INVESTMENT MANAGEMENT TRUST
AGREEMENT
This Agreement is made as of April 19, 2007 by
and between Pinpoint Advance Corp. (the “Company”) and
American Stock Transfer & Trust Company
(“Trustee”).
WHEREAS, the Company’s Registration
Statement on Form S-1, File No. 333-138110 (“Registration
Statement”), for its initial public offering of securities
(“IPO”) has been declared effective on April 19, 2007
by the Securities and Exchange Commission (“Effective
Date”); and
WHEREAS, the Company has issued securities in a
private placement (the “Placement”); and
WHEREAS, Maxim Group LLC (“Maxim”)
is acting as the representative of the underwriters (the
“Underwriters”); and
WHEREAS, as described in the Company’s
Registration Statement, (i) in accordance with the Company’s
Amended and Restated Certificate of Incorporation, $22,516,000 of
the net proceeds of the IPO ($26,003,500 if the Underwriters’
over-allotment option is exercised in full), (ii) in accordance
with the Amended and Restated Subscription Agreement, dated as of
February 15, 2007, among the Company and certain purchasers,
$1,500,000 of the gross proceeds of the Placement (together with
the IPO proceeds, the “Base Deposit”), and (iii) in
accordance with the Underwriting Agreement, dated April 19, 2007,
between the Company and Maxim, as representative of the
Underwriters, an additional $750,000 ($862,500 if the
Underwriters’ over-allotment option is exercised in full),
representing a portion of the Underwriters’ discount (the
“Deferred Discount”), $24,766,000 will be delivered to
the Trustee as of April 25, 2007 to be deposited and held in a
trust account for the benefit of the Company, the public holders of
the common stock, par value $.0001 per share, of the Company
(“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 (“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, the
Company and Maxim and the Underwriters 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;
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
segregated trust accounts (“Trust Account”) established
by the Trustee with Lehman Brothers, Inc.;
(b) Manage, supervise and
administer the Trust Account subject to the terms and conditions
set forth herein;
(c) In a timely manner, upon the
written instruction of the Company, to invest and reinvest the
Property in any “Government Security” or in money
market funds selected by the Company meeting the conditions
specified in Rule 2a-7 promulgated under the Investment Company Act
of 1940, as amended, as determined by the Company. 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) Promptly notify 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 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) 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 (“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
3(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 stockholder vote in favor
of the Business Combination (as hereinafter defined). In all cases,
the Trustee shall provide Maxim 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. As used in this Agreement,
the term “Business Combination” means the acquisition
by the Company, through merger, capital stock exchange, asset or
stock acquisition of, or similar business combination with,
one or more entities located in Israel or Europe as more fully
described in the prospectus forming a part of the Registration
Statement; and
(j) Commence liquidation of the Trust Account
only upon receipt of and only in accordance with the terms of a
letter (the “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. Limited Distributions of Income on
Property .
(a) If there is any income tax
obligation relating to the income from the Property in the Trust
Account, then, at the written instruction of the Company, the
Trustee shall disburse to the Company or the Internal Revenue
Service by wire transfer or check (as directed by the Company in
its instruction letter), 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 containing certification that such distribution pursuant to
this Section 2(b) shall only be used to fund the working capital
requirements of the Company and the costs related to identifying,
researching and acquiring a prospective target businesses, in each
case as described in the prospectus that forms a part of the
Registration Statement, the Trustee shall distribute to the Company
an amount equal to up to $1,500,000 of the income earned on the
Base Deposit, net of taxes payable, through the last day of the
month immediately preceding the date of receipt of the
Company’s written request, provided; however, that in the
event the over-allotment option is exercised in full, the Company
shall be prohibited from receiving distributions of income earned
on the Base Deposit until after the first $114,900 of income is
earned on the Base Deposit (net of taxes payable), which amount
shall be added to the Base Deposit resulting in amount of $9.91 for
each share represented by certificates held by Public
Stockholders.
(c) 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.
(d) Except as provided in this
Section 2, no other distributions from the Trust Account shall be
permitted except in accordance with Sections 1(i) and 3(j)
hereof.
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. In addition,
except with respect to its duties under paragraph 1(i) and 3(j),
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;
(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 Company shall have the right to conduct and manage the
defense against such Indemnified Claim, provided that
the Company shall obtain the consent of the Trustee with
respect to the selection of counsel, which consent shall not be
unreasonably withheld. The Company may not agree to settle any
Indemnified Claim without the prior written consent of the Trustee.
The Trustee may participate in such action with its own
counsel at its own expense;
(c) Pay the Trustee an initial
acceptance fee, an annual fee and a transaction processing fee for
each disbursement made pursuant to Sections 2(a) and 2(b) as set
forth on Schedule A hereto, which fees shall be subject to
modification by the parties from time to time. It is expressly
understood that the Property shall not be used to pay such fees and
further agreed that said transaction processing fees shall be
deducted by the Trustee from the disbursements made to the Company
pursuant to Section 2(b). 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 annual
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 set forth in
this Section 3(c) and 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 Sections);
(d) That, 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 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 3(j) hereof shall require the
Company’s Chief Executive Officer and Chief Financial Officer
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”) pursuant to the unanimous
written consent of the Board has approved (where applicable): (i)
the Letter of Intent; and/or (ii) the Business Combination. A copy
of such consent and the Letter of Intent and/or the definitive
agreement relating to the Business Combination so approved shall be
attached as an exhibit to the Officers Certificate;
(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 wit
