Form of Letter Agreement for Lambert’s Cove Holdings, LLC]
[Form
of
Letter Agreement for
Xxxxxxx’x Cove Holdings, LLC]
[date]
Xxxxxxx’x
Cove Acquisition Corporation
000
Xxxx
Xxxxxxxxx, Xxxxx 000
Xxxxxxx,
XX 00000
UBS
Securities LLC
000
Xxxx
Xxxxxx
Xxx
Xxxx,
XX 00000
Xxxxxx
Xxxxxx & Co. Inc.
000
Xxxxx
Xxxxxx, 00xx Xxxxx
Xxx
Xxxx,
XX 00000
| Re: |
Initial
Public Offering of Xxxxxxx’x Cove Acquisition
Corporation
|
Ladies
and Gentlemen:
This
letter is being delivered to you in accordance with the Underwriting Agreement
(the “Underwriting
Agreement”)
entered into by and among Xxxxxxx’x Cove Acquisition Corporation, a Delaware
corporation (the “Company”),
and
UBS Securities LLC and Xxxxxx Xxxxxx & Co. Inc. as the representatives
(collectively, the “Representatives”)
of the
underwriters named in Schedule A thereto (collectively, the “Underwriters”),
relating to an underwritten initial public offering (the “IPO”)
of the
Company’s units (the “Units”),
each
composed of one share of the Company’s common stock, par value $0.0001 per share
(the “Common
Stock”),
and
one warrant, which is exercisable for one share of Common Stock (the
“Warrants”).
Certain capitalized terms used herein are defined in Section 19
hereof.
In
order
to induce the Company and the Underwriters to enter into the Underwriting
Agreement and to proceed with the IPO, and in recognition of the benefit that
such IPO will confer upon the undersigned security holder of the Company, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the undersigned hereby agrees with the Company as
follows:
1. In
the
event that the Company fails to consummate a Business Combination within 24
months (or 36 months if the Extended Period is approved by the Company’s
stockholders) from the date of the Company’s final prospectus relating to the
IPO (the “Prospectus”),
the
undersigned will take all reasonable actions within its power to (a) cause
the
Trust Account to be liquidated and distributed to the holders of the IPO Shares
as promptly as practicable and (b) cause the Company to liquidate as promptly
as
practicable (the earliest date on which the conditions in clauses (a) and (b)
are both satisfied being the “Liquidation
Date”).
2. Neither
the undersigned nor any Affiliate of the undersigned will be entitled to
receive, and no such person will accept, any finder’s fee, consulting fee,
reimbursement or cash payment or any other form of compensation, including
the
issuance of the Company’s securities, from the Company for services rendered to
the Company prior to or in connection with the consummation of a Business
Combination, other than (subject to the following sentence) (a) repayment
of that certain Promissory Note in the amount of $125,000 made to the Company
by
the undersigned to cover offering expenses; (b) a payment of an aggregate of
$10,000 per month to the undersigned, for office space and certain general
and
administrative services, including but not limited to receptionist, secretarial
and general office services; (c) reimbursement for any out-of-pocket
expenses or advances related to: (i) the IPO or (ii) identifying,
investigating and consummating a Business Combination; or (d) other expenses
or
advances that the Company is permitted to incur. The undersigned acknowledges
that the Company’s Audit Committee (or the Company’s Board of Directors, with
any interested director abstaining from such review and approval, in the case
of
a director who is a member of the Company’s Audit Committee) will review and
approve all payments made to the undersigned, the Company’s officers and
directors and the Company’s or their Affiliates, other than the $10,000 per
month payment described in the immediately preceding sentence.
3. Neither
the undersigned, nor any Affiliate of the undersigned, will accept a finder’s
fee, consulting fee or any other compensation or fees from any person or other
entity in connection with a Business Combination, other than compensation or
fees that may be received for any services provided following such Business
Combination.
4. The
undersigned acknowledges and agrees that the Company will not enter into
any transaction with any of the Company’s officers or directors or any of the
Company’s or their respective Affiliates, including loans by the Company’s
officers and directors and any forgiveness of loans, (a) without the prior
approval by a majority of the Company’s disinterested, “independent” (as defined
below) directors or the members of the Company’s Board of Directors who do not
have an interest in the transaction, in either case who had access, at the
Company’s expense, to the Company’s attorneys or independent legal counsel, and
(b) unless the Company’s disinterested, “independent” directors determine
that the terms of such transaction are no less favorable to the Company than
those that would be available to the Company with respect to such a transaction
from unaffiliated third parties. As used herein “independent” means a director
who qualifies as (a) an “independent director” under Section 121 of
the American Stock Exchange’s “AMEX” Company Guide and (b) independent
under Rule 10A-3 under the Securities Exchange Act of 1934, as amended.
5. In
order
to minimize potential conflicts of interest which may arise from multiple
affiliations, the undersigned agrees to present to the Company for its
consideration, prior to presentation to any other person or entity, any suitable
opportunity to acquire an operating business, until the earlier of the
consummation by the Company of a Business Combination, the liquidation of the
Company or until such time as the undersigned ceases to be an officer or
director of the Company, subject to any pre-existing fiduciary and contractual
obligations the undersigned might have.
6. The
undersigned acknowledges and agrees that the Company will not consummate a
Business Combination with a Target Business that is affiliated with the
undersigned, the Company’s directors or officers or any Existing Holder or any
of the Company’s or their Affiliates unless the Company obtains an opinion from
an unaffiliated, independent investment banking firm, which is a member of
the
Financial Industry Regulatory Authority (the “FINRA”),
and
is reasonably acceptable to the Representatives, that such Business Combination
is fair to the Company’s stockholders from a financial point of
view.
7. The
undersigned will escrow any and all of (A) the Founders Units, Founders Shares
and Founders Warrants (including the shares
of
Common Stock to
be
issued upon the exercise of the Founders Warrants) beneficially owned by it
until one year after the consummation by the Company of a Business Combination
and (B) the Insider Warrants (including the shares of Common Stock to be issued
upon exercise of the Insider Warrants) beneficially owned by it until 30 days
after the consummation by the Company of a Business Combination subject to
the
terms of an Escrow Agreement which the Company will enter into with the
undersigned and an escrow agent acceptable to the Company.
2
8. The
undersigned’s questionnaire(s) furnished to the Company and the Underwriters and
is true and accurate in all respects. The undersigned represents and warrants
that:
(a) the
undersigned is not subject to or a respondent in any legal action for, any
injunction, cease-and-desist order or order or stipulation to desist or refrain
from, any act or practice relating to the offering of securities in any
jurisdiction;
(b) the
undersigned has never been convicted of or pleaded guilty to any crime
(i) involving any fraud or (ii) relating to any financial transaction or
handling of funds of another person, or (iii) pertaining to any dealings in
any
securities and the undersigned is not currently a defendant in any such criminal
proceeding; and
(c) the
undersigned has never been suspended or expelled from membership in any
securities or commodities exchange or association or had a securities or
commodities license or registration denied, suspended or revoked.
9. The
undersigned hereby agrees to not propose, or vote in favor of, (i) an
amendment to Article Sixth of the Company’s Amended and Restated
Certificate of Incorporation or (ii) an amendment to the Company’s Amended
and Restated Certificate of Incorporation to extend the Company’s corporate
existence beyond [•], 2010, except in the case of clause (ii) that (A) the
Company shall submit to its stockholders a proposal to amend its Amended and
Restated Certificate of Incorporation to extend the Company’s corporate
existence to [•], 2011 in connection with the Company submitting the Extended
Period to the Company’s stockholders for approval and (B) the Company shall
submit to its stockholders a proposal to amend its Amended and Restated
Certificate of Incorporation to provide for the Company’s perpetual existence in
connection with the Company submitting a Business Combination to the Company’s
stockholders for approval. In connection with any vote of the Company’s
stockholders on the proposals referred to in clauses (A) and (B) above, the
undersigned will vote any Founders Shares owned directly or indirectly by it
in
accordance with the majority of the shares of Common Stock voted by the
Company’s Public Stockholders in connection with the vote on any such proposal,
and all shares of Common Stock that it may acquire in or following the IPO
in
favor of any such proposal. This Section may not be modified or amended under
any circumstances.
10. The
undersigned has full right and power, without violating any agreement by which
it is bound (including, without limitation, any non-competition or
non-solicitation agreement with any employer or former employer), to enter
into
and perform under this letter agreement and serve as sponsor of the
Company.
11. If
the
Company seeks approval of its stockholders of either the Extended Period or
a
Business Combination, the undersigned will:
(a) vote
any
Founders Shares owned directly or indirectly by it in accordance with the
majority of the shares of Common Stock voted by the Company’s Public
Stockholders in connection with the vote on the Extended Period or any Business
Combination, as applicable; and
(b) vote
all
shares of Common Stock that it may acquire in or following the IPO in favor
of
the Extended Period or the Business Combination, as applicable.
In
addition, the undersigned waives its right to exercise redemption rights with
respect to any shares of Common Stock owned or to be owned by the undersigned,
directly or indirectly, and agrees that it will not seek redemption with respect
to such shares in connection with any vote to approve the Extended Period or
a
Business Combination.
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12. The
undersigned hereby waives any and all right, title, interest or claim of any
kind in or to any distributions of the Trust Account, or to any other amounts
distributed in connection with a liquidating distribution of the Company, with
respect to its Founders Shares and the shares of Common Stock underlying the
Founders Warrants or the Insider Warrants (any “Claim”),
and
hereby waives any Claim the undersigned may have in the future as a result
of,
or arising out of, any contracts or agreements with the Company and will not
seek recourse against the Trust Account for any reason whatsoever; provided
that
the foregoing shall not apply to any IPO Shares acquired by the undersigned.
The
undersigned hereby agrees that the Company shall be entitled to reimbursement
from the undersigned for any distribution of the Trust Account or any other
amounts distributed by the Company in connection with a liquidating distribution
received by the undersigned with respect to its Founders Shares or the shares
of
Common Stock underlying the Founders Warrants or the Insider
Warrants.
13. The
undersigned agrees to indemnify and hold harmless the Company, jointly and
severally with Xxxx X. Xxxxxx, the Company’s Chairman of the Board of Directors,
and Xxxxxxx X. Xxxx, the Company’s President and Chief Executive Officer,
against any and all losses, liabilities, claims, damages and expenses whatsoever
(including, but not limited to, any and all legal or other expenses reasonably
incurred in investigating, preparing or defending against any litigation,
whether pending or threatened, or any claim whatsoever) (collectively,
“Damages”)
to
which the Company may become subject, but only if, and to the extent (a) the
claims reduce the amounts in the Trust Account available for payment to holders
of the IPO Shares in the event of a liquidation of the Trust Account and (b)
the
claims are made (i) by a vendor or service provider for services rendered,
or
products sold, to the Company; (ii) by a creditor; or (iii) by a prospective
Target Business arising out of any negotiations, contracts or agreements with
the Company, provided that such indemnity shall not apply to any amounts claimed
owed to a third party, including a Target Business, who executed a waiver of
any
right, title, interest or claim of any kind in or to the Trust Account, or
as to
any claims under the Company’s obligation to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act of 1933,
as
amended. In the case of the Company’s dissolution and liquidation, the
undersigned understands that the Company expects that all costs and expenses
associated with implementing the Company’s plan of distribution, as well as
payments to any creditors, will be funded from amounts remaining out of the
$50,000 of proceeds from the IPO held outside the Trust Account and from the
up
to $2.5 million in interest income on the balance of the Trust Account that
will
be released to the Company to fund its working capital requirements. Should
the
aforementioned funds not be sufficient, the undersigned hereby agrees to
reimburse the Company for its out-of-pocket costs associated with its
dissolution and liquidation, excluding any special, indirect or consequential
costs, such as litigation, pertaining to the dissolution and liquidation and
agrees not to seek repayment for such costs. The undersigned hereby represents
and warrants to the Company that it is an accredited investor as such term
is
defined in Regulation D under the Securities Act of 1933, as
amended.
14. The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to the Underwriters and its legal representatives
or
agents (including any investigative search firm retained by the Underwriters)
any information they may have about the undersigned’s background and finances
(“Information”).
Neither the Underwriters nor its agents shall be violating the undersigned’s
right of privacy in any manner in requesting and obtaining the Information
and
the undersigned hereby releases them from liability for any damage whatsoever
in
that connection.
15. The
undersigned acknowledges and understands that the Company and the Underwriters
will rely upon the agreements, representations and warranties set forth herein
in proceeding with the IPO. Nothing contained herein shall be deemed to render
the Underwriters a representative of, or a fiduciary with respect to, the
Company, its stockholders, or any creditor or vendor of the Company with respect
to the subject matter hereof.
16. This
letter agreement shall be binding on the undersigned and its respective
successors, heirs, representatives and assigns. This letter agreement shall
terminate on the earlier of (a) the consummation of a Business Combination
and
(b) the Liquidation Date; provided that such termination shall not relieve
the
undersigned from liability for any breach of this agreement prior to its
termination.
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17. This
letter agreement shall be governed by and interpreted and construed in
accordance with the laws of the State of New York applicable to contracts formed
and to be performed entirely within the State of New York, without regard to
the
conflicts of law provisions thereof to the extent such principles or rules
would
require or permit the application of the laws of another
jurisdiction.
18. No
term
or provision of this letter agreement may be amended, changed, waived, altered
or modified except by written instrument executed and delivered by the party
against whom such amendment, change, waiver, alteration or modification is
to be
enforced.
19. As
used
herein:
| l |
“Affiliate”
shall mean, with respect to a specified person, any member of the
family
of the person specified or any entity or person that directly or
indirectly controls is controlled by or is under common control with
the
person specified.
|
| l |
“Business
Combination”
shall mean the Company’s acquisition through a merger, capital stock
exchange, asset or stock acquisition, exchangeable share transaction,
reorganization, joint venture or other similar business combination
of one
or more Target Businesses with a fair market value of at least 80.0%
of
the Company’s net assets held in the Trust Account (exclusive of taxes
payable by the Company and the Underwriters’ deferred underwriting
discounts and commissions held in the Trust Account) at the time
the
Company enters into a definitive agreement providing for the Business
Combination; the Company will proceed with a Business Combination
only if:
(i) a majority of the shares of Common Stock voted by the Public
Stockholders are voted in favor of the Business Combination, (ii)
Public
Stockholders owning no more than one share less than 40.0% of the
IPO
Shares both vote against the proposed Business Combination, or the
Extended Period, as the case may be, and exercise their redemption
rights,
on a cumulative basis and (iii) a majority of the shares of Common
Stock
outstanding have approved an amendment to the Company’s Amended and
Restated Certificate of Incorporation to provide for perpetual
existence.
|
| l |
“Existing
Holder”
shall mean any holder of the Company’s securities immediately prior to the
completion of the IPO.
|
| l |
“Extended
Period”
shall mean the 12 month extension to the 24 month time period within
which
the Company must complete a Business Combination; the Company will
extend
the period of time to 36 months only if: (i) the Company has entered
into
a definitive agreement with respect to a Business Combination within
24
months from the date of the Prospectus; (ii) a majority of the shares
of
Common Stock voted by the Public Stockholders are voted in favor
of the
Extended Period; (iii) Public Stockholders owning no more than one
share
less than 40.0% of the IPO Shares both exercise their redemption
rights
and vote against the Extended Period; and (iv) a majority of the
shares of
Common Stock outstanding have approved an amendment to the Company’s
Amended and Restated Certificate of Incorporation extending the Company’s
corporate life to 36 months from the date of the
Prospectus.
|
| l |
“Founders
Units”
shall mean the 2,875,000 units purchased from the Company by the
undersigned on March 11, 2008 (up to 375,000 of which Founders Units
are
subject to forfeiture by the undersigned to the extent that the
Underwriters do not exercise their over-allotment option) for a purchase
price of $25,000, or approximately $0.009 per Founders Unit. Each
Founders
Unit consists of one share of Common Stock (each a “Founders
Share”)
and one warrant to purchase one share of Common Stock (each a
“Founders
Warrant”).
|
5
| l |
“Insider
Warrants”
shall mean the 3,050,000 warrants the undersigned has committed to
purchase at a price of $1.00 per warrant for an aggregate purchase
price
of $3,050,000 in a private placement that will occur immediately
prior to
the date of the Prospectus.
|
| l |
“IPO
Shares”
shall mean the shares of Common Stock underlying the Units issued
in the
IPO.
|
| l |
“Public
Stockholders”
shall mean purchasers of Common Stock in the IPO or in the secondary
market, including any of the Company’s officers or directors or their
Affiliates, including the undersigned, to the extent that they purchase
or
acquire Common Stock in the IPO or in the secondary
market.
|
| l |
“Registration
Statement”
shall mean the Company’ Registration Statement on Form S-1 (File No.
333-149812), as amended.
|
| l |
“Target
Business”
shall mean one or more operating businesses or assets, which, after
completion of the IPO, the Company may target for a Business
Combination.
|
| l |
“Trust
Account”
shall mean the trust account established under the Investment Management
Trust Agreement, dated as of [________], 2008, by and between the
Company
and Continental Stock Transfer & Trust
Company.
|
| XXXXXXX’X COVE HOLDINGS, LLC | ||
| |
|
|
| By: | ||
|
Name: |
||
| Title: | ||
| Accepted and agreed: | ||||
| XXXXXXX’X COVE ACQUISITION CORPORATION | ||||
| By: | ||||
|
Name: |
||||
|
Title:
|
||||
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