EXHIBIT 10.9
FORM OF
INVESTMENT MANAGEMENT TRUST AGREEMENT
This Agreement is made as of ___________, 2006 by and between
MEDIA & ENTERTAINMENT HOLDINGS, INC. (the "Company") and Continental Stock
Transfer & Trust Company ("Trustee").
WHEREAS, the Company's Registration Statement on Form S-1, No.
333-128218 ("Registration Statement"), for its initial public offering of
securities ("IPO") has been declared effective as of the date hereof ("Effective
Date") by the Securities and Exchange Commission (capitalized terms used herein
and not otherwise defined herein shall have the meanings set forth in the
Registration Statement); and
WHEREAS, Ladenburg Xxxxxxxx & Co. Inc. ("Ladenburg") is acting
as representative of the underwriters in the IPO; and
WHEREAS, as described in the Company's Registration Statement,
in accordance with the Company's Certificate of Incorporation, $69,530,000 of
the gross proceeds of the IPO ($79,790,000 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 $.0001 per share, issued in the IPO, as
hereinafter provided. The amount to be delivered to the Trustee will be referred
to herein as the "Property"; the stockholders for whose benefit the Trustee
shall hold the Property will be referred to as the "Public Stockholders"; and
the Public Stockholders and the Company will be referred to together as the
"Beneficiaries"); and
WHEREAS, the Company and the Trustee desire to enter into this
Agreement to set forth the terms and conditions pursuant to which the Trustee
shall hold the Property;
IT IS AGREED:
1. AGREEMENTS AND COVENANTS OF TRUSTEE. The Trustee hereby agrees and
covenants to:
(a) Hold the Property in trust for the Beneficiaries in
accordance with the terms of this Agreement, in a segregated trust account
("Trust Account") established by the Trustee;
(b) Manage, supervise and administer the Trust Account
subject to the terms and conditions set forth herein;
(c) In a timely manner, upon the instruction of the Company,
to invest and reinvest the Property in United States "government securities"
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940
having a maturity of 180 days or less, or in any open ended investment company
registered under the Investment Company Act of 1940
that holds itself out as a money market fund meeting the conditions of
paragraphs (c)(2), (c)(3) and (c)(4) of Rule 2a-7 promulgated under the
Investment Company Act of 1940;
(d) Collect and receive, when due, all principal and income
arising from the Property, which shall become part of the "Property," as such
term is used herein;
(e) Notify the Company and Ladenburg of all communications
received by it with respect to any Property requiring action by the Company;
(f) Supply any necessary information or documents as may be
requested by the Company in connection with the Company's preparation of the tax
returns for the Trust Account;
(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 and/or Ladenburg to do so;
(h) Render to the Company and Ladenburg, 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; and
(i) Commence liquidation of the Trust Account only after,
and promptly after, receipt of, and only in accordance with, the terms of a
letter ("Termination Letter"), in a form substantially similar to that attached
hereto as either Exhibit A or Exhibit B hereto, signed on behalf of the Company
by its Chief Executive Officer or Chairman of the Board and Secretary or
Assistant Secretary, and affirmed by counsel for the Company, and complete the
liquidation of the Trust Account and distribute the Property in the Trust
Account only as directed in the Termination Letter and the other documents
referred to therein; PROVIDED, HOWEVER, that in the event that a Termination
Letter has not been received by the Trustee by the 18-month anniversary of the
closing ("Closing") of the IPO ("First Date"), or the 24-month anniversary of
the Closing ("Last Date") in the event that a letter of intent, agreement in
principle or definitive agreement for a Business Combination has been executed
on or prior to the First Date but the Business Combination has not been
consummated by the First Date, the Trust Account shall be liquidated in
accordance with the procedures set forth in the Termination Letter attached as
Exhibit B hereto to the stockholders of record on the record date established by
the Company for such purpose. The Company shall set the record date to be within
ten days of the Last Date, or as soon thereafter as reasonably practicable and
legally permissible. In all cases, the Trustee shall provide Ladenburg with a
copy of any Termination Letters and/or any other correspondence that it receives
with respect to any proposed withdrawal from the Trust Account promptly after it
receives same. This section may not be modified, amended or deleted under any
circumstances; and
(j) Upon one or more written requests from the Company,
which may be given not more than once in any calendar month period, the Trustee
shall distribute to the Company interest earned on the Trust Account, net of
taxes payable, up to a maximum of $1,800,000. The distributions requested by the
Company may be for any amount, provided that (i) in the aggregate, all
distributions under this Section 1(j) may not exceed $1,800,000 and
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(ii) such distributions may only be made if and to the extent that interest has
been earned on the amount initially deposited into the Trust Account. No other
distributions from the Trust Account shall be permitted except in accordance
with Section 1(i) and this Section 1(j) hereof.
2. AGREEMENTS AND COVENANTS OF THE COMPANY. The Company hereby agrees and
covenants to:
(a) Give all instructions to the Trustee hereunder in
writing, signed by the Company's Chief Executive Officer or Chairman of the
Board. In addition, except with respect to its duties under paragraph 1(i)
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) 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 (hereinafter referred to as the "Indemnified
Claim"). The Trustee shall have the right to conduct and manage the defense
against such Indemnified Claim, provided, that the Trustee shall obtain the
consent of the Company with respect to the selection of counsel, which consent
shall not be unreasonably withheld. The Trustee may not agree to settle any
Indemnified Claim without the prior written consent of the Company, unless such
settlement includes a full release with respect to such Indemnified Claim. The
Company may participate in such action with its own counsel; and
(c) Pay the Trustee an initial acceptance fee of $1,000 and
an annual fee of $3,000 (it being expressly understood that the Property shall
not be used to pay such fee). The Company shall pay the Trustee the initial
acceptance fee and first year's fee at the consummation of the IPO and
thereafter on the anniversary of the Effective Date. The Trustee shall refund to
the Company the 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 may be provided in paragraph 2(b)
hereof (it being expressly understood that the Property shall not be used to
make any payments to the Trustee under such paragraph).
(d) Provide to the Trustee any letter of intent, agreement
in principle or definitive agreement for a Business Combination that is executed
on or prior to the First Date; and
(e) In connection with any vote of the Company's
stockholders regarding a Business Combination, provide to the Trustee an
affidavit or certificate of a firm regularly engaged in the business of
soliciting proxies and/or tabulating stockholder votes (which firm
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may be the Trustee) verifying the vote of the Company's stockholders regarding
such Business Combination.
3. LIMITATIONS OF LIABILITY. The Trustee shall have no responsibility or
liability to:
(a) Take any action with respect to the Property, other than
as directed in paragraph 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) Institute any proceeding for the collection of any
principal and income arising from, or institute, appear in or defend any
proceeding of any kind with respect to, any of the Property unless and until it
shall have received instructions from the Company given as provided herein to do
so and the Company shall have advanced or guaranteed to it funds sufficient to
pay any expenses incident thereto;
(c) Change the investment of any Property, other than in
compliance with paragraph 1(c);
(d) Refund any depreciation in principal of any Property;
(e) Assume that the authority of any person designated by
the Company to give instructions hereunder shall not be continuing unless
provided otherwise in such designation, or unless the Company shall have
delivered a written revocation of such authority to the Trustee;
(f) The other parties hereto or to anyone else for any
action taken or omitted by it, or any action suffered by it to be taken or
omitted, in good faith and in the exercise of its own best judgment, except for
its gross negligence or willful misconduct. The Trustee may rely conclusively
and shall be protected in acting upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Trustee),
statement, instrument, report or other paper or document (not only as to its due
execution and the validity and effectiveness of its provisions, but also as to
the truth and acceptability of any information therein contained) which is
believed by the Trustee, in good faith, to be genuine and to be signed or
presented by the proper person or persons. The Trustee shall not be bound by any
notice or demand, or any waiver, modification, termination or rescission of this
Agreement or any of the terms hereof, unless evidenced by a written instrument
delivered to the Trustee signed by the proper party or parties and, if the
duties or rights of the Trustee are affected, unless it shall give its prior
written consent thereto;
(g) Verify the correctness of the information set forth in
the Registration Statement or to confirm or assure that any acquisition made by
the Company or any other action taken by it is as contemplated by the
Registration Statement; and
(h) Pay any taxes on behalf of the Trust Account (it being
expressly understood that the Property shall not be used to pay any such taxes
and that such taxes, if any, shall be paid by the Company from funds not held in
the Trust Account).
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4. 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;
(b) At such time that the Trustee has completed the
liquidation of the Trust Account in accordance with the provisions of paragraph
1(i) hereof, and distributed the Property in accordance with the provisions of
the Termination Letter, this Agreement shall terminate except with respect to
Paragraph 2(b).
5. MISCELLANEOUS.
(a) The Company and the Trustee each acknowledge that the
Trustee will follow the security procedures set forth below with respect to
funds transferred from the Trust Account. 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
provided.
(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 conflict of laws. It may be executed in several original or facsimile
counterparts, each one of which shall constitute an original, and together shall
constitute but one instrument.
(c) This Agreement contains the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof.
This Agreement or any provision hereof may only be changed, amended or modified
by a writing signed by each of the parties hereto; provided, however, that no
such change, amendment or modification may be made without the prior written
consent of Ladenburg. As to any claim, cross-claim or counterclaim in any way
relating to this Agreement, each party waives the right to trial by jury.
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(d) The parties hereto consent to the jurisdiction and venue
of any state or federal court located in the City of New York, Borough of
Manhattan, for purposes of resolving any disputes hereunder.
(e) Any notice, consent or request to be given in connection
with any of the terms or provisions of this Agreement shall be in writing and
shall be sent by express mail or similar private courier service, by certified
mail (return receipt requested), by hand delivery or by facsimile transmission:
if to the Trustee, to:
Continental Stock Transfer
& Trust Company
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Chairman
Fax No.: (000) 000-0000
if to the Company, to:
Media & Entertainment Holdings, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Chief Executive Officer
Fax No.: (214) __________
in either case with a copy to:
Ladenburg Xxxxxxxx & Co. Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxx X. Xxxx
Fax No.:
and
Xxxxxxxxx Xxxxxxx, LLP
MetLife Building
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Annex, Esq.
Fax No.: (000) 000-0000
(f) This Agreement may not be assigned by the Trustee
without the prior written consent of the Company and Ladenburg.
(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
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shall not make any claims or proceed against the Trust Account, including by way
of set-off, and shall not be entitled to any funds in the Trust Account under
any circumstance.
IN 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: Xxxxxx X. Xxxxxx
Title: Chairman
MEDIA & ENTERTAINMENT HOLDINGS, INC.
By: ____________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
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EXHIBIT A
[LETTERHEAD OF COMPANY]
[INSERT DATE]
Continental Stock Transfer
& Trust Company
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Re: Trust Account No. [ ] Termination Letter
Gentlemen:
Pursuant to paragraph 1(i) of the Investment Management Trust
Agreement between Media & Entertainment Holdings, Inc. ("Company") and
Continental Stock Transfer & Trust Company ("Trustee"), dated as of __________,
2005 ("Trust Agreement"), this is to advise you that the Company has entered
into an agreement ("Business Agreement") with __________________ ("Target
Business") to consummate a business combination with Target Business ("Business
Combination") on or about [insert date]. The Company shall notify you at least
48 hours in advance of the actual date of the consummation of the Business
Combination ("Consummation Date").
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 funds held in the Trust Account will be
immediately available for transfer to the account or accounts that the Company
shall direct on the Consummation Date.
On the Consummation Date (i) counsel for the Company shall
deliver to you written notification that the Business Combination has been
consummated and (ii) the Company shall deliver to you (a) [AN AFFIDAVIT] [A
CERTIFICATE] of __________, which verifies the vote of the Company's
stockholders in connection with the Business Combination, and (b) written
instructions with respect to the transfer of the funds held in the Trust Account
("Instruction Letter"). You are hereby directed and authorized to transfer the
funds held in the Trust Account immediately upon your receipt of the counsel's
letter and the Instruction Letter, in accordance with the terms of the
Instruction Letter. In the event that certain deposits held in the Trust Account
may not be liquidated by the Consummation Date without penalty, you will notify
the Company of the same and the Company shall direct you as to whether such
funds should remain in the Trust Account and distributed after the Consummation
Date to the Company. Upon the distribution of all the funds in the Trust Account
pursuant to the terms hereof, the Trust Agreement shall be terminated.
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
the funds held in the Trust
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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,
MEDIA & ENTERTAINMENT HOLDINGS, INC.
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Chief Executive Officer
By:
--------------------------------------------
Xxxxx Xxxxxx, Executive Vice President and
Secretary
Cc: Ladenburg Xxxxxxxx & Co. Inc.
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EXHIBIT B
[LETTERHEAD OF COMPANY]
[INSERT DATE]
Continental Stock Transfer
& Trust Company
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx
Re: Trust Account No. [ ] Termination Letter
Gentlemen:
Pursuant to paragraph 1(i) of the Investment Management Trust Agreement
between Media & Entertainment Holdings, Inc. ("Company") and Continental Stock
Transfer & Trust Company ("Trustee"), dated as of , 2006 ("Trust Agreement"),
this is to advise you that the Company has been unable to effect a Business
Combination with a Target Company within the time frame specified in the
Company's Certificate of Incorporation, as described in the Company's prospectus
relating to its IPO.
In accordance with the terms of the Trust Agreement, we hereby authorize
you to commence liquidation of the Trust Account. 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,
MEDIA & ENTERTAINMENT HOLDINGS, INC.
By:
--------------------------------------------
Xxxxxxx X. Xxxxxxx, Chief Executive Officer
By:
--------------------------------------------
Xxxxx Xxxxxx, Executive Vice President and
Secretary
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EXHIBIT C
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AUTHORIZED INDIVIDUAL(S) AUTHORIZED
FOR TELEPHONE CALL BACK TELEPHONE NUMBER(S)
----------------------- -------------------
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
COMPANY:
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
Media & Entertainment Holdings, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx,
Chief Executive Officer (000) 000-0000
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
TRUSTEE:
---------------------------------------- ---------------------------------------
---------------------------------------- ---------------------------------------
Continental Stock Transfer
& Trust Company
00 Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx (000) 000-0000
---------------------------------------- ---------------------------------------
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