_______________, 2007
Western United Financial Corporation
c/o Western United Management, LLC
00 Xxxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
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 Western
United Financial Corporation, a Delaware corporation (the "Company"), and
Sandler X'Xxxxx & Partners, L.P. (the "UNDERWRITER"), relating to an
underwritten initial public offering (the "IPO") of the Company's units (the
"UNITS"), each Unit comprised of one share of the Company's Common Stock, par
value $0.01 per share (the "COMMON STOCK"), and one warrant, which is
exercisable for one share of Common Stock. Certain capitalized terms used herein
are defined in paragraph 11 hereof.
In order to induce the Company and the Underwriter 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 Insider Shares owned by the
undersigned 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 twenty-four (24) months from the effective date of the Registration
Statement (the "EFFECTIVE DATE"), the undersigned will take all reasonable
actions within the undersigned's power to (i) cause the Trust Account to be
liquidated and distributed to the holders of IPO Shares in accordance with that
Investment Management Trust Agreement to be entered into by and among the
Company, the Underwriter and Xxxxx Fargo Bank, National Association ("Xxxxx
Fargo"), as Trustee; and (ii) cause the Company to liquidate as soon as
reasonably practicable. The undersigned hereby waives any and all right, title,
interest or claim of any kind (each a "CLAIM") in or to (x) any distribution of
the Trust Account with respect to the undersigned's Insider Shares in connection
with a liquidation and (y) any remaining net assets of the Company after such
liquidation.
3. Except as disclosed in the Registration Statement, none of 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 for
services rendered to the Company prior to or in connection with the consummation
of the Business Combination; provided that the undersigned
1
shall be entitled to reimbursement from the Company for the undersigned's
reasonable out-of-pocket expenses incurred in connection with seeking and
consummating a Business Combination.
4. None of the undersigned, any member of the family of the undersigned, nor any
Affiliate of the undersigned will be entitled to receive or accept from the
Company a finder's fee or any other compensation in the event the undersigned,
any member of the family of the undersigned or any Affiliate of the undersigned
originates a Business Combination.
5. The undersigned shall escrow the undersigned's Insider Shares until the first
anniversary of the consummation of the Business Combination, subject to the
terms of a Securities Escrow Agreement which the Company will enter into with
the undersigned and Xxxxx Fargo, as escrow agent, in form and substance
acceptable to the Company.
6. The undersigned agrees to be a special advisor to the Board of Directors of
the Company and currently intends to serve until the earlier of the consummation
by the Company of a Business Combination or the liquidation of the Company. The
undersigned's Questionnaire for Directors and Officers furnished to the Company
and attached hereto as EXHIBIT A and the undersigned's biographical information
in the Registration Statement is true and accurate in all respects and does not
omit any material information with respect to the undersigned's background. The
undersigned's NASD Questionnaire furnished to the Underwriter and annexed as
EXHIBIT B hereto is true and accurate in all respects. The undersigned
represents and warrants that:
6.1 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;
6.2 the undersigned has never been convicted of or pleaded guilty to any
crime (i) involving any fraud, (ii) relating to any financial transaction or
handling of funds of another person or (iii) pertaining to any dealings in any
securities, and he is not currently a defendant in any such criminal proceeding;
6.3 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 registration denied suspended or revoked;
6.4 a petition under any federal bankruptcy laws or any state, territorial
or provincial insolvency law was not filed by or against, nor was a receiver
fiscal agent or similar officer appointed by a court for the business or
property of the undersigned, or for any partnership in which the undersigned was
a general partner within the past two years or for any corporation or business
association of which the undersigned was an executive officer within the past
two years;
6.5 the undersigned has not been subject to any order prohibiting and is
not subject to any legal proceeding seeking to prohibit the undersigned from
engaging in any type of business practice;
2
6.6 the undersigned has not been found by a court of competent
jurisdiction in a civil action by the Securities and Exchange Commission or by
any other federal or state administrative or regulatory authority to have
violated any federal or state securities law;
6.7 the undersigned has not been found by a court of competent
jurisdiction in a civil action by the Commodity Futures Trading Commission or by
any other federal or state administrative or regulatory authority to have
violated any federal or state commodities law; and
6.8 the Escrow Agreement, dated as of __________, 2007, by and among the
Company, Xxxxx Fargo, the undersigned and the other stockholders of the Company
party thereto is enforceable against the undersigned (except: (i) as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally; (ii) as enforceability of
any indemnification or contribution provision may be limited under the federal
and state securities laws; and (iii) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to the equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought) and will not, with or without the giving of notice or the lapse
of time or both, result in a breach of, or conflict with any of the terms and
provisions of, or constitute a default under, any agreement or instrument to
which the undersigned is a party.
7. The undersigned agrees that until the earlier of (i) the consummation of a
Business Combination or the liquidation of the Company or (ii) such time as the
undersigned ceases to be an officer or director of the Company, (X) the
undersigned shall present to the Company for its consideration prior to
presentation to any other entity, any business opportunity which may reasonably
be deemed appropriate for the Company based on the description in the
Registration Statement of the Company's proposed business or which is required
to be presented to the Company under Delaware law subject to any pre-existing
fiduciary or contractual obligations the undersigned has and (Y) the undersigned
shall not assist or participate with any other person or entity in the pursuit
of or negotiation with respect to such business opportunity unless and until the
undersigned receives written notice from the Company that the Company has
determined not to pursue such business opportunity.
8. This letter agreement shall be binding on the Company and the undersigned and
the undersigned's respective successors, heirs, personal representatives and
assigns. This letter agreement shall terminate on the earlier of (i) the date
upon which the Business Combination is consummated and (ii) the date upon which
the liquidation and distribution of the Trust Account is completed, provided
that the following Sections shall survive such termination: 3, 4, 5, 9, 10 and
12.
9. This letter agreement shall be governed by and construed and enforced 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). Each of the Company and the
undersigned hereby (i) agrees that any action, proceeding or claim against him
or it arising out of or relating in any way to this letter agreement shall be
brought and enforced in
3
the courts of the State of New York or the United States District Court for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive and (ii) waives any objection to such
exclusive jurisdiction and that such courts represent an inconvenient forum.
10. As used herein:
10.1 "AFFILIATE" shall have the meaning ascribed to it in Rule 12b-2 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended.
10.2. "BUSINESS COMBINATION" shall mean the Company's initial acquisition
of one or more banks, thrifts and their respective holding companies and other
financial services organizations through a merger, capital stock exchange, asset
or stock acquisition, exchangeable share transaction or other similar business
combination.
10.3 "INSIDERS" shall mean each of the following:
X. Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxx
Xxxxxx Xxxxxx
Western United Funding, LLC
10.4 "INSIDER SHARES" shall mean (i) all of the shares of Common Stock of
the Company owned by the undersigned prior to the IPO and (ii) all of the shares
of Common Stock of the Company held in the name of Western United Funding, LLC
with respect to which the undersigned has voting rights.
10.5 "IPO SHARES" shall mean the shares of Common Stock comprising the
Units issued in the Company's IPO.
10.6 "REGISTRATION STATEMENT" shall mean the registration statement filed
by the Company on Form S-1 (No. 333-138263) with the Securities and Exchange
Commission on October 27, 2006, and any amendment or supplement thereto, in
connection with the IPO.
10.7 "TRUST ACCOUNT" shall mean the trust account established with Xxxxx
Fargo, the amounts therein to be released as set forth in the Trust Agreement.
11. 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 undersigned and the Company.
[remainder of page intentionally left blank]
4
Sincerely,
___________________________________
Name: Xxxxxx Xxxxxx
Accepted and agreed:
WESTERN UNITED FINANCIAL CORPORATION
By:_________________________________
Name: X. Xxxxxxx Xxxxxxx
Title: Chief Executive Officer
[Insider Letter]
EXHIBIT A:
QUESTIONNAIRE FOR DIRECTORS AND OFFICERS
EXHIBIT B:
NASD QUESTIONNAIRE
