INVESTMENT MANAGEMENT TRUST AGREEMENT
This
Agreement is made as of , 2005 by and between Key Hospitality Acquisition
Corporation (the “Company”) and Continental Stock Transfer & Trust Company
(“Trustee”).
WHEREAS,
the Company’s Registration Statement on Form S-1, File No. 333-125009
(“Registration Statement”), for its initial public offering of securities
(“IPO”) has been declared effective as of the date hereof by the Securities and
Exchange Commission (“Effective Date”); and
WHEREAS,
Maxim Group LLC (“Maxim”) is acting as the representative of the underwriters in
the IPO; and
WHEREAS,
as described in the Company’s Registration Statement, and in accordance with the
Company’s Certificate of Incorporation, $72,500,000 of the gross proceeds of the
IPO ($83,375,000 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 $.001 per share, issued in the IPO as hereinafter provided and, in
the
event the Units are registered in Colorado, pursuant to
Section 11-51-302(6) of the Colorado Revised Statutes. A copy of the
Colorado Statute is attached hereto and made a part hereof (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.
NOW,
THEREFORE, in consideration of the mutual agreements herein contained, the
parties hereto agree as follows:
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, including the terms of Section 11-51-302(6) of the Colorado
Statute with respect to Public Stockholders in Colorado, in a segregated
trust
account (“Trust Account”) established by the Trustee at a branch of JPMorgan
Chase NY Bank 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 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 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 to do
so;
(h) Render
to
the Company and to Maxim, 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 receipt of and only in accordance
with the terms of a letter (“Termination Letter”), in a form substantially
similar to that attached hereto as either Exhibit A or Exhibit B,
signed on
behalf of the Company by its President or Chairman of the Board and Secretary,
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. The Trustee understands and agrees that
disbursements from the Trust Account shall be made only pursuant to a duly
executed Termination Letter, together with the other documents referenced
herein. In all cases, the Trustee shall provide Maxim 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.
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
President 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 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).
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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).
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, during which time the Trustee shall continue to act in accordance
with
this Agreement. At such time that the Company notifies the Trustee that a
successor trustee has been appointed by the Company and has agreed to become
subject to the terms of this Agreement, the Trustee shall transfer the
management of the Trust Account to the successor trustee, including but not
limited to the transfer of copies of the reports and statements relating
to the
Trust Account, whereupon this Agreement shall terminate; provided, however,
that, in the event that the Company does not locate a successor trustee within
ninety days of receipt of the resignation notice from the Trustee, the Trustee
may, but shall not be obligated to, 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;
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(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); or
(c) On
such
date after , 2006 (unless extended to a later date as described in the
Registration Statement) when the Trustee deposits the Property with the United
States District Court for the Southern District of New York in the event
that,
prior to such date, the Trustee has not received a Termination Letter from
the
Company pursuant to paragraph 1(i).
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 counterparts, each one of which may be delivered by
facsimile transmission and each 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 Maxim, who,
along
with the other underwriters of the IPO, the parties specifically agree, are
and
shall be a third-party beneficiary for purposes of this Agreement. 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 State and County of New York for purposes of resolving
any
disputes hereunder. The parties hereto irrevocably submit to such jurisdiction,
which jurisdiction shall be exclusive. The parties hereto hereby waive any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum.
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(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
Fax
No.:
(000) 000-0000
If
to the
Company, to:
0000
Xxxxxxxx, Xxxxx 000
Xxx
Xxxx,
XX 00000
Attn:
Fax
No.:
in
either
case with a copy to:
Maxim
Group LLC
000
Xxxxxxxxx Xxx.
Xxx
Xxxx,
XX 00000
Attn:
Xxxxxxxx X. Xxxxxx
Fax
No.:
(000) 000-0000
(f) This
Agreement may not be assigned by the Trustee without the prior consent of
the
Company.
(g) Each
of
the Trustee and the Company hereby represents that it has the full right
and
power and has been duly authorized to enter into this Agreement and to perform
its respective obligations as contemplated hereunder. The Trustee acknowledges
and agrees that it shall not make any claims or proceed against the Trust
Account, including by way of set-off, and shall not be entitled to any funds
in
the Trust Account under any circumstance.
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IN
WITNESS WHEREOF, the parties have duly executed this Investment Management
Trust
Agreement as of the date first written above.
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CONTINENTAL
STOCK TRANSFER
&
TRUST COMPANY, as Trustee
By:
Name:
Title:
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By:
Name:
Title:
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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 Xxxxxx
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Re:
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Trust
Account No. Termination Letter
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Gentlemen:
Pursuant
to paragraph 1(i) of the Investment Management Trust Agreement between Key
Hospitality Acquisition Corporation (“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 (a) the Business Combination has been consummated and (b)
the
provisions of Section 11-51-302(6) and Rule 51-3.4 of the Colorado
Statute,
if required, have been met, and (ii) the Company shall deliver to you 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 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.
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Very
truly yours,
By:
By:
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A-1
EXHIBIT
B
[Letterhead
of Company]
[Insert
date]
Continental
Stock Transfer
&
Trust Company
00
Xxxxxxx Xxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx Xxxxxx
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Re:
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Trust
Account No. Termination Letter
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Gentlemen:
Pursuant
to paragraph 1(i) of the Investment Management Trust Agreement between Key
Hospitality Acquisition Corporation (“Company”) and Continental Stock Transfer
& Trust Company (“Trustee”), dated as of _______, 2005 (“Trust Agreement”),
this is to advise you that the Board of Directors of the Company has voted
to
dissolve and liquidate the Trust Account. Attached hereto is a copy of the
minutes of the meeting of the Board of Directors of the Company relating
thereto, certified by the Secretary of the Company as true and correct and
in
full force and effect.
In
accordance with the terms of the Trust Agreement, we hereby (a) certify to
you
that the provisions of Section 11-51-302(6) and Rule 51-3.4 of the
Colorado
Statute have been met and (b) authorize you, to commence liquidation of the
Trust Account. You will notify the Company and JPMorgan Chase NY Bank
(“Designated Paying Agent”) in writing as to when all of the funds in the Trust
Account will be available for immediate transfer (“Transfer Date”). The
Designated Paying Agent shall thereafter notify you as to the account or
accounts of the Designated Paying Agent that the funds in the Trust Account
should be transferred to on the Transfer Date so that the Designated Paying
Agent may commence distribution of such funds in accordance with the Company’s
instructions. You shall have no obligation to oversee the Designated Paying
Agent’s distribution of the funds. Upon the payment to the Designated Paying
Agent of all the funds in the Trust Account, the Trust Agreement shall be
terminated.
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Very
truly yours,
By:
By:
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B-1
EXHIBIT
C
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AUTHORIZED
INDIVIDUAL(S)
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AUTHORIZED
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FOR
TELEPHONE CALL BACK
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TELEPHONE
NUMBER(S)
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Company:
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0000
Xxxxxxxx, Xxxxx 000
Xxx
Xxxx, Xxx Xxxx 00000
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Attn:
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[Telephone]
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Trustee:
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Continental
Stock Transfer
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&
Trust Company
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00
Xxxxxxx Xxxxx
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Xxx
Xxxx, Xxx Xxxx 00000
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Attn:
Xxxxxx X. Xxxxxx, Chairman
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[Telephone]
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C-1
