Document:

Exhibit 10.1

 

INVESTMENT MANAGEMENT TRUST AGREEMENT

 

This Agreement is made as of May     , 2006 by and between HD Partners
Acquisition Corporation (the “Company”) and American Stock Transfer & Trust
Company (“Trustee”).

 

WHEREAS, the Company’s Registration Statement on Form
S-1, No. 333- 130531 (“Registration Statement”), for its initial public
offering of securities (“IPO”) has been declared effective as of the date
hereof by the Securities and Exchange Commission (“Effective Date”); and

 

WHEREAS, Morgan Joseph & Co. Inc. (“Morgan
Joseph”) is acting as the representative of the underwriters in the IPO; and

 

WHEREAS, as described in the Company’s Registration
Statement, and in accordance with the Company’s Amended and Restated
Certificate of Incorporation, $139,575,000 of the net proceeds of the IPO and
sale of founding director warrants ($160,500,000 if the underwriters’
over-allotment option is exercised in full) will be delivered to the Trustee to
be deposited and held in a trust account for the benefit of the Company and the
holders of the Company’s Common Stock issued in the IPO. The amount to be
delivered to the Trustee will be referred to herein as the “Property,” the
stockholders for whose benefit the Trustee shall hold the Property will be
referred to as the “Public Stockholders,” and the Public Stockholders and the
Company will be referred to together as the “Beneficiaries”); and

 

WHEREAS, the Company and the Trustee desire to enter
into this Agreement to set forth the terms and conditions pursuant to which the
Trustee shall hold the Property.

 

IT IS AGREED:

 

1. Agreements and Covenants of Trustee. The Trustee hereby
agrees and covenants to:

 

(a) Hold the Property in trust for the
Beneficiaries in accordance with the terms of this Agreement, in a segregated
trust account (“Trust Account”) established by the Trustee at a branch of
JPMorgan Chase NY Bank selected by the Trustee;

 

(b) Manage, supervise and administer the Trust
Account subject to the terms and conditions set forth herein;

 

(c) In a timely manner, upon the instruction of
the Company, to invest and reinvest the Property in any “Government Security”
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940
with a maturity of 180 days or less, or in money market funds meeting certain
conditions under Rule 2a-7 promulgated under the Investment Company Act of
1940, as amended;

 

(d) Collect and receive, when due, all principal
and income arising from the Property, which shall become part of the
“Property,” as such term is used herein;

 

(e) Notify the Company and Morgan Joseph of all
communications received by it with respect to any Property requiring action by
the Company;

 

(f) Supply any necessary information or documents
as may be requested by the Company in connection with the Company’s preparation
of the tax returns for the Company and Trust Account;

 

(g) Participate in any plan or proceeding for
protecting or enforcing any right or interest arising from the Property if, as
and when instructed by the Company and/or Morgan Joseph to do so;

 

(h) Render to the Company and to Morgan Joseph,
and to such other person as the Company may instruct, monthly written
statements of the activities of and amounts in the Trust Account reflecting all
receipts and disbursements of the Trust Account;

 

 

(i) Upon written instructions from the Company,
deliver to the Company, on a quarterly basis, from the Property in the Trust
Account, an amount equal to the taxes payable by the Company, if any, relating
to interest earned on the Property; and

 

(j) Commence liquidation of the Trust Account
promptly after receipt of and only in accordance with the terms of a letter
(“Termination Letter”), in a form substantially similar to that attached hereto
as either Exhibit A or Exhibit B (subject in the case of Exhibit B,
to the provisions below), signed on behalf of the Company by its Chief
Executive Officer or Chairman of the Board and Secretary and affirmed by its
entire Board of Directors, and complete the liquidation of the Trust Account
and distribute the Property in the Trust Account only as directed in the
Termination Letter and the other documents referred to therein; provided,
however, that in the event that a Termination Letter has not been
received by [DATE/18 MONTHS] (or the date that
is the six month anniversary of such date, in the event that a letter of
intent, agreement in principle or definitive agreement has been executed prior
to such date in connection with a Business Combination (as defined in the
Termination Letter attached hereto as Exhibit A) that has not been
consummated by [DATE/24 MONTHS]), the Trust
Account shall be liquidated as part of the Company’s plan of dissolution and
distribution approved by the Company’s stockholders in accordance with the
procedures set forth in the Termination Letter attached as Exhibit B to
the stockholders of record on the record date; provided, further,
that the record date shall be within ten (10) days of [DATE/18
MONTHS] (or the date that is the six month anniversary of such date,
in the event that a letter of intent, agreement in principle or definitive
agreement has been executed prior to such date in connection with a Business
Combination that has not been consummated by [DATE/24
MONTHS]), or as soon thereafter as is practicable.

 

2. Agreements and Covenants of the Company. The Company hereby
agrees and covenants to:

 

(a) Give all instructions to the Trustee
hereunder in writing, signed by the Company’s Chief Executive Officer or
Chairman of the Board. In addition, except with respect to its duties under
paragraph 1(j) above, the Trustee shall be entitled to rely on, and shall be
protected in relying on, any verbal or telephonic advice or instruction which
it in good faith believes to be given by any one of the persons authorized
above to give written instructions, provided that the Company shall promptly
confirm such instructions in writing;

 

(b) Hold the Trustee harmless and indemnify the
Trustee from and against any and all expenses, including reasonable counsel
fees and disbursements, or loss suffered by the Trustee in connection with any
action, suit or other proceeding brought against the Trustee involving any
claim, or in connection with any claim or demand which in any way arises out of
or relates to this Agreement, the services of the Trustee hereunder, or the
Property or any income earned from investment of the Property, except for
expenses and losses resulting from the Trustee’s gross negligence or willful
misconduct. Promptly after the receipt by the Trustee of notice of demand or
claim or the commencement of any action, suit or proceeding, pursuant to which
the Trustee intends to seek indemnification under this paragraph, it shall
notify the Company in writing of such claim (hereinafter referred to as the
“Indemnified Claim”). The Company shall have the right to conduct and manage
the defense against such Indemnified Claim, provided, that the Company shall
obtain the consent of the Trustee with respect to the selection of counsel,
which consent shall not be unreasonably withheld. The Company may not agree to
settle any Indemnified Claim without the prior written consent of the
Trustee.  The Trustee may participate in
such action with its own counsel at its own expense;

 

(c) Pay the Trustee an initial acceptance fee of
$1,000 and an annual fee of $3,000 (it being expressly understood that the
Property shall not be used to pay such fee). The Company shall pay the Trustee
the initial acceptance fee and first year’s fee at the consummation of the IPO
and thereafter on the anniversary of the Effective Date. The Trustee shall
refund to the Company the fee (on a pro rata basis) with respect to any period
after the liquidation of the Trust Fund. The Company shall not be responsible
for any other fees or charges of the Trustee except as may be provided in paragraph
2(b) hereof (it being expressly understood that the Property shall not be used
to make any payments to the Trustee under such paragraph);

 

 

(d) Provide to the Trustee any letter of intent,
agreement in principle or definitive agreement that is executed prior to [DATE/18 MONTHS] in connection with a Business Combination;
and

 

(e) In connection with any vote of the Company’s
stockholders regarding a Business Combination, provide to the Trustee an
affidavit or certificate of a firm regularly engaged in the business of
soliciting proxies and tabulating stockholder votes (which firm may be the
Trustee) verifying the vote of the Company’s stockholders regarding such
Business Combination.

 

(f) In connection with any vote of the Company’s
stockholders regarding a dissolution and liquidation, provide to the Trustee an
affidavit or certificate of a firm regularly engaged in the business of
tabulating stockholder votes (which firm may be the Trustee) verifying the vote
of the Company’s stockholders regarding such dissolution and liquidation.

 

3. Limitations of Liability. The Trustee shall have no
responsibility or liability to:

 

(a) Take any action with respect to the Property,
other than as directed in paragraph 1 hereof and the Trustee shall have no
liability to any party except for liability arising out of its own gross
negligence or willful misconduct;

 

(b) Institute any proceeding for the collection
of any principal and income arising from, or institute, appear in or defend any
proceeding of any kind with respect to, any of the Property unless and until it
shall have received instructions from the Company given as provided herein to
do so and the Company shall have advanced or guaranteed to it funds sufficient
to pay any expenses incident thereto;

 

(c) Change the investment of any Property, other
than in compliance with paragraph 1(c);

 

(d) Refund any depreciation in principal of any
Property;

 

(e) Assume that the authority of any person
designated by the Company to give instructions hereunder shall not be continuing
unless provided otherwise in such designation, or unless the Company shall have
delivered a written revocation of such authority to the Trustee;

 

(f) The other parties hereto or to anyone else
for any action taken or omitted by it, or any action suffered by it to be taken
or omitted, in good faith and in the exercise of its own best judgment, except
for its gross negligence or willful misconduct. The Trustee may rely
conclusively and shall be protected in acting upon any order, notice, demand,
certificate, opinion or advice of counsel (including counsel chosen by the
Trustee), statement, instrument, report or other paper or document (not only as
to its due execution and the validity and effectiveness of its provisions, but
also as to the truth and acceptability of any information therein contained)
which is believed by the Trustee, in good faith, to be genuine and to be signed
or presented by the proper person or persons. The Trustee shall not be bound by
any notice or demand, or any waiver, modification, termination or rescission of
this agreement or any of the terms hereof, unless evidenced by a written
instrument delivered to the Trustee signed by the proper party or parties and,
if the duties or rights of the Trustee are affected, unless it shall give its
prior written consent thereto;

 

(g) Verify the correctness of the information set
forth in the Registration Statement or to confirm or assure that any
acquisition made by the Company or any other action taken by it is as
contemplated by the Registration Statement; and

 

(h) Subject to the requirements of Section 1(i)
of the Trust Agreement, pay any taxes on behalf of the Trust Account to any
governmental entity or taxing authority.

 

4. Termination. This Agreement shall terminate as follows:

 

(a) If the Trustee gives written notice to the
Company that it desires to resign under this Agreement, the Company shall use
its reasonable efforts to locate a successor trustee. At such time that the
Company

 

 

notifies the Trustee that a successor trustee has been appointed by the
Company and has agreed to become subject to the terms of this Agreement, the
Trustee shall transfer the management of the Trust Account to the successor
trustee, including but not limited to the transfer of copies of the reports and
statements relating to the Trust Account, whereupon this Agreement shall
terminate; provided, however, that, in the event that the Company does not
locate a successor trustee within ninety days of receipt of the resignation
notice from the Trustee, the Trustee may submit an application to have the
Property deposited with the United States District Court for the Southern
District of New York and upon such deposit, the Trustee shall be immune from
any liability whatsoever that arises due to any actions or omissions to act by
any party after such deposit; or

 

(b) At such time that the Trustee has completed
the liquidation of the Trust Account in accordance with the provisions of
paragraph 1(j) and 2(f) hereof, and distributed the Property in accordance with
the provisions of the Termination Letter, this Agreement shall terminate except
with respect to Paragraph 2(b).

 

5. Miscellaneous.

 

(a) The Company and the Trustee each acknowledge
that the Trustee will follow the security procedures set forth below with
respect to funds transferred from the Trust Account. Upon receipt of written
instructions, the Trustee will confirm such instructions with an Authorized
Individual at an Authorized Telephone Number listed on the attached
Exhibit C. The Company and the Trustee will each restrict access to
confidential information relating to such security procedures to authorized
persons. Each party must notify the other party immediately if it has reason to
believe unauthorized persons may have obtained access to such information, or
of any change in its authorized personnel. In executing funds transfers, the
Trustee will rely upon account numbers or other identifying numbers of a
beneficiary, beneficiary’s bank or intermediary bank, rather than names. The
Trustee shall not be liable for any loss, liability or expense resulting from
any error in an account number or other identifying number, provided it has
accurately transmitted the numbers provided.

 

(b) 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 conflict of laws. It may be executed in several
counterparts, each one of which shall constitute an original, and together
shall constitute but one instrument.

 

(c) This Agreement contains the entire agreement
and understanding of the parties hereto with respect to the subject matter
hereof. This Agreement or any provision hereof may only be changed, amended or
modified by a writing signed by each of the parties hereto; provided, however,
that no such change, amendment or modification may be made without the prior
written consent of Morgan Joseph. As to any claim, cross-claim or counterclaim
in any way relating to this Agreement, each party waives the right to trial by
jury.

 

(d) The parties hereto consent to the
jurisdiction and venue of any state or federal court located in the City of New
York for purposes of resolving any disputes hereunder.

 

(e) Any notice, consent or request to be given in
connection with any of the terms or provisions of this 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 by facsimile
transmission:

 

if to the Trustee, to:

 

American Stock Transfer

& Trust Company

59 Maiden Lane

Plaza Level

New York, New York 10038

Attn: Herb Lemmer, Vice President

Fax No.: (718) 331-1852

 

 

if to the Company, to:

 

HD Partners Acquisition Corporation

2601 Ocean Park Boulevard

Suite 320

Santa Monica, California 90405

Attn: Bruce Lederman, Executive Vice President and Secretary

Fax No.: (310) 399-7303

 

in either case with a copy to:

 

Ellenoff Grossman & Schole LLP

370 Lexington Avenue, 19th Floor

New York, New York 1017

Attn: Douglas S. Ellenoff, Esq.

Fax No.: (212) 370-7889

 

and

 

Morgan Joseph & Co. Inc.

600 Fifth Avenue, 19th Floor

New York, New York 10020

Attn: Mary Lou Malanoski

Fax No.: (212) 218-3718

 

and

 

DLA Piper Rudnick Gray Cary US LLP

1251 Avenue of the Americas

New York, New York 10020-1104

Attn: Jonathan Klein, Esq.

Fax No.: (212) 835-6001

 

 

(f) This Agreement may not be assigned by the
Trustee without the prior written consent of the Company and Morgan Joseph.

 

(g) Each of the Trustee and the Company hereby
represents that it has the full right and power and has been duly authorized to
enter into this Agreement and to perform its respective obligations as
contemplated hereunder. The Trustee acknowledges and agrees that it shall not
make any claims or proceed against the Trust Account, including by way of
set-off, and shall not be entitled to any funds in the Trust Account under any
circumstance.

 

 

 IN WITNESS WHEREOF, the parties have duly executed this
Investment Management Trust Agreement as of the date first written above.

 

	
   

  	
   

  
	
   

  	
  AMERICAN STOCK TRANSFER & TRUST

  
	
   

  	
  COMPANY, as
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  HD PARTNERS ACQUISITION

  
	
   

  	
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  

 

 

EXHIBIT
A

[Letterhead
of Company]

[Insert date]

American Stock Transfer

  & Trust Company

59 Maiden Lane

Plaza Level

New York, New York 10038

Attn:                  

Re:          Trust
Account No.
[                    ]
Termination Letter

Gentlemen:

 

Pursuant to paragraph 1(j) of the Investment
Management Trust Agreement between HD Partners Acquisition Corporation
(“Company”) and American Stock Transfer & Trust Company (“Trustee”), dated
as of             ,
200   (“Trust Agreement”), this is to advise you
that the Company has entered into an agreement (“Business Agreement”) with                          (“Target Business”) to consummate a business
combination with Target Business (“Business Combination”) on or about [insert
date]. The Company shall notify you at least 48 hours in advance of the actual
date of the consummation of the Business Combination (“Consummation Date”).

 

In accordance with paragraph 2 of Article 6 of the
Amended and Restated Certificate of Incorporation of the Company, the Business
Combination has been approved by the stockholders of the Company and by the
Public Stockholders holding a majority of the IPO Shares, and Public
Stockholders holding less than 20% of the IPO Shares have voted against the
Business Combination and given notice of exercise of their conversion rights
described in paragraph 3 of Article 6 of the Amended and Restated Certificate
of Incorporation of the Company. Pursuant to Section 2(e) of the Trust
Agreement, we are providing you with [an affidavit] [a certificate] of                     ,
which verifies the vote of the Company’s stockholders in connection with the
Business Combination. In accordance with the terms of the Trust Agreement, we
hereby authorize you to commence liquidation of the Trust Account to the effect
that, on the Consummation Date, all of funds held in the Trust Account will be
immediately available for transfer to the account or accounts that the Company
shall direct on the Consummation Date.

 

On the Consummation Date (i) counsel for the
Company shall deliver to you written notification that the Business Combination
has been consummated or will, concurrently with your transfer of funds to the
accounts as directed by the Company, be consummated, and
(ii) the Company shall deliver to you written instructions with respect to
the transfer of the funds held in the Trust Account (“Instruction Letter”). You
are hereby directed and authorized to transfer the funds held in the Trust
Account immediately upon your receipt of the counsel’s letter and the
Instruction Letter, in accordance with the terms of the Instruction Letter. In
the event that certain deposits held in the Trust Account may not be liquidated
by the Consummation Date without penalty, you will notify the Company of the
same and the Company shall direct you as to whether such funds should remain in
the Trust Account and be distributed after the Consummation Date to the Company
or be distributed immediately and the penalty incurred. Upon the distribution
of all the funds in the Trust Account pursuant to the terms hereof, the Trust
Agreement shall be terminated.

 

In the event that the Business Combination is not
consummated on the Consummation Date described in the notice thereof and we
have not notified you on or before the original Consummation Date of a new
Consummation Date, then the funds held in the Trust Account shall be reinvested
as provided in the Trust Agreement on the business day immediately following
the Consummation Date as set forth in the notice. 

 

	
   

  	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HD PARTNERS ACQUISITION

  
	
   

  	
   

  	
  CORPORATION

  

 

 

	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [NAME, TITLE]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  [NAME, TITLE]

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  AFFIRMED:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Steven J. Cox, Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Eddy W. Hartenstein, Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Robert L. Meyers, Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Henry Goldberg, Director

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Martin E. Gottlieb, Director

  

 

 

EXHIBIT
B

[Letterhead
of Company]

 

[Insert date]

American Stock Transfer

  & Trust Company

59 Maiden Lane

Plaza Level

New York, New York 10038

Attn:                     

 

Re:          Trust
Account No.
[                    ]
Termination Letter

Gentlemen:

 

Pursuant to paragraph 1(j) and 2(f) of the Investment
Management Trust Agreement between HD Partners Acquisition Corporation
(“Company”) and American Stock Transfer & Trust Company dated as of May    ,
2006 (“Trust Agreement”), this is to advise you that the Board of Directors of
the Company and the stockholders of the Company have voted to dissolve and
liquidate the Company. Attached hereto is a copy of the minutes of the meeting
of the Board of Directors and the stockholders of the Company relating thereto,
certified by the Secretary of the Company as true and correct and in full force
and effect.

 

In accordance with the terms of the Trust Agreement,
we hereby authorize you, to commence liquidation of the Trust Account as part
of the Company’s plan of dissolution and distribution. In connection with this
liquidation, you are hereby authorized to establish a record date for the
purposes of determining the stockholders of record entitled to receive their
per share portion of the Trust Account. The record date shall be within ten
(10) days of the liquidation date, or as soon thereafter as is
practicable. You will notify the Company in writing as to when all of the funds
in the Trust Account will be available for immediate transfer (“Transfer Date”)
in accordance with the terms of the Trust Agreement and the Amended and
Restated Certificate of Incorporation of the Company. You shall commence
distribution of such funds in accordance with the terms of the Trust Agreement
and the Amended and Restated Certificate of Incorporation of the Company and
you shall oversee the distribution of the funds. Upon the payment of all the
funds in the Trust Account, the Trust Agreement shall be terminated. 

 

	
   

  	
   

  	
  Very truly yours,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  HD PARTNERS ACQUISITION

  
	
   

  	
   

  	
  CORPORATION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [NAME, TITLE]

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  [NAME, TITLE]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  AFFIRMED:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Steven J. Cox, Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Eddy W. Hartenstein, Director

  	
   

  
								

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Robert L. Meyers, Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Henry Goldberg, Director

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Martin E. Gottlieb, Director

  	
   

  

 

 

EXHIBIT
C 

 

	
  AUTHORIZED INDIVIDUAL(S)

  	
   

  	
  AUTHORIZED

  
	
  FOR TELEPHONE CALL BACK

  	
   

  	
  TELEPHONE NUMBER(S)

  
	
   

  	
   

  	
   

  
	
  Company:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  HD Partners Acquisition Corporation

  	
   

  	
   

  
	
  2601 Ocean Park Boulevard

  Suite 320

  Santa Monica,
  California 90405

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attn: Bruce Lederman, Executive Vice President and
  Secretary

  	
   

  	
  (310) 452-8300

  
	
   

  	
   

  	
   

  
	
  Trustee:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  American Stock Transfer & Trust Company

  	
   

  	
   

  
	
  59 Maiden Lane

  Plaza Level

  	
   

  	
   

  
	
  New York, New York 10004

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attn: Herb Lemmer, Vice President

  	
   

  	
  (718) 921-8209Exhibit
10.4

 

May 17, 2006

 

HD Partners Acquisition Corporation

2601 Ocean Park Boulevard, Suite 320

Santa Monica, CA 90405

 

 

Morgan Joseph & Co.
Inc.

600 Fifth Avenue

19th Floor

New York, New York 10020

 

 

Re:          Initial Public
Offering

 

Gentlemen:

 

The
undersigned officer of HD Partners Acquisition Corporation (“Company”), in
consideration of Morgan Joseph & Co. Inc. (“Morgan Joseph”) entering into a
letter of intent (“Letter of Intent”) to underwrite an initial public offering
of the securities of the Company (“IPO”) and embarking on the IPO process,
hereby agrees as follows (certain capitalized terms used herein are defined in
paragraph 13 hereof):

 

1.             In
the event that the Company fails to consummate a Business Combination within 18
months from the effective date (“Effective Date”) of the registration statement
relating to the IPO (or 24 months under the circumstances described in the
prospectus relating to the IPO), the undersigned will (i) cause the Trust Fund
(as defined in the Letter of Intent) to liquidate the Trust Fund to the holders
of IPO Shares, (ii) take all reasonable actions within his power to cause the
Company to dissolve as soon as reasonably practicable and (iii) vote his shares
in favor of any plan of dissolution and distribution recommended by the
Company’s board of directors.  The undersigned
hereby waives any and all right, title, interest or claim of any kind (“Claim”)
in or to any rights in the Trust Fund, except with respect to any
of the IPO Shares, as defined herein, acquired by the undersigned in connection
with or following the IPO, and any remaining net assets of the Company as a
result of such liquidation of the Trust Fund and dissolution of the Company and hereby
waives any Claim the undersigned may have in the future as a result of, or
arising out of, any contracts or agreements with the Company and will not seek
recourse against the Trust Fund for any reason whatsoever.  The undersigned agrees to indemnify and hold
harmless the Company against any and all loss, liability, claims, 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) which the Company may become subject as a result of
any claim by any vendor, prospective target business or other entity that is
owed money by the Company for services rendered or products sold provided that
the Company did not obtain a waiver from such party of its rights or claims to
the Trust Fund and only to the extent necessary to ensure that such loss,
liability, claim, damage or expense does not reduce the amount in the Trust
Fund (as defined in the Letter of Intent).

 

2.             In
order to minimize potential conflicts of inter­est which may arise from
multiple affiliations, the undersigned agrees to present to the Company for its
consideration, prior to presentation to any other person or entity, any
suitable opportunity to acquire an operating business, until the earlier of the
consummation by the Company of a Business Combination, the dissolution of the
Company or until such time as the undersigned ceases to be an officer of the
Company, subject to any pre-existing fiduciary and contractual obligations the
undersigned might have.

 

3.             The undersigned
acknowledges and agrees that the Company will not consummate any Business
Combination which involves a company which is affiliated with any of the
Insiders unless the Company obtains an opinion from an independent investment
banking firm which is a member of the National Association of Securities
Dealers, Inc. and is reasonably acceptable to Morgan Joseph that the Business
Combination is fair to the Company’s stockholders from a financial perspective.

 

4.             Neither the undersigned, any member of
the family of the undersigned, nor any affiliate of the undersigned
(“Affiliate”) will be entitled to receive and will not accept any compensation
for services rendered to the Company prior to the consummation of the Business
Combination; provided that commencing on the Effective Date, Value Investments,
LLC (“Related Party”), shall be allowed to charge the Company an allocable
share of Related Party’s overhead, up to $7,500 per month, to compensate it for
the Company’s use of Related Party’s office space, utilities,
administrative, technology and secretarial services.  Related Party and the undersigned shall also
be entitled to reimbursement from the Company for their out-of-pocket expenses incurred in
connection with seeking and consummating a Business Combination.

 

5.             Neither the
undersigned, any member of the family of the undersigned, nor any Affiliate
will be entitled to receive or accept a finder’s fee or any other compensation
in the event the undersigned, any member of the family of the undersigned or
any Affiliate originates a Business Combination.

 

6.             The
undersigned agrees to be the Executive Vice President of the Company until the
earlier of the consummation by the Company of a Business Combination or the
dissolution of the Company.  The
undersigned’s biographical information furnished to the Company and Morgan
Joseph and attached hereto as Exhibit A is true and accurate in all respects,
does not omit any material information with respect

 

 

to the undersigned’s background and contains all of the information
required to be disclosed pursuant to Item 401 of Regulation S-K, promulgated
under the Securities Act of 1933.  The
undersigned’s Questionnaire previously furnished to the Company and Morgan
Joseph hereto is true and accurate in all respects.  The undersigned represents and warrants that:

 

(a)                                  he 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;

 

(b)                                 he has never
been convicted of or pleaded guilty to any crime (i) involving any fraud or
(ii) relating to any financial transaction or handling of funds of another
person, or (iii) pertaining to any dealings in any securities, and he is not
currently a defendant in any such criminal proceeding; and

 

(c)                                  he 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.

 

7.             The
undersigned has full right and power, without violating any agreement by which
he is bound, to enter into this letter agreement and to serve as the Executive
Vice President of the Company.

 

8.             The
undersigned authorizes any employer, financial institution, or consumer credit
reporting agency to release to Morgan Joseph and its legal representatives or
agents (including any investigative search firm retained by Morgan Joseph) any
information they may have about the undersigned’s background and finances
(“Information”).  Neither Morgan Joseph
nor its agents shall be violating the undersigned’s right of privacy in any
manner in requesting and obtaining the Information and the undersigned hereby
releases them from liability for any damage whatsoever in that connection.

 

9.             In connection with the vote
required to consummate a Business Combination, the undersigned agrees that he
will vote all shares of common stock, par value, $0.001, owned  by him prior to the IPO (“Insider Shares”) in
accordance with the majority of the votes cast by the holders of the IPO
Shares, and all shares of common stock acquired in connection with or following
the IPO “For” a Business Combination.

 

10.           The undersigned will escrow his Insider
Shares for the period commencing on the Effective Date and ending on the third
anniversary of the Effective Date, subject to the terms of a Stock Escrow
Agreement which the Company will enter into with the undersigned and an escrow
agent acceptable to the Company.

 

11.           The undersigned
agrees to not to resign from his position as officer of the Company as set
forth in the Registration Statement without the prior consent of

 

 

Morgan Joseph until the earlier of the consummation by the Company of a
Business Combination, liquidation of the Trust Account, or the dissolution of
the Company. The undersigned acknowledges that the foregoing does not interfere
with or limit in any way the right of the Company to terminate the
undersigned’s employment at any time (subject to other contractual rights the
undersigned may have) nor confer upon the undersigned any right to continue in
the employ of Company.

 

12.           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
Ellenoff Grossman & Schole LLP as agent for the service of process in the
State of New York to receive, for the undersigned and on his 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 Morgan Joseph and appoint a substitute agent acceptable
to each of the Company and Morgan Joseph within 30 days and nothing in this
letter will affect the right of either party to serve process in any other
manner permitted by law.

 

 

13.           As used herein, (i)
a “Business Combination” shall mean an acquisition by merger, capital stock
exchange, asset or stock acquisition, reorganization or otherwise, of an
operating business or businesses in the media, entertainment and/or
telecommunications industries; (ii) “Insiders” shall mean all officers, directors
and stockholders of the Company immediately prior to the IPO; and (iii) “IPO
Shares” shall mean the shares of Common Stock issued in the Company’s IPO.

 

[Signature Page to Follow]

 

 

	
   

  	
   

  	
   

  	
   

  	
  Lawrence
  N. Chapman

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Print
  Name of Insider

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  /s/ Lawrence N.
  Chapman

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Signature

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT A

 

Lawrence
Chapman has been our Executive Vice President since December 2005 and
served as a director from December 2005 through April 2006. Mr. Chapman
retired from Hughes Electronics Corporation (which changed its name to The
DIRECTV Group in 2004) in August 2004, with his most recent assignment as
President and Chief Operating Officer of DIRECTV’s Latin American operation, at
the time the region’s largest pay television service with offerings in over 28
countries. Mr. Chapman was appointed as President of DIRECTV Latin
America, LLC (a partnership between DIRECTV Latin America Holdings, a
subsidiary of Hughes Electronics Corp., Darlene Investments LLC, an affiliate
of the Cisneros Group of Companies, and Grupo Clarin), to lead the
reorganization of the company under Chapter 11 of the U.S. Bankruptcy Code.
DIRECTV Latin America emerged from Chapter 11 in April 2004. From
August 2001 through December 2002, Mr. Chapman was Executive
Vice President in charge of DIRECTV’s Product Development, Marketing and
Advertising organizations. From March 2000 through August 2001,
Mr. Chapman was President of DIRECTV Global Digital Media Inc., a
subsidiary of Hughes Electronics Corporation). Between 1990 and 2000,
Mr. Chapman served in a number of capacities at DIRECTV including Senior
Vice President of Programming, Senior Vice President of Special Markets and
Distribution, and Vice President of Business Affairs. Before his assignments
with DIRECTV, a business unit of Hughes Electronics Corporation,
Mr. Chapman served in various business development roles at Hughes
Communications Inc., a satellite services subsidiary of Hughes Electronics
Corporation. From 1985 to 1989, Mr. Chapman was Deputy General Manager at
JCSat, a Tokyo-based satellite services joint venture between Hughes
Communications, Itochu Corporation and Mitsui and Company, Ltd.
Mr. Chapman holds MS and BS degrees in Electrical Engineering from the
University of Florida. Mr. Chapman served as a member of the Board of
Directors of TiVo, Inc. from 1999 to 2003 and as a member of the Board of
Directors of PanAmSat Corporation in 2003.

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