FORM OF INVESTMENT MANAGEMENT TRUST AGREEMENT

 

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                                                                    Exhibit 10.2

 

                      INVESTMENT MANAGEMENT TRUST AGREEMENT

 

      This Agreement is made as of ___________, 2005 by and between Confluence

Acquisition Partners I, Inc. (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, Dawson James Securities, Inc. (the "Representative") is acting as

the representative of the underwriters in the IPO; and

 

      WHEREAS, as described in the Registration Statement, and in accordance

with the Company's Certificate of Incorporation, $42,400,000 of the gross

proceeds of the IPO ($49,168,000 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 $.01 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 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 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;

 

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      (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 the Representative, 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.

 

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

 

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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;

 

      (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 Tr