INVESTMENT MANAGEMENT TRUST AGREEMENT

 

 

(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

 

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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 Letter of Intent with a target business; and/or (2) prior to the LOI Termination Date, the Company has entered into a Business Combination with a target business, the terms of which are consistent with the requirements set forth in the Registration Statement; and/or (3) prior to the Second Termination Date, the Company has entered into a Business Combination with a target business, the terms of which are consistent with the requirements set forth in the Registration Statement; and (4) the Board of Directors (the “Board”), has approved (where applicable): (i) the Business Combination; and/or (ii) the Letter of Intent;

 

(f)                                    in connection with any vote of the Company’s stockholders regarding a Business Combination, to provide to the Trustee an affidavit or certificate of a firm regularly engaged in the business of soliciting proxies and tabulating stockholder votes (which firm may be the Trustee) verifying the vote of the Company’s stockholders regarding such Business Combination;

 

(g)                                 in connection with any vote of the Company’s stockholders regarding a dissolution and liquidation, to provide to the Trustee an affidavit or certificate of a firm regularly engaged in the business of tabulating stockholder votes (which firm may be the Trustee) verifying the vote of the Company’s stockholders regarding such dissolution and liquidation; and

 

(h)                                 within five business days after Maxim’s over-allotment option (or any unexercised portion thereof) expires or is exercised in full, to provide the Trustee notice in writing (with a copy to Maxim) of the total amount of the Contingent Discount, which shall in no event be less than $720,000, less any amounts of Contingent Discount returned to stockholders of the Company who have elected to convert their shares into approximately $5.85 per share from the Trust Account in connection with a Business Combination.

 

4.                                       Limitations of Liability. The Trustee shall have no responsibility or liability to:

 

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(a)                                  take any action with respect to the Property, other than as directed in Section 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 written 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 Section 1(c);

 

(d)                                 refund any depreciation in principal of any Property;

 

(e)                                  assume that the authority of any person designated by the Company and/or Maxim to give written instructions hereunder shall not be continuing unless provided otherwise in such designation, or unless the Company and/or Maxim 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 on, 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 Trustee signed by the proper party or parties and, if the duties or rights of the Trustee are affected, unless it shall give its prior written consent thereto;

 

(g)                                 verify the correctness of the information set forth in the Registration Statement or to confirm or assure that any acquisition made by the Company or any other action taken by it is as contemplated by the Registration Statement, unless an officer of the Trustee has actual knowledge thereof, written notice of such event is sent to the Trustee or as otherwise required under Section 1(i) hereof; and