Exhibit 10.5
___________, 2005
Ad.Venture Partners, Inc.
00 X. 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Ad.Venture Partners, Inc. Initial Public Offering - Letter Agreement
Dear Ladies and Gentlemen:
This letter is being delivered to you in accordance with the Underwriting
Agreement (the "UNDERWRITING AGREEMENT") entered into by and between Ad.Venture
Partners, Inc., a Delaware corporation (the "COMPANY"), and Wedbush Xxxxxx
Securities Inc., as Representative (the "REPRESENTATIVE") of the several
Underwriters named in Schedule I thereto (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
$0.0001 per share (the "COMMON STOCK"), and two warrants, each of which are
exercisable for one share of Common Stock (each, a "WARRANT"). The capitalized
terms set forth on Schedule 1 attached hereto are hereby incorporated by
reference herein.
In order to induce the Company and the Underwriters 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 shall vote all Insider Shares owned by such person
in accordance with the majority of the votes cast with respect to IPO Shares by
the holders thereof.
2. If a Transaction Failure occurs, the undersigned shall take all reasonable
actions within such person's power to cause (i) the Trust Fund to be liquidated
and distributed to the holders of the IPO Shares as soon as practicable and in
any event no later than the Termination Date, and (ii) the Company to dissolve
and liquidate as soon as practicable (the earliest date on which the conditions
in clauses (i) and (ii) are both satisfied being the "LIQUIDATION DATE").(1) The
undersigned hereby waives any and all right, title, interest or claim of any
kind ("CLAIM") in or to any distribution of the Trust Fund with respect to such
person's Insider Shares, but only such Insider Shares and not with respect to
any IPO Shares acquired by the undersigned, 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 agrees not to seek recourse for any
Claim against the Trust Fund for any reason whatsoever. The undersigned xxxxxx
agrees that the Company
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1 To be included in the Letter Agreements with all Officers and Directors of
the Company.
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shall be entitled to a reimbursement from the undersigned for any distribution
of the Trust Fund received by the undersigned in respect to such person's
Insider Shares.
3. The undersigned agrees to indemnify and hold harmless the Company, jointly
and severally with [___________], against any and all losses, liabilities,
claims, damages and expenses 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) actually incurred by the Company as a result or arising out of any
claim by any vendor that is owed money by the Company for services rendered or
products sold, in each case, to the Company, or by any target business with
which the Company has entered into a written letter of intent, confidentiality
or non-disclosure agreement or other written agreement, provided, however, that
the amount of such indemnification shall be limited only to the amount by which
such losses, liabilities, claims, damages or expenses actually reduce the amount
of funds in the Trust Fund.(2)
4. In order to minimize potential conflicts of interest which may arise from
multiple affiliations, the undersigned agrees to present to the Company for its
consideration, prior to presentation to any other person or entity, any suitable
opportunity to acquire all or substantially all of the outstanding equity
securities of, or otherwise acquire (through merger, capital stock exchange,
asset acquisition or other business combination), an operating business in the
technology, media or telecommunications industries, until the earlier of the
consummation by the Company of a Business Combination, the distribution of the
Trust Fund or until such time as the undersigned ceases to be an officer or
director of the Company; provided, however, that the presentation of such
opportunities to the Company shall in each case be subject to any fiduciary
obligation of the undersigned's arising from a fiduciary relationship
established prior to the undersigned's fiduciary relationship with the
Company.(3)
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 unless the Company obtains an opinion from an independent
investment banking firm that is a member of the National Association of
Securities Dealers, Inc. that the business combination is fair to the Company's
stockholders from a financial perspective.(4)
6. The undersigned shall not, and shall cause the members of such person's
Immediate Family and the affiliates of such person not to, accept any
compensation for services rendered to the Company prior to, or in connection
with, the Business Combination; provided, that commencing on the effective date
of the Registration Statement, eXact Advertising, LLC ("RELATED PARTY") shall be
entitled to receive $7,500 per month for general and administrative services,
including office space, utilities and secretarial support. The undersigned shall
also be entitled to receive reimbursement from the Company for such person's
out-of-pocket expenses incurred in connection with seeking and consummating a
Business Combination as contemplated in the Prospectus.
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2 Paragraph 3 to be included in the Letter Agreements for each of Messrs.
Xxxxxx and Xxxxxx.
3 Paragraph 4 to be included in the Letter Agreements for all Officers and
Directors of the Company.
4 Paragraph 5 to be included in the Letter Agreements for all Officers and
Directors of the Company.
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7. The undersigned shall not, and shall cause the members of such person's
Immediate Family and the affiliates of such person not to, accept a finder's fee
or any other compensation in the event the undersigned, any member of such
person's Immediate Family or any affiliate of such person originates a Business
Combination.
8. The undersigned hereby agrees to be [the __________ of the Company][ and ][ a
member of the Board of Directors] of the Company until the earlier of (i) the
Business Combination Date and (ii) the Liquidation Date.(5)
9. The undersigned represents and warrants that (i) the biographical information
furnished to the Company and the Representative 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 information
required to be disclosed pursuant to Item 401 of Regulation S-K, promulgated
under the Securities Act of 1933, as amended, (ii) the questionnaires furnished
by the undersigned to the Company and the Representative and attached hereto as
Exhibit B are true and accurate in all respects, and (iii) the undersigned has
full right and power, without violating any agreement (including, without
limitation, any non-competition or non-solicitation agreement with any employer
or former employer) by which the undersigned is bound to enter into this letter
agreement and to serve as [ __________ ][ and ][ a member of the Board of
Directors] of the Company. The undersigned further 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 such person is not currently a
defendant in any such criminal proceeding.
(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.
(D) The undersigned consents to being named in the Registration Statement
as a[n] [Officer] [Director] [Special Advisor] of the Company.(6)
The undersigned acknowledges and understands that the Underwriters and the
Company will rely upon the agreements, representations and warranties set forth
herein in proceeding with the IPO. The Company and the undersigned acknowledge
that the Representative is an intended third party beneficiary of the provisions
of this letter agreement. In that regard, the Representative shall have the
right in its sole discretion, but not the obligation, to enforce the provisions
of this letter agreement. Nothing contained herein shall be deemed to render the
Representative (or any of the Underwriters) a representative of, or a fiduciary
with respect to, the
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5 Paragraph 8 to be included in the Letter Agreements for all Officers and
Directors.
6 Paragraph 9 to be included in the Letter Agreements for all Officers,
Directors and Special Advisors.
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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 Business
Combination Date 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.
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.
[The Remainder of this Page is Intentionally Left Blank]
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Sincerely,
By:
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Name:
Title:
Accepted and agreed:
Ad.Venture Partners, Inc.
By:
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Name: Xxxxxx X. Xxxxxx
Title: Chief Executive Officer
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SCHEDULE 1
SUPPLEMENTAL COMMON DEFINITIONS
UNLESS THE CONTEXT SHALL OTHERWISE REQUIRE, THE FOLLOWING TERMS SHALL HAVE
THE FOLLOWING RESPECTIVE MEANINGS FOR ALL PURPOSES, AND THE FOLLOWING
DEFINITIONS ARE EQUALLY APPLICABLE TO BOTH THE SINGULAR AND THE PLURAL FORMS AND
THE FEMININE, MASCULINE AND NEUTER FORMS OF THE TERMS DEFINED.
"BUSINESS COMBINATION" shall mean the acquisition by the Company, whether
by merger, capital stock exchange, asset acquisition or other similar business
combination, of one or more operating businesses in the technology, media or
telecommunications industries, having, collectively, a fair market value (as
calculated in accordance with the Company's Amended and Restated Certificate of
Incorporation) equal to at least 80% of the Company's net assets at the time of
such merger, capital stock exchange, asset acquisition or other similar business
combination.
"BUSINESS COMBINATION DATE" shall mean the date upon which a Business
Combination is consummated.
"EFFECTIVE DATE" shall mean the date upon which the Registration Statement
is declared effective under the Securities Act of 1933, as amended, by the SEC.
"IMMEDIATE FAMILY" shall mean, with respect to any person, such person's
spouse, lineal descendents, father, mother, brothers or sisters (including any
such relatives by adoption or marriage).
"INDEPENDENT DIRECTORS" shall mean the Company's directors that qualify as
"independent" under NASD Rule 4200(a)(15), as amended.
"INSIDERS" shall mean all of the officers, directors and stockholders of
the Company immediately prior to the Company's IPO.
"INSIDER SHARES" shall mean all shares of Common Stock of the Company
owned by an Insider immediately prior to the Company's IPO. For the avoidance of
doubt, Insider Shares shall not include any IPO Shares purchased by Insiders in
connection with or subsequent to the Company's IPO.
"IPO SHARES" shall mean all shares of Common Stock issued by the Company
in its IPO, regardless of whether such shares were issued to an Insider or
otherwise.
"PROSPECTUS" shall mean the final prospectus filed pursuant to Rule 424(b)
under the Securities Act of 1933, as amended, and included in the Registration
Statement.
"REGISTRATION STATEMENT" shall mean the registration statement filed by
the Company on Form S-1 (No. 333-124141) with the SEC on April 18, 2005, and any
amendment or supplement thereto, in connection with the Company's IPO.
"SEC" shall mean the United States Securities and Exchange Commission.
"TERMINATION DATE" shall mean the date that is sixty (60) calendar days
immediately following the Transaction Failure Date.
"TRANSACTION FAILURE" shall mean the earlier of (i) the failure to enter
into a letter of intent, definitive agreement or agreement in principle with
respect to a Business Combination on any day during the eighteen-month period
immediately following the Effective Date, and (ii) the failure to consummate a
Business Combination on any day during the twenty-four-month period immediately
following the Effective Date.
"TRANSACTION FAILURE DATE" shall mean if a Transaction Failure first
occurs as a result of the failure described in clause (i) of the definition of
"Transaction Failure", the 18-month anniversary of the Effective Date, and if a
Transaction Failure first occurs as a result of the failure described in clause
(ii) of the definition of "Transaction Failure", the second anniversary of the
Effective Date.
"TRUST FUND" shall mean that certain trust account established with
Continental Stock Transfer & Trust Company, as trustee, and in which the Company
deposited the "funds to be held in trust," as described in the Prospectus.
EXHIBIT A
BIOGRAPHY
[ Insert Bio here ]
