EXHIBIT 10.5
INVESTMENT MANAGEMENT TRUST AGREEMENT
This
Agreement is made as of ___________, 2005 by and between Santa
Monica
Media Corporation (the "Company") and
Continental Stock Transfer & Trust Company
("Trustee").
WHEREAS,
the Company's
Registration Statement on Form S-1, No. 333-______
("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,
The Shemano Group,
Inc. ("The Shemano
Group") 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, $[ ] of the gross
proceeds of the IPO ($[ ] 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 (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 at a branch of
Royal Bank of Canada
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 any
"Government
Security." As used
herein,
Government Security means any Treasury Bill
issued by the United States, having
a maturity of one hundred and eighty days
or less;
(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;
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(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 The
Shemano Group, 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 or Assistant 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.
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).
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;
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(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
