INVESTMENT MANAGEMENT TRUST AGREEMENT
by and between
PELLEGRINO HOSPITALITY ACQUISITION CORP.
and
ATLANTIC SEABOARD TRUST COMPANY, NATIONAL ASSOCIATION
Dated as of January 19, 2022
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INVESTMENT MANAGEMENT TRUST AGREEMENT
This INVESTMENT MANAGEMENT TRUST AGREEMENT (this "Agreement") is made and entered into as of January 19, 2022, by and between PELLEGRINO HOSPITALITY ACQUISITION CORP., a Delaware corporation (the "Company"), with its principal office at c/o Pellegrino Capital Group LLC, 1440 Gulf Shore Boulevard North, Suite 600, Naples, FL 34102, and ATLANTIC SEABOARD TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association (the "Trustee"), with its principal office at 100 Federal Street, Suite 2200, Boston, MA 02110.
RECITALS
WHEREAS, the Company is a blank-check company formed under the laws of the State of Delaware for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses in the hospitality and leisure sector (an "Initial Business Combination");
WHEREAS, the Company has entered into an Underwriting Agreement dated January 19, 2022 (the "Underwriting Agreement") with Meridian Tidewater Securities LLC, a Delaware limited liability company, as representative of the several underwriters named therein (including Brindoval Partners Capital LLC as co-manager) (collectively, the "Underwriters"), pursuant to which the Company will sell 15,000,000 units (the "Units") at a price of $10.00 per Unit in an initial public offering (the "Offering") for gross proceeds of $150,000,000, with each Unit consisting of one share of Class A common stock, par value $0.0001 per share ("Class A Common Stock"), and one-half of one redeemable warrant, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share;
WHEREAS, the Underwriters have been granted a forty-five (45)-day option to purchase up to an additional 2,250,000 Units (the "Over-Allotment Units") at the Offering price to cover over-allotments, if any;
WHEREAS, the Company has entered into a Private Placement Warrants Purchase Agreement dated January 19, 2022 with Pellegrino Capital Group LLC, a Delaware limited liability company (the "Sponsor"), pursuant to which the Sponsor will purchase 5,500,000 private placement warrants (the "Private Placement Warrants") at a price of $1.00 per warrant for an aggregate purchase price of $5,500,000, simultaneously with the closing of the Offering, with the proceeds thereof to be deposited into the Trust Account (as defined below);
WHEREAS, a total of $152,500,000, consisting of (i) $150,000,000 in gross proceeds from the Offering, plus (ii) $5,500,000 in proceeds from the sale of the Private Placement Warrants, less (iii) $3,000,000 representing the upfront underwriting discount of 2.0% of the gross Offering proceeds, will be deposited into the Trust Account on the closing date of the Offering;
WHEREAS, the Company desires the Trustee to hold in trust such proceeds, together with any additional amounts deposited from time to time (including upon any exercise of the over-allotment option), subject to the terms and conditions set forth herein;
WHEREAS, the Units, shares of Class A Common Stock, and warrants will be listed on the Nasdaq Stock Market LLC under the symbols "PHAU," "PHA," and "PHAW," respectively;
WHEREAS, the registration statement on Form S-1 (File No. 333-260847) (the "Registration Statement") relating to the Offering was declared effective by the Securities and Exchange Commission (the "SEC") on January 14, 2022; and
NOW, THEREFORE, in consideration of the mutual agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 As used in this Agreement, the following terms shall have the meanings set forth below:
"Amended and Restated Certificate of Incorporation" means the Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on or about the Closing Date, as the same may be further amended from time to time in accordance with its terms and applicable law.
"Business Combination" means a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more operating businesses, as contemplated by the Company's Amended and Restated Certificate of Incorporation and the Registration Statement.
"Business Combination Deadline" means the date that is eighteen (18) months from the Closing Date (i.e., August 4, 2023), as such date may be extended to twenty-four (24) months from the Closing Date (i.e., February 4, 2024) in accordance with the terms and conditions set forth in the Amended and Restated Certificate of Incorporation.
"Class A Common Stock" means shares of Class A common stock of the Company, par value $0.0001 per share.
"Class B Common Stock" means shares of Class B common stock of the Company, par value $0.0001 per share, also referred to as "Founder Shares."
"Closing Date" means January 24, 2022, the date of the closing of the Offering and the initial deposit of funds into the Trust Account.
"Company" means Pellegrino Hospitality Acquisition Corp., a Delaware corporation, and its successors and permitted assigns.
"Deferred Underwriting Commission" means the amount of $5,250,000, representing 3.5% of the gross Offering proceeds of $150,000,000, plus any additional deferred underwriting commission attributable to Over-Allotment Units (an additional $787,500 if the over-allotment option is exercised in full, for a total of $6,037,500 if exercised in full), payable to the representative of the Underwriters upon and subject to the consummation of an Initial Business Combination, as further described in Section 4.1(b) hereof.
"Extension Payment" means any deposits made into the Trust Account by the Sponsor or its designees in connection with extending the Business Combination Deadline beyond eighteen (18) months from the Closing Date to twenty-four (24) months from the Closing Date, in accordance with the terms of the Amended and Restated Certificate of Incorporation.
"Founder Shares" means shares of Class B Common Stock initially issued to the Sponsor and certain of the Company's directors and officers.
"Initial Business Combination" has the meaning ascribed to "Business Combination" in this Section 1.1.
"Liquidation" means the distribution of the Trust Account to holders of Public Shares if no Business Combination is consummated by the Business Combination Deadline, as more fully described in Section 4.3 hereof.
"Offering" means the initial public offering of Units by the Company, as described in the Registration Statement.
"Over-Allotment Units" means up to 2,250,000 additional Units that the Underwriters have an option to purchase pursuant to the Underwriting Agreement to cover over-allotments, if any.
"Permitted Investments" has the meaning set forth in Section 2.3 of this Agreement.
"Private Placement Warrants" means the 5,500,000 warrants (and any additional warrants purchased in connection with the exercise of the over-allotment option) purchased by the Sponsor simultaneously with the closing of the Offering pursuant to the Private Placement Warrants Purchase Agreement.
"Private Placement Warrants Purchase Agreement" means the Private Placement Warrants Purchase Agreement dated January 19, 2022, by and between the Company and the Sponsor.
"Property" means the Trust Account and all monies, securities, and other assets held therein, including all interest, dividends, and other income earned on the Permitted Investments held in the Trust Account.
"Public Shares" means shares of Class A Common Stock sold as part of the Units in the Offering (including any shares of Class A Common Stock sold as part of the Over-Allotment Units, if applicable), whether or not such shares have been separated from the Units.
"Registration Statement" means the registration statement on Form S-1 (File No. 333-260847) filed by the Company with the SEC relating to the Offering, as declared effective on January 14, 2022, as the same may be amended or supplemented from time to time.
"SEC" means the United States Securities and Exchange Commission.
"Sponsor" means Pellegrino Capital Group LLC, a Delaware limited liability company.
"Trust Account" means the trust account established and maintained by the Trustee under this Agreement, as more fully described in Section 2.1 hereof.
"Trustee" means Atlantic Seaboard Trust Company, National Association, a national banking association, or any successor trustee appointed in accordance with Section 11 hereof.
"Underwriters" means Meridian Tidewater Securities LLC and Brindoval Partners Capital LLC, and any other underwriters party to the Underwriting Agreement.
"Underwriting Agreement" means the Underwriting Agreement dated January 19, 2022, by and among the Company and the Underwriters.
Unless otherwise defined herein, capitalized terms used in this Agreement shall have the meanings ascribed to them in the Registration Statement.
SECTION 2. ESTABLISHMENT OF TRUST ACCOUNT; DEPOSITS; INVESTMENT OF TRUST FUNDS
2.1 Establishment of Trust Account.
On or before the Closing Date, the Trustee shall establish and maintain a trust account (the "Trust Account") at a banking institution designated by the Trustee to hold the Property for the benefit of the holders of Public Shares, subject to the terms and conditions of this Agreement. The Trust Account shall be maintained in the name of the Trustee, as trustee for the benefit of the Company and the holders of Public Shares, and shall be held separately from all other funds and assets of the Trustee. The Company's Central Index Key ("CIK") number assigned by the SEC is 0001937482, and the Company's Employer Identification Number ("EIN") is 87-3294815. The Trustee shall use such identifying information as necessary in connection with the establishment and maintenance of the Trust Account.
The Trust Account shall be established and maintained in accordance with the terms of this Agreement, and the Trustee shall not commingle the Property with any other assets or funds of the Trustee or any other person. The Trustee shall maintain accurate and complete books and records with respect to the Trust Account and all transactions relating thereto.
2.2 Initial Deposit; Additional Deposits.
(a) Initial Deposit. On the Closing Date (January 24, 2022), the Company shall deposit, or cause to be deposited, into the Trust Account an amount equal to One Hundred Fifty-Two Million Five Hundred Thousand Dollars ($152,500,000), calculated as follows:
(i) Gross Offering proceeds of $150,000,000 (representing 15,000,000 Units at a price of $10.00 per Unit);
(ii) Plus Private Placement Warrant proceeds of $5,500,000 (representing 5,500,000 Private Placement Warrants at a price of $1.00 per warrant);
(iii) Less the upfront underwriting discount of $3,000,000 (representing 2.0% of the gross Offering proceeds of $150,000,000); and
(iv) Net initial deposit into the Trust Account: $152,500,000.
The Company shall cause such deposit to be made by wire transfer of immediately available funds on the Closing Date. The Trustee shall confirm receipt of such deposit in writing to the Company within one (1) business day of receipt thereof.
(b) Over-Allotment Deposit. In the event the Underwriters exercise the over-allotment option to purchase Over-Allotment Units, in whole or in part, pursuant to the Underwriting Agreement, within one (1) business day of the closing of such exercise, the Company shall deposit, or cause to be deposited, into the Trust Account an amount equal to:
(i) The gross proceeds of the Over-Allotment Units sold in such exercise;
(ii) Plus any additional Private Placement Warrant proceeds purchased by the Sponsor in connection with such exercise; and
(iii) Less the upfront underwriting discount of 2.0% applicable to such Over-Allotment Units.
If the over-allotment option is exercised in full (2,250,000 Over-Allotment Units), the additional deposit into the Trust Account shall be Twenty-Two Million Eight Hundred Seventy-Five Thousand Dollars ($22,875,000), calculated as follows:
(i) Gross proceeds from Over-Allotment Units: $22,500,000 (2,250,000 Units × $10.00 per Unit);
(ii) Plus additional Private Placement Warrant proceeds: $825,000;
(iii) Less additional upfront underwriting discount: $450,000 (2.0% × $22,500,000); and
(iv) Additional deposit: $22,875,000.
After full exercise of the over-allotment option, the total balance of the Trust Account (prior to the accrual of any interest or income thereon) would be One Hundred Seventy-Five Million Three Hundred Seventy-Five Thousand Dollars ($175,375,000).
If the over-allotment option is exercised only in part, the additional deposit shall be calculated on a proportionate basis in accordance with the foregoing formula. The Company shall promptly notify the Trustee in writing of any exercise of the over-allotment option and the amount to be deposited.
(c) Extension Payments. In the event that the Sponsor or its designees deposits any Extension Payment into the Trust Account in connection with extending the Business Combination Deadline beyond eighteen (18) months from the Closing Date in accordance with the terms of the Amended and Restated Certificate of Incorporation, the Trustee shall accept such deposit and hold it as part of the Property, subject to all of the terms and conditions of this Agreement. The Company shall provide written notice to the Trustee of any such Extension Payment at least two (2) business days prior to the date on which such deposit is to be made.
(d) Deferred Underwriting Commission. The Deferred Underwriting Commission of Five Million Two Hundred Fifty Thousand Dollars ($5,250,000) (based on gross Offering proceeds of $150,000,000), plus any additional deferred underwriting commission attributable to Over-Allotment Units (an additional Seven Hundred Eighty-Seven Thousand Five Hundred Dollars ($787,500) if the over-allotment option is exercised in full, for a total of Six Million Thirty-Seven Thousand Five Hundred Dollars ($6,037,500)), shall be held in the Trust Account as part of the Property and shall be released only in accordance with Section 4.1(b) hereof. The Deferred Underwriting Commission is an obligation of the Company to the Underwriters and represents 3.5% of the gross Offering proceeds. The Trustee shall not release the Deferred Underwriting Commission except as expressly provided in this Agreement.
2.3 Investment of Trust Funds (Permitted Investments).
(a) The Trustee shall invest and reinvest the Property solely in the following instruments (collectively, "Permitted Investments"):
(i) United States government treasury obligations having a maturity of one hundred eighty-five (185) days or less from the date of purchase; or
(ii) Money market funds meeting the conditions of Rule 2a-7 promulgated under the Investment Company Act of 1940, as amended (the "Investment Company Act"), that invest solely in direct United States government treasury obligations, as determined by the Company.
(b) The Trustee shall have no discretion whatsoever to invest the Property in any securities, instruments, or other assets other than the Permitted Investments described in Section 2.3(a) above. The Company shall, from time to time, provide the Trustee with written instructions specifying the particular Permitted Investments in which the Property shall be invested or reinvested. In the absence of such written instructions, the Trustee shall invest the Property in money market funds meeting the conditions described in Section 2.3(a)(ii).
(c) All interest, dividends, and other income earned on the Permitted Investments held in the Trust Account shall become part of the Property and shall be held in trust in accordance with the terms of this Agreement. Such interest and income shall be subject to withdrawal for tax payments in accordance with Section 3.1 hereof.
(d) The Trustee shall not be liable for any loss or depreciation in value of the Permitted Investments resulting from market conditions, fluctuations in interest rates, or any other cause beyond the Trustee's reasonable control. The Trustee's sole obligation with respect to the investment of the Property is to invest and reinvest the same in Permitted Investments in accordance with the terms of this Agreement and the written instructions of the Company.
2.4 Trust Account Statements.
(a) The Trustee shall provide the Company with monthly statements of account reflecting the status of the Trust Account, including the principal amount held therein, accrued interest and income earned, any withdrawals made, and any deposits received during the applicable period. Such monthly statements shall be delivered to the Company within fifteen (15) calendar days after the end of each calendar month.
(b) The Trustee shall make available to the Company, upon reasonable request during normal business hours, and upon at least five (5) business days' prior written notice, records of all transactions in the Trust Account, including but not limited to records of all investments, reinvestments, maturities, purchases, sales, interest credits, and disbursements. The Company acknowledges that the Trustee may charge reasonable fees for the preparation and delivery of any special or non-routine reports or statements requested by the Company, in accordance with the fee schedule attached hereto as Exhibit A.
(c) In addition to the monthly statements described above, the Trustee shall provide the Company with such information regarding the Trust Account as the Company may reasonably request from time to time in connection with the Company's SEC reporting obligations, including any information necessary for the Company to prepare its periodic reports on Forms 10-K, 10-Q, and 8-K.
SECTION 3. WITHDRAWALS FROM THE TRUST ACCOUNT
3.1 Limited Withdrawals for Tax Payments.
(a) The Company may, from time to time, request the Trustee to release from the Trust Account interest earned on the Property to pay income tax obligations owed by the Company in connection with interest earned on the Trust Account, net of any amounts needed to pay dissolution expenses (up to a maximum of One Hundred Thousand Dollars ($100,000) for such dissolution expenses as described in Section 4.3 hereof). The Company acknowledges and agrees that no portion of the principal deposited in the Trust Account shall be withdrawn pursuant to this Section 3.1, and that any withdrawal hereunder shall be limited to the interest and income earned on the Property.
(b) Such withdrawals shall be made upon a written request delivered by an authorized officer of the Company (as identified in Section 7.1 hereof) to the Trustee, which request shall be accompanied by a certification that:
(i) The amount requested is being withdrawn solely for the purpose of paying income taxes owed by the Company in connection with interest earned on the Trust Account;
(ii) The amount requested does not exceed the amount of interest earned on the Trust Account since the last withdrawal pursuant to this Section 3.1 (or, if no prior withdrawal has been made, since the Closing Date), net of any amount that may need to be reserved for dissolution expenses; and
(iii) The Company has complied with all applicable provisions of the Amended and Restated Certificate of Incorporation relating to the withdrawal of such amounts.
(c) Upon receipt of a written request and certification complying with the requirements of Section 3.1(b), the Trustee shall disburse the requested amount to the Company within two (2) business days of receipt thereof. The Trustee shall have no obligation to verify that the amount requested is, in fact, for the payment of income taxes, and shall be entitled to rely conclusively on the certification of the Company's authorized officer delivered in accordance with this Section 3.1.
3.2 No Other Withdrawals.
Except as expressly provided in Section 3.1 and Section 4 of this Agreement, no other withdrawals from the Trust Account shall be permitted under any circumstances. The Company shall not seek to have the Trustee release any amounts from the Trust Account other than as expressly provided herein. The Company represents and warrants that it will not seek to amend or modify the terms of this Agreement in a manner that would expand the circumstances under which withdrawals from the Trust Account are permitted, except in compliance with Section 12.3 hereof and applicable law. The Trustee shall not release any Property from the Trust Account except in strict compliance with the terms of this Agreement.
SECTION 4. TRUST ACCOUNT RELEASE CONDITIONS
4.1 Release Upon Completion of Initial Business Combination.
Upon the completion of the Company's Initial Business Combination, the following releases from the Trust Account shall be made:
(a) Redemptions and Remaining Balance. The Trustee shall release the Property (or such portion thereof as is necessary) from the Trust Account to pay:
(i) To the holders of Public Shares who properly exercise their redemption rights in connection with the Initial Business Combination, the per-share redemption price, which shall be calculated as the aggregate amount then on deposit in the Trust Account (including all interest earned thereon, less (A) taxes payable by the Company from the Trust Account and (B) up to One Hundred Thousand Dollars ($100,000) reserved for dissolution expenses), divided by the number of then-outstanding Public Shares; and
(ii) To the Company (or to such other persons as the Company may designate in its written instructions to the Trustee), the remaining balance of the Trust Account after payment of all redemptions described in clause (i) above and after payment of the Deferred Underwriting Commission described in Section 4.1(b) below.
(b) Deferred Underwriting Commission. The Deferred Underwriting Commission of Five Million Two Hundred Fifty Thousand Dollars ($5,250,000) (based on gross Offering proceeds of $150,000,000), plus any additional deferred underwriting commission attributable to the Over-Allotment Units (an additional Seven Hundred Eighty-Seven Thousand Five Hundred Dollars ($787,500) if the over-allotment option was exercised in full, for a total of Six Million Thirty-Seven Thousand Five Hundred Dollars ($6,037,500)), shall be released from the Trust Account and paid directly to Meridian Tidewater Securities LLC, as representative of the Underwriters, simultaneously with the consummation of the Initial Business Combination. The Trustee shall wire such amounts to the account designated by Meridian Tidewater Securities LLC in wire transfer instructions provided to the Trustee. For the avoidance of doubt, the Deferred Underwriting Commission shall be paid from the Property prior to any distribution of the remaining balance to the Company pursuant to Section 4.1(a)(ii).
(c) Documentation Required. The releases described in this Section 4.1 shall be made only upon the Company delivering to the Trustee all of the following:
(i) Written notice, signed by an authorized officer of the Company, that the Initial Business Combination has been consummated;
(ii) A certificate of an officer of the Company confirming that the Initial Business Combination has been duly authorized and consummated in accordance with the terms of the Company's Amended and Restated Certificate of Incorporation and all applicable laws; and
(iii) Written instructions, in the form attached hereto as Exhibit C (or in substantially similar form), specifying in reasonable detail the amounts to be disbursed, the identity of each payee, and wire transfer instructions for each payee.
4.2 Release Upon Redemption of Class A Common Stock.
If the Company's stockholders vote on the Initial Business Combination and holders of Public Shares exercise their redemption rights in connection therewith:
(a) The Trustee shall release from the Trust Account the aggregate redemption price to be paid to the holders of Public Shares who have properly exercised their redemption rights. The per-share redemption amount shall be calculated as the pro rata portion of the aggregate amount then on deposit in the Trust Account (including all interest earned thereon, net of (i) taxes payable by the Company from the Trust Account and (ii) up to One Hundred Thousand Dollars ($100,000) reserved for dissolution expenses), divided by the number of then-outstanding Public Shares.
(b) The Trustee shall disburse such amounts to the redeeming stockholders (or to the Company's transfer agent for further distribution to such stockholders, as the Company may direct) upon receipt of:
(i) Written instructions from the Company, signed by an authorized officer, specifying the number of shares of Class A Common Stock being redeemed, the per-share redemption price, and the aggregate redemption amount; and
(ii) A certification from an authorized officer of the Company that the Company has complied with all procedures and requirements for the redemption of Public Shares as set forth in the Amended and Restated Certificate of Incorporation (filed with the Delaware Secretary of State on January 24, 2022, DE SOS File No. 6148293), including without limitation the provision of adequate notice to stockholders and the opportunity for stockholders to exercise their redemption rights.
(c) The Trustee shall have no obligation to verify the accuracy of the per-share redemption price or the number of shares being redeemed, and shall be entitled to rely conclusively on the written instructions and certification delivered by the Company in accordance with this Section 4.2.
4.3 Release Upon Liquidation.
(a) If the Company does not consummate an Initial Business Combination by the Business Combination Deadline (August 4, 2023, or February 4, 2024, if extended in accordance with the terms of the Amended and Restated Certificate of Incorporation), the Company shall promptly notify the Trustee in writing that the Business Combination Deadline has passed without the consummation of an Initial Business Combination, and the Trustee shall thereupon liquidate and distribute the Property in accordance with this Section 4.3.
(b) Upon receipt of the written notice described in Section 4.3(a), the Trustee shall:
(i) Pay from the Property, dissolution and liquidation expenses of the Company in an amount not to exceed One Hundred Thousand Dollars ($100,000);
(ii) Pay from the Property any outstanding tax obligations of the Company attributable to interest earned on the Trust Account;
(iii) Distribute the remaining Property, on a pro rata basis, to the holders of Public Shares, based on the number of Public Shares held by each such holder, excluding for purposes of such distribution any shares of Class B Common Stock (Founder Shares) held by the Sponsor, officers, and directors of the Company, it being understood that the Sponsor, officers, and directors of the Company have waived their right to participate in any liquidating distribution with respect to any Founder Shares held by them.
(c) For the avoidance of doubt, the Deferred Underwriting Commission shall not be paid to the Underwriters upon a Liquidation. In the event of a Liquidation, the entire amount of the Deferred Underwriting Commission that would otherwise have been payable to the Underwriters shall remain in the Trust Account and shall be included in the liquidating distribution to the holders of Public Shares. The Underwriters have agreed to waive their right to the Deferred Underwriting Commission in the event that the Company fails to consummate an Initial Business Combination by the Business Combination Deadline.
(d) The Trustee shall commence the distribution described in Section 4.3(b) within ten (10) business days after receipt of the written notice from the Company that the Business Combination Deadline has passed without the consummation of an Initial Business Combination. The Trustee shall use commercially reasonable efforts to effect such distribution as promptly as practicable, and shall coordinate with the Company's transfer agent to determine the record holders of Public Shares entitled to receive such distribution.
(e) In connection with any Liquidation, the Company shall provide the Trustee with such information and documentation as the Trustee may reasonably request in order to effect the distribution of the Property, including but not limited to a list of the record holders of Public Shares and the number of shares held by each such holder, wire transfer or mailing instructions for each such holder, and such tax reporting information as may be required.
4.4 Procedure for Release.
(a) All releases from the Trust Account, whether pursuant to Section 3.1, Section 4.1, Section 4.2, or Section 4.3, shall require the delivery to the Trustee of the following:
(i) A letter of instruction, in the form attached hereto as Exhibit C or in such other form as may be reasonably acceptable to the Trustee, signed by an authorized officer of the Company (as identified in Section 7.1 hereof or as subsequently designated in accordance with Section 7.1);
(ii) In the case of a release upon completion of an Initial Business Combination pursuant to Section 4.1, a certificate of an officer of the Company certifying that the Initial Business Combination has been consummated in accordance with the terms of the Company's Amended and Restated Certificate of Incorporation and applicable law; and
(iii) Complete and accurate wire transfer instructions for all payees, including the name of each payee, the name and address of the receiving financial institution, ABA routing number, account number, and any other information reasonably required by the Trustee to effect such wire transfer.
(b) The Trustee shall act on such instructions within two (2) business days of receipt of all required documentation in proper form. The Trustee shall not be required to act on any instructions that are incomplete, ambiguous, or that the Trustee reasonably believes may not have been properly authorized.
(c) The Trustee shall not be liable for any delay in acting on instructions that results from the failure of the Company to provide complete and accurate documentation in accordance with this Section 4.4, or from any delay caused by the failure of a receiving financial institution to credit funds in a timely manner.
SECTION 5. DUTIES AND OBLIGATIONS OF THE TRUSTEE
5.1 Acceptance of Trust.
The Trustee hereby accepts the trust established under this Agreement and agrees to hold and safeguard the Property in accordance with the terms and conditions hereof. The Trustee shall act as a directed trustee and shall have no duty or obligation to invest, manage, use, or dispose of the Property other than as expressly directed by the terms of this Agreement and the written instructions of the Company delivered in accordance herewith. The Trustee shall hold the Property in trust until such time as it is released in accordance with the provisions of Sections 3 and 4 of this Agreement, or until this Agreement is terminated in accordance with Section 10 hereof.
5.2 Standard of Care.
The Trustee shall exercise the same degree of care with respect to the Property as it exercises with respect to its own property of a similar nature, and in all events shall act in good faith and with the degree of care, diligence, and skill that a reasonably prudent trustee would exercise under the circumstances. Notwithstanding the foregoing, the Trustee shall not be liable for any loss or depreciation in value of the Permitted Investments resulting from market conditions, changes in interest rates, or other factors beyond the Trustee's reasonable control, provided that the Trustee has invested the Property in Permitted Investments in accordance with the terms of this Agreement and the written instructions of the Company.
5.3 Limitations on Trustee's Duties.
The Trustee shall have no duty to:
(a) Verify or investigate the accuracy, completeness, or truthfulness of any representation, warranty, statement, or certification made by the Company in connection with this Agreement, the Offering, or any other transaction contemplated hereby;
(b) Monitor or enforce the Company's obligations under any other agreement to which the Company is a party, including without limitation the Underwriting Agreement, the Private Placement Warrants Purchase Agreement, any warrant agreement, any registration rights agreement, or any other agreement entered into in connection with the Offering or any Initial Business Combination;
(c) Determine whether any proposed disbursement from the Trust Account complies with the Company's Amended and Restated Certificate of Incorporation, the Company's bylaws, or applicable law (other than compliance with the express terms of this Agreement), it being understood that the Trustee shall be entitled to rely on the certifications and instructions delivered by the Company in accordance with this Agreement;
(d) Verify the identity of any beneficial holder of Public Shares, or determine the number of Public Shares held by any person, it being understood that the Trustee shall be entitled to rely on information provided by the Company or the Company's transfer agent in connection with any distribution of the Property; or
(e) Take any action, or refrain from taking any action, except as expressly provided in this Agreement, or as directed by the Company in writing in accordance with the terms hereof.
5.4 Reliance on Documents.
The Trustee shall be entitled to rely, and shall be fully protected in relying, upon any notice, instruction, request, certificate, letter of instruction, or other document or communication delivered to it pursuant to this Agreement and believed by the Trustee in good faith to be genuine and to have been signed or presented by the proper person or persons. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in reliance upon any such document or communication, and the Trustee shall not be required to inquire into the authority of any person giving such notice, instruction, or certificate. The Trustee may consult with legal counsel of its own choosing (at the expense of the Company as provided in Section 6.2) with respect to any matter arising under this Agreement, and the Trustee shall not be liable for any action taken or omitted in good faith in reliance on the advice of such counsel.
5.5 No Implied Duties.
The Trustee shall have no implied duties, obligations, or responsibilities beyond those expressly set forth in this Agreement. No provision of this Agreement shall be construed to impose upon the Trustee any duty, obligation, or responsibility that is not expressly stated herein. The permissive right of the Trustee to take actions enumerated in this Agreement shall not be construed as a duty or obligation to do so.
SECTION 6. TRUSTEE COMPENSATION AND EXPENSES
6.1 Trustee Fees.
The Company shall pay the Trustee reasonable compensation for its services under this Agreement in accordance with the fee schedule attached hereto as Exhibit A and incorporated herein by reference. All fees and expenses of the Trustee shall be paid by the Company from funds not held in the Trust Account (i.e., from working capital held outside of the Trust Account). The Company acknowledges and agrees that the Trustee's fees and expenses shall not be paid from the Property or from any funds held in the Trust Account. The Company shall pay such fees and expenses within thirty (30) calendar days of receipt of an invoice from the Trustee.
6.2 Reimbursement of Expenses.
The Company shall promptly reimburse the Trustee for all reasonable out-of-pocket expenses incurred by the Trustee in connection with the performance of its duties under this Agreement, including without limitation legal fees and expenses, accounting fees, mailing and delivery expenses, wire transfer fees, and any other costs reasonably incurred in connection with the administration of the Trust Account. Such expenses shall be paid by the Company from funds not held in the Trust Account. The Trustee shall provide the Company with reasonable documentation supporting any request for reimbursement of expenses.
6.3 Lien. The Trustee shall have no lien on the Trust Account or any portion of the Property for any unpaid fees, expenses, or other amounts owed to the Trustee by the Company. The Trustee acknowledges and agrees that the Property is held for the benefit of the holders of Public Shares and the Underwriters (solely with respect to the Deferred Underwriting Commission), and that the Trustee shall not assert any claim against the Property for fees, expenses, or other amounts owed to it by the Company. The Company's obligation to pay the Trustee's fees and expenses is a general unsecured obligation of the Company, payable solely from funds not held in the Trust Account.
SECTION 7. AUTHORIZED OFFICERS; NOTICES
7.1 Authorized Officers.
The following persons are authorized to act on behalf of the Company for all purposes under this Agreement, including without limitation the delivery of notices, instructions, certificates, letters of instruction, and any other communications to the Trustee:
(a) Marco A. Pellegrino, Chairman and Chief Executive Officer;
(b) Daniella R. Pellegrino, President and Chief Financial Officer; and
(c) Vincent Abruzzi, Chief Operating Officer.
The Company may change its authorized officers at any time by written notice delivered to the Trustee, signed by at least one of the then-current authorized officers. Such notice shall include the name, title, and specimen signature of each new authorized officer, and shall take effect upon receipt by the Trustee. The initial certificate of authorized officers is attached hereto as Exhibit B.
7.2 Notices. All notices, requests, instructions, and other communications required or permitted under this Agreement shall be in writing and shall be delivered as follows:
If to the Company:
Pellegrino Hospitality Acquisition Corp. c/o Pellegrino Capital Group LLC 1440 Gulf Shore Boulevard North, Suite 600 Naples, FL 34102
Attention: Daniella R. Pellegrino, President & Chief Financial Officer
With a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 425 Lexington Avenue New York, NY 10017
Attention: Theodore Langston
If to the Trustee:
Atlantic Seaboard Trust Company, National Association 100 Federal Street, Suite 2200 Boston, MA 02110
Attention: Donald Freemantle, Vice President, Corporate Trust Services
If to the Representative of the Underwriters (solely for purposes of notices relating to the Deferred Underwriting Commission):
Meridian Tidewater Securities LLC 277 Park Avenue, 38th Floor New York, NY 10172
Attention: Jason R. Wovington, Managing Director
Either party may change its address for purposes of notices under this Agreement by giving written notice to the other party in accordance with this Section 7.2.
7.3 Method of Notice.
Notices shall be deemed given and effective as follows: (a) if delivered personally, upon delivery; (b) if sent by nationally recognized overnight courier service (with tracking capability), one (1) business day after deposit with such courier; or (c) if sent by registered or certified mail, return receipt requested, postage prepaid, three (3) business days after deposit in the United States mail. In addition, notices may be given by facsimile or electronic mail (e-mail), but such notices shall be deemed given only upon confirmation of receipt by the recipient (by reply e-mail, telephonic confirmation, or otherwise).
SECTION 8. REPRESENTATIONS AND WARRANTIES
8.1 Representations and Warranties of the Company.
The Company hereby represents and warrants to the Trustee, as of the date hereof and as of the Closing Date, as follows:
(a) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and has the requisite corporate power and authority to own its properties and to carry on its business as presently conducted.
(b) The Company has all requisite corporate power and authority to execute, deliver, and perform its obligations under this Agreement, and to consummate the transactions contemplated hereby.
(c) The execution, delivery, and performance of this Agreement by the Company have been duly authorized by all necessary corporate action on the part of the Company, and no further corporate proceedings on the part of the Company are necessary to authorize the execution and delivery of this Agreement or the performance by the Company of its obligations hereunder.
(d) This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(e) The funds to be deposited in the Trust Account represent the proceeds described in the Recitals hereto and were lawfully obtained. The Company has no reason to believe that any portion of such funds were derived from, or constitute the proceeds of, any illegal activity.
(f) The Registration Statement on Form S-1 (File No. 333-260847) was declared effective by the SEC on January 14, 2022, and, as of the date hereof, no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been initiated or, to the knowledge of the Company, are threatened by the SEC.
8.2 Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants to the Company, as of the date hereof, as follows:
(a) The Trustee is a national banking association duly organized and validly existing under the laws of the United States, and has all requisite power and authority under applicable law to accept the trust created hereby, to hold and administer the Property, and to perform its obligations under this Agreement.
(b) The Trustee has all requisite power and authority to execute, deliver, and perform its obligations under this Agreement. The execution, delivery, and performance of this Agreement by the Trustee have been duly authorized by all necessary corporate action on the part of the Trustee.
(c) This Agreement has been duly executed and delivered by the Trustee and constitutes a valid and binding obligation of the Trustee, enforceable against the Trustee in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and similar laws affecting creditors' rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
(d) The execution, delivery, and performance of this Agreement by the Trustee will not violate, conflict with, or result in a breach or default under any law, regulation, order, judgment, or decree applicable to the Trustee, or any agreement or instrument to which the Trustee is a party or by which the Trustee is bound.
SECTION 9. INDEMNIFICATION
9.1 Indemnification of the Trustee.
The Company shall indemnify, defend, and hold harmless the Trustee, and its officers, directors, employees, agents, and affiliates (each, a "Trustee Indemnitee"), from and against any and all losses, liabilities, claims, demands, actions, suits, proceedings, judgments, damages, penalties, fines, and expenses (including, without limitation, reasonable attorneys' fees and expenses, court costs, and costs of investigation) (collectively, "Losses") arising out of or in connection with:
(a) The Trustee's acceptance of, or performance of its duties and obligations under, this Agreement;
(b) Any action taken or omitted to be taken by the Trustee in good faith in accordance with the terms of this Agreement or in reliance upon any notice, instruction, certificate, or other document delivered to the Trustee in accordance herewith; or
(c) Any claim made by any third party (including, without limitation, any holder of Public Shares, any stockholder, creditor, or other person) relating to the Trust Account or the Property, or relating to the Trustee's role as trustee hereunder;
provided, however, that the Company shall have no obligation to indemnify a Trustee Indemnitee to the extent that such Losses are caused by, or result directly from, the Trustee's own gross negligence, willful misconduct, or material breach of its obligations under this Agreement. The Company's indemnification obligations under this Section 9.1 shall be payable from funds not held in the Trust Account.
9.2 Indemnification of the Company.
The Trustee shall indemnify, defend, and hold harmless the Company and its officers, directors, employees, agents, and affiliates from and against any and all Losses arising out of or resulting from the Trustee's gross negligence, willful misconduct, or material breach of its obligations under this Agreement. The Trustee's liability under this Section 9.2 shall be limited to the amount of actual direct damages suffered by the Company and shall not include consequential, incidental, special, punitive, or indirect damages, except to the extent such damages result from the Trustee's willful misconduct.
9.3 Survival. The indemnification obligations set forth in this Section 9 shall survive the termination of this Agreement, the distribution of the Property from the Trust Account, and the resignation or removal of the Trustee, in each case for a period of three (3) years following the date of such termination, distribution, resignation, or removal, as applicable. The representations and warranties contained in Section 8 shall survive the execution of this Agreement for the same period.
SECTION 10. TERMINATION
10.1 Termination Events.
This Agreement shall terminate upon the earliest to occur of the following: