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As filed with the Securities and Exchange Commission on November 14, 1997 Registration No. ____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
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BW ACQUISITION CORP.
(Name of Small Business Issuer in Its Charter)
Delaware 6799 (a blank check company) 13-3863260
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
Incorporation or Organization) Classification Code Number) Number)
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333 East 56th Street, Penthouse G
New York, New York 10022
(Address of Principal Place of Business or Intended Principal Place of Business)
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333 East 56th Street,
Penthouse G
New York, New York 10022
(212) 752-3563
(Address and Telephone Number of Principal Executive Offices)
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Richard J. Berman
BW Acqusition Corporation
333 East 56th Street
Penthouse G
New York, New York 10022
(212) 752-3563
(Name, Address and Telephone Number of Agent For Service)
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Jeffrey A. Baumel, Esq. Copies to: James M. Jenkins, Esq.
Crummy, Del Deo, Dolan, Griffinger & Harter, Secrest & Emery
Vecchione 700 Midtown Tower
One Riverfront Plaza Rochester, New York 14604
Newark, New Jersey 07102 (716) 232-6500
(973) 596-4500
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. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. |X|
CALCULATION OF REGISTRATION FEE
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Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Each Class of Amount to be Offering Price Offering Registration
Securities to be Registered Registered (1) Per Unit (1) Price (1) Fee
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<S> <C> <C> <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 $9,200,000 $2,787.88
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Class A Common Stock, $.01 par value (4) ............................ 920,000 $ 9.00 $8,280,000 $2,509.09
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Class B Exchangeable Common Stock, $.01 par value (5) ............... 172,500 $ 10.00 $1,725,000 $ 522.73
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Units, issuable upon exchange of the Class B Exchangeable
Common Stock, consisting of one share of Class A Common Stock,
$.01 par value, and one Class A Warrant to purchase one share
of Class A Common Stock (3)(6)(9) ................................... 345,000
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Class A Common Stock, $.01 par value (4) ............................ 345,000 $ 9.00 $3,105,000 $1940.91
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Representatives' Warrants to purchase Units ......................... 80,000 $ 5 (7)
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Units, issuable upon exercise of the Representatives' Warrants,
consisting of one share of Class A Common Stock, $.01 par
value, and one Class A Warrant to purchase one share of Class A
Common Stock (8) .................................................... 80,000 $ 11.00 $ 880,000 $ 266.67
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Class A Common Stock, $.01 par value (4) ............................ 80,000 $ 9.00 $ 720,000 $ 218.18
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Representatives' Warrants to purchase Class B Exchangeable
Common Stock, $01 par value ......................................... 15,000 $ .001 $ 15 (7)
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Class B Exchangeable Common Stock, issuable upon exercise of
the Representatives' Warrants (8) ................................... 15,000 $ 11.00 $ 165,000 $ 50.00
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Units, issuable upon exercise of the Class B Exchangeable Common
Stock $.01 par value, consisting of one share of Class A Common Stock,
$.01 par value, and one Class A Warrant to purchase one share of
Class A Common Stock (8) ............................................ 30,000 $ .001 $ 30 (7)
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Class A Common Stock, $.01 par value (9) ........................... 30,000 $ 9.00 $ 270,000 $ 81.82
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Total ............................................................... $7,377.28
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(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 Exchangeable Common Stock pursuant to Rule 416(a).
(4) Issuable upon exercise of the Class A Warrants.
(5) Includes 22,500 Shares of Class B Exchangeable Common Stock which the
Underwriters have the option to purchase to cover over-allotments.
(6) Issuable upon exchange of Class B Exchangeable Common Stock.
(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 Representatives'
Warrants pursuant to Rule 416(a).
(9) No registration fee required pursuant to Rule 457(i)
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.
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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. Those 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 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.
SUBJECT TO COMPLETION, DATED NOVEMBER 14, 1997
PROSPECTUS
BW ACQUISITION CORP.
800,000 Units, at $10.00 per Unit, each Unit consisting of one share
of Class A Common Stock and one Redeemable Class A Warrant
entitling the holder thereof to purchase, 90 days following the consummation
of a Business Combination, one share of Class A Common Stock at a price of $9.00
150,000 Shares of Class B Exchangeable Common Stock, at
$10.00 per share, each share entitling the holder thereof to
receive, 90 days following the consummation
of a Business Combination, two Units in exchange therefor
BW Acquisition Corp., a Delaware corporation (the "Company"), hereby offers
in a Specialized Merger and Acquisition Allocated Risk Transaction(SM)
("SMA(2)RT(SM)") 800,000 Units (the "Units"), each consisting of one share of
Class A Common Stock, par value $.01 per share (the "Class A Stock"), and one
Redeemable Class A Common Stock Purchase Warrant (the "Class A Warrants"), and
150,000 shares of Class B Exchangeable Common Stock, par value $.01 per share
(the "Class B Stock"), each entitling the holder thereof to receive two Units in
exchange therefor 90 days after the date of a Business Combination, as defined
or any earlier date on or after the date of a Business Combination that the
Representative in its sole discretion elects. The Units and the Class B Stock,
which are being offered in the same offering, will be sold and traded
separately. The Class A 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 Class A Stock at a price per share
of $9.00, 90 days after the date of a Business Combination or any earlier date
on or after the date of a Business Combination that the Representative, in its
sole discretion, so elects. Each share of Class B Stock will entitle the holder
thereof to receive two Units in exchange therefor 90 days following the
consummation of a Business Combination, or any earlier date on or after the date
of a Business Combination that the Representative, in its sole discretion so
elects. (The Class A Stock and the Class B Stock are sometimes hereinafter
collectively referred to as the "Common Stock.") Furthermore, the Class A
Warrants are redeemable, 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 Class A Stock, if the Class A 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 Class A Stock, if the Class A 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 Class A 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 Stock and the
exercise prices and terms of the Class A Warrants have been arbitrarily
determined by the Company and the Representative, and bear no relationship to
the 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 Stock and the
exercise
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prices and the terms of the Class A Warrants, see "Risk Factors" and
"Underwriting." The Company anticipates that the Units, the Class A Stock, the
Class A Warrants and the Class B Stock will be quoted on the OTC Bulletin Board
under the symbols "BWCQU," "BWCQ," "BWCQW" and "BWCQL," 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 18) 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 18)
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.
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Price to Underwriting Proceeds to
Public Discounts (1) Company (2)(3)
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<S> <C> <C> <C>
Per Unit ................ $ 10.00 $ .60 $ 9.40
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Per Class B Share ....... $ 10.00 $ 1.00 $ 9.00
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Total (4) ............... $ 9,500,000.00 $ 630,000.00 $ 8,870,000.00
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(Footnotes on next page)
The Units and the Class B Stock 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 ____________,
1997.
H.J. MEYERS & CO., INC.
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The date of this Prospectus is November __, 1997.
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(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' 3% non-accountable expense allowance of $285,000 (assuming
no exercise of over-allotment option) payable by the Company.
(3) Used as a basis for calculating the underwriting discount with respect to
the Units. A portion of the net proceeds from the sale of the Class B Stock
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 22,500 additional shares of Class B Stock
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 $10,925,000, $724,500, and $10,200,500, respectively. See
"Underwriting."
"SMA(2)RT(SM)" AND "SPECIALIZED MERGER AND ACQUISITION ALLOCATED RISK
TRANSACTION(SM)" 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)RT(SM) AND SPECIALIZED MERGER AND ACQUISITION ALLOCATED RISK
TRANSACTION(SM) SERVICEMARKS.
THE SMA(2)RT(SM) 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)RT(SM) 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)RT(SM), OR SPECIALIZED MERGER AND
ACQUISITION ALLOCATED RISK TRANSACTION(SM), IS IN NO WAY RELATED OR SIMILAR TO A
SPAC(SM), OR SPECIFIED PURPOSE ACQUISITION COMPANY(SM) (WHICH ARE SERVICEMARKS
OF GKN SECURITIES CORP.), AND INVESTORS SHOULD NOT CONSTRUE A SMA(2)RT(SM) AS
BEING SIMILAR TO A SPAC(SM) OR A SPECIFIED PURPOSE ACQUISITION COMPANY(SM). 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 SPAC(SM) AND SPECIFIED PURPOSE
ACQUISITION COMPANY(SM) 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.
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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 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 STOCK WILL BE UNABLE TO EXCHANGE
THIS STOCK FOR UNITS UNLESS AND UNTIL THE UNITS ISSUABLE UPON EXCHANGE OF THE
CLASS B STOCK 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 "EXCHANGE PRICE" OF CLASS B STOCK IS NIL,
THE "OFFERING PRICE" OF THE UNITS ISSUABLE UPON EXCHANGE OF THE CLASS B STOCK
COULD BE CONSIDERED NOT GREATER THAN $5.00. FOR THIS REASON, NO PERMIT TO SELL
THE UNITS ISSUABLE UPON EXCHANGE OF THE CLASS B STOCK IN FLORIDA HAS BEEN
OBTAINED. THERE CAN BE NO ASSURANCE THAT THE UNITS ISSUABLE UPON EXCHANGE OF THE
CLASS B STOCK WILL EVER BE REGISTERED IN FLORIDA OR ESTABLISHED TO BE EXEMPT
FROM THE REQUIREMENT OF SUCH REGISTRATION.
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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 November 28, 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 that is involved
primarily in the development, advancement, and use of science and technology.
The Target Business will likely be involved in an industry that includes
computers and peripheral products, software, electronic components and systems,
telecommunications, media and information services, pharmaceuticals, hospital
supply and medical devices, biotechnology, environmental services, chemicals and
synthetic materials or defense and aerospace. This may also include a Target
Business that could benefit from the commercialization of technological advances
even if they are not directly involved in research and development. Target
Businesses may include small companies developing new technologies or pursuing
scientific breakthroughs or large, better established businesses with track
records of developing and marketing such advances. 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. 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.
Escrow of Initial Public Offering Proceeds
Upon completion of this offering, an aggregate of approximately $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 the sale of the Units,
will be placed in an escrow account maintained by Chase Manhattan Bank (the
"Proceeds Escrow Agent"), subject to
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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, (with each share of Class B Stock entitled to two
votes) as required by this Prospectus, and that the holders of more than 20% of
the Class A Stock of the Company have not elected to redeem their Class A 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
to the holders of Class A Stock purchased as part of the Units sold in this
offering or in the open market thereafter in redemption of the Class A Stock, or
(iii) receipt by the Proceeds Escrow Agent of written notification to distribute
part of the escrow proceeds to the holders of record of Class A 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 Stock will not
be placed in escrow. Rather, these proceeds will be used (i) to repay
indebtedness, (ii) to pay a $100,000 license fee 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 Stock 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 Class A 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 Class A 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 stockholders (in person or by proxy). Each share of Class B Stock is
entitled to two votes on all matters on which the Class A Stock is entitled to
vote, representing the two shares of Class A Stock into which each share of
Class B Stock is exchangeable. 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 Class A 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 (the "Redemption Offer") to each of
the non-affiliated public holders of Class A Stock the right, for a specified
period of time of not less than 20 calendar days, to redeem his shares of Class
A 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 Class A Stock will be determined as of the Record Date
by dividing (A) the amount of the proceeds in the escrow account (including
interest earned thereon) by (B) the number of shares of Class A Stock held by
non-affiliated public stockholders; however, in no event will the Liquidation
Value of each share of Class A 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 Class A 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 Class A 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 Class A
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
Class A Stock in this offering or on the open market thereafter, and only as to
any shares of Class A Stock so purchased.
Escrow of Outstanding Shares
All of the shares of Class A Stock and Series A Preferred Stock (the
"Escrowed Stock") outstanding immediately prior to the date of this Prospectus
have been placed in escrow with American Stock Transfer & Trust Company (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 Class A Stock, subject to their agreement to vote all of
their shares in accordance with the vote of a majority of the non-affiliated
public holders of Class A Stock 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 Securities Exchange Act of
1934, as amended (the "Exchange Act")) of such transferred shares.
Each of the executive officers and the other directors of the Company has
agreed to surrender his shares of Class A Stock 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 Class A Stock outstanding prior to the date of this
Prospectus other than the shares of Class A Stock issuable upon the exercise of
options granted to the Company's officers and directors and the exercise of
warrants
-6-
<PAGE>
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 September __, 1997, the issuance date, 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.
The Company has outstanding 134 shares of Series A Preferred Stock which
are held by Summerwind L.L.C. ("Summerwind"), an indirect affiliate of Bright.
The shares are convertible to Class A Stock on the basis of one thousand shares
of Class A Stock for each share of Series A Preferred Stock for a one year
period commencing upon the consummation of a Business Combination. The 134,000
shares of Class A 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.
Redemption of Class A Stock 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 to the
holders of Class A Stock for their consideration a proposal to distribute to the
then holders of Class A Stock acquired as part of the Units sold in this
offering or in the open market thereafter, in redemption of such shares, the
amounts in the interest bearing escrow account. Following such a redemption of
Class A Stock, each outstanding share of Class B Stock will be exchanged for two
shares of Class A Stock. The assets of the Company (other than the escrowed
assets) will be used to pay the Company's liabilities and to redeem the
Company's outstanding Series A Preferred Stock at its liquidation value,
$13,400. The amount per share for distribution, to the holders of Class A 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 Class A 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 Class A Stock in accordance with the vote of the
majority of all non-affiliated public holders of Common Stock with respect to
any redemption proposal. See "The Company - Escrow of Outstanding Shares."
Holders of Class A Warrants, however, will only be entitled to vote on any
redemption proposal, and allowed to participate in any redemption 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 redemption distribution with respect to the shares of Common
Stock owned by them as of the date of this Prospectus.
-7-
<PAGE>
The Offering
The Offering 800,000 Units, at $10.00 per Unit and
150,000 shares of Class B Exchangeable
Common Stock, at $10.00 per share of
Class B Stock. 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 commencing 90 days after
the date of a Business Combination or
any earlier date on or after the date of
a Business Combination that the
Representative, in its sole discretion,
so elects. Each share of Class B Stock
will entitle the holder thereof to
receive two Units in exchange therefor
90 days after the date of a Business
Combination or any earlier date on or
after the date of a Business Combination
that the Representative, in its sole
discretion, so elects. The Units and the
Class B Stock, 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."
Series A Preferred Stock 134 shares
Class A Stock outstanding prior
to the offering 66,500 shares.
Class A Stock to be outstanding
after the offering (1) 866,500 shares.
Class B Stock outstanding prior
to the Offering None
Class B Stock outstanding
after the Offering(2) 150,000 shares
Number of Class A Warrants to be
outstanding after the offering (3) 800,000 Class A Warrants.
Exercise price of Class A Warrants The exercise price of each Class A
Warrant is $9.00 per share of Common
Stock, subject to adjustment in certain
circumstances. See "Description of
Securities."
Exercise period The exercise period of the Class A
Warrants will commence 90 days after the
consummation of a Business Combination
or any earlier date on or after the date
of a Business Combination that the
Representative, in its sole discretion
so elects, and will expire at 5:00 p.m.,
New York City time, on the fifth
anniversary of the date of this
Prospectus.
-8-
<PAGE>
Redemption The Class A 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 Class A
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 Class A Stock, if the
Class A 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 Class A Stock, if
the Class A 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.
Proposed OTC Bulletin Board Symbols Units - BWCQU
Class A Stock - BWCQ
Class A Warrants - BWCQW
Class B Stock - BWCQL
(1) Excludes a total of 2,254,000 shares of Class A Stock, consisting of: (i)
800,000 shares of Class A Stock reserved for issuance upon the exercise of
the Class A Warrants, (ii) 300,000 shares of Class A Stock reserved for
issuance upon exchange of the Class B Stock, (iii) 300,000 shares of Class
A Stock reserved for issuance upon exercise of the Class A Warrants
comprising a part of the Units underlying the Class B Stock, (iv) 120,000
shares of Class A Stock included in the Units subject to the Underwriters'
over-allotment option, (v) 120,000 shares of Class A Stock reserved for
issuance upon the exercise of the Class A Warrants included in the Units
subject to the Underwriters' over-allotment option, (vi) 45,000 shares of
Class A Stock reserved for issuance upon exercise of the Units underlying
the Class B Stock subject to the Underwriters' over-allotment option, (vii)
45,000 shares of Class A Stock reserved for issuance as part of the Class A
Warrants comprising a part of the Units underlying the Class B Stock
subject to the Underwriters' over-allotment option, (viii) 134,000 shares
of Class A Stock reserved for issuance upon conversion of the Company's
outstanding Series A Preferred Stock, (ix) 80,000 shares of Class A 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"), (x) 80,000 shares of Class
A 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, (xi) 30,000 shares of Class A
Stock included in the Units reserved for issuance upon exercise of a
warrant to purchase 15,000 shares of Class B Stock, 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"), (xii) 100,000 shares of Class A Stock reserved for issuance
upon exchange of the Class B Stock reserved for issuance upon the exercise
of options granted to two of the Company's directors, and (xiii) 100,000
shares of Class A Stock reserved for issuance upon exercise of the Class A
Warrants comprising a part of the Units underlying the Class B Stock
reserved for issuance upon the exercise of options granted to two of the
Company's directors. See "Management," "Underwriting" and "Certain
Transactions."
(2) Excludes (i) 22,500 shares of Class B Stock subject to the Underwriters'
over-allotment option and (ii) 15,000 shares of Class B Stock issuable upon
exercise of the Representative's Class B Warrants. See "The Company,"
"Certain Transactions" and "Underwriting."
(3) Excludes (i) 120,000 Class A Warrants included in the Units subject to the
Underwriters' over-allotment option, (ii) an additional 45,000 Class A
Warrants comprising a part of the Units underlying the Class B Stock
subject to the Underwriters' over-allotment option, (iii) 80,000 Class A
Warrants included in the Units reserved for issuance upon exercise of the
Representative's Unit Purchase Warrants, (v) 30,000 Class A Warrants
underlying the Units underlying the Representative's Class B Warrants, (vi)
100,000 Class A Warrants comprising a part of the Units underlying the
Class B Stock reserved for issuance upon the exercise of options granted to
two of the Company's
-9-
<PAGE>
directors. See "Management" and "Underwriting."
The SMA(2)RT(SM) Structure
A Specialized Merger and Acquisition Allocated Risk Transaction(SM)
(SMA(2)RT(SM)) 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 Stock (which are exchangeable into
Units) for $10.00 each, the proceeds of which will not be placed in escrow, but
rather will be used (i) to repay indebtedness, (ii) to pay a $100,000 license
fee 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, when the Class B Stock
is exchanged, holders of Class B Stock would pay substantially less for the
Units issuable upon exchange of such Class B Stock than holders of Units and,
accordingly, may realize a higher return on their investment. Holders of Class B
Stock, however, risk the loss of their investment if the Company fails to effect
a Business Combination, while holders of shares of Class A 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 Transaction(SM) (SMA(2)RT(SM)) 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 Class A Stock, the Class A Warrants or the
Class B Stock 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
Class A Warrants and Class B Stock; 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."
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 84%
of the gross proceeds of the offering by the Company (representing an amount
equal to the approximately $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 redemption of the Company's Class A Stock, to the
then holders of the Class A 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 Stock will not be placed in escrow. Rather, these proceeds will be used
(i) to repay indebtedness, (ii) to pay a $100,000 license fee due to Bright
pursuant to a license agreement executed by Bright and the Company, (iii) to
cover all of the
-10-
<PAGE>
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 Stock 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 Class A 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
Stock 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.
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>
Actual As Adjusted (1)
---------------- ---------------
October 31, 1997
-----------------------------------
<S> <C> <C>
Balance Sheet Data:
Total assets $ 219,850 $ 8,324,050
Total liabilities 177,000 --
Deficit accumulated during development stage (2,800) (45,000)
Series A preferred stock 1 1
Stockholders' equity and common stock subject to redemption 42,850 8,324,050
</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 Stock at the initial public
offering price of $10.00 per share of Class B Stock, and initial
application of the estimated net proceeds (after the payment of all
estimated offering expenses, including the Representative's non-accountable
expense allowance and discounts) of $8,200,000 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 holders of Class A Stock 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
-11-
<PAGE>
the Company in the escrow account (including income earned thereon) divided
by (B) the number of shares held by non-affiliated public holders of Class
A Stock, but not less than $10.00 per share plus interest earned thereon.
-12-
<PAGE>
THE COMPANY
Business Objective
The Company, which is a "blank check" or "blind pool" company, was formed
in November 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 that is
involved primarily in the development, advancement, and use of science and
technology. The Target Businesses will likely be involved in an industry that
includes computers and peripheral products, software, electronic components and
systems, telecommunications, media and information services, pharmaceuticals,
hospital supply and medical devices, biotechnology, environmental services,
chemicals and synthetic materials or defense and aerospace. This may also
include a Target Business that could benefit from the commercialization of
technological advances even if they are not directly involved in research and
development. Target Business may include small companies developing new
technologies or pursuing scientific breakthroughs or large, better established
businesses with track records of developing and marketing such advances. 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. 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.
Escrow of Offering Proceeds
Upon completion of the offering by the Company, approximately 84% of the
gross proceeds therefrom (representing an amount equal to the approximately
$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, with each share
of Class B Stock entitled to two votes, as required by this Prospectus, and that
the holders of more than 20% of the Class A Stock have not elected to redeem
their Class A 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, 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
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<PAGE>
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 to the holders of Class A 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 Class A 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 Stock will not
be placed in escrow. Rather, these proceeds will be used (i) to repay
indebtedness, (ii) to pay a $100,000 license fee 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 Stock
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 Class A 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 Stock, 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 Class A Stock in accordance with the vote of the majority
of the shares voted by all non-affiliated public holders of Common Stock 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), with each share of Class B Stock entitled to two votes. 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 Class A Warrants who otherwise do not own any shares of
Common Stock will not be entitled to vote on any Business Combination.
Class B Stock Options
Richard J. Berman and Martin R. Wade, directors of the Company, have
received options to purchase 75,000 and 25,000 shares, respectively, or up to
100,000 in the aggregate, of the Company's Class B Stock at an exercise price of
$10.00 per share, or an aggregate exercise price of up to $1,000,000 (Class B
Options"). The options will expire, if not sooner exercised, upon consummation
of a Business Combination. The Company has agreed to use its best efforts to
register the shares of Class A Stock underlying the options as soon as
practicable after their issuance.
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<PAGE>
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 holders of Class A Stock the right, for a specified period of time of not
less than 20 days, to redeem his shares of Class A 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 Class A Stock will be determined as of the
Record Date by dividing the amount of the proceeds in the escrow account
(including all interest earned thereon) by (B) the number of shares of Class A
Stock held by non-affiliated public stockholders; however, in no event wlll the
Liquidation Value of each share of Class A 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 Class A
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 Class A 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 Class A 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 Class A Stock in this offering or on the open market
thereafter, and only as to any shares of Class A 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 Class A 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 September 24, 1997, the issuance date, 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 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
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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.
The Company has outstanding 134 shares of Series A Preferred Stock which
are held by Summerwind. The shares are convertible to Class A Stock on the basis
of one thousand shares of Class A Stock for each share of Series A Preferred
Stock during the one year period commencing upon the consummation of a Business
Combination. The 134,000 shares of Class A 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.
Redemption of Class A Stock 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 to the
holders of Class A Stock for their consideration a proposal to distribute to the
then holders of Class A Stock acquired as part of the Units sold in this
offering or in the open market thereafter, in redemption of such shares, the
amounts in the escrow account. Following such a redemption of Class A Stock,
each outstanding share of Class B Stock will be exchanged for two shares of
Class A Stock. The assets of the Company (other than escrowed assets) will be
used to pay the Company's liabilities and to redeem the Company's outstanding
Series A Preferred Stock at its liquidation value, $13,400. The amount per share
for distribution, to the holders of Class A 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 Class A 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
Class A 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 redemption proposal. Holders of Class A Warrants, however, will only be
entitled to vote on any redemption proposal, and allowed to participate in any
redemption 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 redemption distribution with respect to
the 66,500 shares of Class A 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 the
Class B Stock offered hereby. See "Proposed Business."
A Specialized Merger and Acquisition Allocated Risk Transaction(SM)
(SMA(2)RT(SM)) 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 Stock for $10.00 each, 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 Stock is exchanged, holders of Class B Stock would pay substantially
less for the Units issuable upon exercise of such Class B Stock than holders of
Units and, accordingly, may realize a higher return on their investment. Holders
of Class B Stock, however, risk the loss of their investment if the Company
fails to effect a Business Combination, while holders of shares of Class A 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
November 28, 1995. The Company's
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office is located at 333 East 56th Street, New York, New York 10022 and its
telephone number is (212) 752-3563.
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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.
Blank Check Offering Not Conducted in Accordance with Rule 419
The Company's offering of Units and Class B Stock 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. THE AFOREMENTIONED PROTECTIONS OF RULE 419 ARE NOT PRESENT IN THIS
OFFERING.
No Operating History; Limited Resources; No Present Source of Revenues
The Company, incorporated in November 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 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. All of the proceeds will be used for
on-going expenses
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and unspecified acquisitions. 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 Stock 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."
Risks Applicable to the Technology Industries
An investment in companies in the technology industries entails special
considerations and risks. These industries are highly competitive and are
characterized by rapidly changing technologies. The introduction of products
embodying new technology and the emergence of new industry standards can render
existing products obsolete and unmarketable. Should the Target Business acquired
by the Company be unable, for technological or other reasons, to develop
products that are technologically competitive, responsive to customer needs and
competitively priced, its business will be adversely affected. Some of the
Target Business's competitors and potential competitors may have greater
research, development, financial or other resources or more extensive business
experience than the Target Business. Companies in the technology industries may
be dependent on the strength of copyrights, patents, trade secret laws,
non-disclosure agreements and technical measures to establish and protect their
proprietary interests in their products. No assurance can be given that the
Target Business adequately protects its technology, that any of these
protections will not be challenged, invalidated or circumvented or that the
rights granted will provide significant benefits to the Target Business.
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Unspecified Target Business; Unascertainable Risks
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 sector of the technology industries 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
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. 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 Class B Stock Not Placed in Escrow; Class B Stock Not
Currently Exchangeable; Class B Stock Exchangeable 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 Stock will not be placed in escrow. Rather, these proceeds will be used
(i) to repay indebtedness, (ii) to pay a $100,000 license fee 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 Stock 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 Class B Stock is not exchangeable until
the Company
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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 Class B Stock who do not own shares of
Class A Stock will not be allowed to participate in any redemption distribution
of the proceeds from the escrow account. Consequently, in the event 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, and the stockholders of the Company elect to
permit the Company to redeem the Class A Stock and the holders of Class B Stock
will not receive any distributions. As such, an investment in the Class B Stock
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 Stock would pay substantially less for the Units issuable upon exchange
of such Class B Stock 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 Stock in this offering will pay $5.00 per Unit, 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 Stock will not be placed in escrow for
the benefit of the holders of the Class B Stock 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
Stock, 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 Stock risk the loss of all of their investment if
the Company fails to effect a Business Combination, while holders of shares of
Class A 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.
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. 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
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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 Class A 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
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 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, lack of United States jurisdiction,
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
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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 unless the Class B Options
are exercised. See "The Company Class B Stock Options." 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.
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."
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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 holders of Class A Stock the right, for a specified period of time of not
less than 20 calendar days, to redeem his shares of Class A 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 Class A
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 Class A Stock elect to redeem their shares, the Company will not proceed
with the proposed Business Combination and will not redeem any shares of Class A
Stock. As a result of the foregoing, the Company's ability to consummate a
particular Business Combination may be impaired. Moreover, holders of Class A
Stock prior to the date of this Prospectus and holders of Class A Warrants will
only be allowed to participate in a Redemption Offer if they purchase shares of
Class A Stock in this offering or on the open market thereafter, but only as to
any shares of Class A Stock so purchased.
Redemption of Class A Stock 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 to the
holders of Class A Stock for their consideration a proposal to distribute to the
then holders of Class A Stock acquired as part of the Units sold in this
offering or in the open market thereafter, in redemption of such shares, the
amounts in the interest bearing escrow account. Following such a redemption of
Class A Stock, each outstanding share of Class B Stock will be exchanged for two
shares of Class A Stock. The assets of the Company (other than the escrowed
assets) will be used to pay the Company's liabilities and to redeem of the
Company's outstanding Series A Preferred Stock at its liquidation value, $13,400
The amount per share for distribution of liquidation of the Company to the
holders of Class A 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 Class A 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
redemption proposal. Holders of Class A Warrants, however, will only be entitled
to vote on any redemption proposal, and allowed to participate in any redemption
distribution, only if they purchase shares of Class A Stock in this offering or
on the open market thereafter, and only as to any shares of Class A Stock so
purchased. Present stockholders of the Company will not participate in any
redemption distribution with respect to the shares of Class A 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
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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."
Uncertainty of Servicemarks
The servicemarks SMA(2)RT(SM) and Specialized Merger and Acquisition
Allocated Risk Transaction(SM) 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)RT(SM) and Specialized Merger and Acquisition Allocated Risk
Transaction(SM) 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)RT(SM) or Specialized Merger and
Acquisition Allocated Risk Transaction(SM) 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 Amended and Restated Certificate of Incorporation authorizes
the issuance of 11,000,000 shares of Common Stock, par value $.01 per share, of
which 10,000,000 shall be shares of Common Stock, par value per share and
1,000,000 shall be shares of Preferred Stock, par value $.01 per share. Two
hundred (200) shares of the Preferred Stock shall be designated as "Series A
Convertible Preferred 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 9,933,500 authorized but unissued shares of Common Stock available for
issuance. However, a total of 2,254,000 shares of Class A Stock are reserved for
issuance, consisting of the following: 800,000 shares of Class A Stock are
reserved for issuance upon the exercise of the Class A Warrants, 300,000 shares
of Class A Stock are reserved for issuance upon exercise of the Units underlying
the Class B Stock, 300,000 shares of Class A Stock are reserved for issuance
upon exercise of the Class A Warrants comprising a part of the Units underlying
the Class B Stock, 120,000 shares of Class A Stock are included in the Units
subject to the Underwriters' over-allotment option, 120,000 shares of Class A
Stock are reserved for issuance upon the exercise of the Class A Warrants
included in the Units subject to the Underwriters' over-allotment option, 45,000
shares of Class A Stock are reserved for issuance upon exercise of the Units
underlying the Class B Stock subject to the Underwriters' over-allotment option,
45,000 shares of Class A Stock are reserved for issuance upon exercise of the
Class A Warrants comprising a part of the Units underlying the Class B Stock
subject to the Underwriters' over-allotment option, 134,000 shares of Class A
Stock are reserved for issuance upon conversion of the Company's outstanding
Series A Preferred Stock, 80,000 shares of Class A Stock are included in the
Units reserved for issuance upon exercise of Representative's Unit Purchase
Warrants, 80,000 shares of Class A 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, 30,000 shares of
Class A Stock are included in the Units
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reserved for issuance upon exercise of the Representative's Class B Warrants,
30,000 shares of Class A Stock reserved for issuance upon exercise of Class A
Warrants comprising a part of the Units underlying the Representative's Class B
Warrants, 100,000 shares of Class A Stock reserved for issuance upon exchange of
the Class B Stock reserved for issuance upon the exercise of options granted to
two of the Company's directors, and 100,000 shares of Class A Stock reserved for
issuance upon exercise of the Class A Warrants comprising a part of the Units
underlying the Class B Stock reserved for issuance upon the exercise of options
granted to two of the Company's directors. 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 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 Amended and Restated 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 Class A 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 134 shares of Preferred Stock,
designated as Series A Preferred Stock, which shares are non-voting and
convertible to 134,000 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 40,000 shares of Class A Stock, representing
approximately 4.6% of the issued and outstanding shares of Class A Stock
(assuming no exercise of the Representatives' over-allotment option or the
conversion of the Series A Preferred Stock) and approximately 3.9% 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."
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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 Class A Stock, the Class A Warrants or the Class B Stock. The initial
public offering prices of the Units and the Class B Stock and the respective
exercise prices and terms of the Class A 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. 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 $2.86 or
28.6 % per share between the pro forma net tangible book value per share after
the offering of $7.14 and the initial public offering price of $10.00 per share
allocable to each share of Class A Stock included in the Units (assuming no
value is attributed to the Class A Warrants or Class B Stock included in the
Units). The existing stockholders of the Company, including its executive
officers and directors, acquired their shares of Class A 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. As a result, in the event the Company is unsuccessful, the
investors in this offering will bear a disproportionate share of the loss of
their respective investment, as compared to the stockholders of the Company
prior to the date of this Prospectus. See "Dilution."
No Appraisal of Potential Business Combination
The Company does not anticipate that it will obtain an independent
appraisal or valuation of a Target Business. Thus, stockholders of the Company
will need to rely primarily upon management to evaluate a prospective Business
Combination. However, a Business Combination will not be consummated unless it
is approved by a vote of two-thirds of the Common Stock voted by the
stockholders (in person or by proxy). See "The Company - Stockholder Approval of
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Business Combinations."
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 Stock 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
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 (in addition to those included
in this Prospectus) 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
The 66,500 shares of Class A 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"). Additionally, the
10,000 Placement Shares and the 134,000 shares of Class A 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. 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 Class A Stock
beneficially for at least one year 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 Class A 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 Class A Stock to be sold for at least one
year 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 Class A Stock or the availability of such shares
for sale will have on the market prices for shares of Class A Stock or Class A
Warrants prevailing from time to time. Nevertheless, the sale of substantial
amounts of Class A Stock in the public market would likely adversely affect
prevailing market prices for the Class A 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 Class A Stock owned
immediately prior to the date hereof by all of the stockholders of the Company,
including the Placement Shares, will be
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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 September __, 1997, the issuance date, 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 Class A Stock (and the
securities issuable upon the exercise thereof) without the prior written consent
of the Company until two years from September__, 1997, the issuance date, 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 Stock 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, 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 Stock will be unable to exchange
these shares to Units unless and until the Units issuable upon exchange of the
Class B Stock 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 Nasdaq when the offering price of such securities is $5.00 or less
per share. Because the "exchange price" of Class B Stock is nil, the "offering
price" of the Units issuable upon exchange of the Class B Stock could be
considered not greater than $5.00. For this reason, no permit to sell the Units
issuable upon exchange of the Class B Stock in Florida has been obtained. There
can be no assurance that the Units issuable upon exchange of the
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Class B Stock will ever be registered in Florida or established to be exempt
from the requirement of such registration.
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 $8,200,000 ($9,600,000 if the Underwriters'
over-allotment option is exercised in full). The net proceeds to the Company,
after deducting only underwriting discounts, from the sale of the Class B Stock
to the public are estimated to be $1,350,000. Approximately 84% 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 Class A 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 Stock (i) to repay indebtedness, (ii) to
pay a $100,000 license fee 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, after deducting underwriter's discount, from the sale of the Class
B Stock (assuming no exercise of the Underwriters' over-allotment option) are
quantified as follows:
Percentage of
Class B Stock
Use of Class B Stock Proceeds Amount Proceeds
- ----------------------------- ------ --------
Escrow Account (1) $ 480,000 35.6%
Non-accountable Expense Allowance (2) 285,000 21.1
Repayment of Indebtedness 100,000 7.4
License Fee 100,000 7.4
Expenses of Offering 175,000 12.9
Evaluation of Potential Business Combinations 210,000 15.6
$1,350,000 100.0%
========== =====
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<PAGE>
Percentage of
Class B Stock
Use of Class B Stock Proceeds Amount Proceeds
- ----------------------------- ------ --------
Escrow $7,520,000 100%
- -----------
(1) Represents the amount of the proceeds from the sale of the Class B Stock 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 Stock (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, 1997. 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 November 15, 1999, whichever is
earlier.
Following receipt of the net proceeds from the sale of the Class B Stock 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. 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 Stock 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 Stock 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 Stock during
such period may be sufficient to defray
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<PAGE>
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 Stock in this offering,
may be sufficient to defray continuing expenses for a period of several
additional years until the Company 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 Class A 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 Class A 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.
DILUTION
The difference between the public offering price per share of Class A 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 Class A Stock of the
Company after this offering constitutes the dilution to investors in this
offering. Net tangible book value per share of Class A Stock 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 Class A Stock. Because
the proceeds from the sale of the Class A Stock will be in escrow until the time
of a Business Combination and the Class B Stock will be exchanged for Class A
Stock within 90 days following a Business Combination the number of outstanding
shares of Class A Stock includes the number of shares of Class A Stock (300,000)
issuable upon exchange of the Class B Stock.
At October 31, 1997, net tangible book value of the Company was $(66,350)
or $(1.00) per share of Class A Stock. After giving effect to the sale of
800,000 shares of Class A Stock included in the Units offered hereby (and
assuming no value is attributed to the Class A Warrants included in such Units)
and 150,000 shares of Class B Stock offered hereby and the initial application
of the estimated net proceeds therefrom, the pro forma net tangible book value
of the Company at October 31, 1997, would be $8,324,050 or $7.14 per share,
representing an immediate increase in net tangible book value of $8.14 per share
to existing holders of Class A Stock and an immediate dilution of $2.86 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>
<S> <C> <C>
Public offering price per share of Class A Stock (1)(2)............................... $10.00
Net tangible book value per share of Class A Stock before this offering............... $(1.00)
Increase attributable to this offering................................................ $(8.14)
------
Pro forma net tangible book value per share of Class A Stock after this offering (3).. 7.14
------
Dilution to New Investors............................................................. $ 2.86
======
</TABLE>
The following table sets forth, with respect to existing stockholders and
investors in this offering, a comparison of the number shares of Class A 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>
Price
Amount Percentage Amount Percentage Per Share
------ ---------- ------ ---------- ---------
Average
Shares Purchased (1) Total Consideration (1)
-------------------- -------------------------
<S> <C> <C> <C> <C> <C>
Existing Class A Stockholders.................. 66,500 7.7% $ 45,650 .6% .69
New Investors.................................. 800,000 92.3% 8,000,000(2) 99.4 10.00
------- ----- ---------- -----
866,500 100.0% $8,045,650 100.0%
======= ===== ========== =====
</TABLE>
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<PAGE>
- -----------
(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
Class A Stock, representing 100% of the total consideration for
approximately 100% of the total number of shares of Class A Stock then
outstanding (excluding any exchange of shares of Class B Stock for this
purpose). The foregoing tables also assumes no exercise of the
Representative's Unit Purchase Warrants, the Representative's Class B
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.
(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 $285,000). See "Use of Proceeds."
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<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
October 31, 1997, and as adjusted to give effect to the sale of the Units and
the Class B Stock being offered hereby:
<TABLE>
<CAPTION>
Historical As Adjusted (1)
---------- ---------------
<S> <C> <C>
Note Payable $ 67,000 --
Class A Common Stock, subject to possible redemption, 160,000 shares at
redemption value (3) -- 1,600,000
Preferred Stock, $.01 par value, 1,000,000 shares authorized, None outstanding,
200 shares designated as "Series A Convertible Preferred Stock", 134 shares
issued and outstanding as adjusted 1 1
Subscription Receivable (13,400) --
Class A Common Stock, $.01 par value, 9,750,000 shares authorized, 66,500
shares issued and outstanding; 866,500 shares issued and outstanding after
offering, as adjusted (2) 665 8,665
Class B Common Stock, $.01 par value, shares authorized 250,000, outstanding none; -- --
Additional paid in capital 58,384 6,760,384
Deficit accumulated during the development stage (2,800) (45,000)
-------- ----------
Total capitalization $109,850 $8,324,050
======== ==========
</TABLE>
- -----------
(1) Adjusted to give effect to the sale of 800,000 Units and the 150,000 shares
of Class B Stock offered hereby at the public offering price of $10.00 per
Unit and $10.00 per share of Class B Stock, 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 $8,200,000. See "Use of Proceeds."
(2) Excludes a total of 2,254,000 shares of Class A Stock, consisting of: (i)
800,000 shares of Class A Stock reserved for issuance upon the exercise of
the Class A Warrants, (ii) 300,000 shares of Class A Stock reserved for
issuance upon exchange of the Class B Stock, (iii) 300,000 shares of Class
A Stock reserved for issuance upon exercise of the Class A Warrants
comprising a part of the Units underlying the Class B Stock, (iv) 120,000
shares of Class A Stock included in the Units subject to the Underwriters'
over-allotment option, (v) 120,000 shares of Class A Stock reserved for
issuance upon the exercise of the Class A Warrants included in the Units
subject to the Underwriters' over-allotment option, (vi) 45,000 shares of
Class A Stock reserved for issuance upon exercise of the Units underlying
the Class B Stock subject to the Underwriters' over-allotment option, (vii)
45,000 shares of Class A Common Stock reserved for issuance upon exercise
of the Class A Warrants comprising a part of the Units underlying the Class
B Stock subject to the Underwriters' over-allotment option, (viii) 134,000
shares of Class A Stock reserved for issuance upon conversion of the
Company's outstanding Series A Preferred Stock, which shares of Class A
Stock will be offered for sale by this Prospectus at the time of a Business
Combination, (ix) 80,000 shares of Class A Stock included in the Units
reserved for issuance upon exercise of the Representative's Unit Purchase
Warrants, (x) 80,000 shares of Class A 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, (xi)
100,000 shares of Class A Stock reserved for issuance upon exercise of the
Class A Warrants comprising a part of the Units underlying the Class B
Stock reserved for issuance upon the exercise of options granted to two of
the Company's directors. See "Underwriting" and "Certain Transactions."
(3) In the event the Company consummates a Business Combination, the redemption
rights afforded to
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<PAGE>
the non-affiliated public stockholders may result in the conversion into
cash of up to 20% of the aggregate number of shares of Class A Stock 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 of Class A Stock held by
non-affiliated public stockholders.
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, 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
redemption of Class A Stock by 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 Stock (i) to repay indebtedness, (ii) to pay a $100,000
license fee 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
Stock, 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 $40,000 per year. Following receipt of the
net proceeds from the sale of the Class B Stock 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 Stock 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 to the holders of Class A Stock for their consideration a proposal to
distribute to the then holders of Class A Stock
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<PAGE>
acquired as part of the Units sold in this offering or in the open market
thereafter, the amount held in the escrow account. The assets of the Company
(other than the escrowed assets) will be used to pay the Company's liabilities
and also to pay a liquidation distribution of $13,400 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
permit the Company to redeem the Class A Stock, 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 Stock 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 Stock 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 Class A Stock have agreed to waive their respective rights to
participate in a redemption 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
redemption would be distributed to the owners of the Class A Stock issued as
part of the Units in this offering or in the open market thereafter, after
payment of a redemption distribution of $13,400 to the holders of the Series A
Preferred Stock.
PROPOSED BUSINESS
Introduction
The Company, a development stage entity, was formed in November 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 that is involved primarily in the development, advancement,
and use of science and technology. The Target Businesses will likely be involved
in an industry that includes computers and peripheral products, software,
electronic components and systems, telecommunications, media and information
services, pharmaceuticals, hospital supply and medical devices, biotechnology,
environmental services, chemicals and synthetic materials or defense and
aerospace. This may also include a Target Business that could benefit from the
commercialization of technological advances even if they are not directly
involved in research and development. Target Business may include small
companies developing new technologies or pursuing scientific breakthroughs or
large, better established businesses with track records of developing
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<PAGE>
and marketing such advances. 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. 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 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.
No Independent Appraisal of Potential Acquisition Candidates. The Company
does not anticipate that it will obtain an independent appraisal or valuation of
a Target Business. Thus, stockholders of the Company will need to rely primarily
upon management to evaluate a prospective Business Combination. However, a
Business Combination will not be consummated unless it is approved by a vote of
two-thirds of the Common Stock voted by the stockholders (in person or by
proxy). See "The Company - Stockholder Approval of Business Combinations."
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
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<PAGE>
of the proposed Business Combination. Under current Delaware law, only a merger
or consolidation may give rise to a stockholder vote and to 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) with each share of Class B Stock
entitled to two votes. 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; (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
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<PAGE>
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."
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.
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<PAGE>
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 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.
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<PAGE>
Redemption of Class A Stock
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 to the holders of Class A Stock for their consideration a proposal to
distribute to the then holders of Class A Stock acquired as part of the Units
sold in this offering or in the open market thereafter, in redemption of such
shares the amounts in the interest bearing escrow account. Following such a
redemption of Class A Stock, each outstanding share of Class B Stock will be
exchanged for two shares of Class A Stock. The assets of the Company (other than
the escrowed assets) will be used to pay the Company's liabilities and to pay a
liquidation distribution of $13,400 to the Holders of the Series A Preferred
Stock. The amount per share for distribution, to the holders of the Class A
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 Class A
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 Class
A Stock in accordance with the vote of the majority of all non-affiliated public
stockholders of the Company with respect to any redemption proposal. Holders of
Class A Warrants, however, will only be entitled to vote on any redemption
proposal, and allowed to participate in any redemption distribution, if they
purchase shares of Class A Stock in this offering or on the open market
thereafter, but only as to any shares of Class A Stock so purchased. Present
stockholders including officers, directors and their affiliates will not
participate in any redemption distribution with respect to the shares of Class A
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 Class A Stock, the Class A Warrants and the Class B Stock 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 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's offices are located at 333 East 56th Street, Penthouse G, New
York, New York 10022.
Servicemark License
The servicemarks SMA(2)RT(SM) and Specialized Merger and Acquisition
Allocated Risk Transaction(SM) 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)RT(SM) and Specialized Merger and Acquisition Allocated Risk
Transaction(SM) servicemarks in consideration of a royalty equal to $100,000.
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)RT(SM) or Specialized Merger and Acquisition Allocated Risk
Transaction(SM) servicemarks. See "Certain Transactions."
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<PAGE>
Employees
As of the date of this Prospectus, the Company has no full time employees.
MANAGEMENT
Directors and Officers
The current directors and officers of the Company are as follows:
Name Age Position
---- --- --------
Richard J. Berman 55 Chairman of the Board, Chief Executive Officer,
President, Director
Martin R. Wade 48 Secretary, Treasurer, Director
Marc De Logeres 71 Director
Richard J. Berman is an experienced investor and financial advisor who has
been involved as a principal, advisor and consultant in connection with the
acquisition and divestiture of a variety of companies. He is currently the Chief
Executive Officer of the American Acquisition Company, a merchant banking firm
which acts as a principal in venture capital and real estate transactions as
well as an advisor to companies involved in mergers and acquisition
transactions. Mr. Berman is the former Chairman of the Board of Prestolite
Battery Company of Canada, the largest producer of batteries in Canada which
merged with Exide Corp. in 1993. Mr. Berman is currently a principal in several
real estate development companies, primarily involved in developing commercial
office buildings in New York City and serves as a Director and is a co-owner of
Achievement Tech, Inc., a software company in Dallas, Texas and as a Director
and Officer of Bank Lease Consultants, Inc., an automobile finance, publishing
and consulting company in California. Mr. Berman's consulting activities have
included providing advice with respect to leveraged buyouts, acquisitions,
divestitures with companies such as Union Carbide, Eastman Kodak,
Schering-Plough and The New York Times. From 1975 to 1982, Mr. Berman was a
Senior Vice President at Bankers Trust Company and acted as head of the Mergers
and Acquisition Department and Leveraged Buyout Department.
Martin R. Wade currently serves and has served since 1995 as Managing
Director, Corporate Finance at Solomon Brothers. Prior thereto, Mr. Wade served
as the National Director of Investment Banking for Price Waterhouse. He has
supervised the processing of divestitures in numerous industries, including
among others, the financial services and real estate industries. Mr. Wade has
focused his entire career on mergers and acquisition activities, specializing in
sale-side and buy-side mandates. He has provided advisory services on the
acquisition and sale of corporations in numerous industries aggregating, in
value several billion dollars, and has represented such companies as Magic
Chief, Nike, Maytag and Anchor Glass. Prior to joining Price Waterhouse, Mr.
Wade was employed by a number of Wall Street Investment banking firms in various
senior executives capacities.
Marc De Logeres has over thirty years of experience in Europe, the United
States and Canada in strategic development and restructuring of industrial and
financial companies. Mr. De Logeres has extensive experience in project
structuring and finance and mergers and acquisitions as a banker and as an
industrialist. He served as the Chairman of the Board of Michelin Tires PLC in
the United Kingdom, and currently serves as a Director of the France Growth
Fund, a $100 million closed end fund that invests in French securities and is
listed on the New York Stock Exchange. Mr. De Logeres previously served as the
Chief Executive Officer, President and subsequently chairman of the Board of
Michelin Tire Company in the United States and Michelin Tire Company LTD in
Canada. During the tenure of Mr. De Logeres, Michelin developed from a small
importer of tires with sales of $25 million to become the second largest tire
company in North America with revenue of approximately four billion dollars. Mr.
De Logeres was also a director of Nova Scotia Power Inc., the sole supplier and
distributor of electricity in the Providence of Nova Scotia, Canada and is
currently co-chairman of Ecotyre Technologies, Inc., a tire remanufacturer in
New York State.
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<PAGE>
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.
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
Summerwind, 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)RT(SM) and Specialized Merger and Acquisition Allocated Risk
Transaction(SM).
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.
Class B Stock Options
Messrs. Berman and Wade, directors of the Company, have each received
options to purchase 75,000 and 25,000 shares, respectively, shares, or up to
100,000 in the aggregate, of the Company's Class B Stock at an exercise price of
$10.00 per share, or an aggregate exercise price of up to $1,000,000. The
options will expire, if not sooner exercised, upon consummation of a Business
Combination. The Company has agreed to use its best efforts to register the
shares of Class A Stock underlying the options as soon as practicable after
their issuance.
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. There are currently
no committees of the Board of Directors. However, each officer and director of
the Company will devote such time as he deems reasonably necessary to carry out
the
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<PAGE>
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" 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 redemption of the Class A Stock 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 Class A 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)RT(SM) structure and servicemarks to Initial Acquisition Corp. and Bright
licensing the SMA(2)RT(SM) structure and servicemarks to BW Acquisition Corp.
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<PAGE>
CERTAIN TRANSACTIONS
In August 15, 1996, the Company issued an aggregate of 40,000 shares of
Class A Stock to its directors for a purchase price of $.10 per share as
follows: to Richard Berman, 25,000 shares, Martin Wade, 10,000 shares, Marc De
Logeres, 5,000 shares. In October 1997, the Company issued the 10,000 Placement
Shares to 3 accredited investors at a purchase price of $0.50 per share (before
deducting offering expenses). These 3 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."
In October 29, 1997, Bright granted the Company a non-exclusive license to
use, for the sole purpose of marketing this offering, Bright's SMA(2)RT(SM) and
Specialized Merger and Acquisition Allocated Risk Transaction(SM) 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)RT(SM) name
and structure to Initial Acquisition Corp. and Bright licensed the SMA(2)RT(SM)
name and structure to Orion Acquisition Corp. II and North American Acquisition
Corp., which successfully completed initial public offerings in May 1995, July
1996 and September 1997, respectively. The Company believes that the value it is
paying for the license to use the SMA(2)RT(SM) 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)RT(SM) structure by associating it with the previous
SMA(2)RT(SM) transaction.
Messrs. Berman and Wade, directors of the Company, have received options to
purchase 75,000 and 25,000 shares, respectively, or up to 100,000 in the
aggregate, of the Company's Class B Stock at an exercise price of $10.00 per
share, or an aggregate exercise price of up to $1,000,000. The options will
expire, if not sooner exercised, upon consummation of a Business Combination.
The Company has agreed to use its best efforts to register the shares of Class A
Stock underlying the options as soon as practicable after their issuance.
Summerwind is the holder of the Company's outstanding 134 shares of Series
A Preferred Stock, which it purchased for $13,400, and 1,000 shares of Class A
Stock, which it purchased for $.10 per share. Summerwind paid cash for the Class
A 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 Class A 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.
The directors of the Company may be deemed to be "promoters" of the
Company.
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PRINCIPAL STOCKHOLDERS
The following table sets forth information as of the date hereof, and as
adjusted to reflect the sale of the shares of Class A Stock offered by the
Company hereby, based on information obtained from the persons named below, with
respect to the beneficial ownership of shares of Class A Stock by (i) each
person known by the Company to be the owner of more than 5% of the outstanding
shares of Class A Stock, (ii) each director, and (iii) all executive officers
and directors as a group. None of such persons owns any Class B Stock; Messrs.
Berman and Wade hold options to purchase 75,000 and 25,000 shares, respectively,
of Class B Stock at an exercise price of $10.00 per share. See "The Company -
Class B Stock Options."
<TABLE>
<CAPTION>
Percentage of
Outstanding Shares of
Class A Stock
-------------
Amount and
Nature of
Beneficial
Name or Group (1) Ownership (2) Before Offering After Offering (3)(4)(5)
------------------- ------------- --------------- ------------------------
<S> <C> <C> <C>
Richard J. Berman 25,000(3) 37.6 11.5
Martin R. Wade 10,000(4) 15.0 4.0
Marc de Logeres 5,000 7.5 .006
All executive officers and directors 40,000 60.1 15.51
as a group (three persons)
</TABLE>
- -----------
(1) Each person 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
Class A Stock beneficially owned by him or it.
(3) Includes options to purchase 75,000 shares of Class B Stock. See "The
Company - Class B Stock Options."
(4) Includes options to purchase 25,000 shares of Class B Stock. See "The
Company - Class B Stock Options."
(5) 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 Class A Warrants included in the Units offered
hereby, (iv) the Class B Options and assumes no conversion of the Series A
Preferred Stock. See "The Company - Class B Stock Options", "Underwriting"
and "Description of Capital Stock - Series A Preferred Stock."
The shares of Class A 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 Class A 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 Class A 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
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<PAGE>
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 Class A 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 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 Stock being sold in this offering. except the 100,000 shares reserved for
issuance to two directors upon exercise of the Class B Options. See "The
Company" - Class B Stock Options."
DESCRIPTION OF SECURITIES
Common Stock
The Company will be authorized to issue 11,000,000 shares of Common Stock,
par value $.01 per share, of which 10,000,000 shares shall be shares of Common
Stock, par value per share and 1,000,000 shall be shares of Preferred Stock, par
value $.01 per share. Two hundred (200) shares of the Preferred Stock shall be
designated as "Series A Convertible Preferred Stock." As of the date of this
Prospectus, 66,500 shares of Class A Stock are outstanding, held of record by 13
persons. The holders of Class A Stock are entitled to one vote for each share
held of record on all matters to be voted on by stockholders. The holders of
Class B Stock are entitled two votes 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 redemption offer or
liquidation distribution prior to the consummation of the first Business
Combination. Each outstanding share of Class B Stock at the time of a Business
Combination will be exchanged for two Units (each consisting of one share of
Class A Stock and one Class A Warrant) 90 days following the consummation of the
Business Combination), or any earlier date on or after the date of a Business
Combination that the Representative in its sole discretion so elects. Otherwise,
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.
Class B Stock
As of the date hereof, each share of Class B Stock will entitle the
registered holder thereof to receive two Units, each comprised of one share of
Class A Stock and one Class A Warrant to purchase one share of Class A Stock.
The Class B Stock will be initially exchangeable commencing ninety (90) days
following the consummation of a Business Combination or on any earlier date on
or after the date of a Business Combination that the Representative, in its sole
discretion so elects, 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. Each share
of Class B Stock will be exchanged for two shares of Class A Stock following a
redemption of the Class A Stock sold in this offering in the event a Business
Combination is not consummated within 18
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months from the date of this Prospectus, or 24 months if the Extension Criteria
are satisfied. See "The Company - Redemption of Class A Stock if No Business
Combination."
The Units and the Class B Stock will be sold and traded separately. Florida
residents who purchase Class B Stock will be unable to exchange these Shares to
receive Units unless and until the Units issuable upon exchange of the Class B
Stock 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 when the offering price of such securities is $5.00 or less per share.
Because the "exchange price" of Class B Stock is nil, the "offering price" of
the Units issuable upon exchange of the Class B Stock could be considered not
greater than $5.00. For this reason, no permit to sell the Units issuable upon
exchange of the Class B Stock in Florida has been obtained. There can be no
assurance that the Units issuable upon exchange of the Class B Stock will ever
be registered in Florida or established to be exempt from the requirement of
such registration.
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 134 shares
of Series A Preferred Stock, owned by Summerwind. The purchase price for such
shares, $100.00 per share or $13,400 in the aggregate, is payable to the
Company, with interest, upon the earlier of November 15, 1997 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 1000 shares of Class A 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 Class A Stock issuable upon
conversion of the Series A Preferred Stock at the time of a Business
Combination.
Class A Warrants
The statements under this caption relating to the Class A Warrants are
merely a summary and do not purport to be complete. However, such summary
contains all information with respect to such Class A 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 Class A Stock at a price of $9.00 per
share, subject to adjustment in certain circumstances. The Class A Warrants will
be initially exercisable commencing ninety (90) days following the consummation
of a Business Combination, or any earlier
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date on or after the date of a business combination that the Representative in
its sole discretion so elects, and expire at 5:00 p.m., New York City time, on
the fifth anniversary of the date of this Prospectus.
The Class A 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 Class A Warrants for
redemption, in whole and not in part, at the option of the Company, at a price
of $.05 per Class A 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 Class A Stock, if the 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 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 holders of Class A Warrants shall have exercise rights until the close of
business on the date fixed for redemption.
The exercise price and number of shares of Class A 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 Class A
Warrants are not subject to adjustment for issuances of Class A 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 Class A Warrants for a period of not less than 30 days on not less
than 30 days' prior written notice to the holders of Class A Warrants, 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 Class A Stock is then listed. In addition, the Company has the right,
in its sole discretion, to extend the expiration date of the Class A Warrants on
five business days' prior written notice to the holders of Class A Warrants.
The Class A Warrants may be exercised upon surrender of the warrant
certificate on or prior to the expiration date of the Class A Warrant, 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 Class A Warrants being exercised. The
holders of Class A Warrants do not have the rights or privileges of holders of
Class A 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 Class A Warrants prior
to the exercise of the Class A 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 Class A Warrants prior to the exercise or redemption of such
Class A 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 Class A 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 Class A
Warrants or effect a resale or other disposition of Class A Stock issued upon
such exercise.
No fractional shares will be issued upon exercise of the Class A Warrants.
However, if a warrantholder exercises all Class A 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 Class A Stock on the last
trading day prior to the exercise date.
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<PAGE>
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, the Class A Stock, and the
Class B Stock and the transfer agent, registrar and warrant agent for the Class
A Warrants is American Stock Transfer & Trust Company.
SHARES ELIGIBLE FOR FUTURE SALE
Upon the consummation of this offering (but prior to a Business
Combination), the Company will have 866,500 shares of Class A Stock outstanding
(986,500 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 66,500 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, 10,000 of such shares (the Placement Shares) along with the 134,000
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 Class A Stock to be sold for at least one year 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 Class A 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 Class A Stock to be sold for at least two 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 Class A Stock, 66,500
shares in the aggregate, until two years from September 24, 1997, the issuance
date, 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, 1997) 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 Class A Stock, the
Units, the Class A Warrants or the Class B Stock and no prediction can be made
as to the effect, if any, that market sales of restricted shares of Class A
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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 Class A Stock may be sold in the public market would likely adversely
affect prevailing market prices for the Class A Stock, the Units and the Class A
Warrants and Class B Stock and could impair the Company's ability to raise
capital through the sale of its equity securities.
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<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 shares of Class B Stock set forth opposite their respective names
below.
Number of
Class B
Underwriter Number of Units Shares
- ----------- --------------- ------
H.J. Meyers & Co., Inc................... 800,000 150,000
800,000 150,000
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 Shares of Class B Stock 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 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 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 Stock 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 $.30 per Unit
and $.50 per share of Class B Stock. 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 Stock underwritten (including the sale of any Units and Class B Stock subject
to the Underwriters' over-allotment option).
The Company will reimburse the Representative on a nonaccountable basis in
an amount equal to 3% of the gross proceeds of this offering ($285,000 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.
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<PAGE>
The Company has agreed, in connection with the redemption of or any
solicitation by the underwriter of exercise of the Warrants by the Company
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
redemption (which may also be the Representative) for each Warrant redeemed by
the Company, provided, however, that the Representatives will not be entitled to
receive such compensation in any Warrant redemption transaction in which (i) the
market price of the Common Stock of the Company at the time of the redemption 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 redemption of the Warrants is
unsolicited; and (v) the solicitation of redemption of the Warrants was in
violation of Regulation M 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 Regulation M, 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 Regulation M 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 redemption 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
redemptions 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 Class A Stock, 66,500
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 September 24, 1997, the issuance date, 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 22,500 shares of additional Class B Stock for the
sole purpose of covering over-allotments, if any. To the extent that the
Representative exercises 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 Stock 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 Stock 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 $11.00 per
Unit for a period of four years, commencing one year from the date of this
Prospectus. The Units and Class B Stock issuable upon exercise of the
Representative's Warrants are the same as the Units and Class B Stock being sold
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 Stock issuable
upon exercise of the Representative's Warrants.
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<PAGE>
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
Stock 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 Stock 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 Stock.
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 Stock 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 Crummy, Del Deo, Dolan, Griffinger &
Vecchione, a Professional Corporation, Newark, New Jersey, Harter, Secrest &
Emery, Rochester, New York has acted as counsel to the Representative 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, 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, or at the Regional Offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Citicorp 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.
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The Company intends to furnish to its stockholders annual reports
containing financial statements audited and reported upon by its independent
public accountants.
Prior to the date of this Prospectus, the Company was not subject to the
information requirements of the Exchange Act. Upon the effectiveness of the
Registration Statement, the Company will be subject to certain of the
informational requirements of the Exchange Act and, in accordance therewith,
will file periodic reports and other information with the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549. Copies of the reports and
information so filed can be obtained from the Public Reference Section of the
Commission upon payment of certain fees prescribed by the Commission.
The Commission maintains a Web site that contains reports, proxy statements
and other information regarding registrants that file electronically with the
Commission. The address of the Commission's Web site is http://www.sec.gov.
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BW Acquisition Corp.
(a corporation in the development stage)
Contents
================================================================================
Report of independent certified public accountants F-2
Financial statements:
Balance sheet F-3
Statement of operations F-4
Statement of stockholders' equity F-5
Statement of cash flows F-6
Notes to financial statements F-7 - F-12
F-1
<PAGE>
Report of Independent Certified Public Accountants
BW Acquisition Corp.
(a corporation in the development stage)
New York, New York
We have audited the accompanying balance sheet of BW Acquisition Corp. (a
corporation in the development stage) as of October 31, 1997, and the related
statements of operations, stockholders' equity and cash flows for the period
from September 1, 1997 (inception) to October 31, 1997. 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 audit provides 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 BW Acquisition Corp. as of
October 31, 1997, and the results of its operations and its cash flows for the
period from September 1, 1997 (inception) to October 31, 1997, in conformity
with generally accepted accounting principles.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
New York, New York
November 6, 1997
F-2
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Balance Sheet
<TABLE>
<CAPTION>
=========================================================================================
October 31, 1997
- -----------------------------------------------------------------------------------------
<S> <C>
Assets
Current:
Cash $ 110,650
Deferred registration costs (Note 1) 100,000
Deferred debt costs (Note 1) 9,200
- -----------------------------------------------------------------------------------------
$ 219,850
=========================================================================================
Liabilities and Stockholders' Equity
Current:
Accrued expenses (primarily license agreement) (Note 1) $ 110,000
Notes payable, net of discount (Note 5) 67,000
- -----------------------------------------------------------------------------------------
Total current liabilities 177,000
- -----------------------------------------------------------------------------------------
Commitments (Note 4)
Stockholders' equity (Note 5):
Convertible preferred stock, $.01 par value - shares authorized 1,000,000;
outstanding none; subscribed 134; liquidation value - $13,400 1
Subscription receivable (13,400)
Class A common stock, $.01 par value - shares authorized 9,750,000;
outstanding 66,500 665
Class B common stock, $.01 par value - shares authorized 250,000;
outstanding none --
Additional paid-in capital 58,384
Deficit accumulated during the development stage (2,800)
- -----------------------------------------------------------------------------------------
Total stockholders' equity 42,850
- -----------------------------------------------------------------------------------------
$ 219,850
=========================================================================================
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Statement of Operations
================================================================================
Period from September 1, 1997 (inception) to October 31, 1997
- --------------------------------------------------------------------------------
Debt costs $ (2,800)
- --------------------------------------------------------------------------------
Net loss $ (2,800)
================================================================================
Net loss per common share $ (.04)
================================================================================
Weighted average common shares outstanding 66,500
================================================================================
See accompanying notes to financial statements.
F-4
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Statement of Stockholders' Equity
<TABLE>
<CAPTION>
====================================================================================================================================
Period from September 1, 1997 (inception) to October 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Class A
------------------- Deficit
Preferred stock Common stock accumulated
---------------------- ------------------- Additional during the Total
Shares Subscription paid-in development stockholders'
subscribed Amount receivable Shares Amount capital stage equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of founders' shares -- $ -- $ -- 56,500 $ 565 $ 5,085 $ -- $ 5,650
Sale of common stock -- -- -- 10,000 100 39,900 -- 40,000
Subscription receivable 134 1 (13,400) -- -- 13,399 -- --
Net loss -- -- -- -- -- -- (2,800) (2,800)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, October 31, 1997 134 $ 1 $(13,400) 66,500 $ 665 $ 58,384 $ (2,800) $ 42,850
====================================================================================================================================
</TABLE>
See accompanying notes to financial statements.
F-5
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Statement of Cash Flows
<TABLE>
<CAPTION>
=======================================================================================
Period from September 1, 1997 (inception) to October 31, 1997
- ---------------------------------------------------------------------------------------
<S> <C>
Cash flows from operating activities:
Net loss $ (2,800)
Adjustments to reconcile net loss to net cash provided by operating
activities:
Amortization of deferred debt costs 800
Amortization of discount on notes payable 2,000
- ---------------------------------------------------------------------------------------
Net cash provided by operating activities --
- ---------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from sale of common stock 45,650
Proceeds from issuance of notes payable 65,000
- ---------------------------------------------------------------------------------------
Net cash provided by financing activities 110,650
- ---------------------------------------------------------------------------------------
Net increase in cash 110,650
Cash, beginning of period --
- ---------------------------------------------------------------------------------------
Cash, end of period $ 110,650
=======================================================================================
Supplemental disclosures of cash flow information:
The Company received a note for subscribed preferred stock amounting to
$13,400, which is a noncash financing activity.
The Company has recorded a $100,000 liability relating to a license agreement
(Note 1), which is a noncash financing activity.
=======================================================================================
</TABLE>
See accompanying notes to financial statements.
F-6
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Notes to Financial Statements
================================================================================
1. Summary of Significant Accounting Policies
Deferred Registration Costs
BW Acquisition Corp. (the "Company") has deferred registration costs (primarily
professional fees and a license fee) relating to a public offering (the
"Proposed Offering"). On October 29, 1997, 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 $9,200 are being amortized over six months (the estimated term of the debt)
using the straight-line method. Amortization expense is $800 for the period from
September 1, 1997 (inception) to October 31, 1997.
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.
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.
F-7
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Notes to Financial Statements
================================================================================
2. Organization and Business Operations
The Company was incorporated in Delaware in August 1995 to acquire an operating
business. Operations did not occur until September 1997; accordingly, financial
statements have been presented commencing on September 1, 1997. At November 6,
1997, the Company had not yet commenced any formal business operations and 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)
distribution of the Class A stock (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.
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 Class A 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.
F-8
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Notes to Financial Statements
================================================================================
At the time the Company seeks stockholder approval of any potential Business
Combination, the Company will offer ("Redemption Offer") to each of the
nonaffiliated public Class A stockholders of the Company the right, for a
specified period of time not less than 20 calendar days, to redeem his shares of
Class A 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 of Class A Stock held by such nonaffiliated public
stockholders. In connection with the Redemption Offer, if nonaffiliated public
stockholders holding less than 20% of the Class A 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 of Class A Stock held by
nonaffiliated public stockholders ("Liquidation Value"). In any case, if
nonaffiliated public stockholders holding 20% or more of the Class A 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 escrowed 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
Class A 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.
F-9
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Notes to Financial Statements
================================================================================
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 distribute to the then holders of Class A Stock (issued in the
Proposed Offering or acquired in the open market thereafter) in redemption of
such shares, the amounts in the escrow account. Following such redemption of
Class A Stock, each outstanding share of Class B Stock will be exchanged for two
shares of Class A 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 Class A
stock purchased in the Proposed Offering (including escrow account assets) will
approximately equal the initial public offering price per unit in the Proposed
Offering.
3. Proposed Public Offering
The Proposed Offering calls for the Company to offer for public sale up to
800,000 units ("Units") at $10.00 per unit. Each Unit consists of one share of
the Company's Class A 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 150,000 Class B exchangeable common stock
at $10.00 per share of Class B Stock ("Class B Stock"). 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 share of Class B Stock entitles the holder to
receive two Units in exchange 90 days after the date of a Business Combination.
The Class A 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
$8,200,000 from the Proposed Offering, which is net of underwriter discounts and
related expenses.
The Units and the Class B Stock, which are being offered in the same offering,
will be sold and traded separately.
F-10
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Notes to Financial Statements
================================================================================
Concurrent with the Proposed Offering, the Company amended and restated its
certificate of incorporation to increase its authorized common stock to
10,000,000, of which 9,750,000 shares are designated Class A Stock and 250,000
shares are designated Class B Stock. The Company also increased its Authorized
Preferred Stock to 1,000,000 shares.
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 October 1997, 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 August 1999 or the completion of an initial public
offering. In addition, the Company also issued to the private placement
investors 10,000 shares of common stock for $5,000. 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 September 1, 1997
(inception) to October 31, 1997 was approximately $2,000.
F-11
<PAGE>
BW Acquisition Corp.
(a corporation in the development stage)
Notes to Financial Statements
================================================================================
(b) Preferred Stock
The Company is authorized to issue 1,000,000 shares of "blank check"
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 134 shares of Series A preferred stock, owned
by Summerwind LLC, an indirect affiliate of Bright Licensing Corp. (Note
1). The purchase price for such shares, $100.00 per share or $13,400 in the
aggregate, is payable to the Company, with interest, at 8% upon the earlier
of November 15, 1997 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 shares of the Company's
Class B Stock to two directors at an exercise price of $10.00 per share.
The options will expire, if not sooner exercised, upon consummation of a
Business Combination.
F-12
<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
Page
Prospectus Summary
The Company....................................
Risk Factors...................................
Use of Proceeds................................
Dilution.......................................
Capitalization.................................
Management's Discussion and Analysis of
Financial Condition and Results of
Operations...................................
Proposed Business..............................
Management.....................................
Certain Transactions...........................
Principal Stockholders.........................
Description of Securities......................
Shares Eligible for Future Sale................
Underwriting...................................
Legal Matters..................................
Experts........................................
Additional Information.........................
Index to Financial Statements..................
-----------
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.
================================================================================
BW ACQUISITION CORP.
800,000 Units Each Unit Consisting
of One Share of Common Stock and
One Redeemable Class A Warrant
Entitling the Holder Thereof to
Purchase One Class of Class A
Common Stock
150,000 Shares of Class B
Exchangeable Common Stock Entitling
Holder to Receive Two Units in
Exchange Therefor
-------------------------
PROSPECTUS
-------------------------
H.J. MEYERS & CO., INC.
================================================================================
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 24. Indemnification of Directors and Officers.
BW Acquistion Corp. (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 Amended and Restated Certificate of Incorporation
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 Amended and Restated 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.
Securities and Exchange Commission Registration Fee ..... $ 7,377.28
NASAD Filing Fee ........................................ $ 1,450.00
Fees and Expenses of Counsel and Accountants ............ $ 65,000.00
Printing and Engraving Expenses ......................... $ *
Blue Sky Fees and Expenses .............................. $ 1,385.00
Transfer Agent fees ..................................... $ *
Miscellaneous Expenses .................................. $ *
------------
TOTAL ................................. $ *
============
- --------------
* To be provided by amendment.
II-1
<PAGE>
Item 26. Recent Sales of Unregistered Securities.
In August 1996, the Company sold to Summerwind 1,000 shares of Common Stock
for $100, which was paid in full at the time and 134 shares of Series A
Preferred Stock for $ .01 per share, payable upon the closing of this offering,
in a transaction in which no commissions were paid. In August 1996, the Company
sold an aggregate of 40,000 shares of Common Stock, par value $.01 per share
("Common Stock"), to its then directors, officers (and to an entity affiliated
with certain of its then directors and officers) and to certain other persons at
a price of $.10 per share for aggregate consideration of $4,000. In October,
1997 the Company sold 10,000 shares of Common Stock at a price of $0.50 per
share or $5,000 in the aggregate and $100,000 in promissory notes (the
"Placement Securities") to three 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 &
Co., Inc. acted as placement agents for 100% of such offering, respectively. 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 & Co., Inc., or any other broker-dealer.
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.
Exhibit
Number Description
- -------- -------------------------------------------------------------------
1.1 _ Underwriting Agreement.
3.1 _ Amended and Restated Certificate of Incorporation of the Company.
3.2 _ Bylaws of the Company.
4.1* _ Class A 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 Stock Certificate.
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.
5.1* _ Opinion of Crummy, Del Deo, Dolan, Griffinger & Vecchione.
10.1 _ Form of Escrow Agreement for proceeds from sale of Units.
10.2* _ Form of Escrow Agreement for outstanding Common Stock.
10.3 _ Form of Amended and Restated License Agreement, dated
September 24th between Bright and the Company.
10.4* _ Form of Class B Stock Option Agreement.
23.1 _ Consent of BDO Seidman, LLP
23.2* _ Consent of Crummy, Del Deo, Dolan, Griffinger & Vecchione
(Included in Exhibit 5).
24 _ Power of Attorney; Page II-4.
* To be filed by Amendment.
- ---------------
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:
II-2
<PAGE>
(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;
(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 Registration
Statement to be signed on its behalf by the undersigned, in the City of New
York, State of New York, on the 14 day of November, 1997.
BW ACQUISITION CORP.
By: /s/Richard J. Berman
-------------------------------------
Richard J. Berman
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of Martin R. Wade and Marc De
Logeres constitutes and appoints Richard J. Berman, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
to act, without the other, for him and in his name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as full to all
intents and purposes as he might or could be in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, their
substitute or substitutes may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard J. Berman Chairman of the Board, Chief November 14, 1997
- ---------------------------- Executive Officer
Richard J. Berman (Principal Executive Officer)
/s/ Martin R. Wade Secretary, Treasurer, Director November 14, 1997
- --------------------------- (Principal Financial and
Martin R. Wade Accounting Officer)
/s/ Marc De Logeres Director November 14, 1997
- ---------------------------
Marc De Logeres
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Description Page
--- ----------- ----
<S> <C> <C>
1.1 _ Underwriting Agreement...........................................................................
3.1 _ Amended and Restated Certificate of Incorporation of the Company.................................
3.2 _ Form of Bylaws of the Company....................................................................
4.1 _ Form of Class A 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 Stock Certificate................................................................
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.........................................................................
5.1 _ Opinion of Crummy, Del Deo, Dolan, Griffinger & Vecchione........................................
10.1 _ Form of Escrow Agreement for proceeds from sale of Units.........................................
10.2 _ Form of Escrow Agreement for outstanding Common Stock............................................
10.3 _ Form of Amended and Restated License Agreement, dated September 24, 1997 between Bright and
the Company......................................................................................
10.4 _ Form of Class B Stock Option Agreement...........................................................
23.1 _ Consent of BDO Seidman, LLP......................................................................
23.2 _ Consent of Crummy, Del Deo, Dolan, Griffinger & Vecchione (Included in Exhibit 5)................
24 _ Power of Attorney; Page II-4.....................................................................
</TABLE>
BW ACQUISITION CORP.
800,000 Units
Each Unit Consisting of One Share of Class A Common Stock
and
One Redeemable Class A Common Stock Purchase Warrant
and
150,000 Shares of Class B Exchangeable Common Stock
------------
UNDERWRITING AGREEMENT
------------
November __, 1997
H.J. Meyers & Co., Inc.
1895 Mount Hope Avenue
Rochester, NY 14620
Attn: Mr. Michael Bresner
As representative of the several Underwriters
Ladies and Gentlemen:
BW ACQUISITION CORP., 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 Class A Common Stock, $.01 par value, of the Company (the
"Class A Stock"), and one Class A Warrant (the "Warrants"), each
exercisable to purchase one share of Class A Stock at any time 90 days
after the date of a business combination (the "Business Combination"), or
any earlier date on or after the date of a Business Combination that H.J.
Meyers in its sole discretion so elects, and ending on the fifth
anniversary of the effective date of the Registration Statement (the
"Effective Date"); and
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(2) an aggregate of 150,000 Shares of Class B Exchangeable Common
Stock (the "Class B Stock"), each entitling the holder thereof to receive
two Units in exchange therefor 90 days after the date of a Business
Combination or any earlier date on or after the date of a Business
Combination that H.J. Meyers in its sole discretion so elects.
The Warrant exercise price, subject to adjustment as described in the agreement
providing for the Warrants (the "Warrant Agreement"), shall be $9.00 per share.
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 22,500 shares of
Class B Stock, and to issue to you the Representative's Warrant, referred to and
defined in Section 12, to purchase certain further additional Units and shares
of Class B Stock.
The 800,000 shares of Class A Stock comprising the Units, together with the
120,000 additional shares of Class A Stock comprising the Units that are the
subject of the Over-Allotment Option, are herein collectively called the "Class
A Shares." The 150,000 shares of Class B Stock, together with the 22,500 shares
of Class B Stock that are the subject of the Over-Allotment Option, are herein
collectively called the "Class B Shares." The Units, the Class A Shares, the
Class B Shares, the Warrants (including 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 Class A Shares
issuable upon exercise of the Warrants and the Class A Shares 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 Crummy, Del Deo, Dolan, Griffinger & Vecchione, P.C.,
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 the Class B Shares 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 the Class B Shares 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:
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(a) Registration Statement; Prospectus. A registration statement (File
No. 333-_____) on Form SB-2 relating to the public offering of the
Securities (the "Offering"), 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
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each other jurisdiction in which the nature of its business or the
character or location of its properties requires such qualification, except
where failure to so 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 Class A Shares and
Class B Shares 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, the Stock Escrow 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
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other 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 ended. The Summary
Financial Information and Selected Financial Data included in the
Registration Statement and the Prospectus present fairly the information
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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,
copyrights 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
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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 and Class B Shares 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.
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2. PURCHASE, DELIVERY AND SALE OF UNITS.
(a) Purchase Price for Units. The Units and Class B Shares 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 $9.00 per share of Class B Stock (that
being the public offering price of $10.00 per share of Class B Stock 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 Shares 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
____________, 1997, 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 Agree- ment,
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 22,500 Class B Shares 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 Underwrit- ers, in
whole or in part, within 30 days after the Effective Date, upon notice by you to
the 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 Class A
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Shares, Class B 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 Class A Shares, Class B
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 Class A Shares, Class B 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, Class A Shares, Class B
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
the Class B Shares 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
Shares 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
Shares.
(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 Shares 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
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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 Shares, 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 Shares, 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 Regu-
lations, 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 statements and reports as may be required to continue each such
qualification in effect for so long a period as you may reasonably request.
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(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 Shares, 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.
(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 Class A Shares
underlying the Warrants to become effective in compli-
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<PAGE>
ance 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 Class A Shares 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.
(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,
stock-holders' equity and cash flows of the Company and its Subsidiaries as at
the end of such
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<PAGE>
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 Class A Shares at a price less
than the initial public Offering price of the Class A Shares comprising the
Units.
(o) Warrant Solicitation. Upon the exercise of any Warrants on or after the
first anniversary of the Effective Date or any solicitation by you of the
exercise of any Warrants, 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 Class A Shares 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
Regulation M 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 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 satisfactory to you 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
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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 Class A Shares and Series A
Preferred Stock owned by such shareholders (the "Stock Escrow Agreement").
(s) 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.
(t) 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.
(u) 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").
(v) Board of Directors Seat/Observer. For a period of thirty-six (36)
months from the closing of the Offering, you shall have the option to either:
(i) select an observer designated by you and acceptable to the Company, to
receive notice of and to attend all meetings of the Board of Directors of the
Company (the "Observer"); or (ii) appoint a member of the Company's Board of
Directors (a "Director"). In the event you elect to appoint an Observer, such
Observer shall have no voting rights, and shall be reimbursed for all
out-of-pocket expenses incurred in attending meetings of the Board of Directors.
In the event you elect to appoint a Director, such Director shall have full
voting rights and such other rights as the Company's other Directors, without
limitation. Such Director shall receive the same reimbursement and compensation
as the Company's other Directors. The Company shall hold at least four (4)
meetings of the Board of Directors per year. If you elect to appoint an
Observer, the Observer will be indemnified by the Company against any claims
arising out of his participation at Board meetings. If you appoint a Director,
such Director shall specifically be covered by the Company's Officers and
Directors insurance policy.
(w) Officers and Directors Insurance. Three days prior to the First Closing
Date, the Company shall have obtained Officers and Directors insurance
satisfactory to you with a minimum face value of one million dollars
($1,000,000).
(x) Stock Transfer Sheets. The Company shall supply you with DTC Stock
Transfer sheets on a weekly basis for the first six weeks following the First
Closing Date, and for six weeks following the Option Closing Date, and on a
monthly basis thereafter.
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<PAGE>
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, 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 Class A Shares and Class B
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<PAGE>
Shares 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 Class A 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 Class A Shares and the Warrants
comprising the Units, the Warrant Agreement 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 Class A
Shares 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 or Class B Shares 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 Class A Shares,
Class B Shares and the Warrants are each in valid and proper legal
form; and the Warrants are exercisable for Class A Shares 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;
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<PAGE>
(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 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,
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
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<PAGE>
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 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.
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<PAGE>
(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 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).
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<PAGE>
(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 Class A Shares, Class B Shares and Warrants
issued in the Offering, as well as to transfer other shares of the Common Stock
outstanding from time to time.
(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.
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<PAGE>
(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 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 Shares 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
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<PAGE>
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.
(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
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<PAGE>
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
Preliminary 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 indem-
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<PAGE>
nified 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.
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
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<PAGE>
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.
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 $294,000 (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
- 26 -
<PAGE>
due to a breach by the Company of any covenant, representation or warranty
contained herein or because any 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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<PAGE>
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 15,000 Class B Shares (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 BW Acquisition Corp., 333 East 56th Street, Penthouse G, New
York, New York 10022, with a copy sent to Jeffrey Baumel, Esq., Crummy, Del Deo,
Dolan, Griffinger & Vecchione, P.C., One Riverfront Place, Newark, N.J. 07102.
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.
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.
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<PAGE>
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,
BW ACQUISITION CORP.
______________________________________
Richard J. Berman
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
______________________________________
Michael Bresner
Managing Director Corporate Finance
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<PAGE>
Schedule I
Underwriting Agreement dated ___________, 1997
NUMBER OF CLASS B
NUMBER OF UNITS SHARES TO BE
UNDERWRITER TO BE PURCHASED PURCHASED
H.J. Meyers & Co., Inc.
------- -------
TOTAL 800,000 150,000
- 31 -
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
ORION ACQUISITION CORP. III
The undersigned, Richard J. Berman, hereby certifies that:
1. He is the President of Orion Acquisition Corp. III (the "Corporation")
referred to herein.
2. Such Corporation is a corporation duly organized and validly existing
under the General Corporation Law of the State of Delaware, as amended
(the "GCL").
3. The name of such Corporation is Orion Acquisition Corp. III.
4. The date on which the original Certificate of Incorporation of such
Corporation was filed with the Secretary of State of the State of
Delaware is November 28, 1995.
5. The Amended and Restated Certificate of Incorporation (i) amends the
certificate of incorporation of such Corporation so as to change the
name of such Corporation to BW Acquisition Corp., (ii) amends the
certificate of incorporation so as to increase and change the
authorized capital stock and number of classes of Common Stock and
(iii) integrates into one instrument all of the provisions of such
Certificate of Incorporation, as so amended, which are effective and
operative.
6. This Amended and Restated Certificate was duly adopted effective
October 24, 1997, in accordance with Sections 242, 245 and 228 of the
GCL and the applicable provisions of such Certificate of Incorporation
by unanimous written consent of the members of the Board of Directors
of the Corporation in accordance with Section 141(f) of the GCL and by
the Stockholders owning a majority of the outstanding shares of Common
Stock of the Corporation in accordance with Section 228.
The provisions of such Certificate of Incorporation, as so amended and
restated are as follows:
FIRST: The name of the Corporation is BW ACQUISITION CORP.
SECOND: The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is 1013 Centre
Road, City of Wilmington, County of New Castle; and the name of the registered
agent of the Corporation in the State of Delaware at such address is The
Prentice-Hall Corporation System, Inc.
<PAGE>
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares of stock which the Corporation shall
have 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 shares of Capital Stock shall be as follows:
(a) Common Stock. The Corporation's Common Stock shall be of one class.
(b) Preferred Stock.
(i) Authority of Board of Directors to Designate Preferred Stock.
Preferred Stock may be issued from time to time in one or more series, each
of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by
the Board of Directors of the Corporation as hereinafter provided. Any
shares of Preferred Stock which may be redeemed, purchased or acquired by
the Corporation may be reissued except as otherwise provided herein or by
law. Different series of Preferred Stock shall not be construed to
constitute different classes of shares for the purposes of voting by
classes unless expressly provided for herein or by law. Authority is hereby
expressly granted to the Board of Directors from time to time to issue the
Preferred Stock in one or more series, and in connection with the creation
of any such series, by resolution or resolutions providing for the issuance
of the shares thereof, to determine and fix such voting powers, full or
limited, or no voting powers, and such designations, preferences and
relative participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, including without
limitation thereof, dividend rights, conversion rights, redemption
privileges, and liquidation preferences, as shall be stated and expressed
in such resolutions, all to the full extent now or hereafter permitted by
the General Corporation Law of the State of Delaware. Without limiting the
generality of the foregoing, the resolutions providing for issuance of any
series of Preferred Stock may provide that such series shall be superior or
rank equally or be junior to the Preferred Stock of any other series to the
extent permitted by law.
(ii) Designation of Series A Convertible Preferred Stock. Two hundred
(200) shares of the Preferred Stock shall be designated as "Series A
Convertible Preferred Stock" and shall have the following rights:
A. Voting. Series A Convertible Stock will not be entitled to
vote with respect to the election of directors or on any other matter
submitted to stockholders, unless required by law or upon conversion
to common stock, as provided below.
<PAGE>
B. Conversion Privilege. Each share of the Series A Convertible
Preferred Stock shall be converted into one thousand shares of the
common stock of the Company at the election of the holder(s) for a
period of one year commencing on the first business day after the
completion of a Business Combination by the corporation, which shall
be defined as a statutory merger, share exchange, purchase of capital
stock, asset acquisition or other business combination with an
operating business, such business not to be limited to any particular
location or industry.
C. Redemption Privilege. The Series A Convertible Preferred Stock
is redeemable at the option of the holder(s) at any time. The
redemption price shall be the price originally paid to the Corporation
for such Series A Convertible 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
holder(s) of the Series A Convertible Preferred Stock hereunder to
receive back their original purchase price per share. The Series A
Convertible Preferred Stock shall not otherwise participate in any
liquidation or dissolution of the Corporation or be entitled to
receive any dividend thereon.
FIFTH: The name and the mailing address of the incorporator are as follows:
NAME MAILING ADDRESS
---- ---------------
Joan M. Gerhardt Prentice Hall
830 Bear Tavern Road
West Trenton, New Jersey 08628
SIXTH: The Corporation is to have perpetual existence.
SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
the provisions of ss. 291 of Title 8 of the Delaware Code or on the application
of trustees in dissolution or of any receiver or receivers appointed for this
Corporation under the provisions of ss. 279 of Title 8 of the Delaware Code
order a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this Corporation, as the case may be,
to be summoned in such manner as the said court directs. If a majority in number
representing three fourths in value of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of this Corporation, as the
case may be, agree to any compromise or arrangement and to any reorganization of
this Corporation as consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
<PAGE>
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.
EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation, and
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:
1. The management of the business and the conduct of the affairs
of the Corporation shall be vested in its Board of Directors. The
number of directors which shall constitute the whole Board of
Directors shall be fixed by, or in the manner provided in, the Bylaws.
The phrase "whole Board" and the phrase "total number of directors"
shall be deemed to have the same meaning, to wit, the total number of
directors which the Corporation would have if there were no vacancies.
No election of directors need be by written ballot.
2. After the original or other Bylaws of the Corporation have
been adopted, amended, or repealed, as the case may be, in accordance
with the provisions of ss. 109 of the General Corporation Law of the
State of Delaware, and, after the Corporation has received any payment
for any of its stock, the power to adopt, amend, or repeal the Bylaws
of the Corporation may be exercised by the Board of Directors of the
Corporation, provided, however, that any provision for the
classification of directors of the Corporation for staggered terms
pursuant to the provisions of subsection (d) of ss. 141 of the General
Corporation Law of the State of Delaware shall be set forth in an
initial Bylaw or in a Bylaw adopted by the stockholders entitled to
vote of the Corporation unless provisions for such classification
shall be set forth in this Certificate of Incorporation.
3. Whenever the Corporation shall be authorized to issue only one
class of stock, each outstanding share shall entitle the holder
thereof to notice of, and the right to vote at, any meeting of
stockholders. Whenever the Corporation shall be authorized to issue
ore than one class of stock, no outstanding share of any class of
stock which is denied voting power under the provisions of the
Certificate of Incorporation shall entitle the holder thereof to the
right to vote at any meeting of stockholders except as the provisions
of paragraph (2) of subsection (b) of ss. 242 of the General
Corporation Law of the State of Delaware shall otherwise require;
provided, that no share of any such class which is otherwise denied
voting power shall entitle the holder thereof to
<PAGE>
vote upon the increase or decrease in the number of authorized shares
of said class.
NINTH: The personal liability of the directors of the Corporation is hereby
eliminated to the fullest extent permitted by the provisions of paragraph (7) of
subsection (b) of ss. l02 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
TENTH: The Corporation shall, to the fullest extent permitted by the
provisions of ss. 145 of the General Corporation Law of the State of Delaware,
as the same may be amended and supplemented, indemnify any and all persons whom
it shall have power to indemnify under said section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
ELEVENTH: From time to time any of the provisions of this certificate of
incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article ELEVENTH.
IN WITNESS WHEREOF, the undersigned has signed this Amended and Restated
Certificate of Incorporation as of this 24th day of October, 1997.
/s/ Richard J. Berman
-------------------------------------
Richard J. Berman
President
BYLAWS
OF
BW ACQUISITION CORP.
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Dover, County of
Kent, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders shall be held in at such place
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Section 2. Annual meetings of stockholders, commencing with the year 1997,
shall be held on the first Tuesday of June, if not a legal holiday, and if a
legal holiday, then on the next business day following, at 10:00 A. M., or at
such other date and time as shall be designated from time to time by the board
of directors and stated in the notice of the meeting, at which they shall elect
by a plurality vote a board of directors, and transact such other business as
may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
<PAGE>
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president or the Chairman of the Board of
Directors and shall be called within twenty days by the president or secretary
at the request in writing of a majority of the board of directors. Such request
shall state the purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represent by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the meeting, until
a quorum shall be present or represented. At such adjourned meeting at which a
quorum shall be present or represented any business may be transacted which
might have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
Section 10. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be fixed by resolution of the Board from time to time, but so long as the
corporation has at least three stockholders, the number of directors shall be at
least three. The directors shall be elected at the
<PAGE>
annual meeting of the stockholders, except as provided in Section 2 of this
Article, and each director elected shall hold office until his successor is
elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
meeting and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute.
Section 3. The business of the corporation shall be managed by or under the
direction of its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these bylaws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly-elected board of directors shall
be held immediately after such time and place as shall be fixed for the annual
meeting of stockholders and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event such meeting is not held at the time and
place so fixed for the annual meeting of stockholders, the meeting may be held
at such time and place as shall be specified in a notice given as hereinafter
provided for special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president or
the Chairman on four days' notice to each director, either personally or by mail
or by telegram; special meetings shall be called by the president or secretary
in like manner and on like notice on the written request of two directors.
Section 8. At all meetings of the board, a majority of directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the
<PAGE>
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these bylaws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with the minutes of
proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate of incorporation
or these bylaws, members of the board of directors, or any committee designated
by the board of directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors, shall have and may exercise all the powers and authority of
the board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the sale,
lease or exchange of all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the bylaws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provided,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock. Such committee or committees shall have such
name or names as may be determined from time to time by resolution adopted by
the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
<PAGE>
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of incorporation
or these bylaws, the board of directors shall have the authority to fix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors and/or a stated salary
as directors. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of
incorporation, another provision of these bylaws or by law, any director or the
entire board of directors may be removed, with or without cause, by the holders
of a majority of shares entitled to vote at an election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these bylaws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by facsimile.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these bylaws, a
waiver thereof in writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a secretary and a treasurer. The board of
directors may also choose one or more vice-presidents, and one or more assistant
secretaries and assistant treasurers. Any number of offices may be held by the
same person, unless the certificate of incorporation or these bylaws otherwise
provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a secretary and a treasurer.
<PAGE>
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office at the
pleasure of the board. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall in the absence of the Chairman of the Board of Directors,
preside at all meetings of the stockholders and the board of directors, shall
have general and active management of the business of the corporation and shall
see that all orders and resolutions of the board of directors are carried into
effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his inability
or refusal to act, the vice-president, if any, (or in the event there be more
than one vice-president, the vice-presidents in the order designated by the
directors, or in the absence of any designation, then in the order of their
election) shall perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions upon the
president. The vice-presidents shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an
<PAGE>
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors, or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation.
Section 2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed or
whose facsimile signature has been placed upon a certificate shall have ceased
to be such officer, transfer agent or registrar before such
<PAGE>
certificate is issued, it may be issued by the corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to give the corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution or allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall not be more than sixty nor less than ten days before the date of
such meeting. A determination of stockholders of record entitled to notice of or
to vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the board of directors may fix a new record
date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
<PAGE>
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meetings, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting, and
at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 6. The corporate seal, if any, shall have inscribed thereon the
name of the corporation, the year of its organization and the words "Corporate
Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
<PAGE>
ARTICLE VIII
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed or new bylaws
may be adopted by the stockholders, or by the board of directors, at any regular
meeting of the stockholders or of the board of directors or at any special
meeting of the stockholders or of the board of directors if notice of such
alteration, amendment, repeal or adoption of new bylaws be contained in the
notice of such special meeting. If the power to adopt, amend or repeal bylaws is
conferred upon the board of directors by the certificate of incorporation it
shall not divest or limit the power of the stockholders to adopt, amend or
repeal bylaws.
WARRANT AGENCY AGREEMENT
AGREEMENT, dated this ____ day of _________, 1997, between BW ACQUISITION
CORP., 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 Class A Common
Stock, $.01 par value (the "Class A Stock"), one Class A Common Stock Purchase
Warrant (the "Class A Warrants" or "Warrants") and 150,000 shares of the Class B
Exchangeable Common Stock, $.01 par value (the "Class B Stock"), 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 22,500 shares of Class B Stock
(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 15,000
shares of Class B Stock, 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 250,000 shares of Class B Stock; 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 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
___________, 1997, 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.
- 2
<PAGE>
(k) "Underwriting Agreement" shall mean the Underwriting Agreement, dated
_____________, 1997, 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 172,500 shares of Class B Stock.
(l) "Representative's Warrant Agreement" shall mean the agreement, dated as
of _____________, 1997, 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 substantially in the form annexed hereto as Exhibit A.
(n) "Warrant Expiration Date" shall mean, unless the Warrants are redeemed
as provided in Section 8 hereof prior to such date, 5:00 p.m. (New York time) on
_________, 2002, 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.
(b) Upon execution of this Agreement, Warrant Certificates representing
800,000 Class A 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.
(c) Upon exercise of the Over-allotment Option, in whole or in part,
Warrant Certificates representing up to 120,000 Class A Warrants 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.
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<PAGE>
(d) Upon exercise of the Representative's Warrants as provided therein,
Warrant Certificates representing up to 80,000 Class A 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 (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).
(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
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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.
(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
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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, 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 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
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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.
(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.
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(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 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
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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 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
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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 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
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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 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 (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
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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 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.
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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.
(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.
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(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.
(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.
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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 BW Acquisition Corp., 333 East 56th Street,
Penthouse G, 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 Bresner, or at such
other address as may have been furnished to the Company and the Warrant Agent in
writing.
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.
- 15
<PAGE>
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: ____________________________
BW ACQUISITION CORP.
________________________________
Richard J. Berman
Chairman of the Board and
Chief Executive Officer
- 16
Exhibit 4.3
BW ACQUISITION CORP.
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, (the "Expiration
Date") one (1) fully paid and nonassessable share per Warrant (the "Shares") of
Class A Common Stock, $.01 par value (the "Common Stock"), of BW Acquisition
Corp., 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 the 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
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 ouner(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.
DATED: BW ACQUISITION CORP.
<PAGE>
[1995 DELAWARE BW ACQUISITION CORP. CORPORATE SEAL].
Secretary Richard Berman, Chariman and Chief Executive Officer
Countersigned and Registered:
AMERICAN STOCK TRANSFER & TRUST COMPANY
By Transfer Agent
Warrant Agent and Registrar
Authorized Officer
Warrant to Purchase 80,000 Units
(Consisting of 80,000 Shares of Class A
Common Stock and 80,000 Redeemable Class
A Common Stock Purchase Warrants) and
15,000 Shares of Class B Exchangeable
Common Stock
REPRESENTATIVE'S WARRANT
Dated: ____________, 1997
THIS CERTIFIES THAT H.J. MEYERS & CO., INC. (herein sometimes called the
"Holder") is entitled to purchase from BW ACQUISITION CORP., a Delaware
corporation (the "Company"), at the respective prices and during the period
hereinafter specified, up to 80,000 Units (the "Units"), each Unit consisting of
one share of the Class A Common Stock, $.01 par value, of the Company (the
"Class A Stock") and one Redeemable Class A Common Stock Purchase Warrants (the
"Class A Warrants"), and 15,000 shares of the Class B Exchangeable Common Stock
(the "Class B Stock") (such shares of Class A Stock, shares of Class B and Class
A Warrants being herein sometimes collectively called the "Securities"). Each
Class A Warrant is exercisable to purchase one share of Class A Stock at any
time (subject to the qualification stated in clause (ii) below) commencing on
___________, 1998 (that being the date one year from the date on which the
Registration Statement (as hereinafter defined) became effective) (the date on
which the Registration Statement became effective is hereafter referred to as
the "Effective Date"), and ending on the fifth anniversary of the Effective
Date, at an exercise price (subject to adjustment as described in the warrant
agreement providing for the Class A Warrants) of $9.00 per share of Class A
Stock. This Representative's Warrant (this "Warrant") is issued pursuant to an
Underwriting Agreement dated ____________ 22, 1997 between the Company and H.J.
Meyers & Co., Inc. (the "Representative"), as representative of certain
underwriters, including themselves (the "Underwriters"), in connection with a
public offering, through the Underwriters (the "Offering"), of 800,000 Units
(and up to 120,000 additional Units covered by an over-allotment option granted
to the Underwriters) and 150,000 Shares of Class B Stock (and up to 22,500
additional shares of Class B Stock covered by an over-allotment option granted
to the Underwriters), in consideration of $5.00 received by the Company for this
Warrant. Except as otherwise expressly provided herein, the Units and the shares
of Class B Stock issued upon exercise of this Warrant, the shares of Class A
Stock issued upon exercise of the Class A Warrants, and the Units issued upon
the exchange of the Class B Stock, shall bear the same terms and conditions
described under the caption "Description Of Securities" in the registration
statement (File No. 333-_____) on Form SB-2 relating to the Offering (the
"Registration Statement"), except that (i) the Holder shall have registration
rights under the Securities Act of 1933, as amended (the "Act"), for this
Warrant, the Class A Stock, Class B Stock and the Class A Warrants, as more
fully described in Section 6, and (ii) the Class A
<PAGE>
Warrants shall be exercisable only during the period commencing upon such date
as this Warrant is exercised and expiring five years from the Effective Date.
Each certificate evidencing the Registrable Securities (as hereinafter defined)
shall bear the appropriate restrictive legend set forth below, except that any
such certificate shall not bear such restrictive legend if (a) it is transferred
pursuant to an effective registration statement under the Act or in compliance
with Rule 144 or Rule 144A promulgated under the Act, or (b) the Company is
provided with an opinion of counsel to the effect that such legend is not
required in order to establish compliance with the provisions of the Act:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF
THE REPRESENTATIVE'S WARRANT COVERING REGISTRATION RIGHTS PERTAINING TO
THESE SECURITIES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
SECRETARY OF THE COMPANY AT THE OFFICE OF THE COMPANY AT NEW YORK, NEW
YORK."
Unless the context otherwise requires, all references herein to a "Section"
shall mean the appropriate Section of this Warrant.
1. EXERCISE PRICE AND PERIOD. The rights represented by this Warrant shall
be exercised at the price and during the periods set forth below:
(a) During the period from ____________, 1997 to ___________, 1998
(the "First Anniversary Date"), inclusive, the Holder shall have no right
to purchase any Securities hereunder, except that in the event of any
merger or consolidation of the Company into another entity, or any sale of
substantially all of the assets of the Company as an entirety, prior to the
First Anniversary Date, the Holder shall have the right to exercise this
Warrant at such time and into such kinds and amounts of shares of stock and
other securities and property (including cash) as would be receivable by a
holder of the number of shares of Class A Stock into which this Warrant and
the Units and Class A Warrants thereunder might have been exercisable
immediately prior thereto.
(b) Between ______________, 1998 and ____________, 2002 (the
"Expiration Date"), inclusive, the Holder shall have the right to purchase
Units and Class B Stock hereunder at a price of $11.00 per Unit and $11.00
per share of Class B Stock (that being 110 percent of the public Offering
price of the Units and shares of Class B Stock, respectively) (the
"Exercise Price").
- 2 -
<PAGE>
(c) Notwithstanding the provisions of Section 1(b) with respect to the
Exercise Price to the contrary, the Holder may elect to exercise this
Warrant, in whole or in part, by receiving Units and/or shares of Class B
Stock, as the case may be, equal to the value (as herein determined) of the
portion of this Warrant then being exercised, in which event the Company
shall issue to the Holder the number(s) of Units and/or shares of Class B
Stock, as the case may be, determined by using the following formula:
X = Y(A-B)
------
A
where: X = the number of such Securities to be issued to the
Holder under the provisions of this Section 1(c)
Y = the number of such Securities that would
otherwise be issued upon such exercise
A = the Current Fair Market Value (as
hereinafter defined) of one unit of such
Securities calculated as of the last trading
day immediately preceding such exercise
B = the applicable Exercise Price of such Securities
As used herein, the "Current Fair Market Value" of Securities as of a specified
date shall mean with respect to each unit of such Securities, (i) the average of
the closing prices of such Securities sold on all securities exchanges on which
such Securities may at the time be listed, or (ii) if there have been no sales
on any such exchange on such day, the average of the highest bid and lowest
asked prices on all such exchanges at the end of such day, or (iii) if on such
day such Securities are not so listed, the average of the representative bid and
asked prices quoted in the NASDAQ System as of 4:00 p.m., New York time, or (iv)
if on such day such Securities are not quoted in the NASDAQ System, the average
of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated or any similar successor organization, in each such case averaged
over a period of 21 days consisting of the day as of which the Current Fair
Market Value is being determined and the 20 consecutive business days prior to
such day. If on the date for which Current Fair Market Value is to be determined
such Securities are not listed on any securities exchange or quoted in the
NASDAQ System or the over-the-counter market, then Current Fair Market Value of
such Securities shall be the highest price per unit thereof which the Company
could then obtain from a willing buyer (not a current employee or director) for
such Securities sold by the Company, from original issuance, as determined in
good faith by the Board of Directors of the Company, unless prior to such date
the Company has become subject to a merger, consolidation, reorganization,
acquisition or other similar transaction pursuant to which the Company is not
the surviving entity, in which case the Current Fair Market Value of such
Securities shall be deemed to be
- 3 -
<PAGE>
the per unit value received or to be received in such transaction by the holders
of such Securities.
(d) After the Expiration Date, the Holder shall have no right to purchase
any Securities hereunder.
2. EXERCISE. The rights represented by this Warrant may be exercised, in
whole or in part (with respect to Units and/or shares of Class B Stock), by the
Holder at any time within the periods specified in Section 1 by: (a) surrender
of this Warrant for cancellation (with the purchase form at the end hereof
properly executed) at the principal executive office of the Company (or at such
other office or agency of the Company as it may designate by notice in writing
to the Holder at the address of the Holder appearing on the books of the
Company); (b) to the extent that the Holder does not use the election provided
by Section 1(c), payment to the Company of the Exercise Price for the number of
Units and/or shares of Class B Stock specified in the such purchase form,
together with the amount of applicable stock transfer taxes, if any; and (c)
delivery to the Company of a duly executed agreement signed by the person(s)
designated in the purchase form to the effect that such person(s) agree(s) to be
bound by all of the terms and conditions of this Warrant, including without
limitation the provisions of Sections 6 and 7. This Warrant shall be deemed to
have been exercised, in whole or in part to the extent specified, immediately
prior to the close of business on the date on which all of the provisions of
this Section 2 are satisfied, and the person(s) designated in the purchase form
shall become the holder(s) of record of the Units and/or shares of Class B Stock
issuable upon such exercise at that time and date. The certificates representing
the Units and/or shares of Class B Stock so purchased shall be delivered to the
Holder within a reasonable time, not exceeding ten business days, after this
Warrant shall have been so exercised.
3. TRANSFER OF WARRANT.
(a) During the period from ______________, 1997 to the First Anniversary
Date inclusive, this Warrant shall not be transferred, sold, assigned or
hypothecated, except that during such period this Warrant may be transferred (i)
to successors in interest of the Holder, or (ii) in whole or in part to any one
or more shareholders, directors or officers of the Holder, in each case subject
to compliance with applicable Federal and state securities laws and
Interpretations of the Board of Governors of the National Association of
Securities Dealers, Inc.
(b) Between ____________, 1998 and the Expiration Date inclusive, this
Warrant shall be freely transferable, in whole or in part, subject to the other
terms and conditions hereof and to compliance with applicable federal and state
securities laws.
(c) Any transfer of this Warrant permitted by this Section 3 shall be
effected by: (i) surrender of this Warrant for cancellation (with the assignment
form at the end hereof properly executed) at the office or agency of the Company
referred to in Section 2; (ii) deli-
- 4 -
<PAGE>
very of a certificate (signed, if the Holder is a corporation or partnership, by
an authorized officer or partner thereof), stating that each transferee
designated in the assignment form is a permitted transferee under this Section
3; and (iii) delivery of an opinion of counsel stating that the proposed
transfer may be made without registration or qualification under applicable
federal or state securities laws. This Warrant shall be deemed to have been
transferred, in whole or in part to the extent specified, immediately prior to
the close of business on the date the provisions of this Section 3(c) are
satisfied, and the transferee(s) designated in the assignment form shall become
the holder(s) of record at that time and date. The Company shall issue, in the
name(s) of the designated transferee(s) (including the Holder if this Warrant
has been transferred in part) a new Warrant or Warrants of like tenor and
representing, in the aggregate, rights to purchase the same numbers of
Securities as are then purchasable under this Warrant. Such new Warrant or
Warrants shall be delivered to the record holder(s) thereof within a reasonable
time, not exceeding ten business days, after the rights represented by this
Warrant shall have been so transferred. As used herein (unless the context
otherwise requires), the term "Holder" shall include each such transferee, and
the term "Warrant" shall include each such transferred Warrant.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees that all
Units and all shares of Class B Stock which may be issued upon exercise of this
Warrant, and all Units, Class A Stock, Class B Stock and all Class A Warrants
which may be issued upon exercise of the Units or the Class B Stock, shall, upon
issuance in accordance with the terms hereof, be duly and validly issued, fully
paid and non-assessable, with no personal liability attaching to the Holder
thereof. The Company further covenants and agrees that during the period within
which this Warrant may be exercised, the Company shall at all times have
authorized and reserved a sufficient number of shares of Class A Stock for
issuance upon exercise of the Units, either received upon exercise of this
Warrant or upon exchange of the Class B Stock that are received under the
exercise of this Warrant, and all of the Class A Warrants received under the
Units.
5. SHAREHOLDERS' RIGHTS. This Warrant shall not entitle the Holder to any
voting rights or other rights as a shareholder of the Company.
6. REGISTRATION RIGHTS.
(a) Certain Definitions. As used herein, the term:
(i) "Registrable Securities" shall mean this Warrant, and/or any or
all of the Units, shares of Class A Stock, shares of Class B Stock and/or
Class A Warrants issued or issuable upon exercise of this Warrant, and/or
any or all of the shares of Class A Stock issued or issuable upon exercise
of such Class A Warrants, as the same shall be so designated by the Holder.
- 5 -
<PAGE>
(ii) "50% Holder" shall mean the Holder(s) of at least 50 percent of
the total number of shares of Class A Stock comprising the Registrable
Securities (whether or not this Warrant or any Class A Warrants have been
exercised), and shall include any Holder or combination of Holders.
(b) "Piggyback" Registration. From the date hereof until the Expiration
Date, the Company shall advise the Holder, whether the Holder holds this Warrant
or has exercised this Warrant and holds any of the Securities, by written notice
at least four weeks prior to the filing of any post-effective amendment to the
Registration Statement (unless the Company determines that to comply with
Federal securities law it must file such post-effective amendment in less than
four weeks' time, in which case the Company shall give the Holder the most
notice practicable under the circumstances), or of any new registration
statement or post-effective amendment thereto under the Act (other than a
registration statement on Form S-8 or its counterpart), or any Notification on
Form 1-A under the Act, covering any securities of the Company, whether for its
own account or for the account of others, and shall, upon the request of the
Holder, include in any such post-effective amendment or new registration
statement such information as may be required to permit a public offering of any
or all of the Registrable Securities of the Holder, all at no expense whatsoever
to the Holder, except that each Holder whose Registrable Securities are included
in such registration shall bear the fees of its own counsel and any underwriting
discounts or commissions applicable to the Securities sold by it.
(c) Demand Registration.
(i) If any 50% Holder shall give notice to the Company, at any time
after the First Anniversary Date and prior to the Expiration Date, to the
effect that such 50% Holder desires to register under the Act any
Registrable Securities under such circumstances that a public distribution
(within the meaning of the Act) of any such securities shall be involved,
then the Company shall promptly, but no later than 30 days after receipt of
such notice, file a post-effective amendment to the Registration Statement
or a new registration statement under the Act, to the end that Registrable
Securities of such 50% Holder may be publicly sold under the Act as
promptly as practicable thereafter, and the Company shall use its best
efforts to cause such registration to become effective as soon as possible;
provided, however, that such 50% Holder shall furnish the Company with
appropriate information in connection therewith as the Company may
reasonably request in writing; and provided further that the Company shall
then have available current financial statements (unless the unavailability
of current financial statements results from the Company's fault or
neglect). The 50% Holder may, at its option, cause Registrable Securities
to be included in such registration under this Section 6(c) on a maximum of
two occasions during the four-year period beginning on the First
Anniversary Date and ending on the Expiration Date.
(ii) Within ten days after receiving any such notice pursuant to this
Section 6(c), the Company shall give notice to each other Holder (whether
such Holder holds a Warrant or has exercised the Warrant and holds any of
the Securities), advising that the
- 6 -
<PAGE>
Company is proceeding with such post-effective amendment or new
registration statement and offering to include therein Registrable
Securities held by such other Holders, provided that they shall furnish the
Company with such appropriate information in connection therewith as the
Company shall reasonably request in writing.
(iii) All costs and expenses (including without limitation, legal,
accounting, printing, mailing and filing fees) of the first such
registration effected under this Section 6(c) shall be borne by the
Company, except that the Holder(s) whose Registrable Securities are
included in such registration shall bear the fees of their own counsel and
any underwriting discounts or commissions applicable to the securities sold
by them. All costs and expenses of the second such registration effected
under this Section 6(c) shall be borne by the Holder(s) whose Registrable
Securities are included in such registration.
(iv) The Company shall cause each registration statement or
post-effective amendment filed pursuant to this Section 6(c) to remain
current under the Act (including the taking of such steps as are necessary
to obtain the removal of any stop order) for a period of at least six
months (and for up to an additional three months if requested by the
Holder(s)) from the effective date thereof, or until all the Registrable
Securities included in such registration have been sold, whichever is
earlier.
(d) Further Rights. The registration rights provided by this Section 6 may
be exercised by the Holder either prior or subsequent to its exercise of this
Warrant. A 50% Holder may, at its option, request registration pursuant to
Section 6(b) and/or pursuant to Section 6(c), and its request for registration
under one such Section shall not affect its right to request registration under
the other. The registration rights provided by this Section 6 shall supersede
and be prior in right to any registration rights granted by the Company to other
holders of its outstanding securities.
(e) Further Obligations of Company. With respect to all registrations under
this Section 6, the Company shall: (i) supply prospectuses and such other
documents as the Holder may reasonably request in order to facilitate the public
sale or other disposition of the Registrable Securities; (ii) use its best
efforts to register and qualify the Registrable Securities for sale in such
states as the Holder designates (provided, however, that in no event shall the
Company be required to qualify as a foreign corporation or a dealer in
securities or to execute a general consent to service of process); and (iii) do
any and all other acts and things which may be necessary or desirable to enable
the Holder to consummate the public sale or other disposition of the Registrable
Securities.
7. INDEMNIFICATION.
(a) Indemnification by the Company. As used in this Section 7, 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. Whenever
pursuant to Section 6 a registration state-
- 7 -
<PAGE>
ment relating to any Registrable Securities is filed under the Act, or amended
or supplemented, the Company shall indemnify and hold harmless each Holder of
Registrable Securities included in such registration statement, amendment or
supplement (each, a "Distributing Holder"), and each person (if any) who
controls (within the meaning of the Act) the Distributing Holder, and each
underwriter (within the meaning of the Act) of such Registrable Securities, and
each person (if any) who controls (within the meaning of the Act) any such
underwriter, from and against all Liabilities, joint or several, to which the
Distributing Holder or any such controlling person or underwriter may become
subject, under the Act or otherwise, insofar as such Liabilities arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in any such registration statement, or any preliminary prospectus
or final prospectus constituting a part thereof, or any amendment or supplement
thereto, or arise out of or are based upon 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; provided, however, that the Company
shall not be liable in any such case 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 such registration statement, preliminary
prospectus, final prospectus, or amendment or supplement thereto, in reliance
upon and in conformity with written information furnished by such Distributing
Holder or by any other Distributing Holder for use in the preparation thereof.
The foregoing indemnity shall be in addition to any other liability which the
Company may otherwise have.
(b) Indemnification by Holder. The Distributing Holder(s) shall indemnify
and hold harmless the Company, and each of its directors, each nominee (if any)
named in any preliminary prospectus or final prospectus constituting a part of
such registration statement, each of its officers who have signed such
registration statement and such amendments or supplements thereto, and each
person (if any) who controls the Company (within the meaning of the Act) against
all Liabilities, joint or several, 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 any untrue
or alleged untrue statement of any material fact contained in such registration
statement, preliminary prospectus, final prospectus, or amendment or supplement
thereto, or arise out of or are based upon 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 such Liabilities arise out of or are based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, preliminary prospectus, final prospectus or
amendment or supplement thereto in reliance upon and in conformity with written
information furnished by such Distributing Holder(s) for use in the preparation
thereof. The foregoing indemnity shall be in addition to any other liability
which the Distributing Holder(s) may otherwise have.
(c) Procedure. Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against any indemnifying
party, give the indemnifying party
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<PAGE>
notice 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 7. In case any such
action is brought against any indemnified party, and it notifies an 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, 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 7 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation.
(d) Limitation. Notwithstanding the foregoing, if the Registrable
Securities are to be distributed by means of an underwritten public offering, to
the extent that the provisions on indemnification and contribution contained in
the underwriting agreement entered into in connection with such underwriting are
in conflict with the provisions of this Section 7, the provisions of such
underwriting agreement shall be controlling, provided that the Holder is a party
to such underwriting agreement.
8. ANTI-DILUTION. In the event that the outstanding Units, shares of Class
A Stock, shares of Class B Stock or Class A Warrants are at any time increased
or decreased in number, or changed into or exchanged for a different number or
kind of shares or other security of the Company or of another corporation
through reorganization, merger, consolidation, liquidation, recapitalization or,
in the case of Class A Stock or Class B Stock, stock split, reverse split,
combination of shares or stock dividends payable with respect to such common
stock, appropriate adjustments shall be made in the number and kind of such
securities then subject to this Warrant, and in the Exercise Price of this
Warrant, effective as of the date of such occurrence, so that the position of
the Holder upon exercise of this Warrant shall be the same as it would have been
had it owned immediately prior to the occurrence of such event the Units, Class
A Stock, Class B Stock and the Class A Warrants subject to this Warrant;
provided, however, that in no event shall two adjustments be made for the same
event. For example, if the Company declares a 2-for-1 stock dividend or stock
split, then the number of Units then subject to this Warrant shall be doubled,
the per Unit Exercise Price shall be reduced by 50 percent.
9. GOVERNING LAW. This Warrant 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.
10. AMENDMENT OR WAIVER. Any provision of this Warrant may be amended,
waived or modified upon the written consent of the Company and any 50% Holder;
provided, however, that such amendment, waiver or modification applies by its
terms to each Holder; and provided further, that a Holder may waive any of its
rights or the Company's obligations to such Holder without obtaining the consent
of any other Holder.
- 9 -
<PAGE>
IN WITNESS WHEREOF, NORTH ATLANTIC ACQUISITION CORP. has caused this
Warrant to be signed by its duly authorized officers under its corporate seal
and to be dated as of the date set forth on the first page hereof.
BW ACQUISITION CORP.
____________________________
Richard J. Berman
Chairman of the Board and
Chief Executive Officer
(Corporate Seal)
Attest:
- --------------------------------
Secretary
- 10 -
<PAGE>
PURCHASE FORM
(To be signed only upon exercise of War rant)
The undersigned, the Holder of the foregoing Warrant, hereby irrevocably
elects to exercise the purchase rights represented by such Warrant for, and to
purchase thereunder, ________ Units (each Unit consisting of one share of the
Class A Common Stock, $.01 par value per share, of BW Acquisition Corp. (the
"Company") and one Class A Common Stock Purchase Warrants of the Company (each
such Class A Warrant exercisable to purchase one share of Class A Common Stock))
and/or ________ shares of Class B Exchangeable Common Stock, $.01 per share, of
the Company (each such share exchangeable for two Units at the time of a
Business Combination), and (i) herewith makes payment of an aggregate of
$____________ therefor and/or (ii) pursuant to Section 1(c) of such Warrant
hereby tenders the right to exercise such Warrant to the extent of ________
Units and/or ________ shares of Class B Stock of the Company. The undersigned
requests that the certificates for any such Units and such shares of Class B
Stock be issued in the name(s) of, and delivered to, the person(s) whose name(s)
and address(es) are set forth below:
Dated: _____________________
______________________________
______________________________
Address
Signatures guaranteed by:
_______________________________
Taxpayer Identification Number:
_______________________________
- 11 -
<PAGE>
TRANSFER FORM
(To be signed only upon transfer of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
unto ___________________________________________ the right to purchase Units
(each comprised of one share of the Class A Common Stock, $.01 par value, of BW
Acquisition Corp. (the "Company") and one Class A Common Stock Purchase Warrant
of the Company) and shares of Class B Exchangeable Common Stock, $.01 par value,
of the Company (each exchangeable for two Units at the time of a Business
Combination) of the Company represented by the foregoing Warrant to the extent
of _______ Units and _______ shares of Class B Stock, and appoints
________________________ attorney to transfer such rights on the books of the
Company, with full power of substitution in the premises.
Dated: _____________________
______________________________
______________________________
______________________________
Address
Signatures guaranteed by:
_______________________________
Taxpayer Identification Number:
________________________________
- 12 -
BW ACQUISITION CORP.
Units (comprised of one share of Class A 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)
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
U-
________
SEE REVERSE SIDE FOR [Units]
CERTAIN DEFINITIONS ________
CUSIP ________
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 BW Acquisition Corp. (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 Class A 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 ____ , 2001 (the "Expiration Date"). The terms of the
Warrants are governed by a Warrant Agreement dated as of ________ ___, 1997 (the
"Warrant Agreement") between the Company and American Stock Transfer & Trust
Company, as Warrant Agent (the "Warrant Agent"), and are 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
Warrants 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 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").
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Unit Certificate to be duly
executed, manually or by facsimile, by its officers thereunto duly authorized
and a facsimile of its corporate seal to be imprinted hereon.
Dated:
By: By:
Secretary President
Countersigned and Registered:
American Stock Transfer & Trust Company
By Transfer Agent, Warrant Agent
and Registrar
<PAGE>
BW ACQUISITION CORP.
SEPARATION PROVISIONS
This certificate certifies that for value received, the Registered Holder
hereof 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 Gift 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 so hereby irrevocably constitute and
appoint ________________________________________________________________________
Attorney to transfer the said Shares on the books of the within names
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.
FORM OF
ESCROW AGREEMENT
This ESCROW AGREEMENT is made as of this ____ day of November, 1997 by and
among BW ACQUISITION CORP., with a place of business at 333 East 56th Street,
Penthouse G, 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 (the "Representative"), and Chase Manhattan Bank, a national bank
organized under the laws of the United States of America with a principal place
of business at ______________, 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' overallotment option (the "Units"), each Unit to
consist of (a) one (1) share of the Company's Class A Common Stock, par value
$.01 per share (the "Class A Stock") and (b) one (1) Class A Common Stock
Purchase Warrant (the "Class A Warrants or "Warrants"), and (ii) 150,000 shares
of the Class B Exchangeable Common Stock, $.01 par value (the "Class B Stock"),
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 22,500 shares of
Class B Stock (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 15,000 shares of Class B Stock, 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 250,000 shares of Class B stock; and
WHEREAS, the Company has entered into an Underwriting Agreement dated
__________, 1997 with the Representative 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;
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:
<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 "BW
Acquisition Corp. - 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
Representatives 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 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 Exhibit E (the "Fee Schedule"). The Escrow Agent shall have
no duties or liabilities under this Agreement unless and until full payment of
the fee set forth in Exhibit E. The Escrow Agent shall be reimbursed by the
Company for all expenses, disbursements and advances incurred or
2
<PAGE>
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.
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 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 pursuant to 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 interests 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
3
<PAGE>
gross negligence or willful misconduct) in the investment or reinvestment
of the Escrowed Assets, or any loss of interest incident to any such
delays.
(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 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.
4
<PAGE>
(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 its agents 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 6(l), the 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 Escrow Assets
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 Escrow
Assets 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.
5
<PAGE>
(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 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 Depository 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 7(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 Authorized Officers,
Secretary or an Assistant Secretary or similar officer). In addition, and
subject to subsection 7(b) hereof, the Escrow Agent may rely and act upon
instructions received by telephone, telex, TXW facsimile transmission, bank wire
or other teleprocess acceptable to it which the Escrow Agent believes in good
faith to have been given by an 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
6
<PAGE>
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 Escrow 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.
---------- -------------
Richard J. Berman, President (212) 752-3563
Martin R. Wade, Secretary (212) 783-6870
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;
7
<PAGE>
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 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 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 5, 6(c), and 6(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 Escrow Assets, and
hold, invest and dispose of 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 Escrow 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):
8
<PAGE>
(a) If to the Company, to:
BW Acquisition Corp.
333 East 56th Street
Penthouse G
New York, New York 10022
Attention: President
If to the Representative, to:
H.J. Meyers & Co., Inc.
1895 Mount Hope Avenue
Rochester, New York 14620
Attention: Mr. Michael Bresner
If to the Escrow Agent, to:
Chase Manhattan Bank
__________________________
__________________________
Attn: ____________________
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, exclusively. 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 thereof.
(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
9
<PAGE>
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.
(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.
12. 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; and
10
<PAGE>
(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.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date
first written above.
BW ACQUISITION CORP.
By: __________________________________
Name: Richard J. Berman
Title: President
H.J. MEYERS & CO., INC.
By: __________________________________
Name: Michael Bresner
Agreed and accepted:
CHASE MANHATTAN BANK
as Escrow Agent
By: __________________________
Name:
Title:
11
FORM OF
AMENDED AND RESTATED LICENSE AGREEMENT
THIS AGREEMENT is made as of this 24th day of September, 1997 by and
between:
Bright Licensing Corp., a New York corporation with a place of business at
64 Village Hill Drive, Dix Hills, New York 11746 ("Licensor"), and
BW Acquisition Corp., a Delaware corporation with a place of business at
333 East 56th Street, Penthouse G, New York, New York 10022 ("Licensee").
WITNESSETH:
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 "SMA2RT(TM) and
"Specialized Merger and Acquisition Allocated Risk Transaction(TM)
(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. 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.
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.
<PAGE>
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 SMA2RT offering, the investment banker for the SMA2RT
offering, the underwriter for the SMA2RT public offering, copies of any letters
of intent or underwriting agreements relating to or involving SMA2RT 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. License 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.
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
-2-
<PAGE>
of Licensee or upon the wining 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, License
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 therein 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 or 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 waiver is to be enforced.
(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.
-3-
<PAGE>
(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, agreements 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BRIGHT LICENSING CORP. BW ACQUISITION CORP.
/s/ Dominic Bassani /s/ Richard J. Berman
- ----------------------------------- ---------------------------------------
By: Dominic Bassani By: Richard J. Berman
President President, Chief Executive Officer
/s/ Martin R. Wade
---------------------------------------
By: Martin R. Wade (personally) as to
paragraph 7 only
/s/ Marc De Logeres
---------------------------------------
By: Marc De Logeres (personally) as to
paragraph 7 only
-4-
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
BW Acquisition Corp.
New York, New York
We hereby consent to the use in the Prospectus constituting a part of this
Registration Statement of our report dated November 6, 1997, relating to the
financial statements of BW Acquisition Corp., which is contained in that
Prospectus.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/s/ BDO Seidman, LLP
BDO Seidman, LLP
New York, New York
November 14, 1997
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