INVESTMENT MGMT. TRUST AGREEMENT

 

EXHIBIT 10.8

 

                      INVESTMENT MANAGEMENT TRUST AGREEMENT

 

 

     This  Agreement  is made as of July 30,  2004 by and  between  Sand Hill IT

Security  Acquisition  Corp. (the "Company") and American Stock Transfer & Trust

Company ("Trustee").

 

     WHEREAS, the Company's  Registration  Statement on Form S-1, No. 333-114861

("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,   Newbridge   Securities   Corporation  and  I-Bankers  Securities

Incorporated   (collectively,   the   "Representatives")   are   acting  as  the

representatives 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,  $18,360,000 of the

gross  proceeds  of the IPO  ($19,548,000  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 $.01 per share,  issued in the IPO and in

the event the Units are registered in Colorado, pursuant to Section 11-51-302(6)

of the Colorado Revised Statutes (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,  including  the terms of Section  11-51-302(6)  of the

Colorado Statute in a segregated trust account ("Trust Account")  established by

the Trustee at a branch of JPMorgan Chase NY Bank 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

 

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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;

 

     (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  Representatives,  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,  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

 

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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 Trustee  shall also be entitled to  reimbursement  from the

Company for all  expenses  paid or incurred by it in the  administration  of its

duties  hereunder  including,  but not limited to, all  counsel,  advisors'  and

agents' fees and disbursements and all taxes or other governmental  charges. The

Company  shall not be  responsible  for any other fees or charges of the Trustee

except as set forth in this  Section  2(c) and 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;

 

     (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 conclusively and shall be

protected  in acting upon any order,  notice,  demand,  certificate,  opinion or

 

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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