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 ▇▇▇▇▇ 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 ▇'▇▇▇▇▇ & Partners, L.P. ("Sandler ▇'▇▇▇▇▇") 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)
$75,500,000 ($87,020,000 if the Underwriters' over-allotment option is exercised
in full) plus (ii) up to $1,000,000 to be received by the Company in connection
with the sale of the Company's common stock pursuant to paragraph 2 of that
certain Subscription Agreement, dated as of October 26, 2006 by and between the
Company and Western United Funding, LLC, 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 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";
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 ▇'▇▇▇▇▇, a portion of
the Property equal to $1,600,000 (or $1,840,000 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 $200,000 per month of
the interest earned on the Property in the Trust Account (net of taxes payable
on such interest), until a maximum of $1.0 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 ▇'▇▇▇▇▇ 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 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); 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:
▇▇▇▇▇ Fargo Bank, National Association
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to:
Western United Financial Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: V. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
In either case with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
5
If to Sandler ▇'▇▇▇▇▇, to:
Sandler ▇'▇▇▇▇▇ & Partners, L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Syndicate Manager
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇, A Professional Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: T. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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
"▇▇▇▇▇ Fargo Bank, National Association, as Trustee" in the Registration
Statement and other materials relating to the IPO.
(j) Sandler ▇'▇▇▇▇▇ 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.
▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION, AS TRUSTEE
By:
---------------------------------
Name:
Title:
WESTERN UNITED FINANCIAL
CORPORATION
By:
---------------------------------
Name: V. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
EXHIBIT A
[LETTERHEAD OF COMPANY]
[DATE]
▇▇▇▇▇ Fargo Bank, National Association
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
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 ▇▇▇▇▇ 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 ▇'▇▇▇▇▇ 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
▇'▇▇▇▇▇, 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 ▇'▇▇▇▇▇. 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. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
A-2
EXHIBIT B
[LETTERHEAD OF COMPANY]
[DATE]
▇▇▇▇▇ Fargo Bank, National Association
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇
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 ▇▇▇▇▇ 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. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Executive Officer
B-1
EXHIBIT C
AUTHORIZED INDIVIDUAL(S) AUTHORIZED
FOR TELEPHONE CALL BACK TELEPHONE NUMBER(S)
----------------------------- -------------------------
COMPANY:
Western United Financial Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: V. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chief Executive Officer (▇▇▇) ▇▇▇-▇▇▇▇
Western United Financial Corporation
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Chief Financial Officer (▇▇▇) ▇▇▇-▇▇▇▇
TRUSTEE:
▇▇▇▇▇ Fargo Bank, National Association
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
C-1