-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P18nYYwa7SqwbCu2/HOhTUrbF5j6D1vsggXMPKjgVdBZQZFgrQsKttLcoXyk2CBS o6J+oHsiLvPVxC0cNmzfrg== 0000902664-08-000084.txt : 20080114 0000902664-08-000084.hdr.sgml : 20080114 20080114172652 ACCESSION NUMBER: 0000902664-08-000084 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20080114 DATE AS OF CHANGE: 20080114 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: Pet DRx CORP CENTRAL INDEX KEY: 0001331931 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE SERVICES [0700] IRS NUMBER: 562517815 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-81685 FILM NUMBER: 08529308 BUSINESS ADDRESS: STREET 1: 8000 TOWERS CRESCENT DRIVE, SUITE 1300 CITY: VIENNA STATE: VA ZIP: 22182 BUSINESS PHONE: 703-448-7688 MAIL ADDRESS: STREET 1: 8000 TOWERS CRESCENT DRIVE, SUITE 1300 CITY: VIENNA STATE: VA ZIP: 22182 FORMER COMPANY: FORMER CONFORMED NAME: Echo Healthcare Acquisition Corp. DATE OF NAME CHANGE: 20050630 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Hudson Bay Capital Management, L.P. CENTRAL INDEX KEY: 0001393825 IRS NUMBER: 371511173 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 120 BROADWAY, 40TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10271 BUSINESS PHONE: 212-571-1244 MAIL ADDRESS: STREET 1: 120 BROADWAY, 40TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10271 SC 13D 1 p08-0042sc13d.txt PET DRX CORP. CUSIP No. 27876C107 13D Page 1 of 19 Pages SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------- SCHEDULE 13D* (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13D-1(A) AND AMENDMENTS THERETO FILED PURSUANT TO 13D-2(A) Pet DRx Corp. (formerly known as Echo Healthcare Acquisition Corp.) ------------------------------------------------------ (Name of Issuer) Common Stock, $0.0001 par value per share ------------------------------------------------------ (Title of Class of Securities)) 27876C107 ------------------------------------------------------ (CUSIP NUMBER) Yoav Roth c/o Hudson Bay Capital Management, L.P. 120 Broadway, 40th Floor New York, NY 10271 (212) 571-1244 ------------------------------------------------------ (Name, address and telephone number of person authorized to receive notices and communications) January 3, 2008 ------------------------------------------------------ (Date of event which requires filing of this statement)) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. (Continued on following pages) (Page 1 of 19 Pages) - -------------------------------------------------------------------------------- The information required in the remainder of this cover page shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 27876C107 13D Page 2 of 19 Pages - -------------------------------------------------------------------------------- (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Hudson Bay Fund LP 35-2257058 - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [x] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** WC - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [X] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 427,310 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 427,310 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 427,310 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 1.82% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** PN - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 27876C107 13D Page 3 of 19 Pages - -------------------------------------------------------------------------------- (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Hudson Bay Overseas Fund, Ltd. - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [X] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** WC - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [X] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 697,190 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 697,190 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 697,190 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 2.97% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** CO - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 27876C107 13D Page 4 of 19 Pages - -------------------------------------------------------------------------------- (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Hudson Bay Capital Management, L.P. 37-1511173 - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [X] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** OO - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [X] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 1,124,500 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 1,124,500 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,124,500 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.78% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** PN - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 27876C107 13D Page 5 of 19 Pages - -------------------------------------------------------------------------------- (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Sander Gerber - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [X] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** OO - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [X] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 1,124,500 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 1,124,500 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,124,500 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.78% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** IN - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 27876C107 13D Page 6 of 19 Pages - -------------------------------------------------------------------------------- (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Yoav Roth - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [X] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** OO - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [X] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION Israel - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 1,124,500 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 1,124,500 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,124,500 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.78% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** IN - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 27876C107 13D Page 7 of 19 Pages - -------------------------------------------------------------------------------- (1) NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) John Doscas - -------------------------------------------------------------------------------- (2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ** (a) [ ] (b) [X] - -------------------------------------------------------------------------------- (3) SEC USE ONLY - -------------------------------------------------------------------------------- (4) SOURCE OF FUNDS ** OO - -------------------------------------------------------------------------------- (5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [X] - -------------------------------------------------------------------------------- (6) CITIZENSHIP OR PLACE OF ORGANIZATION United States - -------------------------------------------------------------------------------- NUMBER OF (7) SOLE VOTING POWER -0- SHARES ----------------------------------------------------------------- BENEFICIALLY (8) SHARED VOTING POWER 1,124,500 shares of Common Stock OWNED BY ----------------------------------------------------------------- EACH (9) SOLE DISPOSITIVE POWER -0- REPORTING ----------------------------------------------------------------- PERSON WITH (10) SHARED DISPOSITIVE POWER 1,124,500 shares of Common Stock - -------------------------------------------------------------------------------- (11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,124,500 shares of Common Stock - -------------------------------------------------------------------------------- (12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES ** [ ] - -------------------------------------------------------------------------------- (13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.78% - -------------------------------------------------------------------------------- (14) TYPE OF REPORTING PERSON ** IN - -------------------------------------------------------------------------------- ** SEE INSTRUCTIONS BEFORE FILLING OUT! CUSIP No. 27876C107 13D Page 8 of 19 Pages Item 1. Security and Issuer. This statement relates to the Common Stock, par value $0.0001 per share (the "Common Stock") of Pet DRx Corp. (formerly known as Echo Healthcare Acquisition Corp.), a Delaware corporation (the "Company"). The Company's principal executive offices are located at 560 South Winchester Boulevard, Suite 500, San Jose, CA 95128. Item 2. Identity and Background. (a) This Statement is filed by: (i) Hudson Bay Capital Management, L.P., a Delaware limited partnership, which is the trading manager of Hudson Bay Fund LP and Hudson Bay Overseas Fund, Ltd.; (ii) Hudson Bay Fund LP, a Delaware limited partnership; (iii) Hudson Bay Overseas Fund, Ltd., a Cayman Islands corporation; (iv) Sander Gerber, a United States citizen, who serves as an executive officer of Hudson Bay Capital Management, L.P.; (v) Yoav Roth, an Israeli citizen, who serves as an executive officer of Hudson Bay Capital Management, L.P.; (vi) John Doscas, a United States citizen, who serves as an executive officer of Hudson Bay Capital Management, L.P.; The foregoing persons are hereinafter sometimes collectively referred to as the "Reporting Persons." Any disclosures herein with respect to persons other than the Reporting Persons are made on information and belief after making inquiry to the appropriate party. (b) The address of the principal business and principal office of the Reporting Persons is 120 Broadway, 40th Floor, New York, NY 10271. (c) The principal business of each of the Reporting Persons is the management of investment funds and activities related thereto. The principal occupations of the officers and directors of Hudson Bay Overseas Fund, Ltd. are set forth on Schedule A and incorporated herein by reference. (d) None of the Reporting Persons has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the Reporting Persons has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, was, or is subject to, a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. CUSIP No. 27876C107 13D Page 9 of 19 Pages (f) Hudson Bay Capital Management, L.P. and Hudson Bay Fund LP are Delaware limited partnerships. Hudson Bay Overseas Fund, Ltd. is a Cayman Islands corporation. Sander Gerber and John Doscas are United States citizens. Yoav Roth is an Israeli citizen. Item 3. Source and Amount of Funds and Other Consideration. The Common Stock purchased by Hudson Bay Fund LP was acquired with working capital in open market transactions at an aggregate cost (including commissions, if any) of approximately $2,462,400. The Common Stock purchased by Hudson Bay Overseas Fund, Ltd. was acquired with working capital in open market transactions at an aggregate cost (including commissions, if any) of approximately $4,017,600. Item 4. Purpose of the Transaction. The purpose of the acquisition of the shares of Common Stock by the Reporting Persons is for investment. Although the acquisition of the shares of Common Stock by the Reporting Persons is for investment purposes, the shares of Common Stock were purchased with the intent of voting in favor of the then proposed merger (the "Merger") with XLNT Veterinary Care, Inc. ("XLNT"). In order to give an incentive for Hudson Bay Fund LP to vote in favor of the Merger, certain of the founders of the Company (the "Backstop Parties") entered into a Backstop Agreement attached as Exhibit 2 hereto, dated as of January 3, 2008 by and among the parties named on the signature pages thereto (the "Backstop Agreement"). Hudson Bay Fund LP agreed to use its reasonable best efforts to acquire at least 750,000 shares of Common Stock of the Company for a price not to exceed $8.10 and use commercially reasonable efforts to assist brokers to vote such shares in favor of the Merger. The Backstop Parties agreed to provide Hudson Bay Fund LP with limited make-whole protection, as follows: (A) upon the six-month anniversary of the closing of the Merger, the Backstop Parties agreed to pay Hudson Bay Fund LP an amount (the "Interim Backstop Payment") equal to fifty percent (50%) of the excess of (I) the aggregate purchase price (the "Initial Investment Amount") paid by Hudson Bay Fund LP for all the shares of Common Stock it acquired from January 3, 2008 until January 4, 2008, the date of the special meeting of the Company's stockholders to vote on the approval of the Merger, which was 800,000 shares of Common Stock of the Company (the "Purchased Shares"), less any sale proceeds received by Hudson Bay or deemed to be received by Hudson Bay in connection with a bona fide offer to buy shares (the "Rejected Shares") for cash immediately available upon settlement at a price per share equal to or greater than $6.25, over (II) the market price of the Common Stock (as determined in the Backstop Agreement) multiplied by the sum of (i) the number of Purchased Shares and (ii) 350,000 shares of Common Stock of the Company (together with the Purchased Shares, the "Total Shares"), excluding any Rejected Shares, and (B) upon the one-year anniversary of the closing of the Merger, the Backstop Parties agreed to purchase from Hudson Bay Fund LP the Total Shares still then held by Hudson Bay Fund LP less the Rejected Shares, for an aggregate consideration (the "Aggregate Buyback Amount") equal to the Initial Investment Amount less the sum of (i) the Interim Backstop Payment, (ii) the sale proceeds to Hudson Bay Fund LP from sales of any of the Total Shares prior to the one-year anniversary of the closing of the Merger and (ii) the sale proceeds to Hudson Bay Fund LP that would have been payable for Rejected Shares prior to the one-year anniversary of the closing of the CUSIP No. 27876C107 13D Page 10 of 19 Pages Merger, would such Rejected Shares have been sold. Notwithstanding the foregoing, the sum of the Interim Backstop Payment and the Aggregate Buyback Amount less the product of (i) the market price of the Common Stock (as determined in the Backstop Agreement) and (ii) the number of Total Shares less any Rejected Shares, shall not exceed the Initial Investment Amount less $1,000,000. Hudson Bay Fund LP also received an irrevocable option (the "Put Option") set forth in a Letter Agreement attached as Exhibit 3 hereto, dated as of January 3, 2008, to sell to Chicago Investments Inc. ("CII") and CII is obligated to purchase from Hudson Bay Fund LP, all or any portion of up to 100,000 shares of Common Stock of the Company at a price equal to $8.30 per share for a maximum aggregate price of $830,000. The Put Option will be valid until the earlier of March 3, 2008 and the date Hudson Bay Fund LP sells all of the Common Stock subject to the Put Option to any third party. In connection with the Put Option, CII agreed to secure its payment obligation under the Put Option by depositing cash in the amount of $830,000 in an escrow account. Each of Joshua S. Kanter, Joel Kanter, Gene E. Burleson, Marva Jan Burleson and Windy City, Inc. agreed to provide guaranties of all obligations under the Backstop Agreement and the Letter Agreement in favor of Hudson Bay Fund LP and Hudson Bay Capital Management LP. Subsequent to the transactions set forth in this Item 4, Hudson Bay Fund LP transferred sixty-two percent (62%) of its interest in the shares of Common Stock of the Company to Hudson Bay Overseas Fund Ltd. In connection with such transfer, Hudson Bay Fund LP also transferred a pro rata portion of its rights outlined above to Hudson Bay Overseas Fund Ltd. The descriptions of the Backstop Agreement and the Letter Agreement are a brief summary of each of those agreements. These summaries are not complete, and are qualified in their entirety by reference to the full text of the agreements, which are attached as exhibits to this Schedule 13D. Except as set forth herein or as would occur upon completion of any of the actions discussed herein, including in any Exhibits hereto, the Reporting Persons have no present plan or proposal that would relate to or result in any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D. The Reporting Persons intend to review their investment in the Company on a continuing basis and may engage in discussions with management, the board of directors, other shareholders of the Company and other relevant parties concerning the business, operations, management, governance, strategy and future plans of the Company. Depending on various factors including, without limitation, the Company's financial position and strategic direction, the outcome of the discussions and actions referenced above, actions taken by the board of directors, price levels of the Common Stock, other investment opportunities available to the Reporting Persons, conditions in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Company as they deem appropriate including, without limitation, purchasing additional shares of Common Stock or selling some or all of their shares of Common Stock, engaging in short selling of or any hedging or similar transactions with respect to the shares of Common Stock and/or otherwise changing their intention with respect to any and all matters referred to in Item 4 of Schedule 13D. CUSIP No. 27876C107 13D Page 11 of 19 Pages Item 5. Interest in Securities of the Issuer. A. Hudson Bay Capital Management, L.P. (a) As of the date hereof, Hudson Bay Capital Management, L.P. may be deemed the beneficial owner of (i) 427,310 shares of Common Stock owned by Hudson Bay Fund LP and (ii) 697,190 shares of Common Stock owned by Hudson Bay Overseas Fund, Ltd. As of January 3, 2008, Hudson Bay Capital Management, L.P. may have been deemed the beneficial owner of (i) 304,000 shares of Common Stock owned by Hudson Bay Fund LP and (ii) 496,000 shares of Common Stock owned by Hudson Bay Overseas Fund, Ltd. Percentage: Approximately 4.78% as of the date hereof. Approximately 9.14% as of January 3, 2008. The percentages used herein and in the rest of Item 5 in connection with the Reporting Persons' holdings after the closing of the Merger are calculated based upon 23,511,969 shares, which reflects the number of shares of Common Stock outstanding, as of January 4, 2008 post-Merger, as reported in the Company's current report on Form 8-K filed on January 10, 2007. The percentages used herein and in the rest of Item 5 in connection with the Reporting Persons' holdings on January 3, 2008 are calculated based upon 8,750,000 shares, which reflects the number of shares of Common Stock outstanding, as of November 2007, as reported in the Company's quarterly report on Form 10-Q for the quarterly period ended September 30, 2007. (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: See item (a) above. 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: See item (a) above. (c) Hudson Bay Capital Management, L.P. did not enter into any transactions in the Common Stock within the last sixty days. The transactions in the Common Stock within the last sixty days by Hudson Bay Fund LP and Hudson Bay Overseas Fund, Ltd., which were all in the open market, are set forth in Schedule B, and are incorporated herein by reference. (d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of the Common Stock. (e) Hudson Bay Capital Management, L.P. ceased to be the beneficial owner of more than five percent of the shares of Common Stock on January 4, 2008. B. Hudson Bay Fund LP CUSIP No. 27876C107 13D Page 12 of 19 Pages (a) As of the date hereof, Hudson Bay Fund LP may be deemed the beneficial owner of 427,310 shares of Common Stock. As of January 3, 2008, Hudson Bay Fund LP may have been deemed the beneficial owner of, 304,000 shares of Common Stock. Percentage: Approximately 1.82% as of the date hereof. Approximately 3.47% as of January 3, 2008. (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: See item (a) above. 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: See item (a) above. (c) The number of shares of Common Stock acquired by Hudson Bay Fund LP is set forth on Schedule B and is incorporated herein by reference. Hudson Bay Fund LP entered into transaction in the Common Stock within the last sixty days which are set forth on Schedule B. (d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of the Common Stock. (e) Hudson Bay Fund LP ceased to be the beneficial owner of more than five percent of the shares of Common Stock on January 4, 2008. C. Hudson Bay Overseas Fund, Ltd. (a) As of the date hereof, Hudson Bay Overseas Fund, Ltd. may be deemed the beneficial owner of 697,190 shares of Common Stock. As of January 3, 2008, Hudson Bay Overseas Fund, Ltd. may have been deemed the beneficial owner of 496,000 shares of Common Stock. Percentage: Approximately 2.97% as of the date hereof. Approximately 5.67% as of January 3, 2008. (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: See item (a) above. 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: See item (a) above. (c) The number of shares of Common Stock acquired by Hudson Bay Overseas Fund, Ltd. is set forth on Schedule B and is incorporated herein by reference. Hudson Bay Overseas Fund, Ltd. entered into transaction in the Common Stock within the last sixty days which are set forth on Schedule B. CUSIP No. 27876C107 13D Page 13 of 19 Pages (d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of the Common Stock. (e) Hudson Bay Overseas Fund, Ltd. ceased to be the beneficial owner of more than five percent of the shares of Common Stock on January 4, 2008. D. Sander Gerber (a) As of the date hereof, Sander Gerber may be deemed the beneficial owner of (i) 427,310 shares of Common Stock owned by Hudson Bay Fund LP and (ii) 697,190 shares of Common Stock owned by Hudson Bay Overseas Fund, Ltd. As of January 3, 2008, Sander Gerber may have been deemed the beneficial owner of (i) 304,000 shares of Common Stock owned by Hudson Bay Fund LP and (ii) 496,000 shares of Common Stock owned by Hudson Bay Overseas Fund, Ltd. Percentage: Approximately 4.78% as of the date hereof. Approximately 9.14% as of January 3, 2008. (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: See item (a) above. 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: See item (a) above. (c) Sander Gerber did not enter into any transactions in the Common Stock within the last sixty days. The transactions in the Common Stock within the last sixty days by Hudson Bay Fund LP and Hudson Bay Overseas Fund, Ltd., which were all in the open market, are set forth in Schedule B, and are incorporated herein by reference. (d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of the Common Stock. (e) Sander Gerber ceased to be the beneficial owner of more than five percent of the shares of Common Stock on January 4, 2008. E. Yoav Roth (a) As of the date hereof, Yoav Roth may be deemed the beneficial owner of (i) 427,310 shares of Common Stock owned by Hudson Bay Fund LP and (ii) 697,190 shares of Common Stock owned by Hudson Bay Overseas Fund, Ltd. As of January 3, 2008, Yoav Roth may have been deemed the beneficial owner of (i) 304,000 shares of Common Stock CUSIP No. 27876C107 13D Page 14 of 19 Pages owned by Hudson Bay Fund LP and (ii) 496,000 shares of Common Stock owned by Hudson Bay Overseas Fund, Ltd. Percentage: Approximately 4.78% as of the date hereof. Approximately 9.14% as of January 3, 2008. (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: See item (a) above. 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: See item (a) above. (c) Yoav Roth did not enter into any transactions in the Common Stock within the last sixty days. The transactions in the Common Stock within the last sixty days by Hudson Bay Fund LP and Hudson Bay Overseas Fund, Ltd., which were all in the open market, are set forth in Schedule B, and are incorporated herein by reference. (d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of the Common Stock. (e) Sander Gerber ceased to be the beneficial owner of more than five percent of the shares of Common Stock on January 4, 2008. E. John Doscas (a) As of the date hereof, John Doscas may be deemed the beneficial owner of (i) 427,310 shares of Common Stock owned by Hudson Bay Fund LP and (ii) 697,190 shares of Common Stock owned by Hudson Bay Overseas Fund, Ltd. As of January 3, 2008, John Doscas may have been deemed the beneficial owner of (i) 304,000 shares of Common Stock owned by Hudson Bay Fund LP and (ii) 496,000 shares of Common Stock owned by Hudson Bay Overseas Fund, Ltd. Percentage: Approximately 4.78% as of the date hereof. Approximately 9.14% as of January 3, 2008. (b) 1. Sole power to vote or direct vote: 0 2. Shared power to vote or direct vote: See item (a) above. 3. Sole power to dispose or direct the disposition: 0 4. Shared power to dispose or direct the disposition: See item (a) above. (c) John Doscas did not enter into any transactions in the Common Stock within the last sixty days. The transactions in the Common Stock within the last sixty days by Hudson Bay Fund LP and Hudson Bay Overseas Fund, Ltd., which were all in the open market, are set forth in Schedule B, and are incorporated herein by reference. CUSIP No. 27876C107 13D Page 15 of 19 Pages (d) No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of dividends from, or proceeds from the sale of, such shares of the Common Stock. (e) John Doscas ceased to be the beneficial owner of more than five percent of the shares of Common Stock on January 4, 2008. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Other than the Backstop Agreement Agreement, the Letter Agreement and the Guarantee Agreement described in Item 4 and the Joint Acquisition Statement attached as Exhibit 1 hereto, there are no contracts, arrangements, understandings or relationships (legal or otherwise) among the persons named in Item 2 hereof and between such persons and any person with respect to any securities of the Company, including but not limited to transfer or voting of any other securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, divisions of profits or loss, or the giving or withholding of proxies. Item 7. Materials to be Filed as Exhibits. Exhibit 1: Joint Acquisition Statement as required by Rule 13d-1(k)(1) under the Securities Exchange Act of 1934, as amended. Exhibit 2: Backstop Agreement dated January 4, 2008 by and among the parties named on the signature pages date thereto. Exhibit 3: Letter Agreement dated January 3, 2008. CUSIP No. 27876C107 13D Page 16 of 19 Pages SIGNATURES After reasonable inquiry and to the best of our knowledge and belief, the undersigned certify that the information set forth in this statement is true, complete and correct. DATED: January 14, 2008 HUDSON BAY FUND LP HUDSON BAY OVERSEAS FUND, LTD. By: /s/ Yoav Roth By: /s/ Yoav Roth ------------- ------------- Name: Yoav Roth Name: Yoav Roth Title Principal and Portfolio Manager Title Principal and Portfolio Manager HUDSON BAY CAPITAL MANAGEMENT, L.P. By: /s/ Yoav Roth /s/ Sander Gerber ------------- ----------------- Name: Yoav Roth SANDER GERBER Title Principal and Portfolio Manager /s/ Yoav Roth /s/ John Doscas - ------------- --------------- YOAV ROTH JOHN DOSCAS CUSIP No. 27876C107 13D Page 17 of 19 Pages Schedule A DIRECTORS AND EXECUTIVE OFFICERS OF CERTAIN REPORTING PERSONS The following sets forth the name, citizenship, principal occupation, position and address of each director and executive officer of the applicable Reporting Persons. To the best of the Reporting Persons' knowledge, except as set forth in this statement on Schedule 13D, none of the following individuals owns any shares of Common Stock. HUDSON BAY CAPITAL MANAGEMENT, L.P. Hudson Bay Capital Associates LLC, the General Partner of Hudson Bay Capital Management, L.P., is a Delaware limited liability company. Its principal business is the management of investment funds and activities related thereto. Its principal business address is 120 Broadway, 40th floor, New York, NY 10271. HUDSON BAY FUND LP Hudson Bay Capital GP LLC, the General Partner of Hudson Bay Fund, L.P., is a Delaware limited liability company. Its principal business is the management of investment funds and activities related thereto. Its principal business address is 120 Broadway, 40th floor, New York, NY. HUDSON BAY OVERSEAS FUND LTD. Sander Gerber is a citizen of the United States. His principal occupation is Chief Executive Officer and Chief Investment Officer of Hudson Bay Capital Management, L.P. His business address is 120 Broadway, 40th floor, New York, NY. John C. Doscas is a citizen of the United States. His principal occupation is President of Hudson Bay Capital Management, L.P. His business address is 120 Broadway, 40th floor, New York, NY. Michelle M. Willson-Clarke is a citizen of the Unites States and the Cayman Islands. Her principal occupation is Vice-President of Walkers SPV Limited. Her business address is Walker House, PO Box 908 GT, Mary Street, George Town, Grand Cayman, Cayman Islands. CUSIP No. 27876C107 13D Page 18 of 19 Pages Schedule B TRANSACTION NUMBER OF PRICE PER PURCHASER DATE TYPE SHARES SHARE - --------- ---- ----------- --------- --------- Hudson Bay Fund LP 1/3/2008 Purchase 304,000 $8.10 Hudson Bay Fund LP 1/7/2008 Sale 1,520 $6.75 Hudson Bay Fund LP 1/8/2008 Sale 2,280 $6.64 Hudson Bay Fund LP 1/9/2008 Sale 570 $6.69 Hudson Bay Fund LP 1/10/2008 Sale 4,560 $6.74 Hudson Bay Fund LP 1/14/2008 Sale 760 $6.56 --------- 294,310 --------- Hudson Bay Overseas 1/3/2008 Purchase 496,000 $8.10 Fund, Ltd. Hudson Bay Overseas 1/7/2008 Sale 2,480 $6.75 Fund, Ltd. Hudson Bay Overseas 1/8/2008 Sale 3,720 $6.64 Fund, Ltd. Hudson Bay Overseas 1/9/2008 Sale 930 $6.69 Fund, Ltd. Hudson Bay Overseas 1/10/2008 Sale $7,440 $6.74 Fund, Ltd. Hudson Bay Overseas 1/14/2008 Sale $1,240 $6.56 Fund, Ltd. --------- 480,190 --------- CUSIP No. 27876C107 13D Page 19 of 19 Pages EXHIBIT 1 JOINT ACQUISITION STATEMENT PURSUANT TO RULE 13D-1(k)1 The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint acquisition statements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments and for the completeness and accuracy of the information concerning him or it contained therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that he or it knows or has reason to believe that such information is inaccurate. Dated: January 14, 2008 HUDSON BAY FUND LP HUDSON BAY OVERSEAS FUND, LTD. By: /s/ Yoav Roth By: /s/ Yoav Roth ------------- ------------- Name: Yoav Roth Name: Yoav Roth Title Principal and Portfolio Manager Title Principal and Portfolio Manager HUDSON BAY CAPITAL MANAGEMENT, L.P. By: /s/ Yoav Roth /s/ Sander Gerber ------------- ----------------- Name: Yoav Roth SANDER GERBER Title Principal and Portfolio Manager /s/ Yoav Roth /s/ John Doscas - ------------- --------------- YOAV ROTH JOHN DOSCAS EX-99 2 p08-0042exhibit_1.txt EX. 99.1 EXHIBIT 1 JOINT ACQUISITION STATEMENT PURSUANT TO RULE 13D-1(k)1 The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D shall be filed on behalf of each of the undersigned without the necessity of filing additional joint acquisition statements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments and for the completeness and accuracy of the information concerning him or it contained therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that he or it knows or has reason to believe that such information is inaccurate. Dated: January 14, 2008 HUDSON BAY FUND LP HUDSON BAY OVERSEAS FUND, LTD. By: /s/ Yoav Roth By: /s/ Yoav Roth ------------- ------------- Name: Yoav Roth Name: Yoav Roth Title Principal and Portfolio Manager Title Principal and Portfolio Manager HUDSON BAY CAPITAL MANAGEMENT, L.P. By: /s/ Yoav Roth /s/ Sander Gerber ------------- ----------------- Name: Yoav Roth SANDER GERBER Title Principal and Portfolio Manager /s/ Yoav Roth /s/ John Doscas - ------------- --------------- YOAV ROTH JOHN DOSCAS EX-99 3 p08-0042exhibit_2.txt EX. 99.2 EXHIBIT 2 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO SELLERS (AS DEFINED BELOW) THAT SUCH REGISTRATION IS NOT REQUIRED. BACKSTOP AGREEMENT, dated as of January 3, 2008 (this "AGREEMENT"), by the Sellers identified on the signature page hereof (each, a "SELLER" and collectively, the "SELLERS") and Hudson Bay Fund, LP, a Delaware limited partnership (collectively, and together with any designated affiliate as provided in Section 12 below, the "INVESTOR"). WHEREAS, Echo Healthcare Acquisition Corp., a Delaware corporation ("ECHO"), has entered into a Second Amended and Restated Agreement and Plan of Merger dated October 23, 2007 (the "MERGER Agreement"), pursuant to which Echo will acquire all of the issued and outstanding shares of capital stock of XLNT Veterinary Care, Inc. ("XLNT") on the terms and subject to the conditions set forth therein (the "TRANSACTION"). The consummation of the Transaction is subject to, among other things, (1) the approval of the proposal approving the Transaction (the "TRANSACTION PROPOSAL") set forth in Echo's definitive proxy statement dated November 12, 2007 by the affirmative vote of a majority of the shares of Echo's common stock, par value $.0001 per share (the "COMMON STOCK"), (a) issued in its initial public offering (the "IPO") and actually voting on such proposal at the special meeting of the stockholders of Echo (including any postponement or adjournment thereof, the "SPECIAL MEETING") and (b) issued and outstanding as of the November 7, 2007 record date (the "Record Date") for the Special Meeting; and (2) less than 20% of the shares of Echo's common stock issued in the IPO voting against the Transaction Proposal and electing a cash conversion of their shares. WHEREAS, the Investor intends to acquire shares of Echo's Common Stock, in either open-market purchases or by means of individually negotiated transactions and the Sellers are willing to enter into this Agreement to provide the Investor with the Backstop Right described below. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. DEFINITIONS. For purposes of this Agreement, the following defined terms shall have the following meanings: "ADDITIONAL SHARES" means the number of shares of Common Stock to be received by Investor in connection with the Transaction, equal to 100,000 shares, plus the number of Purchased Shares multiplied by 0.3125; provided, that the number of Additional Shares shall not be more than 412,500 shares. "AFFILIATE" means, with respect to any Person, a Person who is an "affiliate" of such first Person within the meaning of Rule 405 under the Securities Act. 1 "BACKSTOP PAYMENT" means the Interim Backstop Payment (as defined in Section 2) and the Aggregate Buyback Amount (as defined in Section 3). "BACKSTOP RIGHT" shall mean the right to receive the Backstop Payments and the other consideration to be provided by Sellers to the Investor pursuant to this Agreement. "BUSINESS DAY" means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded; provided that "BUSINESS DAY" shall not include any day on which the Common Stock is scheduled to trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on such exchange or market, then during the hour ending at 4:00:00 p.m., New York Time). "ECONOMIC HEDGE" means any hedging or similar transaction, including a short sale, designed to transfer the economic risk of some or all of an investment in the Common Stock away from the Investor; PROVIDED, that the Sale of any Total Shares shall not be deemed to be an Economic Hedge. "INITIAL INVESTMENT AMOUNT" as of any date means (i) the aggregate purchase price paid by the Investor for all Purchased Shares (inclusive of all reasonable fees and documented brokers' fees, commissions or similar transaction costs), but in no event shall the per Share purchase price for any Purchased Shares exceed $8.10 per share without the consent of the Sellers' Representative). "LIEN" means any lien, pledge, claim, charge, mortgage, security interest or other encumbrance of any kind, whether arising by contract or by operation of law. "ONE YEAR ANNIVERSARY DATE" shall mean the first anniversary of closing of the Transaction, or if such day is not a Business Day, the next Business Day. "PERSON" means an individual, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, charitable or not-for-profit institution or organization or other entity or any governmental entity. "PURCHASED SHARES" means the number of shares of Common Stock that the Investor acquires in either open-market purchases or by means of individually negotiated transactions between the date of this Agreement and prior to 11:00 p.m. New York time the day before the Special Meeting (or, if later, any adjournment or postponement thereof) is called to order and beneficially owns as of the close of business on the date of the Special Meeting, or acquired after such time and before the Special Meeting and voted in favor of each item to be considered by stockholders at the Special Meeting. For the avoidance of doubt, "Purchased Shares" shall not include (i) any shares of Common Stock that were (i) acquired by the Investor prior to the beginning of such period, or (ii) any Purchased Shares that are subsequently sold or transferred by the Investor prior to the date of the Special Meeting. 2 "REJECTED OFFER" means a bona fide written offer to sell any of the Total Shares for cash immediately available upon settlement (within no more than three Business Days) through any of the brokers listed on Schedule 1 attached hereto at a price per share equal to or greater than $6.25, which offer was one that the Investor is able to immediately accept but is not accepted by Investor; PROVIDED, HOWEVER, that a "Rejected Offer" shall not include an offer that was not accepted or a transaction not completed for any reason outside the discretion of the Investor. "REJECTED SHARES" means shares subject to a Rejected Offer. "SECURITIES ACT" means the Securities Act of 1933, as amended. "SELLERS' REPRESENTATIVE" shall mean Windy City, Inc. "SIX MONTH ANNIVERSARY DATE" shall mean the date that is six months from the closing of the Transaction, or if such day is not a Business Day, the next Business Day. "TOTAL SHARES" means the Purchased Shares and the Additional Shares. "WEIGHTED AVERAGE PRICE" means, for the Common Stock as of any date, the dollar volume-weighted average price for the Common Stock on the principal trading market for the Common Stock as of such date (the "PRINCIPAL MARKET") during the period beginning at 9:30:01 a.m., New York Time (or such other time as the Principal Market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time as the Principal Market publicly announces is the official close of trading) as reported by Bloomberg Financial Markets ("BLOOMBERG") through its "Volume at Price" functions, or, if the foregoing does not apply, the dollar volume-weighted average price of the Common Stock in the over-the-counter market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., New York Time (or such other time as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., New York Time (or such other time as such market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted average price is reported for the Common Stock by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing ask price of any of the market makers for the Common Stock as reported in the "pink sheets" by Pink Sheets LLC. If the Weighted Average Price cannot be calculated for the Common Stock on a particular date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as mutually determined by the Backstop Party Representative and the Investor. All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during the applicable calculation period. 2. BACKSTOP RIGHT. (a) INTERIM BACKSTOP PAYMENT. Subject to the terms and conditions of this Agreement, if the Interim Investment Amount (as defined below) exceeds the Interim Market Value, the Sellers will pay to the Investor an amount (the "INTERIM BACKSTOP PAYMENT") equal to 50% of such excess. The Interim Backstop Payment shall be made no later than the third Business Day following the Six Month Anniversary Date (the "Interim Closing") by wire transfer of immediately available funds to an account or accounts designated in writing by the Investor prior to the Interim Closing. 3 (b) "INTERIM INVESTMENT AMOUNT" means the Initial Investment Amount, LESS (i) proceeds to the Investor from any sales of any of the Total Shares prior to the Six Month Anniversary Date and (ii) the proceeds that would have been payable to the Investor pursuant to any Rejected Offer received by Investor prior to the Six Month Anniversary Date, had such Rejected Offer been accepted. (c) "INTERIM MARKET VALUE" shall mean the product of (i) the arithmetic average of the Weighted Average Price for the Common Stock for the 20 consecutive Business Days ending on the Six Month Anniversary Date, multiplied by (ii) the number of Total Shares held by the Investor as of the Six Month Anniversary Date, excluding Rejected Shares. 3. ONE YEAR ANNIVERSARY PURCHASE OBLIGATION. (a) PURCHASE AND SALE. Subject to the terms and conditions of this Agreement, the Sellers jointly and severally agree to purchase (the "PURCHASE OBLIGATION") from the Investors, and the Investors agree to sell to the Sellers, all of the Buyback Shares (as defined below) for an aggregate consideration equal to the Aggregate Buyback Amount (as defined below). (b) DEFINITIONS. "AGGREGATE BUYBACK AMOUNT" means the Initial Investment Amount, LESS the sum of (i) the Interim Backstop Payment, (ii) proceeds to the Investor from any sales of any of the Total Shares prior to the One Year Anniversary Date, and (iii) the proceeds that would have been payable to the Investor pursuant to any Rejected Offer received by Investor prior to the One Year Anniversary Date and not accepted had, such Rejected Offer been accepted. "BUYBACK SHARES" means the Total Shares held by the Investor (together with its Affiliates) as of the One Year Anniversary Date, excluding any Rejected Shares. "ONE YEAR MARKET VALUE" means the product of the arithmetic average of the Weighted Average Price for the Common Stock for the 20 Consecutive Business Days ending on the One Year Anniversary Date, multiplied by the number of Buyback Shares. (c) MAXIMUM PAYMENT OBLIGATIONS. Notwithstanding anything in this Agreement to the contrary, in no event shall Sellers be obligated under the Backstop Right or the Purchase Obligation to make payments in an amount that would cause the sum of (a) the Interim Backstop Payment plus (b) the Aggregate Buyback Amount less (c) the One Year Market Value, to exceed the Initial Investment Amount less $1,000,000 (the "Maximum Payment Obligation"). If such calculation would otherwise exceed the Maximum Payment Obligation, then the Interim Backstop Payment and/or Aggregate Buyback Amount will be appropriately reduced. (d) CLOSING. The closing of the Purchase Obligation shall take place no later than the third Business Day following the One Year Anniversary Date (the "Buyback Closing"). At the closing of such transaction and upon payment of the Aggregate Buyback Amount, the Investor shall, subject to Section 4 hereof, (x) if Echo's transfer agent, if any, is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer Program, credit the aggregate number of Buyback Shares to the Sellers' or their designee's balance accounts with 4 DTC, if any, through its Deposit/Withdrawal at Custodian system or (y) if Echo's transfer agent is not participating in the DTC Fast Automated Securities Transfer Program or if the foregoing is not applicable, deliver to the Sellers or to one or more assignees or substitute purchasers designated by the Sellers, at the principal office of Echo, certificates representing all the Buyback Shares free and clear of all Liens, which certificates shall have affixed thereto stock powers in the appropriate form for transfer. The Aggregate Buyback Amount for the Buyback Shares shall be payable to the Investor in cash in U.S. dollars by delivery to the Investor of the amount thereof by wire transfer of immediately available funds to an account or accounts, designated in writing by the Investor prior to the Buyback Closing. (e) ADJUSTMENTS. In the event of changes in the outstanding Common Stock of Echo by reason of stock dividends, stock splits or other similar events, shall be correspondingly adjusted to give the Investor, upon settlement of the Purchase Obligation, the same aggregate payment as the Investor would have been entitled to had the Purchase Obligation been settled immediately prior to such event. This Agreement need not be changed or amended because of any adjustment in the number, class, and kind of the Common Stock. 4. CONDITIONS. This Agreement and the Backstop Right shall automatically terminate and become null and void if (i) the Investor (together with any assignees) does not utilize its reasonable best efforts to acquire at least 750,000 Purchased Shares for a price not to exceed $8.10 per share on or prior to the close of business on the first Business Day prior to the Special Meeting, (ii) Echo does not receive the requisite stockholder approval at the Special Meeting (or any adjournment thereof) to consummate the Transaction, (iii) Echo does not consummate the Transaction, (iv) Investor does not fulfill in all material respects its obligations set forth in Section 7 below or (v) Investor breaches in any material respect the representations and warranties contained in Section 6 below. 5. REPRESENTATIONS AND COVENANTS OF SELLERS. Sellers hereby jointly and severally represent, warrant and covenant to the Investor, as follows: (i) POWER; DUE AUTHORIZATION; BINDING AGREEMENT. Sellers have full legal capacity, power and authority to execute and deliver this Agreement, to perform their obligations hereunder, and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Sellers and constitutes a valid and binding agreement of Sellers, enforceable against Sellers in accordance with its terms, except that enforceability may be subject to the effect of (a) any applicable bankruptcy, reorganization, receivership, conservatorship, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors' rights generally and to general principles of equity and (b) any laws relating to the availability of specific performance, injunctive relief, or other equitable remedies, regardless of whether considered in a proceeding in law or equity. (ii) NO CONFLICTS. The execution and delivery of this Agreement by Sellers does not, and the performance of the terms of this Agreement by Sellers will not, (a) require Sellers to obtain the consent or approval of, or make any filing with or notification to, any governmental or regulatory authority, domestic or foreign (other than the Securities and 5 Exchange Commission (the "SEC")), (b) require the consent or approval of any other Person pursuant to any agreement, obligation or instrument binding on Sellers or their properties and assets, (c) conflict with or violate any organizational document or law, rule, regulation, order, judgment or decree applicable to Sellers or by which any property or asset of Sellers is bound, or (d) violate any other agreement to which the Sellers are a party, including, without limitation, any voting agreement, stockholders agreement, irrevocable proxy, voting trust, or the Stock Purchase Agreement. (iii) OTHER ARRANGEMENTS. If, in the sole discretion of the Investor, any other investor receives consideration that is in the aggregate more favorable to such other investor than the aggregate consideration to the Investor contemplated hereby, the Investor shall have the option, to receive such other consideration on the same terms provided to the other Investor in lieu of the consideration granted hereby. (iv) ACCREDITED INVESTOR. Each Seller is an "accredited investor" as defined in Rule 501(a)(1), (2), (3), (7) or (8) promulgated under the Securities Act. (v) DISCLOSURE. The per share amount to be distributed to holders of Common Stock who exercise conversion rights in connection with the Transaction is not less than $8.10. The financial information provided by Sellers to Investor fairly presents the financial position of such Seller. 6. CERTAIN ADDITIONAL COVENANTS OF SELLERS. (a) FURTHER ASSURANCES. Subject to the terms and conditions set forth in this Agreement, Sellers will use their best efforts, as promptly as is practicable, to take or cause to be taken all actions, and to do or cause to be done all other things, as are necessary, proper or advisable and consistent with the terms and conditions of this Agreement, to consummate and make effective the transactions contemplated by this Agreement and the letter from certain of the Sellers to Investor dated as of the date of this Agreement (the "LETTER AGREEMENT") to refrain from taking any actions that are contrary to, inconsistent with or against, or would frustrate the essential purposes of, the transactions contemplated by this Agreement and the Letter Agreement. (b) DISCLOSURE. Sellers will advise Echo of the material terms and conditions of this Agreement (and any similar agreements entered into with any other Person) such that Echo can promptly publicly disclose the terms hereof (if Echo determines that such disclosure is appropriate) on one or more Current Reports on Form 8-K; provided, however, that Sellers shall request that the identity of Investor, its affiliates, and/or their principals, officers, directors, shareholders, agents, attorneys, consultants, and the like not be disclosed (unless Echo determines that such disclosure is required). (c) PURCHASE VOLUME LIMITS. Without the prior written consent of the Investor, Sellers will not directly or indirectly, prior to the One Year Anniversary Date, purchase Common Stock on any Business Day exceeding 15% of daily trading volume for the Common Stock on the Principal Market on such day. 6 7. REPRESENTATIONS AND WARRANTIES OF INVESTOR. Investor hereby represents and warrants to the Sellers as follows. (a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Investor is duly organized and validly existing under the laws of the state or other jurisdiction of its organization. Investor has all requisite power and authority to execute and deliver this Agreement. (b) OWNERSHIP OF SECURITIES. As of the date of the Buyback Closing: (i) the Total Shares to be sold will be beneficially owned by the Investor and (ii) the Investor shall have voting power and dispositive power with respect to all of the Buyback Shares held by it. On the date of the Buyback Closing, the Investor shall transfer valid title to all of the Buyback Shares to be transferred hereby to Sellers free from all Liens, and the Buyback Shares shall be freely transferable to the Sellers except for restrictions on transfer pursuant to state and/or federal securities laws. (c) AUTHORIZATION; BINDING OBLIGATIONS; GOVERNMENTAL CONSENTS. All actions on the part of Investor, its officers, directors and equity owners necessary for the authorization of this Agreement and the Letter Agreement performance of all obligations of Investor hereunder have been taken prior to the date hereof. This Agreement is a valid and binding obligation of Investor, enforceable in accordance with its terms, except as limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights generally; and (ii) general principles of equity that restrict the availability of equitable remedies. No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority on the part of Investor is required in connection with the consummation of the transactions contemplated by this Agreement (other than Form 3 and/or Form 4 filings or other SEC filings). (d) NO ECONOMIC HEDGES. Between December 14, 2007, and the date hereof, the Investor has not engaged, directly or indirectly, in any Economic Hedge with respect to the Common Stock. 8. CONDITIONS TO BACKSTOP RIGHTS. Investor agrees that the following shall be conditions to its right to receive the Backstop Payments: (a) At the Special Meeting or any meeting of the stockholders of Echo, however called, or any postponement or adjournment thereof, or in connection with any solicitation of votes of the stockholders of Echo by written consent, Investor shall not vote for any action or agreement that would have prevented or materially delayed the consummation of the Transaction or any other transactions contemplated by this Agreement or the Merger Agreement, or that would have been contrary to or inconsistent with, or result in a breach by the Sellers of, or would have frustrated the essential purposes of this Agreement or the Merger Agreement. The Investor shall use its commercially reasonable efforts to take such actions as Sellers may reasonably request in order to assist the brokers in obtaining due authorization from any Person from whom the Investor acquired the Purchased Shares (the "Record Date Seller") in favor of the Transaction Proposal and the Merger Agreement and all other proposals submitted by Echo for vote of its stockholders relating to the Transaction. 7 (b) Between the date hereof and the One Year Anniversary Date, the Investor shall not have engaged, directly or indirectly, in any Economic Hedge with respect to the Total Shares. 9. CERTAIN COVENANTS OF INVESTOR. (a) The Investor agrees that any acquisition of Purchased Shares will be made in accordance with the provisions of this Agreement. (b) For so long as the Sellers have any payment obligations under this Agreement, the Investor shall give the Sellers written notice (which may be by email) of any sales or transfers of Purchased Shares within five (5) Business Days of such sale or transfer, including the number of shares transferred and the proceeds therefrom. (c) Subject to the terms and conditions set forth in this Agreement, Investor will use its commercially reasonable efforts, as promptly as is practicable, to take or cause to be taken all actions, and to do or cause to be done all other things, as are necessary, proper or advisable and consistent with the terms and conditions of this Agreement, to consummate and make effective the transactions contemplated by this Agreement to refrain from taking any actions that are contrary to, inconsistent with or against, or would frustrate the essential purposes of, the transactions contemplated by this Agreement. (d) Without the prior written consent of the Sellers' Representative, the Investor will not directly or indirectly, prior to the One Year Anniversary Date sell Common Stock exceeding 15% of the average trading volume on any Business Day on which the Weighted Average Price is less than $6.25 per share without the consent of the Sellers' Representative; PROVIDED, HOWEVER that if the Investor (i) has given the Sellers' Representative written notice by 5:00 pm New York Time on any Business Day offering to sell a specified percentage of the following Business Day's trading volume to Sellers at the following Business Day's Weighted Average Price and (ii) the Sellers' Representative has not accepted such offer by 8:30 a.m. New York Time on the next Business Day then the Investor may sell up to the specified trading volume on such next Business Day. (e) The Investor will not enter into any Economic Hedges with respect to the Total Shares prior to the One Year Anniversary Date. 10. AMENDMENTS. This Agreement may be amended from time to time by a written instrument executed and delivered by the parties. 11. REMEDIES. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the parties will have the right to injunctive relief, in addition to all of its rights and remedies at law or in equity, to enforce the provisions of this Agreement. Nothing contained in this Agreement will be construed to confer upon any person who is not a signatory hereto or any successor or permitted assign of a signatory hereto any rights or benefits, as a third party beneficiary or otherwise. 8 12. INVESTOR SUBSTITUTION. Investor shall have the right to substitute any other person or entity ("Person") as a purchaser or holder of the Total Shares hereunder, by written notice to the Sellers, which notice shall be signed by both the Investor and such Person, shall contain such Person's agreement to be bound by this Agreement and shall contain a confirmation by such Person of the accuracy with respect to it of the representation and warranties set forth in SECTION 7. Upon receipt of such notice, any reference to Investor in this Agreement (other than in this SECTION 12), shall be deemed to refer to such Person in addition to or in lieu of the Investor (as applicable). 13. GENERAL PROVISIONS. (a) NOTICES. Except as otherwise provided herein, any offer, acceptance, notice or communication required or permitted to be given pursuant to this Agreement shall be deemed to have been duly and sufficiently given for all purposes by a party if given by the party, or an officer, trustee, or other personal or legal representative of such party, or by any other person authorized to act for such party, if in writing and delivered personally to the party or to an officer, trustee or other personal or legal representative of the party, or any other person authorized to act for such party to whom such notice shall be directed, or sent by overnight delivery service, or certified or registered mail, postage and registration prepaid, return receipt requested, or by facsimile to such party's home or business address as reflected on the signature pages hereto or other address as such party may designate to each of the other parties hereto by a notice complying with the requirements of this Section 13(a). Any such notice shall be deemed to have been given on the date on which the same was delivered in the case of personal delivery, post-marked in the case of certified or registered mail or overnight delivery service, or dated in the case of a facsimile. (b) ASSIGNMENTS AND TRANSFERS. Other than as contemplated in SECTION 12, the parties hereto shall have no right to assign or transfer this Agreement or any of their respective rights hereunder (including, without limitation, the Backstop Right). (c) BINDING EFFECT. This Agreement shall be binding upon and inure to the benefit of the successors, assigns, personal representative, estates, heirs and legatees of the parties hereto. (d) MISCELLANEOUS. This Agreement and the Letter Agreement sets forth the entire understanding of the parties hereto with respect to the transactions contemplated hereby. The invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of any other term or provision hereof. The headings in this Agreement are for convenience of reference only and shall not alter or otherwise affect the meaning hereof. This Agreement may be executed in any number of counterparts which together shall constitute one instrument and shall be governed by and construed in accordance with the domestic substantive laws of the State of New York, without regard to principles of conflicts of laws. Delivery of an executed signature page by facsimile or other electronic transmission shall be effective as delivery of a manually signed counterpart of this Agreement. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 9 IN WITNESS WHEREOF, the parties have caused this Backstop Right Agreement to be executed and delivered by their duly authorized representatives as of the date first written above. SELLERS: WINDY CITY, INC. By: /s/ Joel Kanter ------------------------------- Joel Kanter Presdient /s/ Gene E. Burleson ----------------------------------- Gene E. Burleson /s/ Josh S. Kanter ----------------------------------- Joel Kanter CHICAGO INVESTMENTS, INC. /s/ Josh S. Kanter ----------------------------------- By: Josh Kanter President [SIGNATURES CONTINUED ON FOLLOWING PAGE] 10 [SIGNATURES CONTINUED FROM PREVIOUS PAGE] INVESTORS HUDSON BAY FUND, LP /s/ Yoav Roth ----------------------------------- By: Yoav Roth Title: Principal and Portfolio Manager 11 Schedule 1 Piper Jaffray Inc. Roth Capital Partners LLC Morgan Joseph & Co. Inc. 12 EX-99 4 p08-0042exhibit_3.txt EX. 99.3 EXHIBIT 3 CHICAGO INVESTMENTS INC. 6340 SOUTH 3000 EAST SUITE 330 SALT LAKE CITY, UTAH 84121 January 3, 2008 Hudson Bay Capital Management L.P. 120 Broadway 40th Floor New York, New York 10271 Attn: Yoav Roth Dear Sirs: Reference is made to that certain Backstop Agreement (the "Backstop Agreement") dated of even date herewith, by and between Hudson Bay Fund LP ("Hudson Bay"), Chicago Investments Inc. ("CII"), Windy City Inc., ("Windy City"), Joel Kanter ("Kanter") and Gene Burleson ("Burleson"; together with Kanter, Windy City and CII, the "Backstop Parties"). Capitalized terms used herein but not otherwise defined herein shall have the respective meanings set forth in the Backstop Agreement. In connection with and in consideration of Hudson Bay's acquisition of up to one million shares of the common stock ("Common Stock"), par value $0.0001 per share, of Echo Healthcare Acquisition Corp. ("Echo") at a price no greater than $8.10 per share and reasonable efforts to assist brokers to cause such shares of Common Stock to be voted in favor of the merger of Echo with XLNT Veterinary Care, Inc. ("XLNT") and the other items of business to be considered at Echo's upcoming Special Meeting of Stockholders to be held on January 4, 2008, and the various fees and expenses incurred by Hudson Bay in connection with the foregoing, CII will deliver or cause to be delivered to Hudson Bay 412,500 shares of Common Stock or such lesser number of shares of Common Stock together with such number of shares of common stock, $0.001 par value, of XLNT that when exchanged for Echo Common Stock in connection with the consummation of the Merger will equal 412,500 shares of Common Stock. The Common Stock will be delivered on or before the close of business on the tenth trading day following the date of this letter agreement (the "Letter Agreement") but CII will use its best efforts to cause such Common Stock to be delivered on or before the close of business on the fifth trading day following the date of this Letter Agreement. This Letter Agreement grants to Hudson Bay an irrevocable option (the "Put Option") to sell to CII, and CII shall be obligated to purchase from Hudson Bay, all or any portion of up to 100,000 shares of Common Stock at a price of $7.50 per share of Common Stock (the "Per Share Put Price"), for an aggregate price of $750,000 (the "Aggregate Put Price"). To the extent any Put Shares (as defined below) acquired by Hudson Bay as contemplated above are acquired at a cost in excess of $8.00 per share, then the Aggregate Put Price shall be increased by an amount equal to aggregate consideration paid by Hudson Bay for Put Shares in excess of $8.00 per share (the "Put Price Increase") and the Per Share Put Price shall be correspondingly adjusted to reflect the Put Price Increase on a per share basis. By way of example, if Hudson Bay pays $8.10 per share for 1,000,000 Put Shares acquired as contemplated above, then the Aggregate Put Price of the Put Option shall be increased by $100,000 to $850,000. The Put Option will be valid from the date hereof until the earlier of (i) the 60th day after the date hereof and (ii) the date that Hudson Bay sells all of the Common Stock subject to the Put Option to any third party (the "Option Period"). Hudson Bay may exercise the Put Option, in whole or in part, at any time or from time to time during the Option Period, by delivering to CII written notice of exercise, which notice shall specify the number of shares of Common Stock to be purchased by CII (the "Put Shares"). After the Option Period, neither Hudson Bay nor its assigns may exercise the Put Option. The closing of the sale and purchase of the Put Shares pursuant to an exercise of the Put Option (the "Closing") will occur on the third business day following the delivery of such notice of exercise unless mutually agreed otherwise by CII and Hudson Bay. At the Closing, CII shall deliver to Hudson Bay, in immediately available funds, an amount equal to the Per Share Put Price, as adjusted on a per share basis to reflect any Put Price Increase, multiplied by the number of Put Shares specified in the notice of exercise and Hudson Bay will deliver to CII the Put Shares specified in the notice of exercise and will take such action as may be reasonably necessary in order to transfer to CII good and marketable title to such Put Shares, free and clear of all claims, liens and encumbrances of any nature. CII's obligation under this Agreement is secured by a deposit of cash in the amount of $750,000 (the "Escrow Deposit") with Powell Goldstein LLC, as escrow agent, which amount shall be increased if and as necessary as contemplated above by the Put Price Increase. The Escrow Deposit shall be held in an interest bearing IOLTA trust account maintained by Powell Goldstein in the ordinary course of business with any interest not applied in payment of the Aggregate Put Price to be paid over to CII upon termination of this Letter Agreement as provided herein below. Powell Goldstein, in its capacity as escrow agent, shall be entitled to resign at any time and pay over the proceeds of the Escrow Deposit to a substitute escrow agent who shall be engaged pursuant to the terms of an escrow agreement approved by Hudson Bay in its sole discretion and in the event Powell Goldstein shall be in receipt of conflicting instructions from the parties to this Letter Agreement, Powell Goldstein shall be entitled to pay the Escrow Deposit (or any remaining portion thereof) into any court of competent jurisdiction pending resolution by such court of any disputes between the parties. To the extent CII fails to satisfy any of its obligations under this Agreement, Hudson Bay shall be entitled to deliver to the escrow agent a copy of the notice of exercise together with the Put Shares tendered pursuant to such notice of exercise and an affidavit from a duly authorized officer of Hudson Bay certifying that the notice of exercise was delivered 2 to CII or its permitted assigns, the Put Shares were duly and properly tendered as required by this Agreement and that CII or its permitted assigns failed to deliver the Put Price for the Put Shares by the Closing. Upon receipt of the foregoing, the escrow agent shall deliver a copy of such affidavit to CII or its permitted assigns and shall then disburse to Hudson Bay or its assign within three business days an amount equal to the Per Share Put Price multiplied by the number of Put Shares then being tendered against delivery by Hudson Bay or its assign of such Put Shares provided, however, that in the event Hudson Bay delivered the Put Shares to CII then Hudson Bay shall so state in the certificate referenced above. At the first to occur of the expiration of the Option Period (so long as the Put Option has not been exercised as of such date) and the disbursement of the full amount of the escrow upon exercise of the Put Option in full, the escrow agent shall deliver to CII or its permitted assign any Put Shares that have been received by the escrow agent along with any remaining balance of the Escrow Deposit and thereafter the escrow agent shall be discharged. Hudson Bay and CII will each be deemed to represent to the other party as of the date of this Agreement the following: (i) it has full power, authority and capacity to execute and deliver this Agreement, (ii) this Agreement is a valid and binding obligation upon it and is fully enforceable according to the terms contained herein except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors' rights and remedies, and (iii) the execution, delivery and performance by it of this Agreement and the consummation by it of the transactions contemplated hereby will not result in a violation of the organizational documents of it, conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which it is a party or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to it. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. CII shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of Hudson Bay. Hudson Bay and its assigns may assign some or all of its rights hereunder without the consent of CII, in which event such assignee shall be deemed to have the rights granted to Hudson Bay hereunder with respect to such assigned rights. The terms and conditions of this Agreement shall be binding and inure to the benefit of the parties and their respective successors and permitted assign. This Agreement shall be construed in accordance with the laws of the State of New York. This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect as if the signature were an original, not a facsimile signature. 3 Please sign and return to us the enclosed copy of this Agreement to signify your agreement with and acceptance of its terms. Very truly yours, CHICAGO INVESTMENTS INC. By: /s/ Joshua S. Kanter ------------------------ Joshua Kanter President Acknowledged and agreed: HUDSON BAY FUND LP By: /s/ Yoav Roth ------------------------ Name: Yoav Roth Title: Principal and Portfolio Manager POWELL GOLDSTEIN LLP, in its capacity as Escrow Agent By: /s/ Rick Miller --------------------------- Rick Miller Partner 4 -----END PRIVACY-ENHANCED MESSAGE-----