Exhibit 10.5
INVESTMENT MANAGEMENT TRUST
AGREEMENT
This Agreement is made as of
[ ],
2006, by and between TransTech Services Partners Inc. (the “
Company ”) and Continental Stock Transfer &
Trust Company (the “ Trustee ”).
WHEREAS, the Company’s
Registration Statement on Form S-1, No. 333-
[ ]
(the “ 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 (the “ Effective Date
”);
WHEREAS, Maxim Group LLC (“
Maxim ”) is acting as the representative of the
underwriters in the IPO (the
“Underwriters”);
WHEREAS, the Company has agreed to
issue securities in a private placement that will occur prior to
the effective date of the IPO (the “ Placement
”);
WHEREAS, Lotus Capital LLC has
agreed to lend to the Company the principal sum of $500,000 (the
“ Loan Proceeds ”);
WHEREAS, as described in the
Registration Statement, and in accordance with the Company’s
Certificate of Incorporation, an aggregate of $35,100,000
($40,363,000, if the Underwriters’ over-allotment option is
exercised in full), which is comprised of (i) the net proceeds
of the IPO (except as provided in the Registration Statement);
(ii) the $1,000,000 received by the Company in exchange for
its securities pursuant to the Placement; (iii) the Loan
Proceeds; and (iv) an additional $720,000 ($828,000, if the
Underwriters’ over-allotment option is exercised in full) of
the proceeds of the IPO, representing a portion of the
Underwriters’ discount (the “ Contingent
Discount ”) which Maxim has agreed to deposit in the
Trust Account (as defined below), will be delivered to the Trustee
to be deposited and held in the Trust Account for the benefit of
the Company, and the holders of the Company’s common stock,
par value $.0001 per share (the “ Common Stock
”), included in the units of the Company’s securities
issued in the IPO (the “ Units ”) and Maxim and,
in the event the securities offered in the IPO are registered in
Colorado, pursuant to Section 11-51-302(6) of the
Colorado Revised Statutes (the “ CRS ”), a copy
of which 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, Maxim 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;
and
NOW, THEREFORE, in consideration of
the foregoing and the mutual covenants and 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, without limitation, with respect to the
Public Stockholders, the terms of Section 11-51-302(6) of
the CRS, in a segregated trust account (“ Trust Account ”) established by the
Trustee at a branch of HSBC Bank USA, N.A. 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 “government securities,” within the
meaning of Section 2(a)(16) of the Investment Company Act of
1940, as amended (the “ 1940 Act ”), having a maturity
of 180 days or less or in any open ended investment company
registered under the 1940 Act that holds itself out as a money
market fund meeting the conditions of paragraphs (c)(2),
(c)(3) and (c)(4) under Rule 2a-7 promulgated under
the 1940 Act;
(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 within two
business days the Company and Maxim 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 or the Company;
(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 and/or Maxim to do so;
(h)
render to the
Company and to Maxim, and to such other persons 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 upon receipt of the
Officers’ Certificate signed by the Chief Executive Officer
and Chief Financial Officer in accordance with the terms of a
letter (the “ Termination Letter ”), in a
form substantially similar to that attached hereto as
Exhibit A or Exhibit B, signed on behalf of
the Company by its Chief Executive Officer and Chief Financial
Officer, 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
as part of the Company’s plan of dissolution and
liquidation approved by the Company’s stockholders. The
Trustee understands and agrees that, except as provided in
Section 1 (j) and Section 2 hereof, 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 stock
vote in favor of the Business Combination (as hereinafter defined).
In all cases, the Trustee shall provide Maxim with a copy of any
Termination Letter, 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.
As
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used in this Agreement, the
term “ Business
Combination ” means the
acquisition by the Company, through merger, capital stock exchange,
asset acquisition, stock purchase or other similar business
combination with, one or more operating business service providers,
as more fully described in the prospectus forming a part of
the Registration Statement; 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, in the event the Company has executed
a Letter of Intent (defined below) prior to the LOI Termination
Date but failed to consummate a Business Combination
(“ Second Termination
Date ”)), commence
liquidation of the Trust Account. The Trustee, upon consultation
with the Company and Maxim, 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. Following
the requisite approval of the Company’s stockholders, 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 DTC, its Deposit Withdraw Agent Commission (DWAC) system or
as otherwise presented to the Trustee. Notwithstanding the
foregoing, if the Trustee receives a bona fide, executed letter of
intent, agreement in principle or engagement letter (a
“ Letter of
Intent ”) for a Business
Combination prior to the LOI Termination Date accompanied by an
Officers’ Certificate as described in
Section 3(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)
Upon receipt by
the Trustee of an Officers’ Certificate signed by the Chief
Executive Officer and Chief Financial Officer of the Company
certifying as true, accurate and complete a copy of any tax return
required to be filed on behalf of the Trust Account in respect of
income earned on the Property held therein, the Trustee shall
deliver to the Company for submission to the appropriate taxing
authority a check made payable to the order of such taxing
authority in the amount required to pay such taxes;
provided, however, that in no event shall the
aggregate amount of all checks issued to taxing authorities
pursuant to this Section 2(a) exceed the income in
respect of which such taxes are due and owing.
(b)
On the last day
of each month commencing
[ ],
2006 prior to the LOI Termination Date (or, if applicable, the
Second Termination Date), the Trustee shall pay to Lotus Capital
LLC, out of the interest earned on the Trust Account, an amount
equal to
[ ]
(representing 1/18 th of the Loan Proceeds), plus
accrued interest on the unpaid principal balance of the Loan
Proceeds at the rate of 4% per annum, until the full amount of the
Loan Proceeds, plus accrued interest thereon as aforesaid, shall be
repaid to Lotus Capital LLC.
(c)
Upon one or more
written requests from the Company, which may be given not more
than once in any calendar month period, the Trustee shall
distribute to the Company interest earned on the Trust Account, net
of taxes payable, up to a maximum of $600,000 ($800,000, if the
Underwriters’ over-allotment option is exercised in full).
The
3
distributions requested by
the Company may be for any amount, provided that (i) in
the aggregate, all distributions under this
Section 2(c) may not exceed $600,000 ($800,000, if
the Underwriters’ over-allotment option is exercised in
full), and (ii) such distributions may only be made if
and to the extent that interest has been earned on the amount
initially deposited into the Trust Account.
(d)
Upon receipt by
the Trustee of a written instruction from the Company for
distributions from the Trust Account in connection with a plan of
dissolution and distribution, accompanied by an Officers’
Certificate signed by the Chief Executive Officer and Chief
Financial Officer of the Company certifying as true, accurate and
complete (i) a statement of the amount of actual expenses
incurred or, where known with reasonable certainty, imminently to
be incurred by the Company in connection with its dissolution and
distribution, including any fees and expenses incurred or
imminently to be incurred by the Company in connection with seeking
stockholder approval of the Company’s plan of dissolution and
distribution, (ii) any amounts due to pay creditors or
required to reserve for payment to creditors, and (iii) the
sum of (i) and (ii), the Trustee shall distribute to the
Company an amount, as directed by the Company in the instruction
letter, up to the sum of (i) and (ii) as indicated in the
instruction letter.
(e)
Except as
provided in Sections 1(i), 1(j), 2(a), 2(b), 2(c) and
2(d) above, no other distributions from the Trust Account
shall be permitted.
3.
Agreements and
Covenants of the Company . The Company hereby agrees
and covenants:
(a)
to provide all
instructions to the Trustee hereunder in writing, signed by the
Company’s Chief Executive Officer and Chief Financial
Officer, with a copy to Maxim. In addition, except with respect to
its duties under paragraph 1(i) and 1(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
and/or Maxim shall promptly confirm such instructions in writing;
and
(b)
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 Trustee
may not agree to settle any Indemnified Claim without the
prior written consent of the Company. The Company
may participate in such action with its own
counsel;
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(c)
to 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 Section 3(b) hereof (it being expressly
understood that the Property shall not be used to make any payments
to the Trustee under such section);
(d)
that, in the
event that the Company completes a Business Combination and the
Trust Account is liquidated in accordance with
Section 1(i) hereof, the Trustee or another independent
party designated by Maxim shall act as the inspector of election to
certify the results of the stockholder vote;
(e)
that the
Officers’ Certificate referenced in Sections 1(i) and
(j) hereof shall require the Chief Executive Officer and Chief
Financial Officer of the Company to each certify the following
(wherever applicable): (1) prior to the LOI Termination Date,
the Company has entered into a bona fide
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