Exhibit 10.3

 

August 18, 2016

 

Stellar Acquisition III Inc. 

90 Kifissias Avenue

Maroussi 15125

Athens, Greece

  

Re: Initial Public Offering

 

Gentlemen:

 

This letter (this “Letter Agreement”) is being delivered to you in accordance
with the Underwriting Agreement (the “Underwriting Agreement”) proposed to be
entered into by and between Stellar Acquisition III Inc., a Marshall Islands
corporation (the “Company”), and Maxim Group LLC, as representative of the
several underwriters named therein (the “Underwriters”), relating to an
underwritten initial public offering (the “Public Offering”), of 6,500,000 of
the Company’s units (the “Units”), each Unit comprised of one share of the
Company’s common stock, par value $0.0001 per share (the “Common Stock”), and
one warrant (each, a “Warrant”). Each Warrant entitles the holder thereof to
purchase one share of the Common Stock 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 Nasdaq Capital Market.
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, Astra Maritime Corp., Dominium Investments Inc., Magellan
Investments Corp. and Firmus Investments Inc. (each, a “Sponsor” and
collectively, the “Sponsors”) and the undersigned individuals, each of whom is a
director, officer or initial shareholder to the Company (each, an “Insider” and
collectively, the “Insiders”), hereby agrees with the Company as follows:

 

1. Each 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 of Common
Stock owned by it, him or her in favor of such proposed Business Combination and
(ii) not redeem any shares of Common Stock owned by it, him or her in connection
with such shareholder approval. Each Sponsor and each Insider agrees not to
tender any Shares of Common Stock in connection with a tender offer conducted in
conjunction with a Business Combination.

 

2. Each Sponsor and each Insider agrees that in the event that the Company fails
to consummate a Business Combination (as defined in the Underwriting Agreement)
within 12 months from the date of the closing of the Public Offering (or up to
21 months from the closing of the Public Offering if the Company extends the
period of time to consummate a Business Combination in accordance with the
Company’s amended and restated articles of incorporation (the “Charter”)), or
such later period approved by the Company’s shareholders in accordance with the
Charter, the Sponsors and Insiders 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 10 business days
thereafter, subject to lawfully available funds therefor, redeem 100% of the
Common Stock 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 working capital released to the Company, including
repayment from interest of loans made to the Company by the Sponsors or
application of withdrawn or accrued interest to the Sponsors’ obligation to loan
the Company money in connection with an extension as described in the Charter,
and less up to $50,000 of interest to pay dissolution expenses), divided by the
number of then outstanding public shares, which redemption will completely
extinguish 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 Marshall Islands law to provide for claims of creditors and
other requirements of applicable law. Each Sponsor and each Insider agrees not
to propose any amendment to the Charter 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 12 months from the
closing of the Public Offering (or up to 21 months from the closing of the
Public Offering if the Company extends the period of time to consummate a
Business Combination in accordance with the Charter), unless the Company
provides its public shareholders with the opportunity to redeem their shares of
Common Stock 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 and working
capital released to the Company), divided by the number of then outstanding
public shares.

 

 

 

 

Each 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. Each Sponsor and each Insider
further waives, with respect to any shares of the Common Stock 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 shares of the Common Stock (although the Sponsors and Insiders shall be
entitled to redemption and liquidation rights with respect to any shares of the
Common Stock (other than the Founder Shares) they hold if the Company fails to
consummate a Business Combination within 12 months from the date of the closing
of the Public Offering (or up to 21 months from the closing of the Public
Offering if the Company extends the period of time to consummate a Business
Combination in accordance with the Charter).

 

3. Subject to 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, each Sponsor and each Insider shall not
(i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant
any option to purchase or otherwise dispose of or agree to dispose of, directly
or indirectly, file (or participate in the filing of) a registration statement
with the Commission 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 of Common Stock, Warrants or any securities convertible into, or
exercisable, or exchangeable for, shares of Common Stock owned by it, if any,
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of any Units,
shares of Common Stock, Warrants or any securities convertible into, or
exercisable, or exchangeable for, shares of Common Stock owned by it, if any,
whether any such transaction is to be settled by delivery of such securities, in
cash or otherwise, or (iii) publicly announce any intention to effect any
transaction specified in clause (i) or (ii). 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. Each
Sponsor and each Insider 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 (i) the release or
waiver is effected solely to permit a transfer of securities that is not for
consideration and (ii) 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.

 

4. In the event of the liquidation of the Trust Account, Prokopios (Akis)
Tsirigakis and George Syllantavos (the “Indemnitors”) agree to jointly 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 Indemnitors shall apply only to the extent necessary to
ensure that such claims by a third party for services rendered or products sold
to the Company or a Target do not reduce the amount of funds in the Trust
Account to below (i) $10.20 per Offering Share (or up to $10.374 per Offering
Share if the Company extends the period of time to consummate a Business
Combination in accordance with the Charter) 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 and for working capital purposes,
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
Indemnitors shall not be responsible to the extent of any liability for such
third party claim. The Indemnitors shall have the right to defend against any
such claim with counsel of their choice reasonably satisfactory to the Company
if, within 15 days following written receipt of notice of the claim to the
Indemnitors, the Indemnitors notify the Company in writing that they shall
undertake such defense.

 

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5. To the extent that the Underwriters do not exercise their over-allotment
option to purchase an additional 975,000 Units within 45 days from the date of
the Prospectus (and as further described in the Prospectus), the Sponsors and
Insiders agree that they shall forfeit, at no cost, a number of Founder Shares
in the aggregate equal to 283,064 multiplied by a fraction, (i) the numerator of
which is 975,000 minus the number of Units purchased by the Underwriters upon
the exercise of their over-allotment option, and (ii) the denominator of which
is 975,000. The forfeiture will be adjusted to the extent that the
over-allotment option is not exercised in full by the Underwriters so that the
shareholders prior to the Public Offering will own an aggregate of 22.5% of the
Company’s issued and outstanding shares of Common Stock after the Public
Offering (not including shares issued to the Underwriters). The Sponsors and
Insiders further agree that to the extent that the size of the Public Offering
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 Public Offering in such
amount as to maintain the ownership of the shareholders prior to the Public
Offering at 22.5% of its issued and outstanding shares of Common Stock upon the
consummation of the Public Offering (not including shares issued to the
Underwriters). In connection with such increase or decrease in the size of the
Public Offering, then (A) the references to 975,000 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 shares included in the Units
issued in the Public Offering and (B) the reference to 283,064 in the formula
set forth in the first sentence of this paragraph shall be adjusted to such
number of shares of the Common Stock that the Sponsors and Insiders would have
to return to the Company in order to hold an aggregate of 22.5% of the Company’s
issued and outstanding shares after the Public Offering (not including shares
issued to the Underwriters).

 

6. (a) Each Sponsor and each Insider agrees not to participate in the formation
of, or become an officer or director of, any other blank check company until the
Company has entered into a definitive agreement with respect to a Business
Combination or the Company has failed to complete a Business Combination within
12 months after the closing of the Public Offering (or up to 21 months from the
closing of the Public Offering if the Company extends the period of time to
consummate a Business Combination in accordance with the Charter).

 

(b) Each Sponsor and each Insider agrees and acknowledges that: (i) each of the
Underwriters and the Company would be irreparably injured in the event of a
breach by such Sponsor or Insider of his, her or its obligations (as applicable)
under paragraphs 1, 2, 3, 4, 5, 6(a), 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 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) Each Sponsor and each Insider agrees that it, he or she shall not
Transfer (as defined below) any Founder Shares until the earlier of (i) one year
after the completion of a Business Combination or earlier if, 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 date following the completion of a Business Combination
on which the Company completes a liquidation, merger, stock exchange or other
similar transaction that results in all of the Company’s shareholders having the
right to exchange their shares of Common Stock for cash, securities or other
property (the “Founder Shares Lock-up Period”).

 

(b) Each Sponsor and each Insider agrees that it, he or she shall not effectuate
any Transfer of Private Placement Warrants or Common Stock issued or issuable
upon the exercise 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”).

 

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(c) Notwithstanding the provisions set forth in paragraphs 7(a) and (b),
Transfers of the Founder Shares, Private Placement Warrants and shares of Common
Stock issued or issuable upon the exercise of the Private Placement Warrants are
permitted to (a)  the Company’s officers or directors, any affiliates or family
members of any of the Company’s officers or directors, any members of any
Sponsor or any affiliates of any Sponsor or any of its members; (b) in the case
of an individual, by a gift to a member of one of the members of the
individual’s immediate family or to a trust, the beneficiary of which is a
member of one of the individual’s immediate family, 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 a
Business Combination at prices no greater than the price at which the securities
were originally purchased; or (f) in the event of the Company’s liquidation
prior to the completion of a Business Combination; provided, however, that in
the case of clauses (a) through (e), these permitted transferees must enter into
a written agreement agreeing to be bound by these transfer restrictions.

 

8. Each 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 is true and accurate in all respects and
does not omit any material information with respect to the undersigned’s
background. Each Insider’s questionnaire furnished to the Company and the
information about the Insider in the Prospectus is true and accurate in all
respects. Each Insider represents and warrants that: the undersigned is not
subject to or a respondent in any legal action for, any injunction,
cease-and-desist order or order or stipulation to desist or refrain from any act
or practice relating to the offering of securities in any jurisdiction; the
undersigned 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 the undersigned is not currently a defendant in any such criminal
proceeding. 

 

9. Except as disclosed in the Prospectus, neither any Sponsor or any Insider nor
any affiliate of any 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 a Business Combination (regardless of the type of
transaction that it is), other than the following, none of which will be made
from the proceeds of the Public Offering held in the Trust Account prior to the
completion of a Business Combination: (a) repayment of loans of up to an
aggregate of $250,000 made to the Company by the Sponsors; (b) payment to an
affiliate of the Company’s executive officers for office space, utilities and
secretarial support for a total of $10,000 per month; (c) reimbursement for any
reasonable out-of-pocket expenses related to identifying, investigating and
consummating a Business Combination, and (d) repayment of loans, if any, and on
such terms as to be determined by the Company from time to time, made by the
Sponsors or certain of the Company’s officers and directors to finance
transaction costs in connection with an intended Business Combination, provided,
that, if the Company does not consummate a 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 other proceeds from the Trust Account
are used for such repayment. In the event that the Company does not consummate a
Business Combination, each Sponsor of the Company hereby waives its right to be
repaid for any loan such Sponsor has made to the Company, including loans to
extend the period of time during which the Company must consummate a Business
Combination (other than from funds available to the Company not held in the
Trust Account, including interest permitted to be withdrawn). Up to $2,000,000
of such loans (including any loans made in connection with the extension of the
time available for the Company to consummate a Business Combination) may be
convertible into warrants of the post Business Combination entity at a price of
$0.50 per warrant at the option of the lender. Such warrants would be identical
to the Private Placement Warrants.

 

10. Each 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 or director nominee of the Company.

 

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11. As used herein, (i) “Business Combination” shall mean a merger, capital
stock exchange, asset acquisition, stock purchase, reorganization or similar
business combination, involving the Company and one or more businesses;
(ii) “Founder Shares” shall mean the 1,887,097 shares of the Common Stock of the
Company initially acquired by the Sponsors and Insiders for an aggregate
purchase price of $25,000, or approximately $0.0001 per share, prior to the
consummation of the Public Offering; (iii) “Private Placement Warrants “ shall
mean the Warrants to purchase up to 7,650,000 shares of the Common Stock of the
Company that are to be acquired by the Sponsors for an aggregate purchase price
of $3.825 million in the aggregate, or $0.50 per Warrant, in a private placement
that shall occur simultaneously with the consummation of the Public Offering;
(iv) “Public Shareholders” shall mean the holders of securities issued in the
Public Offering; (v) “Trust Account” shall mean the trust fund into which a
portion of the net proceeds of the Public Offering shall be deposited; and
(vi) “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 all parties hereto.

 

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 Sponsors and Insiders and their respective successors and permitted assigns.
Any transfer made in contravention of this Letter Agreement shall be null and
void.

 

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 submits to such
jurisdiction and venue, which jurisdiction and venue shall be exclusive and
(ii) waives 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. 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 August
31, 2016, provided further that paragraph 4 of this Letter Agreement shall
survive such liquidation.

 

[Signature page follows]

 

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Sincerely,

 

ASTRA MARITIME CORP.

        By: /s/ Prokopios (Akis) Tsirigakis    

Name: Prokopios (Akis) Tsirigakis

Title:   President

 

 

DOMINIUM INVESTMENTS INC.         /s/ Prokopios (Aki) Tsirigakis  

Name: Prokopios (Akis) Tsirigakis

Title:   President

      MAGELLAN INVESTMENTS CORP.       /s/ George Syllantavos  

Name: George Syllantavos

Title:   President

 

 

FIRMUS INVESTMENTS INC.          /s/ George Syllantavos  

Name: George Syllantavos

Title:   President

 

 

By: /s/ Prokopios (Akis) Tsirigakis     Prokopios (Akis) Tsirigakis         By:
/s/ George Syllantavos     George Syllantavos         By: /s/ Alexandros Argyros
    Alexandros Argyros         By: /s/ Tiziano Paravagana     Tiziano Paravagna
        By: /s/ Eleonora (Liona) Bacha     Eleonora (Liona) Bacha         By:
/s/ Nikolas Tsirgakis     Nikolas Tsirigakis         By: /s/ Nicolas Bornozis  
  Nicolas Bornozis         By: /s/ Stylianos Anastopoulos     Stylianos
Anastopoulos  

 

CENTARUS METAL CORP.           /s/ Anastasios Chrysostamidis   Name:
  Anastasios Chrysostamidis   Title:   Director         Acknowledged and Agreed:
 

 

STELLAR ACQUISITION III INC.           By: /s/ George Syllantavos     Name:
   George Syllantavos     Title:  co-Chief Executive Officer  

 

 

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