Document:

EX-10.4

 

EXHIBIT 10.4

INVESTMENT MANAGEMENT TRUST AGREEMENT

     This Agreement is made as of [               ] [     ], 2007 by and between TM Entertainment and
Media, Inc. (the “Company”) and Continental Stock Transfer & Trust Company (the “Trustee”).

     WHEREAS, the Company’s Registration Statement on Form S-1, as amended, No. 333-
[               ] (together with any registration statement filed pursuant to Rule 462(b), the
“Registration Statement”), for its initial public offering of securities (the “IPO”) has been
declared effective as of the date hereof by the Securities and Exchange Commission (the “Effective
Date”); and

     WHEREAS, Pali Capital, Inc. is acting as the representative (the “Representative”) to the
underwriters in the IPO (collectively, with the Representative, the “Underwrites”); and

     WHEREAS, the Company has completed a private placement of 2,100,000 securities for an
aggregate purchase price of $2,100,000 (the “Private Placement”); and

     WHEREAS, as described in the Registration Statement, and in accordance with the Company’s
Certificate of Incorporation, $70,520,000 (inclusive of all discounts and commissions including
the Deferred Discount as defined below) of the proceeds of the IPO and the sale of securities in a
private placement simultaneously with the IPO ($80,888,000 if the Underwriters’
over-allotment option is exercised in full) will be delivered to the Trustee to be deposited and
held in a trust account for the benefit of the Company and the holders of the Company’s common
stock, par value $0.001 per share, issued in the IPO (the amount to be delivered to the Trustee
will be referred to herein as the “Property”; the stockholders for whose benefit the Trustee shall
hold the Property will be referred to as the “Public Stockholders,” and the Public Stockholders and
the Company will be referred to together as the “Beneficiaries”); and

     WHEREAS, a portion of the Property consists of $2,160,000 (or $2,484,000 if the Underwriter’s
over-allotment option is exercised in full) attributable to the Underwriters’ discount (“Deferred
Discount”) which the Underwriters have agreed to deposit in the Trust Account (defined below); 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(s) (“Trust Account”) established by the Trustee at a
branch of JP Morgan Chase Bank, N.A. and at a brokerage institution selected by the Trustee;

 

 

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

          (c) In a timely manner, upon the written instruction of the Company, to invest and reinvest
the Property in any “Government Security” within the meaning of Section 2(a)(16) of the Investment
Company Act of 1940, as amended, having a maturity of 180 days or less, or in money market funds
selected by the Company meeting the conditions specified in paragraphs c(2), c(3) and c(4) under
Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended, as determined by the
Company;

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

          (e) Notify the Company of all communications received by it with respect to any Property which
communications require that notice be given by the Company or action be taken by the Company;

          (f) Supply any necessary information or documents as may be requested by the Company in
connection with the Company’s preparation of the tax returns relating to income from the Property
in the Trust Account or otherwise;

          (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 in writing to do so;

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

          (i) Until such time as the Trustee shall have disbursed an aggregate amount equal to
$1,900,000 to the Company (net of any expenses of the Trustee payable pursuant to Section 3(c) and
any income or other tax obligations relating to the income from the Property in the Trust, the
amount of such tax obligations as determined by the Company), the Trustee shall, upon the written
request of the Company, disburse to the Company, in cash, the amount of any income earned and
collected on the Trust Account. Following such time as the Trustee shall have disbursed an amount
equal to $1,900,000 to the Company (net of any expenses of the Trustee payable pursuant Section
3(c) and any income or other tax obligations relating to the income from the Property in the Trust,
the amount of such tax obligations as determined by the Company), if there is any income or other
tax obligation relating to the income from the Property in the Trust Account as determined by the
Company, then, from time to time, at the written instruction of the Company, the Trustee shall
promptly to the extent there is not sufficient cash in the Trust Account to pay such tax
obligation, liquidate such assets held in the Trust Account as shall be designated by the Company
in writing, and disburse to the Company by wire transfer, out of the Property in the Trust Account,
the amount indicated by the Company as owing in respect of such income tax obligation; and

 

 

          (j) Commence liquidation of the Trust Account promptly only upon receipt of and only in
accordance with the terms of a letter (the “Termination Letter”), in a form substantially similar
to that attached hereto as either Exhibit A or Exhibit B as the case by be, signed on behalf of the
Company by its (i) Chief Executive Officer or Chairman of the Board and (ii) Chief Financial
Officer, 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 a Termination Letter has not been received by the 24-month
anniversary of the effective date of the Registration Statement (the “Last Date”), the Trust
Account shall be liquidated in accordance with the procedures set forth in the Termination Letter
attached hereto as Exhibit B to the stockholders of record on the Last Date. The Trustee shall
provide the Representatives with a copy of any Termination Letter/and/or any other correspondence
that it receives with respect to any proposed withdrawal from the Trust Account promptly after it
receives the same.

          The provisions of this Section 1(j) may not be modified, amended or deleted under any
circumstances. The Trustee understands and agrees that, except as provided in paragraphs 1(j), and
7(a) hereof, disbursements from the Trust Account shall be made only pursuant to a duly executed
Termination Letter, together with the other documents referenced herein.

     2. Limited Distributions Of Income From Trust Account.

     Each of the parties hereto hereby acknowledge and agree that no distributions from the Trust
Account shall be permitted except in accordance with Sections 1(i) and 1(j) hereof.

     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 an the Chief
Executive Officer of the Company. Provide the Underwriters with a copy of any Termination Letter
and/or any other correspondence that it issues with respect to any proposed withdrawal from the
Trust Account promptly after it issues same. In addition, except with respect to its duties under
Sections 1(i) and 1(j) above, the Trustee shall be entitled to rely on, and shall be protected in
relying on, any verbal or telephonic advice or instruction which it in good faith believes to be
given by any one of the persons authorized above to give written instructions, provided that the
Company shall promptly confirm such instructions in writing;

          (b) Subject to the provisions of Section 6 hereof, hold the Trustee harmless and indemnify the
Trustee from and against, any and all expenses, including reasonable counsel fees and
disbursements, or loss suffered by the Trustee in connection with any action, suit or other
proceeding brought against the Trustee involving any claim, or in connection with any claim or
demand which in any way arises out of or relates to this Agreement, the services of the Trustee
hereunder, or the Property or any income earned from investment of the Property, except for
expenses and losses resulting from the Trustee’s gross negligence or willful misconduct. Promptly
after the receipt by the Trustee of notice of demand or claim or the commencement of any action,
suit or proceeding, pursuant to which the Trustee intends to seek indemnification under this
paragraph, it shall notify the Company in writing of such claim and the nature, basis

 

 

and amount of such claim to the extent then known (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 Company shall be
entitled to 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 Section 1(i) 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 said transaction processing
fees shall be deducted by the Trustee from the disbursements made to the Company pursuant to
Section 1(i). The Company shall pay the Trustee the initial acceptance fee and first year’s annual
fee at the consummation of the IPO and shall thereafter pay the annual fee on the anniversary of
the Effective Date. The Trustee shall refund to the Company the annual fee (on a pro rata basis)
with respect to any period after the liquidation of the Trust Fund. The Company shall not be
responsible for any other fees or charges of the Trustee except as set forth in this Section 3(c)
and as may be provided in Section 3(b) hereof (it being expressly understood that the Property
shall not be used to make any payments to the Trustee under such Sections);

          (d) Within five business days after the Representative’s over-allotment option (or any
unexercised portion thereof) expires or is exercised in full, provide the Trustee notice in writing
(with a copy to the Representative) of the total amount of the Deferred Compensation, which shall
in no event be less than $2,160,000;

          (e) Provide to the Trustee any letter of intent, agreement in principle or definitive
agreement that is executed prior to [          ,               ] in connection with a business
combination as described in and contemplated by the Registration Statement (a “Business
Combination”) together with a certified copy of a unanimous resolution of the Board of Directors of
the Company affirming that such letter of intent, agreement in principle or definitive agreement is
in effect; and

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

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

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

          (b) to 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 written 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) to change the investment of any Property, other than in compliance with Section 1(c);

          (d) to refund any depreciation in principal of any Property;

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

          (f) to 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, judgment, instruction, 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) in respect of 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 unless an officer of the Trustee has actual knowledge
thereof, written notice of such event is sent to the Trustee or as otherwise required under Section
1(j) hereof;

          (h) Pay any taxes on behalf of the Trust Account (it being expressly understood that, as set
forth in Section 1(i), if there is any income tax obligation relating to the income of the Property
in the Trust Account, then, at the written instruction of the Company, the Trustee shall disburse
to the Company the amount indicated by the Company as owing in respect of such income tax
obligation); and

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

     5. Certain Rights of Trustee.

          (a) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate
or opinion of counsel or both. The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers’ Certificate or opinion of counsel. The Trustee
may consult with counsel and the advice of such counsel or any opinion of counsel shall

 

 

be full and complete authorization and protection from liability in respect of any action
taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

          (b) The Trustee may act through its attorneys and agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.

          (c) The Trustee shall not be liable for any action it takes or omits to take in good faith
that it believes to be authorized or within the rights or powers conferred upon it by this
Agreement.

          (d) The Trustee shall not be responsible for and make no representation as to the validity or
adequacy of this Agreement, and it shall not be accountable for the Company’s use of the proceeds
from the Trust Account. Notwithstanding the effective date of this Agreement or anything to the
contrary contained in this Agreement, the Trustee shall have no liability or responsibility for any
act or event relating to this Agreement or the transactions related thereto which occurs prior to
the date of this Agreement, and shall have no contractual obligations to the Beneficiaries until
the date of this Agreement.

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

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

     7. Waiver.

     Notwithstanding anything herein to the contrary, the Trustee hereby waives any and all right,
title, interest or claim of any kind (“Claim”) in or to any distribution of the Trust Account, and
hereby agrees not to seek recourse, reimbursement, payment or satisfaction for any Claim against
the Trust Account for any reason whatsoever. In the event that the Trustee has a claim against the
Company under this Agreement, including, without limitation, under Section 4(b), the Trustee will
pursue such claim solely against the Company and not against the Property held in the Trust
Account.

 

 

     8. Miscellaneous.

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

          (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 the conflicts of law principles thereof. It may
be executed in one or more counterparts, each of which shall constitute an original, and together
shall constitute one and the same instrument.

          (c) This Agreement contains the entire agreement and understanding of the parties hereto with
respect to the subject matter hereof. The parties hereto may change, waive, amend or modify any
provision contained herein that may be defective or inconsistent with any other provision contained
herein only upon the written consent of each of the parties hereto; provided,
however, that no such change, amendment or modification (other than to correct a
typographical or similar technical error) may be made to Sections 1(i), and 1(j) hereof without the
consent of 95% of the Public Stockholders, it being the specific intention of the parties hereto
that each Public Stockholder is and shall be a third-party beneficiary of this Section 7(c) with
the same right and power to enforce this Section 7(c) as either of the parties hereto. For purposes
of this Section 7(c), the “consent of 95% of the Public Stockholders” shall mean receipt by the
Trustee of a certificate from an entity certifying that (i) such entity regularly engages in the
business of serving as inspector of elections for companies whose securities are publicly traded,
and (ii) either (a) 95% of the Public Stockholders of record as of a record date established in
accordance with Section 213(a) of the Delaware General Corporation Law, as amended (the “DGCL”),
have voted in favor of such amendment or modification or (b) 95% of the Public Stockholders of
record as of a record date established in accordance with Section 213(b) of the DGCL has delivered
to such entity a signed writing approving such amendment or modification. As to any claim,
cross-claim or counterclaim in any way relating to this Agreement, each party waives the right to
trial by jury.

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

          (e) Any notice, consent or request to be given in connection with any of the terms or
provisions of this Agreement shall be in writing and shall be sent by express mail or similar
private courier service, by certified mail (return receipt requested), by hand delivery or by
facsimile transmission:

 

 

          if to the Trustee, to:

Continental Stock Transfer & Trust Company

17 Battery Place

8th Floor

New York, New York 10004

Attn: Steven G. Nelson

Fax: 212 509 5150

Email: cstsgn@aol.com

          if to the Company, to:

TM Entertainment and Media, Inc.

307 East 87th Street

New York, NY 10128

Attn: Theodore S. Green

Telephone: [(212) 289-6362]

Facsimile: [                                        ]

          with copies to:

Morrison Cohen LLP

909 Third Avenue

New York, NY 10022

Attn: Jack Levy, Esq.

Fax: (212) 735-8600

Email: jlevy@morrisoncohen.com

          in either case with a copy on behalf of the Underwriters to:

Pali Capital, Inc.

650 Fifth Avenue

New York, NY 10019

Attn: R. Michael Powell

Telephone: (212) 259-2071

Facsimile: (212) 259-2093

Email: MPowell@palicapital.com

          with a copy to:

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, NY 10036

Attn: Christopher S. Auguste, Esq.

Fax: (212) 715-8000

Email: cauguste@kramerlevin.com

 

 

          (f) This Agreement may not be assigned by the Trustee without the prior written 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
part of the Property under any circumstance.

          (h) The Trustee hereby consents to the inclusion of Continental Stock Transfer & Trust Company
in the Registration Statement and other materials relating to the IPO.

          (i) The Underwriters shall be third party beneficiaries of this Agreement and this Agreement
may not be modified or changed without the prior written consent of the Representative.

[Signature page follows]

 

 

     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:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	TM ENTERTAINMENT AND MEDIA, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

[Investment Management Trust Agreement]

 

 

EXHIBIT A

[LETTERHEAD OF COMPANY]

[INSERT DATE]

Continental Stock Transfer & Trust Company

17 Battery Place

8th Floor

New York, New York 10004

Attn: [                    ]

     Re: Trust Account No. [               ] Termination Letter

Gentlemen:

     Pursuant to Section 1(j) of the Investment Management Trust Agreement between TM Entertainment
and Media, Inc. (the “Company”) and Continental Stock Transfer & Trust Company (the “Trustee”),
dated as of [               ], 2007 (the “Trust Agreement”), this is to advise you that the
Company has entered into an agreement (“Business Agreement”) with
[               ] (the “Target Business”) to consummate a business combination with Target
Business (a “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 (the
“Consummation Date”). Capitalized terms used but not otherwise defined herein shall have the
meaning ascribed to such terms in the Trust Agreement.

     Pursuant to Section 3(e) of the Trust Agreement, we are providing you with [an affidavit] [a
certificate] of [               ], which verifies the vote of the Company’s stockholders in
connection with the Business Combination. In accordance with the terms of the Trust Agreement, we
hereby authorize you to commence liquidation of the Trust Account to the effect that, on the
Consummation Date, all of the funds held in the Trust Account will be immediately available for
transfer to the account or accounts that the Company shall direct in writing on the Consummation
Date.

     On the Consummation Date (i) counsel for the Company shall deliver to you written notification
that the Business Combination has been consummated and (ii) the Company and Pali Capital, Inc., as
the representative of the underwriters of the Company’s IPO (the “Representative”) shall deliver to
you joint written instructions with respect to the transfer of the funds held in the Trust Account
including the Deferred Compensation (the “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 and the Representative of the same
and the Company and the Representative shall jointly direct you as to whether such funds should
remain in the Trust Account and be distributed after the Consummation Date to the Company or, with
respect to the Deferred Discount, to the Underwriters. Upon the distribution of all the funds in
the Trust Account pursuant to the terms

 

 

hereof, the Trust Agreement shall automatically terminated and cease to have any further force
or effect.

     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 the written notice of 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,

TM Entertainment and Media, Inc.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT B

[LETTERHEAD OF COMPANY]

[INSERT DATE]

Continental Stock Transfer & Trust Company

17 Battery Place

8th Floor

New York, New York 10004

Attn: [               ]

     Re: Trust Account No. [               ] Termination Letter

Gentlemen:

     Pursuant to paragraph 1(j) of the Investment Management Trust Agreement between TM
Entertainment and Media, Inc. (the “Company”) and Continental Stock Transfer & Trust Company (the
“Trustee”), dated as of                , 2007 (the “Trust Agreement”), this is to advise
you that the Company has been dissolved due to the Company’s inability to effect a Business
Combination within the time frame specified in the Company’s prospectus relating to its IPO.

     Attached hereto is a certified copy of the Certificate of Dissolution as filed with the
Delaware Secretary of State. Defined terms used but not otherwise defined herein shall have the
meaning ascribed to such terms in the Trust Agreement.

     In accordance with the terms of the Trust Agreement, we hereby authorize you, to commence
liquidation of the Trust Account as promptly as practicable to the stockholders of record on the
Last Date (as defined in the Trust Agreement). The Company will establish a record date for the
purposes of determining the stockholders entitled to receive their share of liquidation proceeds.
The record date shall be within ten (10) days of the date of this letter or as soon thereafter as
is reasonably practicable and legally permissible. You will notify the Company in writing as to
when all of the funds in the Trust Account will be available for immediate transfer (“Transfer
Date”) in accordance with the terms of the Trust Agreement and the Certificate of Incorporation of
the Company. You shall commence distribution of such funds in accordance with the terms of the
Trust Agreement and the Certificate of Incorporation of the Company and you shall oversee the
distribution of the funds. Upon the distribution of all the funds in the Trust Account, your
obligations under the Trust Agreement shall be terminated.

	 	 	 	 	 
	 	Very truly yours,

TM Entertainment and Media, Inc.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

EXHIBIT C

AUTHORIZED INDIVIDUAL(S) AND TELEPHONE NUMBERS

AUTHORIZED FOR TELEPHONE CALL BACK

	 	 	 
	COMPANY:

	 	TM Entertainment and Media, Inc.
	 

	 	307 East 87th Street
	 

	 	New York, NY 10128
	 

	 	Attention: Theodore S. Green
	 

	 	Telephone: [(212) 289-6362]
	 

	 	Facsimile: [                                        ]
	 
	 	 
	TRUSTEE:

	 	Continental Stock Transfer & Trust Company
	 

	 	17 Battery Place
	 

	 	8th Floor
	 

	 	New York, New York 10004
	 

	 	Attn: Frank A. Di Paolo
	 

	 	Telephone: (212) 845-3270

 

 

SCHEDULE A

Schedule of fees pursuant to Section 3(c) of Investment Management Trust Agreement between TM
Entertainment and Media, Inc. and Continental Stock Transfer & Trust Company

	 	 	 	 	 
	FEE ITEM	 	TIME AND METHOD OF PAYMENT	 	AMOUNT
	 
	Initial acceptance fee

	 	Initial closing of IPO by wire transfer
	 	$[1,000]
	 
	 	 	 	 
	 

	 	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
	 	$[3,000]
	 
	 	 	 	 
	Transaction processing fee
for disbursements to
Company under Section 1(i)

	 	Deduction by Trustee from disbursement
made to Company under Section 1(i)
	 	$[250]

	 	 	 	 	 
	 	 	Agreed:
	 
	 	 	 	 
	Dated: [               ], 2007	 	TM Entertainment and Media, Inc.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	Continental Stock Transfer & Trust Co.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:EX-10.5

 

EXHIBIT 10.5

SECURITIES ESCROW AGREEMENT

     This Securities Escrow Agreement (this “Agreement”) is made and entered into as of           ], 2007, by and among Continental Stock Transfer and Trust Company, a New York corporation
(“Escrow Agent”), TM Entertainment and Media, Inc., a Delaware corporation (the
“Company”), and the stockholders of the Company (collectively, the “Stockholders”)
and [               ] (“[     ]”), with reference to the following facts:

     A. The Company has entered into an Underwriting Agreement dated [               ], 2007
(“Underwriting Agreement”), with Pali Capital, Inc., acting as representative
(“Representative”) of the underwriters (collectively, the “Underwriters”), pursuant
to which, among other matters, the Underwriters have agreed to purchase 9,000,000 units
(“Units”) to be issued by the Company. Each Unit consists of one share of the Company’s
common stock, par value $0.001 per share (“Common Stock”), and one warrant
(“Warrant”), and each Warrant entitles the holder thereof to purchase one share of Common
Stock for an exercise price of $5.50, all as more fully described in the Company’s final
prospectus, dated [               ], 2007 (“Prospectus”) comprising part of the Company’s
Registration Statement on Form S-1 (File No. 333-[          ]) under the Securities Act of 1933, as
amended (“Registration Statement”).

     B. [               ] owns [               ] shares of Common Stock and the other Stockholders own
an aggregate of [               ] shares of Common Stock.

     C. The Company has also entered into a Private Placement Purchase Agreement dated as of [               ],
2007 with [               ] (the “Private Placement Agreement”), pursuant
to which [               ] has agreed to purchase in a private placement an aggregate of 2,100,000
warrants in a form substantially identical to the warrants provided in the Units being offered by
the Underwriters.

     D. In order to facilitate the public offering of the Units, (i) the Stockholders have agreed
to deposit all shares of Common Stock they own as of the date hereof (the “Escrow Shares”),
and (ii) [               ] has agreed to deposit all warrants it is to purchase pursuant to the
Private Placement Agreement (the “Escrow Warrants”, and together with the Escrow Shares, the
“Escrow Securities”) in escrow as hereinafter provided.

     E. The Company and the Stockholders desire that the Escrow Agent accept the Escrow Securities,
in escrow, to be held and disbursed as hereinafter provided.

     NOW, THEREFORE, with reference to the foregoing facts, the parties agree as follows:

1. Appointment of Escrow Agent.

     The Company and the Stockholders hereby appoint the Escrow Agent to act in accordance with and
subject to the terms of this Agreement, and the Escrow Agent hereby accepts such appointment and
agrees to act in accordance with and subject to such terms.

2. Deposit of Escrow Securities.

 

 

     On or before the effective date of the Registration Statement, the Stockholders (or the
Company on behalf of any or all of the Stockholders) shall each deliver to the Escrow Agent a
certificate or certificates representing their Escrow Securities, to be held and disbursed subject
to the terms and conditions of this Agreement. The Stockholders acknowledge that the certificate or
certificates representing their Escrow Securities are legended to reflect that such Escrow
Securities are subject to the terms and conditions of this Agreement.

3. Disbursement of the Escrow Securities.

     3.1 The Escrow Agent shall hold the Escrow Securities from the date of delivery until the
applicable Release Date (the “Escrow Period”).

     3.2 For purposes of this Agreement:

          3.2.1 “Business Combination” shall mean a merger, capital stock exchange, asset or
stock acquisition or other similar business combination with one or more operating businesses.

          3.2.2 “Release Date” shall mean the Escrow Shares Release Date or the Escrow Warrants
Release Date, as applicable.

               3..2.2.1 “Escrow Shares Release Date” shall mean the earliest to occur of: (a) (i)
that date which is one year following the closing of the Business Combination; (b) the Sale Date;
and (c) the Trust Account Liquidation Date.

               3.2.2.2 “Escrow Warrants Release Date” shall mean the later of (i) one year from the
effective date of the Registration Statement and (ii) sixty (60) days following the closing of the
Business Combination.

          3.2.3 “Sale Date” shall mean the date after completion of a Business Combination on
which a Stockholder Liquidation Event occurs.

          3.2.4 “Stockholder Liquidation Event” shall mean, after the completion of a Business
Combination: (a) the merger, consolidation, reorganization or similar transaction involving the
Company (or a successor to the Company) in which the common stockholders of the Company (or such
successor) have the right to exchange their shares of Common Stock (or successor securities) for
cash, securities or other property, but excluding a reorganization in which the common stockholders
exchange their shares for shares of a newly formed holding company and have substantially the same
proportionate interests in the holding company that they had in the Company (or successor); (b) the
liquidation of the Company; or (c) the sale of all or substantially all of the assets of the
Company.

          3.2.5 “Trust Account” shall mean a trust account at USB Bank USA, N.A., maintained by
Continental Stock Transfer & Trust Company, acting as trustee.

2

 

          3.2.6 “Trust Account Liquidation Date” shall mean a date prior to the completion of a
Business Combination upon which the Trust Account is liquidated and the funds in the Trust Account
are distributed to the beneficial owners of the Trust Account.

     3.3 Upon any applicable Release Date, the Escrow Agent shall disburse to each of the
Stockholders upon written instructions from such Stockholders, their respective Escrow Securities
(for which the Release Date has occurred) to the address on record of each of the Stockholders, or
as may otherwise be directed by any of the Stockholders in writing.

     3.4 The Company agrees to notify the Escrow Agent in advance of any anticipated Stockholder
Liquidation Event or Trust Account Liquidation Date and upon the occurrence thereof, upon which
occurrence, the Escrow Agent shall promptly destroy the certificates representing the Escrow
Securities. The Escrow Agent shall be entitled to rely upon a certificate (the “Officer’s
Certificate”), executed by the Chairman and Chief Executive Officer of the Company, in form
reasonably acceptable to the Escrow Agent, that certifies that the Release Date has occurred, and
shall not be required to disburse the Escrow Securities unless and until it receives the Officer’s
Certificate.

4. Rights of the Stockholders in Escrow Securities.

     4.1 Rights as a Stockholder. Except as provided in this Section 4 and the Insider
Letters (as defined below), the Stockholders shall retain all of their rights as security-holders
of the Company with respect to their Escrow Securities during the applicable Escrow Periods,
including, without limitation:

          4.1.1 the right to vote; and

          4.1.2 the right to receive dividends and distributions, if any, with cash dividends paid to
the Stockholders and dividends paid in stock or other non-cash property (“Non-Cash
Dividends”) delivered to the Escrow Agent to hold in accordance with the terms hereof (and the
term “Escrow Securities” shall be deemed to include any Non-Cash Dividends distributed with respect
to any Escrow Securities held by the Escrow Agent prior to the distribution).

          4.2 Restrictions on Transfer. During the applicable Escrow Period, the Stockholders
agree not to sell, transfer or assign any or all of their Escrow Securities (for which Release Date
has not occurred) except in the case of [               ] to its members. Notwithstanding the
foregoing, the Stockholders may transfer any of their Escrow Securities to their respective
ancestors, descendants or spouse or to trusts established for the benefit of such persons or the
member or pursuant to a qualified domestic relations order, or to affiliated companies; provided,
however, that any such permissive transfers may be implemented only upon the respective
transferee’s written agreement to be bound by the terms and conditions of this Agreement as a
stockholder and of the Insider Letter signed by transferring Stockholder. During the applicable
Escrow Period, the Stockholders each agree that they may not pledge or grant a security interest in
the Escrow Securities or grant a security interest in their rights under this Agreement.

          4.3 Insider Letters. Each of the Stockholders has executed a letter agreement with the
Representative and the Company, dated as indicated on Exhibit A hereto, and which is filed as an

3

 

exhibit to the Registration Statement (“Insider Letter”), respecting their rights and
obligations in certain events, including but not limited to the liquidation of the Company.

5. Concerning the Escrow Agent.

     5.1 Good Faith Reliance. The Escrow Agent shall not be liable for any action taken or
omitted by it in good faith and in the exercise of its own best judgment, and 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 Escrow Agent), 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 Escrow Agent to be genuine and to be signed or presented by the proper person or
persons. The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification,
termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow
Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are
affected, unless it shall have given its prior written consent thereto.

     5.2 Indemnification. The Company agrees to indemnify and hold the Escrow Agent harmless
from and against any expenses, including counsel fees and disbursements, or losses suffered by the
Escrow Agent in connection with any action, suit or other proceeding involving any claim which in
any way, directly or indirectly, arises out of or relates to this Agreement, the services of the
Escrow Agent hereunder, or the Escrow Securities held by it hereunder, other than expenses or
losses arising from the gross negligence or willful misconduct of the Escrow Agent. Promptly after
the receipt by the Escrow Agent of notice of any demand or claim or the commencement of any action,
suit or proceeding, the Escrow Agent shall notify the other parties hereto in writing. In the event
of the receipt of such notice, the Escrow Agent, in its sole discretion, may commence an action in
the nature of interpleader in an appropriate court to determine ownership or disposition of the
Escrow Securities or it may deposit the Escrow Securities with the clerk of any appropriate court
or it may retain the Escrow Securities pending receipt of a final, non appealable order of a court
having jurisdiction over all of the parties hereto directing to whom and under what circumstances
the Escrow Securities are to be disbursed and delivered. The provisions of this Section 5.2 shall
survive in the event the Escrow Agent resigns or is discharged pursuant to Sections 5.5 or 5.6
below.

     5.3 Compensation. The Escrow Agent shall be entitled to reasonable compensation from
the Company for all services rendered by it hereunder as set forth on Exhibit B hereto. The Escrow
Agent shall also be entitled to reimbursement from the Company for all expenses paid or incurred by
it in the administration of its duties hereunder including, but not limited to, all counsel,
advisors’ and agents’ fees and disbursements and all taxes or other governmental charges.

     5.4 Further Assurances. From time to time on and after the date hereof, the Company and
the Stockholders shall deliver or cause to be delivered to the Escrow Agent such further documents
and instruments and shall do or cause to be done such further acts as the Escrow Agent shall
reasonably request to carry out more effectively the provisions and purposes of this

4

 

Agreement, to evidence compliance herewith or to assure itself that it is protected in acting
hereunder.

     5.5 Resignation. The Escrow Agent may resign at any time and be discharged from its
duties as escrow agent hereunder by giving the other parties hereto written notice, and such
resignation shall become effective as hereinafter provided. Such resignation shall become effective
at such time that the Escrow Agent shall turn over to a successor escrow agent appointed by the
Company, and approved by Pali, the Escrow Securities held hereunder. If no new escrow agent is so
appointed within the 60-day period following the giving of such notice of resignation, the Escrow
Agent may deposit the Escrow Securities with any court it reasonably deems appropriate.

     5.6 Discharge of Escrow Agent. The Escrow Agent shall resign and be discharged from its
duties as escrow agent hereunder if so requested in writing at any time by the Company and the
holders of a majority of the Escrow Securities, provided, however, that such resignation shall
become effective only upon acceptance of appointment by a successor escrow agent as provided in
Section 5.5.

     5.7 Liability. Notwithstanding anything herein to the contrary, the Escrow Agent shall
not be relieved from liability hereunder for its own gross negligence or willful misconduct.

     5.8 Waiver. Notwithstanding anything herein to the contrary, the Escrow Agent hereby
waives any and all right, title, interest or claim of any kind (“Claim”) in or to any
distribution of the Trust Account, and hereby agrees not to seek recourse, reimbursement, payment
or satisfaction for any Claim against the Trust Account for any reason whatsoever.

6. Miscellaneous.

     6.1 Governing Law. This Agreement shall for all purposes be deemed to be made under and
shall be construed 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. Each of the parties hereby agrees that any action, proceeding or claim against it
arising out of or relating in any way to this Agreement shall be brought and enforced in the courts
of the State of New York or the United States District Court for the Southern District of New York,
and irrevocably submits to such jurisdiction, which jurisdiction shall be exclusive. Each of the
parties hereby waives any objection to such exclusive jurisdiction and that such courts represent
an inconvenient forum.

     6.2 Entire Agreement. This Agreement together with the Insider Letters contains the
entire agreement of the parties hereto with respect to the subject matter hereof and, except as
expressly provided herein, may not be changed or modified except by an instrument in writing signed
by the party to be charged. This Agreement may be executed in one or more counterparts, each of
which shall constitute an original, and together shall constitute one and the same instrument.

     6.3 Headings. The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation thereof.

5

 

     6.4 Binding Effect. This Agreement shall be binding upon and inure to the benefit of
the respective parties hereto and their legal representatives, successors and assigns.

     6.5 Notices. Any notice or other communication required or which may be given hereunder
shall be in writing and either be delivered personally or be mailed, certified or registered mail,
or by private courier service, return receipt requested, postage prepaid, and shall be deemed given
when so delivered personally or, if mailed, two days after the date of mailing, as follows:

     If to the Company, to:

TM Entertainment and Media, Inc.

307 East 87th Street

New York, NY 10128

Attention: Theodore S. Green

Telephone: [(212) 289-6362]

Facsimile: [                                        ]

     If to any of the Stockholders to:

c/o TM Entertainment and Media, Inc.

307 East 87th Street

New York, NY 10128

Attention: Theodore S. Green

Telephone: [(212) 289-6362]

Facsimile: [                                        ]

     If to the Escrow Agent, to:

Continental Stock Transfer & Trust Company

17 Battery Place

New York, New York 10004

Attn: Chairman

Facsimile: [               ]

     A copy of any notice sent hereunder shall be sent to:

HSBC Bank USA, N.A.

452 Fifth Avenue, 4th Floor

New York, New York 10018

Attn: Christian J. Covello

Telephone: (212) 525-4910

Facsimile: (212) 525-2555

     And:

6

 

Morrison Cohen LLP

909 Third Avenue

New York, NY 10022

Attn: Jack Levy, Esq.

Facsimile: (212) 735-8600

     And:

Kramer Levin Naftalis & Frankel LLP

1177 Avenue of the Americas

New York, NY 10036

Attn: Christopher S. Auguste, Esq.

Facsimile: (212) 715-8000

     Any party may change the person and address to which the notices or other communications are
to be sent by giving written notice to any such change in the manner provided herein for giving
notice.

     6.6 Third Party Beneficiaries. Each of the Stockholders hereby acknowledges that the
Underwriters are third party beneficiaries of this Agreement and this Agreement may not be modified
or changed without the prior written consent of the Representative.

     6.7 Liquidation of the Company. The Company shall give the Escrow Agent written
notification of the liquidation and dissolution of the Company in the event that the Company fails
to consummate a Business Combination within the time period(s) specified in the Prospectus and a
liquidation and dissolution of the Company is effectuated.

[Remainder of page intentionally left blank.]

7

 

     WITNESS the execution of this Agreement as of the date first above written.

	 	 	 	 	 
	 	TM ENTERTAINMENT AND MEDIA, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	[               ]

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 
	 

	OTHER
STOCKHOLDERS OF TM ENTERTAINMENT
AND MEDIA, INC.

 	 
	 

	 	 	 	 
	 	 	 

[Escrow Agreement]

 

 

Exhibit A

[Form of Insider Letter]

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