Document:

ESCROW AGREEMENT

 

ESCROW AGREEMENT (“Agreement”)
dated __________ 2014 by and among QUARTET HOLDCO LTD., a Bermuda company (“Holdco”), GREGORY MONAHAN (the “Representative”),
as the representative of the former stockholders of QUARTET MERGER CORP., a Delaware corporation (“Quartet”), EDWARD
COLL, ANTHONY LAURA, LAGOA INVESTMENTS, PANGAEA ONE, L.P., PANGAEA ONE PARALLEL FUND (B), L.P. and PANGAEA ONE PARALLEL FUND, L.P.
(together the “Stockholders”) and CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as escrow agent (the “Escrow
Agent”).

 

Holdco, Quartet, Quartet
Merger Sub, Ltd., a wholly-owned subsidiary of Holdco (“Merger Sub”), Pangaea Logistics Solutions Ltd. (“Company”)
and the Stockholders as the former securityholders of the Company are the parties to an Agreement and Plan of Reorganization dated
as of , 2014 (the “Merger Agreement”) pursuant to which (i) Quartet has merged with and into Holdco,
with Holdco being the surviving entity of such merger and (ii) Merger Sub has merged with and into the Company, with the Company
being the surviving entity of such merger and remaining a wholly-owned subsidiary of Holdco. Pursuant to the Merger Agreement,
Holdco is to be indemnified in certain respects. The parties desire to establish an escrow fund as the sole remedy for the indemnification
obligations set forth in Article VII of the Merger Agreement. The Stockholders, together with their permitted transferees, are
referred to herein as the “Owners”. Capitalized terms used herein that are not otherwise defined herein shall have
the meanings ascribed to them in the Merger Agreement.

 

The parties agree as
follows:

 

1.                 
(a)Concurrently with the execution hereof, each of the Stockholders (or Holdco, on their behalf) is delivering to the
Escrow Agent, to be held in escrow pursuant to the terms of this Agreement, stock certificates in the amounts set forth in Schedule
A hereto issued in the name of such Stockholder representing a portion of the shares of Holdco Shares issued to such Stockholder
in the Transaction Merger. The Holdco Shares represented by the stock certificates so delivered by the Stockholders to the Escrow
Agent are herein referred to in the aggregate as the “Escrow Fund.” The Escrow Agent shall maintain a separate account
for each Stockholder’s, and, subsequent to any transfer permitted pursuant to Paragraph 1(d) hereof, each Owner’s,
portion of the Escrow Fund.

 

(a)               
The Escrow Agent hereby agrees to act as escrow agent and to hold, safeguard and disburse the Escrow Fund pursuant to the
terms and conditions hereof. It shall treat the Escrow Fund as a trust fund in accordance with the terms of this Agreement and
not as the property of Holdco. The Escrow Agent’s duties hereunder shall terminate upon its distribution of the entire Escrow
Fund in accordance with this Agreement.

 

(b)              
Except as herein provided, the Owners shall retain all of their rights as shareholders of Holdco with respect to shares
of Holdco Stock constituting the Escrow Fund during the period the Escrow Fund is held by the Escrow Agent (the “Escrow Period”),
including, without limitation, the right to vote their shares of Holdco Stock included in the Escrow Fund.

 

    	 

    	 

    

  

(c)               
During the Escrow Period, all dividends payable in cash with respect to the shares of Holdco Stock included in the Escrow
Fund shall be paid to the Owners, but all dividends payable in stock or other non-cash property (“Non-Cash Dividends”)
shall be delivered to the Escrow Agent to hold in accordance with the terms hereof. As used herein, the term “Escrow Fund”
shall be deemed to include the Non-Cash Dividends distributed thereon, if any.

 

(d)              
During the Escrow Period, no sale, transfer or other disposition may be made of any or all of the shares of Holdco Stock
in the Escrow Fund except (i) to a “Permitted Transferee” (as hereinafter defined), (ii) by virtue of the laws of descent
and distribution upon death of any Owner, or (iii) pursuant to a qualified domestic relations order; provided, however, that 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 used in this Agreement, the term “Permitted Transferee” shall include: (1) members
of a Stockholder’s “Immediate Family” (as hereinafter defined); (2) an entity in which (A) a Stockholder and/or
members of a Stockholder’s Immediate Family beneficially own 100% of such entity’s voting and non-voting equity securities,
or (B) a Stockholder and/or a member of such Stockholder’s Immediate Family is a general partner and in which such Stockholder
and/or members of such Stockholder’s Immediate Family beneficially own 100% of all capital accounts of such entity; (3) a
revocable trust established by a Stockholder during his lifetime for the benefit of such Stockholder or for the exclusive benefit
of all or any of such Stockholder’s Immediate Family; and (4) any Affiliate. As used in this Agreement, the term “Immediate
Family” means, with respect to any Stockholder, a spouse, parent, lineal descendants, the spouse of any lineal descendant,
and brothers and sisters (or a trust, all of whose current beneficiaries are members of an Immediate Family of the Stockholder).
As used in this Agreement, “Affiliate” means, as applied to any Person, any other Person directly or indirectly controlling,
controlled by or under direct or indirect common control with, such Person. For purposes of this definition, “control”
(including with correlative meanings, the terms “controlling,” “controlled by” and “under common
control with”), as applied to any Person, means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.
As used in this Agreement, “Person” means any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability
company or joint stock company), firm or other enterprise, association, organization, entity or governmental entity. In connection
with and as a condition to each permitted transfer, the Permitted Transferee shall agree in writing to be bound by the terms and
conditions of this Agreement. Upon receipt of such agreement, the Escrow Agent shall deliver to Holdco’s transfer agent the
original stock certificate out of which the assigned shares are to be transferred, and shall request that Holdco issue new certificates
representing (m) the number of shares, if any, that continue to be owned by the transferring Stockholder, and (n) the number of
shares owned by the Permitted Transferee as the result of such transfer. Holdco, the transferring Stockholder and the Permitted
Transferee shall cooperate in all respects with the Escrow Agent in documenting each such transfer and in effectuating the result
intended to be accomplished thereby. During the Escrow Period, no Owner shall pledge or grant a security interest in such Owner’s
shares of Holdco Stock included in the Escrow Fund or grant a security interest in such Owner’s rights under this Agreement.

 

    	-2-

    	 

    

  

2.                 
(a)Holdco, acting through the Representative, may make a claim for indemnification pursuant to the Merger Agreement
(“Indemnification Claim”) against the Escrow Fund by giving notice (a “Notice”) to the Stockholder Nominee
(defined below), with a copy to the Escrow Agent, specifying (i) the covenant, representation, warranty, agreement, undertaking
or obligation contained in the Merger Agreement which it asserts has been breached or otherwise entitles Holdco to indemnification,
(ii) in reasonable detail, the nature and dollar amount of any Indemnification Claim, (iii) whether the Indemnification Claim is
a Basic Indemnification Claim or an Environmental Indemnification Claim, and (iv) whether the Indemnification Claim results from
a Third Party Claim against Holdco or the Company. The Representative also shall deliver to the Escrow Agent (with a copy to the
Stockholder Nominee), concurrently with its delivery to the Escrow Agent of the Notice, a certification as to the date on which
the Notice was delivered to the Stockholders. As used herein, “Basic Indemnification Claim” means an Indemnification
Claim other than an Environmental Indemnification Claim.

 

(b)              
If the Stockholder Nominee shall give a notice to the Representative (with a copy to the Escrow Agent and Holdco) (a “Counter
Notice”), within 30 days following the date of receipt (as specified in the Representative’s certification) by the
Stockholder Nominee of a copy of the Notice, disputing whether the Indemnification Claim is indemnifiable under the Merger Agreement,
the Representative and Stockholder Nominee shall attempt to resolve such dispute by voluntary settlement as provided in paragraph
2(c) below. If no Counter Notice with respect to an Indemnification Claim is received by the Escrow Agent from the Stockholder
Nominee within such 30-day period, the Indemnification Claim shall be deemed to be an Established Claim (as hereinafter defined)
for purposes of this Agreement.

 

(c)               
If the Stockholder Nominee delivers a Counter Notice to the Representative and the Escrow Agent, the Representative and
Stockholder Nominee shall, during the period of 60 days following the delivery of such Counter Notice or such greater period of
time as the parties may agree to in writing (with a copy to the Escrow Agent), attempt to resolve the dispute with respect to which
the Counter Notice was given. If the Representative and Stockholder Nominee shall reach a settlement with respect to any such dispute,
they shall jointly deliver written notice of such settlement to the Escrow Agent specifying the terms thereof. If the Representative
and Stockholder Nominee shall be unable to reach a settlement with respect to a dispute, such dispute shall be resolved by arbitration
pursuant to paragraph 2(d) below.

 

(d)              
If the Representative and Stockholder Nominee cannot resolve a dispute prior to expiration of the 60-day period referred
to in paragraph 2(c) above (or such longer period as the parties may have agreed to in writing), then such dispute shall be submitted
(and either party may submit such dispute) for arbitration in accordance with Section 8.

 

(e)               
As used in this Agreement, “Established Claim” means any (i) Indemnification Claim deemed established pursuant
to the last sentence of paragraph 2(b) above, (ii) Indemnification Claim resolved in favor of Holdco by settlement pursuant to
paragraph 2(c) above, resulting in an award to Holdco, (iii) Indemnification Claim established by the decision of an arbitrator
pursuant to paragraph 2(d) above, resulting in a dollar award to Holdco, (iv) Third Party Claim that has been sustained by a final
determination (after exhaustion of any appeals) of a court of competent jurisdiction, or (v) Third Party Claim that the Representative
and Stockholder Nominee have jointly notified the Escrow Agent has been settled in accordance with the provisions of the Merger
Agreement; provided that, subject to the terms of the Merger Agreement, notwithstanding anything herein, no Indemnification Claim
by Holdco shall become an Established Claim unless and until the aggregate amount of indemnification Losses exceeds (i) $2,000,000
(the “Deductible”), in which event only the amount of such Established Claim(s) in excess of the Deductible
shall be payable. The aggregate liability for Losses shall not in any event exceed the Escrow Shares in the case of Basic Indemnity
Claims or the Environmental Indemnity Shares in the case of Environmental Indemnity Claims.

 

    	-3-

    	 

    

  

(f)               
(i)Promptly after an Indemnification Claim becomes an Established Claim, the Representative and Stockholder Nominee
shall jointly deliver a notice to the Escrow Agent (a “Joint Notice”) directing the Escrow Agent to pay to Holdco,
and the Escrow Agent promptly shall deliver Escrow Shares to Holdco, the dollar amount of which shall equal the Loss (as defined
in the Merger Agreement) resulting from the Established Claim (or, if at such time there remains in the Escrow Fund less than the
full amount so payable, the full amount remaining in the Escrow Fund).

 

(ii)              
Payment of an Established Claim shall be made from Escrow Shares pro rata from the account maintained on behalf of each
Owner. For purposes of each payment, such shares shall be valued at the “Fair Market Value” (as defined below). However,
in no event shall the Escrow Agent be required to calculate Fair Market Value or make a determination of the number of shares to
be delivered to Holdco in satisfaction of any Established Claim; rather, such calculation shall be included in and made part of
the Joint Notice. The Escrow Agent shall transfer to Holdco out of the Escrow Fund that number of shares of Holdco Stock necessary
to satisfy each Established Claim, as set out in the Joint Notice. Any dispute between the Representative and Stockholder Nominee
concerning the calculation of Fair Market Value or the number of shares necessary to satisfy any Established Claim, or any other
dispute regarding a Joint Notice, shall be resolved between the Representative and Stockholder Nominee in accordance with the procedures
specified in paragraph 2(d) above, and shall not involve the Escrow Agent. Each transfer of shares in satisfaction of an Established
Claim shall be made by the Escrow Agent delivering to Holdco one or more stock certificates held in each Owner’s account
evidencing not less than such Owner’s pro rata portion of the aggregate number of shares specified in the Joint Notice, together
with assignments separate from certificate executed in blank by such Owner and completed by the Escrow Agent in accordance with
instructions included in the Joint Notice. Upon receipt of the stock certificates and assignments, Holdco shall deliver to the
Escrow Agent new certificates representing the number of shares owned by each Owner after such payment. The parties hereto (other
than the Escrow Agent) agree that the foregoing right to make payments of Established Claims in shares of Holdco Stock may be made
notwithstanding any other agreements restricting or limiting the ability of any Owner to sell any shares of Holdco stock or otherwise.
The Representative and Stockholder Nominee shall be required to exercise utmost good faith in all matters relating to the preparation
and delivery of each Joint Notice. As used herein, “Fair Market Value” means the average reported closing price for
the Holdco Stock for the ten trading days ending on the last trading day prior to (x) the day the Established Claim is paid with
respect to Indemnification Claims paid on or before the Basic Indemnity Escrow Termination Date, (y) the Basic Indemnity Escrow
Termination Date with respect to shares constituting the Pending Claims Reserve (as hereinafter defined) on the Basic Indemnity
Escrow Termination Date, and (z) with respect to shares placed in the Pending Claims Reserve for an Environmental Indemnification
Claim asserted after the Basic Indemnity Escrow Termination Date, the day such Environmental Indemnification Claim is asserted.
If Holdco Stock is not then listed or admitted to trading on any national securities exchange, the “Fair Market Value”
means the average of the reported closing bid and asked prices of Holdco Stock on such date on the principal over the counter market
on which Holdco Stock is traded, and if Holdco Stock is not so traded, a market price per share determined in good faith by the
Holdco Board of Directors.

 

    	-4-

    	 

    

  

(iii)            
Notwithstanding anything herein to the contrary, at such time as an Indemnification Claim has become an Established Claim,
the Stockholders shall have the right to substitute for the Escrow Shares that otherwise would be paid in satisfaction of such
claim (the “Claim Shares”), cash in an amount equal to the Fair Market Value of the Claim Shares (“Substituted
Cash”). In such event (i) the Joint Notice shall include a statement describing the substitution of Substituted Cash for
the Claim Shares, and (ii) substantially contemporaneously with the delivery of such Joint Notice, the Stockholders shall cause
currently available funds to be delivered to the Escrow Agent in an amount equal to the Substituted Cash. Upon receipt of such
Joint Notice and Substituted Cash, the Escrow Agent shall (y) in payment of the Established Claim described in the Joint Notice,
deliver the Substituted Cash to Holdco in lieu of the Claim Shares, and (z) cause the Claim Shares to be returned to the Owners.

 

3.                 
(a)On the first Business Day after the Basic Indemnity Escrow Termination Date, upon receipt of a Joint Notice, the
Escrow Agent shall distribute and deliver to each Owner certificates representing shares of Holdco Stock then in such Owner’s
account in the Escrow Fund equal to one-half of the original number of shares placed in such Owner’s account less that number
of shares in such Owner’s account equal to the sum of (i) the number of shares applied in satisfaction of Indemnification
Claims made prior to that date and (ii) the number of shares in the Pending Claims Reserve allocated to such Owner’s account,
as provided in the following sentence, and shall continue to hold the remaining shares in such Owner’s account as Environmental
Indemnity Shares. If, at such time, there are any Indemnification Claims with respect to which Notices have been received but which
have not been resolved pursuant to Section 2 hereof or in respect of which the Escrow Agent has not been notified of, and received
a copy of, a final determination (after exhaustion of any appeals) by a court of competent jurisdiction, as the case may be (in
either case, “Pending Claims”), and which, if resolved or finally determined in favor of Holdco, would result in a
payment to Holdco, the Escrow Agent shall retain in the Pending Claims Reserve that number of shares of Holdco Stock having a Fair
Market Value equal to the dollar amount for which indemnification is sought in such Indemnification Claim, allocated pro rata from
the account maintained on behalf of each Owner. The Representative and Stockholder Nominee shall certify to the Escrow Agent the
Fair Market Value to be used in calculating the Pending Claims Reserve and the number of shares of Holdco Stock to be retained
therefor. Thereafter, if any Pending Claim becomes an Established Claim, the Representative and Stockholder Nominee shall deliver
to the Escrow Agent a Joint Notice directing the Escrow Agent to deliver to Holdco the number of shares in the Pending Claims Reserve
in respect thereof determined in accordance with paragraph 2(f) above and to deliver to each Owner the remaining shares in the
Pending Claims Reserve allocated to such Pending Claim, all as specified in a Joint Notice. If any Pending Claim is resolved against
Holdco, the Representative and Stockholder Nominee shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent
to pay to each Owner its pro rata portion of the number of shares allocated to such Pending Claim in the Pending Claims Reserve.

 

    	-5-

    	 

    

  

(b)              
On the first Business Day after the Environmental Escrow Termination Date, upon receipt of a Joint Notice, the Escrow Agent
shall distribute and deliver to each Owner certificates representing the remaining shares of Holdco Stock then in such Owner’s
account in the Escrow Fund other than Environmental Indemnity Shares in the Pending Claims Reserve. Upon the subsequent resolution
of a Claim for which shares remain in the Pending Claims Reserve, upon receipt of a Joint Notice, the Escrow Agent shall distribute
and deliver such shares to Holdco, if the Claim is resolved in favor of Holdco, or to the Owners pro rata to the accounts maintained
for them, if the Claim is resolved against Holdco. Upon resolution of all Pending Claims, the Representative and Stockholder Nominee
shall deliver to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to each Owner the remaining portion of his or
her account in the Escrow Fund.

 

(c)               
As used herein, the “Pending Claims Reserve” shall mean, at the time any such determination is made, that number
of shares of Holdco Stock in the Escrow Fund having a Fair Market Value equal to the sum of the aggregate dollar amounts claimed
to be due with respect to all Pending Claims (as shown in the Notices of such Claims).

 

4.                 
The Escrow Agent, the Representative and Stockholder Nominee shall cooperate in all respects with one another in the calculation
of any amounts determined to be payable to Holdco and the Owners in accordance with this Agreement and in implementing the procedures
necessary to effect such payments.

 

5.                 
(a)The Escrow Agent undertakes to perform only such duties as are expressly set forth herein. It is understood that
the Escrow Agent is not a trustee or fiduciary and is acting hereunder merely in a ministerial capacity.

 

(b)              
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.

 

(c)               
The Escrow Agent’s sole responsibility upon receipt of any notice requiring any payment to Holdco pursuant to the
terms of this Agreement or, if such notice is disputed by the Representative or Stockholder Nominee, the settlement with respect
to any such dispute, whether by virtue of joint resolution, arbitration or determination of a court of competent jurisdiction,
is to pay to Holdco the amount specified in such notice, and the Escrow Agent shall have no duty to determine the validity, authenticity
or enforceability of any specification or certification made in such notice.

 

    	-6-

    	 

    

  

(d)              
The Escrow Agent shall not be liable for any action taken by it in good faith and believed by it to be authorized or within
the rights or powers conferred upon it by this Agreement, and may consult with counsel of its own choice and shall have full and
complete authorization and indemnification under Section 5(g), below, for any action taken or suffered by it hereunder in good
faith and in accordance with the opinion of such counsel.

 

(e)               
The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder by its 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 the Escrow Fund to a successor escrow agent appointed jointly by the
Representative and Stockholder Nominee. 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 Fund with any court it reasonably deems appropriate. 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 other
parties hereto, jointly, provided, however, that such resignation shall become effective only upon acceptance of appointment by
a successor escrow agent as provided in this Section 5(e).

 

(f)               
The Escrow Agent shall be indemnified and held harmless by Holdco from and against any expenses, including counsel fees
and disbursements, or loss 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 Fund 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 the any state or federal
court located in New York County, State of New York.

 

(g)              
The Escrow Agent shall be entitled to reasonable compensation from Holdco for all services rendered by it hereunder. The
Escrow Agent shall also be entitled to reimbursement from Holdco 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.

 

(h)              
From time to time on and after the date hereof, the Representative and Stockholder Nominee 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 Agreement, to evidence
compliance herewith or to assure itself that it is protected in acting hereunder.

 

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

 

    	-7-

    	 

    

  

6.                 
This Agreement expressly sets forth all the duties of the Escrow Agent with respect to any and all matters pertinent hereto.
No implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be bound
by the provisions of any agreement among the parties hereto except this Agreement and shall have no duty to inquire into the terms
and conditions of any agreement made or entered into in connection with this Agreement, including, without limitation, the Merger
Agreement.

 

7.                 
This Agreement shall inure to the benefit of and be binding upon the parties and their respective heirs, successors, assigns
and legal representatives shall be governed by and construed in accordance with the law of New York applicable to contracts made
and to be performed therein. This Agreement cannot be changed or terminated except by a writing signed by the Representative, the
Escrow Agent and a majority of the Stockholders.

 

8.                 
All disputes arising under this Agreement between the Representative and Stockholder Nominee, including a dispute arising
from a party’s failure or refusal to sign a Joint Notice, shall be submitted to arbitration to the American Arbitration Association
in New York City. The Representative and Stockholders each hereby consents to the exclusive jurisdiction of the federal and state
courts sitting in New York County, State of New York, with respect to any claim or controversy arising out of this Agreement. Service
of process in any action or proceeding brought against the Representative or Stockholders in respect of any such claim or controversy
may be made upon it by registered mail, postage prepaid, return receipt requested, at the address specified in Section 10, with
copies delivered by nationally recognized overnight carrier to Graubard Miller, The Chrysler Building, 405 Lexington Avenue, New
York, N.Y. 10174, Attention: David Alan Miller, Esq., and to Willkie Farr & Gallagher LLP, 787 7th Avenue, New York, NY 10036,
Attention: Kirk A. Radke, Esq.

 

9.                 
The Stockholders hereby appoint ________ to act on their behalf (the “Stockholder Nominee”) to take any and
all actions and make any decisions required or permitted to be taken by such Stockholders under this Agreement. Should the Stockholder
Nominee resign or be unable to serve, a new Stockholder Nominee will be selected by a majority of the Stockholders, whose appointment
shall be effective upon execution by such successor of a joinder agreement providing for such successor to become a party to the
Escrow Agreement as the Stockholder Nominee, in which case such successor shall for all purposes of this Agreement be the Stockholder
Nominee (and the prior acts taken by the succeeded Stockholder Nominee shall remain valid for purposes of this Agreement). The
Stockholder Nominee shall not be liable to the Stockholders for any liability, loss, damage, penalty, fine, cost or expense incurred
without gross negligence or willful misconduct by the Stockholder Nominee while acting in good faith and arising out of or in connection
with the acceptance or administration of its duties hereunder.

 

10.             
All notices and other communications under this Agreement shall be in writing and shall be deemed given if given by hand
or delivered by nationally recognized overnight carrier, or if given by telecopier and confirmed by mail (registered or certified
mail, postage prepaid, return receipt requested), to the respective parties as follows:

 

    	-8-

    	 

    

  

		A.	If to the Representative, to it at:

 

Gregory Monahan

c/o Crescendo Advisors II LLC

777 Third Avenue, 37th Floor

New York, New York 10017

Telecopier No.: 212-319-0760

 

with a copy to:

Graubard Miller

The Chrysler Building

405 Lexington Avenue

New York, New York 10174-1901

Attention: David Alan Miller, Esq.

Telecopier No.: 212-818-8881

 

		B.	If to the Stockholders, to each at the address listed on Schedule A hereto

 

with a copy to:

[Stockholder Nominee]

Attention:

Telecopier No.:

with a copy to:

Willkie Farr & Gallagher LLP

757 Seventh Avenue

New York, New York 10019

Attention: Kirk A. Radke, Esq.

Telecopier No.: 212-728-9210

 

		C.	If to the Escrow Agent, to it at:

 

Continental Stock Transfer & Trust
Company

17 Battery Place

New York, New York 10004

Attention: Mark Zimkind

Telecopier No.: 212-509-5150

 

or to such other person or address as any
of the parties hereto shall specify by notice in writing to all the other parties hereto.

 

    	-9-

    	 

    

  

11.             
(a)If this Agreement requires a party to deliver any notice or other document, and such party refuses to do so, the
matter shall be submitted to arbitration pursuant to paragraph 2(d) of this Agreement.

 

(b)              
All notices delivered to the Escrow Agent shall refer to the provision of this Agreement under which such notice is being
delivered and, if applicable, shall clearly specify the aggregate dollar amount due and payable to Holdco.

 

(c)               
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original instrument
and all of which together shall constitute a single agreement.

 

[Signatures are on following page]

 

    	-10-

    	 

    

  

IN WITNESS WHEREOF,
each of the parties hereto has duly executed this Agreement on the date first above written.

 

	 	QUARTET HOLDCO LTD.
	 	 	 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	 	 
	 	THE REPRESENTATIVE
	 	 	 
	 	 	 
	 	 
	 	Gregory Monahan
	 	 	 
	 	 	 
	 	STOCKHOLDERS
	 	 	 
	 	 	 
	 	 
	 	Edward Coll
	 	 	 
	 	 	 
	 	 
	 	Anthony Laura
	 	 	 
	 	 	 
	 	LAGOA INVESTMENTS
	 	 	 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	-11-

    	 

    

 

	 	PANGAEA ONE, L.P.
	 	 	 
	 	By: Pangaea One GP, LLC
	 	Its: General Partner
	 	 	 
	 	By:	 
	 	Name: Peter Yu
	 	Its: Managing Member
	 	 	 
	 	 	 
	 	PANGAEA ONE PARALLEL FUND (B), L.P.
	 	 	 
	 	By: Pangaea One GP, LLC
	 	Its: General Partner
	 	 	 
	 	By:	 
	 	Name: Peter Yu
	 	Its: Managing Member
	 	 	 
	 	 	 
	 	PANGAEA ONE (CAYMAN), L.P.
	 	 	 
	 	By: Pangaea One GP (Cayman), L.P.
	 	Its: General Partner
	 	 	 
	 	By: Pangaea One GP (Cayman), Co.
	 	Its: General Partner
	 	 	 
	 	By:	 
	 	Name: Peter Yu
	 	Its: Director
	 	 	 
	 	 	 
	 	PANGAEA ONE PARALLEL FUND, L.P.
	 	 	 
	 	By: Pangaea One GP2 (Cayman), L.P.
	 	Its: General Partner
	 	 	 
	 	By: Pangaea One GP2 (Cayman), Co.
	 	Its: General Partner
	 	 	 
	 	By:	 
	 	Name: Peter Yu
	 	Its: Director

 

    	-12-

    	 

    

 

	 	ESCROW AGENT
	 	 	 
	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY
	 	 	 
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 

 

    	-13-LOCK-UP AGREEMENT

 

__________, 20__

 

Quartet Merger Corp.

777 Third Avenue, 37th Floor

New York, New York 10017

 

Pangaea Logistics Solutions Holding Ltd.

109 Long Wharf, 2nd Floor

Newport, RI 02840

Attention: Edward Coll

 

Ladies and Gentlemen:

 

In connection with
the Agreement and Plan of Reorganization (the “Merger Agreement”), dated as of April 30, 2014, by and among Quartet
Merger Corp. (“Quartet”), Quartet Holdco Ltd. (“Holdco”), Quartet Merger Sub, Ltd., Pangaea Logistics Solutions
Ltd. (“Company”) and the securityholders of the Company, to induce the parties to consummate the transactions contemplated
by the Merger Agreement, the undersigned agrees not to, either directly or indirectly, during the “Restricted Period”
(as hereinafter defined):

 

		(1)	sell or offer or contract to sell or offer, grant any option or warrant for the sale of, assign,
transfer, pledge, hypothecate, or otherwise encumber or dispose of (all being referred to as a “Transfer”) any legal
or beneficial interest in any shares of Holdco Stock, issued or to be issued to the undersigned or to any other person or entity
of which the undersigned is an Affiliate (as defined below), in each case in connection with the transactions contemplated by the
Merger Agreement, including without limitation the Net Income Shares and Cancellation Shares (the “Restricted Securities”);
for the avoidance of doubt, if any Holdco Stock is acquired by the undersigned after the Closing Date in any open-market transaction,
such Holdco Stock shall not be deemed a “Restricted Security” hereunder,

 

		(2)	enter into any swap or any other agreement or any transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of any of the Restricted Securities, whether such swap transaction
is to be settled by delivery of any Restricted Securities or other securities of any person, in cash or otherwise, or

 

		(3)	publicly disclose the intention to make any offer, sale, pledge or disposition, or to enter into
any transaction, swap, hedge or other arrangement relating to any of the Restricted Securities (it being understood that the foregoing
shall not prohibit the undersigned from making any such disclosure to the undersigned’s existing or potential shareholders,
members, partners, Affiliates, general partners, directors, officers, employees or partners, and their respective shareholders,
members, partners, Affiliates, general partners, directors, officers, employees or partners, in each case on a confidential basis).

 

    	 

    	 

    

 

As used herein, “Restricted Period”
means the period commencing on the Closing Date and (A) with respect to 50% of such Restricted Securities, ending on the earlier
of (i) the date on which the Closing Price of the shares of Holdco Stock exceeds $12.50 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period following
the Closing Date and (ii) the day preceding the day that is twelve months after the Closing Date and (B) with respect to the remaining
50% of such Restricted Securities, ending on the day preceding the day that is twelve months after the Closing Date; provided,
however, the Restricted Period shall terminate immediately prior to the consummation of a liquidation, merger, stock exchange
or other similar transaction that results in any HoldCo stockholder having the right to exchange their shares of Holdco Stock for
cash, securities or other property (including pursuant to an acceptance of a general offer for Restricted Securities made to all
holders of such class of securities on equal terms or provision of an irrevocable undertaking to accept such an offer).

 

For purposes of this
Lock-Up Agreement, “Closing Price” means, with respect to the Restricted Securities, as of the date of determination,
(i) if the Restricted Securities are listed on a national securities exchange, the closing price per share of a Restricted Security
officially reported on the principal national securities exchange on which the Restricted Securities are then listed or admitted
to trading; or (ii) if the Restricted Securities are not then listed or admitted to trading on any national securities exchange,
the average of the reported closing bid and asked prices of the Restricted Securities on such date on the principal over the counter
market on which the Restricted Securities are traded; or (iii) if neither of clause (i) or (ii) is applicable, a market price per
share determined in good faith by the Holdco Board or, if such determination is not satisfactory to the undersigned for whom such
determination is being made, by a nationally recognized investment banking firm mutually selected by Holdco and the undersigned,
the expenses for which shall be borne equally by Holdco and the undersigned. If trading is conducted on a continuous basis on any
exchange, then the closing price shall be at 4:00 P.M. New York City time

 

Notwithstanding the
foregoing limitations, this Lock-Up Agreement will not prevent any Transfer of any or all of the Restricted Securities, either
during the undersigned’s lifetime or on the undersigned’s death (in the event the undersigned is an individual rather
than an entity), (i) in a transaction that does not involve a Public Offering or is not made through a securities exchange or an
over-the-counter securities market, or (ii) by gift, will or intestate succession, or by judicial decree, to the undersigned’s
beneficiaries or “family members” (as defined below), as applicable, or to trusts, corporations, partnerships, limited
liability companies, family limited partnerships and similar entities primarily for the benefit of the undersigned or the undersigned’s
“family members” or executives of Holdco or any controlled subsidiary of Holdco; provided, however, that in each and
any such event it shall be a condition to the Transfer that the transferee execute an agreement stating that the transferee is
receiving and holding the Restricted Securities subject to the provisions of this Lock-Up Agreement. For purposes of this sub-paragraph,
“family member” shall mean any relationship by blood, marriage or adoption, including, but not limited to, spouse,
lineal descendants, stepchildren, father, mother, brother or sister of the transferor or of the transferor’s spouse. For
purposes of this Lock-Up Agreement, “Public Offering” means an underwritten public offering of registrable securities
pursuant to an effective registration statement under the Securities Act, other than pursuant to a registration statement on Form
S-4 or Form S-8 or any similar or successor form.

 

Also notwithstanding
the foregoing limitations, in the event the undersigned is an entity rather than an individual, this Lock-Up Agreement will not
prevent any Transfer of any or all of the Restricted Securities to the shareholders, members, Affiliates, directors, officers,
employees or partners of such entity or any Affiliate of the foregoing or Holdco or any controlled subsidiary of Holdco; provided,
however, that in each and any such event it shall be a condition to the Transfer that the transferee execute an agreement stating
that the transferee is receiving and holding the Restricted Securities subject to the provisions of this Lock-Up Agreement.

 

Any of the Restricted
Securities subject to this Lock-Up Agreement may be released, from time to time, in whole or part from the terms hereof upon the
unanimous written consent of the disinterested members of the Holdco Board (provided the shares of Holdco Stock held by the Quartet
Founding Shareholders are similarly released from all restrictions on transfer then applicable to such shares).

 

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The undersigned hereby
authorizes Holdco’s transfer agent to apply to any certificates representing Restricted Securities issued to the undersigned
an appropriate legend to reflect the existence and general terms of this Lock-up Agreement.

 

This Lock-up Agreement
will be legally binding on the undersigned and on the undersigned’s successors and permitted assigns, and is executed as
an instrument governed by the law of Delaware.

 

This Lock-Up Agreement
shall automatically terminate and be of no further force or effect upon the earlier to occur of (i) the termination of the Merger
Agreement and (ii) the first Business Day following the expiration of the Restricted Period.

 

All capitalized terms
used herein, but not otherwise defined, shall have the meaning ascribed to them in the Merger Agreement. This Lock-Up Agreement
constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter of this Lock-Up Agreement, including without limitation that certain letter agreement dated
as of March 20, 2014 by and between Quartet and Cartesian Capital Group, LLC. Sections 10.1 – 10.4, 10.8 – 10.15 of
the Merger Agreement are incorporated herein by reference and shall apply to this Lock-Up Agreement mutatis mutandis. Each
of the parties to this Lock-Up Agreement agrees to use its reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, and to assist and cooperate with the other parties to this Lock-Up Agreement in doing, all things
necessary, in the most expeditious manner practicable to carry out or to perform the provisions of this Lock-Up Agreement

 

[Signature page follows]

 

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SIGNATURE PAGE TO THE LOCK-UP AGREEMENT

 

	 	 
	Signature	 	 
	 	 	 
	Name:	 	 
	 	 	 
	Address: 	 	 
	 	 	 
	 	 

 

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