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EXHIBIT 10.3
FORM OF INVESTMENT MANAGEMENT TRUST AGREEMENT
This
Agreement is made as of _______ __, 2006 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,
$57,800,000 of the
gross proceeds of the IPO ($66,350,000 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 $1,350,000
attributable to
the underwriters' non-accountable expense allowance which FBW has
agreed to
deposit in the Trust Account; and
WHEREAS, a portion of the Property consists of $1,300,000
attributable to
the placement of warrants issued by the Company to certain of its
initial
stockholders; and
WHEREAS, a portion of the Property consists of a loan in the
principal
amount of $150,000 from certain of the initial stockholders of the
Company; 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 and utilizing the services of a securities
broker
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 or in money
market funds
meeting certain conditions under Rule 2a-7 under the Investment
Company Act;
(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;
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(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;
(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, except
as provided in Section 2, 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.
LIMITED DISTRIBUTIONS OF INCOME FROM TRUST ACCOUNT.
(a) If there is any income tax obligation relating to the income
of
the Property in the Trust Account, then, at the written instruction
of the
Company, the Trustee shall disburse to the Company by wire
transfer, out of the
Property in the Trust Account, the amount indicated by the Company
as required
to pay income taxes; and.
(b) Upon written request from the Company, which may be given
not
more than once in any calendar month, the Trustee shall distribute
to the
Company by wire transfer an amount computed and certified by the
Company to be
equal to the total collected and undistributed income earned on the
original
amount deposited in the Trust Account for the preceding month;
PROVIDED,
HOWEVER, that the maximum amount of distributions, net of taxes,
that the
Company may request and the Trustee shall distribute pursuant to
this Section
2(b) shall be $1,650,000 or $1,850,000 if the over-allotment is
exercised by the
underwriters. It is understood that the Trustee's only
responsibility under this
section is to follow the instructions of the Company.
(c) Except as provided in Section 2(a) and 2(b) above, no other
distributions from the Trust Account shall be permitted except in
accordance
with Sections 1(i) and 1(j) hereof.
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3.
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 $1,000 and an
annual fee of $3,000 plus an income distribution processing fee of
$250 (it
being expressly understood that the Property shall not be used to
pay such fee),
except that the monthly income distribution processing fee may be
deducted from
the monthly distributions allowed under Sections 2(a) and 2(b)).
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).
(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 Section 1(i) 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 Business
Combination with a
target business, the terms of which are consistent with the
requirements set
forth in the Registration Statement; or (2)(A) prior to the LOI
Termination
Date, the Company has entered into a bona fide Letter of Intent
with a target
business, and (B) 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.
(f) The Company hereby agrees, in connection with the vote o
