LAMBERT’S COVE ACQUISITION CORPORATION Atlanta, GA 30308
EXHIBIT
10.13
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COVE ACQUISITION CORPORATION
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▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
March
11,
2008
▇▇▇▇▇▇▇’▇
Cove Holdings, LLC
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Dear
▇▇.
▇▇▇▇:
We
are
pleased to accept the offer ▇▇▇▇▇▇▇’▇ Cove Holdings, LLC (the “Subscriber”) has
made to purchase 2,875,000 units (the “Units”), each unit consisting of one
share of common stock, $0.0001 par value per share (the “Common Stock”), and one
warrant to purchase one share of Common Stock at a purchase price of $7.50
(the
“Warrants”). Up to 375,000 of the Units (including the underlying shares of
Common Stock and Warrants) are subject to complete or partial forfeiture
(the “Forfeiture”) by you if the underwriters of the initial public offering of
▇▇▇▇▇▇▇’▇ Cove Acquisition Corporation, a Delaware corporation (the “Company”),
do not fully exercise their over-allotment option. The terms on which the
Company is willing to sell the Units to the Subscriber, and the Company and
the
Subscriber’s agreements regarding such Units, are as follows:
1.
Purchase
of Units.
For the
aggregate sum of $25,000.00 (the “Purchase Price”), which the Company
acknowledges receiving in cash, and subject to the Forfeiture, the Company
hereby sells and issues the Units to the Subscriber, and the Subscriber hereby
purchases the Units from the Company, on the terms and subject to the Forfeiture
and other conditions set forth in this Agreement. Concurrently with the
Subscriber’s execution of this Agreement, the Company is delivering to the
Subscriber certificates registered in the Subscriber’s name representing
the Units, shares of Common Stock and Warrants, receipt of which the
Subscriber hereby acknowledges.
2. Representations
and Warranties of the Company.
To
induce the Subscriber to purchase the Units from the Company, the Company hereby
represents and warrants to the Subscriber and agrees with the Subscriber as
follows:
2.1 Organization
and Corporate Power.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and is qualified to do business in
every
jurisdiction in which the failure to so qualify would reasonably be expected
to
have a material adverse effect on the financial condition, operating results
or
assets of the Company. The Company possesses all requisite corporate power
and
authority necessary to carry out the transactions contemplated by this
Agreement.
2.2 Authorization;
No Breach.
(a)
The
execution and delivery of this Agreement, and performance of this Agreement
have
been duly authorized by the Company as of the date hereof. This Agreement
constitutes the valid and binding obligation of the Company, enforceable in
accordance with its terms.
(b)
The
execution and delivery by the Company of this Agreement, and the sale and
issuance of the Units, the underlying shares of Common Stock and Warrants and
the shares of Common Stock issuable upon exercise of the Warrantrs
(collectively, the
“Securities”) and
the
fulfillment of and compliance with the respective terms hereof and thereof
by
the Company, do not and will not as of the date hereof (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii) constitute
a
default under, (iii) result in the creation of any lien, security interest,
charge or encumbrance upon the Company's capital stock or assets, (iv) result
in
a violation of, or (v) require any authorization, consent, approval, exemption
or other action by or notice or declaration to, or filing with, any court or
administrative or governmental body or agency pursuant to the Certificate of
Incorporation of the Company or the bylaws of the Company, or any material
law,
statute, rule or regulation to which the Company is subject, or any agreement,
order, judgment or decree to which the Company is subject, except for any
filings required after the date hereof under federal or state securities
laws.
2.3.
Title
to Securities.
Upon
issuance in accordance with, and payment pursuant to, the terms hereof
and of the Warrant Agreement related to the Warrants the Securities
will be duly and validly issued, fully paid and nonassessable. Upon issuance
in
accordance with, and payment pursuant to, the terms hereof the Subscriber will
have or receive good title to the Securities, free and clear of all liens,
claims and encumbrances of any kind, other than (a) transfer restrictions
hereunder and under the other agreements contemplated hereby, (b) transfer
restrictions under federal and state securities laws, and (c) liens, claims
or
encumbrances imposed due to the actions of the Subscriber.
3. The
Subscriber’s Representations, Warranties and Agreements.
To
induce the Company to issue the Securities to the Subscriber, the
Subscriber hereby represents and warrants to the Company and agrees with the
Company as follows:
3.1. No
Government Recommendation or Approval.
The
Subscriber understands that no United States federal or state agency or similar
agency of any other country, has passed upon or made any recommendation or
endorsement of the offering of the Securities or the fairness or
suitability of the investment in the Securities by the Subscriber nor have
such authorities passed upon or endorsed the merits of the offering of the
Securities.
3.2. Experience,
Financial Capability and Suitability.
The
Subscriber is sufficiently experienced in financial and business matters to
be
capable of evaluating the merits and risks of this investment and to make an
informed decision relating thereto. The Subscriber is aware its investment
in
the Company is a speculative investment that has limited liquidity, because
there may never be an established market for the Company’s securities. The
Subscriber has the financial capability for making the investment and the
investment is a suitable one for the Subscriber. The Subscriber can, without
impairing its financial condition, hold the Securities for an indefinite
period of time and can afford a complete loss of the investment. The Subscriber
acknowledges that the Company has urged the Subscriber to seek independent
advice from professional advisors relating to the suitability of an investment
in the Company and in connection with this Agreement, and that the Subscriber
has sought and received such independent professional advice with respect to
such investment and this Agreement or, after careful
consideration, the Subscriber has determined to waive its right to seek and/or
receive such independent professional advice.
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3.3. Access
to Information.
Prior
to the execution of this Agreement, the Subscriber has had the opportunity
to
ask questions of and receive answers from representatives of the Company
concerning an investment in the Company, as well as the finances, operations,
business and prospects of the Company, and the opportunity to obtain additional
information to verify the accuracy of all information so obtained.
3.4. Regulation
D Offering.
Subscriber represents that it is an “accredited investor” as such term
is defined in Rule 501(a) of Regulation D under the Securities Act of 1933,
as
amended (the “Securities Act”), and acknowledges the sale contemplated hereby is
being made in reliance on a private placement exemption to “accredited
investors” within the meaning of Section 501(a) of Regulation D under the
Securities Act or similar exemptions under state law; and, accordingly, such
securities will be “restricted securities” within the meaning of Rule 144(a)(3)
under the Securities Act, and therefore may not be offered, pledged or sold
by
the Subscriber, directly or indirectly, in the United States without
registration under United States federal and state securities laws and
Subscriber understands the certificates representing such Securities will
contain a legend in respect of such restrictions. The Subscriber did not decide
to enter into this Agreement as a result of any general solicitation or
general advertising within the meaning of Rule 502 under the Securities
Act.
3.5.
Restrictions
on Transfer.
Subscriber acknowledges and understands the Securities are
being offered in a transaction not involving a public offering within the
meaning of the Securities Act. The Securities have not been registered
under the Securities Act, and, if in the future the Subscriber decides
to offer,
resell, pledge or otherwise transfer the Securities, such Securities may be
offered, resold, pledged or otherwise transferred only (A) pursuant to
an
effective registration statement filed under the Securities Act, (B) pursuant
to
an exemption from registration under Rule 144 promulgated under the Securities
Act, if available, or (C) pursuant to any available other exemption from
the
registration requirements of the Securities Act, and in each case in accordance
with any applicable securities laws of any state or any other jurisdiction.
Subscriber agrees that if any transfer of its Securities or any interest
therein is proposed to be made, as a condition precedent to any such transfer,
Subscriber may be required to deliver to the Company an opinion of counsel
satisfactory to the Company. Absent registration or an available exemption
from
registration, the Subscriber agrees that it will not resell the Securities.
Subscriber explicitly understands and acknowledges that the Securities
and
Exchange Commission (the “SEC”) has taken the position the Subscriber would be
considered a promoter under the Securities Act and that promoters or affiliates
of a blank check company and their transferees, both before and after a
business
combination, would act as “underwriters” under the Securities Act when reselling
the securities of that blank check company. Accordingly, Rule 144 promulgated
under the Securities Act will not be available to the Subscriber for the
resale
of the Securities despite technical compliance with the requirements of
Rule 144, in which event the resale transactions would need to be made
through a
registered offering.
3.6 Pro-rata
Forfeiture.
Subscriber hereby acknowledges and understands that the 375,000 of the 2,875,000
Units being offered herein are subject to partial or complete forfeiture in
the
event that the underwriters’ over-allotment option is not exercised, either
partially or fully, as set forth in Section 4.4 herein.
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4. Forfeiture
of Securities; Escrow of Securities.
4.1. Failure
to Consummate Business Combination.
All of
the Securities initially shall be subject to forfeiture to the Company in
accordance with this Section 4. The Securities shall be forfeited to the
Company in the event the Company does not consummate a business combination
(“Business
Combination”), as such
term is
defined in the Company’s registration statement on Form S-1, as
amended, under the Securities Act (the “Registration Statement”), with
respect to the Company’s initial public offering (the “IPO”) of its
securities, within 24 months (or 36 months in the event the Company has entered
into a definitive agreement with respect to a Business Consummation and the
stockholders have approved an extension ( the “Extension”) for
the purpose of consummating a Business Combination) from the date of the final
prospectus related to the IPO.
4.2. Termination
of Rights.
If
the Securities are forfeited in accordance with this Section 4, then after
such time the Subscriber (or successor in interest), shall no longer have any
rights as a holder of such Securities, and the Company shall take such action
as
is appropriate to cancel such Securities. In addition, the Subscriber hereby
irrevocably grants the Company a limited power of attorney for the purpose
of
effectuating the foregoing.
4.3. Escrow.
Upon
the date of the final prospectus related to the IPO, the Subscriber, and
its designees, shall enter into a securities escrow agreement (the “Escrow
Agreement”) with Continental Stock Transfer & Trust Company (the
“Escrow Agent”), whereby the Securities shall be held in escrow and will
not be released until one year after the consummation of the Company’s initial
Business Combination, unless the over-allotment option is not exercised in
full
or in part in order to have up to 375,000 Units forfeited pursuant to Section
4.4 or unless the Company were to engage in a transaction subsequent to
such Business Combination that results in all of the Company’s stockholders of
the combined entity having the right to exchange their shares of common stock
for cash, securities or other property.
4.4 Pro-rata
Forfeiture. If
the
underwriters of the IPO fail to exercise any portion or all of the
over-allotment option granted to them within 30 days of the date of the final
prospectus related to the IPO, then Subscriber shall automatically forfeit
up to
375,000 Units (including the underlying shares of Common Stock and
Warrants) purchased hereunder, such that Subscriber shall, in the
aggregate, beneficially own no greater than 20% of the Units of the Company
issued and outstanding pursuant to this Agreement and the Company’s IPO.
5.
Waiver
of Liquidation Distributions; Redemption Rights.
In
connection with the Securities purchased pursuant to this Agreement and any
other Company securities purchased on a private placement basis, the Subscriber
hereby waives any and all right, title, interest or claim of any kind in or
to
any distributions by the Company from the trust account (“Trust Account”),
as such term is
defined in the Registration Statement, in the event of a liquidation of the
Company upon the Company’s failure to timely complete a Business Combination.
For purposes of clarity, in the event the Subscriber purchases shares of Common
Stock in the IPO or in the aftermarket, any additional shares so purchased
shall
be eligible to receive any liquidating distributions by the Company. However,
in
no event will Subscriber have the right to redeem any shares of Common
Stock underlying the
Units
or shares of Common Stock issuable upon exercise of the Warrants into funds
held in the Trust Account with the Escrow Agent upon either the approval of
the
Extension or the successful completion of a Business
Combination.
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6. Restrictions
on Transfer.
6.1 Securities
Law Restrictions.
In
addition to the restrictions contained in the Escrow Agreement, Subscriber
agrees not to sell, transfer, pledge, hypothecate or otherwise dispose of all
or
any part of the Securities unless, prior thereto (a) a registration
statement on the appropriate form under the Securities Act and applicable state
securities laws with respect to the Securities proposed to be transferred
shall then be effective or (b) the Company shall have received an opinion from
counsel reasonably satisfactory to the Company, that such registration is not
required because such transaction complies with the Securities Act and the
rules
promulgated by the Securities and Exchange Commission thereunder and with all
applicable state securities laws.
6.2 Restrictive
Legends.
All
certificates representing the Securities shall have endorsed thereon legends
substantially as follows:
“THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND
NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH LAWS WHICH, IN THE OPINION
OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.”
SECURITIES
EVIDENCED BY THIS CERTIFICATE WILL BE ENTITLED TO REGISTRATION RIGHTS UNDER
A
REGISTRATION RIGHTS AGREEMENT TO BE EXECUTED BY THE COMPANY.
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS CONTAINED IN A SECURITIES ESCROW AGREEMENT (THE “AGREEMENT”) AND MAY
NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED DURING THE
TERM
OF THE ESCROW PERIOD (AS DEFINED IN THE AGREEMENT).”
6.3. Additional Securities
or Substituted Securities.
In the
event of the declaration of a stock dividend, the declaration of an
extraordinary dividend payable in a form other than stock, a spin-off, a stock
split, an adjustment in conversion ratio, a recapitalization or a similar
transaction affecting the Company’s outstanding capital stock without receipt of
consideration, any new, substituted or additional securities or other property
which are by reason of such transaction distributed with respect to any
Securities subject to this Section 6 or into which such Securities thereby
become convertible shall immediately be subject to this Section 6 and Section
4.3. Appropriate adjustments to reflect the distribution of such securities
or
property shall be made to the number and/or class of Shares subject to this
Section 6 and Section 4.3.
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7. Other
Agreements.
7.1. Further
Assurances.
Subscriber agrees to execute such further instruments and to take such further
action as may reasonably be necessary to carry out the intent of this
Agreement.
7.2 No
Obligation as to Employment. The
Company is not by reason of this Agreement obligated to employ, or continue
to
employ, the Subscriber in any capacity.
7.3. Notices.
All
notices, requests, consents and other communications hereunder shall be in
writing, shall be addressed to the receiving party’s address set forth on the
first page of this Agreement or to such other address as a party may designate
by notice hereunder, and shall be either (a) delivered by hand, (b) sent by
overnight courier, or (c) sent by certified mail, return receipt requested,
postage prepaid. All notices, requests, consents and other communications
hereunder shall be deemed to have been given either (i) if by hand, at the
time
of the delivery thereof to the receiving party at the address of such party
set
forth above, (ii) if sent by overnight courier, on the next business day
following the day such notice is delivered to the courier service, or (iii)
if
sent by certified mail, on the (5th)
business day following the day such mailing is made.
7.4. Entire
Agreement.
This
Agreement, together with that certain letter agreement between Subscriber and
the Company, substantially in the form filed as an exhibit to the Registration
Statement, embodies the entire agreement and understanding between the
Subscriber and the Company with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings relating
to
the subject matter hereof. No statement, representation, warranty, covenant
or
agreement of any kind not expressly set forth in this Agreement shall affect,
or
be used to interpret, change or restrict, the express terms and provisions
of
this Agreement.
7.5. Modifications
and Amendments.
The
terms and provisions of this Agreement may be modified or amended only by
written agreement executed by all parties hereto.
7.6. Waivers
and Consents.
The
terms and provisions of this Agreement may be waived, or consent for the
departure therefrom granted, only by written document executed by the party
entitled to the benefits of such terms or provisions. No such waiver or consent
shall be deemed to be or shall constitute a waiver or consent with respect
to
any other terms or provisions of this Agreement, whether or not similar. Each
such waiver or consent shall be effective only in the specific instance and
for
the purpose for which it was given, and shall not constitute a continuing waiver
or consent.
7.7. Assignment.
The
rights and obligations under this Agreement may not be assigned by either party
hereto without the prior written consent of the other party.
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7.8. Benefit.
All
statements, representations, warranties, covenants and agreements in this
Agreement shall be binding on the parties hereto and shall inure to the benefit
of the respective successors and permitted assigns of each party hereto. Nothing
in this Agreement
shall be construed to create any rights or obligations except among the parties
hereto, and no person or entity shall be regarded as a third-party beneficiary
of this Agreement.
7.9. Governing
Law.
This
Agreement and the rights and obligations of the parties hereunder shall be
construed in accordance with and governed by the law of State of New York,
without giving effect to the conflict of law principles thereof.
7.10. Severability.
In the
event that any court of competent jurisdiction shall determine that any
provision, or any portion thereof, contained in this Agreement shall be
unreasonable or unenforceable in any respect, then such provision shall be
deemed limited to the extent that such court deems it reasonable and
enforceable, and as so limited shall remain in full force and effect. In the
event that such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall nevertheless
remain in full force and effect.
7.11. No
Waiver of Rights, Powers and Remedies.
No
failure or delay by a party hereto in exercising any right, power or remedy
under this Agreement, and no course of dealing between the parties hereto,
shall
operate as a waiver of any such right, power or remedy of such party. No single
or partial exercise of any right, power or remedy under this Agreement by a
party hereto, nor any abandonment or discontinuance of steps to enforce any
such
right, power or remedy, shall preclude such party from any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The election of any remedy by a party hereto shall not constitute a waiver
of
the right of such party to pursue other available remedies. No notice to or
demand on a party not expressly required under this Agreement shall entitle
the
party receiving such notice or demand to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
party giving such notice or demand to any other or further action in any
circumstances without such notice or demand.
7.12. Survival
of Representations and Warranties.
All
representations and warranties made by the parties hereto in this Agreement
or
in any other agreement, certificate or instrument provided for or contemplated
hereby, shall survive the execution and delivery hereof and any investigations
made by or on behalf of the parties.
7.13. No
Broker or Finder.
Each of
the parties hereto represents and warrants to the other that no broker, finder
or other financial consultant has acted on their behalf in connection with
this
Agreement or the transactions contemplated hereby in such a way as to create
any
liability on the other. Each of the parties hereto agrees to indemnify and
save
the other harmless from any claim or demand for commission or other compensation
by any broker, finder, financial consultant or similar agent claiming to have
been employed by or on behalf of such party and to bear the cost of legal
expenses incurred in defending against any such claim.
7.14. Headings
and Captions.
The
headings and captions of the various subdivisions of this Agreement are for
convenience of reference only and shall in no way modify or affect the meaning
or construction of any of the terms or provisions hereof.
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7.15. Counterparts.
This
Agreement may be executed in one or more counterparts, all of which when taken
together 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, it being understood that both parties need not sign the
same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
(Signature
page to follow)
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If
the
foregoing accurately sets forth our understanding and agreement, please sign
the
enclosed copy of this agreement and return it to us.
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Very
truly yours,
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▇▇▇▇▇▇▇’▇
COVE ACQUISITION
CORPORATION
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By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||
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Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title:
Chief Executive Officer
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Accepted
and agreed this
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11th
day of March, 2008
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▇▇▇▇▇▇▇’▇
COVE HOLDINGS, LLC
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| /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ | ||||
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By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
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Title:
Co-Managing Member
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