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EXHIBIT 10.5
INVESTMENT MANAGEMENT TRUST AGREEMENT
This Agreement is made as of ___________, 2005 by and between
Santa Monica
Media Corporation (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, The Shemano Group, Inc. ("The Shemano Group") 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 Certificate of Incorporation, $[ ]
of the gross
proceeds of the IPO ($[ ] 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 $.001 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 Royal Bank of Canada
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;
(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;
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(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 Shemano Group, 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 or Assistant 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 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;
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(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 concl
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