwise transfer such shares for a period
of 24 months from the date the currently outstanding Founders' Shares were
originally issued (August 18, 1995), but in no event earlier than 120 days
following the consummation of the first Business Combination. However, subject
to compliance with applicable securities laws, any such holder may transfer
Founders' Shares to a family member
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or to a trust established for the benefit of himself, herself, or a family
member or to another affiliated entity (with the consent of the Representative
which will not be unreasonably withheld) or in the event of the holder's death
by will or operation of law, or in the case of its dissolution or merger,
provided that any such transferee or successor must agree as a condition to such
transfer to be bound by the restrictions on transfer applicable to the original
holder and that the transferor or its principals, if the transferor is an entity
(except in the case of death) will continue to be deemed the beneficial owner
(as defined in Regulation 13d-3 promulgated under the Exchange Act) of such
transferred shares. The certificates representing the Founders' Shares will bear
a restrictive legend with respect to such restrictions and the Company's
transfer agent will note such restrictions on the Company's transfer books and
records.
In addition, the holders of the Placement Shares have agreed not to directly
or indirectly sell, offer to sell, grant an option for the sale of, transfer,
assign, pledge, hypothecate or otherwise encumber any of the Placement Shares
without the prior written consent of the Company until the earlier of 24 months
from the date such shares were issued (November 15, 1995) or 60 days following
the consummation of the first Business Combination.
The Company has outstanding 94 shares of Series A Preferred Stock which are
held by CDIJ, an indirect affiliate of Bright. The shares are convertible to
Common Stock on the basis of one thousand shares of Common Stock for each share
of Series A Preferred Stock during the one year period commencing upon the
consummation of a Business Combination. The 94,000 shares of Common Stock
issuable upon conversion of the Company's outstanding Series A Preferred Stock
will be offered by a prospectus at the time of a Business Combination and
thereafter will be freely tradable under applicable securities laws. However,
CDIJ, for itself and any transferees of the Series A Preferred Stock, has agreed
not to sell or otherwise transfer such shares until 60 days following the
consummation of the first Business Combination and to limit the volume of such
sales to the amount that is permitted by Rule 144 ("Rule 144") promulgated under
the Securities Act of 1933, as amended. Subject to other conditions, Rule 144
permits sales, within any three-month period, of a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class or, if the shares are quoted on an exchange or on NASDAQ, the average
weekly trading volume during the four calendar weeks preceding the sale. See
"Risk Factors -- Shares Eligible for Future Sale."
POSSIBLE LIQUIDATION AFTER EIGHTEEN MONTHS IF NO BUSINESS COMBINATION
If the Company does not effect a Business Combination within 18 months from
the date of this Prospectus, or 24 months from the date of this Prospectus if
the Extension Criteria have been satisfied, the Company will submit for
stockholder consideration a proposal to liquidate the Company and distribute to
the then holders of Common Stock acquired as part of the Units sold in this
offering or in the open market thereafter, the amounts in the escrow account.
Thereafter, all remaining assets available for distribution will be distributed
to the non-affiliated public stockholders of the Company after payment of
liabilities and after redemption of the Company's outstanding Series A Preferred
Stock at its liquidation value, $9,400. Since the proceeds to the Company from
the sale of the Class B Warrants will be used (i) to repay indebtedness, (ii) to
pay the balance of a $100,000 license fee, or $90,000, due to Bright pursuant to
a license agreement executed by Bright and the Company, (iii) to cover all the
expenses incurred by the Company in this offering, including the Underwriters'
discounts and the Representative's non-accountable expense allowance, and (iv)
to fund the Company's operating expenses, including investment banking fees and
the costs of business, legal and accounting due diligence on prospective Target
Businesses, until the Company effects a Business Combination, the amount per
share remaining for distribution, in the event of a liquidation of the Company,
to the holders of Common Stock acquired as part of the Units sold in this
offering or in the open market thereafter, and exclusive of any income earned on
the proceeds held in the escrow account (which will be distributed to the
holders of Common Stock along with the funds in the escrow account), will be
approximately equal to the initial public offering price per Unit in this
offering of $10.00 per Unit (assuming no value is attributed to the Warrants
included in the Units offered hereby). All of the
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present stockholders, including the Company's executive officers and other
directors and their affiliates, are required by the escrow agreement to which
their stock is subject to vote their shares of Common Stock in accordance with
the vote of the majority of all non-affiliated public stockholders of the
Company with respect to any liquidation proposal. Holders of Warrants, however,
will only be entitled to vote on any liquidation proposal, and allowed to
participate in any liquidation distribution, if they purchase shares of Common
Stock in this offering or on the open market thereafter, but only as to any
shares of Common Stock so purchased. All of the present stockholders, including
the Company's executive officers and other directors and their affiliates, have
agreed to waive their rights to participate in any liquidation distribution with
respect to the 106,000 shares of Common Stock owned by them as of the date
hereof. See "The Company -- Escrow of Outstanding Shares."
To date, the Company's efforts have been limited to organizational
activities and this offering. The implementation of the Company's business
objectives is wholly contingent upon the successful sale of the Units and Class
B Warrants offered hereby. See "Proposed Business."
Essentially, a Specialized Merger and Acquisition Allocated Risk
TransactionSM (SMA(2)RTSM) provides an investor in this offering with an
opportunity to purchase Units for $10.00 each, the proceeds of which will be
placed into escrow for the benefit of stockholders, and shall be returned if the
Company does not effect a Business Combination; and/or Class B Warrants (which
are exercisable into Units) for $5.875 each (the $5.75 purchase price plus the
$.125 exercise price), the proceeds of which will not be placed in escrow, but
rather will be used to repay indebtedness, to pay a license fee to Bright, and
to cover all of the Company's expenses incurred in this offering. See "Use of
Proceeds." Consequently, if the Class B Warrants were exercised, holders of
Class B Warrants would pay substantially less for the Units issuable upon
exercise of such Class B Warrants than holders of Units and, accordingly, may
realize a higher return on their investment. Holders of Class B Warrants,
however, risk the loss of their investment if the Company fails to effect a
Business Combination, while holders of shares of Common Stock comprising part of
the Units benefit from the Company's escrow of an amount equal to the gross
proceeds from the sale of the Units in this offering.
The Company was organized under the laws of the State of Delaware on August
9, 1995. The Company's office is located at 375 Park Avenue, New York, New York
10022 and its telephone number is (212) 593-4747.
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RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK, INCLUDING, BUT
NOT LIMITED TO, THE SEVERAL FACTORS DESCRIBED BELOW. THESE SECURITIES SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD A LOSS OF THEIR ENTIRE INVESTMENT.
INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS INHERENT IN AND
AFFECTING THE BUSINESS OF THE COMPANY AND THIS OFFERING IN EVALUATING AN
INVESTMENT IN THE SECURITIES OFFERED HEREBY.
OFFERING NOT CONDUCTED IN ACCORDANCE WITH RULE 419
The Company's offering of Units and Class B Warrants is not being conducted
in accordance with Rule 419 promulgated by the Commission under the Securities
Act of 1933, as amended (the "Act"), which was adopted to strengthen the
regulation of securities offerings by "blank check" companies, which Congress
has found to have been common vehicles for fraud and manipulation in the penny
stock market. The Company is a "blank check" company not subject to Rule 419
under the Act because the Company's net tangible assets after its receipt of the
proceeds of this offering will exceed $5,000,000. Accordingly, investors in the
offering will not receive the substantive protection provided by Rule 419 under
the Act. Rule 419 under the Act requires that the securities to be issued and
the funds received in a blank check offering be deposited and held in an escrow
account until a Business Combination meeting specified criteria is completed.
Before a Business Combination can be completed and before the funds and
securities can be released, the blank check company is required to update the
registration statement with a post-effective amendment; and after the effective
date thereof the Company is required to furnish investors with the prospectus
produced thereby containing information, including audited financial statements,
regarding the proposed Target Business and its business. According to the rule,
the investors must have no fewer than 20 and no more than 45 days from the
effective date of the post-effective amendment to decide to remain an investor
or require the return of their investment funds. Any investor not making any
decision within said 45-day period is to automatically receive a return of his
investment funds. Unless a sufficient number of investors elect to remain
investors, all of the deposited funds in the escrow account must be returned to
all investors and none of the securities will be issued. Rule 419 under the Act
further provides that if the blank check company does not complete a Business
Combination meeting specified criteria within 18 months after the date of this
Prospectus, all of the deposited funds in the escrow account must be returned to
investors.
NO OPERATING HISTORY; LIMITED RESOURCES; NO PRESENT SOURCE OF REVENUES
The Company, incorporated on August 9, 1995, is a development stage company
and has not, as of the date hereof, attempted to seek a Business Combination.
Although certain of the Company's directors and its executive officers have had
extensive experience relating to the identification, evaluation and acquisition
of Target Businesses, the Company has no operating history and, accordingly,
there is only a limited basis upon which to evaluate the Company's prospects for
achieving its intended business objectives. None of the Company's officers,
directors, promoters or other persons engaged in management-type activities has
been previously involved with any blank check offerings. To date, the Company's
efforts have been limited to organizational activities and this offering. The
Company has limited resources and has had no revenues to date. In addition, the
Company will not achieve any revenues (other than investment income) until, at
the earliest, the consummation of a Business Combination. Moreover, there can be
no assurance that any Target Business, at the time of the Company's consummation
of a Business Combination, or at any time thereafter, will derive any material
revenues from its operations or operate on a profitable basis. See "Proposed
Business" and "Management -- Prior Blank Check Offerings."
"BLIND POOL" OFFERING; BROAD DISCRETION OF MANAGEMENT
Prospective investors who invest in the Company will do so without an
opportunity to evaluate the specific merits or risks of any one or more Business
Combinations. As a result, investors will be entirely dependent on the broad
discretion and judgment of management in connection with the
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allocation of the proceeds of the offering and the selection of a Target
Business. There can be no assurance that determinations ultimately made by the
Company will permit the Company to achieve its business objectives. See "Use of
Proceeds" and "Proposed Business."
ABSENCE OF SUBSTANTIVE DISCLOSURE RELATING TO PROSPECTIVE BUSINESS COMBINATIONS;
INVESTMENT IN THE COMPANY VERSUS INVESTMENT IN A TARGET BUSINESS
"Blind pool" and "blank check" offerings are inherently characterized by the
absence of substantive disclosure, other than general descriptions, relating to
the intended application of the net proceeds of the offering. The Company has
not yet identified a prospective Target Business. Accordingly, investors will
have no substantive information concerning consummation of any specific Business
Combination in considering a purchase of Units and/or Class B Warrants in this
offering. The absence of disclosure can be contrasted with the disclosure which
would be necessary if the Company had already identified a Target Business as a
Business Combination candidate or if the Target Business were to effect an
offering of its securities directly to the public. There can be no assurance
that an investment in the securities offered hereby will not ultimately prove to
be less favorable to investors in this offering than a direct investment, if
such opportunity were available, in a Target Business. See "Proposed Business."
SEEKING TO ACHIEVE PUBLIC TRADING MARKET THROUGH BUSINESS COMBINATION
While a prospective Target Business may deem a consummation of a Business
Combination with the Company desirable for various reasons, a Business
Combination may involve the acquisition of, merger or consolidation with, a
company which does not need substantial additional capital, but which desires to
establish a public trading market for its shares, while avoiding what it may
deem to be adverse consequences of undertaking a public offering itself,
including time delays, significant expense, loss of voting control and the time
and expense incurred to comply with various Federal and state securities laws
that regulate initial public offerings. Nonetheless, there can be no assurance
that there will be an active trading market for the Company's securities
following the completion of a Business Combination or, if a market does develop,
as to the market price for the Company's securities. See "Proposed Business --
'Blind Pool' Offering -- Background."
UNCERTAIN STRUCTURE OF BUSINESS COMBINATION
The structure of a future transaction with a Target Business cannot be
determined at the present time and may take, for example, the form of a merger,
an exchange of stock or an asset acquisition. The Company may form one or more
subsidiary entities to effect a Business Combination and may, under certain
circumstances, distribute the securities of subsidiaries to the stockholders of
the Company. There cannot be any assurance that a market would develop for the
securities of any subsidiary distributed to stockholders or, if it did, any
assurance as to the prices at which such securities might trade. The structure
of a Business Combination or the distribution of securities to stockholders may
result in taxation of the Company, the Target Business or stockholders. See
"Proposed Business" and "Management."
UNSPECIFIED INDUSTRY AND TARGET BUSINESS; UNASCERTAINABLE RISKS
While the Company will target industries located in the United States, while
reserving the right to acquire a Target Business located elsewhere, the Company
has not selected any particular industry or Target Business in which to
concentrate its Business Combination efforts. None of the Company's directors or
its executive officer has had any contact or discussions with any entity or
representatives of any entity regarding a consummation of a Business
Combination. Accordingly, there is no basis for prospective investors to
evaluate the possible merits or risks of the Target Business or the particular
industry in which the Company may ultimately operate. In connection with
stockholder approval of consummation of a Business Combination, the Company
intends to provide stockholders with complete disclosure documentation,
including audited financial statements, concerning a Target Business.
Accordingly, any Target Business that is selected would need to have audited
financial statements or be audited in connection with the transaction. To the
extent that the Company effects a
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Business Combination with a financially unstable company or an entity in its
early stage of development or growth (including entities without established
records of revenues or income), the Company will become subject to numerous
risks inherent in the business and operations of financially unstable and early
stage or potential emerging growth companies. In addition, to the extent that
the Company effects a Business Combination with an entity in an industry
characterized by a high level of risk, the Company will become subject to the
currently unascertainable risks of that industry. An extremely high level of
risk frequently characterizes certain industries which experience rapid growth.
Although management will endeavor to evaluate the risks inherent in a particular
Target Business or industry, there can be no assurance that the Company will
properly ascertain or assess all such risks. See "Proposed Business."
In addition, to date, none of the Company's officers, directors, promoters,
affiliates or associates have had any preliminary contact or discussions with,
and there are no present plans, proposals, arrangements or understandings with
any representatives or owners of any business or company regarding the
possibility of consummating a Business Combination with such a business or
company.
PROBABLE LACK OF BUSINESS DIVERSIFICATION
As a result of the limited resources of the Company, the Company, in all
likelihood, will have the ability to effect only a single Business Combination.
Accordingly, the prospects for the Company's success will be entirely dependent
upon the future performance of a single business. Unlike certain entities which
have the resources to consummate several Business Combinations or entities
operating in multiple industries or multiple segments of a single industry, it
is highly likely that the Company will not have the resources to diversify its
operations or benefit from the possible spreading of risks or offsetting of
losses. The Company's probable lack of diversification may subject the Company
to numerous economic, competitive and regulatory developments, any or all of
which may have a material adverse impact upon the particular industry in which
the Company may operate subsequent to a consummation of a Business Combination.
The prospects for the Company's success may become dependent upon the
development or market acceptance of a single or limited number of products,
processes or services. Accordingly, notwithstanding the possibility of capital
investment in and management assistance to the Target Business by the Company,
there can be no assurance that the Target Business will prove to be commercially
viable. The Company has no present intention of either loaning any of the
proceeds of this offering to any Target Business or of purchasing or acquiring a
minority interest in any Target Business. Management is unaware of any
circumstances under which this policy, through management's own initiative, may
be changed. See "Use of Proceeds" and "Proposed Business."
PROCEEDS FROM SALE OF WARRANTS NOT PLACED IN ESCROW; WARRANTS NOT CURRENTLY
EXERCISABLE;
WARRANTS EXERCISABLE SUBJECT TO THE COMPANY'S COMPLIANCE WITH SECURITIES LAWS
Except as noted below, the proceeds to the Company from the sale of the
Class B Warrants will not be placed in escrow. Rather, these proceeds will be
used (i) to repay indebtedness, (ii) to pay the balance of a $100,000 license
fee, or $90,000, to Bright pursuant to a license agreement executed by Bright
and the Company, (iii) to cover all of the expenses incurred by the Company in
this offering, including the Underwriters' discounts and the Representative's
non-accountable expense allowance, and (iv) to fund the Company's operating
expenses, including investment banking fees and fees of the Proceeds Escrow
Agent and the costs of business, legal and accounting due diligence on
prospective Target Businesses, until the Company effects a Business Combination.
In addition, a portion of the net proceeds from the sale of the Class B Warrants
equal to the Underwriters' discounts and the Representative's non-accountable
expense allowance with respect to the Units will be placed in the escrow account
with the Proceeds Escrow Agent for the benefit of purchasers of Units in this
offering and in the open market thereafter. Furthermore, the Warrants are not
exercisable until the Company effects a Business Combination, of which there can
be no assurance, provided the Company is then in compliance with all filings
required under the federal and state securities laws, and holders of Warrants
who do not own shares of Common Stock will not be allowed to participate in any
liquidation distribution of the proceeds from the escrow account. Consequently,
in the event the Company does
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not effect a Business Combination within 18 months from the date of this
Prospectus, or 24 months from the date of this Prospectus if the Extension
Criteria have been satisfied, and the stockholders of the Company elect to
liquidate the Company, the holders of Warrants will not receive any
distributions and will lose their entire investment in such Warrants. As such,
an investment in the Warrants therefore should be viewed as a highly speculative
investment and should only be made by an individual who can afford to lose his
entire investment. Holders of Class B Warrants would pay substantially less for
the Units issuable upon exercise of such Class B Warrants than holders of Units
and, accordingly, may realize a higher return on their investment than holders
of Units. By way of illustration, purchasers of Class B Warrants in this
offering will pay $5.875 per Unit (the sum of the $5.75 purchase price and the
$.125 exercise price), while purchasers of Units in this offering will pay
$10.00 per Unit. The proceeds to the Company from the sale of the Class B
Warrants will not be placed in escrow for the benefit of the holders of the
Class B Warrants and will be used to repay indebtedness and to cover all of the
Company's expenses incurred in this offering, including the Underwriters'
discounts and the Representative's non-accountable expense allowance with
respect to both the Units and the Class B Warrants, to pay the Proceeds Escrow
Agent and to pay the Company's costs of evaluating potential Business
Combinations and for administrative and operating expenses. Holders of Class B
Warrants risk the loss of all of their investment if the Company fails to effect
a Business Combination, while holders of shares of Common Stock comprising part
of the Units are protected from such loss by the Company's escrow of an amount
equal to the gross proceeds from the sale of the Units in this offering.
REPRESENTATIVE'S ABILITY TO MAINTAIN REQUIRED MINIMUM NET CAPITAL
As a registered broker-dealer, the Representative is required under the
Exchange Act and the rules promulgated thereunder to maintain minimum net
capital in order to conduct its broker-dealer operations. Currently, the
Representative has sufficient excess net capital to support its broker-dealer
operations, including its underwriting obligations to the Company. In the event,
however, that at any time the Representative should be unable to maintain its
minimum net capital requirements, it will be required to cease operations as a
broker-dealer. Any such cessation of operations by the Representative could have
a material adverse effect on the market price and liquidity of the securities
being offered hereby.
DEPENDENCE UPON EXECUTIVE OFFICERS AND BOARD OF DIRECTORS; NO PRIOR BLIND POOL
EXPERIENCE
The ability of the Company to successfully effect a Business Combination
will be largely dependent upon the efforts of its executive officers and the
Board of Directors. Notwithstanding the significance of such persons, the
Company has not entered into employment agreements or other understandings with
any such personnel concerning compensation or obtained any "key man" life
insurance on their respective lives. The loss of the services of such key
personnel could have a material adverse effect on the Company's ability to
successfully achieve its business objectives. None of the Company's key
personnel are required to commit a substantial amount of their time to the
affairs of the Company and, accordingly, such personnel may have conflicts of
interests in allocating management time among various business activities.
However, the executive officers and the other directors of the Company will
devote such time as they deem reasonably necessary to carry out the business and
affairs of the Company, including the evaluation of potential Target Businesses
and the negotiation and consummation of a Business Combination, and, as a
result, the amount of time devoted to the business and affairs of the Company
may vary significantly depending upon, among other things, whether the Company
has identified a Target Business or is engaged in active negotiation of a
Business Combination. Although the officers and directors of the Company have
substantial experience in buying and selling businesses, they have no prior
experience in "blind pool" or "blank check" offerings. The Company will rely
upon the expertise of such persons, and the Board does not anticipate that it
will hire additional personnel. However, if additional personnel are required,
there can be no assurance that the Company will be able to retain such necessary
additional personnel. Furthermore,
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the Company's Chairman of the Board and Chief Executive Officer was the
co-founder of Integrated Resources, Inc., which commenced bankruptcy proceedings
in 1990. See "Proposed Business" and "Management."
CONFLICTS OF INTEREST
None of the Company's directors or executive officers are required to commit
their full time to the affairs of the Company and it is likely that such persons
will not devote a substantial amount of time to the affairs of the Company. Such
personnel will have conflicts of interest in allocating management time among
various business activities. As a result, the consummation of a Business
Combination may require a greater period of time than if the Company's
management devoted their full time to the Company's affairs. However, the
executive officers and other directors of the Company will devote such time as
they deem reasonably necessary to carry out the business and affairs of the
Company, including the evaluation of potential Target Businesses and the
negotiation and consummation of a Business Combination and, as a result, the
amount of time devoted to the business and affairs of the Company may vary
significantly depending upon, among other things, whether the Company has
identified a Target Business or is engaged in active negotiation and
consummation of a Business Combination. Prior to their involvement with the
Company, none of the directors or the executive officers of the Company has been
involved in any "blind pool" or "blank check" offerings. To avoid certain
conflicts of interest, the executive officers and directors of the Company, and
owners of five percent or more of the Company's Common Stock (after giving
effect to this offering, but without giving effect to the exercise, if any, of
the Warrants to be issued in this offering), have agreed that they will not,
until the consummation of the first Business Combination, introduce a suitable
proposed merger, acquisition or consolidation candidate to another blank check
company. For such purposes, suitable shall mean any business opportunity which,
under Delaware law, may reasonably be required to be presented to the Company.
Certain of the persons associated with the Company are and may in the future
become affiliated with entities engaged in business activities similar to those
intended to be conducted by the Company. Such persons may have conflicts of
interest in determining to which entity a particular business opportunity should
be presented. In general, officers and directors of a corporation incorporated
under the laws of the State of Delaware are required to present certain business
opportunities to such corporation. Accordingly, as a result of multiple business
affiliations, certain of the Company's directors and executive officers may have
similar legal obligations to present certain business opportunities to multiple
entities. There can be no assurance that any of the foregoing conflicts will be
resolved in favor of the Company. See "Management."
LIMITED ABILITY TO EVALUATE TARGET BUSINESS MANAGEMENT; POSSIBILITY THAT
MANAGEMENT WILL CHANGE
The role of the present management in the operations of a Target Business of
the Company following a Business Combination cannot be stated with certainty.
Although the Company intends to scrutinize closely the management of a
prospective Target Business in connection with its evaluation of the
desirability of effecting a Business Combination with such Target Business, and
will retain an independent investment banking firm which is a member in good
standing of the NASD to assist the Company in this regard, there can be no
assurance that the Company's assessment of such management will prove to be
correct, especially in light of the possible inexperience of current key
personnel of the Company in evaluating certain types of businesses. While it is
possible that certain of the Company's directors or executive officers will
remain associated in some capacities with the Company following a consummation
of a Business Combination, it is unlikely that any of them will devote a
substantial portion of their time to the affairs of the Company subsequent
thereto. Moreover, there can be no assurance that such personnel will have
significant experience or knowledge relating to the operations of the Target
Business acquired by the Company. The Company may also seek to recruit
additional personnel to supplement the incumbent management of the Target
Business. There can be no assurance that the Company will successfully recruit
additional personnel or that the additional personnel will have the requisite
skills, knowledge or experience necessary or desirable to enhance the
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incumbent management. In addition, there can be no assurance that the future
management of the Company will have the necessary skills, qualifications or
abilities to manage a public company embarking on a program of business
development. See "Proposed Business" and "Management."
POSSIBLE BUSINESS COMBINATION WITH A TARGET BUSINESS OUTSIDE THE UNITED STATES
The Company may effectuate a Business Combination with a Target Business
located outside the United States. In such event, the Company may face the
additional risks of language barriers, different presentations of financial
information, different business practices, and other cultural differences and
barriers. Furthermore, due to the Company's limited resources, it may be
difficult to assess fully these additional risks. Therefore, a Business
Combination with a Target Business outside the United States may increase the
risk that the Company will not achieve its business objectives.
COMPETITION
The Company expects to encounter intense competition from other entities
having business objectives similar to those of the Company. Many of these
entities, including venture capital partnerships and corporations, other blind
pool companies, large industrial and financial institutions, small business
investment companies and wealthy individuals, are well-established and have
extensive experience in connection with identifying and effecting Business
Combinations directly or through affiliates. Many of these competitors possess
greater financial, technical, human and other resources than the Company and
there can be no assurance that the Company will have the ability to compete
successfully. The Company's financial resources will be limited in comparison to
those of many of its competitors. Further, such competitors will generally not
be required to seek the prior approval of their own stockholders, which may
enable them to close a Business Combination more quickly than the Company. This
inherent competitive limitation may compel the Company to select certain less
attractive Business Combination prospects. There can be no assurance that such
prospects will permit the Company to achieve its stated business objectives. See
"Proposed Business."
UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS
In the event that the Company succeeds in effecting a Business Combination,
the Company will, in all likelihood, become subject to intense competition from
competitors of the Target Business. In particular, certain industries which
experience rapid growth frequently attract an increasingly larger number of
competitors, including competitors with greater financial, marketing, technical,
human and other resources than the initial competitors in the industry. The
degree of competition characterizing the industry of any prospective Target
Business cannot presently be ascertained. There can be no assurance that,
subsequent to a consummation of a Business Combination, the Company will have
the resources to compete in the industry of the Target Business effectively,
especially to the extent that the Target Business is in a high-growth industry.
See "Proposed Business."
ADDITIONAL FINANCING REQUIREMENTS
The Company has had no revenues to date and will be entirely dependent upon
the proceeds of this offering to implement its business objectives. The Company
will not achieve any revenues (other than investment income) until, at the
earliest, the consummation of a Business Combination. Although the Company
anticipates that the net proceeds of this offering will be sufficient to effect
a Business Combination, inasmuch as the Company has not yet identified any
prospective Target Business candidates, the Company cannot ascertain with any
degree of certainty the capital requirements for any particular Business
Combination. In the event that the net proceeds of this offering prove to be
insufficient for purposes of effecting a Business Combination (because of the
size of the Business Combination or other reasons), the Company will be required
to seek additional financing. There can be no assurance that such financing will
be available on acceptable terms, or at all. To the extent that additional
financing proves to be unavailable when needed to consummate a particular
Business Combination, the Company would, in all likelihood, be compelled to
restructure the transaction or abandon that particular Business Combination and
seek an alternative Target Business candidate, if possible. In addition, in the
event of the consummation of a Business Combination, the Company may require
additional financing to fund the operations or growth of the Target Business.
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The failure by the Company to secure additional financing could have a material
adverse effect on the continued development or growth of the Target Business.
The Company does not have any arrangements with any bank or financial
institution to secure additional financing and there can be no assurance that
any such arrangement, if required or otherwise sought, would be available on
terms deemed to be commercially acceptable and in the best interests of the
Company. See "Proposed Business."
POSSIBLE USE OF DEBT FINANCING; DEBT OF A TARGET BUSINESS
There currently are no limitations on the Company's ability to borrow funds
to increase the amount of capital available to the Company to effect a Business
Combination. However, the Company's limited resources and lack of operating
history will make it difficult to borrow funds. The amount and nature of any
borrowings by the Company will depend on numerous considerations, including the
Company's capital requirements, the Company's perceived ability to meet debt
service on any such borrowings and the then prevailing conditions in the
financial markets, as well as general economic conditions. There can be no
assurance that debt financing, if required or sought, would be available on
terms deemed to be commercially acceptable by and in the best interests of the
Company. The inability of the Company to borrow funds required to effect or
facilitate a Business Combination, or to provide funds for an additional
infusion of capital into a Target Business, may have a material adverse effect
on the Company's financial condition and future prospects. Additionally, to the
extent that debt financing ultimately proves to be available, any borrowings may
subject the Company to various risks traditionally associated with indebtedness,
including the risks of interest rate fluctuations and insufficiency of cash flow
to pay principal and interest. Furthermore, a Target Business may have already
incurred borrowings and, therefore, all the risks inherent thereto. See "Use of
Proceeds" and "Proposed Business."
REDEMPTION RIGHTS
At the time the Company seeks stockholder approval of any potential Business
Combination, the Company will offer to each of the non-affiliated public
stockholders of the Company the right, for a specified period of time of not
less than 20 calendar days, to redeem his shares of Common Stock at a price
equal to the Liquidation Value of such shares as of the Record Date. The
Redemption Offer will be described in the disclosure documentation relating to
the proposed Business Combination. In connection with the Redemption Offer,
should non-affiliated public stockholders holding 20% or less of the Common
Stock elect to redeem their shares, the Company may, but will not be required
to, proceed with the proposed Business Combination and, if the Company elects to
so proceed, will redeem such shares at their Liquidation Value as of the Record
Date. In any case, if non-affiliated public stockholders holding more than 20%
of such Common Stock elect to redeem their shares, the Company will not proceed
with the proposed Business Combination and will not redeem any shares of Common
Stock. As a result of the foregoing, the Company's ability to consummate a
particular Business Combination may be impaired. Moreover, holders of Common
Stock prior to the date of this Prospectus and holders of Warrants will only be
allowed to participate in a Redemption Offer if they purchase shares of Common
Stock in this offering or on the open market thereafter, but only as to any
shares of Common Stock so purchased.
POSSIBLE LIQUIDATION OF THE COMPANY IF NO BUSINESS COMBINATION
If the Company does not effect a Business Combination within 18 months from
the date of this Prospectus, or 24 months from the date of this Prospectus if
the Extension Criteria have been satisfied, the Company will submit for
stockholder consideration a proposal to liquidate the Company and distribute to
the then holders of Common Stock acquired as part of the Units sold in this
offering or in the open market thereafter, the amounts in the interest bearing
escrow account. Thereafter, all remaining assets available for distribution will
be distributed to the non-affiliated public stockholders of the Company after
payment of liabilities and after redemption of the Company's outstanding Series
A Preferred Stock at its liquidation value, $9,400. Since the proceeds to the
Company from the sale of the Class B Warrants will be used (i) to repay
indebtedness, (ii) to pay the balance of a $100,000 license fee, or $90,000, due
to Bright pursuant to a license agreement executed by Bright and the
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Company, (iii) to cover all the expenses incurred by the Company in this
offering, including the Underwriters' discounts and the Representative's
non-accountable expense allowance, and (iv) to fund the Company's operating
expenses, including possible investment banking fees and the costs of business,
legal and accounting due diligence on prospective Target Businesses, until the
consummation of a Business Combination, the amount per share remaining for
distribution in the event of liquidation of the Company to the holders of Common
Stock acquired as part of the Units sold in this offering or in the open market
thereafter, and, exclusive of any income earned on the proceeds held in the
escrow account, will be approximately equal to the initial public offering price
per Unit in this offering ($10.00 per Unit assuming no value is attributed to
the Warrants included in the Units offered hereby).
There can be no assurance that the Company will effect a Business
Combination within 18 months from the date of this Prospectus, or within 24
months from the date of this Prospectus if the Extension Criteria have been
satisfied. All of the Company's present stockholders, including the Company's
executive officers and other directors and their affiliates, are required to
vote their shares of Common Stock in accordance with the vote of the majority of
all non-affiliated public stockholders of the Company with respect to any such
liquidation proposal. Holders of Warrants, however, will only be entitled to
vote on any liquidation proposal, and allowed to participate in any liquidation
distribution, only if they purchase shares of Common Stock in this offering or
on the open market thereafter, and only as to any shares of Common Stock so
purchased. Present stockholders of the Company will not participate in any
liquidation distribution with respect to the shares of Common Stock owned by
them as of the date hereof.
INVESTMENT COMPANY ACT CONSIDERATIONS
The regulatory scope of the Investment Company Act of 1940, as amended (the
"Investment Company Act"), which was enacted principally for the purpose of
regulating vehicles for pooled investments in securities, extends generally to
companies engaged primarily in the business of investing, reinvesting, owning,
holding or trading in securities. The Investment Company Act may, however, also
be deemed to be applicable to a company which does not intend to be
characterized as an investment company but which, nevertheless, engages in
activities which may be deemed to be within the definitional scope of certain
provisions of the Investment Company Act. The Company believes that its
anticipated principal activities, which will involve acquiring control of an
operating company, will not subject the Company to regulation under the
Investment Company Act. Nevertheless, there can be no assurance that the Company
will not be deemed to be an investment company, particularly during the period
prior to consummation of a Business Combination. If the Company is deemed to be
an investment company, the Company may become subject to certain restrictions
relating to the Company's activities, including restrictions on the nature of
its investments and the issuance of securities. In addition, the Investment
Company Act imposes certain requirements on companies deemed to be within its
regulatory scope, including registration as an investment company, adoption of a
specific form of corporate structure and compliance with certain burdensome
reporting, recordkeeping, voting, proxy, disclosure and other rules and
regulations. In the event of the characterization of the Company as an
investment company, the failure by the Company to satisfy such regulatory
requirements, whether on a timely basis or at all, would, under certain
circumstances, have a material adverse effect on the Company.
DIVIDENDS UNLIKELY
The Company does not expect to pay dividends prior to the consummation of a
Business Combination. The payment of dividends after consummating any such
Business Combination, if any, will be contingent upon the Company's revenues and
earnings, if any, capital requirements and general financial condition
subsequent to consummation of a Business Combination. The payment of any
dividends subsequent to a Business Combination will be within the discretion of
the Company's then Board of Directors. The Company presently intends to retain
all earnings, if any, for use in the Company's business operations and
accordingly, the Board does not anticipate declaring any dividends in the
foreseeable future. See "Description of Securities -- Dividends."
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UNCERTAINTY OF SERVICEMARKS
The servicemarks SMA(2)RTSM and Specialized Merger and Acquisition Allocated
Risk TransactionSM are owned by Bright. Bright has granted the Company a
non-exclusive license to use, for the sole purpose of marketing this offering,
the SMA(2)RTSM and Specialized Merger and Acquisition Allocated Risk
TransactionSM servicemarks. There can be no assurance that a third party owning
or using a similar servicemark or trademark will not object to, or seek to
prohibit, the Company's use of the SMA(2)RTSM or Specialized Merger and
Acquisition Allocated Risk TransactionSM servicemarks. The Company does not
believe, however, that its business will be adversely affected if it is unable
to utilize either, or both, of these servicemarks. See "Proposed Business --
Servicemark License," "Management -- Directors and Officers" and "Certain
Transactions."
AUTHORIZATION OF ADDITIONAL SECURITIES
The Company's Certificate of Incorporation authorizes the issuance of
10,000,000 shares of Common Stock. Upon completion of this offering (assuming no
exercise of the Underwriters' over-allotment option or any Warrants or other
options, or conversion of the outstanding Series A Preferred Stock), there will
be 9,094,000 authorized but unissued shares of Common Stock available for
issuance. However, a total of 2,294,000 shares of Common Stock are reserved for
issuance, consisting of the following: 800,000 shares of Common Stock are
reserved for issuance upon the exercise of the Class A Warrants, 320,000 shares
of Common Stock are reserved for issuance upon exercise of the Units underlying
the Class B Warrants, 320,000 shares of Common Stock are reserved for issuance
upon exercise of the Class A Warrants comprising a part of the Units underlying
the Class B Warrants, 120,000 shares of Common Stock are included in the Units
subject to the Underwriters' over-allotment option, 120,000 shares of Common
Stock are reserved for issuance upon the exercise of the Class A Warrants
included in the Units subject to the Underwriters' over-allotment option, 48,000
shares of Common Stock are reserved for issuance upon exercise of the Units
underlying the Class B Warrants subject to the Underwriters' over-allotment
option, 48,000 shares of Common Stock are reserved for issuance upon exercise of
the Class A Warrants comprising a part of the Units underlying the Class B
Warrants subject to the Underwriters' over-allotment option, 200,000 shares of
Common Stock are reserved for issuance upon exercise of options to purchase
Units granted to executive officers of the Company, 94,000 shares of Common
Stock are reserved for issuance upon conversion of the Company's outstanding
Series A Preferred Stock, 80,000 shares of Common Stock are included in the
Units reserved for issuance upon exercise of Representative's Unit Purchase
Warrants, 80,000 shares of Common Stock are reserved for issuance upon the
exercise of the Class A Warrants included in the Units reserved for issuance
upon exercise of the Representative's Unit Purchase Warrants, 32,000 shares of
Common Stock are included in the Units reserved for issuance upon exercise of
the Representative's Class B Warrants, and 32,000 shares of Common Stock
reserved for issuance upon exercise of Class A Warrants comprising a part of the
Units underlying the Representative's Class B Warrants. See "Management,"
"Underwriting" and "Certain Transactions." Although the Company's Board of
Directors has the power to issue any or all of such shares without stockholder
approval, the Company has agreed with the Representative that for a period of 18
months from the date of this Prospectus, and for up to six additional months if
the Extension Criteria have been satisfied, it will not issue (other than
pursuant to this offering) any shares of Common Stock or grant Common Stock
purchase options or warrants without the consent of the Representative, except
in connection with effecting a Business Combination. See "Underwriting."
Although the Company has no commitments as of the date of this Prospectus to
issue any shares of Common Stock other than as described in this Prospectus, the
Company will, in all likelihood, issue a substantial number of additional shares
in connection with or following a Business Combination. To the extent that
additional shares of Common Stock are issued, the Company's stockholders would
experience dilution of their respective ownership interests in the Company.
Additionally, if the Company issues a substantial number of shares of Common
Stock in connection with or following a Business Combination, a change in
control of the Company may occur which may affect, among other things, the
Company's ability to utilize net operating loss carryforwards, if any.
Furthermore, the issuance of a substantial number of
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shares of Common Stock may adversely affect prevailing market prices, if any,
for the Common Stock and could impair the Company's ability to raise additional
capital through the sale of its equity securities. See "Proposed Business" and
"Description of Securities."
The Company's Certificate of Incorporation also authorizes the issuance of
1,000,000 shares of preferred stock (the "Preferred Stock"), with such
designations, powers, preferences, rights, qualifications, limitations and
restrictions of such series as the Board of Directors, subject to the laws of
the State of Delaware, may determine from time to time. Accordingly, the Board
of Directors is empowered, without stockholder approval, to issue Preferred
Stock with dividend, liquidation, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders of Common Stock
and Warrants. The Company has agreed with the Representative, however, that for
a period of 18 months from the date of this Prospectus, and for up to six
additional months if the Extension Criteria have been satisfied, it will not
issue any additional shares of Preferred Stock without the consent of the
Representative, except in connection with the consummation of a Business
Combination. In addition, the Preferred Stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Although the Company does not currently intend to issue
any shares of Preferred Stock, there can be no assurance that the Company will
not do so in the future. As of the date of this Prospectus, the Company has
outstanding 94 shares of Preferred Stock, designated as Series A Preferred
Stock, which shares are non-voting and convertible to 94,000 shares of Common
Stock upon consummation of the first Business Combination. See "Proposed
Business" and "Description of Securities -- Series A Preferred Stock."
VOTING BY PRESENT STOCKHOLDERS
Upon consummation of this offering, the Company's directors and executive
officers will collectively own 52,500 shares of Common Stock and options to
purchase 100,000 units, each unit being identical to the Units issued in this
offering, representing approximately 15.2% of the issued and outstanding shares
of Common Stock (assuming no exercise of the Underwriters' over-allotment
option, the Representative's Unit Purchase Warrants or the Representative's
Class B Warrants or the conversion of the Series A Preferred Stock) and
approximately 15.2% of the voting power of the issued and outstanding shares of
Common Stock (subject to the foregoing assumptions). In the election of
directors, stockholders are not entitled to cumulate their votes for nominees.
Accordingly, as a practical matter, management may be able to elect all of the
Company's directors and otherwise direct the affairs of the Company. See
"Principal Stockholders," "Certain Transactions" and "Description of
Securities."
OTC BULLETIN BOARD; NO ASSURANCE OF PUBLIC MARKET; ARBITRARY DETERMINATION OF
OFFERING PRICE; LACK OF PUBLIC MARKET FOR SECURITIES
Prior to this offering, there has been no public trading market for the
Units, the Common Stock or the Warrants. The initial public offering prices of
the Units and the Class B Warrants and the respective exercise prices and terms
of the Warrants have been arbitrarily determined by negotiations between the
Company and the Representative and bear no relationship to such established
valuation criteria such as assets, book value or prospective earnings.
NASDAQ has recently adopted a policy whereby it will not list the securities
of a "blind pool" company. The Representative is seeking approval for listing of
the securities on the OTC Bulletin Board. The OTC Bulletin Board is an NASD
sponsored and operated inter-dealer automated quotation system for equity
securities not included in the NASDAQ system. The OTC Bulletin Board has only
recently been introduced as an alternative to "pink sheet" trading of
over-the-counter securities. Consequently, the liquidity and stock price of the
Company's securities in the secondary market may be adversely affected. There is
no assurance that a regular trading market will develop for any of the Company's
securities after this offering or that, if developed, any such market will be
sustained.
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Moreover, there can be no assurance that the Company's securities will be listed
on NASDAQ or any national securities exchanges following the consummation of a
Business Combination. See "Underwriting."
H.J. Meyers & Co., Inc., the Representative, intends to serve as the market
maker for the Company's securities. Neither the Company nor anyone acting on the
Company's behalf will take affirmative steps to request or encourage any other
broker-dealers to act as market makers for the Company's securities. To date,
there have not been any preliminary discussions or understandings between the
Company and any potential market makers, other than H.J. Meyers & Co., Inc.,
regarding the participation of such market makers in the future trading market,
if any, for the Company's securities.
Moreover, no member of management of the Company or any promoter or anyone
else acting at the Company's direction will recommend, encourage or advise
investors to open brokerage accounts with any broker-dealer making a market in
the Company's securities and the Company does not intend to influence investors
with regard to their decisions as to whether to hold or sell their securities of
the Company.
IMMEDIATE SUBSTANTIAL DILUTION; DISPARITY OF CONSIDERATION
This offering involves an immediate and substantial dilution of $.57 per
share between the pro forma net tangible book value per share after the offering
of $9.43 and the initial public offering price of $10.00 per share allocable to
each share of Common Stock included in the Units (assuming no value is
attributed to the Class A Warrants included in the Units). The existing
stockholders of the Company, including its executive officers and directors,
acquired their shares of Common Stock at prices substantially lower than the
initial public offering price and, accordingly, new investors will bear
substantially all of the risks inherent in an investment in the Company.
Similarly, if and to the extent that the net tangible book value per share of
the securities of the Target Business being acquired (when divided by the number
of shares of the Common Stock to be issued) is less per share than the Company's
current net tangible book value per share, the Company's public stockholders
will suffer further dilution, since the issuance of such shares would result in
an immediate dilution of the net tangible book value per share of the then
consolidated financial position of the Company and the business being acquired.
See "Dilution."
POSSIBLE NEED TO SECURE NEW OFFICE SPACE
The Company, pursuant to an oral agreement, utilizes and will utilize the
offices of Manhattan Associates, LLC ("Manhattan Associates"), a limited
liability company controlled by Arthur H. Goldberg, a stockholder of the Company
and the Company's Chairman and Chief Executive Officer, until the Company
effects a Business Combination. The Company will pay Manhattan Associates $2,500
per month for rent, office and secretarial services following completion of this
offering. Management is unaware of any circumstances under which the Company's
utilization of these offices, through management's own initiative, may be
changed. In the event the Company, for whatever reason, is no longer able to
avail itself of this arrangement, it may be forced to secure new office space
and retain adequate secretarial assistance. There can be no assurance that the
Company, if required, could secure such new office space and retain such
secretarial assistance on favorable terms, if at all. Failure to maintain a
business office could adversely affect the Company's operations. See "Proposed
Business -- Facilities."
COMPLIANCE WITH PENNY STOCK RULES
The Company's securities will not initially be considered "penny stock" as
defined in the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and the rules thereunder, since the price of each security is $5 or more. If the
price per security for any of the Company 's Units, Common Stock, Class A
Warrants or Class B Warrants were to drop below $5, that particular security of
the Company may come within the definition of a "penny stock". Unless such
security is otherwise excluded from the definition of "penny stock," the penny
stock rules apply with respect to that particular security. One such exemption
from the definition of a "penny stock" is for securities of an issuer which has
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assets in excess of $5 million, as represented by audited financial statements.
In the present situation, the Company will have assets in excess of $5 million
and expects to have audited financial statements shortly after its Registration
Statement is declared effective with the Securities and Exchange Commission.
Once such audited financial statements have been obtained, none of the
securities of the Company will be considered "penny stock," even if their price
falls below $5, so long as the requirements for the other exception from the
penny stock rules are met. However, until such time as the Company has obtained
audited financial statements, the selling price of each security must be $5 or
more in order for such security not to be classified as a "penny stock."
The penny stock rules require a broker-dealer prior to a transaction in
penny stock, not otherwise exempt from the rules, to deliver a standardized risk
disclosure document prepared by the Commission that provides information about
penny stocks and the nature and level of risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
sales person in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules require that the broker-dealer, not otherwise exempt from
such rules, must make a special written determination that the penny stock is
suitable for the purchaser and receive the purchaser's written agreement to the
transaction. These disclosure rules have the effect of reducing the level of
trading activity in the secondary market for a stock that becomes subject to the
penny stock rules. If any security of the Company becomes subject to the penny
stock rules, it may become more difficult to sell such securities. Such
requirements, if applicable, could result in reduction in the level of trading
activity for that particular security of the Company and could make it more
difficult for investors to sell that particular security. No assurance can be
given that any security of the Company will continue not to be classified as a
penny stock.
SHARES ELIGIBLE FOR FUTURE SALE
None of the 106,000 shares of Common Stock outstanding as of the date of
this Prospectus are eligible for sale under Rule 144 ("Rule 144") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"). However,
the 20,000 Placement Shares and the 94,000 shares of Common Stock issuable upon
conversion of the Company's outstanding Series A Preferred Stock will be
registered under the Securities Act for sale at the time of a Business
Combination and will be freely tradable at that time, subject, however, to the
volume limitations of Rule 144 and CDIJ's agreement not to sell or otherwise
transfer such shares until 60 days after the first Business Combination in the
case of such 94,000 shares. In general, under Rule 144, as currently in effect,
subject to the satisfaction of certain other conditions, a person, including an
affiliate of the Company (or persons whose shares are aggregated), who has owned
restricted shares of Common Stock beneficially for at least two years is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class or, if the Common Stock is quoted on an exchange or NASDAQ, the
average weekly trading volume during the four calendar weeks preceding the sale.
A person who has not been an affiliate of the Company for at least three months
immediately preceding the sale and who has beneficially owned the shares of
Common Stock to be sold for at least three years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above. No
prediction can be made as to the effect, if any, that sales of such shares of
Common Stock or the availability of such shares for sale will have on the market
prices for shares of Common Stock or Warrants prevailing from time to time.
Nevertheless, the sale of substantial amounts of Common Stock in the public
market would likely adversely affect prevailing market prices for the Common
Stock and Warrants and could impair the Company's ability to raise capital
through the sale of its equity securities. See "Shares Eligible for Future
Sale." The shares of Common Stock owned immediately prior to the date hereof by
all of the stockholders of the Company, including the Placement Shares, will be
placed in escrow. In addition, the holders of the Placement Shares have agreed
not to directly or indirectly sell, offer to sell, grant an option for the sale
of, transfer, assign, pledge, hypothecate or otherwise encumber any of the
Placement Shares without the prior written consent of the Company until the
earlier of 24 months from the date such shares were issued
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(November 15, 1995) or 60 days following the consummation of the first Business
Combination. Furthermore, all of the holders of Founders' Shares have agreed not
to, directly or indirectly, sell, offer to sell, grant an option for the sale
of, transfer, assign, pledge, hypothecate or otherwise encumber any of their
shares of Common Stock or options to purchase Units (and the securities issuable
upon the exercise thereof) without the prior written consent of the Company
until two years from the date that the Founders' Shares were issued (August 18,
1995) but in no event earlier than 120 days following the consummation of the
first Business Combination, subject to any additional terms, conditions or
restrictions that may be imposed in connection with the consummation of a
Business Combination. The Company has agreed with the Representative that it
will not grant such consent without the consent of the Representative. See
"Certain Transactions," "Shares Eligible for Future Sale," "Description of
Securities" and "Underwriting."
STATE BLUE SKY REGISTRATION; RESTRICTED RESALES OF THE SECURITIES
The ability to register or qualify for sale the Units, the shares of Common
Stock and Class A Warrants comprising the Units and the Class B Warrants for
both initial sale and secondary trading will be limited because a significant
number of states have enacted regulations pursuant to their securities or
so-called "blue sky" laws restricting or, in many instances, prohibiting, the
sale of securities of "blind pool" issuers such as the Company within that
state. In addition, many states, while not specifically prohibiting or
restricting "blind pool" companies, would not register the securities to be
offered in this offering for sale in their states. Because of these regulations,
the Company has registered the securities being offered in this offering, or an
exemption from registration has been obtained (or is otherwise available), only
in the states of Colorado, Delaware, Florida, Georgia, Hawaii, Illinois,
Louisiana, Maryland, New York, Rhode Island and South Carolina and in the
District of Columbia (the "Primary Distribution States") and initial sales may
only be made in such jurisdictions. More specifically, the Company has
registered the securities by filing in Colorado, by coordination in Delaware,
Illinois, Maryland, Rhode Island and South Carolina and by notification in
Florida, Louisiana and New York. Exemptions from registration have been obtained
(or are otherwise available) in Georgia, Hawaii and the District of Columbia. In
addition, such securities will be immediately eligible for resale in the
secondary market in each of the Primary Distribution States and, pursuant to an
exemption provided to any nonissuer transaction except when directly or
indirectly for the benefit of an affiliate of the issuer, in the Commonwealth of
Pennsylvania. Such securities will be eligible for resale in the secondary
market 90 days after the date hereof in the states of Maine, Missouri, New
Mexico and Rhode Island and 180 days after the date hereof in the states of
Alabama, Oklahoma and South Dakota, in each case pursuant to an exemption
provided to a company which has securities registered pursuant to Section 12 of
the Exchange Act for the time period indicated. Because of regulations enacted
to prohibit the sale of securities of "blind pool" companies as well as the
unavailability of exemptions provided to companies whose securities are listed
on an exchange or are eligible for inclusion in recognized securities manuals
such as Standard & Poor's Corporation Records, it is not anticipated that a
secondary trading market for the Company's securities will develop in any of the
other 31 states until subsequent to consummation of a Business Combination, if
at all.
Florida residents who purchase Class B Warrants will be unable to exercise
these warrants to purchase Units unless and until the Units issuable upon
exercise of the Class B Warrants have been registered for sale in Florida or are
established to be exempt from the requirement of such registration. Florida law
generally precludes the registration of securities that are not listed on a
securities exchange or the NASDAQ System when the offering price of such
securities is $5.00 or less per share. Because the "exercise price" of Class B
Warrants is $.125, the "offering price" of the Units issuable upon exercise of
the Class B Warrants could be considered not greater than $5.00 if the offering
price of the Class B Warrants is not added to its exercise price in making that
determination. For this reason, no permit to sell the Units issuable upon
exercise of the Class B Warrants in Florida has been obtained. There can be no
assurance that the Units issuable upon exercise of the Class B Warrants will
ever be registered in Florida or established to be exempt from the requirement
of such registration.
27
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company after deducting underwriting discounts and
estimated expenses (including the Representative's non-accountable expense
allowance) are estimated to be $8,710,000 ($10,065,028 if the Underwriters'
over-allotment option is exercised in full). Approximately 81% of the gross
proceeds of this offering (representing an amount equal to $8,000,000 gross
proceeds from the sale of the Units) will be held in an escrow account
maintained by the Proceeds Escrow Agent, until the earlier of written
notification by the Company to the Proceeds Escrow Agent (i) of the Company's
completion of a transaction or series of transactions in which at least 50% of
the gross proceeds from this offering is committed to a specific line of
business as a result of a Business Combination (including any redemption
payments), or (ii) to distribute the escrowed funds, in connection with a
liquidation of the Company, to the then holders of the Common Stock purchased as
part of the Units sold in this offering or in the open market thereafter. All
proceeds held in the escrow account will be invested, until released, in
short-term United States government securities, including treasury bills, cash
and equivalents.
The Company will use the net proceeds of this offering, together with the
income earned thereon, principally in connection with effecting a Business
Combination, including selecting and evaluating potential Target Businesses and
structuring and consummating a Business Combination (including possible payment
of finder's fees or other compensation to persons or entities which provide
assistance or services to the Company). The Company will not effect a Business
Combination with a Target Business unless the Fair Market Value of such business
is greater than 80% of the net assets of the Company at the time of such
consummation of a Business Combination. The Company has no present intention of
either loaning any of the proceeds of this offering to any Target Business or
purchasing a minority interest in any Target Business. Management is unaware of
any circumstances under which this policy, through management's own initiative,
may be changed. The Company does not have discretionary access to the monies in
the escrow account, including income earned on such amounts, and stockholders of
the Company will not receive any distribution of income (other than in
connection with the liquidation of the Company) or have any ability to direct
the use or distribution of such income. Thus, such income will cause the amount
in escrow to increase. The Company cannot use the escrowed amounts to pay the
costs of evaluating potential Business Combinations. The Company will use the
proceeds from the sale of the Class B Warrants (i) to repay indebtedness, (ii)
to pay the balance of a $100,000 license fee, or $90,000, to Bright pursuant to
a license agreement executed by Bright and the Company, (iii) to cover all the
expenses incurred by the Company in this offering, including the Underwriters'
discounts and the Representative's non-accountable expense allowance, and (iv)
to pay the costs of evaluating potential Business Combinations, including
investment banking fees, the fees of the Proceeds Escrow Agent and the costs of
business, legal and accounting due diligence on prospective Target Businesses.
See "Proposed Business -- Servicemark License." Such funds also will be used for
the general and administrative expenses of the Company, including legal and
accounting fees and administrative support expenses in connection with the
Company's reporting obligations to the Commission. The Company does not
anticipate such fees and administrative expenses will exceed $100,000 per year.
The Company's anticipated uses of the net proceeds from the sale of the Class B
Warrants (assuming no exercise of the Underwriters' over-allotment option) are
quantified as follows:
<TABLE>
<CAPTION>
USE OF PROCEEDS AMOUNT PERCENTAGE
- ------------------------------------------------------------------- ------------- -----------
<S> <C> <C>
Escrow Account (1)................................................. $ 480,000 31.6%
Non-accountable Expense Allowance (2).............................. 295,200 19.5
Repayment of Indebtedness.......................................... 100,000 6.6
License Fee........................................................ 90,000 5.9
Expenses of Offering............................................... 169,600 11.2
Evaluation of Potential Business Combination....................... 382,000 25.2
------------- -----
$ 1,516,800 100.0%
------------- -----
------------- -----
</TABLE>
28
<PAGE>
- ------------------------
(1) Represents the amount of the proceeds from the sale of the Class B Warrants
to be added to the Escrow Account to be maintained by the Proceeds Escrow
Agent, which amount equals the Underwriters' discount with respect to the
sale of the Units (assuming no exercise of the Underwriters' over-allotment
option). See "The Company -- Escrow of Offering Proceeds."
(2) Represents the non-accountable expense allowance payable to the Underwriters
in an amount equal to 3% of the gross proceeds from the sale of Units and
Class B Warrants (assuming no exercise of the Underwriters' over-allotment
option). See "Underwriting."
The Company may seek to issue additional securities if it requires
additional funds to meet its operating and administrative expenses. The Company
has agreed with the Representative that for a period of 18 months from the date
of this Prospectus and for up to six additional months if the Extension Criteria
have been satisfied, it will not issue (other than pursuant to this offering)
any securities or grant options or warrants to purchase any securities of the
Company without the consent of the Representative.
The Company anticipates that it will use a portion of the net proceeds of
the offering to repay indebtedness to several lenders evidenced by a series of
notes (the "Investor Notes"). The amount of this indebtedness is $100,000 plus
interest computed at the rate of 8% per year from November 15, 1995. The
proceeds of the borrowings under the Investor Notes were used to finance this
offering, including legal, accounting, printing and other costs. The Investor
Notes bear interest at 8% per year and both interest and principal are payable
in full upon the closing of this offering or May 15, 1997, whichever is earlier.
Following receipt of the net proceeds from the sale of the Class B Warrants
in this offering, the Company believes it will have sufficient available funds,
assuming that a Business Combination is not consummated, to operate for at least
the next 24 months. To the extent that Common Stock is used as consideration to
effect a Business Combination, the net proceeds of this offering not theretofore
expended will be used to finance the operations (including the possible
repayment of debt) of the Target Business. No cash compensation will be paid to
any officer or director until after the consummation of the first Business
Combination. However, the Company will pay rent for office space and a fee for
secretarial services to Manhattan Associates, an affiliate of the Company's
Chairman and Chief Executive Officer of $2,500 per month commencing upon the
closing of this offering. See "Proposed Business -- Facilities." Since the role
of present management after a Business Combination is uncertain, the Company has
no ability to determine what remuneration, if any, will be paid to such persons
after a Business Combination. No portion of the gross proceeds from this
offering will be paid to the Company's officers, directors, their affiliates or
associates for expenses of this offering. Management is not aware of any
circumstances under which the aforementioned policy may be changed.
The net proceeds from the sale of Class B Warrants in this offering, not
immediately required for the purposes set forth above, will be invested in
general debt obligations of the United States Government or other high-quality,
short-term interest-bearing investments, provided, however, that the Company
will attempt not to invest such net proceeds in a manner which may result in the
Company being deemed to be an investment company under the Investment Company
Act. The Company believes that, in the event a Business Combination is not
effected in the time allowed and to the extent that a significant portion of the
net proceeds from the sale of the Class B Warrants in this offering is not used
in evaluating various prospective Target Businesses, the interest income derived
from investment of the net proceeds from the sale of the Class B Warrants during
such period may be sufficient to defray continuing general and administrative
expenses, as well as costs relating to compliance with securities laws and
regulations (including associated professional fees). To the extent that a
Business Combination is not effected in the time allowed and the Company's
stockholders determine not to liquidate the Company, the Company believes that
such interest income, together with a small portion of the net proceeds from the
sale of the Class B Warrants in this offering, may be sufficient to defray
continuing expenses for a period of several additional years until the Company
29
<PAGE>
consummates a Business Combination. If such remaining proceeds are insufficient
to maintain the operations of the Company, management will attempt to secure
additional financing or will again recommend the liquidation of the Company to
the stockholders. Since all of the present holders of the Company's Common Stock
have agreed to waive their respective rights to participate in a liquidation
distribution occurring prior to the first Business Combination, all of the
assets of the Company, including any interest and income earned on the proceeds
of this offering, which may be distributed upon such liquidation would be
distributed to the owners of the Common Stock other than the present
stockholders and to the holders of the Company's Series A Preferred Stock.
The Company will not pay ten percent (10%) or more in the aggregate of the
net proceeds of this offering (through repayment of indebtedness or otherwise)
to NASD members, affiliates, associated persons or related persons.
30
<PAGE>
DILUTION
The difference between the public offering price per share of Common Stock
(assuming no value is attributed to the Class A Warrants included in the Units)
and the pro forma net tangible book value per share of Common Stock of the
Company after this offering constitutes the dilution to investors in this
offering. Net tangible book value per share is determined by dividing the net
tangible book value of the Company (total tangible assets less total
liabilities) by the number of outstanding shares of Common Stock.
At June 30, 1996, net tangible book value of the Company was $(151,545) or
$(1.43) per share of Common Stock. After giving effect to the sale of 800,000
shares of Common Stock included in the Units offered hereby (and assuming no
value is attributed to the Class A Warrants included in such Units) and 320,000
Class B Warrants offered hereby and the initial application of the estimated net
proceeds therefrom, the pro forma net tangible book value of the Company at June
30, 1996, would be $8,547,279 or $9.43 per share, representing an immediate
increase in net tangible book value of $10.86 per share to existing stockholders
and an immediate dilution of $.57 per share to investors purchasing Units in
this offering ("New Investors"). The following table illustrates the foregoing
information with respect to dilution to New Investors on a per share basis
(assuming no value is attributed to the Warrants included in the Units):
<TABLE>
<CAPTION>
Public offering price per share of Common Stock (1)(2)............. $ 10.00
<S> <C> <C>
---------
Net tangible book value per share of Common Stock before this
offering.......................................................... $ (1.43)
Increase attributable to this offering............................. $ 10.86
---------
Pro forma net tangible book value per share of Common Stock after
this offering (3)................................................. 9.43
---------
Dilution to New Investors.......................................... $ .57
---------
---------
</TABLE>
The following table sets forth, with respect to existing stockholders and
investors in this offering, a comparison of the number shares of Common Stock
acquired from the Company, the percentage ownership of such shares, the total
consideration paid, the percentage of total consideration paid and the average
price per share:
<TABLE>
<CAPTION>
AVERAGE
SHARES PURCHASED (1) TOTAL CONSIDERATION (1)
---------------------- -------------------------- PRICE
AMOUNT PERCENTAGE AMOUNT PERCENTAGE PER SHARE
--------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing Stockholders.............................. 106,000 11.7% $ 53,600 0.6% $ .51
New Investors...................................... 800,000 88.3 8,000,000(2) 99.4 $ 10.00
--------- ----- ------------- ----- -----------
906,000 100.0% $ 8,053,600 100.0%
--------- ----- ------------- -----
--------- ----- ------------- -----
</TABLE>
- ------------------------
(1) If the Underwriters' over-allotment option is exercised in full, the
investors in this offering will have paid $9,200,000 for 920,000 shares of
Common Stock, representing 99.8% of the total consideration for
approximately 89.7% of the total number of shares of Common Stock then
outstanding. The foregoing tables also assume no exercise of the
Representative's Unit Purchase Warrants, the Representative's Class B
Warrants, warrants owned by the Company's directors and executive officers
or the Warrants, or conversion of the Series A Preferred Stock. See
"Underwriting" and "Description of Capital Stock -- Series A Preferred
Stock."
(2) Assumes that no value is attributable to the Class A Warrants, and excludes
the consideration paid for the Class B Warrants.
(3) Pro forma net tangible book value after this offering assumes the initial
application of estimated net proceeds to the Company (after payment of all
offering expenses, including the Representatives' non-accountable expense
allowance) of $295,200. See "Use of Proceeds."
31
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of June
30, 1996, and as adjusted to give effect to the sale of the Units and the Class
B Warrants being offered hereby:
<TABLE>
<CAPTION>
HISTORICAL AS ADJUSTED(1)
---------- --------------
<S> <C> <C>
Note Payable................................................................ $ 79,424 --
---------- --------------
Common Stock, subject to possible redemption, 160,000 shares at redemption
value (3).................................................................. $ -- $ 1,600,000
Preferred Stock, $.01 par value, 100 shares authorized, None outstanding, 94
shares subscribed for; 1,000,000 shares authorized, 94 shares issued and
outstanding as adjusted.................................................... 1 1
Subscription Receivable..................................................... (9,400) --
Common Stock, $.01 par value, 200,000 shares authorized, 106,000 shares
issued and outstanding; 10,000,000 shares authorized, 906,000 shares issued
and outstanding, as adjusted (2)........................................... 1,060 9,060
Additional paid in capital.................................................. 61,939 6,986,147
Deficit accumulated during the development stage............................ (27,353) (47,929)
---------- --------------
Total capitalization...................................................... $ 52,071 $ 8,547,279
---------- --------------
---------- --------------
</TABLE>
- --------------------------
(1) Adjusted to give effect to the sale of 800,000 Units and the 320,000 Class B
Warrants offered hereby at the public offering price of $10.00 per Unit and
$5.75 Class B per Warrant, respectively, and the receipt by the Company of
the estimated net proceeds (after the payment of all offering expenses,
including the Representative's non-accountable expense allowance) of
$8,710,000. See "Use of Proceeds."
(2) Excludes a total of 2,294,000 shares of Common Stock, consisting of: (i)
800,000 shares of Common Stock reserved for issuance upon the exercise of
the Class A Warrants, (ii) 320,000 shares of Common Stock reserved for
issuance upon exercise of the Units underlying the Class B Warrants, (iii)
320,000 shares of Common Stock reserved for issuance upon exercise of the
Class A Warrants comprising a part of the Units underlying the Class B
Warrants, (iv) 120,000 shares of Common Stock included in the Units subject
to the Underwriters' over-allotment option, (v) 120,000 shares of Common
Stock reserved for issuance upon the exercise of the Class A Warrants
included in the Units subject to the Underwriters' over-allotment option,
(vi) 48,000 shares of Common Stock reserved for issuance upon exercise of
the Units underlying the Class B Warrants subject to the Underwriters'
over-allotment option, (vii) 48,000 shares of Common Stock reserved for
issuance upon exercise of the Class A Warrants comprising a part of the
Units underlying the Class B Warrants subject to the Underwriters'
over-allotment option, (viii) 200,000 shares of Common Stock reserved for
issuance upon exercise of options for Units granted to executive officers of
the Company, (ix) 94,000 shares of Common Stock reserved for issuance upon
conversion of the Company's outstanding Series A Preferred Stock, which
shares of Common Stock will be offered for sale by this Prospectus at the
time of a Business Combination, (x) 80,000 shares of Common Stock included
in the Units reserved for issuance upon exercise of the Representative's
Unit Purchase Warrants, (xi) 80,000 shares of Common Stock reserved for
issuance upon the exercise of the Class A Warrants included in the Units
reserved for issuance upon exercise of the Representative's Unit Purchase
Warrants, (xii) 32,000 shares of Common Stock included in the Units reserved
for issuance upon exercise of the Representative's Class B Warrants, and
(xiii) 32,000 shares of Common Stock reserved for issuance upon exercise of
Class A Warrants comprising a part of the Units underlying the
Representative's Class B Warrants. See "Underwriting" and "Certain
Transactions."
(3) In the event the Company consummates a Business Combination, the redemption
rights afforded to the non-affiliated public stockholders may result in the
conversion into cash of up to 20% of the aggregate number of shares held by
the non-affiliated public stockholders at a per share redemption price equal
to (A) the greater of (i) the Company's net worth or (ii) the amount of
proceeds of the Company in the escrow account (including interest earned
thereon) divided by (B) the number of shares held by non-affiliated public
stockholders.
32
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Company is currently in the development stage and is in the process of
raising capital. All activity of the Company to date has been related to its
formation and proposed financing. The Company's ability to commence operations
is contingent upon obtaining adequate financial resources through this offering.
All of the Company's costs to date have been paid out of available cash. The
Company will use the net proceeds of this offering, together with the income and
interest earned thereon, principally in connection with effecting a Business
Combination, including selecting and evaluating potential Target Businesses and
structuring and consummating a Business Combination (including possible payment
of finder's fees or other compensation to persons or entities which provide
assistance or services to the Company). The Company does not have discretionary
access to the income on the monies in the escrow account and stockholders of the
Company will not receive any distribution of the income (except in connection
with a liquidation of the Company) or have any ability to direct the use or
distribution of such income. Thus, such income will cause the amount in escrow
to increase. The Company cannot use the escrowed amounts to pay the costs of
evaluating potential Business Combinations and will use the proceeds from the
sale of the Class B Warrants (i) to repay indebtedness, (ii) to pay the balance
of a $100,000 license fee, or $90,000, to Bright pursuant to a license agreement
executed by Bright and the Company, (iii) to cover all the expenses incurred by
the Company in this offering, including the Underwriters' discounts, the
Representatives' non-accountable expense allowance with respect to both the
Units and the Class B Warrants, and the Proceeds Escrow Agent, and (iv) to pay
the costs of evaluating potential Business Combinations, including investment
banking fees and the costs of business, legal and accounting due diligence on
prospective Target Businesses. In addition, such funds will be used for the
general and administrative expenses of the Company, including legal and
accounting fees and administrative support expenses in connection with the
Company's reporting obligations to the Commission. The Company does not
anticipate such fees and administrative expenses will exceed $100,000 per year.
Following receipt of the net proceeds from the sale of the Class B Warrants in
this offering, the Company will have sufficient available funds, assuming that a
Business Combination is not consummated, to operate for at least the next 24
months. To the extent that Common Stock is used as consideration to effect a
Business Combination, the balance of the net proceeds of this offering not
theretofore expended will be used to finance the operations of the Target
Business. See "Use of Proceeds." No cash compensation will be paid to any
officer or director until after the consummation of the first Business
Combination. Since the role of present management after a Business Combination
is uncertain, the Company has no ability to determine what remuneration, if any,
will be paid to such persons after a Business Combination.
The net proceeds from the sale of the Class B Warrants in this offering not
immediately required for the purposes set forth above will be invested in
general debt obligations of the United States Government or other high-quality,
short-term interest-bearing investments, provided, however, that the Company
will attempt not to invest such net proceeds in a manner which may result in the
Company being deemed to be an investment company under the Investment Company
Act. The Company believes that, in the event a Business Combination is not
effected in the time allowed and to the extent that a significant portion of the
net proceeds of this offering is not used in evaluating various prospective
Target Businesses, the interest income derived from investment of such net
proceeds during such period may be sufficient to defray continuing general and
administrative expenses, as well as costs relating to compliance with securities
laws and regulations (including associated professional fees).
In the event that the Company does not effect a Business Combination within
18 months from the date of this Prospectus, or 24 months from the date of this
Prospectus if the Extension Criteria have been satisfied, the Company will
submit for stockholder consideration a proposal to liquidate the Company and
distribute to the then holders of Common Stock acquired as part of the Units
sold in this offering or in the open market thereafter, the amount held in the
escrow account. Thereafter, all remaining assets available for distribution will
be distributed to all holders of the Common Stock after
33
<PAGE>
payment of liabilities and after payment of a liquidation distribution of $9,400
to the holders of the Company's Series A Preferred Stock. To the extent that a
Business Combination is not effected in the time allowed and the Company's
stockholders determine not to liquidate the Company, the Company believes that
income from the escrow account, together with a small portion of the net
proceeds from the sale of the Class B Warrants in this offering, may be
sufficient to defray continuing expenses for a short period of time until the
Company consummates a Business Combination. However, because the Company cannot
estimate the amount of the proceeds from the sale of the Class B Warrants that
will be used to pursue a potential Business Combination, it cannot estimate what
amount of funds, if any, might be available to defray expenses or for how long,
if at all, such funds might be sufficient for that purpose. Since all of the
present holders of the Company's Common Stock have agreed to waive their
respective rights to participate in a liquidation distribution occurring prior
to the first Business Combination, all of the assets of the Company, including
any income and interest earned on the proceeds of this offering, which may be
distributed upon such liquidation would be distributed to the owners of the
Common Stock issued as part of the Units in this offering or in the open market
thereafter, after payment of a liquidation distribution of $9,400 to the holders
of the Series A Preferred Stock.
PROPOSED BUSINESS
INTRODUCTION
The Company, a development stage entity, was formed in August 1995 to serve
as a vehicle for the acquisition of, or the merger or consolidation with, a
Target Business. The Company intends to utilize the proceeds of this offering,
equity securities, debt securities, bank borrowings or a combination thereof in
effecting a Business Combination with a Target Business which the Company
believes has significant growth potential. The Company's efforts in identifying
a prospective Target Business are expected to emphasize businesses primarily
located in the United States; however, the Company reserves the right to acquire
a Target Business located primarily elsewhere. While the Company may, under
certain circumstances, seek to effect Business Combinations with more than one
Target Business, as a result of its limited resources the Company will, in all
likelihood, have the ability to effect only a single Business Combination. The
Company may effect a Business Combination with a Target Business which may be
financially unstable or in its early stages of development or growth.
"BLIND POOL" OFFERING
BACKGROUND. As a result of management's broad discretion with respect to
the specific application of the net proceeds of this offering, this offering can
be characterized as a "blind pool" or "blank check" offering. Although
substantially all of the net proceeds of this offering are intended to be
utilized generally to effect a Business Combination, such proceeds are not
otherwise being designated for any more specific purposes. Accordingly,
prospective investors who invest in the Company will do so without an
opportunity to evaluate the specific merits or risks of any one or more Business
Combinations. Consummation of a Business Combination may involve the acquisition
of, or merger or consolidation with, a company that does not need substantial
additional capital but which desires to establish a public trading market for
its shares, while avoiding what it may deem to be the adverse consequences of
undertaking a public offering itself, such as the time delays and significant
expenses incurred to comply with the various Federal and state securities laws
that regulate initial public offerings.
UNSPECIFIED INDUSTRY AND TARGET BUSINESS. The Company will seek to acquire
a Target Business without limiting itself to a particular industry. Most likely,
the Target Business will be primarily located in the United States, although the
Company reserves the right to acquire a Target Business primarily located
outside the United States. In seeking a Target Business, the Company will
consider, without limitation, businesses which (i) offer or provide services or
develop, manufacture or distribute goods in the United States or abroad,
including, without limitation, in the following areas: health care and health
products, educational services, environmental services, consumer-related
products and services (including amusement and/or recreational services),
personal care services, voice and data
34
<PAGE>
information processing and transmission and related technology development or
(ii) is engaged in wholesale or retail distribution. The Company will not
acquire a Target Business unless the Fair Market Value Test is satisfied. If the
Company determines that the financial statements of a proposed Target Business
do not clearly indicate that the Fair Market Value Test has been satisfied, the
Company will obtain an opinion from an investment banking firm (which is a
member of the NASD) with respect to the satisfaction of such criteria. None of
the Company's directors or its executive officer has had any preliminary contact
or discussions with any representative of any Target Business regarding
consummation of a Business Combination. Accordingly, there is no basis for
investors in this offering to evaluate the possible merits or risks of a
particular industry or the Target Business. In connection with stockholder
approval of a Business Combination, the Company intends to provide stockholders
with complete disclosure documentation, including audited financial statements,
concerning a Target Business. Accordingly, any Target Business that is selected
would need to have audited financial statements or be audited in connection with
the transaction. To the extent the Company effects a Business Combination with a
financially unstable company or an entity in its early stage of development or
growth (including entities without established records of revenue or income),
the Company will become subject to numerous risks inherent in the business and
operations of financially unstable and early stage or potential emerging growth
companies. In addition, to the extent that the Company effects a Business
Combination with an entity in an industry characterized by a high level of risk,
the Company will become subject to the currently unascertainable risks of that
industry. An extremely high level of risk frequently characterizes certain
industries which experience rapid growth. Although management will endeavor to
evaluate the risks inherent in a particular industry or Target Business, there
can be no assurance that the Company will properly ascertain or assess all
risks.
PROBABLE LACK OF BUSINESS DIVERSIFICATION. As a result of the limited
resources of the Company, the Company, in all likelihood, will have the ability
to effect only a single Business Combination. Accordingly, the prospects for the
Company's success will be entirely dependent upon the future performance of a
single business. Unlike certain entities that have the resources to consummate
several Business Combinations or entities operating in multiple industries or
multiple segments of a single industry, it is highly likely that the Company
will not have the resources to diversify its operations or benefit from the
possible spreading of risks or offsetting of losses. The Company's probable lack
of diversification may subject the Company to numerous economic, competitive and
regulatory developments, any or all of which may have a material adverse impact
upon the particular industry in which the Company may operate subsequent to
consummation of a Business Combination. The prospects for the Company's success
may become dependent upon the development or market acceptance of a single or
limited number of products, processes or services. Accordingly, notwithstanding
the possibility of capital investment in and management assistance to the Target
Business by the Company, there can be no assurance that the Target Business will
prove to be commercially viable. The Company has no present intention of either
loaning any of the proceeds of this offering to any Target Business or of
purchasing or acquiring a minority interest in any Target Business.
OPPORTUNITY FOR STOCKHOLDER EVALUATION OR APPROVAL OF BUSINESS
COMBINATIONS. The investors in this offering will, in all likelihood, neither
receive nor otherwise have the opportunity to evaluate any financial or other
information which will be made available to the Company in connection with
selecting a potential Target Business until after the Company has entered into a
definitive agreement to effectuate a Business Combination. As a result,
investors in this offering will be almost entirely dependent on the judgment of
management in connection with the selection of a Target Business and the terms
of any Business Combination.
Under the Delaware General Corporation Law, various forms of Business
Combinations can be effected without stockholder approval. In addition, the form
of Business Combination will have an impact upon the availability of dissenters'
rights (i.e., the right to receive fair payment with respect to the Common
Stock) to stockholders disapproving of the proposed Business Combination. Under
current Delaware law, only a merger or consolidation may give rise to a
stockholder vote and to
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dissenters' rights. Nevertheless, the Company will afford holders of Common
Stock the right to approve the consummation of any Business Combination, whether
or not such approval would be required under applicable Delaware law. In
connection with such approval, the Company intends to provide stockholders with
complete disclosure documentation, including audited financial statements,
concerning a Target Business. The Company's present stockholders have agreed in
the escrow agreement to which their stock is subject to vote their respective
shares of Common Stock in accordance with the vote of the majority of the shares
voted by all non-affiliated public stockholders of the Company with respect to
the consummation of any Business Combination. Pursuant to the Company's
certificate of incorporation, a Business Combination will not be consummated
unless approved by a vote of two-thirds of the shares of Common Stock voted by
non-affiliated public stockholders (in person or by proxy). In addition, the
Delaware General Corporation Law requires approval of certain mergers and
consolidations by a majority of the outstanding stock entitled to vote.
Even if investors are afforded the right to approve a Business Combination
under the Delaware General Corporation Law, no dissenters' rights to receive
fair payment will be available for stockholders if the Company is to be the
surviving corporation unless the Certificate of Incorporation of the Company is
amended and as a result thereof: (i) alters or abolishes any preferential right
of such stock; (ii) creates, alters or abolishes any provision or right in
respect of the redemption of such shares or any sinking fund for the redemption
or purchase of such shares; (iii) alters or abolishes any preemptive right of
such holder to acquire shares or other securities; or (iv) excludes or limits
the right of such holder to vote on any matter, except as such right may be
limited by the voting rights given to new shares then being authorized of any
existing or new class.
LIMITED ABILITY TO EVALUATE MANAGEMENT OF A TARGET BUSINESS. The role of
the present management of the Company, following a Business Combination, cannot
be stated with any certainty. Although the Company intends to scrutinize closely
the management of a prospective Target Business in connection with its
evaluation of the desirability of effecting a Business Combination with such
Target Business, there can be no assurance that the Company's assessment of such
management will prove to be correct. While it is possible that certain of the
Company's directors or its executive officers will remain associated in some
capacities with the Company following consummation of a Business Combination, it
is unlikely that any of them will devote a substantial portion of their time to
the affairs of the Company subsequent thereto. Moreover, there can be no
assurance that such personnel will have significant experience or knowledge
relating to the operations of the particular Target Business. The Company also
may seek to recruit additional personnel to supplement the incumbent management
of the Target Business. There can be no assurance that the Company will have the
ability to recruit additional personnel or that such additional personnel will
have the requisite skills, knowledge or experience necessary or desirable to
enhance the incumbent management. In addition, there can be no assurance that
the future management of the Company will have the necessary skills,
qualifications or abilities to manage a public company intending to embark on a
program of business development.
SELECTION OF A TARGET BUSINESS AND STRUCTURING OF A BUSINESS
COMBINATION. Management of the Company will have substantial flexibility in
identifying and selecting a prospective Target Business within the specified
businesses. However, the Company's flexibility is limited to the extent that it
must satisfy the Fair Market Value Test. If the Company determines that the
financial statements of a proposed Target Business do not clearly indicate that
the Fair Market Value Test has been satisfied, the Company will obtain an
opinion from an investment banking firm that is a member of the NASD with
respect to the satisfaction of such criteria. As a result, investors in this
offering will be almost entirely dependent on the judgment of management in
connection with the selection of a Target Business. In evaluating a prospective
Target Business, management will consider, among other factors, the following:
(i) costs associated with effecting the Business Combination; (ii) equity
interest in and opportunity for control of the Target Business; (iii) growth
potential of the Target Business; (iv) experience and skill of management and
availability of additional personnel of the Target Business; (v) capital
requirements of the Target Business; (vi) competitive position of the Target
Business;
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(vii) stage of development of the Target Business; (viii) degree of current or
potential market acceptance of the Target Business; (ix) proprietary features
and degree of intellectual property or other protection of the Target Business;
(x) the financial statements of the Target Business; and (xi) the regulatory
environment in which the Target Business operates. The Company will retain an
independent investment banking firm which is a member in good standing of the
NASD to assist the Company in identifying, evaluating, structuring and
negotiating potential Business Combinations.
The foregoing criteria are not intended to be exhaustive and any evaluation
relating to the merits of a particular Target Business will be based, to the
extent relevant, on the above factors as well as other considerations deemed
relevant by management in connection with effecting a Business Combination
consistent with the Company's business objectives. In connection with its
evaluation of a prospective Target Business, management anticipates that it will
conduct a due diligence review which will encompass, among other things, meeting
with incumbent management and inspection of facilities, as well as a review of
financial, legal and other information which will be made available to the
Company.
The time and costs required to select and evaluate a Target Business
(including conducting a due diligence review) and to structure and consummate
the Business Combination (including negotiating relevant agreements and
preparing requisite documents for filing pursuant to applicable securities laws
and state "blue sky" and corporation laws) cannot presently be ascertained with
any degree of certainty. The Company's current executive officers and directors
intend to devote only a small portion of their time to the affairs of the
Company and, accordingly, consummation of a Business Combination may require a
greater period of time than if the Company's management devoted their full time
to the Company's affairs. However, each officer and director of the Company will
devote such time as they deem reasonably necessary to carry out the business and
affairs of the Company, including the evaluation of potential Target Businesses
and the negotiation of a Business Combination and, as a result, the amount of
time devoted to the business and affairs of the Company may vary significantly
depending upon, among other things, whether the Company has identified a Target
Business or is engaged in active negotiation of a Business Combination. Any
costs incurred in connection with the identification and evaluation of a
prospective Target Business with which a Business Combination is not ultimately
consummated will result in a loss to the Company and reduce the amount of
capital available to otherwise complete a Business Combination or for the
resulting entity to utilize.
The Company anticipates that various prospective Target Businesses will be
brought to its attention from various non-affiliated sources, including
securities broker-dealers, investment bankers, venture capitalists, bankers,
other members of the financial community and affiliated sources, including,
possibly, the Company's executive officer, directors and their affiliates. While
the Company has not yet ascertained how, if at all, it will advertise and
promote itself, it may elect to publish advertisements in financial or trade
publications seeking potential business acquisitions. While the Company does not
presently anticipate engaging the services of professional firms that specialize
in finding business acquisitions on any formal basis (other than the independent
investment banker), the Company may engage such firms in the future, in which
event the Company may pay a finder's fee or other compensation. In no event,
however, will the Company pay a finder's fee or commission to officers or
directors of the Company or any entity with which they are affiliated for such
service. Moreover, in no event shall the Company issue any of its securities to
any officer, director or promoter of the Company, or any of their respective
affiliates or associates, in connection with activities designed to locate a
Target Business. See "Management -- Conflicts of Interest." In addition, the
Company has agreed with the Representative that any finder's fee in connection
with the Company's first Business Combination will require approval by the
Company's Board of Directors. The Representative may act as finder in connection
with a Business Combination and receive compensation for such service, the
amount and form of which will be subject to negotiation at the time of
introduction of the Target Business to the Company. See "Underwriting."
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As a general rule, Federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. The Company
will evaluate the possible tax consequences of any prospective Business
Combination and will endeavor to structure a Business Combination so as to
achieve the most favorable tax treatment to the Company, the Target Business and
their respective stockholders. There can be no assurance that the Internal
Revenue Service or relevant state tax authorities will ultimately assent to the
Company's tax treatment of a particular consummated Business Combination. To the
extent the Internal Revenue Service or any relevant state tax authorities
ultimately prevail in recharacterizing the tax treatment of a Business
Combination, there may be adverse tax consequences to the Company, the Target
Business and their respective stockholders. Tax considerations as well as other
relevant factors will be evaluated in determining the precise structure of a
particular Business Combination, which could be effected through various forms
of a merger, consolidation or stock or asset acquisition.
The Company may utilize cash derived from the net proceeds of this offering,
equity securities, debt securities or bank borrowings or a combination thereof
as consideration in effecting a Business Combination. Although the Company's
Board of Directors will have the power to issue any or all of the authorized but
unissued shares of Common Stock following the consummation of this offering, the
Company has agreed with the Representative that, for a period of 18 months from
the date of this Prospectus, and for up to six additional months if the
Extension Criteria have been satisfied, it will not issue (other than pursuant
to this offering) any securities or grant options or warrants to purchase any
securities of the Company without the consent of the Representative, except in
connection with effecting a Business Combination. Although the Company has no
commitments as of the date of this Prospectus to issue any shares of Common
Stock or options or warrants, other than as described in this Prospectus, the
Company will, in all likelihood, issue a substantial number of additional shares
in connection with the consummation of a Business Combination. To the extent
that such additional shares are issued, dilution to the interests of the
Company's stockholders will occur. Additionally, if a substantial number of
shares of Common Stock are issued in connection with the consummation of a
Business Combination, a change in control of the Company may occur which may
affect, among other things, the Company's ability to utilize net operating loss
carryforwards, if any.
There currently are no limitations on the Company's ability to borrow funds
to effect a Business Combination. However, the Company's limited resources and
lack of operating history may make it difficult to borrow funds. The amount and
nature of any borrowings by the Company will depend on numerous considerations,
including the Company's capital requirements, potential lenders' evaluation of
the Company's ability to meet debt service on borrowings and the then prevailing
conditions in the financial markets, as well as general economic conditions. The
Company does not have any arrangements with any bank or financial institution to
secure additional financing and there can be no assurance that such arrangements
if required or otherwise sought, would be available on terms commercially
acceptable or otherwise in the best interests of the Company. The inability of
the Company to borrow funds required to effect or facilitate a Business
Combination, or to provide funds for an additional infusion of capital into a
Target Business, may have a material adverse effect on the Company's financial
condition and future prospects, including the ability to effect a Business
Combination. To the extent that debt financing ultimately proves to be
available, any borrowings may subject the Company to various risks traditionally
associated with indebtedness, including the risks of interest rate fluctuations
and insufficiency of cash flow to pay principal and interest. Furthermore, a
Target Business may have already incurred debt financing and, therefore, all the
risks inherent thereto.
COMPETITION
The Company expects to encounter intense competition from other entities
having business objectives similar to that of the Company. Many of these
entities are well established and have extensive experience in connection with
identifying and effecting business combinations directly or through affiliates.
Many of these competitors possess greater financial, technical, human and other
resources than the Company and there can be no assurance that the Company will
have the ability to
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compete successfully. The Company's financial resources will be limited in
comparison to those of many of its competitors. Further, such competitors will
generally not be required to seek the prior approval of their own stockholders,
which may enable them to close a Business Combination more quickly than the
Company. This inherent competitive limitation may compel the Company to select
certain less attractive Business Combination prospects. There can be no
assurance that such prospects will permit the Company to satisfy its stated
business objectives.
UNCERTAINTY OF COMPETITIVE ENVIRONMENT OF TARGET BUSINESS
In the event that the Company succeeds in effecting a Business Combination,
the Company will, in all likelihood, become subject to intense competition from
competitors of the Target Business. In particular, certain industries which
experience rapid growth frequently attract an increasingly large number of
competitors including competitors with increasingly greater financial,
marketing, technical, human and other resources than the initial competitors in
the industry. The degree of competition characterizing the industry of any
prospective Target Business cannot presently be ascertained. There can be no
assurance that, subsequent to a Business Combination, the Company will have the
resources to compete effectively, especially to the extent that the Target
Business is in a high-growth industry.
POSSIBLE LIQUIDATION OF THE COMPANY
In the event that the Company does not effect a Business Combination within
18 months from the date of this Prospectus, or 24 months from the date of this
Prospectus if the Extension Criteria have been satisfied, the Company will
submit for stockholder consideration a proposal to liquidate the Company and
distribute to the then holders of Common Stock acquired as part of the Units
sold in this offering or in the open market thereafter, the amounts in the
interest bearing escrow account. Thereafter, all remaining assets available for
distribution will be distributed to the non-affiliated public stockholders of
the Company after payment of liabilities and after the payment of a liquidation
distribution of $9,400 to the Holders of the Series A Preferred Stock. Since the
proceeds to the Company from the sale of the Class B Warrants will be used (i)
to repay indebtedness, (ii) to pay the balance of a $100,000 license fee, or
$90,000, to Bright pursuant to a license agreement executed by Bright and the
Company, (iii) to cover all the Company's expenses incurred in this offering,
including the Underwriters' discounts and non-accountable expense allowance, and
(iv) to fund the Company's operating expenses, including possible investment
banking fees and the costs of business, legal and accounting due diligence on
prospective Target Businesses, until the consummation of a Business Combination
the amount per share remaining for distribution, in the event of a liquidation
of the Company, to the holders of the Common Stock acquired as part of the Units
sold in this offering or in the open market thereafter, and exclusive of any
income earned from the escrow account, will be approximately equal to the
initial public offering price per Unit in this offering ($10.00 per Unit
assuming no value is attributed to the Warrants included in the Units offered
hereby). There can be no assurance that the Company will effect a Business
Combination within such period. All of the Company's present stockholders
including the Company's executive officers and other directors and their
affiliates are required to vote their shares of Common Stock in accordance with
the vote of the majority of all non-affiliated public stockholders of the
Company with respect to any liquidation proposal. Holders of Warrants, however,
will only be entitled to vote on any liquidation proposal, and allowed to
participate in any liquidation distribution, if they purchase shares of Common
Stock in this offering or on the open market thereafter, but only as to any
shares of Common Stock so purchased. Present stockholders including officers,
directors and their affiliates will not participate in any liquidating
distribution with respect to the shares of Common Stock owned by them as of the
date hereof.
CERTAIN SECURITIES LAWS CONSIDERATIONS
The Company has filed an application with the Commission to register the
Units, the Common Stock, the Class A Warrants and the Class B Warrants under the
provisions of Section 12(g) of the Exchange Act, and it will use its best
efforts to continue to maintain such registration until there has been a
consummation of a Business Combination or a liquidation of the Company. Such
registration
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will require the Company to comply with periodic reporting, proxy solicitation
and certain other requirements of the Exchange Act, including the requirement
that it submit to the Commission, prior to its dissemination, any proxy material
to be furnished to stockholders in connection with a proposed Business
Combination.
Under the Federal securities laws, public companies must furnish
stockholders certain information about significant acquisitions, which
information may require audited financial statements for an acquired company
with respect to one or more fiscal years, depending upon the relative size of
the acquisition. Consequently, the Company will only be able to effect a
Business Combination with a prospective Target Business that has available
audited financial statements or has financial statements which can be audited.
FACILITIES
The Company, pursuant to an oral agreement, utilizes and will utilize the
offices of Manhattan Associates, a limited liability company controlled by
Arthur H. Goldberg, a stockholder of the Company and the Company's Chairman and
Chief Executive Officer, until the acquisition of a Target Business. Following
completion of this offering, the Company will pay Manhattan Associates $2,500
per month for rent, office and secretarial services. Management is unaware of
any circumstances under which the Company's utilization of these offices,
through management's own initiative, may be changed.
SERVICEMARK LICENSE
The servicemarks SMA(2)RTSM and Specialized Merger and Acquisition Allocated
Risk TransactionSM are owned by Bright. Bright has granted the Company a
non-exclusive license to use, for the sole purpose of marketing this offering,
the SMA(2)RTSM and Specialized Merger and Acquisition Allocated Risk
TransactionSM servicemarks in consideration of a royalty equal to $100,000, of
which $10,000 has been paid and the balance of $90,000 is payable upon the
closing of this offering. There can be no assurance that a third party owning or
using a similar servicemark or trademark will not object to, or seek to
prohibit, the Company's use of the SMA(2)RTSM or Specialized Merger and
Acquisition Allocated Risk TransactionSM servicemarks. See "Certain
Transactions."
EMPLOYEES
As of the date of this Prospectus, the Company employs only Mr. Goldberg on
a part time basis.
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MANAGEMENT
DIRECTORS AND OFFICERS
The current directors and officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------------------------- --- -----------------------------------
<S> <C> <C>
Arthur H. Goldberg 54 Chairman of the Board, Chief
Executive Officer, Director
Stanley Kreitman 64 Secretary, Treasurer, Director
A. J. Nassar 40 Director
Marshall Manley 56 Director
</TABLE>
ARTHUR H. GOLDBERG has been President of Manhattan Associates since July
1994. Since March 1995, Mr. Goldberg has been Chairman of the Board and Chief
Executive Officer of Pioneer Commercial Funding, Inc., and has been a member of
its Board of Directors since July 1994. From December 1993 through July 1994, he
was a private investor. He served as Chairman of Reich & Co., a New York Stock
Exchange member firm specializing in investment banking and corporate finance
from April 1990 through December 1993. In 1969, Mr. Goldberg co-founded
Integrated Resources, Inc., a New York Stock Exchange listed financial services
company. He also served as president of Integrated Resources, Inc. through 1990.
Integrated Resources commenced proceedings under Chapter 11 of the Bankruptcy
Code in 1990 and emerged from bankruptcy in November 1994. Mr. Goldberg serves
as a Trustee of Ramco Gershenson Realty Trust.
STANLEY KREITMAN has been Vice Chairman of Manhattan Associates since July
1994. From February through July 1994, he was a private investor. From September
1975 through February 1994, he served as President of United States Banknote
Corporation. Mr. Kreitman is Chairman, Board of Trustees of New York Institute
of Technology, a member of the Board of Directors of St. Barnabas Hospital,
Medallion Funding Corporation, and Silver Shield Foundation. He has also
published articles in AMERICAN BANKER, REAL ESTATE INVESTOR, REIT ANALYSIS
JOURNAL, and NATIONAL REAL ESTATE INVESTOR.
A.J. NASSAR has served as President, Chief Executive Officer, Treasurer and
a Director of The Maxim Group, Inc. since December 1990. From 1986 to 1990, Mr.
Nassar served as Vice President and Chief Operating Officer of Kenny Carpet and
Linoleum, Inc., a multistore retail carpet chain in western New York. He was
previously employed by Trend Carpet Mills and Queen Carpet Mills, both of which
are carpet manufacturers, where he was responsible for cultivating new markets
in the northeastern United States. In addition, Mr. Nassar has served as a
managing partner of K.K.N. Investment, a privately held real estate development
and holding company.
MARSHALL MANLEY is currently engaged in the merchant and investment banking
businesses and in providing business consulting services. Since 1994, Mr. Manley
has been Chairman of Manhattan Associates. From December 1986 through March
1990, Mr. Manley served as President, Chief Executive Officer and Chief
Financial Officer of The Home Group. Mr. Manley has served on the Boards of
Directors of several corporations which were engaged in the businesses of real
estate development, motion picture production, commercial banking, title
insurance and manufacturing. Mr. Manley was the sole shareholder of a
professional corporation which was a partner in the law firm of Finley, Kumble,
Wagner, Heine, Underberg, Manley, Myerson & Casey, until January 1987, which
filed for bankruptcy in 1988.
All directors hold office until the next annual meeting of stockholders and
the election and qualification of their successors. Directors receive no
compensation for serving on the Board of Directors other than the reimbursement
of reasonable expenses incurred in attending meetings. Officers are elected
annually by the Board of Directors and serve at the discretion of the Board. The
Company has not entered into employment agreements or other understandings with
its directors or executive officers concerning compensation. No cash
compensation will be paid to any officer or director until after the
consummation of the first Business Combination. Since the role of present
management after the consummation of a Business Combination is uncertain, the
Company has no ability to determine what remuneration, if any, will be paid to
such persons after the consummation of a Business Combination.
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No family relationships exist among any of the named directors or the
Company's officers. No arrangement or understanding exists between any such
director or officer and any other person pursuant to which any director or
officer was elected as a director or officer of the Company.
There are no agreements or understandings for any officer or director of the
Company to resign at the request of another person and none of the officers or
directors of the Company are acting on behalf of, or will act at the direction
of, any other person.
The holder of the Company's outstanding Series A Preferred Stock is CDIJ, an
indirect affiliate of Bright, a private company which owns and has licensed to
the Company, for the purpose of marketing this offering, the servicemarks
SMA(2)RTSM and Specialized Merger and Acquisition Allocated Risk TransactionSM.
Other than as set forth in this Prospectus, no other relationships exist
between and among management stockholders and non-management stockholders.
Moreover, there are no arrangements, agreements or understandings between
non-management stockholders and management under which non-management
stockholders may directly or indirectly participate in or influence the
management of the Company's affairs. The Company has no knowledge of whether or
not non-management stockholders will exercise their voting right to continue to
elect the current directors to the Company's board. See "Conflict of Interest."
Each of the Company's officers and directors has agreed with the Company and
the Representatives that he will not, at any time, purchase any of the Class B
Warrants being sold in this offering. In addition, management stockholders have
agreed among themselves that they may not actively negotiate or otherwise
consent to the sale or purchase of any portion of their Common Stock or warrants
as a condition to or in connection with a proposed merger or acquisition
transaction. Management is not aware of any circumstances under which this
policy, through their own initiative, may be changed. Moreover, none of the
proceeds from this offering may be used, directly or indirectly, to purchase any
of management's shares of Common Stock or warrants.
OPTIONS TO PURCHASE UNITS
The Company has granted options to purchase 33,333.3 Units to each of Arthur
H. Goldberg, Stanley Kreitman and Marshall Manley in consideration for their
service as directors and, in the case of Messrs. Goldberg and Kreitman,
officers, of the Company. The Units are identical to those to be sold pursuant
to this offering and each consists of one share of Common Stock and one Class A
Warrant to purchase one share of Common Stock at a price of $9.00 per share. The
options are exercisable for a period of three years from the date of a Business
Combination at an exercise price of $12.50 per Unit. The options are
non-qualified options subject to the rules contained in Section 83 of the
Internal Revenue Code. The options are fully vested; however, the options will
be cancelled as to any holder who is no longer a director or executive officer
prior to the first Business Combination. The shares issuable upon exercise of
the options and underlying warrants may not be sold or otherwise transferred
until 120 days after the first Business Combination.
CONFLICTS OF INTEREST
None of the Company's directors or officers is required to commit his full
time to the affairs of the Company and it is likely that such persons will not
devote a substantial amount of time to the affairs of the Company. Such
personnel will have conflicts of interest in allocating management time among
various business activities. As a result, the consummation of a Business
Combination may require a greater period of time than if the Company's
management devoted their full time to the Company's affairs. However, each
officer and director of the Company will devote such time as he deems reasonably
necessary to carry out the business and affairs of the Company, including the
evaluation of potential Target Businesses and the negotiation of a Business
Combination and, as a result, the amount of time devoted to the business and
affairs of the Company may vary significantly depending upon, among other
things, whether the Company has identified a Target Business or is engaged in
active negotiation of a Business Combination. Prior to their involvement with
the Company, none of the directors or officers of the Company has been involved
in any "blind pool" or "blank check"
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offerings. To avoid certain conflicts of interest, the officers and directors of
the Company and owners of five percent or more of the Company's Common Stock
(after giving effect to this offering and to the exercise of warrants owned by
the Company's directors and executive officers but without giving effect to the
exercise, if any, of the Representative's Unit Purchase Warrants, the
Representative's Class B Warrants, or the Warrants or the conversion of the
Series A Preferred Stock), will be required to agree that they will not, until
the completion of the first Business Combination, directly or indirectly,
introduce a suitable proposed acquisition, merger or consolidation candidate to
another "blind pool." For such purposes, "suitable" shall mean any business
opportunity which, under Delaware law, may reasonably be required to be
presented to the Company. Certain of the other persons associated with the
Company are and may in the future become affiliated with other entities engaged
in business activities similar to those intended to be conducted by the Company.
In the course of their other business activities, they may become aware of
investment and business opportunities which may be appropriate for presentation
to the Company as well as the other entities with which they are affiliated.
Such persons may have conflicts of interest in determining to which entity a
particular business opportunity should be presented. In general, officers and
directors of a corporation incorporated under the laws of the State of Delaware
are required to present certain business opportunities to such corporation.
Under Delaware law, officers and directors generally are required to bring
business opportunities to the attention of such corporation if: (i) such
corporation could financially undertake the opportunity; (ii) the opportunity is
within the corporation's line of business; and (iii) it would not be fair to the
corporation and its stockholders for the opportunity not to be brought to the
attention of such corporation. Accordingly, as a result of multiple business
affiliations, certain of the Company's key personnel may have similar legal
obligations relating to presenting certain business opportunities to multiple
entities. In addition, conflicts of interest may arise in connection with
evaluations of a particular business opportunity by the Board of Directors with
respect to the foregoing criteria. There can be no assurance that any of the
foregoing conflicts will be resolved in favor of the Company.
To minimize potential conflicts of interest, the Company is restricted from
pursuing any transactions with entities affiliated (by stock ownership or
otherwise) with an officer or director of the Company without the prior approval
of a majority of the Company's disinterested directors.
The directors and officers of the Company have agreed that neither they nor
any entity with which they are affiliated will be entitled to receive any
finder's fee in the event that they introduce the Company to a prospective
Target Business with which a Business Combination is ultimately consummated. In
addition, none of the directors or executive officers of the Company may
actively negotiate or otherwise consent to the purchase of any portion of such
person's securities in the Company as a condition to, or in connection with, a
proposed Business Combination.
In connection with any stockholder vote relating either to approval of a
Business Combination or the liquidation of the Company due to the failure of the
Company to effect a Business Combination within the time allowed, all of the
Company's present stockholders, including all of its officers and directors,
have agreed to vote all of their respective shares of Common Stock in accordance
with the vote of the majority of the shares voted by all non-affiliated public
stockholders of the Company (in person or by proxy) with respect to such
Business Combination or liquidation.
PRIOR BLANK CHECK OFFERINGS
None of the Company's officers, directors, promoters or other persons
engaged in management-type activities has been previously involved with any
blank check or blind pool offerings with the exception of Bright. Bright's
experience is comprised of its corporate predecessor's licensing the SMA(2)RTSM
structure and servicemarks to Initial Acquisition Corp. and Bright licensing the
SMA(2)RTSM structure and servicemarks to Orion Acquisition Corp. II.
43
<PAGE>
CERTAIN TRANSACTIONS
In August 1995, the Company issued an aggregate of 52,500 shares of Common
Stock to its directors and their affiliates for a purchase price of $.10 per
share as follows: to Manhattan Associates, an affiliate of Arthur H. Goldberg,
Stanley Kreitman and Marshall Manley, 37,500 shares and to A.J. Nassar, 15,000
shares. In November 1995, the Company issued the 20,000 Placement Shares to five
accredited investors at a purchase price of $0.50 per share (before deducting
offering expenses). These five investors also loaned $100,000 to the Company,
which amount is to be repaid out of the proceeds of this offering. See "Use of
Proceeds."
The Company has entered into an oral agreement with Manhattan Associates to
lease office space and to be provided with secretarial and office services
commencing upon the closing of this offering. The Company will pay $2,500 per
month to Manhattan Associates for rent and such services. See "Proposed Business
- -- Facilities."
In September 1995, Bright's predecessor granted the Company a non-exclusive
license to use, for the sole purpose of marketing this offering, Bright's
SMA(2)RTSM and Specialized Merger and Acquisition Allocated Risk TransactionSM
servicemarks. In consideration of Bright granting the non-exclusive license to
the Company, the Company is paying a total of $100,000.00 to Bright. The value
to be paid by the Company was negotiated at arm's length, although no objective
criteria were used to measure the value of the license. One important
consideration, however, is that Bright's corporate predecessor previously
licensed the SMA(2)RTSM name and structure to Initial Acquisition Corp. and
Bright licensed the SMA(2)RTSM name and structure Orion Acquisition Corp. II,
which successfully completed initial public offerings in May 1995 and July 1996,
respectively. The Company believes that the value it is paying for the license
to use the SMA(2)RTSM structure and servicemarks in this offering will enhance
the prospects of successfully completing this offering because the investment
community will be more likely to readily understand the SMA(2)RTSM structure by
associating it with the previous SMA(2)RTSM transaction.
CDIJ, an indirect affiliate of Bright, is the holder of the Company's
outstanding 94 shares of Series A Preferred Stock, which it purchased for
$9,400, and 1,000 shares of Common Stock, which it purchased for $.10 per share.
CDIJ paid cash for the Common Stock and issued a promissory note at an interest
rate of 8% payable upon the earlier of one year from the date of the note or the
closing of this offering for the Preferred Stock.
The purchase prices for all Common Stock and Preferred Stock sold by the
Company prior to the date of this Prospectus were established by negotiations
between the Board of Directors and the various investors.
The Company will require that any future transactions between the Company
and its officers, directors, principal stockholders and the affiliates of the
foregoing persons be on terms no less favorable to the Company than could
reasonably be obtained in arm's length transactions with independent third
parties and that any such transactions also be approved by a majority of the
Company's directors disinterested in the transaction. Management of the Company
has not yet ascertained the amount of remuneration that will be payable to the
Company's officers and directors following completion of a Business Combination.
Mr. Goldberg and the other directors of the Company may be deemed to be
"promoters" of the Company.
44
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information as of the date hereof, and as
adjusted to reflect the sale of the shares of Common Stock offered by the
Company hereby, based on information obtained from the persons named below, with
respect to the beneficial ownership of shares of Common Stock by (i) each person
known by the Company to be the owner of more than 5% of the outstanding shares
of Common Stock, (ii) each director, and (iii) all executive officers and
directors as a group:
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING SHARES OF COMMON
AMOUNT AND STOCK
NATURE OF ------------------------------
BENEFICIAL BEFORE AFTER
NAME OR GROUP (1) OWNERSHIP (2) OFFERING OFFERING (3)(4)
- ------------------------------------------------------------------------- ------------- ----------- -----------------
<S> <C> <C> <C>
Manhattan Associates, LLC (5) 37,500(6) 35.4% 13.7%
A.J. Nassar 15,000 14.1% 1.7%
Jude Spak 12,000 11.3% 1.3%
All executive officers and directors
as a group (four persons) 52,500(6) 49.5% 15.2%
</TABLE>
- ------------------------
(1) Each person and entity listed has an address in care of the Company.
(2) Unless otherwise noted, the Company believes that each person named in the
table has sole voting and investment power with respect to all shares of
Common Stock beneficially owned by him or it.
(3) Includes options to purchase 100,000 Units, each unit to be identical to the
Units issued in this offering, in equal shares to the three (3) members of
Manhattan Associates.
(4) Assumes no exercise of (i) the Underwriters' over-allotment option; (ii) the
Representative's Unit Purchase Warrants, (iii) the Representative's Class B
Warrants, (iv) the Warrants included in the Units offered hereby or (iv) any
other warrants owned by any of the named persons and assumes no conversion
of the Series A Preferred Stock. See "Underwriting" and "Description of
Capital Stock -- Series A Preferred Stock."
(5) The members of Manhattan Associates are Arthur H. Goldberg, Chairman, Chief
Executive Officer and a director of the Company, Stanley Kreitman,
Secretary, Treasurer and a director of the Company, and Marshall Manley, a
director of the Company.
(6) Excludes options held by the Company's executive officers and directors, who
are affiliates of Manhattan Associates, to purchase up to 100,000 Units for
$12.50 per Unit. See "Management -- Options to Purchase Units."
The shares of Common Stock and Series A Preferred Stock owned by the
Company's present stockholders, including the directors and executive officer of
the Company, excluding the Placement Shares, will be placed in escrow until the
earlier of (i) the consummation of the first Business Combination, or (ii) 18
months from the date of this Prospectus, subject to extension to 24 months from
the date of this Prospectus if the Extension Criteria have been satisfied.
During such period, such stockholders will not be able to sell or otherwise
transfer their respective shares of Common Stock (with certain exceptions), but
will retain all other rights as stockholders of the Company, including, without
limitation, the right to vote such shares of Common Stock (subject to their
agreement, as discussed above, to vote their shares in accordance with the vote
of a majority of the shares voted by non-affiliated public stockholders with
respect to the consummation of a Business Combination or liquidation proposal)
but excluding the right to request the redemption of escrowed shares pursuant to
a Redemption Offer. Subject to compliance with applicable securities laws, any
such holder may transfer his, her or its Common Stock held in escrow to a member
of his family or to a trust established for the benefit of himself, herself, or
a family member or to another affiliated entity (with the consent of the
Representative which will not be unreasonably withheld) or in the event of his
or her death by will or operation of law, provided that any such transferee
shall agree as a condition to
45
<PAGE>
such transfer to be bound by the restrictions on transfer applicable to the
original holder and, in the case of present stockholders, that the transferor
(except in the case of death) will continue to be deemed the beneficial owner
(as defined in Regulation 13d-3 promulgated under the Exchange Act).
Each of the Company's officers and directors has agreed with the Company and
the Representative that he will not, at any time, purchase any of the Class B
Warrants being sold in this offering.
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company will be authorized to issue 10,000,000 shares of Common Stock,
par value $.01 per share. As of the date of this Prospectus, 106,000 shares of
Common Stock are outstanding, held of record by 16 persons. The holders of
Common Stock are entitled to one vote for each share held of record on all
matters to be voted on by stockholders. There is no cumulative voting with
respect to the election of directors, with the result that the holders of more
than 50% of the shares voting for the election of directors can elect all of the
directors. The holders of Common Stock are entitled to receive dividends when,
as and if declared by the Board of Directors out of the funds legally available
therefor. In the event of the liquidation, dissolution or winding up of the
Company, the holders of Common Stock are entitled to share ratably in all assets
remaining available for distribution after payment of liabilities and after
provision has been made for each class of stock, if any, having preference over
the Common Stock. All of the present stockholders of the Company have agreed to
waive their respective rights to participate in a liquidation distribution prior
to the consummation of the first Business Combination. Holders of shares of
Common Stock, as such, have no conversion, preemptive or other subscription
rights, and there are no redemption provisions applicable to the Common Stock.
All of the outstanding shares of Common Stock are, and the shares of Common
Stock to be issued in this offering, when issued against payment therefor, will
be, validly authorized and issued, fully paid and nonassessable. The Company has
agreed with the Representatives that for a period of 18 months from the date of
this Prospectus, and for up to six additional months if the Extension Criteria
have been satisfied, it will not issue (other than pursuant to this offering)
any shares of Common Stock or grant Common Stock purchase options or warrants
without the consent of the Representatives, except in connection with effecting
a Business Combination.
PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
1,000,000 shares of "blank check" preferred stock, par value $.01 per share (the
"Preferred Stock"), with such designations, powers, preferences, rights,
qualifications, limitations and restrictions of such series as the Board of
Directors, subject to the laws of the State of Delaware, may determine from time
to time. Accordingly, the Board of Directors is empowered, without stockholder
approval, to issue Preferred Stock with dividend, liquidation, conversion,
voting or other rights which could adversely affect the voting power or other
rights of the holders of Common Stock. The Company has agreed with the
Representatives, however, that for a period of 18 months from the date of this
Prospectus, and for up to six additional months if the Extension Criteria have
been satisfied, it will not issue any shares of Preferred Stock without the
consent of the Representatives, except in connection with a consummation of a
Business Combination. In addition, the Preferred Stock could be utilized, under
certain circumstances, as a method of discouraging, delaying or preventing a
change in control of the Company. Although the Company does not currently intend
to issue any additional shares of Preferred Stock, there can be no assurance
that the Company will not do so in the future.
SERIES A PREFERRED STOCK
As of the date of this Prospectus, the Company has outstanding 94 shares of
Series A Preferred Stock, owned by CDIJ. The purchase price for such shares,
$100.00 per share or $9,400 in the aggregate, is payable to the Company, with
interest, upon the earlier of November 15, 1996 or the closing of this offering.
The Series A Preferred Stock is non-voting, does not bear a dividend and has a
liquidation value of $100.00 per share. Each share of Series A Preferred Stock
will be convertible into
46
<PAGE>
1000 shares of Common Stock for a period one year following the consummation of
a Business Combination. In the event that a Business Combination does not occur
within 18 months of the date of this Prospectus, or 24 months if the Extension
Criteria are satisfied, the Series A Preferred Stock will be redeemed by the
Company for its liquidation value. The Company has agreed to register the Common
Stock issuable upon conversion of the Series A Preferred Stock at the time of a
Business Combination.
WARRANTS
The statements under this caption relating to the Warrants are merely a
summary and do not purport to be complete. However, such summary contains all
information with respect to such Warrants which the Company believes to be
material to investors. Such summary is qualified in its entirety by express
reference to the warrant agreement ("Warrant Agreement") between the Company and
American Stock Transfer & Trust Company, copies of which have been filed with
the Securities and Exchange Commission. Copies of the Warrant Agreement are
available for inspection at the offices of the Company.
As of the date hereof, each Class A Warrant will entitle the registered
holder thereof to purchase one share of Common Stock at a price of $9.00 per
share, subject to adjustment in certain circumstances. The Class A Warrants will
be initially exercisable upon the consummation of a Business Combination and
expire at 5:00 p.m., New York City time, on the fifth anniversary of the date of
this Prospectus.
As of the date hereof, each Class B Warrant will entitle the registered
holder thereof to purchase one Unit, comprised of one share of Common Stock and
one Class A Warrant to purchase one share of Common Stock, at a price of $.125
per Unit, subject to adjustment in certain circumstances. The Class B Warrants
will be initially exercisable upon the consummation of a Business Combination
and expire at 5:00 p.m., New York City time, on the first anniversary of the
date of a consummation of a Business Combination.
The Units and the Class B Warrants will be sold and traded separately. The
Common Stock and the Class A Warrants will become separable and transferable at
such time as the Representative may determine, but in no event before the
Separation Date. The Company may call the Warrants for redemption, each as a
class, in whole and not in part, at the option of the Company, at a price of
$.05 per Warrant at any time after the consummation of a Business Combination,
upon not less than 30 days' prior written notice, provided that the last sale
price of the Common Stock, if the Common Stock is listed for trading on an
exchange or interdealer quotation system which provides last sale prices, or,
the average of the closing bid and asked quotes, if the Common Stock is listed
for trading on an interdealer quotation system which does not provide last sale
prices, on all 10 of the trading days ending on the day immediately prior to the
day on which the Company gives notice of redemption, has been $11.00 or higher.
The warrantholders shall have exercise rights until the close of business on the
date fixed for redemption.
The exercise price and number of shares of Common Stock issuable on exercise
of the Class A Warrants are subject to adjustments under certain circumstances,
including in the event of a stock dividend, recapitalization, reorganization,
merger or consolidation of the Company. However, the Warrants are not subject to
adjustment for issuances of Common Stock at a price below their respective
exercise prices.
The Company has the right, in its sole discretion, to decrease the exercise
price of the Warrants for a period of not less than 30 days on not less than 30
days' prior written notice to the warrantholders, subject to compliance with
applicable laws such as, but not limited to, any prior notice provisions imposed
by the Commission, the NASD or any exchange on which the Company's Common Stock
is then listed. In addition, the Company has the right, in its sole discretion,
to extend the expiration date of the Warrants on five business days' prior
written notice to the warrantholders.
47
<PAGE>
The Warrants may be exercised upon surrender of the warrant certificate on
or prior to the applicable expiration date of the Class A Warrant or Class B
Warrant, as the case may be, at the offices of the warrant agent, with the
exercise form on the reverse side of the warrant certificate completed and
executed as indicated, accompanied by full payment of the exercise price (by
certified check, payable to the Company) to the warrant agent for the number of
Warrants being exercised. The warrantholders do not have the rights or
privileges of holders of Common Stock, including, without limitation, the right
to vote on any matter presented to stockholders for approval.
The Company is required either to maintain the effectiveness of the
Registration Statement or to file a new registration statement with the
Commission, with respect to the securities underlying the Warrants prior to the
exercise of the Warrants and to deliver a prospectus as required by Section
10(a)(3) of the Securities Act with respect to such securities to the holders of
all Warrants prior to the exercise or redemption of such Warrants (except, if in
the opinion of counsel to the Company, such registration is not required under
the federal securities laws or if the Company receives a letter from the staff
of the Commission stating that it would not take any enforcement action if such
registration is not effected). In addition, and subject to the foregoing, the
Company is required to have a current Registration Statement on file with the
Commission and to effect appropriate qualifications under the laws and
regulations of the states in which the initial holders of the Warrants reside in
order to comply with applicable laws in connection with such exercise. There can
be no assurance, however, that the Company will be in a position to be able to
keep its Registration Statement current or to effect appropriate action under
applicable state securities laws, the failure of which may result in the
inability to exercise the Warrants or effect a resale or other disposition of
Common Stock issued upon such exercise. Florida residents who purchase Class B
Warrants will be unable to exercise these warrants to purchase Units unless and
until the Units issuable upon exercise of the Class B Warrants have been
registered for sale in Florida or are established to be exempt from the
requirement of such registration. Florida law generally precludes the
registration of securities that are not listed on a securities exchange or the
NASDAQ System when the offering price of such securities is $5.00 or less per
share. Because the "exercise price" of Class B Warrants is $.125, the "offering
price" of the Units issuable upon exercise of the Class B Warrants could be
considered not greater than $5.00 if the offering price of the Class B Warrants
is not added to its exercise price in making that determination. For this
reason, no permit to sell the Units issuable upon exercise of the Class B
Warrants in Florida has been obtained. There can be no assurance that the Units
issuable upon exercise of the Class B Warrants will ever be registered in
Florida or established to be exempt from the requirement of such registration.
No fractional shares will be issued upon exercise of the Warrants. However,
if a warrantholder exercises all Warrants then owned of record by him, the
Company will pay to such warrantholder, in lieu of the issuance of any
fractional share which is otherwise issuable to such warrantholder, an amount in
cash based on the market value of the Common Stock on the last trading day prior
to the exercise date.
DIVIDENDS
The Company does not expect to pay dividends prior to the consummation of a
Business Combination. Future dividends, if any, will be contingent upon the
Company's revenues and earnings, if any, capital requirements and general
financial condition subsequent to the consummation of a Business Combination.
The payment of dividends subsequent to the consummation of a Business
Combination will be within the discretion of the Company's then Board of
Directors. The Company presently intends to retain all earnings, if any, for use
in the Company's business operations and accordingly, the Board does not
anticipate declaring any dividends in the foreseeable future.
TRANSFER AGENT, REGISTRAR AND WARRANT AGENT
The transfer and registrar agent for the Units and the Common Stock and the
transfer agent, registrar and warrant agent for the Warrants is American Stock
Transfer & Trust Company.
48
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this offering (but prior to a Business
Combination), the Company will have 906,000 shares of Common Stock outstanding
(1,026,000 shares if the Underwriters' over-allotment option is exercised in
full). Of these shares, the 800,000 shares sold by the Company in this offering
(920,000 shares if the Underwriters' over-allotment option is exercised in full)
will be freely tradable without restriction or further registration under the
Securities Act, except for any shares purchased by an "affiliate" of the Company
(as defined in the Securities Act and the rules and regulations thereunder)
which will be subject to the limitations of Rule 144 promulgated under the
Securities Act. All of the remaining 106,000 shares are deemed to be "restricted
securities", as that term is defined under Rule 144 promulgated under the
Securities Act, as such shares were issued in private transactions not involving
a public offering. None of such shares are eligible for sale under Rule 144.
However, 20,000 of such shares (the Placement Shares) along with the 94,000
shares issuable upon conversion of the outstanding Series A Preferred Stock are
expected to be registered under the Securities Act at the time of the Business
Combination.
In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain other conditions, a person, including an affiliate of
the Company (or persons whose shares are aggregated), who has beneficially owned
the restricted shares of Common Stock to be sold for at least two years is
entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of 1% of the total number of outstanding shares of the
same class or, if the Common Stock is quoted on an exchange or NASDAQ, the
average weekly trading volume during the four calendar weeks preceding the sale.
A person who has not been an affiliate of the Company for at least the three
months immediately preceding the sale and who has beneficially owned the shares
of Common Stock to be sold for at least three years is entitled to sell such
shares under Rule 144 without regard to any of the limitations described above.
The holders of Founders' Shares have agreed not to, directly or indirectly,
sell, offer to sell, grant an option for the sale of, transfer, assign, pledge,
hypothecate or otherwise encumber any of their shares of Common Stock, 85,000
shares in the aggregate, until two years from the date the outstanding Founders'
Shares were issued (August 18, 1995), provided that such shares may in no event
be sold or otherwise transferred until 120 days following the completion of the
first Business Combination, subject to any additional terms, conditions or
restrictions that may be imposed in connection with the consummation of a
Business Combination. In addition, the holders of the Placement Shares have
agreed not to directly or indirectly sell, offer to sell, grant an option for
the sale of, transfer, assign, pledge, hypothecate or otherwise encumber any of
the Placement Shares without the prior written consent of the Company until the
earlier of 24 months from the date such shares were issued (November 15, 1995)
or 60 days following the consummation of the first Business Combination. The
Company has agreed with the Representative that it will not grant such consents
without the consent of the Representative.
Prior to this offering, there has been no market for the Common Stock, the
Units or the Warrants and no prediction can be made as to the effect, if any,
that market sales of restricted shares of Common Stock or the availability of
such shares for sale will have on the market prices prevailing from time to
time. Nevertheless, the possibility that substantial amounts of Common Stock may
be sold in the public market would likely adversely affect prevailing market
prices for the Common Stock, the Units and the Warrants and could impair the
Company's ability to raise capital through the sale of its equity securities.
49
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement among the
Company and the Underwriters, the Company has agreed to sell to the Underwriters
named below for whom the Representative is acting as representative, and the
Underwriters have severally and not jointly agreed to purchase, the number of
Units and Class B Warrants set forth opposite their respective names below.
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF CLASS B
UNDERWRITER UNITS WARRANTS
- ---------------------------------------------------------------------- ----------- -----------
<S> <C> <C>
H.J. Meyers & Co., Inc................................................
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters are subject to the approval of certain legal matters by counsel to
the Representatives and various other conditions. The nature of the
Underwriters' obligations are such that they are committed to purchase all of
the above Units and Class B Warrants if any are purchased.
As a registered broker-dealer, the Representative is required under the
Exchange Act and the rules promulgated thereunder to maintain minimum net
capital in order to conduct their broker-dealer operations. Currently, the
Representative has sufficient excess net capital to support their broker-dealer
operations, including their underwriting obligations to the Company. In the
event, however, that at any time the Representative should be unable to maintain
their minimum net capital requirements, they will have to cease operations as a
broker-dealer. Any such cessation of operations by the Representative could have
a material adverse effect on the market price and liquidity of the securities
being offered hereby. No assurance can be given, however, that the firm will be
able to maintain its required minimum net capital at all times during or
following the offering described herein.
The Company has been advised by the Representative that the Underwriters
propose to offer the Units and the Class B Warrants directly to the public at
the public offering prices set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $. per Unit
and $. per Class B Warrant. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $. per Unit and $. per Class B Warrant
to certain other dealers. The Representative has informed the Company that they
do not expect sales to discretionary accounts by the Underwriters to exceed 5%
of the securities offered by the Company hereby.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act. The Company has
agreed to pay to the Representative a non-accountable expense allowance equal to
three percent of the gross proceeds derived from the sale of the Units and Class
B Warrants underwritten (including the sale of any Units and Class B Warrants
subject to the Underwriters' over-allotment option), $25,000 of which has been
paid to date.
The Company will reimburse the Representative on a nonaccountable basis in
an amount equal to 3% of the gross proceeds of this offering ($295,200 if the
Underwriters' overallotment option is not exercised).
The Company has agreed that no finder's or origination fees or similar
compensation will be paid to any of the Company's officers, directors or 5% or
greater stockholders or their respective affiliates in connection with or to
effect a Business Combination. If the Company enters into any finder's fee
agreement or similar agreement or arrangement with any person or entity other
than the Company's officers, directors or 5% or greater stockholders or their
respective affiliates in connection with or to effect the first Business
Combination (other than the independent investment banker), the finder's fee or
other consideration paid in connection therewith must be approved by the
Company's Board of Directors.
50
<PAGE>
The Company has agreed, in connection with the exercise of Warrants pursuant
to solicitation by the Representative, commencing one year from the date of this
Prospectus, to pay to the Representative an aggregate management fee of 10% of
the respective Warrant exercise prices, 8% of which will be reallowed to any
selected dealer who is a member of the NASD who solicited the exercise (which
may also be the Representative) for each Warrant exercised, provided, however,
that the Representatives will not be entitled to receive such compensation in
any Warrant exercise transaction in which (i) the market price of the Common
Stock of the Company at the time of the exercise is lower than the exercise
price of the Warrants in question; (ii) the Warrants are held in a discretionary
account under the control of the selected dealer; (iii) disclosure of
compensation arrangements is not made, in addition to the disclosure provided in
this Prospectus, in documents provided to holders of the Warrants at the time of
exercise; (iv) the exercise of the Warrants is unsolicited; and (v) the
solicitation of exercise of the Warrants was in violation of Rule 10b-6
promulgated under the 1934 Act. In determining the management fee, the
calculation will exclude 10% of the respective Warrant exercise prices, any
underlying warrants, options or convertible securities. Unless granted an
exemption by the Commission from Rule 10b-6, the Representative will be
prohibited from engaging in any market-making activities or solicited brokerage
activities with regard to the Company's securities during the periods prescribed
by Rule 10b-6 before the solicitation of the exercise of any Warrant until the
later of (a) the termination of such solicitation activity, or (b) the
termination by waiver or otherwise of any right the Representative may have to
receive a fee for the exercise of the Warrants following such solicitations. As
a result, the Representative may be unable to provide a market for the Company's
securities during certain periods while the Warrants are exercisable. The
Company has agreed not to solicit Warrant exercises other than through the
Representative.
The holders of Founders' Shares have agreed not to, directly or indirectly,
sell, offer to sell, grant an option for the sale of, transfer, assign, pledge,
hypothecate or otherwise encumber any of their shares of Common Stock, 86,000
shares in the aggregate, or any warrants to purchase Units (and the securities
issuable upon the exercise thereof) without the prior written consent of the
Company until two years from the date the outstanding Founders' Shares were
issued, (August 18, 1995), provided that such shares may in no event be sold or
otherwise transferred until 120 days following the completion of the first
Business Combination, subject to any additional terms, conditions or
restrictions that may be imposed in connection with the consummation of a
Business Combination. An appropriate legend shall be marked on the face of stock
certificates representing all such shares of Common Stock.
The Company has agreed with the Representative that for a period of 18
months from the date of this Prospectus, and for up to six additional months if
the Extension Criteria are satisfied, it will not issue (other than pursuant to
this offering) any securities or grant options or warrants to purchase any
securities of the Company without the consent of the Representative except in
connection with effecting a Business Combination.
The Company has granted to the Representative an option exercisable during
the 30-day period commencing on the date of this Prospectus to purchase from the
Company at the offering price less underwriting discounts, up to an aggregate of
120,000 additional Units and 48,000 additional Class B Warrants for the sole
purpose of covering over-allotments, if any. To the extent that the
Representative exercise such option, the Representative have the right to
require each Underwriter to purchase on a firm commitment basis approximately
the same percentage thereof that the number of Units and Class B Warrants to be
purchased by it or the Underwriters shown, in the above table bears to the total
shown. The Company will be obligated, pursuant to the option, to sell such Units
and Class B Warrants to the Representative or the Underwriters, as the
Representative directs.
In connection with this offering, the Company has agreed to sell to the
Representative, for nominal consideration, the Representative's Warrants. The
Representative's Warrants are initially exercisable at a price of $12.00 per
Unit and $6.90 per Class B Warrant for a period of four years, commencing one
year from the date of this Prospectus. The Units and Class B Warrants issuable
upon exercise of the Representative's Warrants are the same as the Units and
Class B Warrants being sold
51
<PAGE>
in this offering. The Representative's Warrants contain anti-dilution provisions
providing for adjustment of the number of warrants and exercise price under
certain circumstances. The Representative's Warrants grant to the holders
thereof certain rights of registration of the Units and Class B Warrants
issuable upon exercise of the Representative's Warrants.
The Company has also agreed that, for a period of two years form the closing
of this Offering, if it participates in any merger, consolidation or other
transaction which the Representative has brought to the Company (including an
acquisition of assets or stock for which it pays, in whole or in part, with
shares of the Company's Common Stock or other securities), which transaction is
consummated within thirty-six months of the closing of this Offering, then it
will pay for the Representative's services an amount equal to 5% of the first $2
million of value paid or value received in the transaction, 2% of any
consideration above $2 million and less than $4 million and 1% of any
consideration in excess of $4 million. The Company has also agreed that if,
during this two-year period, someone other than the Representative brings such a
merger, consolidation or other transaction to the Company, and if the Company in
writing retains the Representative for consultation or other services in
connection therewith, then upon consummation of the transaction the Company will
pay to the Representative as a fee the appropriate amount as set forth above or
as otherwise agreed to between the Company and the Representative.
Prior to this offering there has been no public market for any of the
Company's securities. Accordingly, the offering prices of the Units and Class B
Warrants and terms of the Class A Warrants underlying the Units were determined
by negotiation between the Company and the Representatives. Factors considered
in determining such price and terms, in addition to prevailing market
conditions, include an assessment of the Company's prospects. The public
offering prices of the Units and Class B Warrants do not bear any relationship
to assets, earnings, book value, or other criteria of value applicable to the
Company and should not be considered an indication of the actual value of the
Units or Class B Warrants. Such prices are subject to change as a result of
market conditions and other factors, and no assurance can be given that the
Units or Class B Warrants can be resold at their respective offering prices.
The foregoing is a summary of the principal terms of the agreements
described above and does not purport to be complete. Nevertheless, it includes
all information concerning such agreements which the Company believes to be
material. Reference is made to copies of each such agreement which are filed as
exhibits to the Registration Statement.
LEGAL MATTERS
The legality of the securities being registered by this Registration
Statement is being passed upon by Greenbaum, Rowe, Smith, Ravin, Davis & Himmel,
Woodbridge, New Jersey. Harter, Secrest & Emery, Rochester, New York has acted
as counsel to the Representatives in connection with this offering.
EXPERTS
The financial statements included in this Prospectus have been audited by
BDO Seidman, LLP, independent certified public accountants, to the extent and
for the period set forth in their report appearing elsewhere herein, and is
included in reliance upon such report given upon the authority of said firm as
experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") under the
Securities Act with respect to the securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and regulations
of the Commission. For further information with respect to the Company and this
offering,
52
<PAGE>
reference is made to the Registration Statement, including the exhibits and
schedules filed therewith, copies of which may be obtained at prescribed rates
from the Commission at its principal office at 450 Fifth Street N.W.,
Washington, D.C. 20549, and at the following regional offices of the Commission:
75 Park Place, New York 10007, and Northwestern Atrium Center, 500 West Madison
Street, Suite 1400 Chicago, Illinois, 60604. Descriptions contained in this
Prospectus as to the contents of any agreement or other documents filed as an
exhibit to the Registration Statement are not necessarily complete and each such
description is qualified by reference to such agreement or document.
The Company intends to furnish to its stockholders annual reports containing
financial statements audited and reported upon by its independent public
accountants.
53
<PAGE>
ORION ACQUISITION CORP. I
(A CORPORATION IN THE DEVELOPMENT STAGE)
JUNE 30, 1996
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
------------
<S> <C>
Report of Independent Certified Public Accountants.................................................. F-2
Financial Statements:
Balance sheet as of June 30, 1996................................................................... F-3
Financial statements for the period from August 9, 1995 to June 30, 1996
Statement of operations......................................................................... F-4
Statement of stockholders' equity............................................................... F-5
Statement of cash flows......................................................................... F-6
Notes to financial statements................................................................... F-7 - F-10
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Orion Acquisition Corp. I
New York, NY
We have audited the accompanying balance sheet of Orion Acquisition Corp. I,
(a corporation in the development stage) as of June 30, 1996, and the related
statements of operations, stockholders' equity and cash flows for the period
from August 9, 1995 (inception) to June 30, 1996. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Orion Acquisition Corp. I as
of June 30, 1996, and the results of its operations and its cash flows for the
period from August 9, 1995 (inception) to June 30, 1996, in conformity with
generally accepted accounting principles.
BDO Seidman, LLP
New York, New York
August 1, 1996
F-2
<PAGE>
ORION ACQUISITION CORP. I
(A CORPORATION IN THE DEVELOPMENT STAGE)
BALANCE SHEET
JUNE 30, 1996
<TABLE>
<S> <C>
Assets
Current:
Cash........................................................................... $ 33,478
Deferred registration costs (Note 1)........................................... 177,792
---------
$ 211,270
---------
---------
Liabilities and Stockholders' Equity
Current:
Accrued expenses (Note 1)...................................................... $ 105,599
Notes payable, net of discount (Note 5)........................................ 79,424
---------
Total current liabilities.................................................. 185,023
---------
Commitments (Note 4)
Stockholders' equity (Notes 1 and 5):
Convertible preferred stock, $.01 par value shares -- authorized 100;
outstanding none; subscribed 94; liquidation value -- $9,400.................. 1
Subscription receivable........................................................ (9,400)
Common stock, $.01 par value shares -- authorized 200,000; outstanding
106,000....................................................................... 1,060
Additional paid-in capital..................................................... 61,939
Deficit accumulated during the development stage............................... (27,353)
---------
Total stockholders' equity................................................. 26,247
---------
$ 211,270
---------
---------
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
ORION ACQUISITION CORP. I
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS
PERIOD FROM AUGUST 9, 1995 (INCEPTION) TO JUNE 30, 1996
<TABLE>
<S> <C>
General and administrative expenses and debt costs ($24,224)..................... $ 27,353
---------
Net loss......................................................................... $ (27,353)
---------
---------
Net loss per common share........................................................ $ (.26)
---------
---------
Weighted average common shares outstanding....................................... 106,000
---------
---------
</TABLE>
See accompanying notes to financial statements.
F-4
<PAGE>
ORION ACQUISITION CORP. I
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF STOCKHOLDERS' EQUITY
PERIOD FROM AUGUST 9, 1995 (INCEPTION) TO JUNE 30, 1996
<TABLE>
<CAPTION>
DEFICIT
PREFERRED STOCK ACCUMULATED
---------------------------- COMMON STOCK ADDITIONAL DURING THE
SHARES SUBSCRIPTION ---------------------- PAID-IN DEVELOPMENT
SUBSCRIBED AMOUNT RECEIVABLE SHARES AMOUNT CAPITAL STAGE
--------------- ----------- ------------ --------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Issuance of founders'
shares....................... -- $ -- $ -- 86,000 $ 860 $ 7,740 $ --
Sale of common stock.......... -- -- -- 20,000 200 44,800 --
Subscription receivable....... 94 1 (9,400) -- -- 9,399 --
Net loss...................... -- -- -- -- -- -- (27,353)
--
--- ------------ --------- ----------- ----------- -----------
Balance, June 30, 1996........ 94 $ 1 $ (9,400) 106,000 $ 1,060 $ 61,939 $ (27,353)
--
--
--- ------------ --------- ----------- ----------- -----------
--- ------------ --------- ----------- ----------- -----------
<CAPTION>
TOTAL
STOCKHOLDERS'
EQUITY
------------
<S> <C>
Issuance of founders'
shares....................... $ 8,600
Sale of common stock.......... 45,000
Subscription receivable....... --
Net loss...................... (27,353)
------------
Balance, June 30, 1996........ $ 26,247
------------
------------
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
ORION ACQUISITION CORP. I
(A CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
PERIOD FROM AUGUST 9, 1995 (INCEPTION) TO JUNE 30, 1996
<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss....................................................................... $ (27,353)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of deferred debt costs.......................................... 9,800
Amortization of discount on notes payable.................................... 14,424
Changes in assets and liabilities -- accrued expenses........................ 15,599
---------
Net cash used in operating activities.................................... 12,470
---------
Cash flows from financing activities:
Proceeds from sale of common stock............................................. 53,600
Deferred costs:
Registration................................................................. (87,792)
Debt......................................................................... (9,800)
Proceeds from issuance of notes payable........................................ 65,000
---------
Net cash provided by financing activities................................ 21,008
---------
Net increase in cash............................................................. 33,478
Cash, beginning of period........................................................ --
Cash, end of period.............................................................. $ 33,478
---------
---------
Supplemental disclosures of cash flow information:
The Company received a note for subscribed preferred stock amounting to $9,400,
which is a noncash financing activity.
The Company has recorded a $90,000 liability relating to a license agreement
(Note 1), which is a noncash financing activity.
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
ORION ACQUISITION CORP. I
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DEFERRED REGISTRATION COSTS
Orion Acquisition Corp. I (the "Company") has deferred registration costs
(primarily professional fees and a license fee) relating to a public offering
(the "Proposed Offering"). In November 1995, the Company entered into a license
agreement with Bright Licensing Corp. for the right to use certain servicemarks
for the sole purpose of marketing such offering at a cost of $100,000. The
deferred registration costs will be charged to equity upon completion of the
Proposed Offering. Should the Proposed Offering prove to be unsuccessful, these
deferred costs, as well as additional expenses to be incurred, will be charged
to operations.
DEFERRED DEBT COSTS
Net unamortized costs incurred in connection with the notes payable (Note
5(a)) of $9,800 were amortized over six months using the straight-line method.
Amortization expense is $9,800 for the period from August 9, 1995 (inception) to
June 30, 1996.
INCOME TAXES
The Company follows the Financial Accounting Standards Board ("FASB")
Statement No. 109. This statement requires that deferred income taxes be
recorded following the liability method of accounting and be adjusted
periodically when income tax rates change.
As of June 30, 1996, the Company has a net operating loss carryforward of
approximately $27,000 which results in a deferred tax asset of approximately
$11,000, which has been offset by a valuation allowance.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. ORGANIZATION AND BUSINESS OPERATIONS
The Company was incorporated in Delaware on August 9, 1995 to acquire an
operating business. All activity to date relates to the Company's formation and
proposed fund raising.
The Company's ability to commence operations is contingent upon obtaining
adequate financial resources through the Proposed Offering, which is discussed
in detail in Note 3. The Company's management has broad discretion with respect
to the specific application of the net proceeds of this offering, although
substantially all of the net proceeds of this offering are intended to be
generally applied toward consummating a business combination with an operating
business ("Business Combination"). Furthermore, there is no assurance that the
Company will be able to successfully effect a Business Combination. Upon the
closing of the Proposed Offering, an aggregate of $8,000,000 of the net proceeds
will be held in an escrow account which will be invested until released in
short-term United States Government Securities, including treasury bills and
cash and cash equivalents ("Proceeds Escrow Account"), subject to release at the
earlier of (i) consummation of its first Business Combination or (ii)
liquidation of the Company (see below). Therefore, the remaining proceeds from
the offering will be used to pay for business, legal and accounting, due
diligence on prospective acquisitions, costs relating to the public offering and
continuing general and administrative expenses in addition to other expenses.
F-7
<PAGE>
ORION ACQUISITION CORP. I
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
2. ORGANIZATION AND BUSINESS OPERATIONS (CONTINUED)
The Company, prior to the consummation of any Business Combination, will
submit such transaction to the Company's stockholders for their approval, even
if the nature of the acquisition is such as would not ordinarily require
stockholder approval under applicable state law. All of the Company's present
stockholders, including all directors and the Company's executive officer, have
agreed to vote their respective shares of common stock in accordance with the
vote of the majority of the shares voted by all other stockholders of the
Company ("nonaffiliated public stockholders") with respect to any such Business
Combination. A Business Combination will not be consummated unless approved by a
vote of two-thirds of the shares of common stock owned by nonaffiliated public
stockholders.
At the time the Company seeks stockholder approval of any potential Business
Combination, the Company will offer ("Redemption Offer") each of the
nonaffiliated public stockholders of the Company the right, for a specified
period of time not less than 20 calendar days, to redeem his shares of common
stock. The per share redemption price will be determined by dividing the greater
of (i) the Company's net worth or (ii) the amount of assets of the Company in
the escrow account (including all interest earned thereon) by the number of
shares held by such nonaffiliated public stockholders. In connection with the
Redemption Offer, if nonaffiliated public stockholders holding less than 20% of
the common stock elect to redeem their shares, the Company may, but will not be
required to, proceed with such Business Combination and, if the Company elects
to so proceed, will redeem such shares by dividing (a) the greater of (i) the
Company's net worth as reflected in the Company's financial statements or (ii)
the amount of the proceeds of the Company in the escrow account by (b) the
number of shares held by nonaffiliated public stockholders ("Liquidation
Value"). In any case, if nonaffiliated public stockholders holding 20% or more
of the common stock elect to redeem their shares, the Company will not proceed
with such potential Business Combination and will not redeem such shares.
All shares of the common stock outstanding immediately prior to the date of
the Proposed Offering will be placed in escrow until the earlier of (i) the
occurrence of the first Business Combination, (ii) 18-months from the effective
date of the offering or (iii) 24 months from the effective date of the offering
if prior to the expiration of such 18 month period the Company has become a
party to a letter of intent or a definitive agreement to effect a Business
Combination, in which case such period shall be extended six months. During the
escrow period, the holders of escrowed shares of common stock will not be able
to sell or otherwise transfer their respective shares of common stock (with
certain exceptions), but will retain all other rights as stockholders of the
Company, including, without limitation, the right to vote escrowed shares of
common stock, subject to their agreement to vote their shares in accordance with
a vote of a majority of the shares voted by nonaffiliated public stockholders
with respect to a Business Combination or liquidation proposal.
If the Company does not effect a Business Combination within 18 months from
the effective date or 24 months from the effective date if the extension
criteria have been satisfied, the Company will submit for stockholder
consideration a proposal to liquidate the Company and, if approved, distribute
to the then holders of common stock (issued in the Proposed Offering or acquired
in the open market thereafter) all assets remaining available for distribution
after payment of liabilities and after having made appropriate provisions for
the payment of liquidating distributions upon each class of stock, if any,
having preference over the common stock.
In the event of liquidation, it is likely that the per share value of the
residual assets remaining available for distribution to the holders of common
stock purchased in the Proposed Offering (including escrow account assets) will
approximately equal the initial public offering price per Unit in the Proposed
Offering.
F-8
<PAGE>
ORION ACQUISITION CORP. I
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
3. PROPOSED PUBLIC OFFERING
The Proposed Offering calls for the Company to offer for public sale up to
800,000 units ("Units"). Each Unit consists of one share of the Company's common
stock and one Class A redeemable common stock purchase warrant ("Class A
Warrant"). The Proposed Offering also calls for the Company to offer for public
sale up to 320,000 Class B redeemable common stock purchase warrants ("Class B
Warrant"). Each Class A Warrant entitles the holder to purchase from the Company
one share of common stock at an exercise price of $9.00; each Class B Warrant
entitles the holder to purchase one Unit at an exercise price of $.125,
commencing on the date of a Business Combination, until the fifth anniversary of
such date for the Class A Warrants, and the first anniversary of such date for
the Class B Warrants. The Class A Warrants and Class B Warrants are redeemable,
each as a class, in whole and not in part, at a price of $.05 per warrant upon
30 days' notice at any time provided that the Company's stockholders have
approved a Business Combination and the last sale price of the common stock, if
the common stock is listed for trading on all 10 of the trading days prior to
the day on which the Company gives notice of redemption, has been $11.00 or
higher. The Company hopes to raise approximately $9,000,000 from the Proposed
Offering, which is net of underwriter discounts and related expenses.
The Units and the Class B Warrants, which are being offered in the same
offering, will be sold and traded separately.
Concurrent with the Proposed Offering, the Company intends to amend and
restate its certificate of incorporation to increase its authorized common stock
and preferred stock to 10,000,000 and 1,000,000 shares, respectively.
4. COMMITMENTS
The Company presently occupies office space provided by a stockholder. Such
stockholder has agreed that, until the acquisition of a target business by the
Company, it will make such office space, as well as certain office and
secretarial service, available to the Company, as may be required by the Company
from time to time at no charge. Upon completion of the Proposed Offering, the
monthly payment will be $2,500. Such stockholder will be reimbursed by the
Company for the costs of such office and services.
5. STOCKHOLDERS' EQUITY
(A) PRIVATE PLACEMENT
In November 1995, the Company completed a private offering to a limited
group of investors which consisted, in aggregate, of $100,000 in unsecured
promissory notes bearing interest at 8% per annum. The notes are payable upon
the earlier of 24 months or the completion of an initial public offering. In
addition, the Company also issued to the private placement investors 20,000
shares of common stock for $10,000. The notes have been discounted $35,000 for
financial reporting purposes as a result of additional fair value attributed to
the common stock issued to the Private Placement shareholders. The effective
rate on the notes is approximately 45%.
Interest expense charged to operations for the period August 9, 1995
(inception) to June 30, 1996 was approximately $14,000.
(B) PREFERRED STOCK
The Company is authorized to issue 100 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined from
time to time by the Board of Directors.
The Company has outstanding 94 shares of Series A preferred stock, owned by
CDIJ Capital Partners, L.P. an indirect affiliate of Bright Licensing Corp.
(Note 1). The purchase price for such
F-9
<PAGE>
ORION ACQUISITION CORP. I
(A CORPORATION IN THE DEVELOPMENT STAGE)
NOTES TO FINANCIAL STATEMENTS
5. STOCKHOLDERS' EQUITY (CONTINUED)
shares, $100.00 per share or $9,400 in the aggregate, is payable to the Company,
without interest, upon the earlier of November 15, 1996 or the closing of the
Proposed Offering. The Series A preferred stock is nonvoting, does not bear a
dividend and has a liquidation value of $100.00 per share. Each share of Series
A preferred stock will be convertible into 1,000 shares of common stock for a
period one year following the consummation of a Business Combination. In the
event that a Business Combination does not occur within 18 months from the
effective date, or 24 months from the effective date if the extension criteria
are satisfied, the Series A preferred stock will be redeemed by the Company for
its liquidation value.
(C) OPTIONS
The Company has granted options to purchase 100,000 Units to the founders,
in consideration for their service as directors, and officers of the Company.
The options are exercisable for a period of three years from the date of a
Business Combination at an exercise price of $12.50 per Unit. The options are
fully vested; however, the options will be cancelled to any holder who is no
longer a director or executive officer prior to the first Business Combination.
The shares issuable upon exercise of the options and underlying warrants may not
be sold or otherwise transferred until 120 days after the first Business
Combination.
F-10
<PAGE>
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT
BE RELIED ON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY OF THE
UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF ANY OFFER TO
BUY, BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR ANY SUCH
PERSON TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY OFFER, SOLICITATION OR SALE MADE HEREUNDER, SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE OF THE PROSPECTUS.
--------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Prospectus Summary............................. 1
The Company.................................... 10
Risk Factors................................... 13
Use of Proceeds................................ 28
Dilution....................................... 31
Capitalization................................. 32
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 33
Proposed Business.............................. 34
Management..................................... 41
Certain Transactions........................... 44
Principal Stockholders......................... 45
Description of Securities...................... 46
Shares Eligible for Future Sale................ 49
Underwriting................................... 50
Legal Matters.................................. 52
Experts........................................ 52
Additional Information......................... 52
Index to Financial Statements.................. F-1
</TABLE>
------------------------
UNTIL 90 DAYS AFTER THE RELEASE OF THE REGISTERED SECURITIES FROM THE ESCROW
ACCOUNT, ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES,
WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
ORION ACQUISITION CORP. I
800,000 UNITS,
EACH UNIT CONSISTING OF
ONE SHARE OF COMMON
STOCK AND ONE CLASS A
COMMON STOCK
PURCHASE WARRANT
(THE CLASS A
WARRANT ENTITLING THE
HOLDERS TO PURCHASE AN
AGGREGATE OF 800,000
SHARES OF COMMON STOCK)
320,000 CLASS B
COMMON STOCK PURCHASE WARRANTS
(ENTITLING THE HOLDERS TO PURCHASE
320,000 UNITS)
---------------------
PROSPECTUS
------------------------
H.J. MEYERS & CO., INC.
AUGUST , 1996
- -------------------------------------------
-------------------------------------------
- -------------------------------------------
-------------------------------------------
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Orion Acquisition Corp. I (the "Company") is incorporated in Delaware. Under
Section 145 of the General Corporation Law of the State of Delaware, a Delaware
corporation has the power, under specified circumstances, to indemnify its
directors, officers, employees and agents in connection with actions, suits or
proceedings brought against them by a third party or in the right of the
corporation, by reason of the fact that they were or are such directors,
officers, employees or agents, against expenses incurred in any action, suit or
proceeding. Article IX of the Certificate of Incorporation and Article III of
the Bylaws of the Company provide for indemnification of directors and officers
to the fullest extent permitted by the General Corporation Law of the State of
Delaware. Reference is made to the Certificate of Incorporation of the Company,
filed as Exhibit 3.1 hereto.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 (relating to liability for unauthorized acquisitions or redemptions
of, or dividends on, capital stock) of the General Corporation Law of the State
of Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit. Article Ninth of the Company's Certificate of
Incorporation contains such a provision.
The Underwriting Agreement filed herewith as Exhibit 1.1 contains provisions
by which each Underwriter severally agrees to indemnify the Company, any person
controlling the Company within the meaning of Section 15 of the Securities Act
of 1933 or Section 20 of the Securities Exchange Act of 1934, each director of
the Company, and each officer of the Company who signs this Registration
Statement with respect to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter expressly for use in the
Registration Statement.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection with this
Registration Statement. All of such expenses are estimates, other than the
filing fees payable to the Securities and Exchange Commission and the National
Association of Securities Dealers, Inc.
<TABLE>
<CAPTION>
Filing Fee -- Securities and Exchange Commission.............. $ 8,632.69
<S> <C>
Filing Fee -- National Association of Securities Dealers,
Inc.......................................................... 3,003.48
Fees and Expenses of Accountants.............................. 12,500.00
Fees and Expenses of Counsel.................................. 50,000.00
Printing and Engraving Expenses............................... 50,000.00
Blue Sky Fees and Expenses.................................... 30,000.00
Transfer and Warrant Agent fees............................... 3,500.00
Miscellaneous Expenses........................................ 13,163.83
-----------
Total..................................................... $170,800.00
-----------
-----------
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
In August 1995, the Company sold to CDIJ, an indirect affiliate of Bright,
1,000 shares of Common Stock for $100, which was paid in full at that time, and
94 shares of Series A Preferred Stock for $9,400, payable upon the closing of
this offering, in a transaction in which no commissions were paid. In August
1995, the Company sold an aggregate of 85,000 shares of Common Stock, par value
$.01 per share ("Common Stock"), to its then directors, officers and certain
other persons at a price of
II-1
<PAGE>
$.10 per share for aggregate consideration of $8,500. In November 1995, the
Company sold 20,000 shares of Common Stock at a price of $0.50 per share or
$10,000 in the aggregate and $100,000 in promissory notes (the "Placement
Securities") to five investors, all of whom represented to the Company that they
were "accredited investors" as such term is defined in Regulation D promulgated
by the Securities and Exchange Commission pursuant to the Securities Act of
1933, as amended (the "Securities Act"). H.J. Meyers and Northeast Securities
acted as placement agents for 60% and 40% of such offering, respectively. The
persons who acquired the Placement Securities are Jude Spak, Burtt R. Ehrlich,
Elizabeth Lane, William Orfanos and George Orfanos. To the Company's knowledge,
none of these investors, nor any of their affiliates, was, at the time of their
investment in the Company, or currently is, affiliated or associated with any of
H.J. Meyers, Northeast, or any other broker-dealer, except that Mr. Ehrlich is
an affiliate of Emax Securities. The Company issued all such securities in
reliance upon the exemption from the registration requirements of the Securities
Act contained in Section 4(2) thereof.
ITEM 27. EXHIBITS.
<TABLE>
<CAPTION>
1.1 -- Underwriting Agreement.
<C> <C> <S>
3.1 -- Certificate of Incorporation of the Company, as amended.
*3.2 -- Form of Bylaws of the Company.
4.1 -- Form of Common Stock Certificate.
4.2 -- Form of Warrant Agency Agreement between the Company and American Stock
Transfer & Trust Company.
4.3 -- Form of Class A Common Stock Purchase Warrant.
4.4 -- Form of Class B Unit Purchase Warrant.
4.5 -- Form of Representative's Warrant Agreement.
4.6 -- Form of Representative's Warrant (included in Exhibit 4.5).
4.7 -- Form of Unit Certificate.
5 -- Opinion of Greenbaum, Rowe, Smith, Ravin, Davis, & Himmel.
10.1 -- Escrow Agreement for proceeds from sale of Units.
*10.2 -- Form of Escrow Agreement for outstanding Common Stock.
10.3 -- License, dated August 25, 1995, between Bright and the Company.
*10.4 -- Form of Management Unit Option Plan.
23.1 -- Consent of BDO Seidman, LLP (Included at page II-5).
23.2 -- Consent of Greenbaum, Rowe, Smith, Ravin, Davis & Himmel (Included in
Exhibit 5).
*24 -- Power of Attorney.
</TABLE>
- ------------------------
* Previously Filed.
ITEM 28. UNDERTAKINGS.
The undersigned small business issuer hereby undertakes:
(a)
To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i)
To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii)
To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
II-2
<PAGE>
(iii)
To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
(b)
The undersigned small business issuer hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreements,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.
(c)
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the small business issuer has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
(d)
The undersigned small business issuer hereby undertakes that:
(i)
For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the small business issuer pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective.
(ii)
For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial BONA FIDE offering thereof.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this Amendment No. 3
to its Registration Statement to be signed on its behalf by the undersigned, in
the City of New York, State of New York, on the 28th day of August, 1996.
ORION ACQUISITION CORP. I
By: /s/ ARTHUR H. GOLDBERG
-----------------------------------
Arthur H. Goldberg
CHAIRMAN, CHIEF EXECUTIVE OFFICER
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------ ------------------------------------------ -------------------
<C> <S> <C>
/s/ ARTHUR H. GOLDBERG
-------------------------------------- Chairman of the Board, Chief
Arthur H. Goldberg Executive Officer August 28, 1996
(ATTORNEY-IN-FACT) (Principal Executive Officer)
* Secretary, Treasurer, Director
-------------------------------------- (Principal Financial and August 28, 1996
Stanley Kreitman Accounting Officer)
*
-------------------------------------- Director August 28, 1996
A.J. Nassar
*
-------------------------------------- Director August 28, 1996
Marshall Manley
*By: /s/ Arthur H. Goldberg
--------------------------------------
Arthur H. Goldberg
(ATTORNEY-IN-FACT)
</TABLE>
II-4
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Orion Acquisition Corp. I
New York, New York
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated August 1, 1996, relating to the
financial statements of Orion Acquisition Corp. I, which is contained in that
Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
BDO Seidman, LLP
New York, New York
August 27, 1996
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER EXHIBITS PAGES
- ----------- ------------------------------------------------------------------------------------- -------------
<C> <C> <S> <C>
1.1 -- Underwriting Agreement...............................................................
3.1 -- Certificate of Incorporation of the Company, as amended..............................
*3.2 -- Form of Bylaws of the Company........................................................
4.1 -- Form of Common Stock Certificate.....................................................
4.2 -- Warrant Agency Agreement between the Company and American Stock Transfer & Trust
Company.............................................................................
4.3 -- Form of Class A Common Stock Purchase Warrant........................................
4.4 -- Form of Class B Unit Purchase Warrant................................................
4.5 -- Form of Representative's Warrant Agreement...........................................
4.6 -- Form of Representative's Warrant (included in Exhibit 4.5)...........................
4.7 -- Form of Unit Certificate.............................................................
5 -- Opinion of Greenbaum, Rowe, Smith, Ravin, Davis & Himmel.............................
10.1 -- Escrow Agreement for proceeds from sale of Units.....................................
*10.2 -- Form of Escrow Agreement for outstanding Common Stock................................
10.3 -- License, dated August 25, 1995, between Bright and the Company.......................
*10.4 -- Form of Management Unit Option Plan..................................................
23.1 -- Consent of BDO Seidman, LLP (Included at page II-5)..................................
23.2 -- Consent of Greenbaum, Rowe, Smith, Ravin, Davis & Himmel (Included in Exhibit 5).....
*24 -- Power of Attorney....................................................................
</TABLE>
- ------------------------
* Previously Filed.
<PAGE>
ORION ACQUISITION CORP. I
800,000 Units
Each Unit Consisting of One Share of Common Stock
and
One Class A Common Stock Purchase Warrant
and
320,000 Class B Unit Purchase Warrants
____________
UNDERWRITING AGREEMENT
____________
[EFFECTIVE DATE]
H.J. Meyers & Co., Inc.
1895 Mount Hope Avenue
Rochester, NY 14620
Attn: Michael S. Smith, Esquire
As representative of the several Underwriters
Ladies and Gentlemen:
ORION ACQUISITION CORP. I, a Delaware corporation (the "Company"), proposes
to issue and sell to the one or more underwriters named in Schedule I hereto
(the "Underwriters"), including H.J. Meyers & Co., Inc. (H.J. Meyers) (the
"Representative" or "you"), the representative of the several Underwriters,
pursuant to this Underwriting Agreement (this "Agreement"):
(1) an aggregate of 800,000 Units (the "Units"), each consisting of
one share of the Common Stock, $.01 par value, of the Company (the "Common
Stock"), and one Class A Common Stock Purchase Warrant (the "Class A
Warrants"), each exercisable to purchase one share of Common Stock at any
time commencing on the date of the business combination (the "Business
Combination"), and ending on the fifth anniversary of the effective date of
the Registration Statement (the "Effective Date"); and
<PAGE>
(2) an aggregate of 320,000 Class B Unit Purchase Warrants (the
"Class B Warrants"), exercisable to purchase one Unit at any time
commencing on the date of the Business Combination and ending on the fifth
anniversary of the Effective Date.
The Class A Warrant exercise price, subject to adjustment as described in the
agreement providing for the Warrants (the "Warrant Agreement"), shall be $9.00
per share. The Class B Warrant exercise price, subject to adjustment as
described in the Warrant Agreement, shall be $0.125 per Unit. In addition, the
Company proposes to grant to the Underwriters the Over-Allotment Option,
referred to and defined in Section 2(c), to purchase all or any part of an
aggregate of 120,000 additional Units and 48,000 additional Class B Warrants,
and to issue to you the Representative's Warrant, referred to and defined in
Section 12, to purchase certain further additional Units and Class B Warrants.
The 800,000 shares of Common Stock comprising the Units, together with the
120,000 additional shares of Common Stock comprising the Units that are the
subject of the Over-Allotment Option, are herein collectively called the
"Shares." The Units, the Shares, the Warrants (including the Warrants
comprising the Units, the additional Warrants comprising the Units that are the
subject of the Over-Allotment Option and the Warrants issuable upon exercise of
the Representative's Warrant), the shares of Common Stock issuable upon exercise
of the Warrants and the shares of Common Stock issuable upon exercise of the
Representative's Warrant, are herein collectively called the "Securities." The
term "Representative's Counsel" shall mean the firm of Harter, Secrest & Emery,
counsel to the Representative, and the term "Company Counsel" shall mean the
firm of Greenbaum, Rowe, Smith, Ravin & Davis, counsel to the Company. Unless
the context otherwise requires, all references herein to a "Section" shall mean
the appropriate Section of this Agreement.
You have advised the Company that the Underwriters desire to purchase the
Units and Class B Warrants as herein provided, and that you have been authorized
to execute this Agreement as representative of the Underwriters. The Company
confirms the agreements made by it with respect to the purchase of the Units and
Class B Warrants by the Underwriters, as follows:
1. REPRESENTATIONS AND WARRANTIES.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and
warrants to, and agrees with, each Underwriter that:
(a) REGISTRATION STATEMENT; PROSPECTUS. A registration statement
(File No. 33-80647) on Form SB-2 relating to the public offering of the
Securities (the "Offering"),
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<PAGE>
including a preliminary form of prospectus, copies of which have heretofore been
delivered to you, has been prepared by the Company in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations of the Securities and Exchange Commission (the
"Commission") promulgated thereunder (the "Rules and Regulations"), and has been
filed with the Commission under the Act. As used herein, the term "Preliminary
Prospectus" shall mean each prospectus filed pursuant to Rule 430 or Rule 424(a)
of the Rules and Regulations. The Preliminary Prospectus bore the legend
required by Item 501 of Regulation S-K under the Act and the Rules and
Regulations. Such registration statement (including all financial statements,
schedules and exhibits) as amended at the time it becomes effective and the
final prospectus included therein are herein respectively called the
"Registration Statement" and the "Prospectus," except that (i) if the prospectus
first filed by the Company pursuant to Rule 424(b) or Rule 430A of the Rules and
Regulations shall differ from such final prospectus as then amended, then the
term "Prospectus" shall instead mean the prospectus first filed pursuant to said
Rule 424(b) or Rule 430A, and (ii) if such registration statement is amended or
such prospectus is amended or supplemented after the effective date of such
registration statement and prior to the Option Closing Date (as defined in
Section 2(c)), then (unless the context necessarily requires otherwise) the term
"Registration Statement" shall include such registration statement as so
amended, and the term "Prospectus" shall include such prospectus as so amended
or supplemented, as the case may be.
(b) CONTENTS OF REGISTRATION STATEMENT. On the Effective Date, and
at all times subsequent thereto for so long as the delivery of a prospectus is
required in connection with the offering or sale of any of the Securities,
(i) the Registration Statement and the Prospectus shall in all respects conform
to the requirements of the Act and the Rules and Regulations, and (ii) neither
the Registration Statement nor the Prospectus shall include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make statements therein not misleading; provided,
however, that the Company makes no representations, warranties or agreements as
to information contained in or omitted from the Registration Statement or
Prospectus in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of the Underwriters specifically for
use in the preparation thereof. It is understood that the statements set forth
in the Prospectus with respect to stabilization, the material set forth under
the caption "UNDERWRITING," and the identity of counsel to the Representative
under the caption "LEGAL MATTERS," constitute the only information furnished in
writing by or on behalf of the Underwriters for inclusion in the Registration
Statement and Prospectus, as the case may be.
(c) ORGANIZATION, STANDING, ETC. The Company and each subsidiary of
the Company (a "Subsidiary") has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware with
full power and corporate authority to own its properties and conduct its
business as described in the Prospectus, and is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each other
jurisdiction in which the nature of its business or the character or location of
its
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<PAGE>
properties requires such qualification, except where failure so to qualify will
not materially affect the business, properties or financial condition of the
Company or such Subsidiary, as the case may be.
(d) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company as of the date of the Prospectus is as set forth in the
Prospectus under the caption "CAPITALIZATION". The shares of Common Stock
issued and outstanding on the Effective Date have been duly authorized, validly
issued and are fully paid and non-assessable. No options, warrants or other
rights to purchase, agreements or other obligations to issue, or agreements or
other rights to convert any obligation into, any shares of capital stock of the
Company or any Subsidiary have been granted or entered into by the Company or
such Subsidiary, except as expressly described in the Prospectus. The
Securities conform to all statements relating thereto contained in the
Registration Statement or the Prospectus.
(e) SECURITIES. The Securities and the Representative's Warrant have
been duly authorized and, when issued and delivered against payment therefor
pursuant to this Agreement, will be duly authorized, validly issued, fully paid
and non-assessable and free of preemptive rights of any security holder of the
Company. Neither the filing of the Registration Statement nor the offering or
sale of any of the Securities or the Representative's Warrant as contemplated by
this Agreement gives rise to any rights, other than those which have been waived
or satisfied, for or relating to the registration of any securities of the
Company, except as described in the Registration Statement.
(f) AUTHORITY, ETC. This Agreement, the Warrant Agreement, the
Representative's Warrant, and the Stock Escrow Agreement, the Financial
Consulting Agreement and the M/A Agreement (each as hereinafter defined), have
been duly and validly authorized, executed and delivered by the Company and,
assuming due execution of this Agreement and such other agreements by the other
party or parties hereto and thereto, constitute valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms. The Company has full right, power and lawful authority to authorize,
issue and sell the Securities and the Representative's Warrant on the terms and
conditions set forth herein. All consents, approvals, authorizations and orders
of any court or governmental authority which are required in connection with the
authorization, execution and delivery of such agreements, the authorization,
issue and sale of the Securities and the Representative's Warrant, and the
consummation of the transactions contemplated hereby have been obtained.
(g) NO CONFLICT. Except as described in the Prospectus, neither the
Company nor any Subsidiary is in violation, breach or default of or under, and
consummation of the transactions hereby contemplated and fulfillment of the
terms of this Agreement will not conflict with or result in a breach of, any of
the terms or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance pursuant to the terms
of, any contract, indenture, mortgage, deed of trust, loan agreement or other
-4-
<PAGE>
material agreement or instrument to which the Company or such Subsidiary is a
party or by which the Company or such Subsidiary may be bound or to which any of
the property or assets of the Company or such Subsidiary are subject, nor will
such action result in any violation of the provisions of the Certificate of
Incorporation or the By-laws of the Company or any Subsidiary, or any statute,
order, rule or regulation applicable to the Company or any Subsidiary of any
court or governmental authority.
(h) ASSETS. Subject to the qualifications stated in the Prospectus:
(i) the Company and each Subsidiary, as the case may be, has good and marketable
title to all properties and assets described in the Prospectus as owned by it,
including without limitation intellectual property, free and clear of all liens,
charges, encumbrances or restrictions, except such as are not materially
significant or important in relation to its business; (ii) all of the material
leases and subleases under which the Company or any Subsidiary is the lessor or
sublessor of properties or assets or under which the Company or any Subsidiary
holds properties or assets as lessee or sublessee, as described in the
Prospectus, are in full force and effect and, except as described in the
Prospectus, neither the Company nor any Subsidiary is in default in any material
respect with respect to any of the terms or provisions of any of such leases or
subleases, and no claim has been asserted by any party adverse to the rights of
the Company or such Subsidiary as lessor, sublessor, lessee or sublessee under
any such lease or sublease, or affecting or questioning the right of the Company
or such Subsidiary to continued possession of the leased or subleased premises
or assets under any such lease or sublease, except as described or referred to
in the Prospectus; and (iii) the Company and each Subsidiary, as the case may
be, owns or leases all such properties, described in the Prospectus, as are
necessary to its operations as now conducted and, except as otherwise stated in
the Prospectus, as proposed to be conducted as set forth in the Prospectus.
(i) INDEPENDENT ACCOUNTANTS. BDO Seidman, LLP, who have given their
report on certain financial statements filed or to be filed with the Commission
as a part of the Registration Statement, and which are included in the
Prospectus, are with respect to the Company, independent public accountants as
required by the Act and the Rules and Regulations.
(j) FINANCIAL STATEMENTS. The financial statements and schedules,
together with related notes, set forth in the Registration Statement and the
Prospectus present fairly the financial position, results of operations and cash
flows of the Company and the Predecessor on the basis stated in the Registration
Statement, at the respective dates and for the respective periods to which they
apply. Such financial statements, schedules and related notes have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the entire period involved, except to the extent
disclosed therein. The financial information for each of the periods presented
in the Registration Statement and the Prospectus present a true and complete
statement of the financial position of the Company and the Predecessor at the
dates indicated and the results of their operations for the periods then
-5-
<PAGE>
ended. The Summary Financial Information and Selected Financial Data included
in the Registration Statement and the Prospectus present fairly the information
shown therein and have been prepared on a basis consistent with that of the
audited financial statements included in the Registration Statement and the
Prospectus.
(k) NO MATERIAL CHANGE. Except as otherwise set forth in the
Prospectus, subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has: (i) incurred any liability or obligation, direct or contingent,
or entered into any transaction, which is material to its business;
(ii) effected or experienced any change in its capital stock; (iii) issued any
options, warrants or other rights to acquire its capital stock; (iv) declared,
paid or made any dividend or distribution of any kind on its capital stock; or
(v) effected or experienced any material adverse change, or development
involving a prospective material adverse change, in its business, property,
operations, condition (financial or otherwise) or earnings.
(l) LITIGATION. Except as set forth in the Prospectus, there is not
now pending nor, to the best knowledge of the Company, threatened, any action,
suit or proceeding (including any related to environmental matters or
discrimination on the basis of age, sex, religion or race), whether or not in
the ordinary course of business, to which the Company or any Subsidiary is a
party or its business or property is subject, before or by any court or
governmental authority, which might result in any material adverse change in the
business, property, operations, condition (financial or otherwise) or earnings
of the Company or such Subsidiary; and no labor disputes involving the employees
of the Company or any Subsidiary exist which might be expected to affect
materially adversely the business, property, operations, condition (financial or
otherwise) or earnings of the Company or such Subsidiary.
(m) NO UNLAWFUL PROSPECTUSES. The Company has not distributed any
prospectus or other offering material in connection with the Offering
contemplated herein, other than any Preliminary Prospectus, the Prospectus or
other material permitted by the Act and the Rules and Regulations.
(n) TAXES. Except as disclosed in the Prospectus, the Company and
each Subsidiary has filed all necessary federal, state, local and foreign income
and franchise tax returns and has paid all taxes shown as due thereon; and there
is no tax deficiency which has been or, to the best knowledge of the Company,
might be asserted against the Company or any Subsidiary.
(o) LICENSES, ETC. The Company and each Subsidiary has in effect all
necessary licenses, permits and other governmental authorizations currently
required for the conduct of its business or the ownership of its property, as
described in the Prospectus, and is in all material respects in compliance
therewith. The Company owns or possesses adequate rights to use all material
patents, patent applications, trademarks, mark registrations, copy-
-6-
<PAGE>
rights and licenses disclosed in the Prospectus and/or which are necessary for
the conduct of such business, and except as disclosed in the Prospectus has not
received any notice of conflict with the asserted rights of others in respect
thereof. To the best knowledge of the Company, none of the activities or
business of the Company or any Subsidiary is in violation of, or would cause the
Company or such Subsidiary to violate, any law, rule, regulation or order of the
United States, any state, county or locality, the violation of which would have
a material adverse effect upon the business, property, operations, condition
(financial or otherwise) or earnings of the Company or such Subsidiary.
(p) NO PROHIBITED PAYMENTS. Neither the Company nor any Subsidiary
nor the Predecessor have, directly or indirectly at any time: (i) made any
contribution to any candidate for political office, or failed to disclose fully
any such contribution in violation of law; or (ii) made any payment to any
federal, state, local or foreign governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
or contributions required or allowed by applicable law. The Company's internal
accounting controls and procedures are sufficient to cause the Company to comply
in all material respects with the Foreign Corrupt Practices Act of 1977, as
amended.
(q) TRANSFER TAXES. On the Closing Dates (as defined in
Section 2(d)), all transfer and other taxes (including franchise, capital stock
and other tax, other than income taxes, imposed by any jurisdiction), if any,
which are required to be paid in connection with the sale and transfer of the
Units to the Underwriters hereunder shall have been fully paid or provided for
by the Company, and all laws imposing such taxes shall have been fully complied
with.
(r) EXHIBITS. All contracts and other documents of the Company or
any Subsidiary which are, under the Rules and Regulations, required to be filed
as exhibits to the Registration Statement have been so filed.
(s) SUBSIDIARIES. Except as described in the Prospectus, the Company
has no Subsidiaries. All of the capital stock of each Subsidiary is owned by
the Company.
(t) SHAREHOLDER AGREEMENTS, REGISTRATION RIGHTS. Except as described
in the Prospectus, no security holder of the Company has any rights with respect
to the purchase, sale or registration of any Securities, and all registration
rights with respect to the Offering have been effectively waived.
(u) INVESTMENT COMPANY STATUS. The Company is in compliance or has
secured a suitable exemption from the Investment Company Act of 1940.
(v) SECURITIES ACT RULE 419. The Company is exempt from the
provisions of Rule 419 of the Securities Act.
-7-
<PAGE>
2. PURCHASE, DELIVERY AND SALE OF UNITS.
(a) PURCHASE PRICE FOR UNITS. The Units and Class B Warrants shall
be sold to and purchased by the Underwriters hereunder at the purchase price of
$9.40 per Unit (that being the public offering price of $10.00 per Unit less an
underwriting discount of 6 percent) and $5.175 per Class B Warrant (that being
the public offering price of $5.75 per Class B Warrant less an underwriting
discount of 10 percent) (respectively the "Purchase Price").
(b) FIRM UNITS.
(i) Subject to the terms and conditions of this Agreement, and
on the basis of the representations, warranties and agreements herein contained
the Company agrees to issue and sell to the Underwriters, severally and not
jointly, and each of the Underwriters agrees, severally and not jointly, to buy
from the Company at the Purchase Price, the number of Units and Class B Warrants
set forth opposite such Underwriter's name in Schedule I hereto (collectively
the "Firm Units").
(ii) Delivery of the Firm Units against payment therefor shall
take place at the offices of H.J. Meyers, 1895 Mt. Hope Avenue, Rochester, New
York 14620 (the "Representative's Offices") (or at such other place as may be
designated by agreement between you and the Company) at 10:00 a.m., New York
time, on [CLOSING DATE], or at such later time and date, not later than ten
banking days after the Effective Date, as you may designate (such time and date
of payment and delivery for the Firm Units being herein called the "First
Closing Date"). Time shall be of the essence and delivery of the Firm Units at
the time and place specified in this Section 2(b)(ii) is a further condition to
the obligations of the Underwriters hereunder.
(c) OPTION UNITS.
(i) In addition, subject to the terms and conditions of this
Agreement, and on the basis of the representations, warranties and agreements
herein contained, the Company hereby grants to the Underwriters an option (the
"Over-Allotment Option") to purchase from the Company all or any part of an
aggregate of an additional 120,000 Units and 48,000 Class B Warrants at the
Purchase Price (collectively the "Option Units"). In the event that the Over-
Allotment Option is exercised by the Underwriters in whole or in part, each
Underwriter shall purchase Option Units in the same proportion as the number of
Firm Units purchased by it bore to the total number of Firm Units, unless you
and the other Underwriters shall otherwise agree.
(ii) The Over-Allotment Option may be exercised by the
Underwriters, in whole or in part, within 30 days after the Effective Date, upon
notice by you to the
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<PAGE>
Company advising it of the number of Option Units as to which the Over-Allotment
Option is being exercised, the names and denominations in which the certificates
for the Shares and the Warrants comprising such Option Units are to be
registered, and the time and date when such certificates are to be delivered.
Such time and date shall be determined by you but shall not be less than four
nor more than ten banking days after exercise of the Over-Allotment Option, nor
in any event prior to the First Closing Date (such time and date being herein
called the "Option Closing Date"). Delivery of the Option Units against payment
therefor shall take place at the Representative's Offices. Time shall be of the
essence and delivery at the time and place specified in this Section 2(c)(ii) is
a further condition to the obligations of the Underwriters hereunder.
(iii) The Over-Allotment Option may be exercised only to cover
over-allotments in the sale by the Underwriters of Firm Units.
(d) DELIVERY OF CERTIFICATES; PAYMENT.
(i) The Company shall make the certificates for the Shares and
the Warrants comprising the Units to be purchased hereunder available to you for
checking at least one banking day prior to the First Closing Date or the Option
Closing Date (each, a "Closing Date"), as the case may be. The certificates
shall be in such names and denominations as you may request at least two banking
days prior to the relevant Closing Date. Time shall be of the essence and the
availability of the certificates at the time and place specified in this
Section 2(d)(i) is a further condition to the obligations of the Underwriters
hereunder.
(ii) On the First Closing Date, the Company shall deliver to you
for the several accounts of the Underwriters definitive engraved certificates in
negotiable form representing all of the Shares and the Warrants comprising the
Firm Units to be sold by the Company, against payment of the Purchase Price
therefor by you for the several accounts of the Underwriters, by certified or
bank cashier's checks payable in next day funds to the order of the Company.
(iii) In addition, if and to the extent that the Underwriters
exercise the Over-Allotment Option, then on the Option Closing Date, the Company
shall deliver to you for the several accounts of the Underwriters definitive
engraved certificates in negotiable form representing the Units, Shares and the
Warrants comprising the Option Units to be sold by the Company, against payment
of the Purchase Price therefor by you for the several accounts of the
Underwriters, by certified or bank cashier's checks payable in next day funds to
the order of the Company.
(iv) It is understood that the Underwriters propose to offer the
Units and Class B Warrants to be purchased hereunder to the public, upon the
terms and conditions set forth in the Registration Statement, after the
Registration Statement becomes effective.
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3. COVENANTS.
COVENANTS OF THE COMPANY. The Company covenants and agrees with each
Underwriter that:
(a) REGISTRATION.
(i) The Company shall use its best efforts to cause the
Registration Statement to become effective and, upon notification from the
Commission that the Registration Statement has become effective, shall so advise
you and shall not at any time, whether before or after the Effective Date, file
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus of which you shall not previously have been advised and furnished
with a copy, or to which you or Representative's Counsel shall have objected in
writing, or which is not in compliance with the Act and the Rules and
Regulations. At any time prior to the later of (A) the completion by the
Underwriters of the distribution of the Units and Class B Warrants contemplated
hereby (but in no event more than nine months after the Effective Date), and
(B) 25 days after the Effective Date, the Company shall prepare and file with
the Commission, promptly upon your request, any amendments to the Registration
Statement or any amendments or supplements to the Prospectus which, in your
reasonable opinion, may be necessary or advisable in connection with the
distribution of the Units and Class B Warrants.
(ii) Promptly after you or the Company shall have been advised
thereof, you shall advise the Company or the Company shall advise you, as the
case may be, and confirm such advice in writing, of (A) the receipt of any
comments of the Commission, (B) the effectiveness of any post-effective
amendment to the Registration Statement, (C) the filing of any supplement to the
Prospectus or any amended Prospectus, (D) any request made by the Commission for
amendment of the Registration Statement or amendment or supplementing of the
Prospectus, or for additional information with respect thereto, or (E) the
issuance by the Commission or any state or regulatory body of any stop order or
other order denying or suspending the effectiveness of the Registration
Statement, or preventing or suspending the use of any Preliminary Prospectus, or
suspending the qualification of the Securities for offering in any jurisdiction,
or otherwise preventing or impairing the Offering, or the institution or threat
of any proceeding for any of such purposes. The Company and you shall not
acquiesce in such order or proceeding, and shall instead actively defend such
order or proceeding, unless the Company and you agree in writing to such
acquiescence.
(iii) The Company has caused to be delivered to you copies of
each Preliminary Prospectus, and the Company has consented and hereby consents
to the use of such copies for the purposes permitted by the Act. The Company
authorizes the Underwriters and selected dealers to use the Prospectus in
connection with the sale of the Units and Class B
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Warrants for such period as in the opinion of Representative's Counsel the use
thereof is required to comply with the applicable provisions of the Act and the
Rules and Regulations. In case of the happening, at any time within such period
as a prospectus is required under the Act to be delivered in connection with
sales by an underwriter or dealer, of any event of which the Company has
knowledge and which materially affects the Company or the Securities, or which
in the opinion of Company Counsel or of Representative's Counsel should be set
forth in an amendment to the Registration Statement or an amendment or
supplement to the Prospectus in order to make the statements made therein not
then misleading, in light of the circumstances existing at the time the
Prospectus is required to be delivered to a purchaser of the Units or Class B
Warrants, or in case it shall be necessary to amend or supplement the Prospectus
to comply with the Act or the Rules and Regulations, the Company shall notify
you promptly and forthwith prepare and furnish to the Underwriters copies of
such amended Prospectus or of such supplement to be attached to the Prospectus,
in such quantities as you may reasonably request, in order that the Prospectus,
as so amended or supplemented, shall not contain any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements in the Prospectus, in the light of the circumstances under which they
are made, not misleading. The preparation and furnishing of each such amendment
to the Registration Statement, amended Prospectus or supplement to be attached
to the Prospectus shall be without expense to the Underwriters, except that in
the case that the Underwriters are required, in connection with the sale of the
Units or Class B Warrants, to deliver a prospectus nine months or more after the
Effective Date, the Company shall upon your request and at the expense of the
Underwriters, amend the Registration Statement and amend or supplement the
Prospectus, or file a new registration statement on Form SB-2 (if applicable) or
Form S-1, if necessary, and furnish the Underwriters with reasonable quantities
of prospectuses complying with section 10(a)(3) of the Act.
(iv) The Company shall comply with the Act, the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations promulgated thereunder in connection with
the offering and issuance of the Securities.
(b) BLUE SKY. The Company shall, at its own expense, use its best
efforts to qualify or register the Securities for sale under the securities or
"blue sky" laws of such jurisdictions as you may designate, and shall make such
applications and furnish such information to Representative's Counsel as may be
required for that purpose, and shall comply with such laws; provided, however,
that the Company shall not be required to qualify as a foreign corporation or a
dealer in securities or to execute a general consent to service of process in
any jurisdiction in any action other than one arising out of the offering or
sale of the Units. The Company shall bear all of the expense of such
qualifications and registrations, including without limitation the legal fees
and disbursements of Representative's Counsel, which fees, exclusive of
disbursements, shall not exceed $35,000 (unless otherwise agreed). After each
Closing Date the Company shall, at its own expense, from time to time prepare
and file such
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statements and reports as may be required to continue each such qualification in
effect for so long a period as you may reasonably request.
(c) EXCHANGE ACT REGISTRATION. The Company shall, at its own
expense, prepare and file with the Commission a registration statement (on
Form 8-A or Form 10) under section 12(g) of the Exchange Act concurrently with
the completion of the Offering or promptly thereafter, but in no event later
than 45 days from the Effective Date, and shall use its best efforts to cause
such registration statement to be declared effective and maintained in effect
for at least five years from the Effective Date.
(d) PROSPECTUS COPIES. The Company shall deliver to you on or before
the First Closing Date two signed copies of the Registration Statement including
all financial statements, schedules and exhibits filed therewith, and of all
amendments thereto. The Company shall deliver to or on the order of the
Underwriters, from time to time until the Effective Date, as many copies of any
Preliminary Prospectus filed with the Commission prior to the Effective Date as
the Underwriters may reasonably request. The Company shall deliver to the
Underwriters on the Effective Date, and thereafter for so long as a prospectus
is required to be delivered under the Act, from time to time, as many copies of
the Prospectus, in final form, or as thereafter amended or supplemented, as the
Underwriters may from time to time reasonably request.
(e) AMENDMENTS AND SUPPLEMENTS. The Company shall, promptly upon
your request, prepare and file with the Commission any amendments to the
Registration Statement, and any amendments or supplements to the Preliminary
Prospectus or the Prospectus, and take any other action which in the reasonable
opinion of Representative's Counsel may be reasonably necessary or advisable in
connection with the distribution of the Units and Class B Warrants, and shall
use its best efforts to cause the same to become effective as promptly as
possible.
(f) CERTAIN MARKET PRACTICES. The Company has not taken, and shall
not take, directly or indirectly, any action designed, or which might reasonably
be expected, to cause or result in, or which has constituted, the stabilization
or manipulation of the price of the Securities to facilitate the sale or resale
thereof.
(g) CERTAIN REPRESENTATIONS. Neither the Company nor any
representative of the Company has made or shall make any written or oral
representation in connection with the Offering and sale of the Securities or the
Representative's Warrant which is not contained in the Prospectus, which is
otherwise inconsistent with or in contravention of any thing contained in the
Prospectus, or which shall constitute a violation of the Act, the Rules and
Regulations, the Exchange Act or the rules and regulations promulgated under the
Exchange Act.
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(h) CONTINUING REGISTRATION OF WARRANTS AND UNDERLYING COMMON STOCK.
For so long as any Warrant is outstanding, the Company shall, at its own
expense: (i) use its best efforts to cause post-effective amendments to the
Registration Statement, or new registration statements (which may be on
Forms SB-2, S-2 or S-3, as the case may be) relating to the Warrants and the
Common Stock and Units underlying the Warrants to become effective in compliance
with the Act and without any lapse of time between the effectiveness of the
Registration Statement and of any such post-effective amendment or new
registration statement; (ii) cause a copy of each Prospectus, as then amended,
to be delivered to each holder of record of a Warrant; (iii) furnish to the
Underwriters and dealers as many copies of each such Prospectus as the
Underwriters or dealers may reasonably request; and (iv) maintain the "blue sky"
qualification or registration of the Warrants and the Common Stock and Units
underlying the Warrants, or have a currently available exemption therefrom, in
each jurisdiction in which the Securities were so qualified or registered for
purposes of the Offering. In addition, for so long as any Warrant is
outstanding, the Company shall promptly notify you of any material change in the
business, financial condition or prospects of the Company.
(i) USE OF PROCEEDS. The Company shall apply the net proceeds from
the sale of the Units substantially for the purposes set forth in the Prospectus
under the caption "USE OF PROCEEDS," and shall file such reports with the
Commission with respect to the sale of the Units and the application of the
proceeds therefrom as may be required pursuant to Rule 463 of the Rules and
Regulations.
(j) TWELVE MONTHS' EARNINGS STATEMENT. The Company shall make
generally available to its security holders and deliver to you as soon as it is
practicable so to do, but in no event later than 90 days after the end of twelve
months after the close of its current fiscal quarter, an earnings statement
(which need not be audited) covering a period of at least twelve consecutive
months beginning after the Effective Date, which shall satisfy the requirements
of section 11(a) of the Act.
(k) NASDAQ, EXCHANGE LISTINGS, ETC. Within 10 days after the
Effective Date, the Company shall also use its best efforts to list itself in
Moody's OTC Industrial Manual or Standard & Poor's Corporation Records and to
cause such listing to be maintained for two years. After the Business
Combination, the Company shall immediately make all filings required to seek
approval for the quotation of the Securities on The Nasdaq Stock Market
("NASDAQ"), the NASDAQ-NNM or the New York Stock Exchange ("NYSE"), and shall
use its best efforts to effect and maintain such approval for at least two
years.
(l) BOARD OF DIRECTORS. The Company shall maintain a Board of
Directors comprised of a size and structure as the Company and Underwriters
jointly agree until completion of the Business Combination.
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(m) PERIODIC REPORTS. For so long as the Company is a reporting
company under section 12(g) or section 15(d) of the Exchange Act, the Company
shall, at its own expense, furnish to its shareholders an annual report
(including financial statements audited by certified public accountants) in
reasonable detail. In addition, during the period ending five years from the
date hereof, the Company shall, at its own expense, furnish to you: (i) within
90 days of the end of each fiscal year, a balance sheet of the Company and its
Subsidiaries as at the end of such fiscal year, together with statements of
income, stockholders' equity and cash flows of the Company and its Subsidiaries
as at the end of such fiscal year, all in reasonable detail and accompanied by a
copy of the certificate or report thereon of certified public accountants;
(ii) as soon as they are available, a copy of all reports (financial or
otherwise) distributed to security holders; (iii) as soon as they are available,
a copy of all non-confidential reports and financial statements furnished to or
filed with the Commission; and (iv) such other information as you may from time
to time reasonably request. The financial statements referred to herein shall
be on a consolidated basis to the extent the accounts of the Company and its
Subsidiaries are consolidated in reports furnished to its shareholders
generally. In addition, during the period ending one year from the date hereof,
the company shall, at its own expense, furnish you monthly with Depository Trust
Company stock transfer sheets.
(n) CERTAIN OPTIONS. For a period of 90 days following the First
Closing Date, the Company shall not, without your prior written consent, grant
any options, warrants or other rights to purchase shares of Common Stock at a
price less than the initial public Offering price of the Shares comprising the
Units and Class B Warrants.
(o) WARRANT SOLICITATION. Upon the exercise of any Warrants on or
after the first anniversary of the Effective Date, the Company shall pay you a
commission of 10 percent of the aggregate exercise price of such Warrants, 8
percent of which may be reallowed by you to the dealer who solicited the
exercise (which may also be you), if: (i) the market price of the Common Stock
is greater than the exercise price of the Warrant on the date of exercise;
(ii) the exercise of the Warrant was solicited by a member of the National
Association of Securities Dealers, Inc. ("NASD"); (iii) the Warrant is not held
in a discretionary account; (iv) the disclosure of the compensation arrangements
has been made in documents provided to customers, both as part of the Offering
and at the time of exercise; and (v) the solicitation of the Warrant was not in
violation of Rule 10b-6 promulgated under the Exchange Act. The Company agrees
not to solicit the exercise of any Warrant other than through you, and shall not
authorize any other dealer to engage in such solicitation without your prior
written consent. No commission shall be paid to you on any Warrant exercised
prior to the first anniversary of the Effective Date, or on any Warrant
exercised at any time without solicitation by you.
(p) AVAILABLE SHARES. The Company shall reserve and at all times
keep available that maximum number of its authorized but unissued Securities
which are issuable
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upon exercise of the Warrants, the Representative's Warrant, and the Warrants
issuable upon exercise of the Representative's Warrant, in each case taking into
account the anti-dilution provisions thereof.
(q) INVESTMENT BANKING ADVISOR. The Company shall engage an
investment banking firm to advise the Company concerning potential business
combinations.
(r) STOCK ESCROW AGREEMENT. On or before the Effective Date, the
Company shall, and shall cause all of its current shareholders to, execute and
deliver to you an agreement with American Stock Transfer & Trust Company (or
other escrow agent mutually acceptable to the Company and you), in the form
previously delivered to the Company by you, regarding the escrow of all shares
of Common Stock and Series A Preferred Stock owned by such shareholders (the
"Stock Escrow Agreement").
(s) M/A AGREEMENT. On the First Closing Date and simultaneously with
the delivery of the Firm Units, the Company shall execute and deliver to you an
agreement with you, in the form previously delivered to the Company by you,
regarding mergers, acquisitions, joint ventures and certain other forms of
transactions (the "M/A Agreement").
(t) PUBLIC RELATIONS. Prior to the Effective Date the Company shall
have retained a public relations firm acceptable to you, and shall continue to
retain such firm, or an alternate firm acceptable to you, for a period of two
years.
(u) BOUND VOLUMES. Within 90 days from the First Closing Date, the
Company shall deliver to you, at the Company's expense, three bound volumes in
form and content acceptable to you, containing the Registration Statement and
all exhibits filed therewith and all amendments thereto, and all other
agreements, correspondence, filings, certificates and other documents filed
and/or delivered in connection with the Offering.
4. CONDITIONS TO UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Units which they have agreed to
purchase hereunder are subject to the accuracy (as of the date hereof and as of
each Closing Date) of and compliance with the representations and warranties of
the Company contained herein, the performance by the Company of all of their
obligations hereunder, the execution, delivery and performance by each of the
parties thereto of all of their obligations under the Stock Escrow Agreement,
and the following further conditions:
(a) EFFECTIVE REGISTRATION STATEMENT; NO STOP ORDER. The
Registration Statement shall have become effective and you shall have received
notice thereof not later than 6:00 p.m., New York time, on the date of this
Agreement, or at such later time or on such later date as to which you may agree
in writing. In addition, on each Closing Date (i) no stop order denying or
suspending the effectiveness of the Registration Statement shall be in effect,
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and no proceedings for that or any similar purpose shall have been instituted or
shall be pending or, to your knowledge or to the knowledge of the Company, shall
be contemplated by the Commission, and (ii) all requests on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of Representative's Counsel.
(b) OPINION OF COMPANY COUNSEL. On the First Closing Date, you shall
have received the opinion, dated as of the First Closing Date, of Company
Counsel, in form and substance satisfactory to Representative's Counsel, to the
effect that:
(i) the Company and each Subsidiary has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Delaware, with full power and corporate
authority to own its properties and conduct its business as described
in the Prospectus, and is duly qualified or licensed to do business as
a foreign corporation and is in good standing in each other
jurisdiction in which the nature of its business or the character or
location of its properties requires such qualification, except where
failure so to qualify will not materially affect the business,
properties or financial condition of the Company or such Subsidiary;
(ii) to the best knowledge of such counsel, (A) the Company
and each Subsidiary has obtained, or is in the process of obtaining,
all necessary licenses, permits and other governmental authorizations
currently required for the conduct of its business or the ownership of
its property, as described in the Prospectus, (B) such obtained
licenses, permits and other governmental authorizations are in full
force and effect, and (C) the Company and each Subsidiary is, in all
material respects, in compliance therewith;
(iii) (A) the authorized capitalization of the Company as of
the date of the Prospectus was as is set forth in the Prospectus under
the caption "CAPITALIZATION;" (B) all of the shares of Common Stock
now outstanding have been duly authorized and validly issued, are
fully paid and non-assessable, conform to the description thereof
contained in the Prospectus, have not been issued in violation of the
preemptive rights of any shareholder and, except as described in the
Prospectus, are not subject to any restrictions upon the voting or
transfer thereof; (C) all of the Shares and all of the Warrants
comprising the Units have been duly authorized and, when paid for as
provided herein, shall be validly issued, fully paid and non-
assessable, shall not have been issued in violation of the preemptive
rights of any shareholder, and no personal liability shall attach to
the ownership thereof; (D) the shareholders of the Company do not have
any preemptive rights or other rights to subscribe for or purchase,
and there are no restrictions upon the voting or transfer of, any of
the Securities; (E) the Shares and the Warrants comprising the Units,
the Warrant Agreement
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and the Representative's Warrant conform to the respective descriptions
thereof contained in the Prospectus; (F) all prior sales of the Company's
securities have been made in compliance with, or under an exemption from,
the Act and applicable state securities laws; (G) a sufficient number of
shares of Common Stock has been reserved, for all times when any of the
Warrants (including the Warrants issuable upon exercise of the
Representative's Warrant) are outstanding, for issuance upon exercise of
all of the Warrants; and (H) to the best knowledge of such counsel, neither
the filing of the Registration Statement nor the offering or sale of the
Units as contemplated by this Agreement gives rise to any registration
rights or other rights, other than those which have been effectively waived
or satisfied, for or relating to the registration of any securities of the
Company;
(iv) the certificates evidencing the Units, the Shares and
the Warrants comprising the Units and Warrants are each in valid and
proper legal form; and the Warrants are exercisable for shares of
Common Stock or Units in accordance with the terms of the Warrants and
at the prices therein provided for;
(v) this Agreement, the Warrant Agreement, the
Representative's Warrant, the Stock Escrow Agreement and the M/A
Agreement have been duly and validly authorized, executed and
delivered by the Company and (assuming due execution and delivery
thereof by the Representative and/or American Stock Transfer & Trust
Company, as the case may be) all of such agreements are, or when duly
executed shall be, the valid and legally binding obligations of the
Company, enforceable in accordance with their respective terms (except
as enforceability may be limited by bankruptcy, insolvency or other
laws affecting the rights of creditors generally); provided, however,
that no opinion need be expressed as to the enforceability of the
indemnity provisions contained in Section 6 or the contribution
provisions contained in Section 7;
(vi) to the best knowledge of such counsel, (A) there is no
pending, threatened or contemplated legal or governmental proceeding
affecting the Company or any Subsidiary which could materially and
adversely affect the business, property, operations, condition
(financial or otherwise) or earnings of the Company or such
Subsidiary, or which questions the validity of the Offering, the
Securities, this Agreement, the Warrant Agreement, the
Representative's Warrant, the Stock Escrow Agreement or the M/A
Agreement, or of any action taken or to be taken by the Company
pursuant thereto; and (B) there is no legal or governmental proceeding
or regulation required to be described or
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referred to in the Registration Statement which is not so described or
referred to;
(vii) to the best knowledge of such counsel, (A) the
Company is not in violation of or default under this Agreement, the
Warrant Agreement, the Representative's Warrant, the Stock Escrow
Agreement, the Financial Consulting Agreement or the M/A Agreement;
and (B) the execution and delivery hereof and thereof and the
incurrence of the obligations herein and therein set forth and the
consummation of the transactions herein or therein contemplated shall
not result in a violation of, or constitute a default under, the
Certificate of Incorporation or By-laws of the Company, or any
material obligation, agreement, covenant or condition contained in any
bond, debenture, note or other evidence of indebtedness, or in any
material contract, indenture, mortgage, loan agreement, lease, joint
venture or other agreement or instrument to which the Company is a
party or by which its assets are bound, or any material order, rule,
regulation, writ, injunction or decree of any government, governmental
instrumentality or court;
(viii) the Registration Statement has become effective under the
Act, and to the best knowledge of such counsel, no stop order denying or
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for that or any similar purpose have been instituted or
are pending before or threatened by the Commission;
(ix) the Registration Statement and the Prospectus (except for
the financial statements, notes thereto and other financial information and
statistical data contained therein, as to which no opinion need be
rendered), comply as to form in all material respects with the Act and the
Rules and Regulations;
(x) all descriptions contained in the Registration
Statement or the Prospectus of contracts and other documents are
accurate and fairly present the information required to be described,
and such counsel is familiar with all contracts and other documents
referred to in the Registration Statement and the Prospectus or filed
as exhibits to the Registration Statement and, to the best knowledge
of such counsel, no contract or document of a character required to be
summarized or described therein or to be filed as an exhibit thereto
is not so summarized, described or filed;
(xi) the descriptions contained in the Registration
Statement and the Prospectus which purport to summarize the provisions
of statutes, rules and regulations are accurate summaries in all
respects, and such descriptions fairly present in all respects the
information shown, and the descriptions
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contained in the Registration Statement and the Prospectus that concern
matters of law or legal conclusions have been reviewed by such counsel and
are correct;
(xii) the Stock Escrow Agreement has been duly and validly
executed and delivered by each party thereto (other than American
Stock Transfer & Trust Company); and
(xiii) except for registration under the Act and
registration or qualification of the Securities under applicable state
or foreign securities or blue sky laws, no authorization, approval,
consent or license of any governmental or regulatory authority or
agency is necessary in connection with: (A) the authorization,
issuance, sale, transfer or delivery of the Securities by the Company;
(B) the execution, delivery and performance of this Agreement by the
Company or the taking of any action contemplated herein; (C) the
issuance of the Representative's Warrant or the Securities issuable
upon exercise thereof; or (D) the execution, delivery and performance
of this Agreement by the Company or the taking of any action
contemplated herein.
Such opinion shall also state that such counsel has participated in the
preparation of the Registration Statement and the Prospectus, and nothing has
come to the attention of such counsel to cause such counsel to have reason to
believe that the Registration Statement at the time it became effective
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus contains any untrue statement of
a material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (except, in the case of both the Registration Statement and the
Prospectus, for the financial statements, notes thereto and other financial
information and statistical data contained therein, as to which no need be. Such
opinion shall also cover such matters incident to the transactions contemplated
hereby as you or Representative's Counsel shall reasonably request. In
rendering such opinion, Company Counsel may rely as to matters of fact upon
certificates of officers of the Company-, and of public officials, and may rely
as to all matters of law other than the law of the United States or the State of
Delaware upon opinions of counsel satisfactory to you, in which case the opinion
shall state that they have no reason to believe that you and they are not
entitled so to rely.
(c) CORPORATE PROCEEDINGS. All corporate proceedings and other legal
matters relating to this Agreement, the Registration Statement, the Prospectus
and other related matters shall be reasonably satisfactory to or approved by
Representative's Counsel, and you shall have received from such counsel a signed
opinion, dated as of the First Closing Date, with respect to the validity of the
issuance of the Units, the form of the Registration Statement and Prospectus
(other than the financial statements and other financial or statistical data
contained therein), the execution of this Agreement and other related matters as
you may
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reasonably require. The Company shall have furnished to Representative's
Counsel such documents as they may reasonably request for the purpose of
enabling them to render such opinion.
(d) COMFORT LETTER. Prior to the Effective Date, and again on and as
of the First Closing Date, you shall have received a letter from BDO Seidman,
LLP, certified public accountants for the Company, substantially in the form
approved by you.
(e) BRING DOWN. At each of the Closing Dates, (i) the
representations and warranties of the Company contained in this Agreement shall
be true and correct with the same effect as if made on and as of such Closing
Date, and the Company shall have performed all of their obligations hereunder
and satisfied all the conditions on their parts to be satisfied at or prior to
such Closing Date; (ii) the Registration Statement and the Prospectus shall
contain all statements which are required to be stated therein in accordance
with the Act and the Rules and Regulations, and shall in all material respects
conform to the requirements of the Act and the Rules and Regulations, and
neither the Registration Statement nor the Prospectus shall contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein not
misleading; (iii) there shall have been, since the respective dates as of which
information is given, no material adverse change in the business, property,
operations, condition (financial or otherwise), earnings, capital stock, long-
term or short-term debt or general affairs of the Company from that set forth in
the Registration Statement and the Prospectus, except changes which the
Registration Statement and Prospectus indicate might occur after the Effective
Date, and the Company shall not have incurred any material liabilities nor
entered into any material agreement other than as referred to in the
Registration Statement and Prospectus; and (iv) except as set forth in the
Prospectus, no action, suit or proceeding shall be pending or threatened against
the Company which would be required to be disclosed in the Registration
Statement, and no proceedings shall be pending or threatened against the Company
before or by any commission, board or administrative agency in the United States
or elsewhere, wherein an unfavorable decision, ruling or finding would
materially adversely affect the business, property, operations, condition
(financial or otherwise), earnings or general affairs of the Company. In
addition, you shall have received, at the First Closing Date, a certificate
signed by the principal executive officer and by the principal financial officer
of the Company, dated as of the First Closing Date, evidencing compliance with
the provisions of this Section 4(e).
(f) TRANSFER AND WARRANT AGENT. On or before the Effective Date, the
Company shall have appointed American Stock Transfer & Trust Company (or other
agent mutually acceptable to the Company and you), as its transfer agent and
warrant agent to transfer all of the Shares and Warrants issued in the Offering,
as well as to transfer other shares of the Common Stock outstanding from time to
time.
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(g) CERTAIN FURTHER MATTERS. On each Closing Date, Representative's
Counsel shall have been furnished with all such other documents and certificates
as they may reasonably request for the purpose of enabling them to render their
legal opinion to the Underwriter and in order to evidence the accuracy and
completeness of any of the representations, warranties or statements, the
performance of any of the covenants, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company on or
prior to each of the Closing Dates in connection with the authorization,
issuance and sale of the Securities as herein contemplated shall be reasonably
satisfactory in form and substance to you and to Representative's Counsel.
(h) ADDITIONAL CONDITIONS. Upon exercise of the Over-Allotment
Option, the Underwriters' obligations to purchase and pay for the Option Units
shall be subject (as of the date hereof and as of the Option Closing Date) to
the following additional conditions:
(i) The Registration Statement shall remain effective at the
Option Closing Date, no stop order denying or suspending the effectiveness
thereof shall have been issued, and no proceedings for that or any similar
purpose shall have been instituted or shall be pending or, to your knowledge or
the knowledge of the Company, shall be contemplated by the Commission, and all
reasonable requests on the part of the Commission for additional information
shall have been complied with to the satisfaction of Representative's Counsel.
(ii) On the Option Closing Date there shall have been delivered
to you the signed opinion of Company Counsel, dated as of the Option Closing
Date, in form and substance satisfactory to Representative's Counsel, which
opinion shall be substantially the same in scope and substance as the opinion
furnished to you on the First Closing Date pursuant to Section 4(b), except that
such opinion, where appropriate, shall cover the Option Units rather than the
Firm Units. If the First Closing Date is the same as the Option Closing Date,
such opinions may be combined.
(iii) All proceedings taken at or prior to the Option Closing
Date in connection with the sale and issuance of the Option Units shall be
satisfactory in form and substance to you, and you and Representative's Counsel
shall have been furnished with all such documents, certificates and opinions as
you may request in connection with this transaction in order to evidence the
accuracy and completeness of any of the representations, warranties or
statements of the Company or its compliance with any of the covenants or
conditions contained herein.
(iv) On the Option Closing Date there shall have been delivered
to you a letter in form and substance satisfactory to you from BDO Seidman, LLP,
dated the Option Closing Date and addressed to you, confirming the information
in their letter referred to in Section 4(d) as of the date thereof and stating
that, without any additional investigation required, nothing has come to their
attention during the period from the ending date of their
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<PAGE>
review referred to in such letter to a date not more than five banking days
prior to the Option Closing Date which would require any change in such letter
if it were required to be dated the Option Closing Date.
(v) On the Option Closing Date there shall have been delivered
to you a certificate signed by the principal executive officer and by the
principal financial or accounting officer of the Company, dated the Option
Closing Date, in form and substance satisfactory to Representative's Counsel,
substantially the same in scope and substance as the certificate furnished to
you on the First Closing Date pursuant to Section 4(e).
(i) CANCELLATION. If any of the conditions provided by this
Section 4 shall not have been completely fulfilled as of the date indicated,
then this Agreement and all obligations of the Underwriters hereunder may be
cancelled at, or at any time prior to, either Closing Date by your notifying the
Company of such cancellation in writing or by telegram at or prior to the
applicable Closing Date. Any such cancellation shall be without liability of
the Underwriters to the Company, except as otherwise provided herein.
5. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company to sell and deliver the Units and Class B Warrants are subject to the
following conditions:
(a) EFFECTIVE REGISTRATION STATEMENT. The Registration Statement
shall have become effective not later than 6:00 p.m. New York time, on the date
of this Agreement, or at such later time or on such later date as the Company
and you may agree in writing.
(b) NO STOP ORDER. On the applicable Closing Date, no stop order
denying or suspending the effectiveness of the Registration Statement shall have
been issued under the Act or any proceedings therefor initiated or threatened by
the Commission.
(c) PAYMENT FOR UNITS. On the applicable Closing Date, you shall
have made payment, for the several accounts of the Underwriters, of the
aggregate Purchase Price for the Units then being purchased, by certified or
bank cashier's checks payable in next day funds to the order of the Company.
If the conditions to the obligations of the Company provided by this Section 5
have been fulfilled on the First Closing Date but are not fulfilled after the
First Closing Date and prior to the Option Closing Date, then only the
obligation of the Company to sell and deliver the Option Units upon exercise of
the Over-Allotment Option shall be affected.
6. INDEMNIFICATION.
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(a) INDEMNIFICATION BY THE COMPANY. As used in this Agreement, the
term "Liabilities" shall mean any and all losses, claims, damages and
liabilities, and actions and proceedings in respect thereof (including without
limitation all reasonable costs of defense and investigation and all attorneys'
fees) including without limitation those asserted by any party to this Agreement
against any other party to this Agreement. The Company hereby indemnifies and
holds harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of the Act, from and against all Liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such Liabilities arise
out of or are based upon: (i) any untrue statement or alleged untrue statement
of any material fact contained in (A) the Registration Statement or any
amendment thereto, or the Prospectus or any Preliminary Prospectus, or any
amendment or supplement thereto, or (B) any "blue sky" application or other
document executed by the Company specifically for that purpose, or based upon
written information furnished by the Company, filed in any state or other
jurisdiction in order to qualify any or all of the Securities under the
securities laws thereof (any such application, document or information being
herein called a "Blue Sky Application"); or (ii) the omission or alleged
omission to state in the Registration Statement or any amendment thereto, or the
Prospectus or any Preliminary Prospectus, or any amendment or supplement
thereto, or in any Blue Sky Application, a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that the Company shall not be liable in any such case to the extent,
but only to the extent, that any such Liabilities arise out of or are based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made in reliance upon and in conformity with written information furnished to
the Company through you by or on behalf of any Underwriter specifically for use
in the preparation of the Registration Statement or any such amendment thereto,
or the Prospectus or any such Preliminary Prospectus, or any such amendment or
supplement thereto, or any such Blue Sky Application. The foregoing indemnity
shall be in addition to any other liability which the Company may otherwise
have.
(b) INDEMNIFICATION BY UNDERWRITERS. Each Underwriter, severally
and not jointly, hereby indemnifies and holds harmless the Company, each of
its directors, each nominee (if any) for director named in the Prospectus,
each of its officers who have signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of the Act, from
and against all Liabilities to which the Company or any such director,
nominee, officer or controlling person may become subject under the Act or
otherwise, insofar as such Liabilities arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, or the Prospectus or
any Preliminary Prospectus, or any amendment or supplement thereto, or (ii)
the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that any such
Liabilities arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in the Registration
Statement or any amendment thereto, or the Prospectus or any Preli-
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minary Prospectus, or any amendment or supplement thereto, in reliance upon
and in conformity with written information furnished to the Company through
you, by or on behalf of such Underwriter, specifically for use in the
preparation thereof. In no event shall any Underwriter be liable or
responsible for any amount in excess of the compensation received by such
Underwriter, in the form of underwriting discounts or otherwise, pursuant to
this Agreement or any other agreement contemplated hereby. The foregoing
indemnity shall be in addition to any other liability which any Underwriter
may otherwise have.
(c) PROCEDURE. Promptly after receipt by an indemnified party under
this Section 6 of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify in writing the indemnifying
party of the commencement thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under this Section 6. In case any such
action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
subject to the provisions hereof, with counsel reasonably satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. The indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the fees and expenses of such counsel shall not be at the expense of the
indemnifying party if the indemnifying party has assumed the defense of the
action with counsel reasonably satisfactory to the indemnified party; provided,
however, that if the indemnified party is any Underwriter or a person who
controls any Underwriter within the meaning of the Act, the fees and expenses of
such counsel shall be at the expense of the indemnifying party if (i) the
employment of such counsel has been specifically authorized in writing by the
indemnifying party, or (ii) the named parties to any such action (including any
impleaded parties) include both such Underwriter or such controlling person and
the indemnifying party and, in your judgment, it is advisable for such
Underwriter or controlling person to be represented by separate counsel (in
which case the indemnifying party shall not have the right to assume the defense
of such action on behalf of such Underwriter or such controlling person, it
being understood, however, that the indemnifying party shall not, in connection
with any one such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more than one
separate firm of attorneys). No settlement of any action against an indemnified
party shall be made without the consent of the indemnified party, which shall
not be unreasonably withheld in light of all factors of importance to such
indemnified party.
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7. CONTRIBUTION. In order to provide for just and equitable contribution
under the Act in any case in which (a) any indemnified party makes claims for
indemnification pursuant to Section 6 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 the express provisions of Section 6 provide for indemnification in such
case, or (b) contribution under the Act may be required on the part of any
indemnified party, then such indemnified party and each indemnifying party (if
more than one) shall contribute to the aggregate Liabilities to which it may be
subject, in either such case (after contribution from others) in such
proportions that the Underwriters are responsible in the aggregate for that
portion of such Liabilities represented by the percentage that the underwriting
discount per Unit appearing on the cover page of the Prospectus bears to the
public Offering price per Unit appearing thereon, and the Company shall be
responsible for the remaining portion; provided, however, that if such
allocation is not permitted by applicable law, then the relative fault of the
Company and the Underwriters in connection with the statements or omissions
which resulted in such Liabilities and other relevant equitable considerations
shall also be considered. The relative fault shall be determined by reference
to, among other things, whether in the case of an untrue statement of a material
fact or the omission to state a material fact, such statement or omission
relates to information supplied by the Company or the Underwriters, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if the respective
obligations of the Company and the Underwriters to contribute pursuant to this
Section 7 were to be determined by PRO RATA or PER CAPITA allocation of the
aggregate Liabilities (even if the Underwriters were to be treated as one entity
for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in the first sentence of
this Section 7. In addition, the contribution of any Underwriter shall not be
in excess of its proportionate share of the portion of such Liabilities for
which such Underwriter is responsible. 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 is not guilty of such fraudulent
misrepresentation. As used in this Section 7, the term "Company" shall include
any officer, director or person who controls the Company within the meaning of
section 15 of the Act. The Underwriters' obligations under this Section 7 to
contribute are several in proportion to their respective underwriting
obligations and not joint. If the full amount of the contribution specified in
this Section 7 is not permitted by law, then each indemnified party and each
person who controls an indemnified party shall be entitled to contribution from
each indemnifying party to the full extent permitted by law. The foregoing
contribution agreement shall in no way affect the contribution liabilities of
any persons having liability under section 11 of the Act other than the Company
and the Underwriters. No contribution shall be requested with regard to the
settlement of any matter from any party who did not consent to the settlement;
provided, however, that such consent shall not be unreasonably withheld in light
of all factors of importance to such party.
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8. COSTS AND EXPENSES.
(a) CERTAIN COSTS AND EXPENSES. Whether or not this Agreement
becomes effective or the sale of the Units to the Underwriters is consummated,
the Company shall pay all costs and expenses incident to the issuance, offering,
sale and delivery of the Units and the performance of its obligations under this
Agreement, including without limitation: (i) all fees and expenses of the
Company's legal counsel and accountants; (ii) all costs and expenses incident to
the preparation, printing, filing and distribution of the Registration Statement
(including the financial statements contained therein and all exhibits and
amendments thereto), each Preliminary Prospectus and the Prospectus, each as
amended or supplemented, this Agreement and the other agreements and documents
referred to herein, each in such quantities as you shall deem necessary;
(iii) all fees of NASD required in connection with the filing required by NASD
to be made by the Representative with respect to the Offering; (iv) all
expenses, including fees (but not in excess of the amount set forth in
Section 3(b)) and disbursements of Representative's Counsel in connection with
the qualification of the Securities under the "blue sky" laws which you shall
designate; (v) all costs and expenses of printing the respective certificates
representing the Shares and the Warrants; (vi) the expense of placing one or
more "tombstone" advertisements or promotional materials as directed by you
(provided, however, that the aggregate amount thereof shall not exceed $10,000);
(vii) all costs and expenses of the Company and its employees (but not of the
Representative or its employees) associated with due diligence meetings and
presentations; (viii) all costs and expenses associated with the preparation of
a seven to ten minute professional video presentation concerning the Company,
its products and its management for broker due diligence purposes; (ix) any and
all taxes (including without limitation any transfer, franchise, capital stock
or other tax imposed by any jurisdiction) on sales of the Units to the
Underwriters hereunder; and (x) all costs and expenses incident to the
furnishing of any amended Prospectus or any supplement to be attached to the
Prospectus as required by Sections 3(a) and 3(d), except as otherwise provided
by said Sections.
(b) REPRESENTATIVE'S EXPENSE ALLOWANCE. In addition to the expenses
described in Section 8(a), the Company shall on the First Closing Date pay to
you the balance of a non-accountable expense allowance (which shall include fees
of Representative's Counsel exclusive of the fees referred to in Section 3(b))
of $290,400 (that being an amount equal to 3 percent of the gross proceeds
received upon sale of the Firm Units), of which $20,000 has been paid to you
prior to the date hereof. In the event that the Over-Allotment Option is
exercised, then the Company shall on the Option Closing Date pay to you an
additional amount equal to 3 percent of the gross proceeds received upon sale of
any of the Option Units. In the event that the transactions contemplated hereby
fail to be consummated for any reason, then you shall return to the Company that
portion of the $20,000 heretofore paid by the Company to the extent that it has
not been utilized by you in connection with the Offering for accountable out-of-
pocket expenses; provided, however, that if such failure is due to a breach by
the Company of any covenant, representation or warranty contained herein or
because any
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<PAGE>
other condition to the Underwriters' obligations hereunder required to be
fulfilled by the Company is not fulfilled, then the Company shall be liable for
your accountable out-of-pocket expenses to the full extent thereof (with credit
given to the $20,000 paid).
(c) NO FINDERS. No person is entitled either directly or indirectly
to compensation from the Company, the Underwriters or any other person for
services as a finder in connection with the Offering, and the Company hereby
indemnify and hold harmless the Underwriters, and the Underwriters hereby
indemnify and hold harmless the Company from and against all Liabilities, joint
or several, to which the indemnified party may become subject insofar as such
Liabilities arise out of or are based upon the claim of any person (other than
an employee of the party claiming indemnity) or entity that he or it is entitled
to a finder's fee in connection with the Offering by reason of such person's or
entity's influence or prior contact with the indemnifying party.
9. SUBSTITUTION OF UNDERWRITERS.
(a) SUBSTITUTION. If any Underwriter defaults in its obligation to
purchase the numbers of Units which it has agreed to purchase under this
Agreement, you shall be obligated to purchase all of the Units not purchased by
the defaulting Underwriter unless such purchase shall cause you to be in
violation of the net capital requirements of Rule 15c3-1 of the Exchange Act, in
which case you, and any other Underwriters satisfactory to you who so agree,
shall have the right, but shall not be obligated, to purchase (in such
proportions as may be agreed upon among them) all of the Units. If you or the
other Underwriters satisfactory to you do not elect to purchase the Units which
the defaulting Underwriter or Underwriters agreed but failed to purchase, then
this Agreement shall terminate without liability on the part of any non-
defaulting Underwriter or the Company, except for (i) the payment by the Company
of expenses as provided by Section 8(a), (ii) the payment by the Company of
accountable expenses as provided by Section 8(b), and (iii) the indemnity and
contribution agreements of the Company and the Underwriters provided by
Sections 6 and 7.
(b) FURTHER MATTERS. Nothing contained herein shall relieve a
defaulting Underwriter of any liability it may have for damages caused by its
default. If the other Underwriters satisfactory to you are obligated or agree
to purchase the Units of a defaulting Underwriter, either you or the Company may
postpone the First Closing Date for up to seven banking days in order to effect
any changes that may be necessary in the Registration Statement, any Preliminary
Prospectus or the Prospectus or in any other document or agreement, and to file
promptly any amendments to the Registration Statement, or any amendments or
supplements to any Preliminary Prospectus or the Prospectus, which in your
opinion may thereby be made necessary.
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<PAGE>
10. EFFECTIVE DATE. The Agreement shall become effective upon its
execution, except that you may, at your option, delay its effectiveness until
10:00 a.m., New York time, on the first full business day following the
Effective Date, or at such earlier time after the Effective Date as you in your
discretion shall first commence the initial public Offering by the Underwriters
of any of the Units. The time of the initial public Offering shall mean the
time of release by you of the first newspaper advertisement with respect to the
Units, or the time when the Units are first generally offered by you to dealers
by letter or telegram, whichever shall first occur. This Agreement may be
terminated by you at any time before it becomes effective as provided above,
except that the provisions of Sections 6, 7, 8, 13, 14, 15 and 16 shall remain
in effect notwithstanding such termination.
11. TERMINATION.
(a) GROUNDS FOR TERMINATION. This Agreement, except for Sections 6,
7, 8, 13, 14, 15 and 16, may be terminated at any time prior to the First
Closing Date, and the Over-Allotment Option, if exercised, may be cancelled at
any time prior to the Option Closing Date, by you if in your sole judgment it is
impracticable to offer for sale or to enforce contracts made by the Underwriters
for the resale of the Units agreed to be purchased hereunder, by reason of:
(i) the Company having sustained a material loss, whether or not insured, by
reason of fire, earthquake, flood, accident or other calamity, or from any labor
dispute or court or government action, order or decree; (ii) trading in
securities on the New York Stock Exchange or the American Stock Exchange having
been suspended or limited; (iii) material governmental restrictions having been
imposed on trading in securities generally which are not in force and effect on
the date hereof; (iv) a banking moratorium having been declared by federal or
New York State authorities; (v) an outbreak or significant escalation of major
international hostilities or other national or international calamity having
occurred; (vi) the passage by the Congress of the United States or by any state
legislature, of any act or measure, or the adoption of any order, rule or
regulation by any governmental body or any authoritative accounting institute or
board, or any governmental executive, which is reasonably believed by you likely
to have a material adverse effect on the business, property, operations,
condition (financial or otherwise) or earnings of the Company; (vii) any
material adverse change in the financial or securities markets beyond normal
fluctuations in the United States having occurred since the date of this
Agreement; or (viii) any material adverse change having occurred since the
respective dates for which information is given in the Registration Statement
and Prospectus, in the business, property, operations, condition (financial or
otherwise), earnings or business prospects of the Company, whether or not
arising in the ordinary course of business.
(b) NOTIFICATION. If you elect to prevent this Agreement from
becoming effective or to terminate this Agreement as provided by this Section 11
or by Section 10, the Company shall be promptly notified by you, by telephone or
telegram, confirmed by letter.
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12. REPRESENTATIVE'S WARRANT. On the First Closing Date, the Company
shall issue and sell to you, for a total purchase price of $5.00, and upon the
terms and conditions set forth in the form of Representative's Warrant filed as
an exhibit to the Registration Statement, a warrant entitling you to purchase
80,000 Units and 32,000 Class B Warrants (the "Representative's Warrant"). In
the event of conflict in the terms of this Agreement and the Representative's
Warrant, the terms and conditions of the Representative's Warrant shall control.
13. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company and the Underwriters set forth in or made
pursuant to this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of any other party, and shall survive
delivery of and payment for the Units and the termination of this Agreement. The
Company hereby indemnifies and holds harmless the Underwriters from and against
all Liabilities, joint or several, to which the Underwriters may become subject
insofar as such Liabilities arise out of or are based upon the breach or failure
of any representation, warranty or covenant of the Company contained in this
Agreement.
14. NOTICES. All communications hereunder shall be in writing and, except
as otherwise expressly provided herein, if sent to you, shall be mailed,
delivered or telegraphed and confirmed to you at H.J. Meyers & Co., Inc.,
1895 Mt. Hope Avenue, Rochester, New York 14620, With a copy sent to James M.
Jenkins, Esq., Harter, Secrest & Emery, 700 Midtown Tower, Rochester, New York
14604; or if sent to the Company, shall be mailed, delivered, or telegraphed and
confirmed to it at Orion Acquisition Corp. I, 150 52nd Street, New York, New
York 10022, with a copy sent to W. Raymond Felton, Esq., Greenbaum, Rowe, Smith,
Ravin & Davis, P.O. Box 5600, Woodbridge, New Jersey 07095-0988.
15. PARTIES IN INTEREST. This Agreement is made solely for the benefit of
the Underwriters, the Company and, to the extent expressed, any person
controlling the Company or an Underwriter, as the case may be, and the directors
of the Company, nominees for directors of the Company (if any) named in the
Prospectus, officers of the Company who have signed the Registration Statement,
and their respective executors, administrators, successors and assigns; and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser,
as such, from an Underwriter of the Units.
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16. APPLICABLE LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely within such State.
17. COUNTERPARTS. This Agreement may be executed in two or more
counterpart copies, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return this Agreement, whereupon it will become a binding
agreement between the Company and the Underwriters in accordance with its terms.
Yours very truly,
ORION ACQUISITION CORP. I
------------------------------------
Arthur H. Goldberg
Chairman of the Board and
Chief Executive Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
H.J. MEYERS & CO., INC.
AS REPRESENTATIVE OF THE
SEVERAL UNDERWRITERS NAMED
IN SCHEDULE I HERETO
By:
---------------------------------
Its
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SCHEDULE I
UNDERWRITING AGREEMENT DATED [EFFECTIVE DATE]
NUMBER OF CLASS B
NUMBER OF UNITS WARRANTS TO BE
UNDERWRITER TO BE PURCHASED PURCHASED
H.J. Meyers & Co., Inc. 800,000 320,000
TOTAL ---------- ----------
800,000 320,000
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CERTIFICATE OF INCORPORATION
OF
ACQUISITION CORPORATION II
* * * * *
1. The name of the corporation is Acquisition Corporation II.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purpose to be conducted or promoted is to
engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Thousand (1,000) and the par value of each of such
shares is One Dollar and No Cents ($1.00) amounting in the aggregate to One
Thousand Dollars and No Cents ($1,000.00).
5. The board of directors is authorized to make, alter or repeal the by-
laws of the corporation. Election of directors need not be by written ballot.
6. The name and mailing address of the sole incorporator is:
K. A. Widdoes
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19801
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this is my act and deed and the facts herein stated are true, and
accordingly have hereunto set my hand this 9th day of August, 1995.
<PAGE>
/s/ K.A. Widdoes
----------------------------------
Sole Incorporator
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<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
BEFORE PAYMENT OF CAPITAL
OF
ACQUISITION CORPORATION II
The undersigned, being all of the directors of Acquisition Corporation
II, a corporation organized and existing under and by virtue of the General
Corporation Law of the State of Delaware,
DO HEREBY CERTIFY:
FIRST: That Article 1 of the Certificate of Incorporation be and is
hereby amended to read as follows:
1. The name of the Corporation is Orion Acquisition Corp. I.
SECOND: That Article 4 of the Certificate of Incorporation be and is
hereby amended to read as follows:
4. The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 200,100, of which 200,000 shall
be shares of Common Stock, par value $.01 per share, and 100 shall be shares of
Preferred Stock, par value $.01 per share. The relative rights, preferences and
limitations of the shares of capital stock shall be as follows:
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COMMON STOCK. The Corporation's Common Stock shall be of one
class.
PREFERRED STOCK. The Preferred Stock shall be designated as
"Series A Convertible Preferred Stock" and shall not be entitled to vote with
respect to the election of directors or on
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<PAGE>
any other matter submitted to stockholders, unless required by law or upon
conversion to common stock, as provided below.
CONVERSION PRIVILEGE. The Preferred Stock is convertible into
shares of the common stock of the Company at any time after the close of
business on the first business day after the completion of a Business
Combination, defined as a merger, exchange, or purchase of capital stock, asset
acquisition or other busienss combination with an operating business, but not be
limited to any particular location or industry.
REDEMPTION PRIVILEGE. The Preferred Stock is redeemable at the
option of the holder(s) thereof upon notice from the Corporation to the
holder(s) thereof that the Corporation has not and will not complete a Business
Combination, and for a period of thirty (30) days following the date of such
notice. The redemption price shall be the price originally paid to the
Corporation for such Preferred Stock, as established by the Corporation's Board
of Directors. In the event of a liquidation or dissolution of the Corporation,
the rights of the holders of the Corporation's Common Stock are subordinate to
the rights of the holders of the Preferred Stock hereunder.
THIRD: That the corporation has not received any
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<PAGE>
payment for any of its stock.
FOURTH: That the amendment was duly adopted in accordance with the
provisions of section 241 of the General Corporation Law of the State of
Delaware.
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<PAGE>
IN WITNESS WHEREOF, I have signed this certificate this 12th day of
August, 1995.
/s/ Arthur H. Goldberg
-----------------------------------
ARTHUR H. GOLDBERG
/s/ Stanley Kreitman
-----------------------------------
STANLEY KREITMAN
/s/ A.J. Nassar
-----------------------------------
A.J. NASSAR
/s/ Marshall Manley
-----------------------------------
MARSHALL MANLEY
-7-
<PAGE>
CERTIFICATE OF AMENDMENT
TO
THE CERTIFICATE OF INCORPORATION
OF
ORION ACQUISITION CORP. I
TO: Secretary of State
State of Delaware
Pursuant to the provisions of Section 242 of the General Corporation Law of
the State of Delaware, the undersigned corporation executes the following
Certificate of Amendment to its Certificate of Incorporation:
1. The name of the corporation is Orion Acquisition Corp. I.
2. The following amendments to the Certificate of Incorporation was
approved by the directors and thereafter duly adopted by the stockholders of the
corporation as of the 11th day of April, 1996.
FIRST: That the introductory paragraph of Article 4 of the Certificate
of Incorporation be amended to read as follows:
4. The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 11,000,000, of which
10,000,000 shall be shares of Common Stock, par value $.01 per share,
and 1,000,000 shall be shares of Preferred Stock, par value $.01 per
share. The relative rights, preferences and limitations of the share
of capital stock shall be as follows:
SECOND: That a new Article 7 be added to the Certificate of Incorporation
as follow:
7. A director of the Corporation shall not be personally liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve
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<PAGE>
intentional misconduct or a knowing violation of law, (iii) under Section
174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived any improper personal benefit.
3. The number of shares outstanding at the time of the adoption of the
amendment was 106,000. The total number of shares entitled to vote thereon was
106,000.
4. The number of shares voting for and against such amendment is as
follows:
Number of Shares Number of Shares
Voting for Amendment Voting Against Amendment
-------------------- ------------------------
106,000 0
5. This Certificate of Amendment shall be effective as of the date of
filing.
Dated this 11th day of April, 1996.
ORION ACQUISITION CORP. I
BY:/s/ Arthur H. Goldberg
--------------------------------
Arthur H. Goldberg,
Chief Executive Officer
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<PAGE>
ORION ACQUISITION CORP. I
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE SIDE FOR
CERTAIN DEFINITIONS
CUSIP
This is to Certify that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, PAR VALUE $0.01, OF
ORION ACQUISITION CORP. I
a corporation incorporated under the laws of the State of Delaware. The shares
evidenced by this certificate are transferable only on the stock transfer books
of ORION ACQUISITION CORP. I by the holder hereof, in person or by attorney,
upon surrender of this certificate properly endorsed.
IN WITNESS WHEREOF ORION ACQUISITION CORP. I has caused this certificate to be
executed by the signatures of its duly authorized officers and has caused its
facsimile seal to be hereunto affixed.
Dated:
Secretary Chairman of the Board and Chief
Executive Officer
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Transfer Agent
and Registrar
Authorized Officer
BANKNOTE CORP. OF AMERICA WALL ST. 1-608004-942 proof#1 ORION 8/1/96 JL
<PAGE>
ORION ACQUISITION CORP. I
The following abbreviations, when used in the inscription on the face of
this certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - ....... Custodian.......
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to
Minors
JT TEN - as joint tenants with right Act . . . . . . . . . .
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
For value received, ________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________ ____________________________________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE.
_______________________________________________________________________________
_______________________________________________________________________________
_________________________________________________________________________Shares
represented by the within Certificate, and do hereby irrevocably constitute and
appoint__________________________________________ Attorney to transfer the said
Shares on the books of the within named corporation with full power of
substitution in the premises.
Dated:_________________________
In the presence of ______________________________________
Signature
______________________________________
Signature
NOTE: THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME OF THE
STOCKHOLDERS(S) AS WRITTEN UPON THE FACE OF
THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT
ALTERATION OR ENLARGEMENT, OR ANY CHANGE
WHATEVER.
BANKNOTE CORP. OF AMERICA WALL ST. 1-608004-942 proof#1 ORION 8/1/96 JL
<PAGE>
WARRANT AGENCY AGREEMENT
AGREEMENT, dated this ____ day of _________________, 1996, between ORION
ACQUISITION CORP., I, a Delaware corporation (the "Company"), and AMERICAN STOCK
TRANSFER & TRUST COMPANY, a New York corporation, as Warrant Agent (the "Warrant
Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, in connection with (i) the offering to the public of 800,000 units
(the "Units"), each unit consisting of one share of the Company's common stock,
$.01 par value ("Common Stock"), one Class A Common Stock Purchase Warrant (the
"Class A Warrants") and 320,000 Class B Unit Purchase Warrants (the "Class B
Warrants" and collectively with the Class A Warrants, the "Warrants"), each
Class A Warrant entitling the registered holder thereof to purchase one (1)
share of Common Stock and each Class B Warrant entitling the registered holder
thereof to purchase one (1) Unit; (ii) the over allotment option granted to the
underwriter to purchase up to an additional 120,000 Units and 48,000 Class B
Warrants (the "Over allotment Options"); and (iii) the sale to H.J. Meyers &
Co., Inc. (the "Representative") and their representatives, successors and
assigns of warrants (the "Representative's Warrants") to purchase 80,000 Units
and 32,000 Class B Warrants, the Company will issue up to 1,500,000 Class A
Warrants (subject to increase as provided in the Representative's Warrant
Agreement) and up to 400,000 Class B Warrants; and
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of certificates representing the
Warrants and the exercise of the Warrants.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth and for the purpose of defining the terms and provisions
of the Warrants and the certificates representing the Warrants and the
respective rights and obligations thereunder of the Company, the
Representatives, the holders of certificates representing the Warrants and the
Warrant Agent, the parties hereto agree as follows:
DEFINITIONS. As used herein, the following terms shall have the following
meanings, unless the context shall otherwise require:
(a) "Common Stock" shall mean stock of the Company of any class, whether
now or hereafter authorized, which has the right to participate in the voting
and in the distribution of earnings and assets of the Company without limit as
to amount or percentage.
<PAGE>
(b) "Corporate Office" shall mean the office of the Warrant Agent (or its
successor) at which at any particular time its principal business in New York,
shall be administered, which office is located on the date hereof at 40 Wall
Street, 46th Floor, New York, NY 10005.
(c) "Exercise Date" shall mean, subject to the provisions of Section 4(b)
hereof as to any Warrant, the date on which the Warrant Agent shall have
received both (i) the Warrant Certificate representing such Warrant, with the
exercise form thereon duly executed by the Registered Holder hereof or his
attorney duly authorized in writing, and (ii) payment in cash or by check made
payable to the Warrant Agent for the account of the Company, of the amount in
lawful money of the United States of America equal to the applicable Purchase
Price.
(d) "Initial Warrant Exercise Date" shall mean the date the Company
consummates a merger, exchange of capital, asset acquisition or other business
combination (a "Business Combination") with an operating business.
(e) "Initial Warrant Redemption Date" shall mean the date that the Company
consummates a Business Combination.
(f) "Applicable Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 7, $9.00 for the Class A Warrants and $0.125
for the Class B Warrants and further subject to the Company's right, in its sole
discretion, to decrease the Applicable Purchase Price for a period of not less
than 30 days on not less than 30 days' prior written notice to the Registered
Holders.
(g) "Registered Holder" shall mean the person in whose name any
certificate representing the Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.
(h) "Registration Statement" shall mean the Registration on Form SB-2
filed by the Company with the Securities and Exchange Commission (the "SEC") on
December 20, 1995, as subsequently amended and declared effective by the SEC
with respect to the offering of the Units, the Common Stock and Warrants.
(i) "Subsidiary" or "Subsidiaries" shall mean any corporation or
corporations, as the case may be, of which stock having ordinary power to elect
a majority of the Board of Directors of such corporation (regardless of whether
or not at the time stock of any other class or classes of such corporation shall
have or may have voting power by reason of the happening of any contingency) is
at the time directly or indirectly owned by the Company or by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
(j) "Transfer Agent" shall mean American Stock Transfer & Trust Company or
its authorized successor.
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<PAGE>
(k) "Underwriting Agreement" shall mean the Underwriting Agreement, dated
[EFFECTIVE DATE], 1996, between the Company and the Representative, as
representative of the several underwriters listed therein, relating to the
purchase by the several Underwriters for resale to the public up to 920,000
Units and 368,000 Class B Warrants.
(l) "Representative's Warrant Agreement" shall mean the agreement, dated
as of [CLOSING DATE], 1996, between the Company and the Representatives relating
to and governing the terms and provisions of the Representative's Warrants.
(m) "Warrant Certificate" shall mean a certificate representing each of
the Class A Warrants and each of the Class B Warrants substantially in the form
annexed hereto as Exhibit A and Exhibit B, respectively.
(n) "Warrant Expiration Date" shall mean, unless the Warrants are redeemed
as provided in Section 8 hereof prior to such date, with respect to the Class A
Warrants, 5:00 p.m. (New York time) on [EFFECTIVE DATE], 2001, and with respect
to the Class B Warrants, 5:00 p.m. (New York time) on the date which is the
first anniversary of the date of the Business Combination, or, if such date
shall in the State of New York be a holiday or a day on which banks are
authorized to close, then 9:00 a.m. (New York time) on the next following day
which in the State of New York is not a holiday or a day on which banks are
authorized to close, subject to the Company's right, prior to the Warrant
Expiration Date, in its sole discretion, to extend such Warrant Expiration Date
on five business days prior written notice to the Registered Holders.
(o) "Warrant Agent" shall mean American Stock Transfer & Trust Company or
its authorized successor.
SECTION 1
WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.
(a) Each Class A Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase at the Applicable
Purchase Price therefor from the Initial Warrant Exercise Date until the Warrant
Expiration Date one share of Common Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 7. Each Class B Warrant
shall initially entitle the Registered Holder of the Warrant Certificate
representing such Warrant to purchase at the Applicable Purchase Price therefor
from the Initial Warrant Exercise Date until the Warrant Expiration Date one
Unit upon the exercise thereof, subject to modification and adjustment as
provided in Section 7.
(b) Upon execution of this Agreement, Warrant Certificates representing
800,000 Class A Warrants and 320,000 Class B Warrants to purchase up to an
aggregate of 1,120,000 shares of Common Stock (subject to modification and
adjustment as provided in Section 7) shall be executed by the Company and
delivered to the Warrant Agent.
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<PAGE>
(c) Upon exercise of the Over-allotment Option, in whole or in part,
Warrant Certificates representing up to 120,000 Class A Warrants and 48,000
Class B Warrants to purchase up to an aggregate of 168,000 shares of Common
Stock (subject to modification and adjustment as provided in Section 7) shall be
executed by the Company and delivered to the Warrant Agent.
(d) Upon exercise of the Representative's Warrants as provided therein,
Warrant Certificates representing up to 80,000 Class A Warrants and up to 32,000
Class B Warrants to purchase up to an aggregate of 112,000 of Common Stock
(subject to modification and adjustment as provided in Section 7 hereof and in
the Representative's Warrant Agreement) shall be countersigned, issued and
delivered by the Warrant Agent upon written order of the Company signed by its
President or a Vice President and by its Treasurer or an Assistant Treasurer or
its Secretary or an Assistant Secretary.
(e) From time to time, up to the applicable Warrant Expiration Date, as
the case may be, the Warrant Agent shall countersign and deliver Warrant
Certificates in required denominations of one or whole number multiples thereof
to the person entitled thereto in connection with any transfer or exchange
permitted under this Agreement. Except as provided in Section 6 hereof, no
Warrant Certificates shall be issued except: (i) Warrant Certificates initially
issued hereunder; (ii) Warrant Certificates issued upon any transfer or exchange
of Warrants; (iii) Warrant Certificates issued in replacement of lost, stolen,
destroyed or mutilated Warrant Certificates pursuant to Section 6; (iv) Warrant
Certificates issued pursuant to the Representative's Warrant Agreement
(including Warrants in excess of the Representative's Warrants issued as a
result of the anti dilution provisions contained in the Representative's Warrant
Agreement); and (v) at the option of the Company, Warrant Certificates in such
form as may be approved by its Board of Directors, to reflect any adjustment or
change in the Applicable Purchase Price, the number of shares of Common Stock
purchasable upon exercise of the Warrants or the Redemption Price therefor made
pursuant to Section 7 hereof.
SECTION 2
FORM AND EXECUTION OF WARRANT CERTIFICATES.
(a) The Warrant Certificates shall be substantially in the form annexed
hereto as Exhibit A for the Class A Warrants and Exhibit B for the Class B
Warrants (the provisions of which are hereby incorporated herein) and may have
such letters, numbers or other marks of identification or designation and such
legends, summaries or endorsements printed, lithographed or engraved thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any law or with any rule
or regulation made pursuant thereto or with any rule or regulation of any stock
exchange on which the Warrants may be listed, or to conform to usage. The
Warrant Certificates shall be dated the date of issuance thereof (whether upon
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or
destroyed Warrant Certificates).
-4-
<PAGE>
(b) Warrant Certificates shall be executed on behalf of the Company by its
President or any Vice President and by its Treasurer or an Assistant Treasurer
or its Secretary or an Assistant Secretary, by manual signatures or by facsimile
signatures printed thereon, and shall have imprinted thereon a facsimile of the
Company's seal. Warrant Certificates shall be manually countersigned by the
Warrant Agent and shall not be valid for any purpose unless so countersigned. In
case any officer of the Company who shall have signed any of the Warrant
Certificates shall cease to be such officer of the Company before the date of
issuance of the Warrant Certificates or before countersignature by the Warrant
Agent and issue and delivery thereof, such Warrant Certificates, nevertheless,
may be countersigned by the Warrant Agent, issued and delivered with the same
force and effect as though the person who signed such Warrant Certificates had
not ceased to be such officer of the Company.
SECTION 3
EXERCISE.
(a) Warrants in denominations of one or whole number multiples thereof may
be exercised commencing at any time on or after the Initial Warrant Exercise
Date, but not after the applicable Warrant Expiration Date, upon the terms and
subject to the conditions set forth herein (including the provisions set forth
in Sections 4 and 8 hereof and in the applicable Warrant Certificate). A
Warrant shall be deemed to have been exercised immediately prior to the close of
business on the Exercise Date, provided that the Warrant Certificate
representing such Warrant, with the exercise form thereon duly executed by the
Registered Holder thereof or his attorney duly authorized in writing, together
with payment in cash or by check made payable to the Warrant Agent for the
account of the Company, of an amount in lawful money of the United States of
America equal to the Applicable Purchase Price has been received in good funds
by the Warrant Agent. The person entitled to receive the securities deliverable
upon such exercise shall be treated for all purposes as the holder of such
securities as of the close of business on the Exercise Date. If Warrants in
denominations other than one or whole number multiples thereof shall be
exercised at one time by the same Registered Holder, the number of full shares
of Common Stock which shall be issuable upon exercise thereof shall be computed
on the basis of the aggregate number of full shares of Common Stock issuable
upon such exercise. As soon as practicable on or after the Exercise Date and in
any event within three business days after such date, if any Warrants have been
exercised, the Warrant Agent on behalf of the Company shall cause to be issued
to the person or persons entitled to receive the same a Common Stock certificate
or certificates for the shares of Common Stock and Class A Warrants
Certificates, if applicable, deliverable upon such exercise, and the Warrant
Agent shall deliver the same to the person or persons entitled thereto. Upon
the exercise of any Warrants, the Warrant Agent shall promptly notify the
Company in writing of such fact and of the number of securities delivered upon
such exercise and, subject to subsection (b) below, shall cause all payments of
an amount in cash or by check made payable to the order of the Company, equal to
the Applicable Purchase Price, to be deposited promptly in the Company's bank
account.
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<PAGE>
(b) At any time upon the exercise of any Warrants after the date hereof,
the Warrant Agent shall, on a daily basis, within two business days after such
exercise, notify the Representatives or their successors or assigns of the
exercise of any such Warrants and shall commencing one (1) year from the date
hereof, on a weekly basis (subject to collection of funds constituting the
tendered Applicable Purchase Price, but in no event later than five business
days after the last day of the calendar week in which such funds were tendered),
remit to the Representatives an amount equal to 10% of the Exercise Price for
each Warrant being then exercised which was solicited by the Representatives or
one of the underwriters participating in this offering, unless the
Representatives shall have notified the Warrant Agent that the payment of such
amount with respect to such Warrant is violative of the General Rules and
Regulations promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or the rules and regulations of the National Association
of Securities Dealers, Inc. ("NASD") or applicable state securities or "blue
sky" laws, or the Warrants are those underlying the Representative's Warrants or
the Cranbrooke Warrants, in which event, the Warrant Agent shall have to pay
such amount to the Company; provided, that the Warrant Agent shall not be
obligated to pay any amounts pursuant to this Section 3(b) during any week that
such amounts payable are less than $ 1,000 and the Warrant Agent's obligation to
make such payments shall be suspended until the amount payable aggregates $
1,000, and provided further, that, in any event, any such payment (regardless of
amount) shall be made not less frequently than monthly.
(c) The Company shall not be obligated to issue any fractional share
interests or fractional warrant interests upon the exercise of any Warrant or
Warrants, nor shall it be obligated to issue scrip or pay cash in lieu of
fractional interests. Any fraction equal to or greater than one-half shall be
rounded up to the next full share or Warrant, as the case may be, any fraction
less than one-half shall be eliminated.
SECTION 4
RESERVATION OF SHARES: LISTING: PAYMENT OF TAXES: ETC.
(a) The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon exercise
of the Warrants shall, at the time of delivery thereof, be duly and validly
issued and fully paid and non-assessable and free from all preemptive or similar
rights, taxes, liens and charges with respect to the issue thereof, and that
upon issuance such shares shall be listed on each securities exchange, if any,
on which the other shares of outstanding Common Stock of the Company are then
listed.
(b) The Company covenants that if any securities to be reserved for the
purpose of exercise of Warrants hereunder require registration with, or approval
of, any governmental authority under any federal securities law before such
securities may be validly issued or
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<PAGE>
delivered upon such exercise, then the Company will file a registration
statement under the federal securities laws or a post effective amendment, use
its best efforts to cause the same to become effective, keep such registration
statement current while any of the Warrants are outstanding and deliver a
prospectus which complies with Section 10(a)(3) of the Securities Act of 1933,
as amended (the "Act"), to the Registered Holder exercising the Warrant (except,
if in the opinion of counsel to the Company, such registration is not required
under the federal securities law or if the Company receives a letter from the
staff of the Securities and Exchange Commission (the "Commission") stating that
it would not take any enforcement action if such registration is not effected).
The Company will use best efforts to obtain appropriate approvals or
registrations under state "blue sky" securities laws. With respect to any such
securities, however, Warrants may not be exercised by, or shares of Common Stock
issued to, any Registered Holder in any state in which such exercise would be
unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the Transfer
Agent to requisition from time to time certificates representing shares of
Common Stock or other securities required upon exercise of the Warrants, and the
Company will comply with all such requisitions.
SECTION 5
EXCHANGE AND REGISTRATION OF TRANSFER.
(a) Warrant Certificates may be exchanged for other Warrant Certificates
representing an equal aggregate number of Warrants or may be transferred in
whole or in part. Warrant Certificates to be so exchanged shall be surrendered
to the Warrant Agent at its Corporate Office, and the Company shall execute and
the Warrant's Agent shall countersign, issue and deliver in exchange therefor
the Warrant Certificate or Certificates which the Registered Holder making the
exchange shall be entitled to receive.
(b) The Warrant Agent shall keep, at such office, books in which, subject
to such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof Upon due presentment for registration of
transfer of any Warrant Certificate at such office, the Company shall execute
and the Warrant Agent shall issue and deliver to the transferee or transferees a
new Warrant Certificate or Certificates representing an equal aggregate number
of Warrants.
-7-
<PAGE>
(c) With respect to any Warrant Certificates presented for registration of
transfer, or for exchange or exercise, the subscription or exercise form, as the
case may be, on the reverse thereof shall be duly endorsed or be accompanied by
a written instrument or instruments of transfer and subscription, in form
satisfactory to the Company and the Warrant Agent, duly executed by the
Registered Holder thereof or his attorney duly authorized in writing.
(d) No service charge shall be made for any exchange or registration of
transfer of Warrant Certificates. However, the Company may require payment of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection therewith.
(e) All Warrant Certificates surrendered for exercise or for exchange
shall be promptly canceled by the Warrant Agent.
(f) Prior to due presentment for registration or transfer thereof, the
Company and the Warrant Agent may deem and treat the Registered Holder of any
Warrant Certificate as the absolute owner thereof of each Warrant represented
thereby (notwithstanding any notations of ownership or writing thereon made by
anyone other than the Company or the Warrant Agent) for all purposes and shall
not be affected by any notice to the contrary.
SECTION 6
LOSS OR MUTILATION. Upon receipt by the Company and the Warrant Agent of
evidence satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and (in the case of loss,
theft or destruction) of indemnity satisfactory to them, and (in case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall countersign and deliver in lieu thereof a new
Warrant Certificate representing an equal aggregate number of Warrants.
Applicants for a substitute Warrant Certificate shall also comply with such
other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 7
ADJUSTMENT OF APPLICABLE PURCHASE PRICE AND NUMBER OF SHARES OF COMMON
STOCK DELIVERABLE.
(a) (i) Except as hereinafter provided, in the event the Company shall,
at any time or from time to time after the date hereof, issue any shares of
Common Stock as a stock dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater or lesser number
of shares (any such issuance, subdivision or combination being herein called a
"Change of Shares"), then, and thereafter upon each further Change of Shares,
the Applicable Purchase Price for the Warrants (whether or not the same shall be
issued and outstanding) in effect immediately prior to such Change of Shares
shall be changed, as to each class of Warrants, to a price (including any
applicable fraction of a cent to the nearest cent) determined by dividing (i)
the sum of (a) the total number of shares of
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<PAGE>
Common Stock outstanding immediately prior to such Change of Shares, multiplied
by the Applicable Purchase Price in effect immediately prior to such Change of
Shares, and (b) the consideration, if any, received by the Company upon such
issuance, subdivision or combination by (ii) the total number of shares of
Common Stock outstanding immediately after such Change of Shares; provided,
however, that in no event shall the Applicable Purchase Price be adjusted
pursuant to this computation to an amount in excess of the Applicable Purchase
Price in effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock.
For the purposes of any adjustment to be made in accordance with this
Section 7(a) the following provisions shall be applicable:
(A) Shares or equivalents of Common Stock issuable by way of
dividend or other distribution on any stock of the Company shall be deemed to
have been issued immediately after the opening of business on the day following
the record date for the determination of shareholders entitled to receive such
dividend or other distribution and shall be deemed to have been issued without
consideration.
(B) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined in good faith by the Board of Directors of the Company
on the basis of a record of values of similar property or services.
(C) The number of shares of Common Stock at any one time
outstanding shall be deemed to include the aggregate maximum number of shares
issuable (subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights or warrants and upon the conversion or exchange of
convertible or exchangeable securities.
(b) Upon each adjustment of the Applicable Purchase Price pursuant to this
Section 7, the number of shares of Common Stock purchasable upon the exercise of
each Warrant shall be the number derived by multiplying the number of shares of
Common Stock purchasable immediately prior to such adjustment by the Applicable
Purchase Price in effect prior to such adjustment and dividing the product so
obtained by the applicable adjusted Purchase Price.
(c) In case of any reclassification or change of outstanding shares of
Common Stock issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger with
a Subsidiary in which merger the Company is the continuing corporation and which
does not result in any reclassification or change of the then outstanding shares
of Common Stock or other capital stock issuable upon exercise of the Warrants
(other
-9-
<PAGE>
than a change in par value, or from par value to no par value, or from no par
value to par value or as a result of subdivision or combination)) or in case of
any sale or conveyance to another corporation of the property of the Company as
an entirety or substantially as an entirety, then, as a condition of such
reclassification, change, consolidation, merger, sale or conveyance, the
Company, or such successor or purchasing corporation, as the case may be, shall
make lawful and adequate provision whereby the Registered Holder of each Warrant
then outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance and shall forthwith file at the Corporate Office of the Warrant Agent
a statement signed by its President or a Vice President and by its Treasurer or
an Assistant Treasurer or its Secretary or an Assistant Secretary evidencing
such provision. Such provisions shall include provision for adjustments which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in Section 7(a) and (b). The above provisions of this Section 7(c) shall
similarly apply to successive reclassifications and changes of shares of Common
Stock and to successive consolidations, mergers, sales or conveyances.
(d) Irrespective of any adjustments or changes in the Applicable Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section l(f) hereof, continue to express the Applicable Purchase
Price per share and the number of shares purchasable thereunder as the
Applicable Purchase Price per share and the number of shares purchasable
thereunder were expressed in the Warrant Certificates when the same were
originally issued.
(e) After each adjustment of the Applicable Purchase Price pursuant to
this Section 7, the Company will promptly prepare a certificate signed by the
President, and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the Applicable Purchase
Price as so adjusted, (ii) the number of shares of Common Stock purchasable upon
exercise of each Warrant, after such adjustment, and (iii) a brief statement of
the facts accounting for such adjustment. The Company will promptly file such
certificate with the Warrant Agent and cause a brief summary thereof to be sent
by ordinary first class mail to each Registered Holder at his last address as it
shall appear on the registry books of the Warrant Agent. No failure to mail
such notice nor any defect therein or in the mailing thereof shall affect the
validity thereof except as to the holder to whom the Company failed to mail such
notice, or except as to the holder whose notice was defective. The affidavit of
an officer of the Warrant Agent or the Secretary or an Assistant Secretary of
the Company that such notice has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
(f) No adjustment of the Applicable Purchase Price shall be made as a
result of or in connection with (A) the issuance or sale of shares of Common
Stock pursuant to options, warrants, stock purchase agreements and convertible
or exchangeable securities outstanding or
-10-
<PAGE>
in effect on the date hereof or granted upon the consummation of and in
connection with the first Business Combination (as defined in the Registration
Statement), or (B) the issuance or sale of shares of Common Stock for cash.
(g) No adjustment of the Applicable Purchase Price shall be made if the
amount of said adjustment shall be less than $ .10, provided, however, that in
such case, any adjustment that would otherwise be required then to be made shall
be carried forward and shall be made at the time of and together with the next
subsequent adjustment that shall amount, together with any adjustment so carried
forward, to at least $.10. In addition, Registered Holders shall not be
entitled to cash dividends paid by the Company prior to the exercise of any
Warrant or Warrants held by them.
SECTION 8
REDEMPTION.
(a) Commencing on the Initial Warrant Redemption Date, the Company may, on
30 days prior written notice redeem all the Warrants at $.05 per Warrant,
provided that the last sale price of Common Stock, if the Common Stock is listed
for trading on an exchange or inter-dealer quotation system which provides last
sale prices, or, the average of the closing bid and asked quotes, if the Common
Stock is listed for trading on an inter-dealer quotation system which does not
provide last sale prices, on all 10 of the trading days ending on the day
immediately prior to the day on which the Company gives notice of redemption,
has been $11.00 or higher (subject to proportionate adjustment for stock splits
and reverse stock splits of such Common Stock from and after the date of this
Agreement). Notwithstanding the foregoing, the Warrants underlying the
Representative's Warrants and the Cranbrooke Warrants are not subject to
redemption.
(b) In case the Company shall exercise its right to redeem all of the
Warrants, it shall give or cause to be given notice to the Registered Holders of
the Warrants, by mailing to such Registered Holders a notice of redemption,
first class, postage prepaid, at their last address as shall appear on the
records of the Warrant Agent. Any notice mailed in the manner provided herein
shall be conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice. Not less than five business days prior
to the mailing to the Registered Holders of the Warrants of the notice of
redemption, the Company shall deliver or cause to be delivered to the
Representatives a notice telephonically and confirmed in writing together with a
list of the Registered Holders (including their respective addresses and number
of Warrants beneficially owned) to whom such notice of redemption has been or
will be given.
(c) The notice of redemption shall specify (i) the redemption price, (ii)
the date fixed for redemption, which shall in no event be less that thirty (30)
days after the date of mailing of such notice, (iii) the place where the Warrant
Certificate shall be delivered and the redemption price shall be paid, (iv) that
the Representatives are the Company's exclusive warrant solicitation agents and
shall receive the commission contemplated by Section 3(b) hereof, and
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<PAGE>
(v) that the right to exercise the Warrant shall terminate at 5:00 p.m. (New
York time) on the business day immediately preceding the date fixed for
redemption. The date fixed for the redemption of the Warrants shall be the
Redemption Date. No failure to mail such notice nor any defect therein or in
the mailing thereof shall affect the validity of the proceedings for such
redemption except as to a holder (a) to whom notice was not mailed or (b) whose
notice was defective. An affidavit of the Warrant Agent or the Secretary or
Assistant Secretary of the Company that notice of redemption has been mailed
shall, in the absence of fraud, be prima facie evidence of the facts stated
therein.
(d) Any right to exercise a Warrant shall terminate at 5:00 p.m. (New York
time) on the business day immediately preceding the Redemption Date. The
redemption price payable to the Registered Holders shall be mailed to such
persons at their addresses of record.
(e) The Company shall indemnify the underwriters and each person, if any,
who controls the underwriters within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise, arising from the
registration statement or prospectus referred to in Section 4(b) hereof to the
same extent and with the same effect (including the provisions regarding
contribution) as the provisions pursuant to which the Company has agreed to
indemnify the underwriters contained in Section I of the Underwriting Agreement.
(f) Five business days prior to the Redemption Date, the Company shall
furnish to the Representatives (i) an opinion of counsel to the Company, dated
such date and addressed to the Representatives, and (ii) a "cold comfort" letter
dated such date addressed to the Representatives, signed by the independent
public accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case covering
substantially the same matters with respect to such registration statement (and
the prospectus included therein) and, in the case of such accountants' letter,
with respect to events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to underwriters in underwritten public offerings of
securities, including, without limitation, those matters covered in Sections
5(d) and (i) of the Underwriting Agreement.
(g) The Company shall as soon as practicable after the Redemption Date,
and in any event within 15 months thereafter, make "generally available to its
security holders" (within the meaning of Rule 158 under the Act) an earnings
statement (which need not be audited) complying with Section 11(a) of the Act
and covering a period of at least 12 consecutive months beginning after the
Redemption Date.
(h) The Company shall deliver within five business days prior to the
Redemption Date copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to discussions with
the Commission or its staff with
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<PAGE>
respect to such registration statement and permit the Representatives to do such
investigation, upon reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the NASD. Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as the Representatives shall reasonably request.
SECTION 9
CONCERNING THE WARRANT AGENT.
(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company and the underwriters, and its duties shall be
determined solely by the provisions hereof. The Warrant Agent shall not, by
issuing and delivering Warrant Certificates or by any other act hereunder, be
deemed to make any representations as to the validity or value or authorization
of the Warrant Certificates or the Warrants represented thereby or of any
securities or other property delivered upon exercise of any Warrant or whether
any stock issued upon exercise of any Warrant is fully paid and non-assessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Applicable Purchase Price provided in this Agreement, or
to determine whether any fact exists which may require any such adjustment, or
with respect to the nature or extent of any such adjustment, when made, or with
respect to the method employed in making the same. It shall not (i) be liable
for any recital or statement of fact contained herein or for any action taken,
suffered or omitted by it in reliance on any Warrant Certificate or other
document or instrument believed by it in good faith to be genuine and to have
been signed or presented by the proper party or parties, (ii) be responsible for
any failure on the part of the Company to comply with any of its covenants and
obligations contained in this Agreement or in any Warrant Certificate, or (iii)
be liable for any act or omission in connection with this Agreement except for
its own gross negligence or willful misconduct.
(c) The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken, suffered or omitted by it in good faith in
accordance with the opinion or advice of such counsel.
(d) Any notice, statement, instruction, request, direction, order or
demand of the Company shall be sufficiently evidenced by an instrument signed by
the President or any Vice President (unless other evidence in respect thereof is
herein specifically prescribed). The Warrant Agent shall not be liable for any
action taken, suffered or omitted by it in accordance with such notice,
statement, instruction, request, direction order or demand.
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<PAGE>
(e) The Company agrees to pay the Warrant Agent reasonable compensation
for its services hereunder and to reimburse it for its reasonable expenses
hereunder; the Company further agrees to indemnify the Warrant Agent and save it
harmless against any and all losses, expenses and liabilities, including
judgments, costs and reasonable counsel fees, for anything done or omitted by
the Warrant Agent in the execution of its duties and powers hereunder except
losses, expenses and liabilities arising as a result of the Warrant Agent's
gross negligence or willful misconduct.
(f) The Warrant Agent may resign its duties and be discharged from all
further duties and liabilities hereunder (except liabilities arising as a result
of the Warrant Agent's own gross negligence or willful misconduct), after giving
30 days' prior written notice to the Company. At least 15 days prior to the
date such resignation is to become effective, the Warrant Agent shall cause a
copy of such notice of resignation to be mailed to the Registered Holder of each
Warrant Certificate at the Company's expense. Upon such resignation the Company
shall appoint in writing a new warrant agent. If the Company shall fail to make
such appointment within a period of 30 days after it has been notified in
writing of such resignation by the resigning Warrant Agent, then the Registered
Holder of any Warrant Certificate may apply to any court of competent
jurisdiction for the appointment of a new warrant agent. Any new warrant agent,
whether appointed by the Company or by such a court, shall be a bank or trust
company having a capital and surplus, as shown by its last published report to
its stockholders, of not less than $10,000,000 or a stock transfer company doing
business in New York City. After acceptance in writing of such appointment by
the new warrant agent is received by the Company, such new warrant agent shall
be vested with the same powers, rights, duties and responsibilities as if it has
been originally named herein as the warrant agent, without any further
assurance, conveyance, act or deed; but if for any reason it shall be necessary
or expedient to execute and deliver any further assurance, conveyable, act or
deed, the same shall be done at the expense of the Company and shall be legally
and validly executed and delivered by the resigning Warrant Agent. Not later
than the effective date of any such appointment the Company shall file notice
thereof with the resigning Warrant Agent and shall forthwith cause a copy of
such notice to be mailed to the Registered Holder of each Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new warrant agent
may be converted or merged, any corporation resulting from any consolidation to
which the Warrant Agent or any new warrant agent shall be a party shall be a
successor warrant agent under this Agreement without any further act, provided
that such corporation is eligible for appointment as successor to the Warrant
Agent under the provisions of the preceding paragraph. Any such successor
warrant agent shall promptly cause notice of its succession as warrant agent to
be mailed to the Company and to the Registered Holders of each Warrant
Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and any of its or
their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
-14-
<PAGE>
(i) The Warrant Agent shall retain for a period of two years from the date
of exercise any Warrant Certificate received by it upon such exercise.
SECTION 10
MODIFICATION OF AGREEMENT.
The Warrant Agent and the Company may by supplement a agreement make any
changes or corrections in this Agreement (i) that they shall deem appropriate to
cure any ambiguity or to correct any defective or inconsistent provision or
manifest mistake or error herein contained; or (ii) that they may deem necessary
or desirable and which shall not adversely affect the interests of the holders
of Warrant Certificates; provided, however, that this Agreement shall not
otherwise be modified, supplemented or altered in any respect except with the
consent in writing of the Registered Holders representing not less than 66-2/3%
of the Warrants then outstanding; provided, further, that no change in the
number or nature of the securities purchasable upon the exercise of any Warrant,
or the Applicable Purchase Price, therefor, shall be made without the consent in
writing of the Registered Holder of the Warrant Certificate, other than such
changes as are specifically prescribed by this Agreement as originally executed.
In addition, this Agreement may not be modified, amended or supplemented without
the prior written consent of the Representatives, other than to cure any
ambiguity or to correct any provision which is inconsistent with any other
provision of this Agreement or to make any such change that is necessary or
desirable and which shall not adversely affect the interests of the underwriters
and except as may be required by law.
SECTION 11
NOTICES.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been made when delivered or mailed
certified mail, return receipt requested, or delivered to a recognized overnight
delivery service if to the Registered Holder of a Warrant Certificate, at the
address of such holder as shown on the registry books maintained by the Warrant
Agent; if to the Company at Orion Acquisition Corp. I, 150 East 52nd Street, New
York, NY 10022, Attention: President, or at such other address as may have been
furnished to the Warrant Agent in writing by the Company; and if to the Warrant
Agent, at its Corporate Office. Copies of any notice delivered pursuant to this
Agreement shall be delivered to H.J. Meyers & Co., Inc., 1895 Mount Hope Avenue,
Rochester, NY 14620, Attention: Michael S. Smith, and Northeast Securities, Inc.
at 1600 Stewart Avenue, Suite 300, Westbury, NY 11590, Attention: Mr. Stephen I.
Porn, President, or at such other address as may have been furnished to the
Company and the Warrant Agent in writing.
-15-
<PAGE>
SECTION 12
GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to conflicts of laws.
SECTION 13
BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Warrant Agent and their respective successors and assigns and the
holders from time to time of Warrant Certificates or any of them. Except as
hereinafter stated, nothing in this Agreement is intended or shall be construed
to confer upon any other person any right, remedy or claim or to impose upon any
other person any duty, liability or obligation. The underwriters, acting
through either Representative, are, and shall at all times irrevocably be deemed
to be, third-party beneficiaries of this Agreement, with full power, authority
and standing to enforce the rights granted to them hereunder.
SECTION 14
COUNTERPARTS.
This Agreement may be executed in several counterparts, which taken
together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the first date first above written.
[CORPORATE SEAL] AMERICAN STOCK TRANSFER
& TRUST COMPANY
As Warrant Agent
By:
-------------------------------
ORION ACQUISITION CORP. I
By:
-------------------------------
-16-
<PAGE>
ORION ACQUISITION CORP. I
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
NO. WA- CLASS A WARRANTS
This Warrant Certificate certifies that CUSIP
or registered assigns, is the registered holder of the number of Class A
Redeemable Unit Purchase Warrants (the "Warrants") set forth above to purchase
initially, at any time from the closing date of the first Business Combination
(as defined in the Warrant Agreement described below), until 5:00 p.m., New York
time on the first anniversary of such initial exercise date, July 2, 2001 (the
"Expiration Date"), one (1) fully paid and nonassessable share per Warrant (the
"Shares"), of Common Stock, $.01 par value (the "Common Stock"), of Orion
Acquisition Corp. I, a Delaware corporation (the "Company"), at the exercise
price of $9.00 per Share (the "Exercise Price"), upon the surrender of this
Warrant Certificate and payment of the Exercise Price at an office or agency of
the Company, but subject to the conditions set forth herein and in the warrant
agreement dated as of (the "Warrant Agreement") by and
among the Company and American Stock Transfer & Trust Company (the "Transfer
Agent"). Copies of the Warrant Agreement are on file at the office of the
Corporation and are available on written request and without cost. Payment of
the Exercise Price shall be made by certified or cashier's check or money order
payable to the order of the Company. No Warrant may be exercised after 5:00
P.M, New York time, on the Expiration Date, at which time all Warrants evidenced
hereby, unless exercised prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement. The Warrant Agreement also
provides that the Warrants are redeemable by the Company upon the occurrence of
certain conditions set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange as provided herein,
without any charge except for any tax or other governmental charge imposed in
connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof; and of any distribution to the holder(s) hereof; and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the
date set forth below.
ORION ACQUISITION CORP. I
DATED: /s/ [CORPORATE SEAL] /S/
Secretary Arthur Goldberg, Chairman and
Chief Executive Officer
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: Transfer Agent,
Warrant Agent and Registrar
Authorized Officer
BANKNOTE CORP. OF AMERICA WALL ST. 1-608005-942 Lot 1 PROOF #1 8/1/96
ORION A WARRANT JL
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED,........................................hereby sells, assigns
and transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
............................. ................................................
(Please print name and address of transferee)
...............................................................................
...............................................................................
...................................................................this Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint
......................................................................Attorney,
to transfer the within Warrant Certificate on the books of Orion Acquisition
Corp. I, with full power of substitution.
Dated:................... .......................................
Signature
(Insert Social Security or Other Identifying
Number of Holder)
.......................................
Signature Guaranteed
NOTE: THE ABOVE SIGNATURE SHOULD CORRESPOND EXACTLY WITH THE NAME ON THE
FACE OF THIS CERTIFICATE AND MUST BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION WITH MEMBERSHIP IN AN APPROVED SIGNATURE
MEDALLION PROGRAM.
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase:
............... Shares of Common Stock, and herewith tenders in payment for such
securities a certified or cashier s check or money order payable to the order of
Orion Acquisition Corp. I in the amount of $................., all in accordance
with the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of ....................................
whose address is ................................. and that such Certificate be
delivered to ............................................................ whose
address is ....................................................................
Dated:................... .......................................
Signature
.......................................
Signature must conform in all respects
to the name of holder as specified on
the face the Warrant Certificate
.......................................
(Insert Social Security or Other
Identifying Number of Holder)
BANKNOTE CORP. OF AMERICA WALL ST. 1-608005942 Lot 1 PROOF #1 8/1/96
ORION A WARRANT JL
<PAGE>
ORION ACQUISITION CORP. I
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
NO. WU- CLASS B WARRANTS
CUSIP
This Warrant Certificate certifies that
or registered assigns, is the registered holder of the number of Class B
Redeemable Unit Purchase Warrants (the "Warrants") set forth above to purchase
initially, at any time from the closing of the first Business Combination (as
defined in the Warrant Agreement described below), until 5:00 p.m., New York
time on the first anniversary of such initial exercise date (the "Expiration
Date"), one unit per Warrant (the "Units"), each Unit consisting of one (1)
fully paid and nonassessable share (the "Shares"), of Common Stock, $.01 par
value (the "Common Stock"), of Orion Acquisition Corp. I, a Delaware corporation
(the "Company"), and one (1) Class A nonredeemable common stock purchase warrant
(the "Class A Warrants") of the Company at the exercise price of $0.125 per Unit
(the "Exercise Price"), upon the surrender of this Warrant Certificate and
payment of the Exercise Price at an office or agency of the Company, but subject
to the conditions set forth herein and in the warrant agreement dated as of
(the "Warrant Agreement") by and among the Company and American Stock
Transfer & Trust Company (the "Transfer Agent"). Copies of the Warrant
Agreement are on file at the office of the Corporation and are available to any
Registered Holder on written request and without cost. Payment of the Exercise
Price shall be made by certified or cashier's check or money order payable to
the order of the Company. No Warrant may be exercised after 5:00 P.M, New York
time, on the Expiration Date, at which time all Warrants evidenced hereby,
unless exercised prior thereto, shall thereafter be void.
Each Class A Warrant entitles the registered holder to purchase one (1)
share of Common Stock at $9.00 per share at the times set forth in the Warrant
Agreement.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words holders or holder meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement. The Warrant Agreement also
provides that the Warrants are redeemable by the Company upon the occurrence of
certain conditions set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange as provided herein,
without any charge except for any tax or other governmental charge imposed in
connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof; and of any distribution to the holder(s) hereof; and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of the
date set forth below.
ORION ACQUISITION CORP. I
DATED:
Secretary Arthur Goldberg, Chairman and Chief
Executive Officer
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
Transfer Agent,
By: Warrant Agent and Registrar
Authorized Officer
BANKNOTE CORP. OF AMERICA WALL ST. 1-608005-942 Lot 1 PROOF #1 8/1/96
ORION B WARRANT JL
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED,.....................hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
................................ ............................................
(Please print name and address of transferee)
...............................................................................
...............................................................................
.................................................................. this Warrant
Certificate, together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint
..................................................................... Attorney,
to transfer the within Warrant Certificate on the books of Orion Acquisition
Corp. I, with full power of substitution.
Dated:................... .................................................
Signature
(Insert Social Security or Other Identifying
Number of Holder)
.................................................
Signature Guaranteed
NOTE: THE ABOVE SIGNATURE SHOULD CORRESPOND EXACTLY WITH THE NAME ON THE
FACE OF THIS CERTIFICATE AND MUST BE GUARANTEED BY AN ELIGIBLE
GUARANTOR INSTITUTION WITH MEMBERSHIP IN AN APPROVED SIGNATURE
MEDALLION PROGRAM.
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase:
...................Units, and herewith tenders in payment for such securities a
certified or cashier's check or money order payable to the order of Orion
Acquisition Corp. I in the amount of $..................., all in accordance
with the terms hereof. The undersigned requests that a certificate for such
securities be registered in the name of .......................................
whose address is .................................................... and that
such Certificate be delivered to ..........................................
whose address is ..............................................................
Dated:................... .................................................
Signature
...........................................................
Signature must conform in all respects to the name of holder
as specified on the face the Warrant Certificate
...........................................................
(Insert Social Security or Other Identifying Number of
Holder)
BANKNOTE CORP. OF AMERICA WALL ST. 1-608005-942 Lot 1 PROOF #1 8/1/96
ORION B WARRANT JL
<PAGE>
ORION ACQUISITION CORP. I
REPRESENTATIVE'S WARRANT AGREEMENT
UNDERWRITERS' WARRANT AGREEMENT dated as of ___________, _______ by
and among ORION ACQUISITION CORP. I, a Delaware corporation (the "Company") and
H.J. MEYERS & CO., INC., ("H.I. Meyers"), as representative of several
underwriters (the "Representative").
W I T N E S S E T H:
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WHEREAS, the Company proposes to issue to the Representative warrants
("Warrants") to purchase (i) up to 80,000 units (the "Units"), each Unit
consisting of one (1) share of common stock, $.01 par value, of the Company (the
"Common Stock") and one (1) Class A Common Stock Purchase Warrant (the "Class A
Warrants") and (ii) 32,000 Class B unit Purchase Warrants (the "Class B
Warrants"). The Class A Warrants and the Class B Warrants are sometimes
collectively referred to herein as the "Constituent Warrants"; and
WHEREAS, the Underwriters have agreed, pursuant to the underwriting
agreement (the "Underwriting Agreement") dated _________, ______ by and among
the Representative and the Company, to act as the underwriters in connection
with the Company' s proposed public offering of up to (i) 920,000 units (the
"Public Units"), each Public Unit consisting of one (1) share of Common Stock
and one (1) Class A Warrant to purchase (i) one share of Common Stock, at a
public offering price of $10.00 per Public Unit and (ii) 368,000 Class B
Warrants to purchase one (1) Unit of Common Stock, at a public offering price of
$5.75 per Class B Warrant (the "Public Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representative in consideration for, and as
part of the Representative's compensation in connection with, the Underwriters'
acting as the underwriters pursuant to the Underwriting Agreement;
NOW, THEREFORE, in consideration of the foregoing premises which are
incorporated into the terms hereof of the payment by the Representative to the
Company of $.01 for each Warrant purchased hereunder, the agreements herein set
forth and other good and valuable consideration, the receipt and sufficiency
<PAGE>
of which are hereby acknowledged, the parties hereto agree as follows:
1. GRANT.
The Holders are hereby granted the right to purchase, at any time from
_____________ until 5:00 p.m., New York time, on _____________, up to (i) 80,000
Units, each Unit consisting of one (1) share of Common Stock and one (1) Class
A Warrant, at an initial exercise price (subject to adjustment as provided in
Article 8 hereof of $11.00 per Unit (110% of the public offering price per
Public Unit) and up to (ii) 32,000 Class B Warrants, at an initial exercise
price (subject to adjustment as provided in Article 8 hereof of $5.75 per Class
B Warrant (110% of the public offering price per Class B Redeemable Warrant),
both subject to the terms and conditions of this Agreement.
Each Class A Warrant is exercisable to purchase one (1) share of Common
Stock at an initial exercise price of $9.00 at any time from the consummation of
a Business Combination (as defined below) until 5:00 P.M. New York time
____________, at which time the Class A Warrants, unless the exercise period of
the then outstanding Class A Redeemable Warrants has been extended beyond May
15, 2000, shall expire. Each Class B Warrant is exercisable to purchase one (1)
Unit at an initial exercise price of $.125 at any time from the consummation of
a Business Combination until the first anniversary thereof. A "Business
Combination" is any merger, exchange of capital stock, asset acquisition or
other business combination effected by the Company. The Class A and Class B
Warrants issuable upon exercise of the Warrants are in all respects identical to
the Public Warrants being purchased by the Representative for resale to the
public pursuant to the terms and provisions of the Warrant Agreement dated
____________ between the Company and American Stock Transfer & Trust Company
(the "Public Warrant Agreement"), a copy of which is attached hereto, except
that the Constituent Warrants included within the Warrants are not redeemable
without the consent of the Registered Holder thereof. The shares of Common
Stock included in the Units are referred to as the "Unit Shares," the Class A
Warrant issuable upon the exercise of the Class B Warrants are referred to as
the "Unit Warrants", the shares of Common Stock issuable upon exercise of the
Constituent Warrants are referred to as the "Warrant Shares," and the Unit
Shares and the Warrant Shares are collectively referred to as the "Shares." The
Shares, the
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Constituent Warrants are collectively referred to as the "Warrant Securities."
2. WARRANT CERTIFICATES.
The warrant certificates (the "Warrant Certificates") delivered and to be
delivered pursuant to this Agreement shall be in the form set forth in Exhibit A
for Units and Exhibit B for Class B Warrants, attached hereto and made a part
hereof, with such appropriate insertions omissions, substitutions, and other
variations as required or permitted by this Agreement.
3. EXERCISE OF WARRANTS.
The Warrants are exercisable during the term set forth in Section 1 hereof
at the Exercise Price (defined below) per Unit or per Class B Warrant, as the
case may be, set forth in Section 6 hereof payable by certified or cashier's
check or money order payable in lawful money of the United States, subject to
adjustment as provided in Article 8 hereof. Upon surrender of a Warrant
Certificate with the annexed Form of Election to Purchase duly executed,
together with payment of the Exercise Price (as hereinafter defined) for the
Units or the Class B Warrants, as the case may be, (and such other amounts, if
any, arising pursuant to Section 4 hereof at the Company's principal office in
New York (150 East 52nd Street, New York, NY 10022), the registered holder of a
Warrant Certificate ("Holder" or "Holders") shall be entitled to receive a
certificate or certificates for the Shares so purchased and a certificate or
certificates for the Public Warrants so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the
Holder thereof; in whole or in part, (but not as to fractional Unit Shares or
Constituent Warrants). The Warrants may be exercised to purchase all or part of
the Units or the Class B Warrants, as the case may be, represented thereby. In
the case of the purchase of less than all the Units or the Class B Warrants, as
the case may be, purchasable on the exercise of Warrants represented by a
Warrant Certificate, the Company shall cancel the Warrant Certificate
represented thereby upon the surrender thereof and shall execute and deliver a
new Warrant Certificate of like tenor for the balance of the Units or the Class
B Warrants, as the case may be, purchasable thereunder.
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<PAGE>
4. ISSUANCE OF CERTIFICATES.
Upon the exercise of the Warrants and payment of the Exercise Price
therefor, the issuance of certificates for the Unit Shares, Constituent Warrants
or other securities, properties or rights underlying such Warrants, and upon the
exercise of the Constituent Warrants, the issuance of certificates for the
Warrant Shares or other securities, properties or rights underlying such
Constituent Warrants, shall be made forthwith (and in any event within three (3)
business days thereafter) without further charge to the Holder thereof; and such
certificates shall (subject to the provisions of Sections 5 and 7 hereof be
issued in the name of or in such names as may be directed by, the Holders
thereof; provided, however, that the Company shall not be required to pay any
tax which may be payable in respect of any transfer involved in the issuance and
delivery of any such certificates in a name other than that of the Holders, and
the Company shall not be required to issue or deliver such certificates unless
or until the person or persons requesting the issuance thereof shall have paid
to the Company the amount of such tax or shall have established to the
satisfaction of the Company that such tax has been paid. The Warrant
Certificates and the certificates representing the Unit Shares, the Constituent
Warrants, the Warrant Shares or other securities, property or rights (if such
property or rights are represented by certificates) shall be executed on behalf
of the Company by the manual or facsimile signature of the then present Chairman
or Vice Chairman of the Board of Directors or President or Vice President of the
Company under its corporate seal reproduced thereon, attested to by the manual
or facsimile signature of the then present Secretary or Assistant Secretary or
Treasurer or Assistant Treasurer of the Company. Warrant Certificates shall be
dated the date of execution by the Company upon initial issuance, division,
exchange, substitution or transfer.
5. RESTRICTION ON TRANSFER OF WARRANTS.
The Holder of a Warrant Certificate (and its Permitted Transferee, as
defined below), by its acceptance thereof covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof; that the Warrants may be sold, transferred, assigned, hypothecated or
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<PAGE>
otherwise disposed of; in whole or in part, to any person (a "Permitted
Transferee"), provided such transfer, assignment, hypothecation or other
deposition is made in accordance with the provisions of the Securities Act of
1933 (the "Act"); and provided, further, that until _____________ (one year
after the Effective Date, defined below) only officers and partners of the
Representative, and any counter-writer, selling group member and their
respective officers and partners, shall be Permitted Transferees. Warrants to
purchase Units may be separately transferable from Warrants to purchase Class B
Warrants.
6. EXERCISE PRICE.
a. INITIAL AND ADJUSTED EXERCISE PRICE. Except as otherwise provided in
Section 8 hereof; the initial exercise price of each Warrant to purchase Units
shall be $ 11.00 per Unit, and of each Warrant to purchase Class B Warrants
shall be $5.75 per Class B Warrant. The respective adjusted exercise prices
shall be the prices which shall result from time to time from any and all
adjustments of the initial exercise prices in accordance with the provisions of
Section 8 hereof.
b. EXERCISE PRICE. The term "Exercise Price" herein shall mean the
initial exercise price or the adjusted exercise price, depending upon the
context.
7. REGISTRATION RIGHTS.
a. REGISTRATION UNDER THE SECURITIES ACT OF 1933. The Warrants have not
been registered under the Act. The Warrant certificates shall bear the following
legend:
The securities represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act"), and may not be offered for
sale or sold except pursuant to (i) an effective registration statement
under the Act, or (ii) an opinion of counsel, if such opinion shall be
reasonably satisfactory to counsel to the issuer, that an exemption from
registration under such Act is available.
b. DEMAND REGISTRATION.
(1) At any time commencing one (1) year and expiring five (5) years after
the effective date of the Company's Registration Statement relating to
the Public Offering
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<PAGE>
(the "Effective Date"), the Holders of the Warrants and the Warrant
Securities representing at least a Majority (as hereinafter defined)
of such securities shall have the right, exercisable by written notice
to the Company, to have the Company prepare and file with the
Securities and Exchange Commission (the "Commission"), on one (1)
occasion, a registration statement on Form S-1 (or Post-Effective
Amendment on Form S-1) or other appropriate form) and such other
documents, including a prospectus, as may be necessary in the opinion
of both counsel for the Company and counsel for the Holders, in order
to comply with the provisions of the Act, so as to permit a public
offering and sale, for a period of nine (9) months, of the Warrant
Securities by such Holders and any other Holders of the Warrants
and/or Warrant Securities who notify the Company within fifteen (15)
business days alter receipt of the notice described in Section
7(b)(2). The Holders of the Warrants may demand registration without
exercising the Representative's Warrants, and are never required to
exercise same.
(2) The Company covenants and agrees to give written notice of any
registration request under this Section 7(b) by any Holder(s) to all
other registered Holders of the Warrants and the Warrant Securities
within ten (10) days from the date of the receipt of any such
registration request.
(3) For purposes of this Agreement, the term "Majority" in reference to
the Holders of the Warrants or Warrant Securities, shall mean in
excess of fifty percent (50%) of the then outstanding Warrants or
Warrant Securities that (i) are not held by the Company, an affiliate,
officer, director; employee or agent thereof or any of their
respective affiliates, members of their family, persons acting as
nominees or in conjunction therewith, or (ii) have not been resold to
the public pursuant to a registration statement filed with the
Commission under the Act.
c. PIGGYBACK REGISTRATION. If at any time within the period commencing one
(1) year and expiring six (6) years after the Effective Date, the Company should
file a registration statement
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<PAGE>
with the Commission under the Act (other than in connection with a merger or
pursuant to Form S-8) it will give written notice by registered mail, at least
thirty (30) days prior to the filing of each such registration statement, to the
Representative and to all other Holders of the Warrants and/or the Warrant
Securities of its intention to do so. If the Representative or other Holders of
the Warrants and/or the Warrant Securities notify the Company within twenty (20)
days after receipt of any such notice of its or their desire to include any
Warrant Securities in such proposed registration statement, the Company shall
afford the Representative and such Holders of the Warrants and/or Warrant
Securities the opportunity to have any such Warrant Securities registered under
such registration statement. Notwithstanding the provisions of this Section
7(c), the Company shall have the right at any time after it shall have given
written notice pursuant to this Section 7(c) (irrespective of whether a written
request for inclusion of any such securities shall have been made) to elect not
to file any such proposed registration statement, or to withdraw the same after
the filing but prior to the effective date thereof.
If the underwriter of an offering to which the above piggyback rights apply
objects to such rights, such objection shall preclude such inclusion. However,
in such event, the Company will, within six (6) months of completion of such
subsequent underwriting, file at its sole expense, a registration statement
relating to such excluded Warrant Securities, which shall be in addition to any
registration statement required to be filed pursuant to Section 7(b), unless
such Holders had refused an opportunity provided with the consent of the
underwriter, to be included in the registration statement on the condition that
they agree not to offer the securities for sale without the prior written
consent of the underwriter for a period not exceeding 60 days from the effective
date of such registration statement.
If the underwriter in such underwritten offering shall advise the Company
that it declines to include a portion or all of the Warrant Securities requested
by the Representative and the Holders to be included in the registration
statement, then (A) registration of all of the Warrant Securities shall be
excluded from such registration statement on the condition that all securities
to be registered by other selling security holders, if any, are also excluded
and (B) registration of a portion of such Warrant Securities allocated among the
Representative and the Holders and
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<PAGE>
any other selling securityholders in proportion to the respective numbers of
securities to be registered by the Representative and each such Holder and other
selling securityholder. In such event the Company shall give the Representative
and the Holders prompt notice of the number of Warrant Securities excluded.
d. COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. In connection
with any registrations under Sections 7(b) and 7(c) hereof; the Company
covenants and agrees as follows:
(1) The Company shall use its best efforts to file a registration
statement within forty-five (45) days of receipt of any demand
therefor; provided, however, that the Company shall not be required to
produce audited or unaudited financial statements for any period prior
to the date such financial statements are required to be filed in a
report on Form 10-K or Form 10-Q (or Form 10-KSB or Form 10-QSB), as
the case may be. The Company shall use its best efforts to have any
registration statements declared effective at the earliest possible
time, and shall furnish each Holder desiring to sell Shares such
number of prospectuses as shall reasonably be requested.
(2) The Company shall pay all costs (excluding fees and expenses of
Holder(s)' counsel and any underwriting discounts or selling fees,
expenses or commissions), fees and expenses in connection with any
registration statement filed pursuant to Sections 7(b) and 7(c) hereof
including, without limitation, the Company's legal and accounting
fees, printing expenses, blue sky fees and expenses. If the Company
shall fail to comply with the provisions of Section 7(d) (1), the
Company shall, in addition to any other equitable or other relief
available to the Holder(s), be liable for any or all incidental,
special and consequential damages and damages due to loss of profit
sustained by the Holder(s) requesting registration of their Shares.
(3) The Company will take all necessary action which may be required to
qualify or register the Shares included in a registration statement
for offering and sale under the securities or blue sky laws of such
states as reasonably
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<PAGE>
are requested by the Holder(s), provided that the Company shall not be
obligated to execute or file any general consent to service of process
or to qualify as a foreign corporation to do business under the laws
of any such jurisdiction.
(4) The Company shall indemnify the Holder(s) of the Shares to be sold
pursuant to any registration statement and each person, if any, who
controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934 (the "Exchange
Act"), against all losses, claims, damages, expenses or liability
(including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of
them may become subject under the Act, the Exchange Act or otherwise,
arising from such registration statement, but only to the same extent
and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify the Representative contained in
Section 8 of the Underwriting Agreement, and the Holder(s) shall
indemnify the Company to the same extent and with the same effect as
the provisions pursuant to which the Representative have agreed to
indemnify the Company contained in Section ___ of the Underwriting
Agreement.
(5) The Holder(s) of the Shares to be sold pursuant to a registration
statement, and their successors and assigns, shall severally, and not
jointly, indemnify the Company, its officers and directors and each
persons, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against
all losses, claims, damages, expenses or liability (including all
expenses reasonably incurred in investigating, preparing or defending
against any claim whatsoever) to which they may become subject under
the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or
assigns, for specific inclusion in such registration statement to the
same extent and with the same effect as the provisions contained in
Section ___ of the Underwriting Agreement pursuant to which the
Representative have agreed to indemnify the Company.
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(6) Nothing contained in this Agreement shall be construed as requiring
the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(7) If the manner of distribution proposed by the holders of the Warrants
and the Warrant Securities is an underwriting, the Company shall
furnish to each Holder participating in the offering and to each
underwriter, a signed counterpart, addressed to such Holder or
underwriter of (i) an opinion of counsel to the Company, dated the
effective date of such registration statement (and if such
registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement), and
(ii) a "cold comfort" letter dated the effective date of such
registration statement (and, if such registration includes an
underwritten public offering, a letter dated the date of the closing
under the underwriting agreement) signed by the independent public
accountants who have issued a report on the Company's financial
statements included in such registration statement, in each case
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' letter, with respect to events subsequent to the date of
such financial statements, as are customarily covered in opinions of
issuer's counsel and in accountants' letters delivered to underwriters
in underwritten public offerings of securities.
(8) The Company shall as soon as practicable after the effective date of
the registration statement, and in any event within the first full
four fiscal quarters following the effective date, make "generally
available to its security holders" (within the meaning of Rule 158
under the Act) an earnings statement (which need not be audited)
complying with Section 11(a) of the Act.
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(9) The Company shall deliver promptly to each Holder participating in the
offering requesting the correspondence described below and any
managing underwriter, copies of all correspondence between the
Commission and the Company, its counsel or auditors with respect to
the registration statement and permit each Holder and underwriter to
do such investigation, upon reasonable advance notice, with respect to
information contained in or omitted from the registration statement as
it deems reasonably necessary to comply with applicable securities
laws or rules of the National Association of Securities Dealers, Inc.
("NASD"). Such Investigation shall include access to books, records
and properties and opportunities to discuss the business of the
Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any
such Holder shall reasonably request.
(10) In connection with an offering for which the Holders have demand
rights, the Company shall enter into an underwriting agreement with
the managing underwriter selected for such underwriting by Holders
holding a Majority of the Shares requested to be included in such
underwriting. In connection with an offering for which the Holders
have piggyback rights, the Company shall have the sole right to select
the managing underwriter. Such underwriting agreement shall be
satisfactory in form and substance to the Company, a Majority of such
Holders and such managing underwriters, and shall contain such
representations, warranties and covenants by the Company and such
other terms as are customarily contained in agreements of that type
used by the managing underwriter. The Holders shall be parties to any
underwriting agreement relating to an underwritten sale of their
Shares and may, at their option, require that any or all the
representations, warranties and covenants of the Company to or for the
benefit of such underwriters shall also be made to and for the benefit
of such Holders. Such Holders shall not be required to make any
representations or warranties to or agreements with the Company or the
underwriters except as they may relate to
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such Holders their ownership and their intended methods of
distribution.
e. FURTHER REGISTRATIONS. The Company will cooperate with the Holder(s)
of the Warrants and Warrant Securities in preparing and signing one additional
registration statement, in addition to the registration statements discussed
above, required in order to sell or transfer the Shares and will supply all
information required therefor, but such additional registration statement
expenses or offering statement expenses will be prorated between the Company and
the Holders of the Warrants and Warrant Securities according to the aggregate
sales price of the securities being issued. The provisions of Section 7(d)
other than subsection (2) shall apply to any such registration statement.
8. ADJUSTMENTS TO EXERCISE PRICE AND NUMBER OF SECURITIES: REDEMPTION.
a. (i) Except as hereinafter provided, in the event the Company shall, at
any time or from time to time after the date hereof; issue any shares of Common
Stock as a stock dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater or lesser number
of shares (any such issuance, subdivision or combination being herein called a
"Change of Shares"), then, and thereafter upon each further Change of Shares,
the Purchase Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to such Change of Shares shall be
changed to a price (including any applicable fraction of a cent to the nearest
cent) determined by dividing (i) the sum of (a) the total number of shares of
Common Stock outstanding immediately prior to such Change of Shares, multiplied
by the Purchase Price in effect immediately prior to such Change of Shares, and
(b) the consideration, if any, received by the Company upon such issuance,
subdivision or combination by (ii) the total number of shares of Common Stock
outstanding immediately after such Change of Shares; provided, however, that in
no event shall the Purchase Price be adjusted pursuant to this computation to an
amount in excess of the Purchase Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of Common
Stock.
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For the purposes of any adjustment to be made in accordance with this
Section 8(a) the following provisions shall be applicable:
(1) Shares or equivalents of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have
been issued immediately after the opening of business on the day
following the record date for the determination of shareholders
entitled to receive such dividend or other distribution and shall be
deemed to have been issued without consideration.
(2) The reclassification of securities of the Company other than shares of
Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of
business on the date fixed for the determination of security holders
entitled to receive such shares, and the value of the consideration
allocable to such shares of Common Stock shall be determined in good
faith by the Board of Directors of the Company on the basis of a
record of values of similar property or services.
(3) The number of shares of Common Stock at any one time outstanding shall
be deemed to include the aggregate maximum number of shares issuable
(subject to readjustment upon the actual issuance thereof upon the
exercise of options, rights or warrants and upon the conversion or
exchange of convertible or exchangeable securities.
b. Upon each adjustment of the Purchase Price pursuant to this Section 8,
the number of shares of Common Stock (but not the number of Class A Warrants or
Class B Warrants that may be obtained upon such exercise) purchasable upon the
exercise of each Warrant shall be the number derived by multiplying the number
of shares of Common Stock purchasable immediately prior to such adjustment by
the Purchase Price in effect prior to such adjustment and dividing the product
so obtained by the applicable adjusted Purchase Price.
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c. In case of any reclassification or change of outstanding shares of
Common Stock issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger with
a Subsidiary in which merger the Company is the continuing corporation and which
does not result in any reclassification or change of the then outstanding shares
of Common Stock or other capital stock issuable upon exercise of the Warrants
(other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of subdivision or combination) or in case
of any sale or conveyance to another corporation of the property of the Company
as an entirety or substantially as an entirety, then, as a condition of such
reclassification, change, consolidation, merger, sale or conveyance, the
Company, or such successor or purchasing corporation, as the case may be, shall
make lawful and adequate provision whereby the Registered Holder of each Warrant
then outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Warrant immediately
prior to such reclassification change, consolidation, merger, sale or conveyance
and shall forthwith file at the Corporate Office of the Warrant Agent a
statement signed by its President or a Vice President and by its Treasurer or an
Assistant Treasurer or its Secretary or an Assistant Secretary evidencing such
provision. Such provisions shall include provision for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
Section 8a. The above provisions of this Section 8b. shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances.
d. Irrespective of any adjustments or changes in the Purchase Price or
the number of shares of Common Stock purchasable upon exercise of the Warrants,
the Warrant Certificates therefore and thereafter issued shall, unless the
Company shall exercise its option to issue new Warrant Certificates, continue to
express the Purchase Price per share and the number of shares
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purchasable thereunder as the Purchase Price per share and the number of shares
purchasable thereunder were expressed in the Warrant Certificates when the same
were originally issued.
e. After each adjustment of the Purchase Price pursuant to this Section
8, the Company will promptly prepare a certificate signed by the Chairman or
President, and by the Treasurer or an Assistant Treasurer or the Secretary or an
Assistant Secretary, of the Company setting forth: (i) the Purchase Price as so
adjusted, (ii) the number of shares of Common Stock purchasable upon exercise of
each Warrant, after such adjustment, and (iii) a brief statement of the facts
accounting for such adjustment. The Company will promptly file such certificate
with the Warrant Agent and cause a brief summary thereof to be sent by ordinary
first class mail to each Registered Holder at his last address as it shall
appear on the registry books of the Warrant Agent. No failure to mail such
notice nor any defect therein or in the mailing thereof shall affect the
validity thereof except as to the holder to whom the Company failed to mail such
notice, or except as to the holder whose notice was defective. The affidavit of
an officer of the Warrant Agent or the Secretary or an Assistant Secretary of
the Company that such notice has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
f. No adjustment of the Purchase Price shall be made as a result of or in
connection with the issuance or sale of shares of Common Stock pursuant to
options, warrants, stock purchase agreements and convertible or exchangeable
securities outstanding or in effect on the date hereof or granted upon the
consummation of and in connection with the first Business Combination (as
defined in the Registration Statement). In addition, Registered Holders shall
not be entitled to cash dividends paid by the Company prior to the exercise of
any Warrant or Warrants held by them.
g. DEFINITION OF COMMON STOCK. For the purpose of this Agreement, the
term "Common Stock" shall mean (i) the class of stock designated as Common Stock
in the Certificate of Incorporation of the Company as it may be amended as of
the date hereof; or (ii) any other class of stock resulting from successive
changes or reclassification of such Common Stock consisting solely of changes in
par value, or from par value to no par value, or from no par value to par value.
In the event that the Company shall, after the date hereof, issue securities
with greater or superior voting rights than those of the shares of Common Stock
outstanding
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as of the date hereof; the Holder, at its option, may receive upon exercise of
any Warrant either shares of Common Stock or a like number of such securities
with greater or superior voting rights.
h. RECLASSIFICATION. MERGER OR CONSOLIDATION. The Company will not
merge, reorganize or take any other action which would terminate the
Representative's Warrants without first making adequate provision for the
Representative's Warrants. In case of any reclassification or change of the
outstanding shares of Common Stock (other than a change in par value to no par
value, or from no par value to par value, or as a result of a subdivision or
combination), or in case of any consolidation of the Company with, or merger of
the Company with, or merger of the Company into, another corporation (other than
a consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of the outstanding
Common Stock except a change as a result of a subdivision or combination of such
shares or a change in par value, as aforesaid), or in the case of a sale or
conveyance to another corporation or other entity of the property of the Company
as an entirety, the Holder of each Warrant then outstanding or to be outstanding
shall have the right thereafter (until the expiration of such Warrant) to
purchase, upon exercise of such Warrant, the kind and number of shares of stock
and other securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance as if the Holder were the owner of the
shares of Common Stock underlying such Warrants and the Constituent Warrants
immediately prior to any such events at a price equal to the product of (x) the
number of shares issuable upon exercise of the Warrants and the Constituent
Warrants and (y) the Exercise Prices in effect immediately prior to the record
date for such reclassification, change, consolidation, merger, sale or
conveyance, as if such Holder has exercised the Warrants and the Constituent
Warrants. In the event of a consolidation, merger, sale or conveyance of
property, the corporation formed by such consolidation or merger, or acquiring
such property, shall execute and deliver to the Holders a supplemental warrant
agreement to such effect. Such supplemental warrant agreement shall provide for
adjustments which shall be identical to the adjustment to those provided in
Section 8. The provisions of this Section 8(h) shall similarly apply to
successive consolidations or mergers.
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i. NO ADJUSTMENT OF EXERCISE PRICES IN CERTAIN CASES. No adjustment of
the Exercise Prices shall be made:
(I) Upon the issuance or sale of (i) the Warrants, the Constituent
Warrants or the Shares; (ii) the shares of Common Stock and the Public
Warrants pursuant to the Public Offering; (iii) the shares of Common
Stock issuable upon the exercise of the Public Warrants, or the
options, warrants, stock purchase agreements and convertible or
exchangeable securities outstanding or in effect on the date hereof as
described in the prospectus relating to the Public Offering; or (iv)
Common Stock upon the exercise of the Constituent Warrants.
(2) If the amount of said adjustments shall be less than ten ($.10) cents
per Unit or five ($.05) cents per Class B Warrant, as the case may be,
provided, however, that in such case any adjustment that would
otherwise be required then to be made shall be carried forward and
shall be made at the time of and together with the next subsequent
adjustment which, together with any adjustment so carried forward,
shall amount to at least ten ($.10) cents per Unit or five ($.05)
cents per Class B Warrant, as the case may be.
j. DIVIDENDS AND OTHER DISTRIBUTIONS. In the event that the Company
shall at any time prior to the exercise of all the Warrants declare a dividend
(other than a dividend consisting solely of shares of Common Stock) or otherwise
distribute to its stockholders any assets, property, rights, evidences of
indebtedness, securities (other than shares of Common Stock), whether issued by
the Company or by another, or any other thing of value, the Holders of the
unexercised Warrants shall thereafter be entitled, in addition to the shares of
Common Stock or other securities and property receivable upon the exercise
thereof; to receive, upon the exercise of such Warrants, the same property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution as if the Warrants had been exercised immediately prior to such
dividend or distribution. At the time of any such dividend or distribution, the
Company shall make appropriate reserves to ensure the timely performance of the
provisions of this Section 8 (j).
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k. ADJUSTMENT OF CONSTITUENT WARRANT EXERCISE PRICE AND SHARES ISSUABLE ON
EXERCISE OF CONSTITUENT WARRANTS. With respect to any of the Constituent
Warrants underlying the Warrants, whether or not the Constituent Warrants have
been exercised and whether or not the Constituent Warrants are issued and
outstanding, the Constituent Warrant exercise price and the number of shares of
Common Stock underlying such Constituent Warrants shall be automatically
adjusted in accordance with Section ___ of the Public Warrant Agreement upon the
occurrence of any of the events described therein. Thereafter, the underlying
Constituent Warrants shall be exercisable at such adjusted exercise price and
for such adjusted number of underlying shares of Common Stock.
l. SUBSCRIPTION RIGHTS FOR SHARES OF COMMON STOCK OF OTHER SECURITIES. In
the event that the Company or an affiliate of the Company shall at any time
after the date hereof and prior to the exercise of all the Warrants, issue any
rights to subscribe for shares of Common Stock or any other securities of the
Company or of such affiliate to all the stockholders of the Company, the Holders
of the unexercised Warrants shall be entitled to receive, in addition to the
Unit Shares and Constituent Warrants or other securities receivable upon the
exercise of the Warrants, such rights at the time such rights are distributed to
the other stockholders of the Company.
m. REDEMPTION OF CONSTITUENT WARRANTS. Notwithstanding anything to the
contrary contained in the Public Warrant Agreement or elsewhere, the Constituent
Warrants underlying the Warrants cannot, under any circumstances, be redeemed by
the Company without the prior written consent of the Holders of the Warrants and
shall remain exercisable upon the same terms and provisions of the Public
Warrant Agreement (other than the exercise period, which shall be as set forth
in Section I hereof irrespective of whether the Company has called the
Redeemable Warrants for redemption.
9. EXCHANGE AND REPLACEMENT OF WARRANT CERTIFICATES.
Each Warrant Certificate is exchangeable without expense, upon the
surrender thereof by the registered Holder at the principal executive office of
the Company, for a new Warrant Certificate of like tenor and date representing
in the aggregate the right to purchase the same number of Units in such
denominations as shall be designated by the Holder thereof at the time of such
surrender.
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<PAGE>
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. ELIMINATION OF FRACTIONAL INTERESTS.
The Company shall not be required to issue certificates representing
fractions of Shares or of Constituent Warrants upon the exercise of the
Warrants, nor shall it be required to issue scrip or pay cash in lieu of
fractional interests, provided, however, that if a Holder exercises all Warrants
or Constituents Warrants (as the case may be) held of record by such Holder the
fractional interests shall be eliminated by rounding any fraction up to the
nearest whole number of Unit Shares, Warrant Shares, Constituent Warrants or
other securities, properties or rights.
11. RESERVATION AND LISTING OF SECURITIES.
The Company shall at all times reserve and keep available out of its
authorized shares of Common Stock, solely for the purpose of issuance upon the
exercise of the Warrants and the Constituent Warrants and the conversion of
preferred stock, if any, such number of shares of Common Stock or other
securities, properties or rights as shall be issuable upon the exercise on
conversion thereof. The Company covenants and agrees that, upon exercise of the
Warrants and payment of the Exercise Price therefor, all the Unit Shares and
other securities issuable upon such exercise shall be duly and validly issued,
fully paid, nonassessable and not subject to the preemptive rights of any
stockholder. The Company further covenants and agrees that upon exercise of the
Constituent Warrants underlying the Warrants and payment of the respective
Common Stock Warrant exercise price therefor, all the Warrant Shares and other
securities issuable upon such exercises shall be duly and validly issued, fully
paid, non-assessable and not subject to the preemptive rights of any
stockholder. As long as the Warrants and the Constituent Warrants shall be
outstanding, the Company shall use its best efforts to cause the Common Stock to
be listed (subject to official notice of issuance) on all securities
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<PAGE>
exchanges on which the Public Units, the Common Stock and the Constituent
Warrants issued to the public in connection herewith may then be listed or
quoted.
12. NOTICES TO WARRANT HOLDERS.
Nothing contained in this Agreement shall be construed as conferring upon
the Holders the right to vote or to consent or to receive notice as a
stockholder in respect of any meetings of stockholders for the election of
directors or any other matter, or as having any rights whatsoever as a
stockholder of the Company. If, however, at any time prior to the expiration of
the Warrants and their exercise, any of the following events shall occur:
a. the Company shall take a record of the holders of its shares of Common
Stock for the purpose of entitling them to receive a dividend or distribution
payable otherwise than in cash, or a cash dividend or distribution payable
otherwise than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
b. the Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any option, right
or warrant to subscribe therefor; or
c. a dissolution, liquidation or winding up of the Company (other than in
connection with a consolidation or merger) or a sale of all or substantially all
of its property, assets and business as an entirety shall be proposed; then, in
any one or more of said events, the Company shall give written notice of such
event at least fifteen (15) days prior to the date fixed as a record date or the
date of closing the transfer books for the determination of the stockholders
entitled to such dividend, distribution, convertible or exchangeable securities
or subscription rights, or entitled to vote on such proposed dissolution,
liquidation, winding up or sale. Such notice shall specify such record date or
the date of closing the transfer books, as the case may be. Failure to give such
notice or any defect therein shall not affect the validity of any action taken
in connection with the declaration or payment of any such dividend, or the
issuance of any convertible or exchangeable
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<PAGE>
securities, or subscription rights, options or warrants, or any proposed
dissolution, liquidation, winding up or sale.
13. COMMON STOCK WARRANTS.
The form of the certificates representing the Class A and Class B Warrants
(and the form of election to purchase shares of Common Stock upon the exercise
of the Class A and Class B Warrants and the form of assignment printed on the
reverse thereof shall be substantially as set forth in Exhibits A and B to the
Public Warrant Agreement, except that the exercise periods shall be as set forth
in Section I hereof. Each Class A Warrant issuable upon exercise of the
Warrants shall evidence the Holder's right to purchase one (1) fully paid and
non-assessable share of Common Stock at an initial exercise price of $9.00. Each
Class B Warrant issuable upon exercise of the Warrants shall evidence the
Holder's right to purchase one (1) Unit consisting of one (1) fully paid and
non-assessable share of Common Stock and one (1) Class A Warrant at an initial
exercise price of $.125. The exercise price of the Constituent Warrants and the
number of the shares of Common Stock issuable upon the exercise of the
Constituent Warrants are subject to adjustment, whether or not the Warrants have
been exercised and the Constituent Warrants have been issued, in the manner and
upon the occurrence of the events set forth in Section 8 of the Public Warrant
Agreement, which is hereby incorporated herein by reference and made a part
hereof as if set forth in its entirety herein. Subject to the provisions of this
Agreement and upon issuance of the Constituent Warrants underlying the Warrants,
each registered Holder of such Common Stock Warrant shall have the right to
purchase from the Company (and the Company shall issue to such registered
Holders) up to the number of fully paid and non-assessable shares of Common
Stock (subject to adjustment as provided herein and in the Public Warrant
Agreement), free and clear of all preemptive rights of stockholders, provided
that such registered Holder complies with the terms governing the exercise of
the Redeemable Warrants set forth in the Public Warrant Agreement, and pays the
applicable exercise price, determined in accordance with the terms of the Public
Warrant Agreement. Upon exercise of the Constituent Warrants, the Company shall
forthwith issue to the registered Holder of any such Common Stock Warrant in his
name or in such name as may be directed by him, certificates for the number of
shares of Common Stock and Class A Warrants so purchased. Except as otherwise
provided herein and in Sections 1, 6(a) and 8(i), the
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Constituent Warrants underlying the Warrants shall be governed in all respects
by the terms of the Public Warrant Agreement. The Constituent Warrants shall be
transferable in the manner provided in the Public Warrant Agreement, and upon
any such transfer, a new Common Stock Warrant Certificate shall be issued
promptly to the transferee. The Company covenants to, and agrees with, the
Holder(s) that without the prior written consent of the Holder(s), this
Agreement will not be modified, amended, canceled, altered or superseded, and
that the Company will send to each Holder, irrespective of whether or not the
Warrants have been exercised, any and all notices required by this Agreement to
be sent to holders of Constituent Warrants.
14. NOTICES.
All notices, requests, consents and other communications hereunder shall be
in writing and shall be deemed to have been duly made when delivered, or mailed
by registered or certified mail, return receipt requested:
a. If to the registered Holder of the Warrants, to the address of such
Holder as shown on the books of the Company; or
b. If to the Company to the address set forth in Section 3 hereof or to
such other address as the Company may designate by notice to the Holders.
15. SUPPLEMENTS AND AMENDMENTS.
The Company and the Representative may from time to time supplement or
amend this Agreement without the approval of any Holders of Warrant Certificates
(other than the Representative) in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and the Representative may deem
necessary or desirable and which the Company and the Representative deem shall
not adversely affect the interests of the Holders of Warrant Certificates.
16. SUCCESSORS
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<PAGE>
All the covenants and provisions of this Agreement shall be binding upon
and inure to the benefit of the Company, the Underwriters, the Holders and their
respective successors and assigns hereunder.
17. TERMINATION.
This Agreement shall terminate at the close of business on ___________.
Notwithstanding the foregoing, the indemnification provisions of Section 7 shall
survive such termination until the close of business on the later of the
expiration of any applicable statute of limitations or _______________.
18. GOVERNING LAW: SUBMISSION TO JURISDICTION.
This Agreement and each Warrant Certificate issued hereunder shall be
deemed to be a contract made under the laws of the State of New York and for all
purposes shall be construed in accordance with the laws of said State without
giving effect to the rules of said State governing the conflicts of laws, except
that matters concerning the validity of the issuance of securities shall be
determined and construed in accordance with the laws of Delaware. The Company,
the Representative and the Holders hereby agree that any action, proceeding or
claim against it arising out of, or relating in any way to, this Agreement shall
be brought and enforced in the courts of the State of New York or of the United
States of America for the Southern District of New York, and irrevocably submits
to such jurisdiction, which jurisdiction shall be exclusive. The Company, the
Representative and the Holders hereby irrevocably waive any objection to such
exclusive jurisdiction or inconvenient forum. Any such process or summons to be
served upon any of the Company, the Representative and the Holders (at the
option of the party bringing such action, proceeding or claim) 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
14 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim.
19. ENTIRE AGREEMENT: MODIFICATION.
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This Agreement (including the Underwriting Agreement and the Public Warrant
Agreement to the extent portions thereof are referred to herein) contains the
entire understanding between the parties hereto with respect to the subject
matter hereof. Subject to Section 15, this Agreement may not be modified or
amended except by a writing duly signed by the party against whom enforcement of
the modification or amendment is sought.
20. SEVERABILITY.
If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
21. CAPTIONS.
The caption headings of the Sections of this Agreement are for convenience
of reference only and are not intended, nor should they be construed as, a part
of this Agreement and shall be given no substantive effect.
22. BENEFITS OF THIS AGREEMENT.
Nothing in this Agreement shall be construed to give to any person or
corporation other than the Company and the Representative and any other
registered Holder(s) of the Warrant Certificates or Warrant Securities any legal
or equitable right, remedy or claim under this Agreement; and this Agreement
shall be for the sole and exclusive benefit of the Company and the
Representative and any other Holder(s) of the Warrant Certificates or Warrant
Securities.
23. COUNTERPARTS.
This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and such
counterparts shall together constitute but one and the same instrument.
24. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of the
Company, the Representative and their respective successors
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<PAGE>
and assigns and the Holders from time to time of the Warrant Certificate(s) or
any of them.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
ORION ACQUISITION CORP. I
By:
--------------------------------
Arthur H. Goldberg, Chief
Executive Officer
H.J. MEYERS & CO., INC.
By:
--------------------------------
Authorized Agent
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<PAGE>
EXHIBIT A
ORION ACQUISITION CORP. I
WARRANT CERTIFICATE
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANT REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), and may not be offered for
sale or sold except pursuant to (i) an effective registration statement under
the Act, or (ii) an opinion of counsel, if such opinion shall be reasonably
satisfactory to counsel to the issuer, that an exemption from registration under
such Act is available.
THE TRANSFER OR EXCHANGE OF THE WARRANT REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE COMMENCING __________ THROUGH 5:00 P.M., NEW YORK TIME
_________________.
No.WU-l _____Warrants
This Warrant Certificate certifies that _______________ ________________ or
registered assigns, is the registered holder of __________ warrants (the
"Warrants") to purchase initially, at any time from _____________, until 5:00
p.m., New York time on ________________ (the "Expiration Date"), up to ________
units (the "Units"), each Unit consisting of one (1) fully paid and
nonassessable share (the "Shares"), of Common Stock, $.01 par value (the "Common
Stock"), of Orion Acquisition Corp. I, a Delaware corporation (the "Company"),
and one (1) Class A nonredeemable common stock purchase warrant (the "Class A
Warrants") of the Company at the exercise price of $11.00 per Unit (the
"Exercise Price"), upon the surrender of this Warrant Certificate and payment of
the Exercise Price at an office or agency of the Company, but
<PAGE>
subject to the conditions set forth herein and in the warrant agreement dated as
of __________ (the "Warrant Agreement") by and among the Company and H.J. Meyers
Co., Inc., as representative of several underwriters (the "Representative")
Payment of the Exercise Price shall be made by certified or cashier's check or
money order payable to the order of the Company. No Warrant may be exercised
after 5:00 P.M, New York time, on the Expiration Date, at which time all
Warrants evidenced hereby, unless exercised prior thereto, shall thereafter be
void.
Each Class A Warrant entitles the registered holder to purchase one (1)
share of Common Stock at $9.00 per share at the times set forth in the Warrant
Agreement. Except as set forth in the Warrant Agreement and as described below,
the Class A Warrants are subject to the conditions set forth in the warrant
agreement dated ______________ between the Company and American Stock Transfer &
Trust Company.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange as provided herein,
without any charge except for any tax or other governmental charge imposed in
connection with such transfer.
<PAGE>
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof; and of any distribution to the holder(s) hereof; and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate this
_____ day of _________, 199__.
[SEAL]
ORION ACQUISITION CORP. I
By:_______________________
Arthur H. Goldberg,
Chief Executive Officer
ATTEST:
By:_______________________
, Secretary
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED________________
hereby sells, assigns and transfers unto _______________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint ______________________
Attorney, to transfer the within Warrant Certificate on the books of Orion
Acquisition Corp. I, with full power of substitution.
Dated:_____________________
Signature____________________
(Signature must conform in all respects to
the name of holder as specified on the face
of the Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase:
________ Class B Warrants
and herewith tenders in payment for such securities a certified or cashier's
check or money order payable to the order of Orion Acquisition Corp. I in the
amount of $___________, all in accordance with the terms hereof. The undersigned
requests that a certificate for such securities be registered in the name of
__________________ whose address is _____________________________ and that such
Certificate be delivered to _______________________ whose address is
Dated:___________________
Signature_____________________
(Signature must conform in all respects
to the name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
EXHIBIT B
ORION ACQUISITION CORP. I
WARRANT CERTIFICATE
THE SECURITIES ISSUABLE UPON EXERCISE OF THE WARRANT REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE EXTENT
APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT RELATING
TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF SUCH
OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
The securities represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Act"), and may not be offered for
sale or sold except pursuant to (i) an effective registration statement under
the Act, or (ii) an opinion of counsel, if such opinion shall be reasonably
satisfactory to counsel to the issuer, that an exemption from registration under
such Act is available.
THE TRANSFER OR EXCHANGE OF THE WARRANT REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE COMMENCING _____________ THROUGH 5:00 P.M., NEW YORK TIME
__________________.
No.WW-1 _________ Warrants
This Warrant Certificate certifies that ________________ _______ or
registered assigns, is the registered holder of _________ warrants (the
"Warrants") to purchase initially, at any time from ______________, until 5:00
p.m., New York time on _________________ (the "Expiration Date"), up to ________
Redeemable Class B common stock purchase warrants (the "Class B Warrants") of
Orion Acquisition Corp. I, a Delaware corporation (the "Company"), of the
Company at the exercise price of $5.75 per Class B Warrant (the "Exercise
Price"), upon the surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the warrant agreement dated as of
_____________ (the "Warrant Agreement") by and among the Company and H.J. Meyers
&
<PAGE>
Co., Inc., as representative of several underwriters (the "Representative").
Payment of the Exercise Price shall be made by certified or cashier's check or
money order payable to the order of the Company. No Warrant may be exercised
after 5:00 P.M., New York time, on the Expiration Date, at which time all
Warrants evidenced hereby, unless exercised prior thereto, shall thereafter be
void. Each Class B Warrant entitles the registered holder to purchase one (1)
Unit of the Company at a price of $.125, consisting of one share of Common
Stock, $.01 par value ("Common Stock"), and one non-redeemable Class A common
stock purchase warrant ("Class A Warrant") of the Company, at the times set
forth in the Warrant Agreement. Each Class A Warrant entitles the registered
holder to purchase one (1) share of Common Stock at $9.00 per share at the times
set forth in the Warrant Agreement. Except as set forth in the Warrant Agreement
and as described below, the Class A Warrants and Class B Warrants are subject to
the conditions set forth in the Warrant Agreement dated _______________ between
the Company and American Stock Transfer & Trust Company.
Except as set forth in the Warrant Agreement and as described below, the
Class B Warrants are subject to the conditions set forth in the Warrant
Agreement dated _________________ between the Company and American Stock
Transfer & Trust Company.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new
<PAGE>
Warrant Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange as provided herein, without any charge except for any tax or other
governmental charge imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof; and of any distribution to the holder(s) hereof; and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the undersigned has executed this certificate this ____
day of __________ 199__.
[SEAL]
ORION ACQUISITION CORP. I
By:_____________________
Arthur H. Goldberg,
Chief Executive Officer
ATTEST:
By:___________________
, Secretary
<PAGE>
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires to transfer the
Warrant Certificate.)
FOR VALUE RECEIVED________________
hereby sells, assigns and transfers unto _____________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint _______________________
Attorney, to transfer the within Warrant Certificate on the books of Orion
Acquisition Corp. I, with full power of substitution.
Dated:
Signature_____________________
(Signature must conform in all respects
to the name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
FORM OF ELECTION TO PURCHASE
The undersigned hereby irrevocably elects to exercise the right, represented by
this Warrant Certificate, to purchase:
_____Class B Warrants
and herewith tenders in payment for such securities a certified or cashier's
check or money order payable to the order of Orion Acquisition Corp. I in the
amount of $_____ all in accordance with the terms hereof. The undersigned
requests that a certificate for such securities be registered in the name
of_____________________ whose address is _______________________ and that such
Certificate be delivered to ________________________ whose address is
________________________________________
Dated:__________________
Signature____________________
(Signature must conform in all respects
to the name of holder as specified on
the face of the Warrant Certificate.)
(Insert Social Security or Other
Identifying Number of Holder)
<PAGE>
NUMBER UNITS
ORION ACQUISITION CORP. I
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE CUSIP
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT
for value received
(the "Registered Holder") is the owner of the number of Units specified above,
transferable only on the books of Orion Acquisition Corp. I (the "Corporation")
by the Registered Holder thereof in person or by his or her duly authorized
attorney, on surrender of this Unit Certificate properly endorsed.
Each Unit consists of one (1) share of the Corporation's common stock, par value
$.01 per share (the "Common Stock"), and one (1) redeemable Class A common stock
purchase warrant (the "Warrants") to purchase one (1) share of Common Stock for
$9.00 per share (subject to adjustment) at any time on or after the consummation
of a Business Combination by the Corporation and before 5:00 P.M. New York time
on July 2, 2001 (the "Expiration Date"). The terms of the Warrants are governed
by a Warrant Agreement dated as of (the "Warrant
Agreement") between the Company and American Stock Transfer & Trust Company, as
Warrant Agent (the "Warrant Agent"), and re subject to the terms and provisions
contained therein, all of which terms and provisions the Registered Holder of
this Unit Certificate consents to by acceptance hereof. Copies of the Warrant
Agreement are on file at the office of the Corporation and are available to any
Registered Holder on written request and without cost. The Warrant shall be void
unless exercised before 5:00 P.M., New York time, on the Expiration Date.
This certificate is not valid unless countersigned and registered by the
Transfer Agent, Warrant Agent, Warrant Agent and Registrar of the Corporation.
The Warrants and the shares of Common Stock of the Corporation represented by
this Unit Certificate shall be nondetachable and not separately transferable
until such date as shall be determined by H.J. Meyers & Co., Inc. (the
"Separation Date").
IN WITNESS WHEREOF, the Corporation has caused this Unit Certificate to be duly
executed, manually or by facsimile, by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted herein.
Dated:
By: By:
Secretary Arthur H. Goldberg, Chairman and
Chief Executive Officer
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By : Transfer Agent,
Warrant Agent and Registrar
Authorized Officer
BANKNOTE CORP. OF AMERICA WALL ST. 1- 603035-942 ORION 8/1/96 PROOF #1 JL
<PAGE>
ORION ACQUISITION CORP. I
SEPARATION PROVISIONS
This certificate certifies that for value received the Registered Holder
hereby is entitled, at and after such time, as H.J. Meyers & Co., Inc. may
determine that the Common Stock and the Warrants, which comprise the Units,
shall be separately transferable (the "Separation Date") to exchange each Unit
represented by this Unit Certificate for Common Stock certificates representing
one share of Common Stock and one Warrant Certificate representing one Warrant
upon surrender of this Unit Certificate to the Transfer Agent at the office of
the Transfer Agent together with any documentation required by such Transfer
Agent.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - . . . Custodian . . . .
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right Act . . . . . . . . . . . . .
of survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
For value received, ________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_________________ ___________________________________________________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING ZIP CODE OF ASSIGNEE.
_______________________________________________________________________________
_______________________________________________________________________________
__________________________________________________________________________Units
represented by the within Certificate, and do hereby irrevocably
constitute and appoint
_______________________________________________________________________Attorney
to transfer the said stock on the books of the within-named Corporation with
full power of substitution in the premises.
Dated : ____________________________
_______________________________________
NOTICE: THE ABOVE SIGNATURE SHOULD CORRESPOND
EXACTLY WITH THE NAME ON THE FACE OF
THIS UNIT CERTIFICATE OR WITH THE NAME
OF THE ASSIGNEE APPEARING IN THE
ASSIGNMENT FORM ABOVE AND MUST BE
GUARANTEED BY AN ELIGIBLE GUARANTOR
INSTITUTION WITH MEMBERSHIP IN AN
APPROVED SIGNATURE GUARANTEE MEDALLION
PROGRAM.
BANKNOTE CORP. OF AMERICA WALL ST. 1- 603035-942 ORION 8/1/96 PROOF #1 JL
<PAGE>
August 28, 1996
Orion Acquisition Corp. I
375 Park Avenue
New York, NY 10022
Re: Orion Acquisition Corp. I
Gentlemen:
We have acted as counsel to Orion Acquisition Corp. I, a Delaware
corporation (the "Company") in connection with the filing by the Company of a
Registration Statement on Form SB-2 (Registration No. 33-80647), covering the
registration of up to 800,000 Units, at $10.00 per Unit, each Unit consisting of
one share of common stock ("Common Stock") and one Class A Warrant entitling the
holder thereof to purchase, upon consummation of a Business Combination, one
share of Common Stock at a price of $9.00, and 320,000 Redeemable Class B Unit
Purchase Warrants, at $5.75 per Class B Warrant, each Class B Warrant entitling
the holder thereof to purchase, upon the consummation of a Business Combination,
one Unit at a price of $.125 (collectively "Securities"). We have been asked to
issue an opinion as to whether the Securities being registered will, when sold,
be legally
<PAGE>
August 1, 1996
Page 2
issued, fully paid, non-assessable, and binding obligations of the Company.
As counsel to the Company, we have examined the Certificate of
Incorporation and By-Laws, as amended to date, and other corporate records of
the Company and have made such other investigations as we have deemed necessary
in connection with the opinion hereinafter set forth. We have relied, to the
extent we deem such reliance proper, upon certain factual representations of
officers and directors of the Company given in certificates, in answer to our
written inquiries and otherwise, and, although we have not independently
verified all of the facts contained therein, nothing has come to our attention
that would cause us to believe that any of the statements contained therein are
untrue or misleading.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us. We have assumed that the corporate records of the Company furnished to
us constitute all of the existing corporate records of the Company and include
all corporate proceedings taken by it.
Based solely upon and subject to the foregoing, we are of the opinion that:
1. The Securities have been registered by the Company and the shares of
Common Stock have been duly and validly authorized and, when issued and paid
for, will be duly and validly issued, fully paid and non-assessable.
2. The shares of common stock issuable upon exercise of the Warrants have
been duly authorized and reserved for issuance upon exercise and, when issued
upon exercise in accordance with the terms of the Securities, will have been
validly issued and will be fully paid and non-assessable, and the issuance of
such shares is not subject to any preemptive or similar rights.
<PAGE>
August 1, 1996
Page 3
Very truly yours,
Greenbaum, Rowe, Smith, Ravin, Davis & Himmel
<PAGE>
ESCROW AGREEMENT
This ESCROW AGREEMENT is made as of this ____ day of ________, 1996 by and
among ORION ACQUISITION CORP. I, with a place of business at 150 East 52nd
Street, New York, New York 10022 (the "Company"), H.J. MEYERS & CO., INC., with
its principal place of business at 1895 Mount Hope Avenue, Rochester, New York
14620 ("H.J. Meyers" or the "Representative"), and Citibank, N.A., a national
bank organized under the laws of the United States of America with a principal
place of business at 120 Wall Street, New York, New York 10043, in its capacity
as escrow agent only (the "Escrow Agent").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company intends to consummate the initial public offering (the
"Offering") of up to an aggregate of (i) 920,000 Units, including 120,000 Units
subject to the underwriters' over-allotment option (the "Units"), each Unit to
consist of (a) one (1) share of the Company's common stock, par value $.01 per
share (the "Common Stock") and (b) one (1) redeemable Class A Common Stock
Purchase Warrant to purchase one share of Common Stock (the "Class A Warrants"),
and (ii) 368,000 redeemable Class B Unit Purchase Warrants (the "Class B
Warrants"), including 48,000 Class B Warrants subject to the underwriters' over-
allotment option, each Class B Warrant to be exercisable for one (1) Unit, all
as more fully described in the Company's Registration Statement on Form SB-2
under the Securities Act of 1933, as amended (File No. 33-80647), as declared
effective by the Securities and Exchange Commission on ____________ (the
"Registration Statement");
WHEREAS, the Company has entered into an Underwriting Agreement dated
_____________ with the Representative of the underwriters named therein,
pursuant to which, among other matters, such underwriters have agreed to
purchase the Units and the Class B Warrants from the Company;
WHEREAS, in accordance with the terms of the Offering as set forth in the
Registration Statement, the gross proceeds from the sale of the Units are
required to be placed directly in an escrow account; and
WHEREAS, the Company and the Representative agree to appoint the Escrow
Agent as the escrow agent for such account, on the terms and conditions set
forth below;
<PAGE>
NOW, THEREFORE, in consideration of the mutual promises and obligations set
forth below, and for other valuable consideration the sufficiency and receipt of
which are hereby acknowledged, the parties hereto hereby agree as follows:
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<PAGE>
1. APPOINTMENT OF ESCROW AGENT AND CREATION OF ACCOUNT. The Company and
the Representative hereby appoint the Escrow Agent as escrow agent hereunder and
direct it to hold those assets described in Exhibit A attached hereto, together
with any additional assets which may be deposited with the Escrow Agent from
time to time to be held pursuant to this Agreement and all income earned from
investment of the assets described in Exhibit A and any additions thereto
(collectively, the "Escrow Assets"), in a separate account in the name of "Orion
Acquisition Corp. I - Escrow Account" (the "Escrow Account"). The Escrow Account
shall be invested, administered and distributed in accordance with the terms set
forth below. Contemporaneously with the closing of the Offering, the
Representative shall deposit with the Escrow Agent those assets listed on
Exhibit A.
2. INITIAL FUNDING OF ESCROW ACCOUNT. The Escrow Account shall be
initially funded with the proceeds from the sale of Units by the Representative
on behalf of the Company. All funds from the initial sale of Units by the
Representative shall be deposited directly in the Escrow Account by wire
transfer or certified check.
3. INVESTMENT OF ESCROW ASSETS. The Escrow Assets shall be invested in
accordance with the instructions set forth in Exhibit C attached hereto. Such
instructions may be modified only by a written certificate executed by an
authorized officer of the Company and delivered to the Escrow Agent; however,
this Escrow Agreement may not be altered by the Board of Directors of the
Company in terms of the investment instructions, except as may be required by
the Board of Directors to fulfill their fiduciary obligations. Escrow Agent
shall make monthly accountings of such investments, the income received
therefrom, and the then existing balance of the Escrow Account to the Company.
4. DISTRIBUTION FROM ESCROW ACCOUNT. The Escrow Agent shall make
distributions from the Escrow Account in accordance with the requirements set
forth in Exhibit D attached hereto. Such instructions may be modified only by a
written certificate executed by authorized officers of both the Company and the
Representative, and delivered to the Escrow Agent; provided that such
modification may not contravene Section 11-51-302(6) of the Colorado Revised
Statutes. In addition, this Escrow Agreement may not be altered by the Board of
Directors of the Company in terms of its distribution instructions, except as
may be required by the Board of Directors to fulfill their fiduciary
obligations. The Escrow Agent shall not
-3-
<PAGE>
be responsible for determining whether such instructions contravene Section 11-
51-302(6) of the Colorado Revised Statutes and is authorized to make
distributions in reliance on the instructions it receives. Written notice of
each disbursement from the Escrow Agent shall be provided to the Company within
ten (10) days of each such disbursement. Upon the final distribution of all of
the Escrow Assets, this Agreement shall terminate and the Escrow Agent shall
have no further obligations or liabilities hereunder.
5. COMPENSATION OF ESCROW AGENT. The Escrow Agent shall receive fees
determined in accordance with, and payable as specified in, the Schedule of Fees
attached hereto as Exhibits E and F (the "Fee Schedule"). The Start-Up Fee, as
specified in the Fee Schedule, shall be paid by the Company upon the execution
of this Agreement. The Escrow Agent shall have no duties or liabilities under
this Agreement unless and until full payment of the Start-Up Fee. The Escrow
Agent shall be reimbursed by the Company for all expenses, disbursements and
advances incurred or made by the Escrow Agent in preparation, administration and
enforcement of this Agreement, including, but not limited to, reasonable legal
fees and expenses. The Company shall be liable for all payments due to the
Escrow Agent under this Agreement. The Company hereby grants to the Escrow Agent
a first lien on the Escrow Assets such that in the event that any and all
charges payable to the Escrow Agent under this Agreement shall not be timely
paid, the Escrow Agent shall have the right, without any prior action, to pay
itself from the Escrow Assets the full money owned. It is understood that the
Escrow Agent's fees may be adjusted from time to time to conform to its then
current guidelines.
6. RESPONSIBILITIES AND RIGHTS OF THE ESCROW AGENT. To induce the Escrow
Agent to act hereunder, it is further agreed by the Undersigned that:
(a) The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein. Without limiting the generality of the foregoing,
the Escrow Agent shall have no duty or responsibility as regards any: (i)
security as to which a default in the payment of principal or interest has
occurred, to give notice of default, make demand for payment or take any other
action with respect to such default; and (ii) loss occasioned by delay in the
actual receipt of notice of any payment, redemption or other transaction
regarding any item in the Escrow Assets as to which it
-4-
<PAGE>
is authorized to take action hereunder. The Escrow Agent may consult with
counsel and shall be fully protected with respect to any action taken in good
faith in accordance with such advice. The Escrow Agent shall have no liability
or responsibility for any misstatement in, or omission from, the Prospectus.
(b) The Escrow Agent shall not be under any duty to give the Escrowed
Assets held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Escrow Agreement. In the event that there is a
change in the investment instructions resulting in uninvested funds, such
uninvested funds held hereunder shall not earn or accrue interest.
(c) The Escrow Agent does not make any representation or warranty
with regard to the creation or perfection, hereunder or otherwise, of a security
interest in the Escrow Assets or regarding the negotiability or transferability
of, or existence of other interest in the Escrow Assets. The Escrow Agent shall
have no responsibility at any time to ascertain whether or not any security
interest exists in the Escrow Assets or any part thereof or to file any
financing statement under the Uniform Commercial Code of any state with respect
to the Escrow Assets or any part thereof.
(d) The Escrow Agent is hereby authorized to comply with any judicial
order or legal process which stays, enjoins, directs or otherwise affects the
transfer or delivery of the Escrow Assets or any party hereto and shall incur no
liability for any delay or loss which may occur as a result of such compliance.
(e) The Escrow Agent shall have no duty or responsibility with regard
to any loss resulting from the investment, reinvestment, sale or liquidation of
the Escrow Assets in accordance with the terms of this Agreement. The Escrow
Agent need not maintain any insurance with respect to the Escrow Assets.
(f) The Escrow Agent shall in no event be liable in connection with
its investment or reinvestment of any cash held by it hereunder in good faith,
in accordance with the terms hereof, including, without limitation, any
liability for any delays (not resulting from its gross negligence or willful
misconduct) in the investment or reinvestment of the Escrowed Assets, or any
loss of interest incident to any such delays.
-5-
<PAGE>
(g) Except as otherwise expressly provided herein, the Escrow Agent
is authorized to execute instructions and take other actions pursuant to this
Agreement in accordance with its customary processing practices for similar
customers and, in accordance with such practices the Escrow Agent may retain
agents, including its own subsidiaries or affiliates, to perform certain of such
functions. The Escrow Agent shall have no liability under this Agreement for
any loss or expense other than those occasioned by the Escrow Agent's gross
negligence or willful misconduct and in any event its liability shall be limited
to direct damages and shall not include any special or consequential damages.
All collection and receipt of funds or securities and all payment and delivery
of funds or securities under this Agreement shall be made by the Escrow Agent as
agent, at the risk of the other parties hereto with respect to their actions or
omissions and those of any person other than the Escrow Agent. In no event shall
the Escrow Agent be responsible or liable for any loss due to force beyond its
control, including, but not limited to, acts of God, flood, fire, nuclear
fusion, fission or radiation, war (declared or undeclared), terrorism,
insurrection, revolution, riot, strikes or work stoppages for any reason,
embargo, government action, including any laws, ordinances, regulations or the
like which restrict or prohibit the providing of the services contemplated by
this Agreement, inability to obtain equipment or communications facilities, or
the failure of equipment or interruption of communications facilities, and other
causes whether or not of the same class or Kind as specifically named above. In
the event that the Escrow Agent is unable substantially to perform for any of
the reasons described in the immediately preceding sentence, it shall so notify
the other parties hereto as soon as reasonably practicable following its actual
knowledge of the same.
(h) This Escrow Agreement expressly sets forth all the duties of the
Escrow Agent with respect to any and all matters pertinent hereto. No implied
duties or obligations shall be read into this agreement against the Escrow
Agent. Notwithstanding any provisions of this Agreement to the contrary, the
Escrow Agent shall not be bound by, or have any responsibility with respect to,
any other agreement or contract among the Company and the Representative
(whether or not the Escrow Agent has knowledge thereof).
(i) It is understood and agreed that should any dispute arise with
respect to the payment and/or ownership or right of
-6-
<PAGE>
possession of the Escrow Assets, or should the Escrow Agent in good faith be in
doubt as to what action it should take hereunder, the Escrow Agent is authorized
and directed to retain in its possession, without liability to anyone, all or
any part of the Escrow Assets until such dispute shall have been settled either
by mutual agreement by the parties concerned or by the final order, decree or
judgment of any court or other tribunal of competent jurisdiction in the United
States of America and time for appeal has expired and no appeal has been
perfected but the Escrow Agent shall be under no duty whatsoever to institute or
defend any such proceedings. Any such court order shall be accompanied by a
legal opinion by counsel for the presenting party satisfactory to the Escrow
Agent to the effect that said court order is final and nonappealable.
(j) The Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Without limiting the foregoing, in the event of any alteration
of investment or distribution instructions, the Escrow Agent shall have no
responsibility to determine whether the requested alteration was required by the
Board of Directors of the Company to fulfill its fiduciary obligations. The
Escrow Agent may act in reliance upon any instrument or signature believed by it
to be genuine and may assume that any person purporting to give receipt or
advice or make any statement or execute any document in connection with the
provisions hereof has been duly authorized to do so.
(k) The Company and the Representative are jointly and severally
liable to hold the Escrow Agent and its agents harmless from, and indemnify and
reimburse the Escrow Agent and them, for all claims, liability, loss and expense
(including reasonable out-of-pocket and incidental expenses and legal fees),
incurred by the Escrow Agent or them in connection with the Escrow Agent or
their acting under this Agreement, provided that the Escrow Agent or they, as
the case may be, have not acted with gross negligence or willful misconduct with
respect to the events resulting in such claims, liability, loss, and expense.
(l) The Company and the Representative acknowledge and agree that,
except as otherwise provided in this Section 5(l), the
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<PAGE>
Escrow Agent shall not be responsible for taking any steps, including without
limitation, the filing of forms or reports, or withholding of any amounts in
connection with any tax obligations of the Company, the Representative or any
other party in connection with the Escrow Assets; provided, however, that the
Escrow Agent shall be entitled to take any action such as withholding, that it
deems appropriate to ensure compliance with its obligations under any applicable
tax laws. In no event shall the Escrow Agent be required to distribute funds
from the Escrow Account to either the shareholders or the Company unless the
appropriate Internal Revenue Service Form W-8 or Form W-9 are received, as
required by the Registration Statement. Notwithstanding the foregoing, the
Escrow Agent shall supply any information or documents as may be reasonably
requested by the Company in connection with the Company's preparation of its tax
returns for the Escrow Account. Upon any distribution of Escrow Assets in
accordance with the instructions set forth in Exhibit D attached hereto, the
Escrow Agent shall prepare and deliver to each person receiving a distribution a
completed Form 1099, and shall supply any necessary information as may
reasonably be requested in writing by such persons.
(m) The Escrow Agent does not have any interest in the Escrowed
Property deposited hereunder but is serving as escrow holder only and having
only possession thereof. The Company shall pay or reimburse the Escrow Agent
upon request for any transfer taxes or other taxes relating to the Escrowed
Property incurred in connection herewith and shall indemnify and hold harmless
the Escrow Agent from any amounts that it is obligated to pay in the way of such
taxes. This paragraph shall survive notwithstanding any termination of this
Escrow Agreement or the resignation of the Escrow Agent.
(n) The Escrow Agent makes no representation as to the validity,
value, genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(o) The Escrow Agent shall not be called upon to advise any party as
to the wisdom in selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
(p) No printed or other matter in any language (including without
limitation prospectuses, notices, reports and promotional
-8-
<PAGE>
material) which mentions the Bank's name or the rights, powers, or duties of the
Escrow Agent shall be issued by the other parties hereto or on such parties'
behalf unless the Bank shall first have given its specific written consent
thereto. Notwithstanding the foregoing sentence, the Escrow Agent hereby
specifically consents to the use of its name as Escrow Agent as necessary to
effectuate the Company's public offering and a business combination of the
Company.
(q) The other parties hereto authorize the Escrow Agent, for any
securities held hereunder, to use the services of any United States central
securities depository it deems appropriate, including, but not limited to, the
Depositary Trust Company and the Federal Reserve Book Entry System.
7. INSTRUCTIONS: FUND TRANSFERS.
(a) The Escrow Agent is authorized to rely and act upon all
instructions given or purported to be given by one or more officers, employees
or agents of the Company (i) authorized by or in accordance with a corporate
resolution delivered to the Escrow Agent or (ii) described as authorized in a
certificate delivered to the Escrow Agent by the appropriate Secretary or
Assistant Secretary or similar officer (each such officer, employee or agent or
combination of officers, employees and agents authorized pursuant to clause (i)
or described pursuant to clause (ii) of this Section 6(a) is hereinafter
referred to as an "Authorized Officer"). (The term "instructions" includes,
without limitation, instructions to sell, assign, transfer, deliver, purchase or
receive for the Escrow Account any and all stocks, bonds and other securities or
to transfer all or any portion of the Escrow Assets. The Escrow Agent may also
rely and act upon instructions when bearing or purporting to bear the signature
or facsimile signature of any of the individuals designated by an Authorized
Officer regardless of by whom or by what means the actual or purported facsimile
signature or signatures thereon may have been affixed thereto if such facsimile
signature or signatures resemble the facsimile specimen or specimens from time
to time furnished to the Escrow Agent by any of such Officers, Secretary or an
Assistant Secretary or similar officer). In addition, and subject to subsection
6(b) hereof, the Escrow Agent may rely and act upon instructions received by
telephone, telex, TWX, facsimile transmission, bank wire or other teleprocess
acceptable to it which the Escrow Agent believes in good faith to have been
given by an
-9-
<PAGE>
Authorized Officer or which are transmitted with proper testing or
authentication pursuant to terms and conditions which the Escrow Agent may
specify. The Escrow Agent shall incur no liability to the Company or otherwise
for having acted in accordance with instructions on which it is authorized to
rely pursuant to the provisions hereof. Any instructions delivered to the Escrow
Agent by telephone shall promptly thereafter be confirmed in writing by an
Authorized Officer but the Escrow Agent shall incur no liability for a failure
to send such confirmation in writing, the failure of any such written
confirmation to conform to the telephone instruction which it received, the
failure of any such written confirmation to be signed or properly signed, or its
failure to produce such confirmation at any subsequent time. The Escrow Agent
shall incur no liability for refraining from acting upon any instructions which
for any reason it, in good faith, is unable to verify to its own satisfaction.
Unless otherwise expressly provided, all authorizations and instructions shall
continue in full force and effect until canceled or superseded by subsequent
authorizations or instructions received by the Escrow Agent's safekeeping
account administrator. The Escrow Agent's authorization to rely and act upon
instructions pursuant to this paragraph shall be in addition to, and shall not
limit, any other authorization which the Company may give to it hereunder.
(b) With respect to written or telephonic instructions or
instructions sent by facsimile transmission to transfer funds from the Account
in accordance herewith (such instructions hereinafter referred to as "Transfer
Instructions"), the security procedure agreed upon for verifying the
authenticity of Transfer Instructions is a callback by the Escrow Agent to any
of the persons designated below, whether or not any such person has issued such
Transfer Instruction. (It is recommended that the persons designated below not
be persons who generally issue Transfer Instructions; whenever possible, the
Escrow Agent will endeavor to call someone other than the issuer of the Transfer
Instructions).
With respect to Transfer Instructions given by the Company pursuant to
its authority under this Agreement:
Name/Title Telephone No.
---------- -------------
Arthur H. Goldberg/Chairman (212) 593-4747
of the Board and Chief
Executive Officer
-10-
<PAGE>
Alternatively, at the Escrow Agent's option, the callback may be made
to any person designated in the certified resolutions or other certificates or
documentation furnished to it by a party in connection with the Escrow Account
as authorized to issue Transfer Instructions or otherwise transact business with
respect to the Escrow Account for that party. The Company shall implement any
other authentication method or procedure or security device required by the
Escrow Agent at any time or from time to time.
8. STOCKHOLDER REDEMPTION. In the event a stockholder exercises his or
her redemption right upon the business combination of the Company, the funds to
repay said stockholder shall be distributed directly from the Escrow Account. As
soon as practicable after the Company receives notice from a stockholder that
the stockholder is exercising its redemption rights, the Company shall instruct
the Escrow Agent to transfer, and (so long as the Escrow Agent has received an
Internal Revenue Service Form W-8 or Form W-9, as required by the Registration
Statement) the Escrow Agent shall so transfer, the funds owed to the
stockholder; such instructions to include the amount to be transferred and
delivery instructions. These instructions shall comply with Section 7 of this
Escrow Agreement.
9. RESIGNATION OR REMOVAL OF ESCROW AGENT.
(a) The Escrow Agent may resign at any time by giving written notice
to the Company and the Representative. The Company and H.J. Meyers on behalf of
the Representative may remove the Escrow Agent upon joint written notice to the
Escrow Agent. Such resignation or removal shall take effect upon delivery of the
Escrow Assets to a successor escrow agent designated in writing by the Company
and H.J. Meyers on behalf of the Representative, and the Escrow Agent shall
thereupon be discharged from all obligations under this Agreement, and shall
have no further duties or responsibilities in connection herewith. The
obligations of the Company and the Representative to the Escrow Agent and the
rights of the Escrow Agent under Sections 4, 5(c), and 5(h) hereof shall survive
termination of this Agreement or the resignation or removal of the Escrow Agent.
(b) In the event that the Escrow Agent submits a notice of
resignation, its only duty, until a successor Escrow Agent shall have been
appointed and shall have accepted such appointment, shall be to safekeep the
Escrowed Assets, and hold, invest and dispose of
-11-
<PAGE>
the Escrow Assets in accordance with this Agreement, until receipt of a
designation of successor Escrow Agent or a joint written disposition instrument
by the other parties hereto or a Final Order of a Court of competent
jurisdiction, but without regard to any notices, requests, instructions, demands
or the like received by it from the other parties hereto after such notice shall
have been given, unless the same is a direction that the Escrow Assets be paid
or delivered in its entirety out of the Escrow Account. The Escrow Agent, upon
submission of its resignation in accordance with this subparagraph (b) may
deposit the Escrow Assets with a court of competent jurisdiction if the Escrow
Agent deems such action advisable. The resignation of the Escrow Agent will take
effect on the earlier of (a) the appointment of a successor (including a court
of competent jurisdiction) or (b) the day which is 30 days after the date of
delivery of its written notice of resignation to the other parties hereto. If,
at the time the Escrow Agent has not received a designation of a successor
Escrow Agent, the Escrow Agent's sole responsibility after that time shall be to
safe-keep the Escrowed Assets until receipt of a designation of a successor
Escrow Agent or a joint written disposition instrument by the other parties
hereto or a final order of a court of competent jurisdiction.
10. NOTICES. Unless expressly provided herein to the contrary, notices
hereunder shall be in writing, and delivered by telecopier, overnight express
mail, first-class postage prepaid, delivered personally or by receipted courier
service. All such notices which are mailed shall be deemed delivered upon
receipt if the addressee is the Escrow Agent, but shall be deemed delivered upon
mailing if otherwise, all such notices shall be addressed as follows (or to such
other address as any party hereto may from time to time designate by notice duly
given in accordance with this paragraph):
(a) If to the Company, to:
Orion Acquisition Corp. I
375 Park Avenue
New York, New York 10022
Attention: Chairman
-12-
<PAGE>
If to the Representative, to:
H.J. Meyers & Co., Inc.
1895 Mount Hope Avenue
Rochester, New York 14620
Attention: Mr. Michael Smith
(c) If to the Escrow Agent, to:
Citibank, N.A.
120 Wall Street, 13th Floor
New York, New York 10043
Attention: Corporate Agency and Trust
11. MISCELLANEOUS.
(a) CHOICE OF LAW AND JURISDICTION. This Agreement shall be governed
by and construed in accordance with the law of the State of New York applicable
to agreements made and to be performed in New York. The parties to this
Agreement hereby agree that jurisdiction over such parties and over the subject
matter of any action or proceeding arising under this Agreement may be exercised
by a competent Court of the State of New York sitting in New York City, or by a
United States Court sitting in the Southern District of New York. The parties
agree that delivery or mailing of any process or other papers in the manner
provided herein, or in such other manner as may be permitted by law, shall be
valid and sufficient service hereof.
(b) BENEFITS AND ASSIGNMENT. Nothing in this Agreement, expressed or
implied, shall give or be construed to give any person, firm or corporation,
other than the parties hereto and their successors and assigns, any legal claim
under any covenant, condition or provision hereof; all the covenants,
conditions, and provisions contained in this Agreement being for the sole
benefit of the parties hereto and their successors and assigns. No party may
assign any of its rights or obligations under this Agreement without (i) the
written consent of all the other parties, which consent may be withheld in the
sole discretion of the party whose consent is sought and (ii) the written
agreement of the transferee that it will be bound by the provisions of this
Agreement.
-13-
<PAGE>
(c) COUNTERPARTS. This Agreement may be executed in several
counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument.
(d) AMENDMENT AND WAIVER. This Agreement may be modified only by a
written amendment signed by all the parties hereto, and no waiver of any
provision hereof shall be effective unless expressed in a writing signed by the
party to be charged.
(e) HEADINGS. The headings of the sections hereof are included for
convenience of reference only and do not form part of this Agreement.
(f) ENTIRE AGREEMENT. This Agreement contains the complete agreement
of the parties with respect to its subject matter and supersedes and replaces
any previously made proposals, representations, warranties or agreements with
respect thereto by any of the parties hereto.
(g) SEPARABILITY. Any provisions of this Agreement which may be
determined by competent authority to be prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or enforceability without invalidating the remaining provisions
hereof, and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
10. ADDITIONAL DOCUMENTATION. This Agreement shall not become effective
(and the Escrow Agent shall have not responsibility hereunder except to return
the Escrow Assets to the Company) until the Escrow Agent shall have received
from the Company the following:
(i) Certified resolutions of its board of directors authorizing the
making and performance of this Agreement;
(ii) A certificate as to the names and specimen signatures of its
officers or representatives authorized to sign the Agreement and
notices, instructions and other communications hereunder; and
-14-
<PAGE>
(iii) Counterpart signature pages to the escrow agreement being
executed simultaneously herewith among the Escrow Agent, the
Company and the current stockholders of the Company (the
"Stockholders"), executed by the Stockholders holding an
aggregate at least 66 2/3% of the issued and outstanding shares
of common stock of the Company as of the date hereof.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
ORION ACQUISITION CORP. I
By:__________________________
Name: Arthur H. Goldberg
Title: Chairman
H.J. MEYERS & CO., INC.
By:___________________________
Name:
Title:
Agreed and accepted:
CITIBANK, N.A.,
as Escrow Agent
By:___________________________
Name:
Title:
-16-
<PAGE>
EXHIBIT A to ESCROW AGREEMENT
ESCROW ASSETS
$
-17-
<PAGE>
EXHIBIT B to ESCROW AGREEMENT
INTENTIONALLY OMITTED
-18-
<PAGE>
EXHIBIT C to ESCROW AGREEMENT
INVESTMENT INSTRUCTIONS
The Escrow Agent shall invest the Escrow Assets in short-term United
States government securities, including treasury bills, cash and cash
equivalents.
-19-
<PAGE>
EXHIBIT D to ESCROW AGREEMENT
DISBURSEMENT INSTRUCTIONS
1. RELEASE OF ESCROW ASSETS TO THE COMPANY. In accordance with Section 11-51-
302(6) of the Colorado Revised Statutes, the Escrow Agent shall release the
Escrow Assets to the Company upon receipt by the Escrow Agent of:
(a) Written notice from the Company that the Company has completed a
transaction or series of transactions in which at least 50% of the
gross proceeds of the Offering under the Securities Act of 1933, as
amended, is committed to a specific line of business, and that at
lease 10 days have lapsed since the Company filed a Notice of Proposed
Release of Escrow Assets from Escrow on Form ES with the Securities
Commissioner of the Colorado Division of Securities; and
(b) An opinion of counsel of the Company, reasonably acceptable to the
Escrow Agent, that:
(i) A Business Combination was approved by a vote of two-thirds of
the shares of Common Stock of the Company, as required by the
Registration Statement;
(ii) More than twenty percent of the shareholders of the Company have
not elected to redeem their Common Stock, as required by the
Registration Statement;
(iii)The fair market value (evidenced by a written
certification from the Company, as determined by the Company,
based upon standards generally accepted by the financial
community, including revenues, earnings, cash flow, and book
value) of the target exceeds eighty percent of the net value of
the assets of the Company, as required by the Registration
Statement; and
(iv) All other actions required by the Company for the release of the
Escrow Assets have been met.
-20-
<PAGE>
2. DISTRIBUTION OF ESCROW ASSETS AS TO STOCKHOLDERS. The Escrow Agent shall
disburse the Escrow Assets to the holders of record of the Company's Common
Stock if:
(a) Within 18 months of the date of effectiveness of the Offering (or
twenty-four months if the Escrow Agent has received notice within the
initial eighteen month period that the Extension Criteria, as defined
in the Prospectus used in the Offering, have been satisfied) the
Escrow Agent has not received written notice from the Company that the
Company has completed a transaction or series of transactions in which
at least 50% of the gross proceeds of the Offering is committed to a
specific line of business; or
(b) The Company delivers written notice to the Escrow Agent that all of
the Escrow Assets should be distributed to the holders of record of
the Company's Common Stock sold in the Offering in connection with the
liquidation of the Company; or
(c) The Company delivers written notice to the Escrow Agent that part of
the Escrow Assets should be distributed to holders of record of the
Company's Common Stock sold in the Offering electing to have their
shares redeemed in accordance with the terms set forth in the
Registration Statement.
3. METHOD OF RELEASE OF ESCROW ASSETS TO THE COMPANY. Upon receipt by the
Escrow Agent of the written notice required by paragraph 1 above, the
Escrow Agent shall wire transfer the Escrow Assets to the Company in
accordance with the wire transfer instructions of the Company set forth in
such notice.
4. METHOD OF DISTRIBUTION OF ESCROW ASSETS TO STOCKHOLDERS. Upon the
occurrence of either of the events specified in Section 2(a), 2(b) or 2(c)
above, the Escrow Agent shall distribute the Escrow Assets to the holders
of record of the Company's Common Stock sold in the Offering by mail in
accordance with and to the address specified in the books and records of
the Company. The written notice required by Section 2(a) or 2(b), as the
case may be, shall include the name and address of each
-21-
<PAGE>
such holder, together with the percentage of the Escrow Assets to be
distributed thereto.
-22-
<PAGE>
EXHIBIT E to ESCROW AGREEMENT
FEE SCHEDULE
See Attachment II
-23-
<PAGE>
EXHIBIT F
In the event that the Escrow Agent is requested to return funds to individual
subscribers, the following will apply:
- - There will be a charge of $10.00 for each check that is issued by the
Escrow Agent. Checks will be sent via First Class mail.
- - There will be a charge of $20.00 for each individual wire transfer, for
each individual subscriber or shareholder.
-24-
<PAGE>
EXHIBIT 10.3
LICENSE AGREEMENT
THIS AGREEMENT is made this 25th day of August, 1995 by and between:
Bright Capital, Limited, a New York corporation with a place of
business at 64 Village Hill Drive, Dix Hills, New York 11746 ("Licensor"), and
Acquisition Corporation II, a Delaware corporation with a place of
business at 150 East 52nd Street, New York, NY 10022 ("Licensee").
W I T N E S S E T H:
WHEREAS, Licensee was formed to serve as a vehicle to effect a
merger, exchange of capital stock, asset acquisition or other business
combination ("Business Combination") with an operating business;
WHEREAS, Licensee intends to finance the Business Combination, in
whole or in part, with the proceeds of a public offering of its securities
(the "Offering");
WHEREAS, Licensor is the owner of the servicemarks "SMA(2)RT-SM-"and
"Specialized Merger and Acquisition Allocated Risk Transaction-SM-"
(collectively, the "Servicemarks");
WHEREAS, Licensee sees valuable marketing and other commercial
advantage arising from using the Servicemarks to market the Offering;
WHEREAS, Licensee wishes to obtain a non-exclusive, one-time
license to use the Servicemarks to market the Offering during its initial
public sale of its securities, and Licensor is willing to permit such use by
Licensee in accordance with the terms and conditions of this License
Agreement;
NOW, THEREFORE, in consideration of the promises and of the mutual
covenants herein contained, the parties agree as follows:
1. GRANT OF LICENSE.
(a) Licensor grants to Licensee a non-exclusive, non-transferable
license to use the Servicemarks in the United States to market the Offering,
and Licensee accepts the license subject to the terms and conditions herein
contained. The license granted herein shall be for a one-time use only in
the Offering, and shall not be available to Licensee for any other use or
subsequent offerings of its securities.
(b) Upon the successful consummation of Business Combination by
Licensee, Manhattan Associates, L.L.C. may request a license to utilize the
SMA(2)RT service mark and intellectual property for one additional transaction
on terms and conditions then prevailing by Licensor for other transactions
similarly enacted. In the event that Licensor declines for any reason or for
nor reason, to grant such a license to Manhattan Associates, L.L.C., the
non-compete provisions of Paragraph 7 hereof shall not apply to Manhattan
Associates, L.L.C. or its affiliates; PROVIDED, HOWEVER, that neither
Manhattan Associates, L.L.C. nor any of its affiliates shall have any right
to use, and may not use, the SMA(2)RT-SM- format, structure, asset allocation
model and/or intellectual property. Manhattan Associates, L.L.C. and/or its
affiliates shall have no recourse, claim, cause of action or the like should
Licensor decline to grant a license to it as above contemplated.
<PAGE>
2. CONSIDERATION. In consideration for Licensor's grant of the
license set forth herein, Licensor shall receive a license fee from Licensee
in the amount of $100,000, $10,000 of which shall be payable upon the date of
execution of this Agreement. The balance of the license fee, or $90,000,
shall be due and payable twelve (12) months from the date of execution of
this Agreement, or at the closing of the Offering, whichever occurs sooner.
3. OWNERSHIP OF MARK. Licensee acknowledges the ownership of the
Servicemarks by Licensor, agrees that it will do nothing inconsistent with
such ownership, and that all use of the Servicemarks by Licensee shall inure
to the benefit of Licensor. Licensee agrees that nothing in this License
shall give Licensee any right, title or interest in the Servicemarks other
than the right to use the Servicemarks in accordance with this Agreement and
Licensee agrees that it will not attack the title of Licensor to the
Servicemarks or attack the validity of this Agreement.
4. FORM OF USE. Licensee agrees to use the Servicemarks only in the
form and manner and with appropriate legends, and not to use any other mark
in combination with the Servicemarks without the prior written consent of
Licensor.
5. QUALITY STANDARDS. Licensee agrees that the nature and quality of
the services rendered by Licensee in connection with the Servicemarks and all
related advertising, promotional and other related uses of the mark by
Licensee shall conform to standards set by and under the strict and
unilateral control of Licensor. In this regard, Licensee shall provide
Licensor with copies of all documents or materials using the Servicemarks
prior to their use, for Licensor's review and approval, which approval shall
not be unreasonably withheld, including, without limitation, the officers and
directors of Licensee, the escrow agent for the SMA(2)RT offering, the
investment banker for the SMA(2)RT offering, the underwriter for the SMA(2)RT
public offering, copies of any letters of intent or underwriting agreements
relating to or involving SMA(2)RT offerings, as well as any and all comment
letters received from the Securities and Exchange Commission in respect
thereof and any and all responses thereto.
6. QUALITY MAINTENANCE. Licensee agrees to cooperate with Licensor in
facilitating Licensor's control of the nature and quality of Licensee's use
of the Servicemarks, to permit reasonable inspection of Licensee's operations
related to its use of the Servicemarks, and to supply Licensor with specimens
of all uses of the Servicemarks upon request. Licensee shall comply with all
applicable laws and regulations pertaining to the use of the Servicemarks as
contemplated by this Agreement.
7. NON-CIRCUMVENTION. Licensee and its officers and directors
severally agree, individually and personally, that neither they nor any
affiliate will, directly or indirectly, promote, become a founding
stockholder in, nor serve as an officer or director of, any other blind pool
or "blank check" company, unless consented to in writing by Licensor.
8. INFRINGEMENT PROCEEDINGS. Licensee agrees to notify Licensor of
any unauthorized use of the Servicemarks promptly as it comes to Licensee's
attention. Either party shall have the right and discretion to bring
proceedings, whether in law or equity, against such unauthorized use, at its
sole expense.
<PAGE>
9. TERM. This Agreement shall commence as of the date hereof and
shall continue for a period of one (1) year thereafter, unless sooner
terminated as provided herein.
10. TERMINATION FOR CAUSE. Licensor shall have the right to terminate
this Agreement upon fifteen (15) days written notice to Licensee in the event
of any affirmative act of insolvency by Licensee, or upon the appointment of
any receiver or trustee to take possession of the property of Licensee or
upon the winding up, sale, consolidation, or merger of Licensee, or upon the
breach of any material provisions hereof by Licensee (which breach is not
cured within thirty (30) days after written notice thereof by Licensor).
11. EFFECT OF TERMINATION. Upon termination of this Agreement,
Licensee agrees to immediately discontinue all use of the Servicemarks and
any items confusingly similar thereto, and that all rights in the
Servicemarks and goodwill contained therewith shall remain the property of
Licensor. Any termination of this Agreement shall not effect the parties'
duties to perform their respective obligations as to matters arising prior to
the termination date.
(a) NOTICES. All notices and other communications herein provided
for shall be sent by postage prepaid, registered, or certified mail, return
receipt requested, or delivered personally or by overnight carrier to the
parties at their respective addresses as set forth on the first page of this
Agreement or to such other address as either party shall give to the other
party in the manner provided herein for giving notice. Notice by mail shall
be considered given on the date received. Notice personally delivered or by
overnight carrier shall be considered given at the time it is delivered.
(b) ASSIGNABILITY. No right or obligation under this Agreement
shall be assignable by Licensee without the prior written consent of Licensor.
(c) SUCCESSORS AND PERMITTED ASSIGNS. This Agreement shall inure
to the benefit of and be binding upon each of the parties hereto and their
respective successors and permitted assigns. Nothing in this Agreement,
expressed or implied, is intended to confer upon any persons, other than the
parties hereto and their successors and permitted assigns, any rights or
remedies under or by any reason thereof.
(d) MODIFICATION OR AMENDMENT. Any modification or amendment of
any provision of this Agreement must be in writing, signed by the parties
hereto, and dated subsequent to the date hereof.
(e) WAIVER. The failure by either party to exercise any of its
rights under this Agreement or to require the performance of any term of
provision of this Agreement, or the waiver by either party of any breach of
this Agreement, shall not prevent a subsequent exercise or enforcement of
such rights or be deemed a waiver of any subsequent breach of the same or any
other term or provision of this Agreement. Any waiver of the performance of
any of the terms or conditions of this Agreement shall be effective only if
in writing and signed by the party against which such wavier is to be
enforced.
<PAGE>
(f) VALIDITY. If any of the terms and provisions of this
Agreement are invalid or unenforceable, such term or provisions shall not
invalidate the rest of this Agreement which shall nonetheless remain in full
force and effect as if such invalidated or unenforceable terms and provisions
had not been made part of this Agreement.
(g) HEADINGS. Headings are included solely for convenience of
reference and are not to be considered part of this Agreement.
(h) NO JOINT VENTURE. This is an agreement between separate legal
entities and neither party is the agent of the other for any purpose
whatsoever. The parties do not intend to create a partnership or joint
venture between themselves. Neither party shall have the right to bind the
other party to any agreement with a third party or to incur any obligation or
liability on behalf of the other party.
(i) COMPLETE AGREEMENT. This Agreement contains the entire
Agreement between the parties concerning the subject matter hereof and there
are no collateral or precedent representations, agreement or conditions not
specifically set forth herein.
(j) LAW GOVERNING AGREEMENT. The validity of this Agreement and
the rights, obligations and relations of the parties hereunder shall be
construed and determined under and in accordance with the laws of the State
of New York without giving effect to the conflict of laws rules of such State.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
BRIGHT CAPITAL LIMITED ACQUSITION CORPORATION II
/s/ Dominic Bassani /s/ Arthur Goldberg
- -------------------------- -----------------------
By: Dominic Bassani By: Arthur Goldberg
President Chief Executive Officer
MANHATTAN ASSOCIATES, L.L.C. /s/ Arthur Goldberg
---------------------------------
By: Arthur Goldberg (personally)
as to paragraph 7 only
By: /s/ Arthur Goldberg
--------------------------
-----------------------
as to paragraph 1 only
/s/ Stanley Kreitman
---------------------------------
By: Stanley Kreitman (personally)
as to paragraph 7 only
/s/ Marshall Manley
----------------------------------
By: Marshall Manley (personally)
as to paragraph 7 only
/s/ A. J. Nassar
-----------------------------------
By: A. J. Nassar (personally)
as to paragraph 7 only
<PAGE>
ASSIGNMENT AND ASSUMPTION AGREEMENT
Assignment and Assumption Agreement dated August 23, 1996 by and
between Bright Capital, Ltd., a New York corporation (the "Assignor") and
Bright Licensing Corp., a New York corporation (the "Assignee"), both having
a place of business at 64 Village Hill Drive, Dix Hills, New York 11746.
WHEREAS, the Assignor is the licensor under a certain License
Agreement (the "License Agreement") dated August 25, 1995 between the
Assignor and Acquisition Corporation II, a Delaware corporation, now known as
Orion Acquisition Corp. I, a Delaware corporation ("Orion");
WHEREAS, the Assignor has heretofore assigned to Assignee all of its
right, title and interest in and to the servicemark which is the subject of
said License Agreement; and
WHEREAS, the Assignor wishes to assign to the Assignee, and the
Assignee wishes to accept and assume from the Assignor, all of the Assignor's
rights and obligations under the License Agreement.
NOW, THEREFORE, in consideration of the foregoing and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Assignor hereby assigns, transfers and sets over all of its
right, title and interest in and to the License Agreement to the Assignee,
and the Assignee hereby accepts such assignment and assumes all obligations
of the Assignor under the License Agreement.
IN WITNESS WHEREOF, this Agreement has been executed as of the date
and year first above written.
BRIGHT CAPITAL, LTD.
By:/s/ Dominic Bassani
--------------------------------
Name: Dominic Bassani
Title: President
BRIGHT LICENSING CORP.
By:/s/ Dominic Bassani
--------------------------------
Name: Dominic Bassani
Title: President
