Document:

Unassociated 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;

  

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

(c)           In a timely manner, upon the instruction of the Company, 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 C, 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 C 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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(j)            Distribute upon receipt of an Amendment Notification Letter (defined below), to Public Stockholders who exercised their conversion rights in connection with an Amendment an amount equal to the pro rata share of the Property relating to the shares of Common Stock for which such Public Stockholders have exercised conversion rights in connection with such Amendment.

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 D, 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 E, 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 aggregate amount of all such distributions shall not exceed $750,000 and 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) and 1(j) 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), 1(j), 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;

 

  

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(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;

(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.

(f)           If the Company seeks to amend any provisions of its amended and restated certificate of incorporation relating to stockholders’ rights or pre-Business Combination activity (including the time within which the Company has to complete a Business Combination) (in each case, an “Amendment”), the Company will provide the Trustee with a letter (an “Amendment Notification Letter”) in the form of Exhibit B providing instructions for the distribution of funds to Public Stockholders who exercise their conversion option in connection with such Amendment.

 

  

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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);

(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.

 

  

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(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), 1(j), 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

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.

  

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(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.

(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

 

  

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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

(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]

 

  

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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: 

 

  

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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

	 

  

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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.

 

  

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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:________________________________

 

  

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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:

Reference is made to the Investment Management Trust Agreement between Quartet Merger Corp. (“Company”) and Continental Stock Transfer & Trust Company, dated as of _______, 2013 (“Trust Agreement”).  Capitalized words used herein and not otherwise defined shall have the meanings ascribed to them in the Trust Agreement.

Pursuant to Section 1(j) of the Trust Agreement, this is to advise you that the Company has sought an Amendment. Accordingly, in accordance with the terms of the Trust Agreement, we hereby authorize you to liquidate the Trust Account on [      ] and to transfer $_____ of the proceeds of the Trust to the checking account at [         ] for distribution to the stockholders that have requested conversion of their shares in connection with such Amendment. The remaining funds shall be reinvested by you as previously instructed.

 

	 	Very truly yours,
	 	 	  
	 	QUARTET MERGER CORP.
	 	 	  
	 	By:	 
	 	 	
Eric S. Rosenfeld, Chairman of the Board

	 	 	  
	 	By:	 
	 	 	
David Sgro, Secretary

 

cc: EarlyBirdCapital, Inc.

  

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EXHIBIT C

[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.

 

  

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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(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]

 

	 	Very truly yours,
	 	 	  
	 	QUARTET MERGER CORP.
	 	 	  
	 	By:	 
	 	 	
Eric S. Rosenfeld, Chairman of the Board

	 	 	  
	 	By:	 
	 	 	
David Sgro, Secretary

 

cc: EarlyBirdCapital, Inc.

 

  

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EXHIBIT E

 

[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.

16ex10_1.htm

Exhibit 10.1

 

SECOND AMENDMENT TO CREDIT AGREEMENT

This SECOND AMENDMENT TO CREDIT AGREEMENT (the “Amendment”) is dated as of October 23, 2013, by and between SPEEDEMISSIONS, INC., a Florida corporation (the “Issuing Borrower”), and SPEEDY OPERATIONS, INC., a Georgia corporation (each of the foregoing, including the Issuing Borrower, hereinafter sometimes individually referred to as a “Borrower” and all such entities sometimes hereinafter collectively referred to as “Borrowers”) and TCA GLOBAL CREDIT MASTER FUND, LP, a Cayman Islands limited partnership (the “Lender”).

RECITALS

WHEREAS, the Borrowers and the Lender executed that certain Credit Agreement dated as of June 8, 2012 (the “Original Credit Agreement”), as amended by that certain First Amendment to Credit Agreement dated as of September 28, 2012, but made effective as of October 9, 2012 (the “First Amendment”)(the Original Credit Agreement and the First Amendment collectively referred to as the “Credit Agreement”); and

WHEREAS, pursuant to the Original Credit Agreement, the Borrowers executed and delivered to Lender that certain Revolving Note dated as of June 8, 2012, evidencing a Revolving Loan under the Credit Agreement in the amount of Three Hundred Fifty Thousand Dollars ($350,000) (the “First Revolving Note”); and

WHEREAS, pursuant to the First Amendment, the Borrowers executed and delivered to Lender that certain Revolving Note dated as of September 28, 2012, but made effective as of October 9, 2012, evidencing an additional Revolving Loan under the Credit Agreement in the amount of Five Hundred Fifty Thousand Dollars ($550,000) (the “Second Revolving Note”)(the First Revolving Note and the Second Revolving Note hereinafter sometimes collectively referred to as the “Existing Notes”); and

WHEREAS, the Existing Notes have an aggregate outstanding principal balance outstanding as of October 23, 2013 in the amount of $607,664.25; and

WHEREAS, in connection with the Credit Agreement and the Existing Notes, the Borrowers executed and delivered to the Lender various ancillary documents referred to in the Credit Agreement as the Loan Documents; and

WHEREAS, the Borrowers’ obligations under the Credit Agreement and the Existing Notes are secured by the following, all of which are included within the Loan Documents: (i) one or more Security Agreements dated as of June 8, 2012, from each of the Borrowers in favor of the Lender (collectively, the “Security Agreements”), pursuant to which the Lender has a continuing, first-priority security interest encumbering all of the “Collateral” (as defined in the Credit Agreement and each of the Security Agreements) of the Borrowers; (ii) a Validity Guaranty dated as of June 8, 2012 from Richard Parlontieri in favor of Lender (the “Validity Guaranty”); and (iii) UCC-1 Financing Statements for each of the Borrowers, as debtor, and Lender, as secured party, one filed with the Secretary of State of Florida under filing No. 201206926226, and one filed with the Secretary of State of Georgia under filing No. 56-2012-0925 (collectively, the “UCC-1’s”); and

WHEREAS, the Credit Agreement contemplated that the Revolving Loan Commitment under the Credit Agreement could be increased, and in connection therewith, Lender could make additional Revolving Loans to Borrowers to be evidenced by a new Revolving Note, all as more specifically set forth in the Credit Agreement; and

 

  

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WHEREAS, the Borrowers desire and have requested an increase in the Revolving Loan Commitment to One Million Three Hundred Thousand Dollars ($1,300,000), and Lender is amenable to such increase, and in connection therewith, Borrowers desire, and Lender is amenable to making, an additional Revolving Loan to Borrowers in the amount of Four Hundred Thousand Dollars ($400,000), which additional Revolving Loan, together with the Revolving Loans evidenced by the Existing Notes, shall be evidenced by a newly issued consolidated, replacement, amended and restated Revolving Note in the form attached hereto as Exhibit “A” (the “Replacement Revolving Note”), all as more specifically set forth in this Amendment; and

WHEREAS, the Borrowers and Lender desire to make additional amendments to the Credit agreement, all as more specifically set forth in this Amendment;

NOW, THEREFORE, in consideration of the premises and the mutual covenants of the parties hereinafter expressed and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, each intending to be legally bound, agree as follows:

1.           Recitals.  The recitations set forth in the preamble of this Amendment are true and correct and incorporated herein by this reference.

2.           Capitalized Terms.  All capitalized terms used in this Amendment shall have the same meaning ascribed to them in the Credit Agreement, except as otherwise specifically set forth herein.  In addition, the other definitional and interpretation provisions of Sections 1.2, 1.3 and 1.4 of the Credit Agreement shall be deemed to apply to all terms and provisions of this Amendment, unless the express context otherwise requires.

3.           Conflicts.  In the event of any conflict or ambiguity by and between the terms and provisions of this Amendment and the terms and provisions of the Credit Agreement, the terms and provisions of this Amendment shall control, but only to the extent of any such conflict or ambiguity.

4.           Increase of Revolving Loan Commitment; Replacement Revolving Note.  Subject to the terms and conditions of this Amendment, the Revolving Loan Commitment is hereby increased to an aggregate total of One Million Three Hundred Thousand Dollars ($1,300,000).  In connection with such increase, the Borrowers have requested an additional Revolving Loan in the amount of Four Hundred Thousand Dollars ($400,000), which Lender hereby agrees to make subject to the terms and conditions of this Amendment.  In that regard, simultaneously with the execution of this Amendment, the Borrowers shall execute and deliver the Replacement Revolving Note in favor of the Lender.

5.           Representations and Warranties.  The Borrowers hereby confirm and affirm that all representations and warranties made by the Borrowers under the Credit Agreement and all other Loan Documents (specifically including under Section 7 of the Credit Agreement) are true, correct and complete as of the date of the Credit Agreement, and hereby confirm and affirm that all such representations and warranties remain true, correct and complete as of the date of this Amendment, and by this reference, the Borrowers do each hereby re-make each and every one of such representations and warranties herein as of the date of this Amendment, as if each and every one of such representations and warranties was set forth and re-made in its entirety in this Amendment by each of the Borrowers, as same may be qualified by revised disclosure schedules attached to this Amendment, if any (if no revised disclosures are attached to this Amendment, then no such revised disclosure schedules shall be deemed to exist or to qualify any of the representations and warranties hereby re-made).

  

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6.           Affirmation.  The Borrowers hereby affirm all of their Obligations to the Lender under all of the Loan Documents and agree and affirm as follows: (i) that as of the date hereof, each of the Borrowers has performed, satisfied and complied in all material respects with all the covenants, agreements and conditions under each of the Loan Documents to be performed, satisfied or complied with by each of the Borrowers; (ii) that each of the Borrowers shall continue to perform each and every covenant, agreement and condition set forth in each of the Loan Documents and this Amendment, and continue to be bound by each and all of the terms and provisions thereof and hereof; (iii) that as of the date hereof, no default or Event of Default has occurred or is continuing under the Credit Agreement or any other Loan Documents, and no event has occurred that, with the passage of time, the giving of notice, or both, would constitute a default or an Event of Default under the Credit Agreement or any other Loan Documents; and (iv) that as of the date hereof, no event, fact, or other set of circumstances has occurred which could reasonably be expected to have a Material Adverse Effect.

7.           Ratification.  The Borrowers hereby acknowledge, represent, warrant and confirm to Lender that: (i) each of the Loan Documents executed by the Borrowers are valid and binding obligations of the Borrowers, enforceable against the Borrowers in accordance with their respective terms; (ii) the Replacement Revolving Note, and all other Obligations of the Borrowers under the Replacement Revolving Note, the Credit Agreement, all other Loan Documents and this Amendment, shall be and continue to be and remain secured by and under the Loan Documents, including the Security Agreements, Validity Guaranty and the UCC-1’s; (iii) there are no defenses, setoffs, counterclaims, cross-actions or equities in favor of the Borrowers, to or against the enforcement of any of the Loan Documents, and to the extent any of the Borrowers have any defenses, setoffs, counterclaims, cross-actions or equities against Lender and/or against the enforceability of any of the Loan Documents, the Borrowers acknowledge and agree that same are hereby fully and unconditionally waived by the Borrowers; and (iv) no oral representations, statements, or inducements have been made by Lender, or any agent or representative of Lender, with respect to the Credit Agreement, this Amendment or any other Loan Documents.

8.           Additional Confirmations.  The Borrowers hereby represent, warrant and covenant as follows: (i) that the Lender’s Liens and security interests in all of the “Collateral” (as such term is defined in the Credit Agreement and each of the Security Agreements) are and remain valid, perfected, first-priority security interests in such Collateral, and the Borrowers have not granted any other Liens or security interests of any nature or kind in favor of any other Person affecting any of such Collateral.

9.           Lender’s Conduct.  As of the date of this Amendment, the Borrowers hereby acknowledge and admit that: (i) the Lender has acted in good faith and has fulfilled and fully performed all of its obligations under or in connection with the Credit Agreement or any other Loan Documents; and (ii) that there are no other promises, obligations, understandings or agreements with respect to the Credit Agreement or the Loan Documents, except as expressly set forth herein, or in the Credit Agreement and other Loan Documents.

10.         Advisory Fee.

  

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(a)            Fee Amount.  In consideration of advisory services provided by Lender to Issuing Borrower prior to the date of this Amendment, and as consideration for Lender’s agreement to enter into this Amendment, the Issuing Borrower shall pay to Lender a fee equal to $100,000.00 (the “Advisory Fee”).  The Advisory Fee shall be initially paid by the issuance to Lender of shares of the Issuing Borrower’s Common Stock (the “Advisory Fee Shares”) in accordance with the terms and provisions of this Section.  For purposes of determining the number of shares issuable to Lender under this Section 10(a), the Issuing Borrower’s Common Stock shall be valued at the average of the volume weighted average price for the Common Stock for the five (5) Business Days immediately prior to the date the Borrowers execute this Amendment (the “Valuation Date”), as reported by Bloomberg or such other reporting service acceptable to Lender (the “VWAP”).  The Lender shall confirm to the Issuing Borrower in writing, the VWAP for the Common Stock as of the Valuation Date, and the Issuing Borrower shall issue to Lender, on the date of the execution of this Amendment, a number of Advisory Fee Shares equal to one hundred percent (100%) of the Advisory Fee, based on such VWAP as of the Valuation Date.  On the date of the execution of this Amendment, the Issuing Borrower shall instruct its transfer agent (the “Transfer Agent”) to issue certificates representing the Advisory Fee Shares issuable to the Lender hereunder (and in that regard, the Issuing Borrower shall deliver to Lender, upon execution of this Amendment, an irrevocable issuance instruction letter and board resolution in form and substance acceptable to Lender, irrevocably authorizing the issuance of the Advisory Fee Shares and irrevocably directing its Transfer Agent to issue and deliver the Facility Fee Shares to Lender or its designee), and shall cause its Transfer Agent to deliver such certificates to Lender within five (5) Business Days from the Closing Date.  The Issuing Borrower’s obligations to pay the Advisory Fee as herein provided is an Obligation of the Issuing Borrower, secured by all of the applicable Loan Documents, and failure by the Issuing Borrower to issue such certificates representing the Advisory Fee Shares issuable hereunder within the time frames set forth herein shall be an Event of Default hereunder and under the Credit Agreement and other Loan Documents.  The Advisory Fee Shares, when issued, shall be deemed to be validly issued, fully paid, and non-assessable shares of the Issuing Borrower’s Common Stock. The Advisory Fee Shares shall be deemed fully earned as of the date the Borrowers execute this Amendment, regardless of the amount or number of Revolving Loans made hereunder. 

(b)            Adjustments.  It is the intention of the Issuing Borrower and Lender that the Lender shall be able to sell the Advisory Fee Shares and generate net proceeds (net of all brokerage commissions and other fees or charges payable by Lender in connection with the sale thereof) from such sale equal to the Advisory Fee.  In this regard, the Lender shall have the right to sell the Advisory Fee Shares in the Principal Trading Market, or otherwise, at any time in accordance with applicable securities laws.  Upon : (A) the sale of all Advisory Fee Shares; (B) Lender receiving net proceeds from the sale of the Advisory Fee Shares equal to the Advisory Fee; or (C) at any time Lender may elect, the Lender shall deliver to the Issuing Borrower a reconciliation statement showing the net proceeds actually received by the Lender from the sale of the Advisory Fee Shares (the “Sale Reconciliation”).  If, as of the date of the delivery by Lender of the Sale Reconciliation, the Lender has not realized and received net proceeds from the sale of the Advisory Fee Shares equal to at least the Advisory Fee, as shown on the Sale Reconciliation, then the Issuing Borrower shall immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Lender in an amount sufficient such that, when sold and the net proceeds thereof are added to the net proceeds from the sale of any of the previously issued and sold Advisory Fee Shares, the Lender shall have received total net funds equal to the Advisory Fee.  If additional shares of Common Stock are issued pursuant to the immediately preceding sentence, and after the sale of such additional issued shares of Common Stock, the Lender still has not received net proceeds equal to at least the Advisory Fee, then the Issuing Borrower shall again be required to immediately take all required action necessary or required in order to cause the issuance of additional shares of Common Stock to the Lender as contemplated above, and such additional issuances shall continue until the Lender has received net proceeds from the sale of such Common Stock equal to the Advisory Fee.  In the event the Lender receives net proceeds from the sale of Advisory Fee Shares equal to the Advisory Fee before Lender has sold all Advisory Fee Shares issued to Lender hereunder, then the Lender shall return all such remaining Advisory Fee Shares to the Issuing Borrower.  In the event additional Common Stock is required to be issued as outlined above, the Issuing Borrower shall instruct its Transfer Agent to issue certificates representing such additional shares of Common Stock to the Lender immediately subsequent to the Lender’s notification to the Issuing Borrower that additional shares of Common Stock are issuable hereunder, and the Issuing Borrower shall in any event cause its Transfer Agent to deliver such certificates to Lender within five (5) Business Days following the date Lender notifies the Issuing Borrower that additional shares of Common Stock are to be issued hereunder.  In the event such certificates representing such additional shares of Common Stock issuable hereunder shall not be delivered to the Lender within said five (5) Business Day period, same shall be an immediate default under the Credit Agreement and the Loan Documents.  Notwithstanding anything contained in this Section 10 to the contrary, at any time on or prior to the Revolving Loan Maturity Date, the Issuing Borrower shall have the right, at any time during such period, to redeem any Advisory Fee Shares then in the Lender’s possession for an amount payable by the Issuing Borrower to Lender in Dollars equal to the Advisory Fee, less any net proceeds received by the Lender from any previous sales of Advisory Fee Shares.  Upon Lender’s receipt of such cash payment in accordance with the immediately preceding sentence, the Lender shall return any then remaining Advisory Fee Shares in its possession back to the Issuing Borrower.

  

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(c)            Mandatory Redemption.  Notwithstanding anything contained in this Amendment to the contrary, in the event the Lender has not realized net proceeds from the sale of Advisory Fee Shares equal to at least the Advisory Fee by the Revolving Loan Maturity Date, then at any time thereafter, the Lender shall have the right, upon written notice to the Issuing Borrower, to require that the Issuing Borrower redeem all Advisory Fee Shares then in Lender’s possession for cash equal to the Advisory Fee, less any cash proceeds received by the Lender from any previous sales of Advisory Fee Shares, if any.  In the event such redemption notice is given by the Lender, the Issuing Borrower shall redeem the then remaining Advisory Fee Shares in Lender’s possession for an amount of Dollars equal to the Advisory Fee, less any cash proceeds received by the Lender from any previous sales of Advisory Fee Shares, if any, payable by wire transfer to an account designated by Lender within five (5) Business Days from the date the Lender delivers such redemption notice to the Issuing Borrower.

(d)            Surviving Obligations.  The Borrowers agree and acknowledge that notwithstanding the termination of the Credit Agreement, or the payment in full of the Replacement Revolving Note or other obligations under the Credit Agreement or under any other Loan Documents, the Borrowers’ obligations and liability under this Amendment and the other Loan Documents, and the Lender’s Lien and security interest on all Collateral, shall survive, shall remain valid and effective and shall not be released or terminated, until the Issuing Borrower has fully complied with all of its obligations with respect to payment of the Advisory Fee, and Lender has generated and received net proceeds from the sale of the Advisory Fee Shares (or otherwise received equivalent payment thereof in Dollars as permitted hereunder) equal to the Advisory Fee.

(e)            Lender Representations.  The Lender hereby confirms and affirms that all representations and warranties made by the Lender in Section 8 of the Credit Agreement are hereby re-made as of the date of this Amendment with respect to Lender’s acquisition of the Advisory Fee Shares, as if each and every one of such representations and warranties was set forth and re-made in its entirety in this Amendment by Lender with respect to Lender’s acquisition of the Advisory Fee Shares.

11.           Redefined Terms.  The term “Loan Documents,” as defined in the Credit Agreement and as used in this Amendment, shall be deemed to refer to and include the Replacement Revolving Note, this Amendment and all other documents or instruments executed in connection with this Amendment and the execution and delivery of the Replacement Revolving Note.  The term “SEC Documents,” as defined in the Credit Agreement, shall be deemed to refer to and include all filings made by the Borrowers with the SEC between the date of the First Amendment and the date of this Amendment.

12.           Representations and Warranties of the Borrowers.  Each of the Borrowers hereby makes the following representations and warranties to the Lender:

  

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(a)           Authority and Approval of Agreement; Binding Effect.  The execution and delivery by the Borrowers of this Amendment, the Replacement Revolving Note, and all other documents executed and delivered in connection herewith and therewith, and the performance by Borrowers of all of their Obligations hereunder and thereunder, have been duly and validly authorized and approved by the Borrowers and their board of directors pursuant to all applicable laws and other than the corporate action or resolutions delivered by the Borrowers in connection with this Amendment, no other corporate action or Consent on the part of the Borrowers, their board of directors, stockholders or any other Person is necessary or required by the Borrowers to execute this Amendment, the Replacement Revolving Note, and the documents executed and delivered in connection herewith and therewith, to consummate the transactions contemplated herein and therein, or perform all of the Borrowers’ Obligations hereunder and thereunder.  This Amendment, the Replacement Revolving Note and each of the documents executed and delivered in connection herewith and therewith have been duly and validly executed by the Borrowers (and the officer executing this Amendment and all such other documents for each Borrower is duly authorized to act and execute same on behalf of the Borrowers) and constitute the valid and legally binding agreements of the Borrowers, enforceable against the Borrowers in accordance with their respective terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

13.           Indemnification.  Each of the Borrowers, jointly and severally, hereby indemnifies and holds the Lender Indemnitees, and each of them, harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, Proceedings, suits, claims, costs, expenses and distributions of any kind or nature payable by any of the Lender Indemnitees to any Person, including reasonable attorneys’ and paralegals’ fees and expenses, court costs, settlement amounts, costs of investigation and interest thereon from the time such amounts are due at the highest non-usurious rate of interest permitted by applicable law, through all negotiations, mediations, arbitrations, trial and appellate levels, as a result of, or arising out of, or relating to any matters relating to this Amendment or the Replacement Revolving Note, including the assertion of a claim or ruling by a Governmental Authority that documentary stamp tax, intangible tax or any penalties or interest associated therewith must be paid by reason of the execution and delivery of any of the Replacement Revolving Note or the other Loan Documents.  The foregoing indemnification obligations shall survive the termination of the Credit Agreement or any of the Loan Documents and repayment of the Obligations.

14.           Release.  As a material inducement for Lender to increase the Revolving Loan Commitment and enter into this Amendment, each of the Borrowers does hereby release, waive, discharge, covenant not to sue, acquit, satisfy and forever discharges each of the Lender Indemnitees and their respective successors and assigns, from any and all liabilities, obligations, losses, damages, penalties, actions, judgments, Proceedings, suits, claims, costs, expenses and distributions of any kind or nature whatsoever in law or in equity which any Borrower ever had, now has, or which any successor or assign of any Borrower hereafter can, shall or may have against any of the Lender Indemnitees, for, upon or by reason of any matter, cause or thing whatsoever related to the Credit Agreement, this Amendment or any other Loan Documents, through the date hereof.  The Borrowers further expressly agree that the foregoing release and waiver agreement is intended to be as broad and inclusive as permitted by the laws governing the Credit Agreement. In addition to, and without limiting the generality of foregoing, the Borrowers further covenant with and warrant unto the Lender and each of the other Lender Indemnitees, that as of the date hereof, there exists no claims, counterclaims, defenses, objections, offsets or other claims against Lender or any other Lender Indemnitee, or the obligation of the Borrowers to comply with the terms and provisions of the Credit Agreement, this Amendment and all other Loan Documents.  The foregoing release shall survive the termination of the Credit Agreement or any of the Loan Documents and repayment of the Obligations.

15.           Effect on Agreement and Loan Documents.  Except as expressly amended by this Amendment, all of the terms and provisions of the Credit Agreement and the Loan Documents shall remain and continue in full force and effect after the execution of this Amendment, are hereby ratified and confirmed, and incorporated herein by this reference.

  

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16.           Waiver.  Neither this Amendment, nor shall Lender’s agreement to increase the Revolving Loan Commitment and make the additional Revolving Loan pursuant to the Replacement Revolving Note, be deemed or construed in any manner as a waiver by the Lender of any Claims, defaults, Events of Default, breaches or misrepresentations by the Borrowers under the Credit Agreement, any other Loan Documents, or any of Lender’s rights or remedies in connection therewith.

17.           Execution.  This Amendment may be executed in one or more counterparts, all of which taken together shall be deemed and considered one and the same Amendment, and same shall become effective when counterparts have been signed by each party and each party has delivered its signed counterpart to the other party.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format file or other similar format file, such signature shall be deemed an original for all purposes and shall create a valid and binding obligation of the party executing same with the same force and effect as if such facsimile or “.pdf” signature page was an original thereof.

18.           Fees and Expenses.

(a)            Document Review and Legal Fees.  The Borrowers agree to pay to the Lender or its counsel a legal fee equal to Seven Thousand Five Hundred and No/100 Dollars ($7,500.00) for the preparation, negotiation and execution of this Amendment and all other documents in connection herewith, together with costs of $550.00 associated with this transaction, all of which shall be due and payable by the Borrowers upon execution of this Amendment and withheld from the proceeds of the Revolving Loan made hereby.

(b)            Transaction Fees.  The Borrowers agree to pay to Lender a transaction advisory fee equal to two percent (2%) of the amount of the Revolving Loan contemplated by this Amendment, which fee shall be due and payable by the Borrowers upon execution of this Amendment and withheld from the proceeds of the Revolving Loan made hereby.

(c)            Due Diligence Fee.  The Borrowers agree to pay to Lender a due diligence fee equal to Two Thousand Five Hundred Dollars ($2,500.00), which fee shall be due and payable by the Borrowers upon execution of this Amendment and withheld from the proceeds of the Revolving Loan made hereby.

19.           Additional Agreements.

(a)            Extension of Maturity Date.  The Borrowers and Lender hereby agree and acknowledge that the Revolving Loan Maturity Date has been extended to October 9, 2014.

(b)            Payment Date.  Section 2.1(c) of the Credit Agreement is hereby deleted in its entirety and the following is inserted in lieu thereof:

“(c)           Revolving Loan Interest and Payments.  Except as otherwise provided in this Section 2.1, the outstanding principal balance of all Revolving Loans shall be repaid on or before the Revolving Loan Maturity Date.  The principal amount of all the Revolving Loans outstanding from time to time shall bear interest at the Interest Rate. The Account Collection Fee, accrued and unpaid interest on the unpaid principal balance of all Revolving Loans outstanding from time to time, and other fees and charges due hereunder, shall be payable on a twice weekly basis on the same two (2) days of each week as determined by Lender, commencing on the first such date to occur after the date hereof and on the Revolving Loan Maturity Date (each a “Payment Date”).  Any amount of principal or interest on the Revolving Loans which is not paid when due, whether at stated maturity, by acceleration or otherwise, shall at Lender’s option bear interest payable on demand at the Default Rate.”

  

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(c)            Section 2.1(d)(i) of the Credit Agreement is hereby deleted in its entirety and the following is inserted in lieu thereof:

“(i)           Mandatory Principal Prepayments; Overadvances.  Following payment of all items and fees as required by Section 2.1(e)(i)(1) – (4), inclusive (other than the Mandatory Principal Repayment Amounts): (A) on each Payment Date commencing as of October 1, 2013, a minimum amount of fifteen percent (15%) of all amounts collected into the Lock Box Account shall be paid to Lender to reduce the then outstanding principal balance of all Revolving Loans hereunder; (B) on each Payment Date commencing as of April 1, 2014, a minimum amount of twenty percent (20%) of all amounts collected into the Lock Box Account shall be paid to Lender to reduce the then outstanding principal balance of all Revolving Loans hereunder; and (C) on each Payment Date commencing as of July 1, 2014, a minimum amount of twenty-five percent (25%) of all amounts collected into the Lock Box Account shall be paid to Lender to reduce the then outstanding principal balance of all Revolving Loans hereunder (collectively, the “Mandatory Principal Repayment Amounts”).  All Revolving Loans hereunder shall be repaid by Borrowers on or before the Revolving Loan Maturity Date, unless payable sooner pursuant to the provisions of this Agreement.  In the event the aggregate outstanding principal balance of all Revolving Loans hereunder exceed the Revolving Loan Availability, Borrowers shall, upon notice or demand from Lender, immediately make such repayments of the Revolving Loans or take such other actions as shall be necessary to eliminate such excess.  Lender shall apply funds received into the Lock Box Account in accordance with Section 2.1(e) below.”

(d)            Section 2.1(e)(i) of the Credit Agreement is hereby deleted in its entirety and the following is inserted in lieu thereof:

 “(i)           All Daily Receipts of each Borrower shall, after deposit of same into each Borrower’s operating bank account, be swept daily into the Borrower Account.  In addition, the Lender shall establish and maintain an account at a financial institution acceptable to Lender in its sole and absolute discretion (the “Lock Box Account”), which Lock Box Account is and shall be maintained in Lender’s name.  All amounts in the Borrower Account shall be swept into the Lock Box Account twice per week on such days as Lender and Borrowers may agree upon.  If any Borrower, any Affiliate or Subsidiary, any shareholder, officer, director, employee or agent of any Borrower or any Affiliate or Subsidiary, or any other Person acting for or in concert with any Borrower, shall at any time receive any Daily Receipts or any other monies, checks, notes, drafts or other payments relating to or as proceeds of Eligible Accounts or otherwise in connection with the business of each Borrower, each Borrower and each such Person shall receive all such items in trust for, and as the sole and exclusive property of, Lender, and, immediately upon receipt thereof, shall remit the same (or cause the same to be remitted) in kind to the Borrower Account for further sweeping of same into the Lock Box Account as hereby provided.  Borrowers and Lender agree that all Daily Receipts and other payments made or received into the Lock Box Account, whether in respect of the Eligible Accounts or as proceeds of other collateral or otherwise, will be swept from the Lock Box Account on each Payment Date and applied according to the following priorities: (1) to Lender, towards unpaid fees and expenses due hereunder or under any other Loan Documents, including, any recurring fees due pursuant to Section 2.2 hereof; (2) to Lender, towards any accrued but unpaid Account Collection Fee; (3) to Lender, towards accrued but unpaid interest owed under Sections 2.1(c) and 2.4 hereof; (4) to Lender, towards amounts payable pursuant to Section 2.1(d)(i), including the Mandatory Principal Repayment Amounts; and (5) upon the occurrence of an Event of Default, to Lender, to reduce the outstanding balance of all Revolving Loans to zero (each of the foregoing payments, the “Lock Box Payments”).  The amount remaining in the Lock Box Account following the payment of the Lock Box Payments on each Due Date shall be referred to herein as the “Net Amount”.  If at any time the Daily Receipts and other payments made or received into the Lock Box Account are not sufficient to pay all of the Lock Box Payments then due, then Borrowers shall make payment to Lender of any such deficiency within three (3) Business Days after the applicable Payment Date.  The Lender agrees that, provided the Borrowers are in good standing under this Agreement and the other Loan Documents, and provided no Event of Default exists under this Agreement or any other Loan Document, and provided no event has occurred that, with the passage of time, or the giving of notice, or both, would constitute an Event of Default under this Agreement or any other Loan Document, then within three (3) Business Days after each Payment Date, the Net Amount will be transferred to Borrowers from the Lock Box Account via wire transfer or electronic funds transfer to an account designated by the Borrowers. Borrowers agree to pay all reasonable fees, costs and expenses in connection with opening and maintaining of the Lock Box and the Lock Box Account.  All of such reasonable fees, costs and expenses, if not paid by Borrower within five (5) Business Days of Lender’s written request, may be paid by Lender and in such event all amounts paid by Lender shall constitute Obligations hereunder, shall be payable to Lender by Borrower upon demand, and, until paid, shall bear interest at the Default Rate.  Upon an Event of Default, all Daily Receipts and other checks, drafts, instruments and other items of payment or proceeds of Collateral shall be endorsed by Borrowers, as applicable, to Lender, and, if that endorsement of any such item shall not be made for any reason, Lender is hereby irrevocably authorized to endorse the same on each Borrower’s behalf.  For purpose of this Section, each Borrower irrevocably hereby makes, constitutes and appoints Lender (and all Persons designated by Lender for that purpose) as each Borrower’s true and lawful attorney and agent-in-fact: (A) to endorse each Borrower’s name upon said Daily Receipts and other items of payment and/or proceeds of collateral and upon any chattel paper, document, instrument, invoice or similar document or agreement relating to any Accounts of any Borrower; (B) to take control in any manner of any Daily Receipts and other items of payment or proceeds thereof; and (C) to have access to any lock box or postal box into which any of Borrowers’ mail is deposited, and open and process all mail addressed to each Borrower and deposited therein.”

  

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(e)            True-Up Payment.  Commencing on February 1, 2014, and on the first (1st) day of each consecutive calendar month thereafter until the Revolving Loan Maturity Date, the Lender shall reconcile all Mandatory Principal Repayment Amounts received by Lender from the Lock Box Account for the immediately preceding calendar month (the aggregate of all such amounts, for each corresponding month, referred to as the “Aggregate Monthly Principal Repayment Amount”), and compare the Aggregate Monthly Principal Repayment Amount for such immediately preceding calendar month with the corresponding amount for such month as shown on the schedule attached hereto as Exhibit “B” (the “True-Up Schedule”)(i.e. on February 1, 2014, Lender shall reconcile and aggregate all Mandatory Principal Repayment Amounts received by Lender from the Lock Box Account between January 1, 2014 and January 31, 2014, and compare such aggregate amount with the February 1, 2014 amount shown on the True-Up Schedule).  If the Aggregate Monthly Principal Repayment Amount for any given calendar month is less than the corresponding amount for such month as shown on the True-Up Schedule (such difference referred to as the “Deficiency”), then within three (3) Business Days after Lender provides such reconciliation to Borrowers, Borrowers shall pay to Lender such Deficiency by wire transfer of immediately available Dollars to an account designated by Lender from time to time; provided, however, rather than requiring payment of such Deficiency from Borrowers by wire transfer Lender may elect to take such Deficiency directly from the Lock Box Account on any Payment Date.  In the event the Borrowers become cash-flow positive and the Borrowers provide evidence of same to Lender that is reasonably acceptable to Lender, then at such time, Borrowers and Lender agree to review the amounts being deposited into the Lock Box Account at such time, and to discuss and negotiate in good faith on possible changes to the True-Up Schedule.

(f)             Section 1.1(eee) and Section 2.1(e)(iv) of the Credit Agreement are hereby deleted in their entirety.

[Signatures on the following page]

   

  

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IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of the day and year first above written.

BORROWERS:

 

	
SPEEDEMISSIONS, INC.

	  	
SPEEDY OPERATIONS, INC.

	  	  	  	  	  
	
By:

	 
/s/ Richard Parlontieri

	  	
By:

	
/s/ Richard Parlontieri

	
Name:

	 
Richard Parlontieri

	  	
Name:

	
Richard Parlontieri

	
Title:

	 
Pres/CEO

	  	
Title:

	
Pres

 

LENDER:

TCA GLOBAL CREDIT MASTER FUND, LP

 

	By:	TCA Global Credit Fund GP, Ltd.
	Its:	 
General Partner

	 	 
	By: 	Robert Press, Director

 

  

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EXHIBIT “A”

 REPLACEMENT REVOLVING NOTE

 

 

 

 

 

 

  

  

  

 

EXHIBIT “B”

TRUE-UP SCHEDULE

	
2/1/2014

	 	
   40,500.00

	
3/1/2014

	 	
   40,500.00

	
4/1/2014

	 	
   40,500.00

	
5/1/2014

	 	
   54,000.00

	
6/1/2014

	 	
   54,000.00

	
7/1/2014

	 	
   54,000.00

	
8/1/2014

	 	
   67,500.00

	
9/1/2014

	 	
   67,500.00

	
10/1/2014

	 	
   67,500.00

	
11/1/2014

	 	
   67,500.00

 

 

 

 

  

  

  

REVISED DISCLOSURE SCHEDULES

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00222-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00222-of-00352.parquet"}]]