Document:

f8k100913ex10_hoteloutsource.htm

Exhibit 10.1

 

	

 

Execution Copy

		 

 

Loan Agreement

Dated as of October 9, 2013

	
By and between:

	
Hotel Outsource Management International, Inc., a Delaware corporation whose address for the purposes of notices sent under this Agreement shall be One Embarcadero Center, Suite 500, San Francisco CA 94111, Fax: +1-415-433 5994, e-mail: jackronnel@my-homi.com; with a copy to Reif & Reif Law Offices, 72/2 Gibstein Street, Rishon LeZion 75313, Israel, Fax: +972-3-7444479, e-mail: Mail@ReifLaw.com (the “Borrower”);

	
And:

	
tomwood limited, a BVI company with a registered office at Vanterpool Plaza, 2nd floor, Wickhams Cay I, Road Town, Tortola, British Virgin Islands, and whose correspondence address for the purposes of this Agreement shall be at 8, rue Eynard, 1205, Geneva, Switzerland, represented by Isaac Elbaz, email: ielbaz@bluewin.ch (“Lender”);

	
Whereas:

	
Borrower requires immediate funds, which, in the current economic climate, it has not been able to obtain in a timely manner from banking institutions, as medium term financing until its business becomes cash-flow positive; and

 

	
Whereas:

	
Borrower has requested that Lender, which is the majority shareholder of Borrower, assist Borrower by agreeing to loan such funds to Borrower in the amount and under the terms set forth in this Agreement below; and

 

	
Whereas:

	
Lender is willing to make a loan to Borrower, all subject to and in accordance with the terms of this Agreement;

 

Therefore, the parties have made condition and agreed as follows:

 

	
1.

	
The Loan

 

	
  

	
1.1

	
Upon the terms and conditions set forth in this Agreement, Lender agrees to loan to Borrower the principal amount of USD 50,000 (fifty thousand USD) (the “Loan”).

 

	
  

	
1.2

	
The Loan has already been wired to Borrower, via its subsidiary, HOMI Israel Ltd, in September 2013. The loan date will be deemed to be October 1, 2013 (the “Loan Date”).

 

	
2.

	
Interest

 

Interest will accrue on the entire outstanding balance of the Loan, commencing as of the Loan Date, at the rate of 8% per annum (the “Interest”).

 

	
3.

	
Repayment

 

	
  

	
3.1

	
Borrower shall repay the entire Loan, with all accrued Interest in 16 (sixteen) consecutive, quarterly payments, commencing as of January 1, 2014 and thereafter on the first day of each calendar quarter, ending with the final payment on October 1, 2017.

 

	
  

	
3.2

	
Notwithstanding the foregoing, as of the Loan Date, there will be a two year grace period prior to commencement of repayment of the principal of the Loan. Accordingly, for each of the first eight quarterly repayments, the repayment will comprise of accrued Interest, without principal. Accordingly, the principal of the Loan will be repaid in eight equal installments over the subsequent eight quarters, together with accrued Interest, commencing January 1, 2016.

 

  

  

  

	

Loan Agreement

HOMI – Tomwood limited

Execution Copy

	 

 

	
4.

	
Conversion

 

	
  

	
4.1

	
Notwithstanding Lender’s declaration that, as at the date hereof, it would prefer for the Loan to be repaid in cash, Lender nevertheless agrees that Borrower may elect, within 30 days of closing an equity investment for the investment of at least $600,000 in Borrower, if at all, to effect repayment of any part, or all, of the outstanding Loan and/or accrued Interest, by means of the issue to the Lender of shares of Borrower’s common stock. The purchase price of each share so issued shall be deemed to be the same price per share as in said equity investment (the “Price Per Share”), such that the outstanding balance of the Loan plus accrued Interest shall be reduced, at the time of issue of such shares, by the quantity of shares so issued multiplied by the Price Per Share.

 

	
  

	
4.2

	
Conversion will be by means of written notice by Borrower to Lender, stating the amount of outstanding Loan and accrued Interest which is being converted. Promptly, after issuing a conversion notice, Borrower shall issue to Lender, or to Lender’s order, the applicable quantity of shares of Borrower’s common stock.

 

	
  

	
4.3

	
Any and all amounts of the outstanding Loan and accrued Interest which are so converted by Borrower will be deemed repaid by Borrower upon the issue to Lender, or to Lender’s order, of the applicable quantity of shares of Borrower’s common stock.

 

	
5.

	
Late Payment

 

Without derogating from any statutory remedies and/or other remedies available under the terms of this Agreement, any sums not paid by Borrower at the appointed time under this Agreement shall be subject to interest at the highest rate of interest then charged by Bank Leumi of Israel in respect of Dollar sums overdrawn beyond an agreed credit facility, such interest to accrue from the date payment was originally due until the date of actual payment; this interest rate shall initially be determined on the date payment was originally due, and thereafter monthly until the date of actual payment. Nothing in this Section ‎5 may be construed in any way as derogating from Borrower’s undertaking and obligation to repay the Loan and pay the Interest as set forth above. Arrears interest accruing pursuant to the terms of this Section ‎5 shall, for all intents and purposes, be deemed part of the Interest, as defined herein.

 

	
6.

	
Specified Purpose of Loan

 

	
  

	
6.1

	
The Parties hereby confirm and agree that Borrower requested the Loan for the sole purpose of using all of said Loan to finance its activity in the ordinary course of business, including making financing available to one or more of its subsidiaries, to finance their activity in the ordinary course of business (the “Specified Purpose”).

 

	
  

	
6.2

	
Borrower hereby undertakes to use the Loan solely for the Specified Purpose and not to use any part of the Loan for any purpose other than the Specified Purpose.

 

	
  

	
6.3

	
Borrower hereby recognizes and acknowledges that Lender’s consent to make the Loan to Borrower in accordance with the terms hereof is inter alia subject to and in reliance upon Borrower’s undertaking as set forth in Section ‎6.2 above, which is a fundamental condition of this Agreement.

 

	
7.

	
Borrower’s General Covenants

 

	
  

	
7.1

	
Borrower shall keep proper records and books of account in accordance with generally accepted accounting principles consistently applied, and shall maintain, preserve and keep all of its properties and assets in good working order and condition, subject to ordinary wear and tear.

 

	
  

	
7.2

	
Borrower shall conduct its affairs in such manner as is appropriate for a public company whose shares are traded on the New York OTCQB, and in accordance with all laws and regulations by which it is bound.

 

	
  

	
7.3

	
Other than in the ordinary course of business or otherwise as agreed to in writing by the Lender, on a case by case basis, Borrower shall not create, incur, or assume any indebtedness, nor shall it create incur, assume or suffer any mortgage, pledge, lien, security interest, charge or encumbrance of any kind or nature in or upon any of its property or assets, whether now owned or hereafter acquired, nor shall it sell, lease, assign, transfer or otherwise dispose of any of its assets, including its accounts receivable.

 

  

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Loan Agreement

HOMI – Tomwood limited

Execution Copy

	 

 

	
8.

	
Representations and Warranties

 

Borrower hereby represents and warrants to Lender as follows:

 

	
  

	
8.1

	
that it is duly organized and existing under the laws of the jurisdiction in which it was incorporated, with the requisite corporate or other power to own and operate its properties and assets, and to carry on its business as presently conducted and to execute and perform its obligations under this Agreement;

 

	
  

	
8.2

	
that this Agreement is valid and binding upon it and it is bound by it and obliged to act in accordance with its terms; and that the execution and performance by it of this Agreement, and compliance therewith, and the consummation of the transactions contemplated by this Agreement will not result in any violation of and will not conflict with, or result in a breach of any of the terms of, or constitute a default under, any document, other obligation, law, regulation or order to which it is or will be party or by which it is or will be bound;

 

	
  

	
8.3

	
that all actions on its part and on the part of its directors, required for the authorization, execution, and performance by it, of this Agreement, and the consummation of all the transactions contemplated herein, have been obtained, or that they will be obtained within 30 days of the date hereof and until such time as they are obtained no use will be made of the Loan, which will, until such time, be deemed held in trust for Lender by Borrower;

 

	
  

	
8.4

	
that this Agreement and the entire contents thereof do not require that any notice be made to any authorities, other than notice which has already been made by Borrower or which will be made by Borrower in a timely manner (such as a Form 8-K), in accordance with all laws and regulations by which Borrower is bound, in accordance with directions which Borrower will receive from its US Legal Counsel.

 

	
9.

	
Events of Default

 

The occurrence and continuation of any of the following events shall be considered an Event of Default upon the occurrence of which the entire unpaid balance of the Loan and Interest, and all reasonable costs of collection, including reasonable attorney fees and expenses, shall become immediately due and payable:

 

	
  

	
9.1

	
Borrower shall fail to make any payment which it is obliged to make under the terms of this Agreement and such failure is not fully remedied within thirty (30) days after the occurrence thereof;

 

	
  

	
9.2

	
for the avoidance of doubt it is hereby stipulated and emphasized that it is the fundamental obligation and undertaking of Borrower to repay the Loan and pay the Interest, in accordance with the schedule set forth herein, and that failure by Borrower to repay the Loan and pay the Interest in such manner shall be considered an Event of Default, regardless of the reason for such failure, and without Lender being required to deliver any kind of notice to Borrower;

 

	
  

	
9.3

	
Borrower shall default in the performance of any material covenant or obligation contained herein or in any other agreement, debenture, pledge, promissory note or other instrument of indebtedness with Lender and such default is not remedied within thirty (30) days after the occurrence thereof;

 

	
  

	
9.4

	
Borrower uses and/or attempts and/or permits use of the Loan, or any part thereof, for any purpose other than the Specified Purpose;

 

	
  

	
9.5

	
any representation or warranty made by or on behalf of Borrower to Lender, howsoever in connection with the Loan and/or this Agreement, shall at any time prove to have been incorrect or misleading;

 

	
  

	
9.6

	
any judgment materially affecting the ability of Borrower to repay the Loan and pay the Interest shall be entered against Borrower or any attachment, levy or execution against a substantial portion of its properties shall remain unpaid, or shall not be released, discharged, dismissed, suspended or stayed for a period of thirty (30) days or more after its entry, issue or levy, as the case may be;

 

	
  

	
9.7

	
any proceedings seeking to declare Borrower bankrupt, or insolvent, or seeking liquidation, winding up, reorganization, arrangement with creditors, composition of debts or any other similar proceedings shall be initiated against Borrower, and such proceeding shall not be dismissed within thirty (30) days;

 

	
  

	
9.8

	
any event shall occur materially affecting the ability of Borrower to repay the Loan and pay the Interest under the terms of this Agreement.

 

  

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Loan Agreement

HOMI – Tomwood limited

Execution Copy

	 

 

	
10.

	
Miscellaneous

 

	
  

	
10.1

	
In view of the fact that Lender is the majority shareholder in Borrower, Lender hereby agrees that, so long as it owns more than 1% of Borrower’s issued and outstanding share capital, it will not participate in any shareholder vote taken by Borrower in connection with this Agreement. This clause is in addition to, and without derogating from, the provisions of applicable law that may apply to this Agreement in connection with its being an agreement between a corporation and individuals who are shareholders and directors of that corporation.

 

	
  

	
10.2

	
Lender shall be entitled, at any time and without requiring the consent of Borrower or any other individual, to assign all or any part of its rights under this Agreement, to any other entity. Borrower shall not be entitled to assign all or any part of its rights and/or obligations under this Agreement, without Lender’s advance written consent.

 

	
  

	
10.3

	
No Amendment to this Agreement, or any part thereof, shall be valid or binding upon the Parties unless drawn up in writing and signed by both Parties.

 

	
  

	
10.4

	
As used in this Agreement, the term “including”, and all derivations thereof, shall mean “including, without limitation”, unless expressly stipulated to the contrary. Where the context permits, use of the singular number includes the plural and vice versa and words denoting any gender shall include all genders. The Preamble, and any Appendices, Exhibits or Schedules to this Agreement, constitute an integral part hereof. Section headings are for convenience purposes only, and may not be used in the construction or interpretation of this Agreement.

 

	
  

	
10.5

	
No failure or delay on the part of any party in exercising any right and/or remedy to which it may be entitled hereunder and/or by law shall operate as a waiver by that party of any right whatsoever. No waiver of any right under this Agreement shall be deemed as a waiver of any further or future right hereunder, whether or not such right is the same kind of right as was waived in a previous instance.

 

	
  

	
10.6

	
In case any provision of the Agreement shall be declared invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and shall continue in full force and effect.

 

	
  

	
10.7

	
This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and replaces any previous agreements between the parties, if at all, whether written or verbal, pertaining to any of the subject-matter hereof.

 

	
  

	
10.8

	
This Agreement shall be governed by and construed in accordance with the laws of Israel, without regard to its rules of conflict of laws. The parties hereby agree and submit to the exclusive jurisdiction of the competent courts in the city of Tel-Aviv, with respect to any claim or dispute arising out of and/or in connection with this Agreement. For this purpose, Borrower hereby gives notice that an address for service of court papers in any action relating to this Agreement shall be c/o HOMI Israel Ltd., 1 Aba Even Street, Merkazim Bldg. A, Herzliya Pituach 46725, Israel.

 

	
  

	
10.9

	
Notices sent by one party to the other under this Agreement will be sent by registered mail to the addresses specified herein, delivered by hand, or transmitted by fax and will be deemed to have reached their destination within 5 days of being deposited with the Post Office for dispatch as registered mail (10 days in the case of air mail), upon actual delivery when delivered by hand, and upon receipt of the recipient’s confirmation of receipt when sent by fax.

 

	
 

	
10.10

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

 

  

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Loan Agreement

HOMI – Tomwood limited

Execution Copy

	 

 

In witness whereof the parties have executed this

Loan Agreement on the date first above written: 

 

	SIGNED for and on behalf of	)	 
	Hotel Outsource Management International, Inc.	)	 
	 	)	 
	By: Daniel Cohen, Jacky Ronnel 	)	 
	 	)	 
	SIGNED for and on behalf of	)	 
	Tomwood Limited	)	 
	 	)	 
	By:	)	 

 

 5Unassociated Document

 

Exhibit 10.2

 

INVESTMENT MANAGEMENT TRUST AGREEMENT

This Agreement is made as of                    , 2013 by and between Quartet Merger Corp. (the “Company”) and Continental Stock Transfer & Trust Company (“Trustee”).

WHEREAS, the Company’s registration statement on Form S-1, No. 333-191129 (“Registration Statement”) for its initial public offering of securities (“IPO”) has been declared effective as of the date hereof (“Effective Date”) by the Securities and Exchange Commission (capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Registration Statement); and

WHEREAS, EarlyBirdCapital, Inc. (“EBC”) is acting as the representative of the underwriters in the IPO; and

WHEREAS, simultaneously with the IPO, the Company’s initial stockholders and EBC will be purchasing an aggregate of 542,500 units (“Initial Private Units”) from the Company for an aggregate purchase price of $5,425,000; and

WHEREAS, in the event EBC exercises its over-allotment option in full or in part, certain of the Company’s initial stockholders and EBC will purchase up to an aggregate of an additional 65,625 units (“Over-Allotment Private Units,” together with the Initial Private Units, the “Private Units”) for an aggregate purchase price of up to $656,250; and

WHEREAS, as described in the Registration Statement, and in accordance with the Company’s Amended and Restated Certificate of Incorporation, $ 85,645,000 of the gross proceeds of the IPO and sale of the Private Units ($98,491,750 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, par value $.0001 per share (“Common Stock”), issued in the IPO as hereinafter provided (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 JP Morgan Chase Bank, N. A. and at a brokerage institution selected by the Trustee that is satisfactory to the Company;

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

  

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(c)           In a timely manner, upon the instruction of the Company, invest and reinvest the Property (i) in United States government treasury bills, notes or bonds having a maturity of 180 days or less and/or (ii) in money market funds meeting certain conditions under Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended, and that invest solely in U.S. treasuries, as determined by the Company;

(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 EBC 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 its tax returns;

(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 to do so;

(h)           Render to the Company monthly written statements of the activities of and amounts in the Trust Account reflecting all receipts and disbursements of the Trust Account; and

(i)           Commence liquidation of the Trust Account only after and 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, signed on behalf of the Company by its Chief Executive Officer or Chairman of the Board and Secretary or Assistant Secretary, affirmed by counsel for the Company and, in the case of a Termination Letter in a form substantially similar to that attached hereto as Exhibit A, acknowledged and agreed to by EBC, 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 the Trustee by the 18-month anniversary of the closing of the IPO (“Closing”) or, in the event that a definitive agreement for a Business Combination has been executed on or prior to the 18-month anniversary of the Closing but the Business Combination has not been consummated by the 18-month anniversary of the Closing, the 24-month anniversary of the Closing, (“Last Date”), the Trust Account shall be liquidated in accordance with the procedures set forth in the Termination Letter attached as Exhibit B hereto and distributed to the Public Stockholders as of the Last Date.  The provisions of this Section 1(i) may not be modified, amended or deleted under any circumstances.

 

  

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2.           Limited Distributions of Income from Trust Account.

(a)           Upon written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto as Exhibit C, the Trustee shall distribute to the Company the amount of interest income earned on the Trust Account requested by the Company to cover any income or other tax obligation owed by the Company.

(b)           Upon written request from the Company, which may be given from time to time in a form substantially similar to that attached hereto as Exhibit D, the Trustee shall distribute to the Company the amount of interest income earned on the Trust Account requested by the Company to cover expenses related to investigating and selecting a target business and other working capital requirements; provided, however, that the Company will not be allowed to withdraw interest income earned on the Trust Account unless there is an amount of interest income available in the Trust Account sufficient to pay the Company’s tax obligations on such interest income or otherwise then due at that time.

(c)           The limited distributions referred to in Sections 2(a) and 2(b) above shall be made only from income collected on the Property.  Except as provided in Section 2(a), and 2(b) above, no other distributions from the Trust Account shall be permitted except in accordance with Section 1(i) hereof.

(d)           In addition to the requirements of Sections 1(e) and 1(i) above, and in all cases, the Company shall provide EBC with a copy of any Termination Letters and/or any other correspondence that it issues to the Trustee with respect to any proposed withdrawal from the Trust Account promptly after such issuance.

3.           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 Chairman of the Board, Vice Chairman of the Board, Chief Executive Officer, President or Chief Financial Officer.  In addition, except with respect to its duties under paragraphs 1(i), 2(a) and 2(b) 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)           Subject to the provisions of Section 6(g) of this Agreement, 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 claim, potential claim, 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 Trustee shall have the right to conduct and manage the defense against such Indemnified Claim, provided, that the Trustee shall obtain the consent of the Company with respect to the selection of counsel, which consent shall not be unreasonably withheld.  The Trustee may not agree to settle any Indemnified Claim without the prior written consent of the Company, which consent shall not be unreasonably withheld.  The Company may participate in such action with its own counsel;

  

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(c)           Pay the Trustee an initial acceptance fee, an annual fee and a transaction processing fee for each disbursement made pursuant to Sections 2(a) and 2(b) as set forth on Schedule A hereto, which fees shall be subject to modification by the parties from time to time.  It is expressly understood that the Property shall not be used to pay such fees and further agreed that any fees owed to the Trustee shall be deducted by the Trustee from the disbursements made to the Company pursuant to Sections 1(i) solely in connection with the consummation of a Business Combination, or pursuant to Section 2(b).  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;

(d)           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/or tabulating stockholder votes verifying the vote of the Company’s stockholders regarding such Business Combination; and

(e)           In the event that the Company directs the Trustee to commence liquidation of the Trust Account pursuant to Section 1(i), the Company agrees that it will not direct the Trustee to make any payments that are not specifically authorized by this Agreement.

4.           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 paragraphs 1 and 2 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);

 

  

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(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)           File local, state and/or Federal tax returns or information returns with any taxing authority on behalf of the Trust Account and payee statements with the Company documenting the taxes, if any, payable by the Company or the Trust Account, relating to the income earned on the Property.

(i)           Pay any taxes on behalf of the Trust Account (it being expressly understood that the Property shall not be used to pay any such taxes and that such taxes, if any, shall be paid by the Company from funds not held in the Trust Account or released to it under Section 2(a) hereof).

(j)           Imply obligations, perform duties, inquire or otherwise be subject to the provisions of any agreement or document other than this agreement and that which is expressly set forth herein.

(k)           Verify calculations, qualify or otherwise approve Company requests for distributions pursuant to Section 1(i), 2(a) or 2(b) above.

5.           Trust Account Waiver. The Trustee has no right of set-off or any right, title, interest or claim of any kind (“Claim”) to, or to any monies in, the Trust Account, and hereby irrevocably waives any Claim to, or to any monies in, the Trust Account that it may have now or in the future. In the event the Trustee has any Claim against the Company under this Agreement, including, without limitation, under Section 3(b) or Section 3(c) hereof, the Trustee shall pursue such Claim solely against the Company and its assets outside the Trust Account and not against the Property or any monies in the Trust Account

  

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6.           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 during which time the Trustee shall act in accordance with this Agreement.  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 any court in the State of New York or 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; or

(b)           At such time that the Trustee has completed the liquidation of the Trust Account in accordance with the provisions of paragraph 1(i) hereof, and distributed the Property in accordance with the provisions of the Termination Letter, this Agreement shall terminate except with respect to Paragraph 3(b).

7.           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.  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 all information supplied to it by the Company, including account names, account numbers and all other identifying information relating to a beneficiary, beneficiary’s bank or intermediary bank.  The Trustee shall not be liable for any loss, liability or expense resulting from any error in the information or transmission of the wire.

(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 conflicts of law principles that would result in the application of the substantive laws of another jurisdiction.  It may be executed in several original or facsimile counterparts, each one of which shall constitute an original, and together shall constitute but one instrument.

 

  

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(c)           This Agreement contains the entire agreement and understanding of the parties hereto with respect to the subject matter hereof.  Except for Section 1(i) (which may not be amended under any circumstances), 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 EBC.  As to any claim, cross-claim or counterclaim in any way relating to this Agreement, each party waives the right to trial by jury.  The Trustee may require from Company counsel an opinion as to the propriety of any proposed amendment.

(d)           The parties hereto consent to the jurisdiction and venue of any state or federal court located in the City of New York, Borough of Manhattan, 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:

Continental Stock Transfer

  & Trust Company

17 Battery Place

New York, New York 10004

Attn:  Steven G. Nelson, Chairman, and Frank A. DiPaolo, CFO

Fax No.:  (212) 509-5150

if to the Company, to:

Quartet Merger Corp.

777 Third Avenue, 37th Floor

New York, New York 10017

Attn:  Eric S. Rosenfeld, Chairman and Chief Executive Officer

Fax No.:  (___) ___-____

in either case with a copy to:

EarlyBirdCapital, Inc.

275 Madison Avenue, 27th Floor

New York, New York 10016

Attn:  Steven Levine, Chief Executive Officer

Fax No.:  (212) 661-4936

 

  

7

  

 

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

(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 the event that the Trustee has a claim against the Company under this Agreement, the Trustee will pursue such claim solely against the Company and not against the Property held in the Trust Account.

(h)           Each of the Company and the Trustee hereby acknowledge that EBC is a third party beneficiary of this Agreement.

[Signature Page Follows]

 

  

8

  

 

 

 

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

 

 

	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Trustee 

 

By: ____________________________

     Name:  Frank A. Di Paolo

     Title:  Trust Officer

 

QUARTET MERGER CORP.

By: ____________________________

     Name:

     Title:                      

 

 

  

9

  

 

SCHEDULE A

	
Fee Item

	 	
Time and method of payment

	 	
Amount

	
Initial acceptance fee

	 	
Initial closing of IPO by wire transfer

	 	
[$3,000]

	 	 	 	 	 
	
Annual fee

	 	
First year, initial closing of IPO by wire transfer; thereafter on the anniversary of the effective date of the IPO by wire transfer or check

	 	
[$10.000]

	 	 	 	 	 
	
Transaction processing fee for disbursements to Company under Section 2

	 	
Deduction by Trustee from accumulated income following disbursement made to Company under Section 2

	 	
[$250]

	 	 	 	 	 
	
Paying Agent services as required pursuant to section 1(i)

	 	
Billed to Company upon delivery of service pursuant to section 1(i)

	 	
 

Prevailing rates

 

 

 

  

10

  

 

EXHIBIT A

[Letterhead of Company]

[Insert date]

Continental Stock Transfer

  & Trust Company

17 Battery Place

New York, New York 10004

Attn:  Steven Nelson and Frank DiPaolo

Re:           Trust Account No.     -           Termination Letter

Gentlemen:

Pursuant to paragraph 1(i) of the Investment Management Trust Agreement between Quartet Merger Corp. (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of _________, 2013 (“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”).  Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Trust Agreement.

In accordance with the terms of the Trust Agreement, we hereby authorize you to liquidate the Trust Account investments on __________ and to transfer the proceeds to the above-referenced account at JP Morgan Chase Bank 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.  It is acknowledged and agreed that while the funds are on deposit in the trust account awaiting distribution, the Company will not earn any interest or dividends.

 

On the Consummation Date (i) counsel for the Company shall deliver to you written notification that the Business Combination has been consummated and (ii) the Company shall deliver to you (a) [an affidavit] [a certificate] of __________________, which verifies the vote of the Company's stockholders in connection with the Business Combination if a vote is held and (b) joint written instructions from it and EarlyBirdCapital, Inc. 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 distributed after the Consummation Date to the Company.  Upon the distribution of all the funds in the Trust Account pursuant to the terms hereof, the Trust Agreement shall be terminated.

 

  

A-1

  

 

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 upon receipt by the Trustee of written instructions from the Company, 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, 

QUARTET MERGER CORP.

By:________________________________

      Eric S. Rosenfeld, Chairman of the Board

By:________________________________

     David Sgro, Secretary

 

AGREED TO AND

ACKNOWLEDGED BY

EARLYBIRDCAPITAL, INC.

By:________________________________

 

 

  

A-2

  

 

EXHIBIT B

[Letterhead of Company]

[Insert date]

 

Continental Stock Transfer

  & Trust Company

17 Battery Place

New York, New York 10004

Attn:  Steven Nelson and Frank DiPaolo

Re:           Trust Account No.    -       Termination Letter

Gentlemen:

Pursuant to paragraph 1(i) of the Investment Management Trust Agreement between Quartet Merger Corp. (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of ________, 2013 (“Trust Agreement”), this is to advise you that the Company has been unable to effect a Business Combination with a Target Company within the time frame specified in the Company’s Amended and Restated Certificate of Incorporation, as described in the Company’s prospectus relating to its IPO.  Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Trust Agreement.

In accordance with the terms of the Trust Agreement, we hereby authorize you to liquidate all the Trust Account investments on ______________ and to transfer the total proceeds to the Trust Checking Account at JP Morgan Chase Bank to await distribution to the Public Stockholders. The Company has selected ____________, 20__ as the record date for the purpose of determining the Public Stockholders entitled to receive their share of the liquidation proceeds.  It is acknowledged that no interest will be earned by the Company on the liquidation proceeds while on deposit in the Trust Checking Account. You agree to be the Paying Agent of record and in your separate capacity as Paying Agent, to distribute said funds directly to the Public Stockholders in accordance with the terms of the Trust Agreement and the Amended and Restated Certificate of Incorporation of the Company. Upon the distribution of all the funds in the Trust Account, your obligations under the Trust Agreement shall be terminated.

 

	 	Very truly yours, 

QUARTET MERGER CORP.

By:________________________________

     Eric S. Rosenfeld, Chairman of the Board

By:________________________________

     David Sgro, Secretary

 

cc: EarlyBirdCapital, Inc.

 

  

B-1

  

 

EXHIBIT C

[Letterhead of Company]

[Insert date]

 

 

Continental Stock Transfer

  & Trust Company

17 Battery Place

New York, New York 10004

Attn:  Frank Di Paolo and Cynthia Jordan

Re:           Trust Account No.

Gentlemen:

Pursuant to paragraph 2(a) of the Investment Management Trust Agreement between Quartet Merger Corp. (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of ___________, 2013 (“Trust Agreement”), the Company hereby requests that you deliver to the Company $_______ of the interest income earned on the Property as of the date hereof.  The Company needs such funds to pay for its tax obligations.  In accordance with the terms of the Trust Agreement, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter to the Company’s operating account at:

[WIRE INSTRUCTION INFORMATION]

 

	 	QUARTET MERGER CORP. 

By:________________________________

     Eric S. Rosenfeld, Chairman of the Board

By:________________________________

     David Sgro, Secretary

 

cc: EarlyBirdCapital, Inc.

 

  

C-1

  

 

EXHIBIT D

[Letterhead of Company]

[Insert date]

 

 

Continental Stock Transfer

  & Trust Company

17 Battery Place

New York, New York 10004

Attn:  Frank Di Paolo and Cynthia Jordan

Re:           Trust Account No.

Gentlemen:

Pursuant to paragraph 2(b) of the Investment Management Trust Agreement between Quartet Merger Corp. (“Company”) and Continental Stock Transfer & Trust Company (“Trustee”), dated as of __________, 2013 (“Trust Agreement”), the Company hereby requests that you deliver to the Company $_______ of the interest income earned on the Property as of the date hereof.  The Company needs such funds to cover its expenses relating to investigating and selecting a target business and other working capital requirements.  In accordance with the terms of the Trust Agreement, you are hereby directed and authorized to transfer (via wire transfer) such funds promptly upon your receipt of this letter to the Company’s operating account at:

[WIRE INSTRUCTION INFORMATION]

 

	 	Very truly yours, 

QUARTET MERGER CORP.

By:________________________________

     Eric S. Rosenfeld, Chairman of the Board

By:________________________________

     David Sgro, Secretary

 

cc: EarlyBirdCapital, Inc.

 

 D-1

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