EXHIBIT 10.3
FORM OF INVESTMENT MANAGEMENT TRUST AGREEMENT
This Agreement is made as of _______ __, 2005 by and between Harbor
Acquisition Corporation (the "Company") and Continental Stock Transfer & Trust
Company ("TRUSTEE").
WHEREAS, the Company's Registration Statement on Form S-1, No.
333-126300 ("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, Ferris, Baker Watts, Incorporated ("FBW") is acting as the
lead underwriter in the IPO; and
WHEREAS, as described in the Company's Registration Statement, and in
accordance with the Company's Certificate of Incorporation, $55,000,000 of the
gross proceeds of the IPO ($63,460,000 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 $0.0001 per share, issued in the IPO as
hereinafter provided (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, a portion of the Property consists of $1,500,000 attributable
to the underwriters' discount and non-accountable expense allowance which FBW,
on behalf of the underwriters, has agreed to deposit in the Trust Account; 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 JPMorgan Chase Bank, N.A.
selected by the Company;
(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 and pay any taxes shown as due thereon;
(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 and/ or FBW to do so;
(h) Render to the Company and to FBW, 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) As of the date of the consummation of a business combination
("BUSINESS COMBINATION"), commence liquidation of the Trust Account upon receipt
of the Officers' Certificate signed by the Chief Executive Officer and Chief
Financial Officer of the Company and in accordance with the terms of a letter
("Termination Letter"), in a form substantially similar to that attached hereto
as EXHIBIT A, signed on behalf of the Company by its President or Chairman of
the Board and Secretary or Assistant Secretary. The Trustee shall complete the
liquidation of the Trust Account and distribute the Property in the Trust
Account to the Beneficiaries as directed in the Termination Letter and the other
documents referred to therein. The Trustee understands and agrees that
disbursements from the Trust Account shall be made only pursuant to a duly
executed Termination Letter, together with the other documents referenced
herein, including, without limitation, an independently certified oath and
report of inspector of election in respect of the shareholder vote for a
Business Combination. In all cases, the Trustee shall provide FBW with a copy of
any Termination Letters, Officers' Certificates and/or any other correspondence
that it receives with respect to any proposed withdrawal from the Trust Account
promptly after it receives same; and
(j) As of the date 18 months from the date of this Agreement (the
"LOI TERMINATION DATE") (or 24 months from the date hereof ("SECOND TERMINATION
DATE") provided the Trustee receives a bona fide, executed letter of intent or
engagement letter (the "LETTER OF INTENT") for a Business Combination), commence
liquidation of the Trust Account in accordance with the terms of a Termination
Letter, in a form substantially similar to that attached hereto as EXHIBIT B,
signed on behalf of the Company by its President or Chairman of the Board and
Secretary of Assistant Secretary. The Trustee, upon consultation with the
Company and FBW, shall file a press release immediately to notify the Public
Stockholders of such event and take such other actions as it may deem necessary
to inform the Beneficiaries. In addition, the Trustee shall deliver the Property
against satisfactory evidence of delivery of the stock certificates by the
Public Stockholders to the Company through the Depository Trust Company, its
Deposit Withdraw Agent Commission (DWAC) system or otherwise. Notwithstanding
the foregoing, if the Trustee receives an executed Letter of Intent prior to the
LOI Termination Date accompanied by an Officers' Certificate as described in
Paragraph 2(e) hereof, then the Trustee shall forego or suspend any liquidation
of the Trust Account until the earlier of a Business Combination or 24 months
from the date hereof.
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 Chief Executive Officer, 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 [$_____] 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
2
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).
(d) In the event that the Company consummates a Business Combination
and the Trust Account is liquidated in accordance with Paragraph 1(i) hereof,
the Trustee or another independent party designated by FBW shall act as the
inspector of election to certify the results of the shareholder vote.
(e) The Officers' Certificate referenced in Paragraph 1(i) and (j)
hereof shall require the Chief Executive Officer and Chief Financial Officer of
the Company to each certify either of the following: (1) prior to the LOI
Termination Date, the Company has entered into a bona fide Letter of Intent with
a target business; (2) prior to the LOI Termination Date, the Company has
entered into a Business Combination with a target business, the terms of which
are consistent with the requirements set forth in the Registration Statement; or
(3) prior to the Second Termination Date, the Company has entered into a
Business Combination with a target business, the terms of which are consistent
with the requirements set forth in the Registration Statement.
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
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; and
(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.
4. CERTAIN RIGHTS OF TRUSTEE.
(a) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or opinion of counsel or both. The Trustee shall not be
liable for any action it takes or omits to take in good faith in
3
reliance on such Officers' Certificate or opinion of counsel. The Trustee may
consult with counsel and the advice of such counsel or any opinion of counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(b) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
(c) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Agreement.
(d) The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Agreement; it shall not be
accountable for the Company's use of the proceeds from the Trust Account.
Notwithstanding the effective date of this Agreement or anything to the contrary
contained in this Agreement, the Trustee shall have no liability or
responsibility for any act or event relating to this Agreement or the
transactions related thereto which occurs prior to the date of this Agreement,
and shall have no contractual obligations or fiduciary duties to the
Beneficiaries until the date of this Agreement.
5. 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 days of receipt of the resignation notice from the Trustee, the
Trustee may 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;
(b) At such time that the Trustee has completed the liquidation of
the Trust Account in accordance with the provisions of paragraph 1(i) 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); or
(c) On such date after ______, 2007, when the Trustee deposits the
Property with the United States District Court for the Southern District of New
York in the event that, prior to such date, the Trustee has not received a
Termination Letter from the Company pursuant to Paragraph 1(i) or (j) hereof.
6. 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.
(b) This Agreement shall be governed by and construed and enforced
in accordance with the laws of the State of New York, without giving effect to
conflict of laws. It may be executed in several counterparts, each one of which
shall constitute an original, and together shall constitute but one instrument.
4
(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, however, that no such change,
amendment or modification may be made without the prior written consent of FBW.
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) The parties hereto consent to the jurisdiction and venue of any
state or federal court located in the City of New York for purposes of resolving
any disputes hereunder.
(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:
Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attn: Felix Orihuela
Fax No.: (212) 509-5150
if to the Company, to:
Harbor Acquisition Corporation
One Boston Place - Suite 3630
Boston, Massachusetts 02108
Attn: Chief Executive Officer
Fax No.: (617) 624-8416
in either case with a copy to:
Ferris, Baker Watts, Incorporated
100 Light Street, 8th Floor
Baltimore, MD 21202
Attn: Richard Prins
Fax No.: ________________
(f) This Agreement may not be assigned by the Trustee without the
prior consent of the Company and FBW.
(g) 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.
(h) The Trustee acknowledges and agrees that it shall not make any
claims or proceed against the Trust Account, including by way of set-off, and
shall not be entitled to any funds in the Trust Account under any circumstance.
5
IN WITNESS WHEREOF, the parties have duly executed this Investment
Management Trust Agreement as of the date first written above.
CONTINENTAL STOCK TRANSFER & TRUST COMPANY,
as Trustee
By:
-----------------------------------------
Name:
Title:
HARBOR ACQUISITION CORPORATION
By:
-----------------------------------------
Robert J. Hanks, Chief Executive Officer
6
EXHIBIT A
---------
[LETTERHEAD OF COMPANY]
[INSERT DATE]
Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attn: ________________
Re: Trust Account No. [__________] - Termination Letter
Gentlemen:
Pursuant to paragraph 1(i) of the Investment Management Trust Agreement
between Harbor Acquisition Corporation ("COMPANY") and Continental Stock
Transfer & Trust Company ("TRUSTEE"), dated as of , 2005 ("TRUST
AGREEMENT"), this is to advise you that the Company has entered into an
agreement ("BUSINESS AGREEMENT") with ("TARGET BUSINESS") to consummate a
business combination with Target Business ("BUSINESS COMBINATION") on or about
[Insert Date]. The Company shall notify you at least 48 hours in advance of the
actual date of the consummation of the Business Combination ("CONSUMMATION
DATE") and provide you with an Officer's Certificate in accordance with
Paragraphs 1(i) and 2(e) of the Trust Agreement.
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
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,
(ii) the Company shall deliver the oath and report of inspector of election
certified by an independent inspector which may be the Trustee or as otherwise
appointed by FBW (collectively, the "Report"); and (iii) the Company and FBW
shall deliver to you written instructions with respect to the transfer of the
funds held in the Trust Account ("Instruction Letter") along with satisfactory
evidence of delivery of the stock certificates from the Public Stockholders
through the Depository Trust Company, its Deposit Withdraw Agent Commission
(DWAC) system or otherwise (the "Stock Certificates"). You are hereby directed
and authorized to transfer the funds held in the Trust Account immediately upon
your receipt of the counsel's letter, the Report, evidence of delivery of the
Stock Certificates, the Officers' Certificates 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 and FBW of the same and the
Company and FBW shall issue joint written instructions directing you as to
whether such funds should remain in the Trust Account and distributed after the
Consummation Date to the Company and/or FBW. Upon the distribution of all the
funds in the Trust Account pursuant to the terms hereof, the Trust Agreement
shall be terminated.
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,
HARBOR ACQUISITION CORPORATION
By:
-------------------------------
EXHIBIT B
---------
[LETTERHEAD OF COMPANY]
[INSERT DATE]
Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attn: ________________
Re: Trust Account No. [ ] - Termination Letter
------------
Gentlemen:
Pursuant to paragraph 1(i) of the Investment Management Trust Agreement
between Harbor Acquisition Corporation. ("COMPANY") and Continental Stock
Transfer & Trust Company ("TRUSTEE"), dated as of , 2005 ("TRUST
AGREEMENT"), this is to advise you that the Board of Directors of the Company
has voted to dissolve and liquidate the Company. Attached hereto is a copy of
the minutes of the meeting of the Board of Directors of the Company relating
thereto, certified by the Secretary of the Company as true and correct and in
full force and effect. All terms not defined herein shall have the meanings
ascribed to them in the Trust Agreement.
In accordance with the terms of the Trust Agreement, we hereby
acknowledge and agree that you have full authority to commence liquidation of
the Trust Account immediately on the LOI Termination Date (unless certain
conditions have been satisfied in accordance with the terms of the Trust
Agreement) or Second Termination Date, whichever is applicable. You will notify
the Company, FBW and JPMorgan Chase Bank, N.A. ("Designated Paying Agent") in
writing as to when all of the funds in the Trust Account will be available for
immediate transfer ("Transfer Date").
The Designated Paying Agent shall thereafter notify you as to the
account or accounts of the Designated Paying Agent that the funds in the Trust
Account should be transferred to on the Transfer Date so that the Designated
Paying Agent may commence distribution of such funds in accordance with the
Company's instructions; provided, however, that satisfactory evidence of
delivery of the stock certificates from the Public Stockholders through the
Depository Trust Company, its Deposit Withdraw Agent Commission (DWAC) system or
otherwise. You shall have no obligation to oversee the Designated Paying Agent's
distribution of the funds. Upon the payment to the Designated Paying Agent of
all of the funds in the Trust Account, the Trust Agreement shall be terminated.
Very truly yours,
HARBOR ACQUISITION CORPORATION
By:
--------------------------
EXHIBIT C
---------
AUTHORIZED INDIVIDUAL(S)
AUTHORIZED FOR TELEPHONE CALL BACK TELEPHONE NUMBER(S)
COMPANY:
Harbor Acquisition Corporation
One Boston Place - Suite 3630
Boston, Massachusetts 02108
Attn: Chief Executive Officer
(617) 624-8409
FBW:
Ferris, Baker Watts, Incorporated
100 Light Street
Baltimore, Maryland 21202
Attn: Richard K. Prins
(410) 659-4385
TRUSTEE:
Continental Stock Transfer & Trust Company
17 Battery Place
New York, New York 10004
Attn: Felix Orihuela
(212) 845-3215