Form of Initial Stockholder Letter
Exhibit 10.11
Form of Initial Stockholder Letter
, 2010
L&L Acquisition Corp.
000 Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
000 Xxxxxxxx Xxxxxx
00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Xxxxxx Xxxxxx LLC
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
| 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 L&L Acquisition Corp., a
Delaware corporation (the “Company”) and Xxxxxx Xxxxxx LLC, as representative of the several
underwriters (the “Underwriters”), relating to an underwritten initial public offering (the
“Offering”), of 5,000,000 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 the 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 10 hereof.
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, _____________________ (an “Initial Stockholder”)
hereby agrees with the Company as follows:
1. The undersigned agrees that if the Company seeks stockholder approval of a proposed
Business Combination, then in connection with such proposed Business Combination, it (i) shall vote
all Initial Shares owned by it in accordance with the majority of the votes cast by the Public
Stockholders and (ii) shall vote any shares acquired by it in the Offering or the secondary public
market in favor of such proposed Business Combination.
2. The undersigned hereby agrees that (a) in the event that the Company fails to consummate a
Business Combination (as defined in the Underwriting Agreement) within 18 months from the closing
of the Offering, the undersigned shall take all reasonable steps to 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 shares of the Common Stock sold in the Offering (the “Offering Shares”) for cash
equal to their pro rata share of the aggregate amount then on deposit in the Trust Account
(including interest), less franchise and income taxes payable, which redemption will completely
extinguish the rights of the holders of Offering Shares (including the right to receive further
liquidation distributions, if any), subject to applicable law, and subject to the requirement that
any refund of income taxes that were paid
from the Trust Account which is received after the redemption of the Offering Shares be distributed to
the former holders of record of such Offering Shares as of the date of redemption, 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 the balance of
the Company’s net assets to the remaining Public Stockholders, subject in each case to the
Company’s obligations under Delaware law to provide for claims of creditors and other requirements
of applicable law;
(b) it will take all reasonable action within its power, in the event the Company conducts the
redemption of its Offering Shares pursuant to a tender offer, to cause the Company or its
affiliates or any dealer-manager or its affiliates, or any advisors to the Company or any
dealer-manager, (i) not to purchase or arrange to purchase shares outside the tender offer while
such tender offer is open or (ii) enter into any agreement, understanding or arrangement with any
other person in connection with their purchase or arrangement to purchase shares outside the tender
offer, when such tender offer is open; and
(c) in the event the Company seeks to amend the Warrants (as defined the Warrant
Agreement between the Company and Continental Stock Transfer and Trust Company, as Warrant Agent)
in a manner that requires the written consent of the registered holders of 65% of the then
outstanding Warrants under the Warrant Agreement, the undersigned will not vote any Warrants owned
or controlled by the undersigned in favor of such amendment unless the registered holders of 65% of
the Offering Warrants (as defined in the Warrant Agreement) vote in favor of such amendment.
3. The undersigned acknowledges that it 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 Initial Shares. The undersigned hereby further
waives, with respect to any shares of the Common Stock beneficially held by it, the right to seek
appraisal rights with respect to such shares and any redemption rights it 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 Initial Shares) it holds if the Company fails to consummate a
Business Combination within 18 months from the date of the closing of the Offering).
[Paragraph 4 for Xxxx X. Xxxxxxxx, LLM Structured Equity Fund L.P. and LLM Investors L.P.
Only]
4. In the event of the liquidation of the Trust Account, the undersigned agrees to indemnify
and hold harmless the Company against any and all loss, liability, claim, damage and expense
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) to which the Company may become subject as a result of any claim by (i) any
third party for services rendered or products sold to the Company or (ii) a prospective target
business with which the Company has entered into an acquisition agreement with (a “Target”);
provided, however, that such indemnification of the Company by the undersigned
shall apply only to the extent necessary to ensure that such claims by a third party for services
rendered or products sold to the Company or a Target do not reduce the amount of funds in the Trust
Account to below $9.85 per Offering Share (or approximately $9.83 per Offering Share if the
Underwriters’ over-allotment option, as described in the Prospectus, is exercised in full, or such
pro rata amount in between $9.83 and $9.85 per Offering Share that corresponds to the portion of
the over-allotment option that is exercised), and provided, further, that only if
such third party or Target has not executed an agreement waiving claims against and all rights to
seek access to the Trust Account whether or not such agreement is enforceable. In the event that
any such executed waiver is deemed to be
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unenforceable against such third party, the undersigned shall not be responsible for any liability
as a result of any such third party claims. Notwithstanding any of the foregoing, such
indemnification of the Company by the undersigned shall not apply 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. The undersigned shall have the right to
defend against any such claim with counsel of its choice reasonably satisfactory to the Company if,
within 15 days following written receipt of notice of the claim to the undersigned, the undersigned
notifies the Company in writing that it shall undertake such defense.
5. (a) On the date of the Prospectus (the “Effective Date”), the undersigned will escrow the
Initial Shares beneficially held by it pursuant to the terms of a Securities Escrow Agreement which
the Company will enter into with the undersigned and Continental Stock Transfer & Trust Company
(the “Securities Escrow Agreement”). To the extent that the Underwriters do not exercise their
over-allotment option to purchase an additional 750,000 shares of the Common Stock (as described in
the Prospectus), the undersigned agrees that it shall return to the Company for cancellation, at no
cost, the number of Initial Shares held by it determined by multiplying _____________ by a
fraction, (i) the numerator of which is 750,000 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 750,000. 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 Initial 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 750,000 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 ____________ 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 ___% of the
Company’s issued and outstanding shares after the Offering (assuming the Underwriters do not
exercise their over-allotment option).
(b) In addition, _____________ of the Initial Shares (the “Second Tranche Shares”) held by the
undersigned, shall be returned to the Company for cancellation, at no cost, in the event that,
within five years following the closing of the Company’s initial Business Combination, either (a)
the last sales price of the Company’s stock does not equal or exceed $18.00 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 or (b) a transaction is not consummated following the
Company’s initial Business Combination in which all stockholders have the right to exchange their
shares of Common Stock for cash consideration which equals or exceeds $18.00 per share. The
undersigned xxxxxx agrees and acknowledges that he will have no ability to vote any of the Second
Tranche Shares and hereby waives any right to vote such Second Tranche Shares until such time, if
ever, that such shares are released from escrow.
6. (a) The undersigned agrees and acknowledges that the Initial Shares beneficially owned by
it shall be held in escrow for the period commencing on the Effective Date and ending: with
respect to (a) an aggregate of _________ of the Initial Shares (the “First Tranche Shares”), one
year following the completion of the Company’s initial Business Combination (the “First Tranche
Lock-Up Period”) and (b) ___________ of the Initial Shares, such date within five years subsequent
to the completion of the Company’s initial Business Combination, if ever, that (i) the last sales
price of the Common Stock equals or exceeds $18.00 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 or (ii) the Company consummates a subsequent liquidation, merger, stock
exchange or other similar
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transaction, which results in all of the Company’s stockholders having the right to exchange
their shares of the Common Stock for cash consideration that equals or exceeds $18.00 per share
(the “Second Tranche Lock-Up Period”). Until the expiration of the First Tranche Lock-Up Period
and the Second Tranche Lock-Up Period, as the case may be, 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 First Tranche Shares and the Second Tranche Shares, as applicable, (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 First Tranche Shares or the Second Tranche Shares, as applicable,
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).
(b) The undersigned will escrow any Sponsor Warrants purchased in a private placement
simultaneous with or immediately prior to the Offering until the 30th day after the date of the
completion of the initial Business Combination, subject to the terms of the Securities Escrow
Agreement. Until 30 days after the completion of the Company’s initial Business Combination
(“Sponsor Warrant Lock-Up Period”), 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 SEC promulgated thereunder, with respect to the Sponsor Warrants and the
respective Common Stock underlying the Sponsor Warrants, (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 Sponsor Warrants and the respective Common Stock underlying the Sponsor
Warrants, 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).
(c) Notwithstanding the provisions of paragraphs 6(a) and 6(b) herein, the undersigned may
transfer the First Tranche Shares, the Second Tranche Shares and/or Sponsor Warrants and the
respective Common Stock underlying the Sponsor Warrants (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 undersigned or to any limited partner(s) of the undersigned; (ii) in the case of a Sponsor who
is a natural person, 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) in the case of a Sponsor who is a natural
person, by virtue of the laws of descent and distribution upon death of the undersigned; (iv) in
the case of a Sponsor who is a natural person, pursuant to a qualified domestic relations order;
(v) by virtue of the laws of the state of Delaware or the undersigned’s limited partnership
agreement upon dissolution of the undersigned; (vi) in the event of the Company’s liquidation prior
to the completion of the Company’s initial Business Combination; or (vii) in the event that the
Company consummates a subsequent liquidation, merger, stock exchange or other similar transaction
that results in all of the Company’s 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 paragraphs 6(a) and 6(b) herein, as the case may be.
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(d) Further, the undersigned agrees that after the First Tranche Lock-Up Period, Second
Tranche Lock-Up Period or the Sponsor Warrant Lock-Up Period, as applicable, has elapsed, the
Initial Shares and the Sponsor Warrants and the respective Common Stock underlying such Warrants,
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 and the parties thereto, the parties thereto may request that a
registration statement relating to the Initial Shares, and the Sponsor Warrants and/or the shares
of the Common Stock underlying the Sponsor Warrants be filed with the Commission prior to the end
of the First Tranche Lock-Up Period, Second Tranche Lock-Up Period or the Sponsor Warrant Lock-Up
Period, as the case may be; provided, however, that such registration statement
does not become effective prior to the end of the First Tranche Lock-Up Period, Second Tranche
Lock-Up Period or the Sponsor Warrant Lock-Up Period, as applicable.
(e) Each of the undersigned and the Company understands and agrees that the transfer
restrictions set forth in this paragraph 6 shall supersede any and all transfer restrictions
relating to (i) the Initial Shares set forth in that certain Securities Purchase Agreement,
effective as of [DATE], 2010, by and between the Company and the undersigned, and (ii) the Sponsor
Warrants set forth in that certain Sponsor Warrants Purchase Agreement, effective as of [DATE],
2010, by and between the Company and the undersigned.
7. 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 $__________ loan made to the Company by the undersigned, pursuant to a
Promissory Note dated [DATE];
(b) payment of an aggregate of $7,500 per month to LLM Capital Partners LLC, for office space,
secretarial and administrative services, pursuant to a Letter Agreement for Administrative Services
dated August 17, 2010;
(c) reimbursement for any out-of-pocket expenses related to finding, identifying,
investigating and completing 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; and
(d) repayment of loans, if any, and on such terms as to be determined by the Company from time
to time, 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 long as no proceeds from the Trust Account are used for such repayment.
8. The undersigned has full right and power, without violating any agreement to which it is
bound (including, without limitation, any non-competition or non-solicitation agreement with any
employer or former employer), to enter into this Letter Agreement.
9. The undersigned acknowledges and agrees that the Company will not consummate any Business
Combination that involves a company which is affiliated with the undersigned unless the
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Company obtains an opinion from an independent investment banking firm which is a member of
FINRA that the Business Combination is fair to the Company’s stockholders from a financial point of
view.
10. As used herein, (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) “Initial Shares” shall mean the [ ] shares of
the Common Stock of the Company acquired by the undersigned for an aggregate purchase price of
$________, or approximately $0.0174 per share, prior to the consummation of the Offering; (iii)
“Sponsor Warrants” shall mean the Warrants to purchase up to [ ] shares of the Common
Stock of the Company that are acquired by the undersigned for an aggregate purchase price of $[ ], or approximately $0.50 per Warrant in a private placement that shall occur
simultaneously with the consummation of the Offering; (iv) “Public Stockholders” shall mean the
holders of securities issued in the Offering; and (v) “Trust Account” shall mean the trust fund
into which a portion of the net proceeds of the Offering shall be deposited.
11. This Letter Agreement constitutes 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 all parties hereto.
12. No party hereto 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 its successors, heirs, personal representatives and assigns.
13. This Letter Agreement shall be governed by and construed and enforced 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. The parties 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 the State of New York for the
Southern District of New York, and irrevocably submit to such jurisdiction and venue, which
jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive
jurisdiction and venue or that such courts represent an inconvenient forum.
14. 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.
15. This Letter Agreement shall terminate on the earlier of (i) the expiration of the First
Tranche Lock-Up Period, Second Tranche Lock-Up Period or the Sponsor Warrant Lock-Up Period,
whichever is longer 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 [DATE], 2010, provided further that paragraph 4 of this Letter Agreement
shall survive such liquidation.
[Signature page follows]
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as of the date first
written above.
| COMPANY: L&L ACQUISITION CORP. |
||||
| By: | ||||
| Name: | ||||
| Title: | ||||
| Address: | 00 Xxxxxxxx Xxxxxx, 00xx Xxxxx Xxxxxx, XX 00000 Fax: (000) 000-0000 |
|||
HOLDER:
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