December , 2017
4 Palo Alto Square, Suite 232
3000 El Camino Real
Palo Alto, CA 94306
Re: Initial Public Offering
This letter agreement (this Letter Agreement) is being delivered to you in accordance with the Underwriting Agreement (the Underwriting Agreement) entered into by and between GigCapital, Inc., a Delaware corporation (the Company), and Cowen and Company, LLC, as representative (the Representative) of the several Underwriters named therein (the Underwriters), relating to an underwritten initial public offering (the IPO) of the Companys units (the Units), each consisting of one share of the Companys common stock, par value $0.0001 per share (Common Stock and such shares included in the Units, Offering Shares), one right to receive one-tenth (1/10) of one share of Common Stock (the Right) and one-half ( 1⁄2) of a warrant to purchase one share of Common Stock at a price of $11.50 per share, subject to adjustment (the warrants included in the Units sold, the Offering Warrants). Capitalized terms used herein but not defined in context are defined in paragraph 15 hereof.
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, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the undersigned entities and individuals, each of whom is a Founder, hereby agrees with the Company as follows:
1. With respect to stockholder votes and associated conversion rights,
(a) if the Company solicits stockholder approval of a Business Combination via a proxy solicitation, then the undersigned will vote all shares of then outstanding Common Stock beneficially owned by him or it in favor of such Business Combination; provided, that (i) the undersigned acknowledges and agrees that prior to entering into a Business Combination with a target business that is affiliated with any Insiders, such transaction must be approved by a majority of the Companys disinterested independent directors and the Company must obtain an opinion from an independent investment banking firm, or another independent entity that commonly renders valuation opinions on the type of target business the Company is seeking to acquire, that such Business Combination is fair to the Companys unaffiliated stockholders from a financial point of view, and (ii) no Insider will be entitled to receive or accept a finders fee or any other compensation in the event such Insider originates a Business Combination (provided that this clause (ii) shall not apply to Cowen Investments LLC, a Delaware limited liability company (Cowen Investments), or any of its Affiliates);
(b) the undersigned hereby agrees not to propose for a stockholder approval any amendment to the Amended and Restated Certificate of Incorporation that would (i) affect the substance or timing of the Companys obligation to redeem 100% of the Offering Shares if the Company does not complete a Business Combination within 18 months of the closing of the IPO (or 21 months from the closing date of the IPO if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial Business Combination within 18 months from the closing date of the IPO but has not completed the initial Business Combination within such 18 month period), or (ii) alter its provisions relating to the Companys pre-Business Combination activity or the related stockholders rights, unless the Company
provides the holders of any Offering Shares with the opportunity to redeem their Offering Shares upon the approval of any such amendment. Such redemption must be at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest (net of taxes payable), divided by the number of then outstanding Offering Shares; and
(c) the undersigned will not redeem any shares of Common Stock beneficially owned by him or it in connection with a solicitation for stockholder approval described in either of clauses (a) or (b) above, or sell any such shares of Common Stock in a tender offer undertaken by the Company in connection with a Business Combination.
2. The undersigned hereby waives any and all right, title, interest or claim of any kind the undersigned may have in the future in or to any distribution of the Trust Account and any remaining assets of the Company as a result of, or arising out of, any contracts or agreements with the Company and will not seek recourse against the Trust Account for any reason whatsoever; provided, that the foregoing waiver shall not apply with respect to liquidating distributions from the Trust Account made in connection with any Offering Shares purchased by the undersigned or its Affiliates during the IPO or on the open market after the completion of the IPO if the Company fails to complete a Business Combination within 18 months of the completion of the IPO (or 21 months from the closing date of the IPO if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial Business Combination within 18 months from the closing date of the IPO but has not completed the initial Business Combination within such 18 month period). The undersigned acknowledges and agrees that there will be no distribution from the Trust Account with respect to any of the Offering Warrants, all rights of which will terminate upon the Companys liquidation.
3. In order to minimize potential conflicts of interest that may arise from multiple corporate affiliations,
(a) GigAcquisitions, LLC, a Delaware limited liability company (Sponsor), an Affiliate of Dr. Katz, the Companys Chief Executive Officer, shall present to the Company for its consideration, prior to presentation to any other entity, any target business that has a fair market value of at least 80% of the assets held in the Trust Account (excluding taxes payable on interest earned), subject to any pre-existing fiduciary or contractual obligations the undersigned might have;
(b) the Sponsor and its Affiliates, shall not participate in the formation of, or become an officer or director of, any blank check company with a class of securities registered under the Exchange Act until the Company has entered into a definitive agreement regarding a Business Combination or the Company has failed to complete a Business Combination within 18 months of the closing of the IPO (or 21 months from the closing date of the IPO if the Company has executed a letter of intent, agreement in principle or definitive agreement for an initial Business Combination within 18 months from the closing date of the IPO but has not completed the initial Business Combination within such 18 month period); and
(c) the undersigned hereby acknowledges and agrees that (i) each of the Underwriters and the Company may be irreparably injured in the event of a breach of any of the obligations contained in this Letter Agreement, (ii) monetary damages may not be an adequate remedy for such breach, and (iii) the non-breaching party shall be entitled to injunctive relief, in addition to any other remedy that such party may have in law or in equity, in the event of such breach.
4. Neither the undersigned nor any of their Affiliates will be entitled to receive, and none of them may accept, any compensation or other cash payment prior to, or for services rendered in order to effectuate, the consummation of the Business Combination, except for the following:
(a) Sponsor may receive compensation for administrative services and office space, as provided for under that certain Administrative Services Agreement with the Company dated as of October 11, 2017;
(b) Sponsor may receive amounts due under that certain promissory note in the aggregate principal amount of up to $55,000, dated October 11, 2017, issued by the Company in favor of Sponsor;
(c) any of the undersigned may receive reimbursement of out-of-pocket expenses incurred by them in connection with certain activities on behalf of the Company, such as identifying and investigating possible business targets and business combinations, and repayment upon consummation of a Business Combination of any loans which may be made by them or by their Affiliates to finance transaction costs in connection with an intended Business Combination. While the terms of any such loans have not been determined nor have any written agreements been executed with respect thereto, it is acknowledged and agreed that up to $1,500,000 of any such loans may be convertible into units of the post-business combination entity at a price of $10.00 per unit at the option of the lender; and
(d) any underwriting discounts, commissions and other fees and compensation payable to the underwriters of the IPO, including the Representative, who is an Affiliate of each of Cowen Investments, Mr. Silverberg and Mr. Bernstein, and/or their Affiliates.
5. To the extent that the Underwriters do not exercise their over-allotment option to purchase an additional 2,250,000 Units within the time period set forth in the Registration Statement (and as further described in the Registration Statement), (i) Sponsor agrees that it shall forfeit, at no cost, up to 455,357 Founder Shares, (ii) Cowen Investments agrees that it shall forfeit, at no cost, up to 75,000 Founder Shares, (iii) Mr. Silverberg agrees that he shall forfeit, at no cost, up to 28,929 Founder Shares, and (iv) Mr. Bernstein agrees that he shall forfeit, at no cost, up to 3,214 Founder Shares. If applicable, the Founders would forfeit, on a pro rata basis consistent with the proportion of their ownership of Founder Shares, such number of Founder Shares as would be required to maintain the ownership of the Companys pre-IPO stockholders at 20.0% of the total issued and outstanding shares of Common Stock immediately after the closing of the IPO; provided, that the total issued and outstanding shares of Common Stock would not take into account any shares of Common Stock included in units purchased by the Founders in the private placement that such parties intend to consummate simultaneously with the closing of the IPO. The Founders further agree that to the extent that the size of the IPO is increased or decreased, the Company will purchase or sell shares of Common Stock or effect a stock dividend or share contribution back to capital, as applicable, immediately prior to the consummation of the IPO in such amounts as to maintain the ownership of the stockholders prior to the IPO at 20.0% of its total issued and outstanding shares of Common Stock upon the consummation of the IPO; provided, that the total issued and outstanding shares of Common Stock would not take into account any shares of Common Stock included in units purchased by the Founders in the private placement that such parties intend to consummate simultaneously with the closing of the IPO.
6. Sponsor agrees to continue to serve as the Sponsor of the Company until the earlier of the consummation by the Company of a Business Combination or its liquidation.
7. The undersigneds FINRA Questionnaire previously furnished to the Company and the Representative is true and accurate in all respects.
8. The undersigned represents and warrants that (i) he or it 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; (ii) he or it has never been convicted of or pleaded guilty to any crime involving any fraud, relating to any financial transaction or
handling of funds of another person, or pertaining to any dealings in any securities, and he is not currently a defendant in any such criminal proceeding; and (iii) he or it 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.
9. The undersigned agrees that he or it shall not Transfer (as defined below) any securities (Securities) of the Company beneficially held by him or by his Affiliates, other than any Units, or the Offering Shares or Offering Warrants underlying such Units, purchased in the IPO or in the open market after the IPO, until the earlier of (i) one year after the completion of a Business Combination or (ii) the date on which, subsequent to a Business Combination, (x) the last sale price of the Common Stock equals or exceeds $12.00 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 commencing at least 150 days after a Business Combination or (y) the Company completes a liquidation, merger, stock exchange or other similar transaction that results in all of the Companys stockholders having the right to exchange their shares of Common Stock for cash, securities or other property (the Lock-up Period). Notwithstanding the foregoing, during the Lock-up Period, Transfers of Securities are permitted to be made (a) to any persons (including their Affiliates and members) participating in the private placement of the private units (as described in the Registration Statement); (b) among the Founders or to the Companys executive officers, directors or employees; (c) in the case of an entity, as a distribution to its partners, stockholders or members upon its liquidation; (d) in the case of an individual, by a bona fide gift to a member of one of the members of the individuals immediate family or to a trust, the beneficiary of which is a member of one of the individuals immediate family, for estate planning purposes; (e) in the case of an individual, by virtue of laws of descent and distribution upon death of the individual; (f) in the case of an individual, pursuant to a qualified domestic relations order; (g) by pledges to secure obligations incurred in connection with purchases of the Companys securities; (h) by private sales or transfers made in connection with the consummation of a Business Combination at prices no greater than the price at which the securities were originally purchased; or (i) to the Company for no value for cancellation in connection with the consummation of a Business Combination; provided, however, that in any case (other than clause (i)), these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions and the other terms described in this Letter Agreement to the extent and for the duration that such terms remain in effect at the time of the Transfer.
10. Notwithstanding the foregoing paragraph 9, each of the undersigned agrees that during the period commencing on the effective date of the Underwriting Agreement and ending 180 days after such date, none of them nor any of their Affiliates, may Transfer any Securities beneficially owned by them, other than any Units, or the Offering Shares or Offering Warrants underlying such Units, purchased in the IPO or in the open market after the IPO. The foregoing sentence shall not apply to the registration of the offer and sale of Units contemplated by the Underwriting Agreement and the sale of the Units to the Underwriters.
11. In the event of the liquidation of the Trust Account, Sponsor (the Indemnitor) 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; provided, however, that such indemnification of the Company by the Indemnitor shall apply only to the extent necessary to ensure that such claims by a third party for services rendered (other than the Companys independent public accountants) or products sold to the Company or a target do not reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per share of the Offering Shares, or (ii) such lesser amount per share of the Offering Shares
held in the Trust Account due to reductions in the value of the trust assets as of the date of the liquidation of the Trust Account, in each case, net of the amount of interest earned on the property in the Trust Account which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account (whether or not such agreement is enforceable) and as to any claims under the Companys indemnity of the Underwriters against certain liabilities, including liabilities under the Securities Act. In the event that any such executed waiver is deemed to be unenforceable against such third party, the Indemnitor shall not be responsible for any liability as a result of any such third party claims. The Indemnitor shall have the right to defend against any such claim with counsel of its choice reasonably satisfactory to the Company if, within fifteen (15) days following written receipt of notice of the claim to the Indemnitor, the Indemnitor notifies the Company in writing that it shall undertake such defense.
12. The undersigned has full right and power, without violating any agreement by which he is bound, to enter into this Letter Agreement.
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 undersigned hereby (i) agrees that any action, proceeding or claim against him arising out of or relating in any way to this Letter Agreement (a Proceeding) shall be brought and enforced in the courts of the State of New York of the United States of America for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive, (ii) waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient forum, and (iii) irrevocably agrees to appoint Crowell & Moring LLP as agent for the service of process in the State of New York to receive, for the undersigned and on his or its behalf, service of process in any Proceeding. If for any reason such agent is unable to act as such, the undersigned will promptly notify the Company and the Representative and appoint a substitute agent acceptable to each of the Company and the Representative within 30 days and nothing in this Letter Agreement will affect the right of either party to serve process in any other manner permitted by law.
14. As used herein, (i) Affiliate has the meaning set forth in Rule 144(a)(1) under the Securities Act; (ii) Amended and Restated Certificate of Incorporation refers to the Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware, as the same may be amended from time to time; (iii) a Business Combination shall mean a merger, share exchange, asset acquisition, stock purchase, recapitalization, reorganization or other similar business combination with one or more businesses or entities; (iv) Exchange Act means the Securities Exchange Act of 1934, as amended; (v) Founder means Sponsor, Cowen Investments, Mr. Irwin Silverberg and Mr. Jeffrey Bernstein, each of whom hold Founder Shares; (vi) Founder Shares means shares of Common Stock purchased by each Founder pursuant to subscription agreements entered into by and between each Founder and the Company, each dated as of October 11, 2017; (vii) Insiders means all executive officers, directors and director nominees of the Company immediately prior to the IPO, as well as the Founders, and any of their Affiliates; (viii) the Registration Statement shall mean the Registration Statement on Form S-1 filed by the Company with the Securities and Exchange Commission in connection with the IPO, as the same may be amended or supplemented; (ix) Securities Act means the Securities Act of 1933, as amended; (x) the SEC means the United States Securities and Exchange Commission; (xi) Transfer means (a) the sale of, offer to sell, contract or agreement to sell, hypothecate, pledge, grant of any option to purchase or otherwise dispose of or agreement to dispose of, directly or indirectly, or establishment or increase of a put equivalent position or liquidation with respect to or decrease of a call equivalent position within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder with respect to, any security, (b) the entry into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any security, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise, or (c) the public announcement of any intention to effect any transaction specified in clause (a) or (b); and (xii) Trust Account means the trust account into which a portion of the net proceeds of the Companys IPO will be deposited.
15. This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes 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.
16. 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. 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.
17. This Letter Agreement shall be binding on the undersigned and such persons respective successors, heirs, personal representatives and assigns. This Letter Agreement shall terminate on the earlier of (i) the Companys consummation of a Business Combination, or (ii) the liquidation of the Company; provided, that such termination shall not relieve the undersigned from liability for any breach of this agreement prior to its termination.
18. This Letter 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 each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or any other form of electronic delivery, 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 signature page were an original thereof.
[Signature page to follow]
|Very truly yours,|
By: Dr. Avi S. Katz, Manager
|COWEN INVESTMENTS LLC|
By: Stephen Lasota, Chief Financial Officer
|Accepted and agreed this day of December, 2017.|
By: Dr. Avi S. Katz, Chairman of the Board
and Chief Executive Officer
Signature page to Insider Letter (Founders)