Re: Initial Public Offering
Exhibit 10.3
___, 2010
Xxxxx Acquisition Company II, Inc.
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: General Counsel
| Re: | Initial Public Offering |
Gentlemen:
This letter (“Letter Agreement”) is being delivered to you in accordance with the Underwriting
Agreement (the “Underwriting Agreement”) entered into by and between Xxxxx Acquisition Company II,
Inc., a Delaware corporation (the “Company”) and Citigroup Global Markets Inc., as representative
of the several underwriters (the “Underwriters”), relating to an underwritten initial public
offering (the “Offering”), of 15,000,000 of the Company’s units (the “Units”), each comprised of
one share of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), and one
warrant exercisable for one share of Common Stock (each, a “Warrant”). The Units sold in the
Offering shall be quoted and traded on the Over-the-Counter Bulletin Board pursuant to a
registration statement on Form S-1 and prospectus (the “Prospectus”) filed by the Company with the
Securities and Exchange Commission (the “Commission”). Certain capitalized terms used herein are
defined in paragraph 8 hereof.
In order to induce the Company and the Underwriters to enter into the Underwriting Agreement
and to proceed with the Offering, the Company has entered into that certain letter agreement, dated
as of ___, 2010, by and among Xxxxxx X. Xxxxx (the “Founder”) and HH-HACII, L.P. (the
“Sponsor”).
Therefore, in order to induce the Company and the Underwriters to enter into the Underwriting
Agreement and to proceed with the Offering and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned xxxxxx agrees with the
Company as follows:
1. The undersigned xxxxxx agrees that in the event that the Company fails to consummate a
Business Combination (as defined in the Underwriting Agreement) within 21 months from the closing
of the Offering, he or she shall take all reasonable steps to
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cause the Company to (i) cease all operations except for the purpose of winding up, (ii) as
promptly as reasonably possible, redeem 100% of the Common Stock held by the Public Stockholders,
at a per-share price, payable in cash, equal to the aggregate amount including interest then on
deposit in the Trust Account, but net of any taxes payable (less up to $100,000 of such net
interest to pay reasonable expenses of dissolution), divided by the number of shares of Common
Stock then outstanding, together with the contingent right to receive, in cash, following the
Company’s dissolution, a pro rata share of the balance of the Company’s net assets, if any, and
(iii) as promptly as reasonably possible following such redemption, subject to the approval of the
Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate,
subject in each case to the Company’s obligations under Delaware law to provide for claims of
creditors and other requirements of applicable law.
[Underlined paragraph 2 herein to be included in Director letter only]
2. (a) The undersigned agrees that if the Company seeks stockholder approval of a proposed
Business Combination, then in connection with such proposed Business Combination, he or she shall
(i) vote all the Founder Shares owned by him or her in accordance with the majority of the votes
cast by the Public Stockholders and (ii) vote any shares acquired by him or her in the Offering or
the secondary public market in favor of such proposed Business Combination.
(b) To the extent that the Underwriters do not exercise their over-allotment option to
purchase an additional 2,250,000 shares of Common Stock (as described in the Prospectus), the
undersigned agrees that he or she shall return to the Company for cancellation, at no cost, the
number of Founder Shares held by him or her determined by multiplying 1,607 by a fraction, (i) the
numerator of which is 2,250,000 minus the number of shares of the Common Stock purchased by the
Underwriters upon the exercise of their over-allotment option, and (ii) the denominator of which is
2,250,000. The undersigned further agrees that to the extent that (a) the size of the Offering is increased or
decreased and (b) the undersigned has either purchased or sold shares of the Common Stock or
an adjustment to the number of Founder Shares has been effected by way of a stock split, stock
dividend, reverse stock split, contribution back to capital or otherwise, in each case in connection
with such increase or decrease in the size of the Offering, then (i) the references to 2,250,000 in
the numerator and denominator of the formula in the immediately preceding sentence shall be
changed to a number equal to 15% of the number of shares included in the Units issued in the
Offering and (ii) the reference to 1,607 in the formula set forth in the immediately preceding
sentence shall be adjusted to such number of shares of the Common Stock that the undersigned
would have to return to the Company in order to hold 0.0625% of the Company’s issued and
outstanding shares after the Offering (assuming the Underwriters do not exercise their over-allotment option). In addition, a portion of the Founder Shares held by him or her in an amount equal to
0.0125% of the Company’s issued and outstanding shares immediately after the Offering, shall be
returned to the Company for cancellation, at no cost, in the event that the last sales price of the
Company’s stock does not equal or exceed $12.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any
30-trading day period within twenty-four (24) months following the closing of the Company’s initial Business
Combination.
(c)
The undersigned acknowledges that he or she has no right, title, interest or claim of any kind in or to
any monies held in the Trust Account or any other asset of the Company as a result of any liquidation of the Company with respect to
the Founder Shares held by him or her. The undersigned hereby further waives, with respect to any
shares of the Common Stock held by him or
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her, any redemption rights he or she may have in connection with the consummation of a Business Combination, including, without limitation, any such rights available in the context of a
stockholder vote to approve such Business Combination or in the context of a tender offer made by
the Company to purchase shares of the Common Stock (although the undersigned shall be entitled to
redemption and liquidation rights with respect to any shares of the Common Stock (other than the
Founder Shares) he or she holds if the Company fails to consummate a Business Combination within 21
months from the date of the closing of the Offering).
(d) In the case of any of the Founder Shares owned by the undersigned, until (A) one year
after the completion of the Company’s initial Business Combination or earlier if, subsequent to the
Company’s initial Business Combination (such applicable period being the “Founder Lock-Up Period”),
the last sales price of the Common Stock equals or exceeds $12.00 per share (as adjusted for stock
splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days
within any 30-trading day period commencing at least 150 days after the Company’s initial Business
Combination or (B) the Company consummates a subsequent liquidation, merger, stock exchange or
other similar transaction which results in all of the Company’s stockholders having the right to
exchange their shares of Common Stock for cash, securities or other property, the undersigned shall
not, except as described in the Prospectus, (i) sell, offer to sell, contract or agree to sell,
hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of,
directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease
a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated thereunder, with respect to
the Founder Shares owned by him or her, (ii) enter into any swap or other arrangement that
transfers to another, in whole or in part, any of the economic consequences of ownership of any of
the Founder Shares owned by him or her, whether any such transaction is to be settled by delivery
of the Common Stock or such other securities, in cash or otherwise, or (iii) publicly announce any
intention to effect any transaction specified in clause (i) or (ii).
(e) Notwithstanding the provisions contained in 2(d) herein, the undersigned may transfer
the Founder Shares owned by him or her (i) to the Company’s officers or directors, any affiliate or
family member of any of the Company’s officers or directors or any affiliate of the Sponsor or to
any limited partner(s) of the Sponsor; (ii) by gift to a member of the undersigned’s immediate
family or to a trust, the beneficiary of which is a member of the undersigned’s immediate family,
an affiliate of the undersigned or to a charitable organization; (iii) by virtue of the laws of
descent and distribution upon death of the undersigned; (iv) pursuant to a qualified domestic
relations order; (v) by virtue of the laws of the state of Delaware or the Sponsor’s limited
partnership agreement upon dissolution of the Sponsor; (vi) in the event of the Company’s
liquidation prior to
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the completion of the Company’s initial Business Combination; or (vii) in the
event that the Company consummates a liquidation, merger, stock exchange or other similar transaction that
results in all of its stockholders having the right to exchange their shares of the Common Stock
for cash, securities or other property subsequent to the consummation of the Company’s initial
Business Combination; provided, however, that, in the case of clauses (i) through (iv), these
permitted transferees enter into a written agreement with the Company agreeing to be bound by the
transfer restrictions in 2(d) herein.
(f) Further, the undersigned agrees that after the Founder Lock-Up Period has elapsed, the
Founder Shares owned by him or her shall only be transferable or saleable pursuant to a sale
registered under the Securities Act or pursuant to an available exemption from registration under
the Securities Act. The Company and the undersigned each acknowledge that pursuant to that certain
registration rights agreement to be entered into between the Company, the Founder and the Sponsor,
each of the Founder and the Sponsor may request that a registration statement relating to the
Founder Shares be filed with the Commission prior to the end of the Founder Lock-Up Period;
provided, however, that such registration statement does not become effective prior to the end of
the Founder Lock-Up Period.
(g)Each of the Company and the undersigned understand and agree that the transfer
restrictions set forth in 2(d) herein shall supersede any and all transfer restrictions relating to
(i) the Founder Shares set forth in that certain Securities Purchase Agreement, effective as of
June 15, 2010, by and between the Company and the Sponsor, and (ii) the Sponsor Warrants set forth
in that certain Sponsor Warrants Purchase Agreement, effective as of June 23, 2010, by and between
the Company and the Sponsor.
(h) During the period commencing on the effective date of the Underwriting Agreement and
ending 180 days after such date, the undersigned shall not (i) sell, offer to sell, contract or
agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree
to dispose of, directly or indirectly, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated
thereunder, with respect to any Units, shares of Common Stock, Warrants or any securities
convertible into, or exercisable, or exchangeable for, shares of Common Stock owned by him or her,
(ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any
of the economic consequences of ownership of any Units, shares of Common Stock, Warrants or any
securities convertible into, or exercisable, or exchangeable for, shares of Common Stock owned by
him or her, whether any such transaction is to be settled by delivery of such securities, in cash
or otherwise, or (iii) publicly announce any intention to effect any transaction specified in
clause (i) or (ii).
[Underlined
paragraphs 3 and 4 herein to be included in Officer letter only]
3. During the period commencing on the effective date of the Underwriting
Agreement and ending 180 days after such date, the undersigned shall not (i) sell, offer to sell,
contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose
of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent
position or liquidate or decrease a call equivalent position within the meaning of Section 16 of
the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission
promulgated thereunder, with respect to any Units, shares of Common Stock, Warrants or any
securities convertible into, or exercisable, or exchangeable for, shares of Common Stock owned by
him or her, (ii) enter into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of any Units, shares of Common Stock, Warrants
or any securities convertible into, or exercisable, or exchangeable for, shares of Common Stock
owned by him or her, whether any such transaction is to be settled by delivery of such
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securities, in cash or otherwise, or (iii) publicly announce any intention to effect any transaction specified
in clause (i) or (ii).
4. (a) In order to minimize potential conflicts of interest that may arise from multiple
corporate affiliations, the undersigned hereby agrees that until the earliest of the Company’s
initial Business Combination, liquidation or such time as he or she ceases to be an officer of the
Company, he or she shall present to the Company for its consideration, prior to presentation to any
other entity, any business opportunity with an enterprise value of $100 million or more, subject to
any pre-existing fiduciary or contractual obligations he or she might
have.
(b) The undersigned understands that the Company may effect a Business Combination with a
single target business or multiple target businesses simultaneously and agrees that he or she will
not participate in the formation of, or become an officer or director of, any blank check company,
until the Company has entered into a definitive agreement regarding its initial Business
Combination or the Company has failed to complete an initial Business Combination within 21 months
from the closing of the Offering; provided, however, that nothing contained herein shall override
the undersigned’s fiduciary obligations to any entity with which he or she is currently directly or
indirectly associated or affiliated or by whom he or she is currently
employed.
(c) The undersigned hereby agrees and acknowledges that (i) each of the Underwriters and the
Company would be irreparably injured in the event of a breach by the undersigned of his or her
obligations under paragraphs 2(a) and/or 2(b) hereof[3(a) and/or 3(b)], (ii) monetary damages may
not be an adequate remedy for such breach and (iii) the non-breaching party shall be entitled to
injunctive relief, in addition to any other remedy that such party may have in law or in equity, in
the event of such breach.
5. The undersigned’s biographical information furnished to the Company and attached here as
Exhibit A is true and accurate in all respects and does not omit any material information
with respect to the undersigned’s background. The undersigned’s questionnaire furnished to the
Company and attached hereto as Exhibit B 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
fraud, (ii) relating to any financial transaction or handling of funds of another person, or (iii)
pertaining to any dealings in any securities and the
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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.
6. Except as disclosed in the Prospectus, neither the undersigned nor any affiliate of the
undersigned, shall receive any finder’s fee, reimbursement, consulting fee, monies in respect of
any repayment of a loan or other compensation prior to, or in connection with any services rendered
in order to effectuate the consummation of the Company’s initial Business Combination (regardless
of the type of transaction that it is), other than the following:
(a) repayment of a $225,000 loan made to the Company by the Founder, pursuant to a Promissory
Note dated June 15, 2010;
(b) payment of an aggregate of $10,000 per month to Xxxxx Holdings Operating LLC, an affiliate
of the Founder, for office space, secretarial and administrative services, pursuant to an
Administrative Support Agreement, dated June 23, 2010;
(c) reimbursement for any reasonable out-of-pocket expenses related to identifying,
investigating and consummating an initial Business Combination, so long as no proceeds of the
Offering held in the Trust Account may be applied to the payment of such expenses prior to the
consummation of a Business Combination, except that the Company may, for purposes of funding its
working capital requirements (including paying such expenses), receive from the Trust Account up to $2,250,000 in interest income
(net of franchise and income taxes payable), in the event the underwriters’ over-allotment option in
the Offering is not exercised in full, or $2,587,500 in interest income (net of franchise and income taxes payable), if the underwriters’ over-allotment option in the Offering is exercised in full
(or, if the over-allotment option is not exercised in full, but is exercised in part, the amount in
interest income (net of franchise and income taxes payable) to be released shall be increased
proportionally in relation to the proportion of the over-allotment option which was exercised); and
(d) repayment of loans, if any, and on such terms as to be determined by the Company from time
to time, made by the Sponsor or an affiliate of the Sponsor or certain of the Company’s officers
and directors to finance transaction costs in connection with an intended initial Business
Combination, provided, that, if the Company does not consummate an initial Business Combination, a
portion of the working capital held outside the Trust Account may be used by the Company to repay
such loaned amounts so
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long as no proceeds from the Trust Account are used for such repayment;
provided, however, that the Company may, for purposes of funding its
working capital requirements (including repaying such loans),
receive from the Trust Account up to $2,250,000 in interest income (net of taxes payable on such
interest), in the event the underwriters’ over-allotment option in the Offering is not
exercised in full, or $2,587,500 in interest income (net of taxes payable on such interest), if the
underwriters’ over-allotment option in the Offering is exercised in full (or, if the over-allotment
option is not exercised in full, but is exercised in part, the amount in interest income (net of
taxes payable on such interest) to be released shall be increased proportionally in relation to the
proportion of the over-allotment option which was exercised).
7. The undersigned has full right and power, without violating any agreement to which he or
she is bound (including, without limitation, any non-competition or non-solicitation agreement with
any employer or former employer), to enter into this Letter Agreement and to serve as an officer of
the Company or as a director on the board of directors of the Company, as applicable, and hereby
consents to being named in the Prospectus as an officer and/or as a director of the Company, as
applicable.
8. As used in this Letter Agreement, (i) “Business Combination” shall mean a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar business combination,
involving the Company and one or more businesses; (ii) “Founder Shares” shall mean the 3,285,714
shares of the Common Stock of the Company acquired by the Sponsor for an aggregate purchase price
of $25,000, or approximately $0.0076 per share, prior to the consummation of the Offering, adjusted to
reflect the return and cancellation of 821,428 of such shares on October 8, 2010; (iii)
“Public Stockholders” shall mean the holders of securities issued in the Offering; and (iv) “Trust
Account” shall mean the trust fund into which a portion of the net proceeds of the Offering will be
deposited.
9. This Letter Agreement, and the exhibits thereto, constitute the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof and supersede all prior
understandings, agreements, or representations by or among the parties hereto, written or oral, to
the extent they relate in any way to the subject matter hereof or the transactions contemplated
hereby. This Letter Agreement may not be changed, amended, modified or waived (other than to
correct a typographical error) as to any particular provision, except by a written instrument
executed by the parties hereto.
10. Neither party may assign either this Letter Agreement or any of its rights, interests, or
obligations hereunder without the prior written consent of the other party. Any purported
assignment in violation of this paragraph shall be void and ineffectual and shall not operate to
transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be
binding on the undersigned and each of his or her heirs, personal representatives and assigns.
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11. This Letter Agreement shall be governed by and construed and enforced in accordance with
the laws of the State of Texas, without giving effect to conflicts of law
principles that would result in the application of the substantive laws of another jurisdiction.
The parities hereto (i) agree that any action, proceeding, claim or dispute arising out of, or
relating in any way to, this Letter Agreement shall be brought and enforced in the courts of Dallas
County, in the State of Texas, and irrevocably submits to such jurisdiction and venue, which
jurisdiction and venue shall be exclusive and (ii) waives any objection to such exclusive
jurisdiction and venue or that such courts represent an inconvenient forum.
12. Any notice, consent or request to be given in connection with any of the terms or
provisions of this Letter Agreement shall be in writing and shall be sent by express mail or
similar private courier service, by certified mail (return receipt requested), by hand delivery or
facsimile transmission.
13. This Letter Agreement shall terminate on the earlier of (i) the expiration of the Founder
Lock-up Period, or (ii) the liquidation of the Company; provided, however, that
this Letter Agreement shall earlier terminate in the event that the Offering is not consummated and
closed by December 31, 2010.
[Signature page follows]
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| Sincerely, |
||||
| By: | ||||
| Name: | ||||
| Undersigned | ||||
Acknowledged and Agreed:
| XXXXX ACQUISITION COMPANY II, INC. |
||||
| By: | ||||
| Xxxxxx X. Xxxxxx | ||||
| President and Chief Executive Officer | ||||
9
Exhibit A
(Attached)
10
Exhibit B
(Attached)
11
