INVESTMENT MANAGEMENT TRUST
AGREEMENT
This Agreement is
made as of , 2006 by and between
JK Acquisition Corp. (the “ Company ”)
and Continental Stock Transfer & Trust Company (“
Trustee ”).
WHEREAS, the
Company’s Registration Statement on Form S-1,
No. 333-125211 (“ 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, Ferris,
Baker Watts, Incorporated (“ FBW ”) 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 Amended and Restated
Certificate of Incorporation, as amended, $56,249,900 of the gross
proceeds of the IPO and private placement of Units (as described in
the Registration statement) ($64,514,900 if the underwriters
over-allotment option is exercised in full) (the “ Base
Deposit ”) will be delivered to the Trustee to be
deposited and held in a trust account for the benefit of the
Company, FBW 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, FBW and
the Company will be referred to together as the “
Beneficiaries ”); and
WHEREAS, a portion
of the Property consists of $1,305,000 attributable to FBW is
non-accountable expense allowance which FBW has agreed to deposit
in the Trust Account (defined below); and
WHEREAS, the
Company has agreed to issue securities in a private placement (the
“Placement”); 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; and
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 Revised Statutes, in a
segregated trust account (“ Trust Account
”) established by the Trustee at a branch of Lehman Brothers,
Inc. selected by the Trustee and a securities broker 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 or in money market funds
meeting certain conditions under 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 FBW 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;
1
(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 FBW, 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;
(i) As
of the date of the consummation of a business combination (“
Business Combination ”), commence liquidation
of the Trust Account upon receipt of the Officers’
Certificate signed by the Chief Executive Officer and Chief
Financial Officer of the Company and in accordance with the terms
of a letter (“ Termination Letter ”), in
a form substantially similar to that attached hereto as
Exhibit A , signed on behalf of the Company by its
President or Chairman of the Board and Secretary or Assistant
Secretary. The Trustee shall complete the liquidation of the Trust
Account and distribute the Property in the Trust Account to the
Beneficiaries 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, including, without limitation,
an independently certified oath and report of inspector of election
in respect of the shareholder vote for a Business Combination. In
all cases, the Trustee shall provide FBW with a copy of any
Termination Letters, Officers’ Certificates and/or any other
correspondence that it receives with respect to any proposed
withdrawal from the Trust Account promptly after it receives same;
and
(j) As
of the date 18 months from the date of this Agreement (the
“ LOI Termination Date ”) (or
24 months from the date hereof (“ Second
Termination Date ”) provided the Trustee receives a
bona fide, executed letter of intent or engagement letter (the
“ Letter of Intent ”) for a Business
Combination), commence liquidation of the Trust Account in
accordance with the terms of a Termination Letter, in a form
substantially similar to that attached hereto as Exhibit B,
signed on behalf of the Company by its President or Chairman of the
Board and Secretary or Assistant Secretary. The Trustee, upon
consultation with the Company, shall deliver a notice to Public
Stockholders of record as of the LOI Termination Date or Second
Termination Date, whichever the case may be, by U.S. mail or via
the Depository Trust Company (“DTC”), within five days
of the LOI Termination Date or Second Termination Date, to notify
the Public Stockholders of such event and take such other actions
as it may deem necessary to inform the Beneficiaries. In addition,
the Trustee shall deliver to each Public Stockholder its ratable
share of the Property against satisfactory evidence of delivery of
the stock certificates by the Public Stockholders to the Company
through the DTC, its Deposit Withdraw Agent Commission
(DWAC) system or otherwise. Notwithstanding the foregoing, if
the Trustee receives an executed Letter of Intent prior to the LOI
Termination Date accompanied by an Officers’ Certificate as
described in Paragraph 2(e) hereof, then the Trustee shall forego
or suspend any liquidation of the Trust Account until the earlier
of a Business Combination or the Second Termination
Date.
2. Limited
Distributions of Income on Property.
(a) If
there is any income tax obligation relating to the income on the
Property in the Trust Account, then, at the written instruction of
the Company, the Trustee shall disburse to the Company by wire
transfer, out of the Property in the Trust Account, the amount
indicated by the Company as required to pay income
taxes.
(b) Upon
written request from the Company, the Trustee shall distribute to
the Company an amount certified by the Company to be equal to the
lesser of (i) the total accumulated collected income earned on the
Base Deposit, on an aggregate basis, and (ii)
$2,205,000.
(c) Except
as provided in Sections 2(a) and 2(b) above, no other distributions
from the Trust Account shall be permitted except in accordance with
Sections 1(i) and 1(j) hereof.
3. Agreements
and Covenants of the Company:
(a) The
Company hereby agrees and covenants to provide all instructions to
the Trustee hereunder in writing, signed by the Company’s
Chief Executive Officer, President or Chairman of the Board. In
addition, except with respect to its duties under section 1(i)
and (j) 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) The
Company hereby agrees and covenants to 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
2
(c) The
Company hereby agrees and covenants to pay the Trustee an initial
acceptance fee of [___] and an annual fee of [___] (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 Section 3(b) hereof (it
being expressly understood that the Property shall not be used to
make any payments to the Trustee under such paragraph).
(d) In
the event that the Company consummates a Business Combination and
the Trust Account is liquidated in accordance with Section 1(i)
hereof, the Trustee or another independent party designated by FBW
shall act as the inspector of election to certify the results of
the shareholder vote.
(e) The
Officers’ Certificate referenced in Section 1(i) and
(j) hereof shall require the Chief Executive Officer and Chief
Financial Officer of the Company to each certify either of the
following: (1) prior to the LOI Termination Date, the Company
has entered into a bona
|
