Exhibit 10.1

 

EXECUTION VERSION

 

September 13, 2017

 

Social Capital Hedosophia Holdings Corp.

120 Hawthorne Avenue
Palo Alto, CA 94301

 

Re:Initial Public Offering

 

Ladies and Gentlemen:

 

This letter (this “Letter Agreement”) is being delivered to you in accordance
with the Underwriting Agreement (the “Underwriting Agreement”) entered into or
proposed to be entered into by and between Social Capital Hedosophia Holdings
Corp., a Cayman Islands exempted company (the “Company”), and Credit Suisse
Securities (USA) LLC, as the representative of the underwriters (the
“Underwriters”), relating to an underwritten initial public offering (the
“Public Offering”), of 69,000,000 of the Company’s units (including up to
9,000,000 units that may be purchased to cover over-allotments, if any) (the
“Units”), each comprised of one Class A ordinary share of the Company, par value
$0.0001 per share (the “Ordinary Shares”), and one-third of one warrant (each, a
“Warrant”). Each whole Warrant entitles the holder thereof to purchase one
Ordinary Share at a price of $11.50 per share, subject to adjustment. The Units
shall be sold in the Public Offering pursuant to a registration statement on
Form S-1 and prospectus (the “Prospectus”) filed by the Company with the
Securities and Exchange Commission (the “Commission”) and the Company shall
apply to have the Units listed on the New York Stock Exchange. Certain
capitalized terms used herein are defined in paragraph 11 hereof.

 

In order to induce the Company and the Underwriters to enter into the
Underwriting Agreement and to proceed with the Public Offering and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, SCH Sponsor Corp., a Cayman Islands exempted company (the
“Sponsor”), and the other undersigned persons (each, an “Insider” and
collectively, the “Insiders”), hereby agrees with the Company as follows:

 

1.          The Sponsor and each Insider agrees that if the Company seeks
shareholder approval of a proposed Business Combination, then in connection with
such proposed Business Combination, it, he or she shall (i) vote any Shares
owned by it, him or her in favor of any proposed Business Combination and (ii)
not redeem any Shares owned by it, him or her in connection with such
shareholder approval.

 

 

 

 

2.          The Sponsor and each Insider hereby agrees that in the event that
the Company fails to consummate a Business Combination within 24 months from the
closing of the Public Offering, or such later period approved by the Company’s
shareholders in accordance with the Company’s amended and restated memorandum
and articles of association, the Sponsor and each Insider shall take all
reasonable steps to cause the Company to (i) cease all operations except for the
purpose of winding up, (ii) as promptly as reasonably possible but not more than
ten (10) business days thereafter, subject to lawfully available funds therefor,
redeem 100% of the Ordinary Shares sold as part of the Units in the Public
Offering (the “Offering Shares”), at a per share price, payable in cash, equal
to the aggregate amount then on deposit in the Trust Account, including interest
(which interest shall be net of taxes payable and less up to $100,000 of
interest to pay dissolution expenses), divided by the number of then outstanding
Offering Shares, which redemption will completely extinguish all Public
Shareholders’ rights as shareholders (including the right to receive further
liquidation distributions, if any), subject to applicable law, and (iii) as
promptly as reasonably possible following such redemption, subject to the
approval of the Company’s remaining shareholders and the Company’s board of
directors, dissolve and liquidate, subject in each case to the Company’s
obligations under Cayman Islands law to provide for claims of creditors and
other requirements of applicable law. The Sponsor and each Insider agrees to not
propose any amendment to the Company’s amended and restated memorandum and
articles of association that would affect the substance or timing of the
Company’s obligation to redeem 100% of the Offering Shares if the Company does
not complete a Business Combination within 24 months from the closing of the
Public Offering, unless the Company provides its Public Shareholders with the
opportunity to redeem their Offering Shares upon approval of any such amendment
at a per share price, payable in cash, equal to the aggregate amount then on
deposit in the Trust Account, including interest (which interest shall be net of
taxes payable), divided by the number of then outstanding Offering Shares.

 

The Sponsor and each Insider acknowledges that it, he or she has no right,
title, interest or claim of any kind in or to any monies held in the Trust
Account or any other asset of the Company as a result of any liquidation of the
Company with respect to the Founder Shares held by it. The Sponsor and each
Insider hereby further waives, with respect to any Shares held by it, him or
her, if any, any redemption rights it, he or she may have in connection with the
consummation of a Business Combination, including, without limitation, any such
rights available in the context of a shareholder vote to approve such Business
Combination or in the context of a tender offer made by the Company to purchase
Ordinary Shares (although the Sponsor and the Insiders shall be entitled to
redemption and liquidation rights with respect to any Offering Shares it or they
hold if the Company fails to consummate a Business Combination within 24 months
from the date of the closing of the Public Offering).

 

3.          Notwithstanding the provisions set forth in paragraphs 7(a) and (b)
below, during the period commencing on the effective date of the Underwriting
Agreement and ending 180 days after such date, the Sponsor and each Insider
shall not, without the prior written consent of Credit Suisse Securities (USA)
LLC, offer, sell, contract to sell, pledge or otherwise dispose of (or enter
into any transaction that is designed to, or might reasonably be expected to,
result in the disposition (whether by actual disposition or effective economic
disposition due to cash settlement or otherwise)), directly or indirectly, 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 Commission
promulgated thereunder, with respect to, any Units, Shares, Warrants or any
securities convertible into, or exercisable, or exchangeable for, Ordinary
Shares or publicly announce an intention to effect any such transaction. Each of
the Insiders and the Sponsor acknowledges and agrees that, prior to the
effective date of any release or waiver, of the restrictions set forth in this
paragraph 3 or paragraph 7 below, the Company shall announce the impending
release or waiver by press release through a major news service at least two
business days before the effective date of the release or waiver. Any release or
waiver granted shall only be effective two business days after the publication
date of such press release. The provisions of this paragraph will not apply if
the release or waiver is effected solely to permit a transfer not for
consideration and the transferee has agreed in writing to be bound by the same
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.

 

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4.          In the event of the liquidation of the Trust Account, the Sponsor
(which for purposes of clarification shall not extend to any other shareholders,
members or managers of the Sponsor) 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 (a
“Target”); provided, however, that such indemnification of the Company by the
Sponsor shall apply only to the extent necessary to ensure that such claims by a
third party for services rendered (other than the Company’s 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 (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 and except as
to any claims under the Company’s indemnity of the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In the event that any such executed waiver is deemed to be unenforceable against
such third party, the Sponsor shall not be responsible to the extent of any
liability for such third party claims. The Sponsor shall have the right to
defend against any such claim with counsel of its choice reasonably satisfactory
to the Company if, within 15 days following written receipt of notice of the
claim to the Sponsor, the Sponsor notifies the Company in writing that it shall
undertake such defense.

 

5.          To the extent that the Underwriters do not exercise their
over-allotment option to purchase up to an additional 9,000,000 Units within 45
days from the date of the Prospectus (and as further described in the
Prospectus), the Sponsor agrees that it shall forfeit, at no cost, a number of
Founder Shares in the aggregate equal to 2,250,000 multiplied by a fraction, (i)
the numerator of which is 9,000,000 minus the number of Units purchased by the
Underwriters upon the exercise of their over-allotment option, and (ii) the
denominator of which is 9,000,000. All references in this Letter Agreement to
Founder Shares of the Company being forfeited shall take effect as surrenders
for no consideration of such Founder Shares as a matter of Cayman Islands law.
The forfeiture will be adjusted to the extent that the over-allotment option is
not exercised in full by the Underwriters so that the Initial Shareholders will
own an aggregate of 20.0% of the Company’s issued and outstanding Shares after
the Public Offering. The Initial Shareholders further agree that to the extent
that the size of the Public Offering is increased or decreased, the Company will
effect a capitalization or share repurchase or redemption, as applicable,
immediately prior to the consummation of the Public Offering in such amount as
to maintain the ownership of the Initial Shareholders prior to the Public
Offering at 20.0% of the Company’s issued and outstanding Shares upon the
consummation of the Public Offering. In connection with such increase or
decrease in the size of the Public Offering, then (A) the references to
9,000,000 in the numerator and denominator of the formula in the first sentence
of this paragraph shall be changed to a number equal to 15% of the number of
Ordinary Shares included in the Units issued in the Public Offering and (B) the
reference to 2,250,000 in the formula set forth in the immediately preceding
sentence shall be adjusted to such number of Founder Shares that the Sponsor
would have to return to the Company in order to hold (with all of the Initial
Shareholders) an aggregate of 20.0% of the Company’s issued and outstanding
Shares after the Public Offering.

 

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6.          The Sponsor and each Insider hereby agrees and acknowledges that:
(i) the Underwriters and the Company would be irreparably injured in the event
of a breach by such Sponsor or Insider of its, his or her obligations under
paragraphs 1, 2, 3, 4, 5, 7(a), 7(b), and 9 of 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 seek injunctive relief, in addition to
any other remedy that such party may have in law or in equity, in the event of
such breach.

 

7.          (a) The Sponsor and each Insider agrees that it, he or she shall not
Transfer (as defined below) any Founder Shares (or Ordinary Shares issuable upon
conversion thereof) until the earlier of (A) one year after the completion of
the Company’s initial Business Combination or (B) subsequent to the Business
Combination, (x) if the last sale price of the Ordinary Shares equals or exceeds
$12.00 per share (as adjusted for share splits, share dividends, rights
issuances, subdivisions, reorganizations, recapitalizations and the like) for
any 20 trading days within any 30-trading day period commencing at least 150
days after the Company’s initial Business Combination or (y) the date following
the completion of the Company’s initial Business Combination on which the
Company completes a liquidation, merger, share exchange, reorganization or other
similar transaction that results in all of the Company’s shareholders having the
right to exchange their Ordinary Shares for cash, securities or other property
(the “Founder Shares Lock-up Period”).

 

(b)          The Sponsor and each Insider agrees that it, he or she shall not
Transfer any Private Placement Warrants (or Ordinary Shares issued or issuable
upon the conversion of the Private Placement Warrants), until 30 days after the
completion of a Business Combination (the “Private Placement Warrants Lock-up
Period”, together with the Founder Shares Lock-up Period, the “Lock-up
Periods”).

 

(c)          Notwithstanding the provisions set forth in paragraphs 7(a) and
(b), transfers of the Founder Shares, Private Placement Warrants and Ordinary
Shares issued or issuable upon the exercise or conversion of the Private
Placement Warrants or the Founder Shares, are permitted (a) to the Company’s
officers or directors, any affiliates or family members of the Company’s
officers or directors, the Sponsor, any members of the Sponsor or any affiliates
of the Sponsor; (b) in the case of an individual, by gift to a member of the
individual’s immediate family, or to a trust, the beneficiary of which is a
member of the individual’s immediate family or an affiliate of such person, or
to a charitable organization; (c) in the case of an individual, by virtue of
laws of descent and distribution upon death of the individual; (d) in the case
of an individual, pursuant to a qualified domestic relations order; (e) by
private sales or transfers made in connection with the consummation of the
Company’s Business Combination at prices no greater than the price at which the
securities were originally purchased; (f) in the event of the Company’s
liquidation prior to the Company’s completion of an initial Business
Combination; (g) by virtue of the laws of the Cayman Islands or the Sponsor’s
memorandum and articles of association, as amended, upon dissolution of the
Sponsor; and (h) in the event of the Company’s completion of a liquidation,
merger, share exchange, reorganization or other similar transaction which
results in all of the Company’s shareholders having the right to exchange their
Ordinary Shares for cash, securities or other property subsequent to the
completion of the Company’s initial Business Combination; provided, however,
that, in the case of clauses (a) through (e), these permitted transferees must
enter into a written agreement with the Company agreeing to be bound by the
transfer restrictions in this Agreement.

 

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8.          The Sponsor and each Insider represents and warrants that it, he or
she 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. Each Insider’s biographical
information furnished to the Company, if any (including any such information
included in the Prospectus), is true and accurate in all respects and does not
omit any material information with respect to such Insider’s background. Each
Insider’s questionnaire furnished to the Company, if any, is true and accurate
in all respects. Each Insider represents and warrants that: 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; it has never been convicted
of, or pleaded guilty to, any crime (i) involving fraud, (ii) relating to any
financial transaction or handling of funds of another person, or (iii)
pertaining to any dealings in any securities and it is not currently a defendant
in any such criminal proceeding.

 

9.          Except as disclosed in the Prospectus, neither the Sponsor nor any
Insider nor any affiliate of the Sponsor or any Insider, nor any director or
officer of the Company, shall receive from the Company any finder’s fee,
reimbursement, consulting fee, monies in respect of any repayment of a loan or
other compensation prior to, or in connection with any services rendered in
order to effectuate the consummation of the Company’s initial Business
Combination (regardless of the type of transaction that it is), other than the
following, none of which will be made from the proceeds held in the Trust
Account prior to the completion of the initial Business Combination: (i)
repayment of a loan and advances up to an aggregate of $300,000 made to the
Company by the Sponsor; (ii) payment to an affiliate of the Sponsor for office
space; (iii) administrative and secretarial support for a total of $10,000 per
month; (iv) payment of customary fees for financial advisory services; (v)
reimbursement for any reasonable out-of-pocket expenses related to identifying,
investigating and consummating an initial Business Combination; and (vi)
repayment of loans, if any, and on such terms as to be determined by the Company
from time to time, made by the Sponsor or any of the Company’s officers or
directors to finance transaction costs in connection with an intended initial
Business Combination, provided, that, if the Company does not consummate an
initial Business Combination, a portion of the working capital held outside the
Trust Account may be used by the Company to repay such loaned amounts so long as
no proceeds from the Trust Account are used for such repayment. Up to $1,500,000
of such loans may be convertible into warrants at a price of $1.50 per warrant
at the option of the lender. Such warrants would be identical to the Private
Placement Warrants.

 

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10.         The Sponsor and each Insider has full right and power, without
violating any agreement to which 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 and, as applicable, to serve as a
director on the board of directors of the Company and hereby consents to being
named in the Prospectus as a director of the Company.

 

11.         As used herein, (i) “Business Combination” shall mean a merger,
share exchange, asset acquisition, share purchase, reorganization or similar
business combination, involving the Company and one or more businesses; (ii)
“Shares” shall mean, collectively, the Ordinary Shares and the Founder Shares;
(iii) “Founder Shares” shall mean the 17,250,000 Class B Ordinary Shares, par
value $0.0001 per share, issued and outstanding immediately prior to the
consummation of the Public Offering; (iv) “Initial Shareholders” shall mean the
Sponsor and any Insider that holds Founder Shares; (v) “Private Placement
Warrants” shall mean the Warrants to purchase up to 8,000,000 Ordinary Shares of
the Company that the Sponsor has agreed to purchase for an aggregate purchase
price of $12,000,000 in the aggregate, or $1.50 per Warrant, in a private
placement that shall occur simultaneously with the consummation of the Public
Offering; (vi) “Public Shareholders” shall mean the holders of securities issued
in the Public Offering; (vii) “Trust Account” shall mean the trust fund into
which a portion of the net proceeds of the Public Offering shall be deposited;
and (viii) “Transfer” shall mean the (a) 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 Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder with respect to, any
security, (b) 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) public announcement of any intention to
effect any transaction specified in clause (a) or (b).

 

12.         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 the Sponsor and each Insider that is the subject of any
such change, amendment modification or waiver.

 

13.         No party hereto may assign either this Letter Agreement or any of
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 Letter Agreement
shall be binding on the Sponsor and each Insider and their respective
successors, heirs and assigns and permitted transferees.

 

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14.         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 parties hereto (i) all agree
that any action, proceeding, claim or dispute arising out of, or relating in any
way to, this Letter Agreement shall be brought and enforced in the courts of New
York City, in the State of New York, and irrevocably submit 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.

 

15.         Any notice, consent or request to be given in connection with any of
the terms or provisions of this Letter Agreement shall be in writing and shall
be sent by express mail or similar private courier service, by certified mail
(return receipt requested), by hand delivery or facsimile transmission.

 

16.         Each party hereto shall not be liable for any breaches or
misrepresentations contained in this Letter Agreement by any other party to this
Letter Agreement (including, for the avoidance of doubt, any Insider with
respect to any other Insider), and no party shall be liable or responsible for
the obligations of another party, including, without limitation, indemnification
obligations and notice obligations.

 

17.         This Letter Agreement shall terminate on the earlier of (i) the
expiration of the Lock-up Periods or (ii) the liquidation of the Company;
provided, however, that this Letter Agreement shall earlier terminate in the
event that the Public Offering is not consummated and closed by December 31,
2017; provided further that paragraph 4 of this Letter Agreement shall survive
such liquidation.

 

[Signature Page follows]

 

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  Sincerely,       SCH Sponsor Corp.           By: /s/ Chamath Palihapitiya    
Name: Chamath Palihapitiya     Title: Chief Executive Officer

 

  /s/ Chamath Palihapitiya   Chamath Palihapitiya       /s/ Ian Osborne   Ian
Osborne       /s/ Philip Deutch   Philip Deutch       /s/ Sachin Sood   Sachin
Sood       /s/ Simon Williams   Simon Williams       /s/ Anthony Bates   Anthony
Bates       /s/ Adam Bain   Adam Bain       /s/ Andrea Wong   Andrea Wong

 

[Signature Page to Letter Agreement]

 

 

 

 

Acknowledged and Agreed:

 

Social Capital Hedosophia Holdings Corp.

 

By: /s/ Chamath Palihapitiya     Name: Chamath Palihapitiya     Title: Chief
Executive Officer  

 

[Signature Page to Letter Agreement]