INVESTMENT MANAGEMENT TRUST AGREEMENT
THIS INVESTMENT MANAGEMENT TRUST AGREEMENT (this "Agreement") is made as
of the __ day of __________, 2007, by and between Western United Financial
Corporation, a Delaware corporation (the "Company"), and Xxxxx Fargo Bank,
National Association (the "Trustee").
WHEREAS, the Company's Registration Statement on Form S-1, File No.
333-138263 (the "Registration Statement") for its initial public offering of
securities (the "IPO") has been declared effective as of the date hereof by the
Securities and Exchange Commission (the "Effective Date");
WHEREAS, Sandler X'Xxxxx & Partners, L.P. ("Sandler X'Xxxxx") is acting as
the representative of the underwriters in the IPO (collectively, the
"Underwriters");
WHEREAS, as described in the Registration Statement, and in accordance
with the Company's Amended and Restated Certificate of Incorporation, (i)
approximately $47,650,000 (approximately $54,962,000 if the Underwriters'
over-allotment option is exercised in full) plus (ii) $1,580,000 to be received
by the Company if Western United Funding, LLC purchases 200,000 shares of the
Company's common stock in the IPO will be delivered to the Trustee to be
deposited and held in a trust account for the benefit of the Company and the
Company's public stockholders (other than Western United Funding, LLC). 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";
WHEREAS, the Property is being held by the Trustee for the benefit of the
Public Stockholders in the event that the Company fails to consummate a business
combination (as such term is defined in the Registration Statement; hereinafter
a "Business Combination");
WHEREAS, pursuant to the Underwriting Agreement, dated as of ____________,
2007, by and between the Company and Sandler X'Xxxxx, a portion of the Property
equal to $1,750,000 (or $2,012,500 if the Underwriters' over-allotment option is
exercised in full) is attributable to the Underwriters' fees, which amounts the
Underwriters have agreed to deposit in the Trust Account (defined below) and
which will be paid from the Trust Account to the Underwriters upon the
consummation of a Business Combination; 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 (the "Trust
Account") established by the Trustee;
(b) 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,
invest and reinvest the Property in any United States "government security"
within the meaning of Section 2(a)(16) of the Investment Company Act of 1940
(the "1940 Act"), having a maturity of one hundred and eighty
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(180) days or less or in money market funds selected by the Company meeting the
conditions of Rule 2a-7 promulgated under the 1940 Act. The Trustee shall bear
no responsibility for any loss or penalty which may result from any investment
or sale of investment made pursuant to the Company's instruction. The parties
acknowledge that the Trustee is not providing investment supervision,
recommendations or advice;
(d) Collect and receive, when due, all principal and income arising
from the Property, which income, net of taxes, shall become part of the
"Property," as such term is used herein;
(e) Promptly notify the Company of all communications received by it
with respect to the Property;
(f) Promptly supply any 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 otherwise;
(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, it being understood that the Trustee will be
indemnified by the Company pursuant to paragraph 2(b) hereof for such
participation;
(h) Render to the Company, 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) Release to the Company up to $125,000 per month of the interest
earned on the Property in the Trust Account (net of taxes payable on such
interest), until a maximum of $1.5 million of such interest has been released to
the Company from the Trust Account;
(j) Upon written instructions from the Company, deliver to the
Company or to such governmental entity or taxing authority as the Company shall
direct, on a quarterly basis, from the Property in the Trust Account, an amount
equal to the taxes payable by the Company, if any, relating to interest earned
on the Property; and
(k) Commence liquidation of the Trust Account promptly after 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 Chief Executive 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; PROVIDED, HOWEVER, that in the event that a Termination
Letter has not been received by ________, 2008, the Trust Account shall be
liquidated in accordance with the procedures set forth in the Termination Letter
attached as Exhibit B to the stockholders of record on the record date, which
record date shall be fixed by the Board of Directors of the Company; PROVIDED,
FURTHER, that the record date shall be within ten (10) days of ________, 2008,
or as soon thereafter as is practicable. In all cases, the Trustee shall provide
Sandler X'Xxxxx with a copy of any Termination letter and/or any other
correspondence that it receives with respect to any proposed withdrawal from the
Trust Account promptly after it receives the same.
(l) No distributions from the Trust Account shall be permitted
except in accordance with Sections 1(i), 1(j) or 1(k) hereof.
2. AGREEMENTS AND COVENANTS OF THE COMPANY. The Company hereby agrees and
covenants to:
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(a) Give all instructions to the Trustee hereunder in writing,
signed by the Company's Chief Executive Officer or Chief Financial Officer;
(b) Hold the Trustee harmless, defend 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 conduct and manage the defense against such
Indemnified Claim, provided, that the Trustee may voluntarily participate in
such action at its own cost with its own counsel;
(c) Pay the Trustee an initial acceptance fee of $_______ and an
annual fee of $_______ (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 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); and
(d) In connection with any vote of the Company's stockholders
regarding a Business Combination, provide to the Trustee an affidavit or
certificate of a firm regularly engaged in the business of soliciting proxies
and tabulating stockholder votes verifying the vote of the Company's
stockholders regarding such Business Combination.
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 under this Agreement 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 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;
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(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, 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 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; or
(h) Look to any other agreement for the determination of its duties.
4. TERMINATION. This Agreement shall terminate as follows:
(a) If the Trustee gives written notice to the Company that it
desires to resign under this Agreement, the Company shall use its reasonable
efforts to locate a successor trustee. At such time that the Company notifies
the Trustee that a successor trustee has been appointed by the Company and has
agreed to become subject to the terms of this Agreement, the Trustee shall
transfer the management of the Trust Account to the successor trustee, including
but not limited to the transfer of copies of the reports and statements relating
to the Trust Account, whereupon this Agreement shall terminate; provided,
however, that in the event that the Company does not locate a successor trustee
within ninety (90) days of receipt of the resignation notice from the Trustee,
the Trustee may, upon written notice to the Company, submit an application to
have the Property deposited with the United States District Court for the
Southern District of New York and upon such deposit, the Trustee shall be immune
from any liability whatsoever that arises due to any actions or omissions to act
by any party after such deposit; or
(b) At such time that the Trustee has completed the liquidation of
the Trust Account in accordance with the provisions of paragraph 1(k) hereof,
and distributed the Property in accordance with the provisions of the
Termination Letter, this Agreement shall terminate except with respect to
Paragraph 2(b).
5. MISCELLANEOUS.
(a) The Company and the Trustee each acknowledge that the Trustee
will follow the security procedures set forth below with respect to funds
transferred from the Trust Account. Upon receipt of written instructions, the
Trustee will confirm such instructions with an Authorized Individual at an
Authorized Telephone Number listed on the attached Exhibit C. The Company and
the Trustee will each restrict access to confidential information relating to
such security procedures to authorized persons. Each party must notify the other
party immediately if it has reason to believe unauthorized persons may have
obtained access to such information, or of any change in its authorized
personnel. In executing funds transfers, the Trustee will rely upon account
numbers or other identifying numbers of a beneficiary, beneficiary's bank or
intermediary bank, rather than names. The Trustee shall not be liable for any
loss, liability or expense resulting from any error in an account number or
other identifying number, provided it has accurately transmitted the numbers
provided.
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(b) This Agreement may be executed by facsimile and in several
counterparts, which together shall constitute but one instrument.
(c) This Agreement contains the entire agreement and understanding
of the parties hereto with respect to the subject matter hereof. This Agreement
or any provision hereof may only be changed, amended or modified by a writing
signed by each of the parties hereto; provided that such action shall not
materially adversely affect the interests of the Public Stockholders. Any other
change, waiver, amendment or modification to this Agreement shall be subject to
approval by a majority of the Public Stockholders. As to any claim, cross-claim
or counterclaim in any way relating to this Agreement, each party waives the
right to trial by jury.
(d) This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York applicable to contracts executed in and
to be performed in that State, including, without limitation, Sections 5-1401
and 5-1402 of the New York General Obligations Law and the New York Civil
Practice Laws and Rules 327(b). The parties hereto agree that any action,
proceeding or claim against it arising out of or relating in any way to this
Agreement shall be brought and enforced in the courts of the State of New York
or the United States District Court for the Southern District of New York, and
irrevocably submit to such jurisdiction, which jurisdiction shall be exclusive.
The parties hereby waive any objection to such exclusive jurisdiction and that
such courts represent an inconvenient forum.
(e) Any notice, consent or request to be given in connection with
any of the terms or provisions of this Agreement shall be in writing and shall
be sent by express mail or similar private courier service, by certified mail
(return receipt requested), by hand delivery or by facsimile transmission:
If to the Trustee, to:
Xxxxx Fargo Bank, National Association
000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxx
Fax: (000) 000-0000
If to the Company, to:
Western United Financial Corporation
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: V. Xxxxxxx Xxxxxxx
Fax: (000) 000-0000
In either case with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxx, Esq.
Xxxxx Xxxxx, Esq.
Fax: (000) 000-0000
If to Sandler X'Xxxxx, to:
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Sandler X'Xxxxx & Partners, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Syndicate Manager
Fax: (000) 000-0000
With a copy to:
Jenkens & Xxxxxxxxx, A Professional Corporation
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: T. Xxxxx XxXxxxxxx, Esq.
Fax: (000) 000-0000
Each such communication will be effective (a) if delivered by express mail, by
private courier service, by certified mail or by hand, when such delivery is
made at the address specified in this Section 5(e), or (b) if delivered by
facsimile, on the next business day after such facsimile is transmitted to the
facsimile number specified in this Section 5(e) and appropriate acknowledgement
is received.
(f) This Agreement may not be assigned by the Trustee without the
prior written consent of the Company.
(g) The obligations and rights contained in Section 2(b) herein will
survive the termination of this Agreement.
(h) Each of the Trustee and the Company hereby represents that it
has the full right and power and has been duly authorized to enter into this
Agreement and to perform its respective obligations as contemplated hereunder.
The Trustee acknowledges and agrees that it shall not make any claims or proceed
against, and waives any and all right, title, interest or claim of any kind, in
or to any distribution of the Trust Account, including by way of set-off, and
shall not be entitled to any funds in, and hereby agrees not to seek recourse,
reimbursement, payment or satisfaction for any claim against, the Trust Account
under any circumstance.
(i) The Trustee hereby consents to the inclusion of "Xxxxx Fargo
Bank, National Association, as Trustee" in the Registration Statement and other
materials relating to the IPO.
(j) Sandler X'Xxxxx shall be a third party beneficiary of this
Agreement.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have duly executed this Investment
Management Trust Agreement as of the date first written above.
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, AS TRUSTEE
By: ______________________________
Name:
Title:
WESTERN UNITED FINANCIAL
CORPORATION
By: ______________________________
Name: V. Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
[Trust Agreement]
EXHIBIT A
[LETTERHEAD OF COMPANY]
[DATE]
Xxxxx Fargo Bank, National Association
000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxx
Re: TRUST ACCOUNT NO. [ ] TERMINATION LETTER
Gentlemen:
Pursuant to paragraph 1(k) of the Investment Management Trust Agreement
between Western United Financial Corporation (the "Company") and Xxxxx Fargo
Bank, National Association (the "Trustee"), dated as of __________________, 2007
(the "Trust Agreement"), this is to advise you that the Company has entered into
an agreement (the "Business Agreement") with ______________________ (the "Target
Acquisition") to consummate a business combination with the Target Acquisition
(the "Business Combination") on or about [insert date]. The Company shall notify
you at least forty-eight (48) hours in advance of the actual date of the
consummation of the Business Combination (the "Consummation Date"). Defined
terms used but not otherwise defined herein shall have the meaning ascribed to
such term in the Trust Agreement.
Pursuant to Section 2(d) of the Trust Agreement, we are providing you with
[an affidavit] [a certificate] of ____________________, which verifies the vote
of the Company's stockholders in connection with the Business Combination. In
accordance with the terms of the Trust Agreement, we hereby authorize you to
commence liquidation of the Trust Account to the effect that, on the
Consummation Date, all of the funds held in the Trust Account will be
immediately available for transfer to the account or accounts that the Company
and Sandler X'Xxxxx shall direct in writing on the Consummation Date.
On the Consummation Date (i) counsel for the Company shall deliver to you
written notification that the Business Combination has been consummated and (ii)
the Company shall deliver to you written instructions (the "Instruction Letter")
with respect to the transfer of the funds held in the Trust Account, including,
but not limited to, (a) funds to be delivered to any Public Stockholder that has
properly exercised its conversion rights (as described in the Registration
Statement), (b) pursuant to the terms of the Underwriting Agreement, dated as of
_____________, 2007, between the Company and Sandler X'Xxxxx, the portion of the
Property attributable to the deferred Underwriters' fees, and (c) the portion of
the Property to be release to the Company in connection with the consummation of
the Business Combination.
You are hereby directed and authorized to transfer the funds held in the
Trust Account immediately upon your receipt of the counsel's letter and the
Instruction Letter, in accordance with the terms of the Instruction Letter. In
the event that certain deposits held in the Trust Account may not be liquidated
by the Consummation Date without penalty, you will notify the Company of the
same and the Company shall direct you as to whether such funds should remain in
the Trust Account and be distributed after the Consummation Date to the Company
or, with respect to the deferred Underwriters' fees, to Sandler X'Xxxxx. Upon
the distribution of all the funds in the Trust Account pursuant to the terms
hereof, the Trust Agreement shall be terminated.
A-1
In the event that the Business Combination is not consummated on the
Consummation Date described in the notice thereof and we have not notified you
on or before the original Consummation Date of a new Consummation Date, then the
funds held in the Trust Account shall be reinvested as provided in the Trust
Agreement on the business day immediately following the Consummation Date as set
forth in the notice.
Very truly yours,
WESTERN UNITED FINANCIAL
CORPORATION
By: ______________________________
Name: V. Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
A-2
EXHIBIT B
[LETTERHEAD OF COMPANY]
[DATE]
Xxxxx Fargo Bank, National Association
000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxx
Re: TRUST ACCOUNT NO. [ ] TERMINATION LETTER
Gentlemen:
Pursuant to paragraph 1(k) of the Investment Management Trust Agreement
between Western United Financial Corporation (the "Company") and Xxxxx Fargo
Bank, National Association (the "Trustee"), dated as of ___________________,
2007 (the "Trust Agreement"), this is to advise you that the Company is to be
liquidated in accordance with the terms of the Company's Amended and Restated
Certificate of Incorporation.
In accordance with the terms of the Trust Agreement, we hereby authorize
you to commence liquidation of the Trust Account. In connection with this
liquidation, you are hereby authorized to establish a record date for the
purposes of determining the stockholders of record entitled to receive their per
share portion of the Trust Account. The record date shall be within ten (10)
days of the liquidation date, or as soon thereafter as is practicable. You will
notify the Company in writing as to when all of the funds in the Trust Account
will be available for immediate transfer (the "Transfer Date") in accordance
with the terms of the Trust Agreement and the Amended and Restated Certificate
of Incorporation of the Company. You shall commence distribution of such funds
in accordance with the terms of the Trust Agreement and the Amended and Restated
Certificate of Incorporation of the Company and you shall oversee the
distribution of the funds. Upon the payment of all the funds in the Trust
Account, the Trust Agreement shall be terminated.
Very truly yours,
WESTERN UNITED FINANCIAL
CORPORATION
By: ______________________________
Name: V. Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
B-1
EXHIBIT C
AUTHORIZED INDIVIDUAL(S) AUTHORIZED
FOR TELEPHONE CALL BACK TELEPHONE NUMBER(S)
----------------------- -------------------
COMPANY:
Western United Financial Corporation
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: V. Xxxxxxx Xxxxxxx, Chief Executive Officer (000) 000-0000
Western United Financial Corporation
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxxx, Chief Financial Officer (000) 000-0000
TRUSTEE:
Xxxxx Fargo Bank, National Association
000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxx (000) 000-0000
C-1
