Highbury Financial Inc. Denver, Colorado 80202 EarlyBirdCapital, Inc. New York, New York 10016 ThinkEquity Partners LLC New York, New York 10019 Re: Initial Public Offering Ladies and Gentlemen:
Exhibit
10.7
__________,
2005
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EarlyBirdCapital,
Inc.
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ThinkEquity
Partners LLC
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Re: Initial
Public Offering
Ladies
and Gentlemen:
This
letter is being delivered to you in accordance with the Underwriting Agreement
(the “Underwriting Agreement”) entered into by and between Highbury Financial
Inc., a Delaware corporation (the “Company”), ThinkEquity Partners LLC and
EarlyBirdCapital, Inc. (the “Underwriters”), relating to an underwritten initial
public offering (the “IPO”) of the Company’s units (the “Units”), each comprised
of one share of the Company’s common stock, par value $0.0001 per share (the
“Common Stock”), and two warrants, each of which is exercisable for one share of
Common Stock (each, a “Warrant”). Certain capitalized terms used herein are
defined in paragraph 10 hereof.
In
order
to induce the Company and the Underwriters to enter into the Underwriting
Agreement and to proceed with the IPO, and in recognition of the benefit
that
such IPO will confer upon the undersigned as a stockholder of the Company,
and
for other good and valuable consideration, the receipt and sufficiency of
which
are hereby acknowledged, the undersigned hereby agrees with the Company and
the
Underwriter as follows:
1. If
the
Company solicits approval of its stockholders of a Business Combination,
the
undersigned will vote all shares of Common Stock, including Insider Shares
and
IPO Shares, owned by him in accordance with the majority of the votes cast
by
the holders of the IPO Shares.
2. In
the
event that the Company fails to consummate a Business Combination within
18
months from the effective date (“Effective Date”) of the registration statement
relating to the IPO or 24 months under the circumstances described in the
prospectus relating to the IPO (the first to occur of such dates, the
“Transaction Failure Date”), the undersigned will take all reasonable actions
within his power to (i) cause the Trust Fund to be liquidated and
distributed to the holders of the IPO Shares as soon as practicable but in
no
event later than 60 (sixty) calendar days after the Transaction Failure Date
and
(ii) cause the Company to dissolve and liquidate as soon as practicable
(the earliest date on which the conditions in clauses (i) and (ii)
are both
satisfied being the “Liquidation Date”). The undersigned hereby waives any and
all right, title, interest or claim of any kind in or to any distributions
of
the Trust Fund as a result of such distribution, or to any other amounts
distributed in connection with a liquidating distribution of the Company
with
respect to his Insider Shares (“Claim”) and hereby waives any Claim the
undersigned may have in the future as a result of, or arising out of, any
contracts or agreements with the Company and will not seek recourse against
the
Trust Fund for any reason whatsoever. The undersigned hereby agrees that
the
Company shall be entitled to reimbursement from the undersigned for any
distribution of the Trust Fund, or any other amounts distributed by the Company
in connection with a liquidating distribution, received by the undersigned
in
respect of such person’s Insider Shares.
3. [The
undersigned agrees to indemnify and hold harmless the Company, jointly and
severally with R. ▇▇▇▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, against any
and all
loss, liability, claims, damage and expense whatsoever (including, but not
limited to, any and all legal or other expenses reasonably incurred in
investigating preparing or defending against any litigation, whether pending
or
threatened, or any claim whatsoever) which the Company may become subject
as a
result of (i) any claim by any vendor or other person who is owed
money by
the Company for services rendered or products sold, or (ii) any claim
by
any acquisition target that the Company did not pay, or reimburse, such target
for the fees and expenses of third party providers of services (such as
accountants, consultants and attorneys) to the target that the Company agreed
in
writing with the target to be liable for, in accordance with the terms of
such
agreement, but in each case only to the extent necessary to ensure that such
loss, liability, claim, damage or expense does not reduce the amount in the
Trust Fund (or, in the event that such claim arises after the distribution
of
the Trust Fund, to the extent necessary to ensure that the Company’s former
stockholders other than the undersigned and ▇▇. ▇▇▇▇▇▇▇/▇▇▇▇▇ are
not
liable for any amount of such loss, liability, claim, damage or
expense).]1
4. In
order
to minimize potential conflicts of interest which may arise from multiple
affiliations, the undersigned agrees to present to the Company for its
consideration, prior to presentation to any other person or entity, any suitable
opportunity to acquire all or substantially all of the outstanding equity
securities of, or otherwise acquire or acquire control of (through merger,
capital stock exchange, asset acquisition, stock purchase or other business
combination), an operating business in the financial services industry, until
the earlier of the consummation by the Company of a Business Combination,
the
distribution of the Trust Fund or until such time as the undersigned ceases
to
be an officer or director of the Company; provided,
however,
that
the presentation of such opportunities to the Company shall in each case
be
subject to any fiduciary or contractual obligation of the undersigned arising
from a fiduciary or contractual relationship.
5. The
undersigned acknowledges and agrees that the Company will not consummate
any
Business Combination which involves a company which is affiliated with any
of
the Insiders or their respective affiliates unless the Company obtains an
opinion from an independent investment banking firm that the business
combination is fair to the Company’s stockholders from a financial
perspective.
______________________
1 This
section of the agreement will
appear only in the agreements executed by R. ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇.
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6. Neither
the undersigned, any member of the family of the undersigned, nor any affiliate
of the undersigned will be entitled to receive and will not accept any
compensation, including payments to related parties of the existing stockholders
for performing due diligence, for services rendered to the Company prior
to or
in connection with the consummation of the Business Combination, provided
that
commencing on the effective date of the IPO, Berkshire Capital Securities
LLC
(“Related Party”) shall be allowed to charge the Company $7,500 per month to
compensate it for the Company’s use of Related Party’s offices, utilities and
personnel. The undersigned shall also be entitled to reimbursement from the
Company for his out-of-pocket expenses incurred in connection with seeking
and
consummating a Business Combination.
7. Neither
the undersigned, any member of the family of the undersigned, nor any affiliate
of the undersigned will be entitled to receive, or accept, a finder’s fee or any
other compensation from the Company in the event the undersigned, any member
of
the family of the undersigned or any affiliate of the undersigned originates
a
Business Combination except as described in the Company’s registration
statement.
8. The
undersigned shall not, and shall cause the members of such person's immediate
family and the affiliates of such person to not, accept a finder's fee
or
any
other compensation in the event the undersigned, any member of such person's
immediate family or any affiliate of such person originates our initial Business
Combination.
9. The
undersigned will escrow his Insider Shares for the three year period commencing
on the Effective Date subject to the terms of a Stock Escrow Agreement which
the
Company will enter into with an escrow agent acceptable to the
Company.
10. The
undersigned agrees to be [President and Chief Executive Officer, Treasurer
and
Director/Chairman of the Board of Directors] until the earlier of the
consummation by the Company of a Business Combination or the Liquidation
Date.
The undersigned’s biographical information furnished to the Company and the
Underwriters and attached hereto as Exhibit A is true and accurate in all
respects, does not omit any material information with respect to the
undersigned’s background and contains all of the information required to be
disclosed pursuant to Section 401 of Regulation S-K, promulgated under the
Securities Act of 1933. The undersigned’s questionnaires furnished to the
Company and the Underwriters and attached hereto as Exhibit B are true and
accurate in all respects. The undersigned represents and warrants
that:
(a) the
undersigned is not subject to or a respondent in any legal action for, any
injunction, cease-and-desist order or order or stipulation to desist or refrain
from any act or practice relating to the offering of securities in any
jurisdiction;
(b) the
undersigned has never been convicted of or pleaded guilty to any crime
(i) involving any fraud or (ii) relating to any financial transaction
or handling of funds of another person, or (iii) pertaining to any
dealings
in any securities and the undersigned is not currently a defendant in any
such
criminal proceeding; and
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(c) the
undersigned has never been suspended or expelled from membership in any
securities or commodities exchange or association or had a securities or
commodities license or registrations denied, suspended or revoked.
11. The
undersigned has full right and power, without violating any agreement by
which
he is bound (including, without limitation, any non-competition or
non-solicitation agreement with any employer or former employer), to enter
into
this letter agreement serve as [President and Chief Executive Officer, Treasurer
and as a member of the Board of Directors of the Company/Chairman of the
Board
of Directors and hereby consents to being named in the registration statement
as
a[n] [officer] [director] of the Company.]
12. As
used
herein, (i) a “Business Combination” shall mean the initial acquisition by
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or otherwise, of or control of an operating business in the
financial services industry selected by the Company; (ii) “Insiders” shall
mean all officers, directors and stockholders of the Company immediately
prior
to the IPO; (iii) “Insider Shares” shall mean all of the shares of Common
Stock of the Company owned by an Insider prior to the IPO; (iv) “IPO
Shares” shall mean the shares of Common Stock issued in the Company’s IPO; and
(v) “Trust Fund” shall mean the Trust Account established under that
certain Investment Management Trust Agreement, dated as of the date hereof,
between the Company and Continental Stock Transfer & Trust
Company.
The
undersigned acknowledges and understands that the Underwriters and the Company
will rely upon the agreements, representations and warranties set forth herein
in proceeding with the IPO. Nothing contained herein shall be deemed to render
the Underwriters a representative of, or a fiduciary with respect to, the
Company, its stockholders, or any creditor or vendor of the Company with
respect
to the subject matter hereof.
This
letter agreement shall be binding on the undersigned and such person’s
respective successors, heirs, personal representatives and assigns. This
letter
agreement shall terminate on the earlier of (i) the Business Combination
Date and (ii) the Liquidation Date; provided that such termination
shall
not relieve the undersigned from liability for any breach of this agreement
prior to its termination, [and provided further that Section 3 of this agreement
shall survive a termination pursuant to clause (ii).]
This
letter agreement shall be governed by and interpreted and construed in
accordance with the laws of the State of New York applicable to contracts
formed
and to be performed entirely within the State of New York, without
regard to the conflicts of law provisions thereof to the extent such principles
or rules would require or permit the application of the laws of another
jurisdiction.
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No
term
or provision of this letter agreement may be amended, changed, waived, altered
or modified except by written instrument executed and delivered by the party
against whom such amendment, change, waiver, alteration or modification is
to be
enforced.
________________________________
[Name
of
current stockholder]
Accepted
and agreed:
By:_______________________________
Name:
Title:
ThinkEquity
Partners LLC
By:_______________________________
Name:
Title:
EarlyBirdCapital,
Inc.
By:_______________________________
Name:
Title:
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