SECURITIES ESCROW AGREEMENT
Exhibit 10.5
This Securities Escrow Agreement, dated as of September 19, 2024 (“Agreement”), by and among Xxxxxx Acquisition Corp, a Cayman Islands exempted company (the “Company”), the initial shareholders listed on Exhibit A attached hereto (each, an “Initial Shareholder” and collectively the “Initial Shareholders”) and Continental Stock Transfer & Trust Company, a New York corporation (the “Escrow Agent”).
WHEREAS, the Company has entered into an Underwriting Agreement, dated as of September 19, 2024 (“Underwriting Agreement”), with EarlyBirdCapital, Inc. (“EBC”), acting as the representative of the underwriters (collectively, the “Underwriters”), pursuant to which, among other matters, the Underwriters have agreed to purchase 6,000,000 units (“Units”) of the Company, plus an additional 900,000 Units if the Underwriters exercise their over-allotment option in full. Each Unit consists of one ordinary share of the Company, $0.0001 par value (“Ordinary Shares”), and one right, with each right entitling the holder to receive one-tenth of an Ordinary Share, all as more fully described in the Company’s final Prospectus, dated September 19, 2024 (“Prospectus”), comprising part of the Company’s Registration Statement on Form S-1 (File No. 333-280564) under the Securities Act of 1933, as amended (“Registration Statement”), declared effective on September 19, 2024 (“Effective Date”).
WHEREAS, the Initial Shareholders have agreed as a condition of the sale of the Units to deposit their Ordinary Shares, as set forth opposite their respective names in Exhibit A attached hereto, in escrow as hereinafter provided.
WHEREAS, the Company and the Initial Shareholders desire that the Escrow Agent accept the Ordinary Shares, in escrow, to be held and disbursed as hereinafter provided.
IT IS AGREED:
1. Appointment of Escrow Agent. The Company and the Initial Shareholders hereby appoint the Escrow Agent to act in accordance with and subject to the terms of this Agreement and the Escrow Agent hereby accepts such appointment and agrees to act in accordance with and subject to such terms.
2. Deposit of Escrow Shares. On or prior to the date hereof, the Initial Shareholders’ Ordinary Shares set forth on Exhibit A hereto shall be deposited in escrow, to be held and disbursed subject to the terms and conditions of this Agreement. The Initial Shareholders acknowledge that the Ordinary Shares deposited in escrow will be legended to reflect the deposit of such shares under this Agreement.
3. Disbursement of the Escrow Shares.
3.1 If the over-allotment option to purchase all or a portion of the additional 900,000 Units of the Company is not exercised in full within 45 days of the date of the Prospectus (as described in the Underwriting Agreement), the Initial Shareholders agree that the Escrow Agent shall return to the Company for cancellation, at no cost, the number of Ordinary Shares determined by multiplying 225,000 by a fraction, (i) the numerator of which is 900,000 minus the number of Ordinary Shares included in the Units purchased by the Underwriters upon the exercise of the over-allotment option, and (ii) the denominator of which is 900,000. The Company shall promptly provide notice to the Escrow Agent of the expiration or termination of the over-allotment option and the number of Units, if any, purchased by the Underwriters in connection with the exercise thereof.
3.2 Except as otherwise set forth herein, the Escrow Agent shall hold the shares remaining after any cancellation required pursuant to Section 3.1 above (such remaining shares to be referred to herein as the “Escrow Shares”) until the earlier of (i) the six-month anniversary of the date of the consummation of the Company’s initial Business Combination (as defined in the Registration Statement), (ii) any time after the 90th day after the consummation of the Company’s initial Business Combination where the volume weighted average price of the Ordinary Shares equals or exceeds $12.00 (as adjusted for share splits, dividends, combinations or similar actions) for twenty trading days out of any thirty consecutive trading day period and (iii) the date on which subsequent to the initial Business Combination, the Company consummates a liquidation, merger, share exchange or other similar transaction which results in all of the Company’s shareholders having the right to exchange their Ordinary Shares for cash, securities or other property (such period of time during which the Escrow Shares are held in escrow, the “Escrow Period”). Upon the achievement of any of the conditions set forth above, the Company shall promptly provide notice to the Escrow Agent, in form reasonably acceptable to the Escrow Agent. Upon completion of the Escrow Period, the Escrow Agent shall disburse such amount of each Initial Shareholders’ Escrow Shares to the Initial Shareholders. The Escrow Agent shall have no further duties hereunder after the disbursement of the Escrow Shares in accordance with this Section 3.2.
3.3 Notwithstanding the provisions of Section 3.2, if the Escrow Agent is notified by the Company pursuant to Section 6.7 hereof that the Company’s Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date hereof, by and between the Company and the Escrow Agent as trustee thereunder) is being liquidated, then the Escrow Agent shall deliver the certificates representing the Escrow Shares to the Initial Shareholders promptly after the public shareholders are paid the liquidating distributions and shall have no further duties hereunder.
4. Rights of Initial Shareholders in Escrow Shares.
4.1 Voting Rights as a Shareholder. Subject to the terms of the Insider Letter described in Section 4.4 hereof and except as herein provided, the Initial Shareholders shall retain all of their rights as shareholders of the Company during the Escrow Period, including, without limitation, the right to vote such shares.
4.2 Dividends and Other Distributions in Respect of the Escrow Shares. During the Escrow Period, all dividends payable in cash with respect to the Escrow Shares shall be paid to the Initial Shareholders, but all dividends payable in shares or other non-cash property (“Non-Cash Dividends”) shall be delivered to the Escrow Agent to hold in accordance with the terms hereof. As used herein, the term “Escrow Shares” shall be deemed to include the Non-Cash Dividends distributed thereon, if any.
4.3 Restrictions on Transfer. During the Escrow Period, the only permitted transfers of the Escrow Shares will be (i) to the Company’s officers or directors, any affiliates or family members of any of the Company’s officers or directors, any members of the Company’s Initial Shareholders, or any affiliate of the Company’s Initial Shareholders; (ii) in the case of an individual, by gift to a member of the individual’s immediate family, to a trust, the beneficiary of which is a member of the individual’s immediate family or an affiliate of such person, or to a charitable organization; (iii) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (iv) in the case of an individual, pursuant to a qualified domestic relations order; (v) by private sales or transfers made at or prior to the consummation of a Business Combination at prices no greater than the price at which the securities were originally purchased; (vi) in the case of an entity, by virtue of the laws of the jurisdiction of incorporation or charter document of any Initial Shareholder upon dissolution of such Initial Shareholder; or (vii) to the Company for no value for cancellation in connection with the consummation of a Business Combination; provided, however, that in each case (except for clause (vii) or with the Company’s consent), these permitted transferees must enter into a written agreement agreeing to be bound by this Agreement and these transfer restrictions and the other restrictions contained in the Insider Letter (as defined below).
4.4 Insider Letter. Each of the Initial Shareholders has executed a letter agreement with EBC and the Company, dated as of the date hereof, and the form of which is filed as an exhibit to the Registration Statement (the “Insider Letter”), respecting the rights and obligations of such Initial Shareholder in certain events, including but not limited to the liquidation of the Company.
5. Concerning the Escrow Agent.
5.1 Good Faith Reliance. The Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons. The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto.
5.2 Indemnification. Subject to Section 5.8 hereof, the Escrow Agent shall be indemnified and held harmless by the Company from and against any expenses, including reasonable counsel fees and disbursements, or loss suffered by the Escrow Agent in connection with any action, suit or other proceeding involving any claim which in any way, directly or indirectly, arises out of or relates to this Agreement, the services of the Escrow Agent hereunder, or the Escrow Shares held by it hereunder, other than expenses or losses arising from the gross negligence or willful misconduct of the Escrow Agent. Promptly after the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action, suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing. In the event of the receipt of such notice, the Escrow Agent, in its sole discretion, may commence an action in the nature of interpleader in an appropriate court to determine ownership or disposition of the Escrow Shares or it may deposit the Escrow Shares with the clerk of any appropriate court or it may retain the Escrow Shares pending receipt of a final, non-appealable order of a court having jurisdiction over all of the parties hereto directing to whom and under what circumstances the Escrow Shares are to be disbursed and delivered. The provisions of this Section 5.2 shall survive in the event the Escrow Agent resigns or is discharged pursuant to Sections 5.5 or 5.6 below.
5.3 Compensation. The Escrow Agent shall be entitled to reasonable compensation from the Company for all services rendered by it hereunder. The Escrow Agent shall also be entitled to reimbursement from the Company for all expenses paid or incurred by it in the administration of its duties hereunder including, but not limited to, all counsel, advisors’ and agents’ fees and disbursements and all taxes or other governmental charges.
5.4 Further Assurances. From time to time on and after the date hereof, the Company and the Initial Shareholders shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.
5.5 Resignation. The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by its giving the other parties hereto written notice and such resignation shall become effective as hereinafter provided. Such resignation shall become effective at such time that the Escrow Agent shall turn over to a successor escrow agent appointed by the Company, the Escrow Shares held hereunder. If no new escrow agent is so appointed within the 60 day period following the giving of such notice of resignation, the Escrow Agent may deposit the Escrow Shares with any court it reasonably deems appropriate.
5.6 Discharge of Escrow Agent. The Escrow Agent shall resign and be discharged from its duties as escrow agent hereunder if so requested in writing at any time by the other parties hereto, jointly, provided, however, that such resignation shall become effective only upon acceptance of appointment by a successor escrow agent as provided in Section 5.5.
5.7 Liability. Notwithstanding anything herein to the contrary, the Escrow Agent shall not be relieved from liability hereunder for its own gross negligence or its own willful misconduct.
5.8 Waiver. The Escrow Agent hereby waives any right of set-off or any other right, title, interest or claim of any kind (“Claim”) in, or to any distribution of, the Trust Account and hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against the Trust Account for any reason whatsoever.
6. Miscellaneous.
6.1 Governing Law. This Agreement shall for all purposes be deemed to be made under and shall be construed in accordance with the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.
6.2 Third Party Beneficiaries. The Escrow Agent and the Initial Shareholders hereby acknowledge that EBC is a third party beneficiary of this Agreement and this Agreement may not be modified or changed without the prior written consent of EBC.
6.3 Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the subject matter hereof and, except as expressly provided herein, may not be changed or modified except by an instrument in writing signed by the party to the charged.
6.4 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation thereof.
6.5 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the respective parties hereto and their legal representatives, successors and assigns.
6.6 Notices. Any notice or other communication required or which may be given hereunder shall be in writing and either be delivered personally or be mailed, certified or registered mail, or by private national courier service, return receipt requested, postage prepaid, and shall be deemed given when so delivered personally or, if mailed, two days after the date of mailing, as follows:
| If to the Company, to: | |
| Xxxxxx Acquisition Corp | |
| 000 Xxxxxxxxx Xxx, Xxxxx 0000 | |
| New York, NY 10170 | |
| Attn: | Xxx Xxxxx, Chief Executive Officer |
| If to an Initial Shareholder, to the address set forth in Exhibit A. | |
| and | |
| If to the Escrow Agent, to: | |
| Continental Stock Transfer & Trust Company 0 Xxxxx Xxxxxx, 00xx Xxxxx | |
| New York, New York 10004 | |
| Attn: | Compliance Department |
| A copy (which copy shall not constitute notice) sent hereunder shall be sent to: | |
| EarlyBirdCapital, Inc. | |
| 000 Xxxxxxx Xxxxxx | |
| New York, New York 10017 | |
| Attn: | General Counsel |
| and: | |
| XxXxxxxxx Will & Xxxxx | |
| One Vanderbilt Avenue | |
| New York, New York 10017 | |
| Attn: | Xxxxxx Xxxxx, Esq. |
| Email: | xxxxxx@xxx.xxx |
| and: | |
| Xxxxxxxx Xxxxxx | |
| 000 Xxxxxxxxx Xxxxxx | |
| 44th Floor | |
| New York, New York 10174 | |
| Attn: | Xxxxx X. Xxxxxx and Xxxxxxx X. Xxxxxxx |
| Email: | XXxxxxx@xxxxxxxx.xxx, XXxxxxxx@xxxxxxxx.xxx |
The parties may change the persons and addresses to which the notices or other communications are to be sent by giving written notice to any such change in the manner provided herein for giving notice.
6.7 Liquidation of the Company. The Company shall give the Escrow Agent written notification of the liquidation and dissolution of the Company in the event that the Company fails to consummate a Business Combination within the time period specified in the Prospectus.
[Signature Page Follows]
WITNESS the execution of this Agreement as of the date first above written.
| COMPANY: | ||
| XXXXXX ACQUISITION CORP | ||
| By: | /s/ Xxxxx Xxx | |
| Name: | Xxxxx Xxx | |
| Title: | CEO | |
| INITIAL SHAREHOLDERS: | ||
| /s/ Xxxxx Xxx | ||
| Xxxxx Xxx | ||
| Xxxxxx Holding LP | ||
| By: | /s/ Xxxx Xxxxx | |
| Name: | Xxxx (Xxxxxx) Xxxxx | |
| Title: | Manager of General Partner, Xxxxxx Management LLC | |
| CONTINENTAL STOCK TRANSFER & TRUST COMPANY | ||
| By: | /s/ Xxxxx Xxxxxxx | |
| Name: | Xxxxx Xxxxxxx | |
| Title: | Vice President | |
[Signature Page to Securities Escrow Agreement]
EXHIBIT A
| Name and Address of Initial Shareholder[1] | Number of Shares | |||
| Xxx Xxxxx | 862,500 | |||
| Xxxxxx Holding LP | 862,500 | |||
[1]The address of each of the individuals is c/o, Xxxxxx Acquisition Corp, 000 Xxxxxxxxx Xxx, Xxxxx 0000, Xxx Xxxx, XX 00000.
