EXHIBIT 3
CHICAGO INVESTMENTS INC.
6340 SOUTH 0000 XXXX
XXXXX 000
XXXX XXXX XXXX, XXXX 00000
January 3, 2008
Xxxxxx Bay Capital Management L.P.
000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx
Dear Sirs:
Reference is made to that certain Backstop Agreement (the "Backstop Agreement")
dated of even date herewith, by and between Xxxxxx Bay Fund LP ("Xxxxxx Bay"),
Chicago Investments Inc. ("CII"), Windy City Inc., ("Windy City"), Xxxx Xxxxxx
("Xxxxxx") and Xxxx Xxxxxxxx ("Xxxxxxxx"; together with Xxxxxx, Xxxxx City and
CII, the "Backstop Parties"). Capitalized terms used herein but not otherwise
defined herein shall have the respective meanings set forth in the Backstop
Agreement.
In connection with and in consideration of Xxxxxx Bay's acquisition of up to one
million shares of the common stock ("Common Stock"), par value $0.0001 per
share, of Echo Healthcare Acquisition Corp. ("Echo") at a price no greater than
$8.10 per share and reasonable efforts to assist brokers to cause such shares of
Common Stock to be voted in favor of the merger of Echo with XLNT Veterinary
Care, Inc. ("XLNT") and the other items of business to be considered at Echo's
upcoming Special Meeting of Stockholders to be held on January 4, 2008, and the
various fees and expenses incurred by Xxxxxx Bay in connection with the
foregoing, CII will deliver or cause to be delivered to Xxxxxx Bay 412,500
shares of Common Stock or such lesser number of shares of Common Stock together
with such number of shares of common stock, $0.001 par value, of XLNT that when
exchanged for Echo Common Stock in connection with the consummation of the
Merger will equal 412,500 shares of Common Stock. The Common Stock will be
delivered on or before the close of business on the tenth trading day following
the date of this letter agreement (the "Letter Agreement") but CII will use its
best efforts to cause such Common Stock to be delivered on or before the close
of business on the fifth trading day following the date of this Letter
Agreement.
This Letter Agreement grants to Xxxxxx Bay an irrevocable option (the "Put
Option") to sell to CII, and CII shall be obligated to purchase from Xxxxxx Bay,
all or any portion of up to 100,000 shares of Common Stock at a price of $7.50
per share of Common Stock
(the "Per Share Put Price"), for an aggregate price of $750,000 (the "Aggregate
Put Price"). To the extent any Put Shares (as defined below) acquired by Xxxxxx
Bay as contemplated above are acquired at a cost in excess of $8.00 per share,
then the Aggregate Put Price shall be increased by an amount equal to aggregate
consideration paid by Xxxxxx Bay for Put Shares in excess of $8.00 per share
(the "Put Price Increase") and the Per Share Put Price shall be correspondingly
adjusted to reflect the Put Price Increase on a per share basis. By way of
example, if Xxxxxx Bay pays $8.10 per share for 1,000,000 Put Shares acquired as
contemplated above, then the Aggregate Put Price of the Put Option shall be
increased by $100,000 to $850,000. The Put Option will be valid from the date
hereof until the earlier of (i) the 60th day after the date hereof and (ii) the
date that Xxxxxx Bay sells all of the Common Stock subject to the Put Option to
any third party (the "Option Period"). Xxxxxx Bay may exercise the Put Option,
in whole or in part, at any time or from time to time during the Option Period,
by delivering to CII written notice of exercise, which notice shall specify the
number of shares of Common Stock to be purchased by CII (the "Put Shares").
After the Option Period, neither Xxxxxx Bay nor its assigns may exercise the Put
Option.
The closing of the sale and purchase of the Put Shares pursuant to an exercise
of the Put Option (the "Closing") will occur on the third business day following
the delivery of such notice of exercise unless mutually agreed otherwise by CII
and Xxxxxx Bay. At the Closing, CII shall deliver to Xxxxxx Bay, in immediately
available funds, an amount equal to the Per Share Put Price, as adjusted on a
per share basis to reflect any Put Price Increase, multiplied by the number of
Put Shares specified in the notice of exercise and Xxxxxx Bay will deliver to
CII the Put Shares specified in the notice of exercise and will take such action
as may be reasonably necessary in order to transfer to CII good and marketable
title to such Put Shares, free and clear of all claims, liens and encumbrances
of any nature.
CII's obligation under this Agreement is secured by a deposit of cash in the
amount of $750,000 (the "Escrow Deposit") with Xxxxxx Xxxxxxxxx LLC, as escrow
agent, which amount shall be increased if and as necessary as contemplated above
by the Put Price Increase. The Escrow Deposit shall be held in an interest
bearing IOLTA trust account maintained by Xxxxxx Xxxxxxxxx in the ordinary
course of business with any interest not applied in payment of the Aggregate Put
Price to be paid over to CII upon termination of this Letter Agreement as
provided herein below. Xxxxxx Xxxxxxxxx, in its capacity as escrow agent, shall
be entitled to resign at any time and pay over the proceeds of the Escrow
Deposit to a substitute escrow agent who shall be engaged pursuant to the terms
of an escrow agreement approved by Xxxxxx Bay in its sole discretion and in the
event Xxxxxx Xxxxxxxxx shall be in receipt of conflicting instructions from the
parties to this Letter Agreement, Xxxxxx Xxxxxxxxx shall be entitled to pay the
Escrow Deposit (or any remaining portion thereof) into any court of competent
jurisdiction pending resolution by such court of any disputes between the
parties.
To the extent CII fails to satisfy any of its obligations under this Agreement,
Xxxxxx Bay shall be entitled to deliver to the escrow agent a copy of the notice
of exercise together with the Put Shares tendered pursuant to such notice of
exercise and an affidavit from a duly authorized officer of Xxxxxx Bay
certifying that the notice of exercise was delivered
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to CII or its permitted assigns, the Put Shares were duly and properly tendered
as required by this Agreement and that CII or its permitted assigns failed to
deliver the Put Price for the Put Shares by the Closing. Upon receipt of the
foregoing, the escrow agent shall deliver a copy of such affidavit to CII or its
permitted assigns and shall then disburse to Xxxxxx Bay or its assign within
three business days an amount equal to the Per Share Put Price multiplied by the
number of Put Shares then being tendered against delivery by Xxxxxx Bay or its
assign of such Put Shares provided, however, that in the event Xxxxxx Bay
delivered the Put Shares to CII then Xxxxxx Bay shall so state in the
certificate referenced above. At the first to occur of the expiration of the
Option Period (so long as the Put Option has not been exercised as of such date)
and the disbursement of the full amount of the escrow upon exercise of the Put
Option in full, the escrow agent shall deliver to CII or its permitted assign
any Put Shares that have been received by the escrow agent along with any
remaining balance of the Escrow Deposit and thereafter the escrow agent shall be
discharged.
Xxxxxx Bay and CII will each be deemed to represent to the other party as of the
date of this Agreement the following: (i) it has full power, authority and
capacity to execute and deliver this Agreement, (ii) this Agreement is a valid
and binding obligation upon it and is fully enforceable according to the terms
contained herein except as such enforceability may be limited by general
principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting
generally, the enforcement of applicable creditors' rights and remedies, and
(iii) the execution, delivery and performance by it of this Agreement and the
consummation by it of the transactions contemplated hereby will not result in a
violation of the organizational documents of it, conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
it is a party or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws) applicable to
it.
This Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. CII shall not assign this Agreement or
any rights or obligations hereunder without the prior written consent of Xxxxxx
Bay. Xxxxxx Bay and its assigns may assign some or all of its rights hereunder
without the consent of CII, in which event such assignee shall be deemed to have
the rights granted to Xxxxxx Bay hereunder with respect to such assigned rights.
The terms and conditions of this Agreement shall be binding and inure to the
benefit of the parties and their respective successors and permitted assign.
This Agreement shall be construed in accordance with the laws of the State of
New York.
This Agreement may be executed in two or more identical counterparts, all of
which shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other
party; provided that a facsimile signature shall be considered due execution and
shall be binding upon the signatory thereto with the same force and effect as if
the signature were an original, not a facsimile signature.
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Please sign and return to us the enclosed copy of this Agreement to signify your
agreement with and acceptance of its terms.
Very truly yours,
CHICAGO INVESTMENTS INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Xxxxxx Xxxxxx
President
Acknowledged and agreed:
XXXXXX BAY FUND LP
By: /s/ Xxxx Xxxx
------------------------
Name: Xxxx Xxxx
Title: Principal and Portfolio Manager
XXXXXX XXXXXXXXX LLP, in its capacity as Escrow Agent
By: /s/ Xxxx Xxxxxx
---------------------------
Xxxx Xxxxxx
Partner
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