Omnibus Form of Insider Letter Agreement]
[Omnibus Form of Insider Letter Agreement]
Exhibit 10.1
, 2006
Santa Xxxxxx Media Corporation
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
0000 Xxxxxx Xxxxxxxxx, Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
| Re: Initial Public Offering |
Ladies and Gentlemen:
This letter is being delivered to you in accordance with the Underwriting Agreement (the
“Underwriting Agreement”) entered into by and between Santa Xxxxxx Media Corporation, a Delaware
corporation (the “Company”), Citicorp Global Markets Inc., Deutsche Bank Securities Inc. and
Ladenburg Xxxxxxxx & Co. Inc. (the “Underwriters”), relating to an underwritten initial public
offering (the “IPO”) of the Company’s units (the “Units”), each comprised of one share of the
Company’s common stock, par value $0.001 per share (the “Common Stock”), and one warrant, which is
exercisable for one share of Common Stock (a “Warrant”). Certain capitalized terms used herein are
defined in paragraph 12 hereof.
In order to induce the Company 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 as a
stockholder 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. If the Company solicits approval of its stockholders of a Business Combination, the
undersigned will vote all shares of Common Stock, including Insider Shares, Private Placement
Shares and IPO Shares, owned directly or indirectly by him or it in accordance with the majority of
the votes cast by the holders of the IPO Shares, and hereby waives any and all rights to convert
his or its Insider Shares and Private Placement Shares in connection with a Business Combination.
2. (i) [In the event that the Company fails to consummate a Business Combination within
(a) 18 months from the consummation of the IPO, unless a letter of intent, agreement in principle or
definitive agreement has been executed with respect to a Business Combination within such 18 month
period, (“18-Month Execution Failure”) or
(b) 24 months after the consummation of the IPO, if a
letter of intent, agreement in principle or definitive agreement has been executed with respect to
a Business Combination within 18 months from the consummation of
the IPO but the Business Combination has
not been consummated within such 18 month period (“24-Month Transaction Failure”), the undersigned
will (1) within a reasonable time prior to the expiration of such 18 or 24 month period, as the
case may be, vote to adopt a specific plan of dissolution and liquidation to be included in a proxy
statement to seek stockholder approval for such plan of dissolution and liquidation in the event
that the Company fails to so consummate a Business Combination within such 18- or 24-month period,
as the case may be, and (2) take all reasonable actions within the undersigned’s power to cause to
be prepared a proxy statement that sets forth such plan of dissolution and liquidation and
recommends that the Company’s stockholders approve such plan.]1 In the event of an
18-Month Execution Failure or 24-Month Transaction Failure, as the case may be, the undersigned
will take all reasonable actions within the undersigned’s power to (x) cause the proxy statement
setting forth the specific plan of dissolution and liquidation approved by the Company’s board of
directors to be filed with the Securities and Exchange Commission (the “SEC”) as promptly as
possible after the expiration of the 18- or 24-month period, as the case may be, and (y)
cause a meeting of the Company’s stockholders to consider such plan of dissolution and liquidation
to be held (1) within 30 days following the passing of the deadline for SEC review of the proxy
statement, in the event the SEC does not review the proxy statement, and (2) promptly following the
conclusion of the comment and review process, in the event the SEC reviews the proxy statement.
The undersigned will vote all shares of Common Stock, including Insider Shares, Private Placement
Shares and IPO Shares, owned directly or indirectly by him or it in favor of such plan of
dissolution and liquidation.
(ii) [In the event that the Company seeks approval from its stockholders for a Business
Combination within the foregoing 24-month period, the
undersigned will (a) vote to adopt a specific plan of dissolution and liquidation to be included in
the proxy statement seeking such stockholder approval of the Business Combination in the event that
the Company’s stockholders fail to so approve such Business Combination (“Business
Combination Approval Failure”) and (b) take all reasonable actions within the undersigned’s power
to cause to be prepared a proxy statement that sets forth such Business Combination and plan of
dissolution and liquidation and recommends that the Company’s stockholders approve such plan in the
event of a Business Combination Approval Failure.]2 In the event that the
Company seeks approval from its stockholders for a Business Combination prior to the
expiration of the foregoing 24-month period, the undersigned will take all reasonable actions
within the undersigned’s power to (x) cause the proxy statement setting forth both the Business
Combination recommendation and the specific plan of dissolution and liquidation approved by the
Company’s board of directors to be filed with the SEC and (y) cause a meeting of the
Company’s stockholders to be held to consider such alternative recommendations.
(iii) In the event the Company’s stockholders approve a plan of dissolution and liquidation in
connection with (a) an 18 Month Execution Failure or (b) a 24 Month Transaction Failure or (c) a Business Combination Approval Failure (the date of the first such failure to occur being the
“Transaction Failure Date”), the undersigned will take all reasonable actions within the
undersigned’s power to (x) cause the Trust Fund to be liquidated and, after paying or reserving for
payment the Company’s liabilities, distributed to the holders of the IPO Shares as soon as
practicable and (y) cause the Company to dissolve and liquidate as soon as practicable (the
earliest date on which the conditions in clauses (x) and (y) are both satisfied being the
“Liquidation Date”). [In the event that the assets held outside the Trust Fund are insufficient to
pay the costs and expenses associated with the dissolution and liquidation of the Company, the
undersigned will indemnify and hold the Company harmless, jointly and severally with the other
officers of the Company (with right of contribution against such other officers), against any such
additional costs or expenses incurred by the Company in connection with the dissolution and
liquidation, excluding any costs that may be incurred as a result of
litigation pertaining to the Company’s dissolution and liquidation.]3 The undersigned hereby waives any and
all right, title, interest or claim of any kind in or to any distributions of the Trust Fund as a
result of such distribution, or to any other amounts distributed in connection with a liquidating
distribution of the Company with respect to the undersigned’s Insider Shares and the undersigned’s
Private Placement Shares (“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 Fund for any reason whatsoever. The undersigned hereby agrees that
the Company shall be entitled to reimbursement from the undersigned for any distribution of the
Trust Fund, or any other amounts distributed by the Company in connection with a liquidating
distribution, received by the undersigned in respect of the undersigned’s Insider Shares and
Private Placement Shares.
3. [Subsequent to the Transaction Failure Date, the undersigned agrees to indemnify and hold
harmless the Company, jointly and severally with the other officers
of the Company (with right of contribution from such other officers), against any and
all loss, liability, claims, 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, prior to, on or after the Transaction Failure Date, as a result of (i) any claim by any person who is owed money by the Company
for goods provided or services rendered, products sold or money loaned to the Company, or (ii) any claim by any acquisition target that the
Company did not pay or reimburse such target for the fees and expenses of third party providers of
services (such as accountants, consultants and attorneys) to the target that the Company agreed in
writing with the target to be liable for, in accordance with the terms of such agreement, but in
each case only to the extent (i) such vendor, lender or prospective acquisition target failed to execute a
valid and enforceable waiver of rights or claims to the Trust Fund, and (ii) necessary to ensure
that such loss, liability, claim, damage or expense does not reduce the amount in the Trust Fund
(or, in the event that such claim arises after the distribution of the Trust Fund, to the extent
necessary to ensure that the Company’s former stockholders, other than the officers of the Company, are not liable for any amount of
such loss, liability, claim, damage or
expense).]3
| 1 | This section of the agreement will appear only in the agreements executed by the directors of the Company. | |
| 2 | This section of the agreement will appear only in the agreements executed by the directors of the Company. | |
| 3 | This section of the agreement will appear only in the agreements executed by the executive officers of the Company. |
4. The undersigned hereby waives any and all rights to exercise the Warrants included in its
Private Placement Shares unless a registration statement under the Securities Act of 1933, as
amended (the “Securities Act”), with respect to the shares of Common Stock underlying the Warrants
is effective and a current prospectus is on file with the SEC. The undersigned acknowledges and
agrees that the Warrants included in its Private Placement Shares must be exercised privately
pursuant to an exemption from the registration requirements of Section 5 of the Securities Act and
that such exercise is not eligible for
registration.4
5. The undersigned acknowledges and agrees that the Company will not consummate any Business
Combination which involves a company which is affiliated with any of the Insiders or their
respective affiliates unless the Company obtains an opinion from an independent investment banking
firm that the Business Combination is fair to the Company’s stockholders from a financial point of
view.
6. Neither
the undersigned, any member of the family of the undersigned, nor any affiliate of the undersigned will be entitled to receive
and will not accept any compensation, including payments to related parties of the existing
stockholders, for performing due diligence or for services rendered to the Company prior to or in
connection with the consummation of the Business Combination, provided that Santa Xxxxxx
Capital Corp. (“Related Party”) shall be allowed to charge the Company $7,500 per month to
compensate it for the Company’s use of Related Party’s offices, utilities and personnel as
described in the Registration Statement. The undersigned shall be entitled to reimbursement from
the Company for his or its reasonable out-of-pocket expenses incurred in connection with seeking and
consummating a Business Combination, to the extent that such expenses
do not exceed the amount of available assets held outside of the
trust account, unless a business combination is consummated.
7. Neither the undersigned, any member of the family of the undersigned, nor any affiliate of
the undersigned will be entitled to receive, or accept, a finder’s fee or any other compensation
from the Company in the event the undersigned, any member of the family of the undersigned or any
affiliate of the undersigned originates a Business Combination.
8. The undersigned shall not, and shall cause the members of
such the undersigned’s immediate family
and the affiliates of the undersigned to not, accept a finder’s
fee or any other compensation from any other person or entity in the
event the undersigned, any member of the undersigned’s immediate
family or any affiliate of the undersigned originates the initial Business Combination.
9. 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,
| 4 | This section of the agreement will appear only in the agreement executed by Santa Xxxxxx Capital Partners, LLC. |
directly or indirectly, or, except as provided in that certain Registration Rights Agreement
dated as of the date hereof pertaining to the Insider Shares and
Private Placement Shares of the undersigned, file (or participate in the
filing of) a registration statement with the SEC in respect of, 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, any Units and the shares of Common Stock and Warrants
comprising the Units, the shares of Common Stock issuable upon exercise of the Warrants or any
securities convertible into or exercisable or exchangeable for shares of Common Stock or such
Warrants or other rights to purchase shares of Common Stock or any such securities, (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 Units, shares of Common Stock or Warrants, the shares of Common Stock
issuable upon exercise of the Warrants or any securities convertible into or exercisable or
exchangeable for shares of Common Stock or such Warrants or other rights to purchase shares of
Common Stock or any such securities, whether any such transaction is to be settled by delivery of
shares of Common Stock or such other securities, in cash or otherwise, or (iii) publicly announce
an intention to effect any transaction specified in clause (i) or (ii) until (a) with respect to
his or its Insider Shares, the first anniversary of the Business Combination and (b) with respect
to its Private Placement Shares, after the consummation of a Business Combination (each, the “Lock-Up Period”).
Notwithstanding the foregoing, the undersigned may transfer his or its Insider Shares and his or
its Private Placement Shares during the applicable Lock-Up Period (i) by gift to a member of the
undersigned’s immediate family or to a trust, the beneficiary of which is a member of an
undersigned’s immediate family, an affiliate of the undersigned or to a charitable organization,
(ii) by virtue of the laws of descent and distribution upon death of the undersigned, (iii)
pursuant to a qualified domestic relations order, or (iv) in the event of a liquidation of the
Company prior to a Business Combination or the consummation of a liquidation, merger, stock
exchange or other similar transaction which results in all the Company’s stockholders having the
right to exchange their shares of Common Stock for cash, securities or other property subsequent to
the Company’s consummating a Business Combination with a target business; provided, however, that
the permissive transfers pursuant to clauses (i) — (iii) may be implemented only upon the
respective transferee’s written agreement to be bound by the terms and conditions of this
Agreement. During the applicable Lock-Up Period, the undersigned shall not grant a security
interest in his or its Insider Shares or Private Placement Shares.
10. The undersigned agrees to be [President and Chief Executive
Officer, Treasurer and Director/Chairman of the Board of Directors/Member of the Advisory Board]
until the earlier of the consummation by the Company of a Business Combination or the Liquidation
Date.5 The undersigned’s biographical information furnished to the Company and the Underwriters and
attached hereto as Exhibit A is true and accurate in all respects, does not omit any material
information with respect to the undersigned’s background and contains all of the
| 5 | Not applicable to investors who are not officers, directors, members of the Advisory Board or holders of more than 5% of the equity of the Company. |
information required to be disclosed pursuant to Section 401 of Regulation S-K, promulgated
under the Securities Act of 1933. The undersigned’s questionnaire furnished to the Company and the
Underwriters 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
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 registrations
denied, suspended or revoked.
11. The undersigned has full right and power, without violating any agreement by which he or
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, [serve as [President and
Chief Executive Officer, Treasurer and as a member of the Board of Directors of the
Company/Chairman of the Board of Directors/Member of the Advisory Committee] and hereby consents to
being named in the registration statement as a[n] [officer] [director] [adviser] of the
Company.]6
12. As used herein, (i) a “Business Combination” shall mean the initial acquisition of one or
more assets or operating businesses through a merger, capital stock exchange, asset or stock
acquisition or other similar business combination in the communications, media, gaming and/or
entertainment industries in connection with which the Company will require that a majority of the
shares of Common Stock voted by the public stockholders, as such term is used in the Registration
Statement, are voted in favor of the acquisition and less than 20% of the public stockholders both
exercise their conversion rights and vote against the proposed acquisition selected by the Company;
(ii) “Insiders” shall mean all officers, directors, advisers, beneficial owners and stockholders of
the Company immediately prior to the IPO; (iii) “Insider Shares” shall mean all of the shares of
Common Stock owned directly or indirectly by an Insider prior to
,
2006 and any securities convertible into or exercisable or exchangeable for shares of
Common Stock or other rights to purchase shares of Common Stock or any such
securities; (iv) “IPO Shares” shall mean the shares of
Common Stock underlying the Units of the Company, and all shares of
Common Stock issuable upon exercise of such Warrants, issued in
the Company’s IPO; (v) “Private
| 6 | Not applicable to persons who are not officers, directors, or members of the Advisory Board. |
Placement Shares” shall mean the 375,000 shares of Common Stock and Warrants underlying the
375,000 Units that Santa Xxxxxx Capital Partners, LLC has agreed to purchase in a private placement immediately prior to
the IPO, all shares of Common Stock issuable upon exercise of such Warrants and any securities
convertible into or exercisable or exchangeable for shares of Common Stock or such Warrants or
other rights to purchase shares of Common Stock or any such securities; and (vi) “Trust Fund” shall
mean the Trust Account established under that certain Investment Management Trust Agreement, dated
as of the date hereof, by and among the Company and Continental Stock Transfer & Trust Company.
The undersigned acknowledges and understands that the Company 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.
This letter agreement shall be binding on the undersigned and such person’s respective
successors, heirs, personal representatives and assigns. This letter agreement shall terminate on
the earlier of (i) the consummation of a Business Combination and (ii) the Liquidation Date;
provided that such termination shall not relieve the undersigned from liability for any breach of
this agreement prior to its termination, [and provided further
that the second sentence of Section 2(iii) and Section 3 of this agreement
shall survive a termination pursuant to clause (ii).]
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.
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.
[Name of current stockholder]
Accepted and agreed:
SANTA XXXXXX MEDIA CORPORATION
| By: | ||
| Name: | ||
| Title: |
Exhibit A
[Biographical Information Furnished to the Company and the Underwriters]
Exhibit B
[Questionnaires Furnished to the Company and the Underwriters]
