Exhibit 10.11

 

THIS EXPENSE ADVANCEMENT AGREEMENT (this “Agreement”), dated as of October 24,
2014, is made and entered into by and among Hydra Industries Acquisition Corp.,
a Delaware corporation (the “Company”), and Hydra Industries Sponsor LLC and
MIHI LLC (collectively, the “Sponsors”).

 

RECITALS

 

WHEREAS, the Company is engaged in an initial public offering (the “Offering”)
pursuant to which the Company will issue and deliver up to 9,200,000 units (the
“Units”) (including up to 1,200,000 Units subject to an over-allotment option
granted to the underwriters of the Offering), with each Unit comprised of one
share of common stock, par value $0.0001 per share (the “Common Stock”), of the
Company, one right (each, a “Right,” and collectively, the “Rights”) to receive
one-tenth of one share of Common Stock upon the Company’s completion of a
Business Combination (as defined below) and one warrant, each warrant
exercisable to purchase one-half of one share of Common Stock at $5.75 per half
share ($11.50 per whole share), subject to certain adjustments (each, a
“Warrant,” and collectively, the “Warrants”);

 

WHEREAS, the Company has filed with the Securities and Exchange Commission a
registration statement on Form S-1, No. 333-198236 (the “Registration
Statement”) for the registration, under the Securities Act of 1933, as amended
(the “Securities Act”), of the Units, the Rights, the Warrants and the Common
Stock underlying the Units, including a prospectus (the “Prospectus”);

 

WHEREAS, the gross proceeds of the Offering will be deposited in a trust account
(the “Trust Account”) at J.P. Morgan Chase Bank, N.A. and managed by Continental
Stock Transfer & Trust Company, as trustee, as described in the Registration
Statement and the Prospectus; and

 

WHEREAS, the Sponsors desire to enter into this Agreement in order to facilitate
the Offering and the other transactions contemplated in the Registration
Statement and the Prospectus, including any merger, capital stock exchange,
asset acquisition, stock purchase, reorganization or other similar business
combination by the Company with one or more businesses (a “Business
Combination”).

 

NOW, THEREFORE, in consideration of the representations, covenants and
agreements contained herein, and certain other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:

 

1.             (a)         From time to time, as may be requested by the
Company, the Sponsors agree to advance to the Company up to $500,000 in the
aggregate, allocated in accordance with Schedule I hereto, in each instance
pursuant to the terms of the form of promissory note attached as Exhibit A
hereto (the “Note”), as may be necessary to fund the Company’s expenses relating
to investigating and selecting a target business and other working capital
requirements following the Offering and prior to any potential Business
Combination.

 

(b)          The Sponsors represent to the Company that they are capable of
making such advances, collectively, to satisfy their obligations under clause
(a) of this Section 1.

 

(c)          Notwithstanding anything to the contrary herein or in the Note,
Sponsors hereby waive any and all right, title, interest or claim of any kind
("Claim") in or to any distribution of the Trust Account in which the proceeds
of the Offering, as described in greater detail in the Registration Statement
and the Prospectus, will be deposited, and hereby agree not to seek recourse,
reimbursement, payment or satisfaction for any Claim against the Trust Account
for any reason whatsoever; provided, however, that if the Company completes its
Business Combination, the Company shall repay such loaned amounts out of the
proceeds released to the Company from the Trust Account.

 

 

 

  

2.           This Agreement, together with the Note, 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 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 the parties hereto.

 

3.           No party may assign either this Agreement or any of his, her or 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 Agreement shall be binding on the
undersigned and each of his or its heirs, personal representatives, successors
and assigns.

 

4.           Any notice, statement or demand authorized by this Agreement shall
be sufficiently given (i) when so delivered if by hand or overnight delivery,
(ii) the date and time shown on a telefacsimile transmission confirmation, or
(iii) if sent by certified mail or private courier service within five (5) days
after deposit of such notice, postage prepaid. Such notice, statement or demand
shall be addressed as follows:

 

If to the Company or Hydra Industries Sponsor LLC:

 

Hydra Industries Acquisition Corp.

3 Columbus Circle
16th Floor
New York, NY 10019
Attn: Jeffrey S. Lipkin

Facsimile: (646) 619-4266

 

with a copy in each case (which shall not constitute notice) to:

 

Ellenoff Grossman & Schole LLP

1345 Avenue of the Americas

New York, New York 10105

Attn: Stuart Neuhauser, Esq.

Facsimile: (212) 370-7889

 

If to MIHI LLC:

 

c/o Macquarie Capital (USA) Inc.

125 West 55th Street, L-22

New York, NY 10019-5369
Attn: Jin Chun
Facsimile: (212) 231-1717

  

 

 

  

with a copy in each case (which shall not constitute notice) to:

 

Skadden, Arps, Slate, Meagher & Flom LLP

525 University Avenue

Palo Alto, California 94301

Attn: Thomas J. Ivey

Fascimile: (650) 798-6549

 

5.          This Agreement may be executed in any number of original or
facsimile counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.

 

6.          This Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof.
Furthermore, in lieu of any such invalid or unenforceable term or provision, the
parties hereto intend that there shall be added as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable provision as may
be possible and be valid and enforceable.

 

7.          This 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 Agreement shall be brought and enforced in the courts of New York, in the
State of New York, and irrevocably submits 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.

 

[Signature Page Follows]

 

 

 

  

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be executed as
of the date first written above.

 

  HYDRA INDUSTRIES ACQUISITION
CORP., a Delaware corporation         By:  /s/ Martin E. Schloss     Name:
Martin E. Schloss     Title: Executive Vice President and Secretary

 

  PURCHASERS:       HYDRA INDUSTRIES SPONSOR LLC           By:  

 /s/A. Lorne Weil

      Name: A. Lorne Weil       Title:  Managing Member          

 MIHI LLC

          By:  

 /s/Duncan Murdoch

      Name: Duncan Murdoch       Title:  Vice President           By:    /s/Drew
Reid       Name: Drew Reid       Title:  Authorized Signatory

 

 

 

  

Schedule I

 

Allocation

 

To be allocated 50% for each of MIHI LLC and Hydra Industries Sponsor LLC. 

 

 

 

  

Exhibit A

 

Promissory Note

 

 

 

  

THIS PROMISSORY NOTE (“NOTE”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THIS NOTE HAS BEEN ACQUIRED FOR
INVESTMENT ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.  

 

PROMISSORY NOTE

 

   Dated as of _____, 2014     Principal Amount:  $____________  New York, New
York

  

              Pursuant to that certain Expense Advance Agreement (the
“Agreement”), dated as of October 24, 2014, by and between Hydra Industries
Acquisition Corp., a Delaware corporation (the “Maker”), and [________] (the
“Payee”), the Maker hereby promises to pay to the order of the Payee or its
registered assigns or successors in interest, or order, the principal sum of
_________ Dollars ($_________) in lawful money of the United States of America,
on the terms and conditions described below.  All payments on this Note shall be
made by check or wire transfer of immediately available funds or as otherwise
determined by the Maker to such account as the Payee may from time to time
designate by written notice in accordance with the provisions of this Note.
Certain terms used herein but not defined herein shall have the meaning given to
such terms in the Agreement.

 

1.            Principal. The principal balance of this Note shall be payable on
the date on which Maker consummates its Businesses Combination. The principal
balance may be prepaid at any time.

 

2.            Interest. No interest shall accrue on the unpaid principal balance
of this Note.

 

3.            Application of Payments. All payments shall be applied first to
payment in full of any costs incurred in the collection of any sum due under
this Note, including (without limitation) reasonable attorney’s fees, then to
the payment in full of any late charges and finally to the reduction of the
unpaid principal balance of this Note.

 

4.            Events of Default. The following shall constitute an event of
default (“Event of Default”):

 

(a)           Failure to Make Required Payments. Failure by Maker to pay the
principal amount due pursuant to this Note within five (5) business days of the
date specified above.

 

(b)           Voluntary Bankruptcy, Etc. The commencement by Maker of a
voluntary case under any applicable bankruptcy, insolvency, reorganization,
rehabilitation or other similar law, or the consent by it to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Maker or for any substantial part of
its property, or the making by it of any assignment for the benefit of
creditors, or the failure of Maker generally to pay its debts as such debts
become due, or the taking of corporate action by Maker in furtherance of any of
the foregoing.

  

 

 

  

(c)           Involuntary Bankruptcy, Etc. The entry of a decree or order for
relief by a court having jurisdiction in the premises in respect of Maker in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of Maker or for any substantial part of its
property, or ordering the winding-up or liquidation of its affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days.

 

5.            Remedies.

 

(a)           Upon the occurrence of an Event of Default specified in Section
4(a) hereof, Payee may, by written notice to Maker, declare this Note to be due
immediately and payable, whereupon the unpaid principal amount of this Note, and
all other amounts payable thereunder, shall become immediately due and payable
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, anything contained herein or in the documents
evidencing the same to the contrary notwithstanding.

 

(b)           Upon the occurrence of an Event of Default specified in Sections
4(b) and 4(c), the unpaid principal balance of this Note, and all other sums
payable with regard to this Note, shall automatically and immediately become due
and payable, in all cases without any action on the part of Payee.

 

6.            Waivers. Maker and all endorsers and guarantors of, and sureties
for, this Note waive presentment for payment, demand, notice of dishonor,
protest, and notice of protest with regard to the Note, all errors, defects and
imperfections in any proceedings instituted by Payee under the terms of this
Note, and all benefits that might accrue to Maker by virtue of any present or
future laws exempting any property, real or personal, or any part of the
proceeds arising from any sale of any such property, from attachment, levy or
sale under execution, or providing for any stay of execution, exemption from
civil process, or extension of time for payment; and Maker agrees that any real
estate that may be levied upon pursuant to a judgment obtained by virtue hereof,
on any writ of execution issued hereon, may be sold upon any such writ in whole
or in part in any order desired by Payee.

 

7.            Unconditional Liability. Maker hereby waives all notices in
connection with the delivery, acceptance, performance, default, or enforcement
of the payment of this Note, and agrees that its liability shall be
unconditional, without regard to the liability of any other party, and shall not
be affected in any manner by any indulgence, extension of time, renewal, waiver
or modification granted or consented to by Payee, and consents to any and all
extensions of time, renewals, waivers, or modifications that may be granted by
Payee with respect to the payment or other provisions of this Note, and agrees
that additional makers, endorsers, guarantors, or sureties may become parties
hereto without notice to Maker or affecting Maker’s liability hereunder.

 

8.            Notices. All notices, statements or other documents which are
required or contemplated by this Agreement shall be: (i) in writing and
delivered personally or sent by first class registered or certified mail,
overnight courier service or facsimile or electronic transmission to the address
designated in writing, (ii) by facsimile to the number most recently provided to
such party or such other address or fax number as may be designated in writing
by such party and (iii) by electronic mail, to the electronic mail address most
recently provided to such party or such other electronic mail address as may be
designated in writing by such party.  Any notice or other communication so
transmitted shall be deemed to have been given on the day of delivery, if
delivered personally, on the business day following receipt of written
confirmation, if sent by facsimile or electronic transmission, one (1) business
day after delivery to an overnight courier service or five (5) days after
mailing if sent by mail.

 

 

 

  

9.            Construction. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.

 

10.          Severability. Any provision contained in this Note which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

 

11.          Trust Waiver.  Notwithstanding anything herein to the contrary, the
Payee hereby waives any Claim in or to any distribution of or from the Trust
Account, and hereby agrees not to seek recourse, reimbursement, payment or
satisfaction for any Claim against the Trust Account for any reason whatsoever;
provided, however, that if the Maker completes its Business Combination, the
Maker shall repay the principal balance of this Note out of the proceeds
released to the Maker from the Trust Account.

 

12.          Amendment; Waiver.  Any amendment hereto or waiver of any provision
hereof may be made with, and only with, the written consent of the Maker and the
Payee.

 

13.          Assignment.  No assignment or transfer of this Note or any rights
or obligations hereunder may be made by any party hereto (by operation of law or
otherwise) without the prior written consent of the other party hereto and any
attempted assignment without the required consent shall be void; provided,
however, that the foregoing shall not apply to an affiliate of the Payee who
agrees to be bound to the terms of this Note.

 

14.Conversion.

 

(a)          At the Payee’s option, at any time prior to payment in full of the
principal balance of this Note, the Payee may elect to convert all or any
portion of this Note into that number of warrants (the “Conversion Warrants”)
equal to: (i) the portion of the principal amount of the Note being converted
pursuant to this Section 14, divided by (ii) $0.50, rounded up to the nearest
whole number. Each Conversion Warrant shall have the same terms and conditions
as the warrants issued by the Maker pursuant to a private placement, as
described in Maker’s Registration Statement on Form S-1 (333-198236). The
Conversion Warrants, the shares of Common Stock underlying the Conversion
Warrants and any other equity security of Maker issued or issuable with respect
to the foregoing by way of a stock dividend or stock split or in connection with
a combination of shares, recapitalization, amalgamation, consolidation or
reorganization (the “Warrant Shares”), shall be entitled to the registration
rights set forth in Section 15 hereof.

 

(b)          Upon any complete or partial conversion of the principal amount of
this Note, (i) such principal amount shall be so converted and such converted
portion of this Note shall become fully paid and satisfied, (ii) the Payee shall
surrender and deliver this Note, duly endorsed, to Maker or such other address
which Maker shall designate against delivery of the Conversion Warrants, (iii)
Maker shall promptly deliver a new duly executed Note to the Payee in the
principal amount that remains outstanding, if any, after any such conversion and
(iv) in exchange for all or any portion of the surrendered Note, Maker shall
deliver to Payee the Conversion Warrants, which shall bear such legends as are
required, in the opinion of counsel to Maker or by any other agreement between
Maker and the Payee and applicable state and federal securities laws.

 

(c)          The Payee shall pay any and all issue and other taxes that may be
payable with respect to any issue or delivery of the Conversion Warrants upon
conversion of this Note pursuant hereto; provided, however, that the Payee shall
not be obligated to pay any transfer taxes resulting from any transfer requested
by the Payee in connection with any such conversion.

 

 

 

  

(d)          The Conversion Warrants shall not be issued upon conversion of this
Note unless such issuance and such conversion comply with all applicable
provisions of law.

 

15.Registration Rights.

 

(a)          Reference is made to that certain Registration Rights Agreement
between the Maker and the parties thereto, dated as of the date hereof (the
“Registration Rights Agreement”). All capitalized terms used in this Section 15
shall have the same meanings ascribed to them in the Registration Rights
Agreement.

 

(b)          The holders (“Holders”) of the Conversion Warrants (or the Warrant
Shares) shall be entitled to one Demand Registration, which shall be subject to
the same provisions as set forth in Section 2.1 of the Registration Rights
Agreement.

 

(c)          The Holders shall also be entitled to include the Conversion
Warrants (or the Warrant Shares) in Piggyback Registrations, which shall be
subject to the same provisions as set forth in Section 2.2 of the Registration
Rights Agreement; provided, however, that in the event that an underwriter
advises the Maker that the Maximum Number of Securities has been exceeded with
respect to a Piggyback Registration, the Holders shall not have any priority for
inclusion in such Piggyback Registration.

 

(d)          Except as set forth above, the Holders and the Maker, as
applicable, shall have all of the same rights, duties and obligations set forth
in the Registration Rights Agreement.

  

[Signature Page Follows]

 

 

 

  

IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this
Note to be duly executed by the undersigned as of the day and year first above
written. 

 

  Hydra Industries Acquisition Corp.             By:         Name:       Title: