Attached files
file | filename |
---|---|
EX-23.1 - Crumbs Bake Shop, Inc. | v166081_ex23-1.htm |
As
filed with the Securities and Exchange Commission on November 16,
2009
File No:
333-[ ]
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
Form
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
57th Street
General Acquisition Corp.
(Exact
name of registrant as specified in its charter)
Delaware
|
6770
|
27-1215274
|
||
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
590
Madison Avenue, 35th Floor
New York,
New York 10022
(212)
409-2434
(Address,
including zip code, and telephone number, including
area
code, of registrant’s principal executive offices)
Mark
D. Klein
President
and Chief Executive Officer
590
Madison Avenue, 35th Floor
New
York, New York 10022
(212)
409-2434
(Name,
address, including zip code, and telephone number, including
area
code, of agent for service)
Copies
to:
Douglas
S. Ellenoff, Esq.
Stuart
Neuhauser, Esq.
Asim
Grabowski-Shaikh, Esq.
Ellenoff
Grossman & Schole LLP
150
East 42nd Street
New
York, New York 10017
(212)
370-1300
(212)
370-7889—Facsimile
|
Joel
L. Rubinstein, Esq.
Morgan
Fox Walbridge, Esq.
McDermott
Will & Emery LLP
340
Madison Avenue
New
York, New York 10173
(212)
547-5400
(212)
547-5444—Facsimile
|
Approximate date of commencement of proposed sale to the public:
As soon
as practicable after the effective date of the registration statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box : x
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.
Large
accelerated filer o
|
Accelerated
filer o
|
Non-accelerated filer o
|
Smaller
reporting company x
|
(Do
not check if a smaller
|
|||
reporting
company)
|
CALCULATION
OF REGISTRATION FEE
Title of Each Class of
Securities to be Registered
|
Amount to be
Registered (1)
|
Proposed
Maximum
Offering Price
per Unit (1)
|
Proposed
Maximum
Aggregate
Offering Price (1)
|
Amount of
Registration Fee
|
||||||||||||
Units,
each consisting of one share of Common Stock, $.0001 par value, and one
Warrant (2)
|
5,750,000 | $ | 10.00 | $ | 57,500,000 | $ | 3,208.50 | |||||||||
Shares
of Common Stock included as part of the Units (2)
|
5,750,000 | — | — | — | (3) | |||||||||||
Warrants
included as part of the Units (2)
|
5,750,000 | — | — | — | (3) | |||||||||||
Shares
of Common Stock underlying the Warrants included in the Units
(2)(4)
|
5,750,000 | $ | 11.50 | $ | 66,125,000 | $ | 3,689.78 | |||||||||
Total
|
$ | 123,625,000 | $ | 6,898.28 |
(1)
|
Estimated
solely for the purpose of calculating the registration
fee.
|
(2)
|
Includes
750,000 units, 750,000 shares of common stock and 750,000 warrants
underlying such units, which may be issued on exercise of a 45-day option
granted to the underwriters to cover over-allotments, if
any.
|
(3)
|
No
fee pursuant to Rule 457(g).
|
(4)
|
Pursuant
to Rule 416, there are also being registered an indeterminable number
of additional securities as may be issued to prevent dilution resulting
from stock splits, stock dividends or similar
transactions.
|
The registrant hereby amends this
registration statement on such date or dates as may be necessary to delay its
effective date until the registrant shall file a further amendment which
specifically states that this registration statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or
until the registration statement shall become effective on such date as the
Securities and Exchange Commission, acting pursuant to said Section 8(a),
may determine.
The
information in this prospectus is not complete and may be changed. We may not
sell these securities until the registration statement filed with the Securities
and Exchange Commission is effective. This prospectus is not an offer to sell
these securities and it is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
PRELIMINARY
PROSPECTUS
|
SUBJECT
TO COMPLETION, DATED NOVEMBER 16,
2009
|
$50,000,000
57TH STREET
GENERAL ACQUISITION CORP.
5,000,000
Units
57th
Street General Acquisition Corp. is a newly-organized blank check company formed
for the purpose of acquiring, through a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization, exchangeable share transaction or
other similar business transaction, one or more operating businesses or assets
that we have not yet identified. We do not have any specific merger, capital
stock exchange, asset acquisition, stock purchase, reorganization, exchangeable
share transaction or other similar business transaction under consideration and
we have not, nor has anyone on our behalf, contacted any prospective target
business or had any discussions, formal or otherwise, with respect to such a
transaction.
This is
an initial public offering of our units. Each unit is being sold at a purchase
price of $10.00 per unit and consists of (i) one share of our common stock and
(ii) one warrant to purchase one share of our common stock.
Each
warrant entitles the holder to purchase one share of our common stock at a price
of $11.50. Each warrant will become exercisable on the later of 30 days after
our completion of a business transaction or
[ ], 2010 [one year from the date of this
prospectus], and will expire five years from the date of our initial business
transaction, or earlier upon redemption or liquidation. We may redeem the
warrants following the consummation of a business transaction on the terms set
forth in this prospectus.
Our
sponsor, 57th Street GAC Holdings LLC, a limited liability company wholly
owned by our officers and directors, has agreed to purchase 3,000,000
warrants, which we refer to as the insider warrants, from us at a price of $0.50
per warrant in a private placement to be completed on or before the date of this
prospectus. All of the proceeds received from the sale of the insider warrants
($1,500,000) will be placed in the trust account described below. The insider
warrants will be identical to those warrants sold in this offering except that
if held by our sponsor or its permitted assigns, they (i) may be exercised for
cash or on a cashless basis and (ii) are not subject to redemption. In addition,
the insider warrants will be held in escrow until 30 days following the
consummation of our initial business transaction.
There is
presently no public market for our units, common stock or warrants. It is
anticipated that our units, common stock and warrants will be quoted on the OTC
Bulletin Board under the symbol “[TICKER]”, “[TICKER]” and “[TICKER]”,
respectively. The shares of common stock and warrants comprising the units will
begin separate trading five business days following the earlier to occur of the
expiration of the underwriters’ over-allotment option, its exercise in full or
the announcement by the underwriters of their intention not to exercise all or
any remaining portion of the over-allotment option, subject to our filing of a
Current Report on Form 8-K with the Securities and Exchange Commission, which we
refer to as the SEC, containing an audited balance sheet reflecting our receipt
of the gross proceeds of this offering and issuing a press release announcing
the trading date when such separate trading will commence.
The
underwriters have a 45-day option to purchase up to 750,000 additional units
from us to cover over-allotments of units on the same terms set forth
below.
Investing
in our securities involves risks. See “Risk Factors” beginning on page 15.
Investors will not be entitled to protections normally afforded to investors in
Rule 419 blank check offerings.
Price
to
Public
|
Underwriting
Discounts
and
Commissions(1)
|
Proceeds,
Before
Expenses,
to us
|
||||||||||
Per
Unit
|
$ | 10.00 | $ | 0.30 | $ | 9.70 | ||||||
Total
|
$ | 50,000,000 | $ | 1,500,000 | $ | 48,500,000 |
(1)
|
The
underwriting fee is equal to 3% of the gross proceeds from the sale of
units offered to the public. Solely in the event we consummate
our initial business transaction, the following additional contingent fees
will become payable to Morgan Joseph from the amounts held in the trust
account: (A) an advisory fee equal to 1% of the gross proceeds from the
sale of units offered to the public (which fee shall be increased to 1.5%
if we consummate our initial business transaction with a business or asset
introduced to us by Morgan Joseph) and (B) a contingent fee equal to up to
2.5% of the aggregate amount of the funds released from the trust account
to us or to our target upon consummation of our initial business
transaction.
|
Of the
net proceeds we receive from this offering, $48,750,000 (approximately $9.75 per
share) or $56,025,000 (approximately $9.74 per share) if the underwriters’
over-allotment option is exercised in full will be deposited into a trust
account at [Deutsche Bank] maintained by Continental Stock Transfer & Trust
Company, acting as trustee. None of the funds held in trust will be released
from the trust account, other than to pay taxes, until the earlier of (i) the
consummation of a business transaction and (ii) the redemption of 100% of our
public shares of common stock for a per share pro rata portion of the trust
account approximately 15 months from the date hereof. The proceeds deposited in
the trust account could become subject to the claims of our creditors, if any,
which could have priority over the claims of our public
stockholders.
We are
offering the units for sale on a firm-commitment basis. Delivery of the units
will be made on or
about ,
2009.
Neither
the SEC nor any state securities commission has approved or disapproved of these
securities or determined if this prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
Morgan
Joseph
|
Ladenburg
Thalmann & Co. Inc.
|
Sole Book-Running
Manager
|
The date
of this prospectus
is ,
2009
2
PROSPECTUS
SUMMARY
This
summary highlights certain information appearing elsewhere in this prospectus.
For a more complete understanding of this offering, you should read the entire
prospectus carefully, including the information under “Risk Factors” and our
financial statements and the related notes included elsewhere in this
prospectus. Unless otherwise stated in this prospectus:
|
·
|
references
to “we,” “us,” “our,” “company” or “our company” are to 57th Street
General Acquisition Corp., a Delaware corporation; references to “initial
business transaction” and to “business transaction” are to our initial
acquisition of one or more operating businesses or assets through a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization, exchangeable share transaction or other similar business
transaction;
|
|
·
|
references
to “initial shares” are to the 638,889 shares of our common stock issued
to our sponsor, up to 83,333 of which are subject to forfeiture by our
sponsor if the underwriters’ over-allotment option is not exercised in
full;
|
|
·
|
references
to “public stockholders” are to the holders of common stock sold as part
of the units in this offering (whether they are purchased in this offering
or thereafter in the open market);
|
|
·
|
references
to our “sponsor” are to 57th Street GAC Holdings LLC, a Delaware limited
liability company, which is wholly-owned by our officers and
directors;
|
|
·
|
references
to “insider warrants” are to the warrants to purchase 3,000,000 shares of
our common stock for the purchase price of $1,500,000, in a private
placement offering that will occur on or before the date of this
prospectus;
|
|
·
|
references
to a “target business” are to one or more operating businesses or assets
which, after completion of this offering, we may target for an initial
business transaction;
|
|
·
|
references
to a “notice” are to the materials we intend to distribute to our public
stockholders in connection with our initial business transaction in which
we intend to set forth substantially the same information that would be
contained in a Schedule 14C information statement prepared in accordance
with the Securities Exchange Act of 1934, as amended, which we refer to
as the Exchange Act, and which we intend to distribute in lieu
of proxy materials if a vote of stockholders is not required under
law. Unless expressly stated to the contrary, the information
in this prospectus assumes that we will only submit a notice in connection
with our initial business transaction, and will not submit proxy materials
in connection with our initial business transaction;
and
|
|
·
|
unless
expressly stated to the contrary, the information in this prospectus
assumes that the underwriters will not exercise their over-allotment
option.
|
Our
Business
We are a
newly-organized blank check company formed for the purpose of acquiring, through
a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization, exchangeable share transaction or other similar business
transaction, one or more operating businesses or assets that we have not yet
identified. To date, our efforts have been limited to organizational activities
and activities relating to this offering.
We will
seek to capitalize on the significant strength of our management team. Each of
our executive officers and directors has over 20 years of experience advising,
acquiring, financing and selling private and public companies in a variety of
industries and has prior experience with a blank check company. We believe that
our extensive contacts and sources, ranging from private and public company
contacts, private equity funds, and investment bankers to attorneys, accountants
and business brokers, will allow us to generate acquisition opportunities. In
addition, our executive officers and the majority of our directors have already
been involved in the successful initial public offering and the subsequent
consummation of a business combination for a blank check company, Great American
Group, Inc. (OTCBB:GAMR) (formerly, Alternative Asset Management Acquisition
Corp.). Our executive officers played a key role throughout the
business combination transaction for Great American Group, Inc, including
assisting in identifying numerous suitable acquisition candidates including the
ultimate target, and assisting in the proxy solicitation of stockholder approval
for such acquisition.
We do not
have any specific initial business transaction under consideration, and we have
not nor has anyone on our behalf, contacted any prospective target business or
had any discussions, formal or otherwise, with respect to such a transaction.
From the period prior to our formation through the date of this prospectus,
there have been no communications or discussions between any of our officers and
directors or our sponsor and any of their potential contacts or relationships
regarding a potential initial business transaction. Additionally, we have not,
nor has anyone on our behalf, taken any measure, directly or indirectly, to
contact any suitable acquisition candidate, nor have we engaged or retained any
agent or other representative to do the same.
3
We have
identified the following criteria that we believe are important and that we
intend to use in evaluating business transaction opportunities. While we intend
to utilize these criteria in evaluating business transaction opportunities, we
expect that no individual criterion will entirely determine a decision to pursue
a particular opportunity. Further, any particular business transaction
opportunity which we ultimately determine to pursue may not meet one or more of
these criteria:
|
·
|
History of
profitability and free cash flow. We will seek to
acquire one or more businesses or assets that have a history of, or
potential for, strong, stable free cash flow generation. We will focus on
companies that have predictable and recurring revenue
streams.
|
|
·
|
Strong
management team. We will seek to acquire one or more
businesses or assets that have strong, experienced management teams or
those that provide a platform for us to assemble an effective and
experienced management team. We will focus on management teams with a
proven track record of driving revenue growth, enhancing profitability and
creating value for their
stockholders.
|
|
·
|
Opportunities
for add-on acquisitions. We will seek to acquire one or
more businesses or assets that we can grow both organically and through
acquisitions. In addition, our ability to source proprietary opportunities
and execute transactions will help the business we acquire grow through
acquisition, and thus serve as a platform for further add-on
acquisitions.
|
|
·
|
Spin-offs /
divestitures from larger companies. We will focus on one
or more businesses or assets that are part of larger companies where the
owners seek to divest or spin-off in order to monetize their
investment.
|
|
·
|
Defensible
business niche. We will focus on one or more businesses
or assets that have a leading or niche market position and that
demonstrate advantages when compared to their competitors, which may help
to protect their market position and profitability and deliver strong free
cash flow.
|
|
·
|
Diversified
customer and supplier base. We will pursue one or more
businesses or assets that have a diversified customer and supplier base.
Companies with a diversified customer and supplier base are generally
better able to endure economic downturns, industry consolidation, changing
business preferences and other factors that may negatively impact their
customers, suppliers and
competitors.
|
Effecting
a Business Transaction
Our
sponsor, officers and directors have agreed that we will only have 15 months
from the date of this prospectus to consummate our initial business
transaction. If we do not consummate a business transaction within
such 15 month period, we shall (i) cease all operations except for the purposes
of winding up, (ii) redeem 100% of our public shares of common stock for a per
share pro rata portion of the trust account, including a portion of the interest
earned thereon, but net of any taxes (which redemption would completely
extinguish such holders’ rights as stockholders, including the right to receive
further liquidation distributions, if any), subject to the requirements of
applicable law and (iii) as promptly as possible following such redemption,
dissolve and liquidate the balance of our net assets to our remaining
stockholders, as part of our plan of dissolution and liquidation.
We
anticipate structuring a business transaction to acquire 100% of the equity
interests or assets of the target business or businesses. We may, however,
structure a business transaction to acquire less than 100% of such interests or
assets of the target business but will not acquire less than a controlling
interest. We will acquire a controlling interest either through the acquisition
of at least 50.1% of the voting equity interests in the target or through the
acquisition of a significant voting equity interest that enables us to exercise
a greater degree of control over the target than any other person or group. In
the event we acquire less than a majority of the voting equity interests in the
target, we may seek an even greater degree of control through contractual
arrangements with the target and/or other target equity holders, or through
special rights associated with the target equity security that we hold, which
arrangements or rights may grant us the ability, among other things, to appoint
certain members of the board (or equivalent governing body) or management of the
target or the ability to approve certain types of significant transactions that
the target may seek to enter into.
4
We intend
to furnish our public stockholders with a notice containing substantially the
same material required in a Schedule 14C information statement setting forth the
details of our proposed business transaction. Following our mailing of such
notice, our public stockholders will have the right, up until the date provided
in such notice (which date shall not be less than 10 days from the mailing
thereof), to elect to put their shares back to us for cash. We will
consummate our initial business transaction only if (i) our board of directors
approves such business transaction and authorizes the mailing of a notice in
connection with the proposed business transaction and (ii) holders of no more
than 88% of our public shares elect to put their shares back to us for
cash. Assuming such threshold is not exceeded, upon the consummation
of our business transaction, each of our public stockholders who properly elect
to put their shares back to us for cash will receive the pro-rata portion of the
trust account attributable to their shares of common stock, less
taxes.
In the
event we are required to seek stockholder approval to effect our business
transaction, we will distribute proxy materials to our public stockholders and
proceed with a business transaction only if (i) a majority of the outstanding
shares of common stock voted are voted in favor of the business transaction and
(ii) holders of no more than 88% of our public shares elect to put their shares
back to us for cash.
While we
do not intend to pursue an initial business transaction with any company that is
affiliated with our sponsor, officers or directors, we are not prohibited from
pursuing such a transaction. In the event we seek to complete an
initial business transaction with such a company, we would obtain an opinion
from an independent investment banking firm which is a member of the Financial
Industry Regulatory Authority, which we refer to as FINRA, that such an initial
business transaction is fair to our stockholders from a financial point of
view.
Potential
Conflicts of Interest
Our
directors and officers may have legal obligations relating to presenting
business opportunities to multiple entities to the extent of a director’s and
officer’s multiple affiliations. In addition, conflicts of interest may arise
when our board of directors evaluates a particular business opportunity. These
conflicts of interest may not be resolved in our favor.
The
discretion of our officers and directors, some of whom may be officers and/or
directors of other companies, including our sponsor, in identifying and
selecting a suitable target business may result in a conflict of interest when
determining whether the terms, conditions and timing of a particular business
transaction are appropriate and in our stockholders’ best interest. Investors
should be aware of the following potential conflicts of interest:
|
·
|
None
of our officers and directors is required to commit his full time to our
affairs and, accordingly, each may have conflicts of interest in
allocating his time among various business
activities.
|
|
·
|
Our
officers and directors currently either are, or may in the future become,
affiliated with additional entities that are engaged in business
activities similar to those intended to be conducted by us and,
accordingly, may have conflicts of interest in determining to which entity
a particular business opportunity should be presented. Such officers and
directors may become subject to conflicts of interest regarding us and
other business ventures in which they may be involved, which conflicts may
have an adverse effect on our ability to consummate a business
transaction.
|
|
·
|
Our
officers and directors may in the future become affiliated with entities,
including other blank check companies, engaged in business activities
similar to those intended to be conducted by our
company.
|
|
·
|
Since
our sponsor owns shares of our common stock and warrants which will be
released from escrow if a business transaction is successfully completed
and since our sponsor may own securities which will become worthless if a
business transaction is not consummated, the members of our board of
directors that have an interest in our sponsor may have a conflict of
interest in determining whether a particular target business is
appropriate to effect a business
transaction.
|
|
·
|
If
our management negotiates to be retained post-business transaction as a
condition to any potential business transaction, their financial
interests, including compensation arrangements, could influence their
motivation in selecting, negotiating and structuring a transaction with a
target business, and such negotiations may result in a conflict of
interest.
|
In order
to minimize potential conflicts of interest which may arise from multiple
corporate affiliations, we have entered into a business opportunity right of
first review agreement with Mark D. Klein, our chief executive officer,
president and a director and Paul D. Lapping, our chief financial officer,
treasurer, secretary and director, that provides that from the date of this
prospectus until the earlier of the consummation of our initial business
transaction or our liquidation in the event we do not consummate an initial
business transaction, we will have a right of first review with respect to
business transaction opportunities of Messrs. Klein and Lapping, and companies
or other entities which they manage or control. Messrs. Klein and`
Lapping will, and will cause such companies or entities under their management
or control to, first offer any such business opportunity to us (subject to any
fiduciary obligations they may have) and they will not, and will cause each
other company or entity under their management or control not to, pursue such
business opportunity unless and until a majority of our disinterested directors
have determined for any reason that we will not pursue such
opportunity.
5
Conflict
of Interest Relating to Underwriting Activities
Mark D.
Klein, our chief executive officer and president, is an affiliate of Ladenburg
Thalmann & Co. Inc., a member of FINRA, and will economically own in excess
of 10% of our securities. Ladenburg Thalmann & Co. Inc is one the
underwriters of this offering. Therefore, FINRA requires this offering to
be made in compliance with the applicable provisions of FINRA Rule 2720.
Pursuant to that rule, the appointment of a “qualified independent underwriter”
(as such term is defined in Rule 2720) is not necessary in connection with this
offering because Morgan Joseph, the FINRA member primarily responsible for
managing this offering, does not have a conflict of interest, is not an
affiliate of any member that has a conflict of interest and meets the
requirements of paragraph (f)(12)(E) of Rule 2720.
Private
Placements
On
October 30, 2009, we issued in a private placement 638,889 shares of restricted
common stock (up to 83,333 of which are subject to forfeiture if the
underwriters’ over-allotment option is not exercised in full) to our sponsor for
an aggregate purchase price of $25,000. The initial shares will not be released
from escrow until one year following the consummation of our initial business
transaction except under limited circumstances as described in this prospectus.
The holders of initial shares will not have any right to any liquidation
distributions in the event we fail to consummate an initial business
transaction. On or before the date of this prospectus, our sponsor will purchase
3,000,000 insider warrants from us at a price of $0.50 per warrant in a private
placement pursuant to Section 4(2) or Regulation D of the Securities Act of
1933, as amended, or the Securities Act. The insider warrants will be identical
to those warrants sold in this offering except that if held by our sponsor or
its permitted assigns, they (i) may be exercised for cash or on a cashless basis
and (ii) are not subject to redemption. In addition, the insider warrants will
be held in escrow until 30 days following the consummation of our initial
business transaction. No placement fees will be payable in connection with these
private placements.
All of
the gross proceeds from the sale of the 3,000,000 insider warrants in a private
placement, or $1,500,000, will be deposited into the trust account.
Our
executive offices are located at 590 Madison Avenue, 35th Floor, New York, New
York 10022, and our telephone number at that location is (212)
409-2434.
6
THE
OFFERING
Securities
offered
|
5,000,000
units, at $10.00 per unit, each unit consisting of:
|
·
one share of common
stock; and
|
|
·
one
warrant.
|
|
Proposed
OTCBB symbols for our:
|
|
Units
|
“[UNIT
SYMBOL]”
|
Common
Stock
|
“[COMMON
STOCK SYMBOL]”
|
Warrants
|
“[WARRANT
SYMBOL]”
|
Trading
commencement and separation of
common
stock and warrants
|
The
units will begin trading on or promptly after the date of this prospectus.
The shares of common stock and warrants comprising the units will trade
separately on the fifth business day following the earlier to occur of the
expiration of the underwriters’ over-allotment option (which is 45 days
from the date of this prospectus), its exercise in full or the
announcement by the underwriters of their intention not to exercise all or
any remaining portion of the over-allotment option.
In
no event will the shares of our common stock and warrants begin to trade
separately until we have filed a Current Report on Form 8-K with the SEC
containing an audited balance sheet reflecting our receipt of the gross
proceeds of this offering. We intend to file this Form 8-K promptly after
the consummation of this offering, which is anticipated to take place four
business days from the date of this prospectus. The audited balance sheet
will include proceeds we receive from the exercise of the underwriters’
over-allotment option if the over-allotment option is exercised prior to
the filing of the Form 8-K. If the over-allotment option is exercised
following the filing of such Form 8-K, a second or amended Form 8-K will
be filed to provide updated information reflecting the exercise of the
over-allotment option. For more information, see “Description of
Securities—Units.”
Following
the date that the shares of our common stock and warrants are eligible to
trade separately, the units will continue to be listed for trading, and
any security holder may elect to separate a unit and trade the common
stock or warrants separately or as a unit. Even if the component parts of
the units are separated and traded separately, the units will continue to
be listed as a separate security, and consequently, any subsequent
security holder owning shares of our common stock and warrants may elect
to combine them together and trade them as a unit. Security holders will
have the ability to trade our securities as units until such time as the
warrants expire or are redeemed. Although investors may trade
in partial warrants, partial warrants cannot be exercised for fractional
shares, but only for full shares of common
stock.
|
Number
of securities to be outstanding
|
||||||||
After
the Private Placements and
before
this Offering
|
After
the Private Placements and
this
Offering
|
|||||||
Units
|
0 | 5,000,000 | ||||||
Common
Stock
|
638,889 |
1
|
5,555,556 |
2
|
||||
Warrants
|
3,000,000 | 8,000,000 | ||||||
Warrants
offered
|
||||||||
Exercisability
|
Each
warrant is exercisable for one share of common stock.
|
|||||||
Exercise
price
|
$11.50,
subject to adjustment as described herein.
|
2 Assumes
no exercise of the underwriters’ over-allotment option, and the forfeiture of
83,333 shares of common stock.
7
Exercise
period
|
The
warrants will become exercisable on the later of:
· 30
days after the completion of our initial business transaction,
or
· [ ],
2010 [one year from
the date of this prospectus]
However,
the warrants will be exercisable only if we have an effective and current
registration statement covering the shares of common stock issuable upon
exercise of the warrants and a current prospectus relating to such common
stock.
The
warrants will expire at 5:00 p.m., New York City time, on the five year
anniversary of the consummation of our business transaction, unless
earlier redeemed.
|
Registration
rights
|
We
have agreed to use our best efforts to have an effective registration
statement covering shares of common stock issuable upon exercise of the
warrants from the date the warrants become exercisable and to maintain a
current prospectus relating to that common stock until the warrants expire
or are redeemed.
Our
sponsor will be entitled to demand registration rights and
certain “piggy-back” registration rights with respect to the initial
shares and the insider warrants and the common stock underlying the
insider warrants, commencing, in the case of the initial shares, one year
after the consummation of our initial business transaction and commencing,
in the case of the insider warrants and the respective common stock
underlying the insider warrants, 30 days after the consummation of our
initial business transaction.
|
Redemption
of warrants
|
We
may redeem the outstanding warrants (excluding insider warrants held by
our sponsor or its permitted assigns) at any time after the warrants
become exercisable:
· in
whole and not in part;
· at
a price of $0.01 per warrant;
· upon
not less than 30 days prior written notice of redemption;
and
· if,
and only if, the last sales price of our common stock equals or exceeds
$17.50 per share (subject to adjustment for splits, dividends,
recapitalizations and other similar events) for any 20 trading days within
a 30 trading day period ending three business days before we send the
notice of redemption;
provided
that on the date we give notice of redemption and during the entire period
thereafter until the time we redeem the warrants, we have an effective
registration statement covering shares of common stock issuable upon
exercise of the warrants and a current prospectus relating to such common
stock.
If
the foregoing conditions are satisfied and we call the warrants for
redemption, each warrant holder shall then be entitled to exercise its
warrants prior to the date scheduled for redemption. If we call the
warrants for redemption as described above, we will have the option to
require all holders that subsequently wish to exercise warrants to do so
on a “cashless basis.” In such event, each holder would pay the exercise
price by surrendering the warrants for that number of shares of common
stock equal to the quotient obtained by dividing (x) the product of the
number of shares of common stock underlying the warrants, multiplied by
the difference between the exercise price of the warrants and the fair
market value by (y) the fair market value. The “fair market value” shall
mean the average reported last sale price of the common stock for the 10
trading days ending on the third trading day prior to the date on which
the notice of redemption is sent to the holders of
warrants.
|
8
The
redemption provisions for our warrants have been established at a price
which is intended to provide such warrant holders a premium to the initial
warrant exercise price and to provide a sufficient differential between
the then-prevailing common stock price and the warrant exercise price to
absorb any negative market reaction to our redemption of the warrants.
There can be no assurance, however, that the price of the common stock
will exceed either $17.50 or the warrant exercise price of $11.50 after we
call the warrants for redemption and the price may in fact decline as a
result of the limited liquidity following any such call for
redemption.
|
|
Offering
proceeds to be held in trust
|
Of
the approximate net proceeds we receive from this offering, $48,750,000
(including $1,500,000 paid by our sponsor in a private placement for the
insider warrants) (approximately $9.75 per share) will be deposited into a
trust account at [Deutsche Bank] maintained by Continental Stock Transfer
& Trust Company, acting as trustee. None of the funds held in trust
will be released from the trust account, other than to pay taxes, until
the earlier of (i) the consummation of a business transaction within 15
months from the date hereof and (ii) the redemption of 100% of our public
shares of common stock for a per share pro rata portion of the trust
account if we are unable to consummate a business transaction within 15
months from the date hereof. The proceeds deposited in the trust account
could become subject to the claims of our creditors, if any, which could
have priority over the claims of our public stockholders. In
the event we are required to seek stockholder approval in connection with
our initial business transaction, public stockholders exercising their put
rights and voting (1) in favor of the business transaction will be
entitled to receive a pro-rata portion of the trust account including
interest and (2) against the business transaction will be entitled to
receive a pro-rata portion of the trust account excluding interest, in
each case excluding taxes.
None
of the warrants may be exercised until 30 days after the consummation of
our business transaction and, thus, after the funds in the trust account
have been disbursed. Accordingly, the warrant exercise price will be paid
directly to us and not placed in the trust account.
|
Anticipated
expenses and funding sources
|
Unless
and until our business transaction is consummated, the proceeds held in
the trust account (net of taxes) will not be available for our use for any
expenses related to this offering or expenses which we may incur related
to the investigation and selection of a target business and the
negotiation of an agreement to acquire a target business. Expenses
incurred while seeking a business transaction may be paid prior to a
business transaction only from $800,000 of the offering proceeds not held
in the trust account.
We
believe that, upon the date of this prospectus, the $800,000 from the
proceeds of this offering not held in the trust account will be sufficient
to allow us to operate for the next 15 months, assuming that a business
transaction is not consummated during that time. Over this time period, we
will be using these funds for identifying and evaluating target
businesses, performing business due diligence on prospective target
businesses, traveling to and from the offices, plants or similar locations
of prospective target businesses or their representatives or owners,
reviewing corporate documents and material agreements of prospective
target businesses, and structuring, negotiating and consummating a
business transaction.
|
Limited
payments to insiders
|
There
will be no fees, reimbursements, cash payments or compensation of any
kind, including the issuance of any securities of our company, made to our
sponsor, officers, directors or their affiliates other than:
·
repayment of a $10,000 non-interest bearing loan made by our sponsor to
pay a portion of our offering expenses;
·
reimbursement for any out-of-pocket expenses incident to the
offering and finding a suitable initial business transaction;
and
·
payment to our sponsor of $7,500 per month for office space and general
and administrative services, including but not limited to receptionist,
secretarial and general office services commencing upon the date of this
prospectus.
|
9
Stockholders
not required to approve
initial
business transaction unless required
by
law
|
We
will not seek stockholder approval before we effect our initial business
transaction unless the business transaction would require stockholder
approval under applicable state law. We will proceed with the
consummation of a business transaction only if (i) our board of directors
approves such business transaction and authorizes the mailing of a notice
in connection with the proposed business transaction and (ii) holders of
no more than 88% of our public shares elect to put their shares back to us
for cash. Following our mailing of such notice, our public
stockholders will have the right, up until the date provided in such
notice (which date shall not be less than 10 days from the mailing
thereof), to elect to put their shares back to us for cash. We
will not grant any request for the exercise of put rights to us for cash
in the event such business transaction is not consummated, or if a public
stockholder fails to meet the deadline to put such shares as set forth in
the notice.
In
the event we are required to seek stockholder approval to effect our
business transaction, we will distribute proxy materials to our public
stockholders and proceed with a business transaction only if (i) a
majority of the outstanding shares of common stock voted are voted in
favor of the business transaction and (ii) holders of no more than 88% of
our public shares elect to put their shares back to us for
cash.
|
Conditions
to consummating our initial
business
transaction
|
There
is no limitation on our ability to raise funds privately or through loans
in connection with our initial business transaction. In no
event will we acquire less than a controlling interest in a target
business. We will acquire a controlling interest either through the
acquisition of at least 50.1% of the voting equity interests in the target
or through the acquisition of a significant voting equity interest that
enables us to exercise a greater degree of control over the target than
any other person or group. In the event we acquire less than a majority of
the voting equity interests in the target, we may seek an even greater
degree of control through contractual arrangements with the target and/or
other target equity holders, or through special rights associated with the
target equity security that we hold, which arrangements or rights may
grant us the ability, among other things, to appoint certain members of
the board (or equivalent governing body) or management of the target or
the ability to approve certain types of significant transactions that the
target may seek to enter into.
While
we do not intend to pursue an initial business transaction with any
company that is affiliated with our sponsor, officers or directors, we are
not prohibited from pursuing such a transaction. In the event we seek to
complete an initial business transaction with such a company, we would
obtain an opinion from an independent investment banking firm which is a
member of FINRA that such an initial business transaction is fair to our
stockholders from a financial point of view.
|
Put
rights for public stockholders
|
Unlike
other blank check companies, we will allow holders of no more than 88% of
our public shares of common stock to put their shares back to
us for a per share pro rata portion of the trust account (initially
approximately $9.75 per share, or approximately $9.74 per share if the
underwriters’ over-allotment option is exercised in full), plus a portion
of the interest earned on the trust account but net of any taxes, if they
timely exercise their put rights as set forth in this
prospectus.
|
Holders
of no more than 88% of our public shares will be able to put their shares
of common stock back to us for cash as follows: (i) in
connection with our distribution of a notice setting forth the details of
a proposed business transaction, within the time set forth in our mailing
of such notice (which time shall not be less than 10 days from the mailing
thereof); or (ii) in connection with our mailing of proxy materials
setting forth the details of a proposed business transaction, should we be
required by law to issue such proxy materials, at any time after the
mailing to our public stockholders of the proxy statement and up to two
business days prior to the vote taken with respect to a proposal to
approve such business transaction at a meeting held for that purpose;
however, in no event will a request to put such shares be granted unless
the business transaction is consummated, approved and completed, as
applicable.
|
10
We
intend to distribute a notice (setting forth substantially the same
information that would be contained in a Schedule 14C information
statement prepared in accordance with the Exchange Act) to our public
stockholders, and do not intend to seek stockholder approval in connection
with our proposed business transaction, unless required to do so by
law. Each of our public stockholders properly electing to put
their shares of common stock back to us as provided in such notice shall
be entitled to receive a per share pro rata distribution of the trust
account, together with any pro rata interest earned thereon (net of any
taxes), upon the consummation of our business transaction, only if holders
of no more than 88% of our public shares elect to put their shares back to
us for cash. We will not grant any request to put such shares
in the event such business transaction is not consummated, or if a public
stockholder fails to meet the deadline to put such shares as set forth in
the notice.
|
|
Notwithstanding
the foregoing, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of his or
any other person with whom he is acting in concert or as a ‘‘group’’ (as
defined under Section 13 of the Exchange Act), will be restricted from
seeking put rights with respect to more than an aggregate of 10% of the
shares sold in this offering. We believe this restriction will
discourage stockholders from accumulating large blocks of shares, and
subsequent attempts by such holders to use their put right as a means to
force us or our management to purchase their shares at a significant
premium to the then current market price or on other undesirable
terms. Absent this provision, a public stockholder holding more
than an aggregate of 10% of the shares sold in this offering could
threaten to seek to exercise their put rights if such holder’s shares are
not purchased by us or our management at a premium to the then current
market price or on other undesirable terms. By limiting our
stockholders’ ability to put back to us no more than 10% of the shares
sold in this offering, we believe we will limit the ability of a small
group of stockholders to unreasonably attempt to block our ability to
consummate a business transaction. In the event we are required
to seek stockholder approval of our business transaction, however, we
would not be restricting our stockholders’ ability to vote all of their
shares for or against a business transaction.
|
|
In
the event we are required by law to seek stockholder approval in
connection with a proposed business transaction, public stockholders
voting in favor of the business transaction and electing to exercise their
put rights shall be entitled to receive a per share pro rata distribution
of the trust account (together with a pro rata portion of any interest
earned thereon, but net of taxes), and our public stockholders voting
against the business transaction and electing to exercise their put rights
shall be entitled to receive a per share pro rata distribution of the
trust account (exclusive of any interest earned on the trust account and
net of taxes); however, such requests for put rights shall only be granted
and distributed upon the consummation of our business
transaction.
|
|
The
foregoing “put right” is different from the “conversion” thresholds used
by most blank check companies. Traditionally, blank check companies would
not be able to consummate a business transaction if the holders of the
company’s public shares voted against a proposed business transaction and
elected to convert more than a much smaller percentage of the shares sold
in such company’s initial public offering, which percentage threshold is
typically between 19.99% and 39.99%. As a result, many blank
check companies are unable to complete business transactions because the
amount of shares voted by their public stockholders electing conversion
exceeded the maximum conversion threshold pursuant to which such company
could proceed with a business
transaction.
|
11
Our
sponsor has waived its right to put back to us any of its initial shares
for a pro rata share of the trust account. Additionally, our sponsor,
directors and officers have agreed not to exercise their put rights with
respect to shares acquired during or subsequent to this
offering.
|
|
Redemption
of common stock and
dissolution
and liquidation if no initial
business
transaction
|
We
will only have 15 months from the date of this prospectus to consummate
our initial business transaction. If we do not consummate a
business transaction within such 15 month period, we shall (i) cease all
operations except for the purposes of winding up, (ii) redeem 100% of our
public shares of common stock for a per share pro rata portion of the
trust account, plus a portion of the interest earned on the trust account
but net of any taxes, subject to the requirements of applicable
law and (iii) as promptly as possible following such
redemption, dissolve and liquidate the balance of our net assets to our
remaining stockholders, as part of our plan of dissolution and liquidation
to be adopted in accordance with Section 281(b) of the Delaware General
Corporation Law.
The
distribution of our assets in contemplation of liquidation must provide
for all claims against us to be paid in full or for us to make provision
for payments to be made in full, as applicable, if there are sufficient
assets. These claims must be paid or provided for before we make any
distribution of our remaining assets to our stockholders. We cannot assure
you that we will have access to funds sufficient to pay or provide for all
creditors’ claims. Although we will seek to have all third parties such as
vendors and prospective target businesses enter into agreements with us
waiving any interest to any assets held in the trust account, there is no
guarantee that they will execute such agreements. Mark D. Klein, our chief
executive officer and president, and Paul D. Lapping, our chief financial
officer, treasurer, secretary and director, have agreed that they will be
liable to us if and to the extent any claims by a vendor for services
rendered or products sold to us, or a prospective target business with
which we have discussed entering into a transaction agreement reduce the
amounts in the trust account to below $9.75 per share (or approximately
$9.74 per share if the underwriter’s over-allotment option is exercised in
full), except as to any claims by a third party who executed a waiver of
any and all rights to seek access to the trust account and except as to
any claims under our indemnity of the underwriters of this offering
against certain liabilities, including liabilities under the Securities
Act. In the event that an executed waiver is deemed to be unenforceable
against a third party, Messrs. Klein and Lapping will not be responsible
to the extent of any liability for such third party claims.
Our
sponsor has waived its rights to participate in any redemption with
respect to its initial shares if we fail to consummate an initial business
transaction. However, if our sponsor or any of our officers, directors or
affiliates acquire shares of common stock in or after this offering they
will be entitled to a pro rata share of the trust account with respect to
such shares upon our redemption in the event we do not consummate a
business transaction within the required time period.
After
distributing the proceeds of our trust account pursuant to our redemption
of 100% of our public shares of common stock as described in this
prospectus, we will promptly distribute the balance of our net assets to
our remaining stockholders according to our plan of
dissolution. We will pay the costs of liquidation from our
remaining assets outside of the trust account. If such funds are
insufficient, our sponsor has agreed to advance us the funds necessary to
pay any and all costs involved or associated with the process of
liquidation and the return of the funds in the trust account to our public
stockholders (currently anticipated to be no more than approximately
$30,000) and has agreed not to seek repayment for such
expenses.
|
12
Amended
and restated certificate of
incorporation
|
If
we do not consummate a business transaction within 15 months from the date
of this prospectus, our amended and restated certificate of incorporation
provides that we shall (i) cease all operations except for the purposes of
winding up, (ii) redeem 100% of our public shares of common stock for a
per share pro rata portion of the trust account, including a portion of
the interest earned thereon, but net of any taxes (which redemption would
completely extinguish such holders’ rights as stockholders, including the
right to receive further liquidation distributions, if any) and (iii) as
promptly as possible following such redemption, dissolve and liquidate the
balance of our net assets to our remaining stockholders, as part of our
plan of dissolution and liquidation.
|
Escrow
of initial shares and insider
warrants
|
On
the date of this prospectus, our sponsor will place the initial shares and
the insider warrants into an escrow account maintained by Continental
Stock Transfer & Trust Company acting as escrow agent. Other than
transfers made to permitted transferees who agree in writing to be bound
to the transfer restrictions, agree to vote in favor of our initial
business transaction in the event we seek stockholder approval in
connection with our initial business transaction and waive any rights to
participate in any liquidation distribution if we fail to consummate an
initial business transaction. The initial shares will not be
released from escrow until one year following our business transaction,
unless we were to consummate a transaction after the consummation of the
initial business transaction that results in all of our stockholders
having the right to exchange their ordinary shares for cash, securities or
other property. The insider warrants will not be released
from escrow until 30 days following the consummation of our initial
business transaction. Permitted transferees means: immediate
family members of the holder and trusts established by the holder for
estate planning purposes; and affiliates of the holder.
|
Determination
of offering amount
|
In
consultation with our underwriters, we determined the size of the
offering, in part, based upon our beliefs concerning the capital that
could be successfully raised given market conditions. In addition, our
management concluded, based on their collective experience, that an
offering of this size, and the sale of the additional insider warrants,
would provide us with sufficient equity capital to execute our business
plan. We believe that this amount of equity capital, plus our ability to
finance an acquisition using stock or debt, will give us substantial
flexibility in selecting an acquisition target and structuring our initial
business transaction. This belief is not based on any specific research,
analysis, evaluations, discussions or compilations of information with
respect to any particular investment or any such action undertaken in
connection with our organization. We cannot assure you that our belief is
correct, that we will be able to successfully identify target businesses
or that we will be able to obtain any necessary
financing.
|
Risks
We are a newly-formed company that has
conducted no operations and has generated no revenues. Until we complete our
initial business transaction, we will have no operations and will generate no
operating revenues. In making your decision as to whether to invest in our
securities, you should take into account not only the background of our
management team, but also the special risks we face as a blank check company.
This offering is not being conducted in compliance with Rule 419 promulgated
under the Securities Act. Accordingly, you will not be entitled to protections
normally afforded to investors in Rule 419 blank check offerings. For additional
information concerning how Rule 419 blank check offerings differ from this
offering, please see “Comparison to Offerings of Blank Check Companies.” You
should carefully consider these and the other risks set forth in the section
entitled “Risk Factors” within this prospectus.
13
SUMMARY
FINANCIAL DATA
The
following table is derived from and summarizes the relevant financial data for
our business and should be read in conjunction with our audited financial
statements and the related notes, which are included elsewhere in this
prospectus. We have not had any significant operations to date; therefore, only
balance sheet data are presented.
As
of November 11, 2009
|
||||||||
Actual
|
As
adjusted
|
|||||||
Working
capital (deficiency)
|
$ | (1,076 | ) | $ | (1,076 | ) | ||
Cash
held in trust
|
— | 48,750,000 | ||||||
Total
assets
|
59,924 | 49,573,924 | ||||||
Total
liabilities
|
36,000 | 633,750 | ||||||
Value
of common stock which may be put to us for cash(2)
|
— | 42,900,000 | ||||||
Stockholders’
equity(1)
|
23,924 | 6,040,174 |
(1) Excludes
approximately 4,400,000 shares, at an initial per-share put price of
approximately $9.75, subject to possible put rights and assumes the
underwriters’ over-allotment has not been exercised.
The “as
adjusted” information gives effect to the sale of the units that we are offering
(other than pursuant to the underwriters’ over-allotment option), including the
application of the related gross proceeds.
The “as
adjusted” total assets amount includes the $48,750,000 held in the trust account
for our benefit, which amount, less contingent fees, will be available to us
only upon the consummation of a business transaction within 15 months of the
date of this prospectus. Our sponsor, officers and directors have agreed that we
will only have 15 months from the date of this prospectus to consummate our
initial business transaction. If we do not consummate a business
transaction within such 15 month period, we shall (i) cease all operations
except for the purposes of winding up, (ii) redeem 100% of our public shares of
common stock for a per share pro rata portion of the trust account (initially
approximately $9.75 per share, or approximately $9.74 per share if the
underwriters’ over-allotment option is exercised in full), plus a portion of the
interest earned on the trust account but net of any taxes and (iii) as promptly
as possible following such redemption, dissolve and liquidate the balance of our
net assets to our remaining stockholders, as part of our plan of dissolution and
liquidation, subject to our obligations under Delaware law to provide for claims
of creditors. Our sponsor has waived its rights to participate in any redemption
with respect to its initial shares upon our redemption of shares sold in this
offering if we fail to consummate an initial business transaction within 15
months.
14
RISK
FACTORS
Investing
in our securities involves a high degree of risk. You should carefully consider
the following risk factors and all other information contained in this
prospectus before making a decision to invest in our units. If any of the
following risks occur, our business, financial conditions or results of
operations may be materially and adversely affected. In that event, the trading
price of our securities could decline, and you could lose all or part of your
investment. This prospectus also contains forward-looking statements that
involve risks and uncertainties. Our actual results could differ materially from
those anticipated in the forward-looking statements as a result of specific
factors, including the risks described below.
We
are a development stage company with no operating history and, accordingly, you
will not have any basis on which to evaluate our ability to achieve our business
objective.
We are a
recently incorporated development stage company with no operating results to
date. Therefore, our ability to begin operations is dependent upon obtaining
financing through the public offering of our securities. Since we do not have
any operations or an operating history, you will have no basis upon which to
evaluate our ability to achieve our business objective, the focus of which is to
acquire through a merger, capital stock exchange, asset acquisition, stock
purchase, reorganization, exchangeable share transaction or other similar
business transaction, one or more operating businesses or assets that we have
not yet identified. We have not conducted any discussions and we have no plans,
arrangements or understandings with any prospective target business with respect
to a business transaction. We have no present revenue and will not generate any
revenues or income until, at the earliest, after the consummation of a business
transaction. We do not know when or if a business transaction will occur. The
report of our independent registered public accountants on our financial
statements includes an explanatory paragraph stating that our ability to
continue as a going concern is dependent on the consummation of this offering.
The financial statements do not include any adjustments that might result from
our inability to consummate this offering or our ability to continue as a going
concern.
Our
public stockholders will not be afforded an opportunity to vote on our proposed
business transaction, unless such vote is required by law.
We will not seek stockholder approval
before we effect our initial business transaction unless the business
transaction would require stockholder approval under applicable state
law. We will proceed with the consummation of a business transaction
only if (i) our board of directors approves such business transaction and
authorizes the mailing of a notice in connection with the proposed business
transaction and (ii) holders of no more than 88% of our public shares elect to
put their shares back to us for cash. Following our mailing of such
notice, our public stockholders will have the right, up until the date provided
in such notice (which date shall not be less than 10 days from the mailing
thereof), to elect to put their shares back to us for cash. We will
not honor any request to put such shares unless we consummate a business
transaction. Accordingly, unless we are otherwise required by law to
submit proxy materials in connection with our initial business transaction, our
public stockholders will not be afforded an opportunity to vote on our proposed
business transaction, and you may not approve of the business transaction we
consummate.
Your
only opportunity to evaluate and affect the investment decision regarding a
potential business transaction will be limited to the exercise of your put
rights, unless we are required by law to seek stockholder approval of the
business transaction.
At the
time of your investment in us, you will not be provided with an opportunity to
evaluate the specific merits or risks of one or more target businesses. Since
our board of directors may consummate a business transaction without seeking
stockholder approval, public stockholders will not have the right or opportunity
to vote on the business transaction, unless such stockholder vote is otherwise
required by law. Accordingly, your only opportunity to evaluate and
affect the investment decision regarding a potential business transaction will
be limited to exercising your put rights within period of time set forth in our
notice (which period shall not be less than 10 days from the mailing thereof)
mailed to our public stockholders in which we describe our business
transaction. In addition, your election to exercise your put rights
could still be rejected if holders of more than 88% of our public shares elect
to exercise their put rights, or if, as a condition of the consummation of the
business transaction, we are required to meet a certain minimum
valuation.
If
we are unable to consummate a business transaction, our public stockholders will
be forced to wait the full 15 months before receiving distributions from
our trust account.
We have
15 months in which to complete a business transaction. If we do not
consummate a business transaction within 15 months from the date of this
prospectus, we shall (i) cease all operations except for the purposes of winding
up, (ii) redeem 100% of our public shares of common stock for a per share pro
rata portion of the trust account, plus a portion of the interest earned on the
trust account but net of any taxes, subject to the requirements of applicable
law and (iii) as promptly as possible following such redemption, dissolve and
liquidate the balance of our net assets to our remaining
stockholders. If we redeem such shares, such redemption must comply
with the applicable provisions of the Delaware General Corporation Law,
including Section 160 thereof, governing rights of redemption. Upon
the termination of our corporate existence, the balance of our net assets will
be distributed to our remaining stockholders. Accordingly, if our
plan to redeem 100% of our shares of common stock sold in this offering is not
consummated for any reason, compliance with Delaware law may require that we
submit a plan of dissolution and liquidation to our then existing stockholders
for approval prior to the distribution of the proceeds held in our trust
account. In that case, investors may be forced to wait beyond 15
months before the liquidation proceeds of our trust account become available to
them, and they receive the return of their pro rata portion of the proceeds from
our trust account. Except for the above redemption, we have no
obligation to return funds to investors prior to the date of our liquidation
unless we consummate a business transaction prior thereto and only then in cases
where investors have sought to put their shares back to us for cash. Only upon
our liquidation, if no such redemption occurs, will public stockholders be
entitled to liquidation distributions if we are unable to complete a business
transaction.
15
We
may not be able to consummate a business transaction within the required
timeframe, in which case we will be forced to redeem our public stockholders and
liquidate.
Our
sponsor, officers and directors have agreed that we will only have 15 months
from the date of this prospectus to consummate our initial business
transaction. If we do not consummate a business transaction within
such 15 month period, we shall (i) cease all operations except for the purposes
of winding up, (ii) redeem 100% of our public shares of common stock for a per
share pro rata portion of the trust account, plus a portion of the interest
earned on the trust account but net of any taxes, subject to the requirements of
applicable law and (iii) as promptly as possible following such
redemption, dissolve and liquidate the balance of our net assets to our
remaining stockholders. We may not be able to find a suitable target business
within the required 15 month time frame. In addition, our negotiating position
and our ability to conduct adequate due diligence on any prospective target may
be reduced as we approach the deadline for the consummation of a business
transaction. We do not have any specific business transaction under
consideration, and neither we, nor any representative acting on our behalf, has
had any contacts with any target businesses regarding a business transaction,
nor taken any direct or indirect actions to locate or search for a target
business.
If
we are forced to redeem or liquidate before the completion of a business
transaction and distribute the trust account, our public stockholders will
receive less than $10.00 per share and our warrants will expire
worthless.
If we are
unable to complete a business transaction within the prescribed time frame and
are forced to cease operations and ultimately liquidate our assets, the amount
of either of the (i) per share redemption or (ii) per share liquidation
distribution will be less than $10.00 because of the expenses of this offering,
our general and administrative expenses and the anticipated costs of seeking a
business transaction. If we are unable to complete a business transaction and
have expended all of the net proceeds of this offering, other than the proceeds
deposited in the trust account (net of any taxes), the initial (i) per-share
redemption or (ii) per-share liquidation amounts would be $9.75. Furthermore,
there will be no distribution with respect to our outstanding warrants which
will expire worthless if we liquidate before the completion of a business
transaction.
Public
stockholders may receive less than their pro rata share of the trust account
upon redemption due to claims of creditors.
Our
placing of funds in the trust account may not protect those funds from third
party claims against us. Although we will seek to have all vendors, service
providers (other than our independent accountants), prospective target
businesses or other entities we engage execute agreements with us waiving any
right, title, interest or claim of any kind in or to any monies held in the
trust account for the benefit of our public stockholders, such parties may not
execute such agreements, or even if they execute such agreements they may not be
prevented from bringing claims against the trust account, including, but not
limited to, fraudulent inducement, breach of fiduciary responsibility or other
similar claims, as well as claims challenging the enforceability of the waiver,
in each case in order to gain advantage with respect to a claim against our
assets, including the funds held in the trust account. If any third party
refused to execute an agreement waiving such claims to the monies held in the
trust account, we would perform an analysis of the alternatives available to us
if we chose not to engage such third party and evaluate if such engagement would
be in the best interest of our stockholders if such third party refused to waive
such claims.
Examples
of possible instances where we may engage a third party that refused to execute
a waiver include the engagement of a third party consultant whose particular
expertise or skills are believed by management to be significantly superior to
those of other consultants that would agree to execute a waiver or in cases
where management is unable to find a service provider willing to execute a
waiver. In addition, such entities may not agree to waive any claims they may
have in the future as a result of, or arising out of, any negotiations,
contracts or agreements with us and may seek recourse against the trust account
for any reason. Upon redemption of our public shares if we are unable to
complete a business transaction within the required timeframe or upon the
exercise of a put right upon a business transaction, we will be required to
provide for payment of claims of creditors which were not waived that may be
brought against us within the subsequent 10 years prior to
redemption. Accordingly, the (i) per share redemption
price or (ii) per share liquidation price could be less than the $9.75 per share
held in the trust account, plus interest (net of any taxes), due to claims of
such creditors. In addition, Mark D. Klein, our chief executive officer and
president, and Paul D. Lapping, our chief financial officer, treasurer,
secretary and director, have agreed that they will be liable to us if and to the
extent any claims by a vendor for services rendered or products sold to us, or a
prospective target business with which we have discussed entering into a
transaction agreement reduce the amounts in the trust account to below $9.75 per
share (or approximately $9.74 per share if the underwriter’s over-allotment
option is exercised in full), except as to any claims by a third party who
executed a waiver of any and all rights to seek access to the trust account and
except as to any claims under our indemnity of the underwriters of this offering
against certain liabilities, including liabilities under the Securities Act.
Moreover, in the event that an executed wavier is deemed to be unenforceable
against a third party, Messrs. Klein and Lapping will not be responsible to the
extent of any liability for such third party claims. We have not,
however, asked Messrs. Klein and Lapping to reserve for such indemnification
obligations. Messrs. Klein and Lapping may not be able to satisfy those
obligations.
16
Additionally,
if we are forced to file a bankruptcy case or an involuntary bankruptcy case is
filed against us which is not dismissed, the funds held in our trust account
could be subject to applicable bankruptcy law, and may be included as an asset
in our bankruptcy estate and subject to the claims of third parties with
priority over the claims of our stockholders. To the extent any bankruptcy
claims deplete the trust account, we may not be able to return $9.75 per share
to our public stockholders.
Our
directors may decide not to enforce Messrs. Klein’s and Lapping’s
indemnification obligations, resulting in a reduction in the amount of funds in
the trust account available for distribution to our public
stockholders.
In the
event that the proceeds in the trust account are reduced below $9.75 per share
(or approximately $9.74 per share if the underwriter’s over-allotment option is
exercised in full) and Messrs. Klein and Lapping assert that they are unable to
satisfy their obligations or that they have no indemnification obligations
related to a particular claim, our independent directors, if any, would
determine whether to take legal action against Messrs. Klein and Lapping to
enforce their indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against Messrs.
Klein and Lapping to enforce their indemnification obligations to us, it is
possible that our independent directors in exercising their business judgment
may choose not to do so in any particular instance. If our directors choose not
to enforce these indemnification obligations, the amount of funds in the trust
account available for distribution to our public stockholders may be reduced
below $9.75 per share (or approximately $9.74 per share if the underwriters’
over-allotment is exercised in full).
If
holders of more than 88% of our public shares indicate their intention to
exercise their put rights, our sponsor, directors, officers and their affiliates
could affect the outcome of the consummation of our business transaction if they
elect to purchase shares from stockholders who would otherwise choose to
exercise their put rights.
Any
privately negotiated transaction to purchase shares from a stockholder who would
otherwise elect to put their shares back to us for a per share pro-rata portion
of the trust account would include a contractual acknowledgement that such
stockholder, although still the record holder of our shares is no longer the
beneficial owner thereof and therefore agrees not to exercise their put rights.
In the event that our sponsor, officers, directors or their respective
affiliates purchase shares in privately negotiated transactions from public
stockholders who have already elected to exercise their put rights, such selling
stockholders would be required to revoke their prior elections to put their
shares back to us for cash. This will have the effect of reducing the number of
shares put to us and making it more likely that we would be able to consummate
our initial business transaction.
Investors
are cautioned that none of our sponsor, officers, directors or their respective
affiliates or any third parties has agreed to purchase any such shares, and the
failure to so agree at the applicable time could adversely impair our ability to
consummate a business transaction. Moreover, even if our sponsor, officers,
directors and their respective affiliates were to undertake such purchases, such
purchases could be subject to limitations under applicable securities laws and
regulations, including Regulation M and regulations regarding tender offers. The
inability of such persons to effect such purchases could adversely impair our
ability to consummate a business transaction.
We may use funds in our trust
account to purchase, directly or indirectly, shares from holders thereof who
have indicated an intention to put their shares back to us for
cash.
If
holders of shares sold in this offering indicate an intention to seek to put
their shares back to us for cash, we may privately negotiate arrangements to
provide for the purchase of such shares at the closing of the business
transaction using funds held in the trust account. The purpose of such
arrangements would be to increase the likelihood of satisfaction of the
requirements that no more than 88% of our outstanding shares of common stock
demand to put their shares back to us for cash where it appears that such
requirements would otherwise not be met. This may result in the consummation of
a business transaction that may not otherwise have been possible. Additionally,
as a consequence of such purchases,
|
·
|
the
funds in our trust account that are so used will not be available to us
after the business transaction; and
|
17
|
·
|
the
public ‘‘float’’ of our common stock may be reduced and the number of
beneficial holders of our securities may be reduced, which may make it
difficult to obtain the quotation, listing or trading of our securities on
a national securities exchange.
|
You
will not have any rights or interests in funds from the trust account, except
under certain limited circumstances.
Our
public stockholders will be entitled to receive funds from the trust account
only upon the earlier to occur of: (i) our redemption of 100% of our
public shares of common stock for a per share pro rata portion of the trust
account, plus a portion of the interest earned on the trust account but net of
any taxes, (ii) our consummation of a business transaction, and then only in
connection with those shares of our common stock that such stockholder properly
elected to put to us, subject to the restrictions described in this prospectus
or (iii) our liquidation (if redemption does not occur). In no other
circumstances will a stockholder have any right or interest of any kind in the
trust account.
You
will not be entitled to protections normally afforded to investors of blank
check companies.
Since the
net proceeds of this offering are intended to be used to complete a business
transaction with an unidentified target business, we may be deemed to be a
“blank check” company under the United States securities laws. However, since
our securities will be quoted on the OTC Bulletin Board, we will have net
tangible assets in excess of $5,000,000 upon the successful consummation of this
offering and will file a Current Report on Form 8-K with the SEC upon
consummation of this offering, including an audited balance sheet demonstrating
this fact, we are exempt from rules promulgated by the SEC to protect investors
of blank check companies, such as Rule 419 of the Securities Act. Accordingly,
investors will not be afforded the benefits or protections of those rules, such
as a requirement that we consummate a business transaction with a target whose
fair market value is equal to 80% of the proceeds in our trust account. Because
we are not subject to these rules, including Rule 419, our units will be
immediately tradable, as set forth in this prospectus, prior to completion of a
business transaction. For a more complete discussion of the
differences between the terms of this offering and terms of an offerings subject
to Rule 419, please see “Proposed Business—Comparison of Offering to Blank Check
Companies” below.
If
the net proceeds of this offering not being placed in the trust account are
insufficient to allow us to operate for at least the next 15 months, we may not
be able to complete an initial business transaction.
Upon the
date of this prospectus, $800,000 of the net proceeds of this offering not held
in the trust account will be available to us for at least the next 15 months to
cover expenses incurred in connection with a business transaction or to cover
expenses in connection with our liquidation if we do not complete a business
transaction during that time. These amounts may prove to be insufficient
especially if a portion of the available proceeds is used to make a down payment
or pay exclusivity or similar fees in connection with a business transaction, or
if we expend a significant portion of the available proceeds in pursuit of a
business transaction that is not consummated.
We could
use a portion of the $800,000 not held in trust to pay due diligence costs in
connection with a potential business transaction or to pay fees to consultants
to assist us with our search for a target business. We could also use a portion
of these funds as a down payment, “reverse break-up fee” (a provision in
designed to compensate the target for any breach by the buyer which results in a
failure to close the transaction), or to fund a “no-shop” provision (a provision
designed to keep target businesses from “shopping” around for transactions with
others on terms more favorable to such target businesses) with respect to a
particular proposed business transaction, although we do not have any current
intention to do so. If we entered into such an agreement with a prospective
target where we paid for the right to receive exclusivity from a target business
and were subsequently required to forfeit such funds (whether as a result of our
breach or otherwise) or if we agree to a reverse break-up fee and subsequently
were required to pay such fee as a result of our breach of a merger or other
agreement or if our costs are otherwise higher than expected, we might not have
sufficient funds to continue searching for, or conduct due diligence with
respect to, any other potential target businesses. If we do not have sufficient
proceeds available to fund our expenses, we may be forced to obtain additional
financing, either from our management or the sponsor or from third parties, to
continue operating. We may not be able to obtain additional financing and our
sponsor and management are not obligated to provide any additional financing. If
we do not have sufficient proceeds and cannot find additional financing, we may
be forced to dissolve and liquidate prior to consummating a business
transaction.
If
we are deemed to be an investment company under the Investment Company Act, we
may be required to institute burdensome compliance requirements and our
activities may be restricted, which may make it difficult for us to complete a
business transaction.
If we are
deemed to be an investment company under the Investment Company Act of 1940, as
amended, our activities may be restricted, including:
18
|
·
|
restrictions
on the nature of our investments;
and
|
|
·
|
restrictions
on the issuance of securities, each of which may make it difficult for us
to complete a business transaction.
|
In
addition, we may have imposed upon us burdensome requirements,
including:
|
·
|
registration
as an investment company;
|
|
·
|
adoption
of a specific form of corporate structure;
and
|
|
·
|
reporting,
record keeping, voting, proxy and disclosure requirements and other rules
and regulations.
|
In order
not to be regulated as an investment company under the Investment Company Act,
unless we can qualify for an exclusion, we must ensure that we are engaged
primarily in a business other than investing, reinvesting or trading of
securities and that our activities do not include investing, reinvesting,
owning, holding or trading "investment securities" constituting more than 40% of
our assets (exclusive of U.S. government securities and cash items) on an
unconsolidated basis. Our business will be to identify and consummate a business
transaction and thereafter to operate the acquired business or assets for the
long term. We do not plan to buy businesses or assets with a view to resale or
profit from their resale. We do not plan to buy unrelated businesses or assets
or to be a passive investor. We do not believe that our anticipated principal
activities will subject us to the Investment Company Act. To this end, the
proceeds held in the trust account may only be invested in United States
"government securities" within the meaning of Section 2(a)(16) of the Investment
Company Act having a maturity of 180 days or less or in money market funds
meeting certain conditions under Rule 2a-7 promulgated under the Investment
Company Act. Pursuant to the trust agreement, the trustee is not permitted to
invest in other securities or assets. By restricting the investment of the
proceeds to these instruments, and by having a business plan targeted at
acquiring, growing and businesses for the long term (rather than on buying and
selling businesses in the manner of a merchant bank or private equity fund), we
intend to avoid being deemed an "investment company" within the meaning of the
Investment Company Act. This offering is not intended for persons who are
seeking a return on investments in government securities or investment
securities. The trust account is intended as a holding place for funds pending
the earlier to occur of either: (i) the consummation of our primary business
objective, which is a business transaction; or (ii) absent a business
transaction, our return of the funds held in the trust account to our public
stockholders as part of our redemption of public shares. If we do not invest the
proceeds as discussed above, we may be deemed to be subject to the Investment
Company Act. If we were deemed to be subject to the Investment Company Act,
compliance with these additional regulatory burdens would require additional
expense for which we have not accounted.
In
certain circumstances, our board of directors may be viewed as having breached
their fiduciary duties to our creditors, thereby exposing itself and us to
claims of punitive damages.
If we are
forced to file a bankruptcy case or an involuntary bankruptcy case is filed
against us which is not dismissed, any distributions received by stockholders
could be viewed under applicable debtor/creditor and/or bankruptcy laws as
either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders.
Furthermore, because we intend to redeem 100% of our public shares of common
stock for a per share pro rata portion of the trust account, in the event we do
not consummate a business transaction within 15 months from the date of this
prospectus, this may be viewed or interpreted as giving preference to
our public stockholders over any potential creditors with respect to access to
or distributions from our assets. Furthermore, our board of directors may be
viewed as having breached its fiduciary duty to our creditors and/or may have
acted in bad faith, thereby exposing itself and us to claims of punitive
damages, by paying public stockholders from the trust account prior to
addressing the claims of creditors.
Our
stockholders may be held liable for claims by third parties against us to the
extent of distributions received by them upon redemption of their
shares.
If we do
not consummate a business transaction within 15 months from the date of this
prospectus, our sponsor, officers and directors have agreed that we will (i)
cease all operations except for the purposes of winding up, (ii) redeem 100% of
our public shares of common stock for a per share pro rata portion of the trust
account, plus a portion of the interest earned on the trust account but net of
any taxes, subject to the requirements of Delaware General Corporation Law
Section 160 and other applicable law and (iii) as promptly as possible following
such redemption, dissolve and liquidate the balance of our net assets to our
remaining stockholders. Under the Delaware General Corporation Law,
stockholders may be held liable for claims by third parties against a
corporation to the extent of distributions received by them pursuant to a
dissolution, and our redemption of 100% of the shares sold in this offering may
be deemed a liquidating distribution. If a corporation complies with
certain procedures set forth in Section 280 of the Delaware General Corporation
Law intended to ensure that it makes reasonable provision for all claims against
it, including a 60-day notice period during which any third-party claims can be
brought against the corporation, a 90-day period during which the corporation
may reject any claims brought, and an additional 150-day waiting period before
any liquidating distributions are made to stockholders, any liability of
stockholders with respect to a liquidating distribution is limited to the lesser
of such stockholder’s pro rata share of the claim or the amount distributed to
the stockholder, and any liability of the stockholder would be barred after the
third anniversary of the dissolution. Because we will not be
complying with certain procedures set forth in Section 280 of the Delaware
General Corporation Law, as set forth above, a stockholder who received
distributions in the redemption may be liable for the lesser of such
stockholder’s pro rata share of the claim or the amount distributed to the
stockholder until the third anniversary of the dissolution.
19
Although
we are required to use our best efforts to have an effective registration
statement covering the issuance of the shares of common stock underlying the
warrants at the time that our warrant holders exercise their warrants, a
registration statement may not be effective, in which case our warrant holders
may not be able to exercise their warrants and therefore the warrants could
expire worthless.
Holders
of our warrants will be able to exercise the warrants only if we have an
effective registration statement covering the shares of common stock issuable
upon exercise of the warrants and a current prospectus relating to such common
stock and such shares of common stock are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of warrants reside. Although we have undertaken in the warrant
agreement, and therefore have a contractual obligation, to use our best efforts
to maintain an effective registration statement covering the shares of common
stock issuable upon exercise of the warrants following completion of this
offering, and we intend to comply with our undertaking, we may not be able to do
so. Factors such as an unexpected inability to remain current in our SEC
reporting obligations or other material developments concerning our business
could present difficulties in maintaining an effective registration statement
and a current prospectus. Holders of warrants will not be entitled to a cash
settlement for their warrants if we fail to have an effective registration
statement or a current prospectus available relating to the common stock
issuable upon exercise of the warrants. The expiration of warrants prior to
exercise would result in each unit holder paying the full unit purchase price
solely for the shares of common stock underlying the unit.
We
intend to consummate a business transaction with an operating company, but do
not have a particular focus on businesses or assets involved in any particular
industry. As we have not currently selected any target business with which to
complete a business transaction, investors in this offering are unable to
currently ascertain the merits or risks of the target business, may not be able
to vote in connection with such business transaction and will be relying on our
management’s ability to identify a target business or businesses and complete a
business transaction.
We intend
to focus on identifying a prospective target business, and have not focused on
any particular business or industry. As we have not yet identified a prospective
target business, investors in this offering have no current basis to evaluate
the possible merits or risks of the target business until we provide our
stockholders with a notice (or proxy statement, if required by law) concerning
the business transaction. Currently, since we may consummate a
business transaction without seeking stockholder approval, we do not intend to
provide proxy materials to our stockholders in connection with a proposed
business transaction. Stockholders, therefore, will not be afforded the
opportunity to vote upon any proposed business transaction, unless we are
required to seek stockholder approval by law. To the extent we
complete a business transaction we may be affected by numerous risks inherent in
the business operations of those entities which our management may not properly
ascertain. An investment in our units may ultimately prove to be less favorable
to investors in this offering than a direct investment, if an opportunity were
available, in a target business.
Unlike
most other blank check companies, we are not required to consider a target’s
valuation when entering into or consummating our business
transaction.
Most
blank check companies are required to consummate their initial business
combination with a target whose value is equal to at least 80% of the amount of
money deposited in the trust account of the blank check company at the time of
entry into a materially definitive agreement. Because we do not have
the limitation that a target business have a minimum fair market enterprise
value of the net assets held in the trust account (net of taxes and exclusive of
any amounts subject to the exercise of put rights) at the time of our signing a
definitive agreement in connection with our initial business transaction, we
will have virtually unrestricted flexibility in identifying and selecting a
prospective acquisition candidate. Investors will be relying on our management’s
ability to identify business transactions, evaluate their merits, conduct or
monitor diligence and conduct negotiations.
We
may not obtain an opinion from an independent investment banking firm as to the
fair market enterprise value of the target business or that the price we are
paying for the business is fair to our stockholders.
Unless we
consummate a business transaction with an affiliated entity, we are not required
to obtain an opinion from an independent investment banking firm that either the
target business we select has a certain fair market enterprise value at the time
of our signing a definitive agreement in connection with our initial business
transaction or that the price we are paying is fair to our stockholders unless
our board of directors is not able to independently determine that a target
business or businesses have a sufficient fair market enterprise value or there
is a conflict of interest with respect to the transaction. The fair market
enterprise value of such business will be determined by our board of directors
based upon standards generally accepted by the financial community, such as
actual and potential sales, earnings and cash flow and book value, and the price
for which comparable businesses have recently been sold. If no opinion is
obtained, our stockholders will be relying on the judgment or our board of
directors.
20
We
may issue shares of our capital stock to complete a business transaction, which
would reduce the equity interest of our stockholders and likely cause a change
in control of our ownership.
Our
amended and restated certificate of incorporation authorizes the issuance of up
to 100,000,000 shares of common stock, par value $0.0001 per share, and
1,000,000 shares of preferred stock, par value $0.0001 per share. Immediately
after this offering and the purchase of the insider warrants (assuming no
exercise of the underwriters’ over-allotment option), there will be 86,444,444
authorized but unissued shares of our common stock available for issuance (after
appropriate reservation for the issuance of shares of common stock upon full
exercise of our outstanding warrants) and of the 1,000,000 shares of preferred
stock a total of 1,000,000 will be available for issuance. Although we have no
commitment as of the date of this prospectus, we may issue a substantial number
of additional shares of our common or preferred stock, or a combination of
common and preferred stock, to complete a business transaction. The issuance of
additional shares of our common stock or any number of shares of our preferred
stock:
|
·
|
may
significantly reduce the equity interest of investors in this
offering;
|
|
·
|
may
subordinate the rights of holders of common stock if preferred stock is
issued with rights senior to those afforded to the holders of our common
stock;
|
|
·
|
may
cause a change in control if a substantial number of our shares of common
stock are issued, which may affect, among other things, our ability to use
our net operating loss carry forwards, if any, and may result in the
resignation or removal of our present officers and directors;
and
|
|
·
|
may
adversely affect prevailing market prices for our common
stock.
|
For a
more complete discussion of the possible structure of a business transaction,
see the section below entitled “Proposed Business—Effecting a Business
Transaction—We Have Not Identified a Target Business.”
Substantial
resources could be expended in researching initial business transactions that
are not consummated, which could materially adversely affect subsequent attempts
to locate and consummate an initial business transaction.
We
anticipate the investigation of each specific target business and the
negotiation, drafting and execution of relevant agreements, disclosure documents
and other instruments will require substantial management time and attention and
substantial costs for accountants, attorneys and other third party fees and
expenses. If we decide not to enter into an agreement with respect to a specific
proposed initial business transaction we have investigated, the costs incurred
up to that point for the proposed transaction likely would not be recoverable.
Furthermore, even if an agreement is reached relating to a specific target
business, we may fail to consummate the business transaction for any number of
reasons including those beyond our control. Any such event will result in a loss
to us of the related costs incurred which could materially adversely affect
subsequent attempts to locate and consummate a business
transaction.
Our
ability to successfully effect a business transaction and to be successful
thereafter will be dependent in large part upon the efforts of our key
personnel, including our officers and directors.
Our
ability to successfully effect a business transaction is dependent upon the
efforts of our key personnel. Our key personnel will also be officers,
directors, key personnel and/or members of other entities, to whom we anticipate
we will have access on an as needed basis, although such personnel may not be
able to devote either sufficient time, effort or attention to us when we need
it. None of our key personnel, including our executive officers, will have
entered into employment or consultant agreements with us.
Our
officers and directors may allocate their time to other businesses, thereby
causing conflicts of interest in their determination as to how much time to
devote to our affairs. These conflicts could impair our ability to consummate a
business transaction.
Our
officers and directors are not required to commit their full time to our
affairs, which may result in a conflict of interest in allocating their time
between our operations and other businesses. We do not intend to have any full
time employees prior to the consummation of a business transaction. Certain of
our executive officers are engaged in several other business endeavors and are
not obligated to contribute any specific number of hours per week to our
affairs. If our executive officers’ other business affairs require them to
devote more substantial amounts of time to such affairs, it could limit their
ability to devote time to our affairs and could impair our ability to consummate
a business transaction. These conflicts may not be resolved in our
favor.
21
Our
officers, directors and their affiliates currently are, and may in the future
become, affiliated with entities engaged in business activities that are similar
to those intended to be conducted by us and, accordingly, may have conflicts of
interest in determining to which entity a particular business opportunity should
be presented.
Certain
of our officers, directors or their affiliates have been principals of, or
affiliated or associated with, other blank check companies, and/or may in the
future become, affiliated with additional entities engaged in business
activities similar to those intended to be conducted by us. Due to these
existing affiliations, our officers and directors may have fiduciary obligations
to present potential business opportunities to those entities prior to
presenting them to us, which could cause additional conflicts of interest.
Accordingly, they may have conflicts of interest in determining to which entity
a particular business opportunity should be presented. These conflicts may not
be resolved in our favor. For a complete discussion of our
management’s business affiliations and the potential conflicts of interest that
you should be aware of, see “Management—Conflicts of Interest.”
Our
management may negotiate employment or consulting agreements with a target
business in connection with a particular business transaction. These agreements
may provide for them to receive compensation following a business transaction
and, as a result, may cause them to have conflicts of interest in determining
whether a particular business transaction is in the best interest of our public
stockholders.
Our
management may not be able to remain with the company after the consummation of
a business transaction unless they are able to negotiate employment or
consulting agreements in connection with a business transaction. If, as a
condition to a potential initial business transaction, our existing officers
negotiate to be retained after the consummation of the business transaction,
such negotiations may result in a conflict of interest. Such negotiations would
take place simultaneously with the negotiation of the business transaction and
could provide for such individuals to receive compensation in the form of cash
payments and/or our securities for services they would render to us after the
consummation of the business transaction. While the personal and financial
interests of such individuals may influence their motivation in identifying and
selecting a target business, the ability of such individuals to remain with us
after the consummation of a business transaction will not be the determining
factor in our decision as to whether or not we will proceed with any potential
business transaction. In making the determination as to whether current
management should remain with us following the business transaction, we will
analyze the experience and skill set of the target business’s management and
negotiate as part of the business transaction that our existing officers and
directors remain if it is believed to be in the best interests of the combined
company after the consummation of the business transaction.
We
will only have a limited ability to evaluate the management of the target
business.
We intend
to closely scrutinize the management of the target business; however, our
assessment of these individuals may not prove to be correct. These individuals
may be unfamiliar with the requirements of operating a public company which
could cause us to have to expend time and resources helping them become familiar
with such requirements. This could be expensive and time-consuming and could
lead to various operational issues which may adversely affect our
operations.
We
may engage in a business transaction with one or more target businesses that
have relationships or are affiliated with our sponsor, directors or officers,
which may raise potential conflicts.
We may
engage in a business transaction with one or more target businesses that have
relationships or are affiliated (as defined in Rule 405 of the Securities Act)
with our sponsor, directors or officers, which may raise potential conflicts.
Also, the completion of a business transaction between us and an entity owned by
a business in which one of our directors or officers may have an interest could
enhance their prospects for future business from such client. To minimize
potential conflicts of interest, we have agreed not to consummate, and our
amended and restated certificate of incorporation provides that we may not
consummate, a business transaction with a target business that is affiliated
with our sponsor, our directors or officers or any of our or their affiliates
unless we obtain an opinion from an independent investment banking firm that is
a member of FINRA that the business transaction is fair to our stockholders from
a financial point of view.
Since
our sponsor will lose its entire investment in us if a business transaction is
not consummated and may be required to pay costs associated with our liquidation
and our officers and directors have significant financial interests in us, a
conflict of interest may arise in determining whether a particular acquisition
target is appropriate for our initial business transaction.
Our
sponsor owns 638,889 shares of our common stock, up to 83,333 of which will be
forfeited if the underwriters’ over-allotment is not exercised in full (which
were purchased for $25,000) that will be worthless if we do not consummate a
business transaction. In addition, our sponsor has agreed to purchase warrants
exercisable for our common stock (for $1,500,000), which will also be worthless
if we do not consummate a business transaction. In addition, in the event we are
forced to liquidate, our sponsor has agreed to advance us the entire amount of
the funds necessary to complete such liquidation (currently anticipated to be no
more than approximately $30,000) and has agreed not to seek repayment for such
expenses. The personal and financial interests of our officers and our directors
may influence their motivation in identifying and selecting a target business
transaction and completing an initial business transaction. Consequently, the
discretion of our officers and directors, in identifying and selecting a
suitable target business transaction may result in a conflict of interest when
determining whether the terms, conditions and timing of a particular initial
business transaction are appropriate and in the best interest of our public
stockholders.
22
The
requirement that we complete a business transaction
by ,
2012 [15 months from the date of this prospectus] may give potential target
businesses leverage over us in negotiating a business transaction.
If we
have not consummated a business transaction within 15 months from the date of
this prospectus, we will redeem 100% of our public shares of common stock for a
per share pro rata portion of the trust account (initially approximately $9.75
per share, or approximately $9.74 per share if the underwriters’ over-allotment
option is exercised in full), plus a portion of the interest earned on the trust
account but net of any taxes, and then adopt a plan of dissolution pursuant to
which we will liquidate and promptly distribute the balance of our net assets to
our remaining stockholders (subject to our obligations under Delaware law for
claims of creditors). Any potential target business with which we enter into
negotiations concerning a business transaction will be aware of this
requirement. Consequently, such target businesses may obtain leverage over us in
negotiating a business transaction, knowing that if we do not complete a
business transaction with that particular target business, we may be unable to
complete a business transaction with any target business. This risk will
increase as we get closer to the time limits referenced above.
The
requirement that we complete a business transaction
by ,
2012 [15 months from the date of this prospectus] may motivate our
officers and directors to approve a business transaction that is not in the best
interests of stockholders.
Each of
our officers and directors may receive reimbursement for out-of-pocket expenses
incurred by him in connection with activities on our behalf, such as identifying
potential target businesses and performing due diligence on suitable business
transactions. The funds for such reimbursement will be provided from the money
not held in trust. In the event that we do not effect a business transaction
by ,
2012 [15 months from the date of this prospectus], then any expenses incurred by
such individuals in excess of the money being held outside of the trust account
will not be repaid and we will liquidate. On the other hand, if we complete a
business transaction within such time period, those expenses will be repaid by
the target business.
Consequently, our officers and
directors may have an incentive to complete a business transaction other than
just what is in the best interest of our stockholders.
Our
officers, directors, security holders and their respective affiliates may have
competitive pecuniary interests that conflict with our interests.
We have
not adopted a policy that expressly prohibits our directors, officers, security
holders or affiliates from having a direct or indirect pecuniary interest in any
investment to be acquired or disposed of by us or in any transaction to which we
are a party or have an interest. Nor do we have a policy that expressly
prohibits any such persons from engaging for their own account in business
activities of the types conducted by us. Accordingly, such persons or entities
may have a conflict between their interests and ours.
Our
securities will be quoted on the OTC Bulletin Board, which will limit the
liquidity and price of our securities more than if our securities were quoted or
listed on the Nasdaq Stock Market or another national exchange.
Our
units, common stock and warrants will be traded in the over-the-counter market
and will be quoted on the OTC Bulletin Board, a FINRA-sponsored and operated
inter-dealer automated quotation system for equity securities not included in
the Nasdaq Stock Market. Quotation of our securities on the OTC Bulletin Board
will limit the liquidity and price of our securities more than if our securities
were quoted or listed on the Nasdaq Stock Market or a national exchange. Lack of
liquidity will limit the price at which you may be able to sell our securities
or your ability to sell our securities at all.
A
market for our securities may not develop, which would adversely affect the
liquidity and price of our securities.
Although
we have applied to have our securities quoted on the OTC Bulletin Board, as of
the date of this prospectus, there is currently no market for our securities.
Prospective stockholders therefore have no access to information about prior
trading history on which to base their investment decision. Following this
offering, the price of our securities may vary significantly due to our reports
of operating losses, one or more potential business transactions, the filing of
periodic reports with the SEC, and general market and economic conditions. Once
quoted on the OTC Bulletin Board, an active trading market for our securities
may never develop or, if developed, it may not be sustained. In addition, the
price of the securities after the offering can vary due to general economic
conditions and forecasts, our general business condition and the release of our
financial reports. You may be unable to sell your securities unless a
market can be established or sustained.
23
If
you are not an institutional investor, you may purchase securities in this
offering only if you reside within the states in which we will apply to have the
securities registered. Although the states are preempted from regulating the
resales of our securities, state securities regulators who view blank check
offerings unfavorably could use or threaten to use their investigative or
enforcement powers to hinder resales in their states.
We have
applied to register our securities, or have obtained or will seek to obtain an
exemption from registration, in Colorado, Delaware, the District of Columbia,
Florida, Georgia, Hawaii, Illinois, Louisiana, Maryland, New York and Rhode
Island. If you are not an “institutional investor,” you must be a resident of
these jurisdictions to purchase our securities in the offering. The definition
of an “institutional investor” varies from state to state but generally includes
financial institutions, broker-dealers, banks, insurance companies and other
qualified entities. Institutional investors in every state except in Idaho may
purchase the units in this offering pursuant to exemptions provided to such
entities under the Blue Sky laws of various states. Under the National
Securities Market Improvement Act of 1996, the states are pre-empted from
regulating transactions in covered securities. We will file periodic and annual
reports under the Exchange Act and our securities will be considered covered
securities. Therefore, the states will be pre-empted from regulating the resales
of the units, from and after the effective date, and the common stock and
warrants comprising the units, once they become separately transferable.
However, the states retain the jurisdiction to investigate and bring enforcement
actions with respect to fraud or deceit, or unlawful conduct by a broker or
dealer, in connection with the sale of securities. Although we are not aware of
a state having used these powers to prohibit or restrict resales of securities
issued by blank check companies generally, certain state securities
commissioners view blank check companies unfavorably and might use these powers,
or threaten to use these powers, to hinder the resale of securities of blank
check companies in their states. For a more complete discussion of the state
securities laws and registrations affecting this offering, please see
“Underwriting — State Blue Sky Information” below.
We
will probably complete only one business transaction with the proceeds of this
offering and the private placement of the insider warrants, meaning our
operations will depend on a single business and we will be exposed to higher
risk than other entities that have the resources to complete several
transactions.
The net
proceeds from this offering will provide us with approximately $48,750,000
(approximately $56,025,000 if the underwriters’ over-allotment option is
exercised in full) that we may use to complete a business transaction. We may
not be able to acquire more than one target business because of various factors,
including the existence of complex accounting issues and the requirement that we
prepare and file pro forma financial statements with the SEC that present
operating results and the financial condition of several target businesses as if
they had been operated on a combined basis. Additionally, we may encounter
numerous logistical issues if we pursue multiple target businesses, including
the difficulty of coordinating the timing of negotiations, notice or proxy
statement disclosure, as applicable, and closings. We may also be exposed to the
risk that our inability to satisfy conditions to closing with one or more target
businesses would reduce the fair market enterprise value of the remaining target
businesses in the combination. Due to these added risks, we are more likely to
choose a single target business with which to pursue a business transaction than
multiple target businesses. Unless we combine with a target business in a
transaction in which the purchase price consists substantially of common stock
and/or preferred stock, it is likely we will complete only one business
transaction with the proceeds of this offering. Accordingly, the prospects for
our success may depend solely on the performance of a single business. If this
occurs, our operations will be highly concentrated and we will be exposed to
higher risk than other entities that have the resources to complete several
business transactions, or that operate in diversified industries or industry
segments.
We
may not be able to maintain control of a target business after our initial
business transaction.
We may
structure a business transaction to acquire less than 100% of the equity
interests or assets of a target business, but will not acquire less than a
controlling interest. We will acquire a controlling interest either through the
acquisition of at least 50.1% of the voting equity interests in the target or
through the acquisition of a significant voting equity interest that enables us
to exercise a greater degree of control over the target than any other person or
group. However, other minority stockholders may subsequently combine their
holdings resulting in a single person or group obtaining a larger share of the
company’s stock than we initially acquired. Accordingly, this may make it more
likely that we will not be able to maintain our control of the target
business.
24
Unlike
other blank check offerings, we allow our public stockholders holding no more
than 88% of the shares sold in this offering to exercise their put rights. This
higher threshold will make it easier for us to consummate a business transaction
with which you may not agree.
Following
our mailing of a notice describing our business transaction, our public
stockholders will have the right, up until the date provided in such notice
(which date shall not be less than 10 days from the mailing thereof), to elect
to put their shares back to us for cash. In the event we are
required to distribute proxy material to our public stockholders in connection
with a proposed business transaction, when we seek stockholder approval of the
business transaction, our public stockholders (but not our sponsor with respect
to any shares it owned prior to the date of this prospectus) will have the
right, up until the date provided in such notice (which date shall not be less
than 10 days from the mailing thereof) to put their shares back to us for
cash. In neither circumstance shall a request to put stock to us be
granted if the business transaction is not consummated. In the event
we are required to seek stockholder approval of our business transaction, we
will consummate the initial business transaction only if (i) a majority of the
outstanding shares of common stock voted are voted in favor of the business
transaction and (ii) holders of no more than 88% of our public shares elect to
put their shares back to us for cash. In any event, however, our
sponsor’s, officers’, directors’ or their affiliates’ participation in
privately-negotiated transactions (as described in this prospectus), if any,
could result in either our ability to proceed with a business transaction, or
the approval of a business transaction, as the case may be, even if a majority
our public stockholders indicate their intention to exercise their put rights,
or vote against such business transaction, as the case may be. Many other blank
check companies have a threshold of 20%, which makes it more difficult for such
companies to consummate their initial business transaction. Thus, because we
permit holders of no more than 88% of our public shares to exercise their put
rights (regardless of whether we distribute a notice or proxy materials), it
will be easier for us to consummate an initial business transaction with a
target business which you may believe is not suitable for us. In the
event we mail only a notice, you would not have the ability to vote on the
business transaction, and would only be able to exercise your put
rights.
The
ability of a larger number of our stockholders to exercise put rights may not
allow us to consummate the most desirable business transaction or optimize our
capital structure.
If our
business transaction requires us to use substantially all of our cash to pay the
purchase price, because we will not know how many stockholders may exercise such
put rights, we may either need to reserve part of the trust account for possible
payment upon such put, or we may need to arrange third party financing to help
fund our business transaction in case a larger percentage of stockholders
exercise their put rights than we expect. In the event that the acquisition
involves the issuance of our stock as consideration, we may be required to issue
a higher percentage of our stock to make up for a shortfall in funds. Raising
additional funds to cover any shortfall may involve dilutive equity financing or
incurring indebtedness at higher than desirable levels. This may limit our
ability to effectuate the most attractive business transaction available to
us.
Even
if holders of no more than 88% of our public shares elect to exercise their put
rights, we may be unable to consummate a business transaction.
Although
we permit holders of no more than 88% of our public shares to exercise their put
rights, a potential target may make it a closing condition to our business
transaction that we exceed a certain minimum net asset valuation at the time of
closing. If the number of our public stockholders electing to
exercise their put rights would have the effect of reducing the amount of money
available to us to consummate a business transaction below such minimum net
asset valuation, we would not be able to consummate our business
transaction.
We
may issue notes or other debt securities, or otherwise incur substantial debt,
to complete a business transaction, which may adversely affect our leverage and
financial condition.
Although
we have no commitments as of the date of this prospectus to issue any notes or
other debt securities, or to otherwise incur outstanding debt, we may choose to
incur substantial debt to complete a business transaction. The incurrence of
debt could result in:
|
·
|
default
and foreclosure on our assets if our operating cash flow after a business
transaction is insufficient to pay our debt
obligations;
|
|
·
|
acceleration
of our obligations to repay the indebtedness even if we have made all
principal and interest payments when due if the debt security contains
covenants that require the maintenance of certain financial ratios or
reserves and any such covenant is breached without a waiver or
renegotiation of that covenant;
|
|
·
|
our
immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand;
|
|
·
|
covenants
that limit our ability to acquire capital assets or make additional
acquisitions;
|
|
·
|
our
inability to obtain additional financing, if necessary, if the debt
security contains covenants restricting our ability to obtain additional
financing while such security is
outstanding;
|
|
·
|
our
inability to pay dividends on our common
stock;
|
|
·
|
using
a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our
common stock if declared, expenses, capital expenditures, acquisitions and
other general corporate purposes;
|
25
|
·
|
limitations
on our flexibility in planning for and reacting to changes in our business
and in the industry in which we
operate;
|
|
·
|
increased
vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation;
and
|
|
·
|
limitations
on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our
competitors who have less debt.
|
Our
sponsor controls a substantial interest in us and thus may influence certain
actions requiring a stockholder vote.
Upon
consummation of our offering (including any exercise of the over-allotment
option, in whole or in part), and after giving effect to the private placement
of insider warrants, our sponsor will own 10% of our issued and outstanding
common stock (assuming it does not purchase units in this offering). This
ownership interest, together with any other acquisitions of our shares of common
stock (or warrants which are subsequently exercised), could allow our sponsor to
influence the outcome of matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions after
completion of our business transaction. Our board of directors is divided into
two classes, each of which will generally serve for a term of two years with
only one class of directors being elected in each year. It is unlikely that
there will be an annual meeting of stockholders to re-elect existing directors
or elect new directors prior to the consummation of a business transaction, in
which case all of the current directors will continue in office until at least
the consummation of the business transaction. If there is an annual meeting, as
a consequence of our “staggered” board of directors, only a minority of the
board of directors will be considered for election and our sponsor, because of
its ownership position, will have considerable influence regarding the outcome
of an election of directors. The interests of our sponsor and your interests may
not always align and taking actions which require approval of a majority of our
stockholders, such as selling the company, may be more difficult to
accomplish.
We
may be unable to obtain additional financing, if required, to complete a
business transaction or to fund the operations and growth of the target
business, which could compel us to restructure the transaction or abandon a
particular business transaction.
We
believe that the net proceeds of this offering will be sufficient to allow us to
consummate a business transaction. However, because we have not yet identified
any prospective target business, we cannot ascertain the capital requirements
for any particular transaction. If the net proceeds of this offering prove to be
insufficient, either because of the size of the business transaction, the
depletion of the available net proceeds in search of a target business, or the
obligation to pay cash for a significant number of shares put to us, we will be
required to seek additional financing. Such financing may not be available on
acceptable terms, if at all. To the extent that additional financing proves to
be unavailable when needed to consummate a particular business transaction, we
would be compelled to either restructure the transaction or abandon that
particular business transaction and seek an alternative target business
candidate. None of our officers, directors or stockholders are required to
provide any financing to us in connection with or after a business
transaction.
We
may choose to redeem our outstanding warrants at a time that is disadvantageous
to our warrant holders.
We may
redeem the outstanding warrants (excluding any insider warrants held by our
sponsor or its permitted assigns) issued as a part of our units at any time
after the warrants become exercisable, in whole and not in part, at a price of
$0.01 per warrant, upon not less than 30 days prior written notice of
redemption, and if, and only if, the last sales price of our common stock equals
or exceeds $17.50 per share for any 20 trading days within a 30 trading day
period ending three business days before we send the notice of redemption. In
addition, we may not redeem the warrants unless on the date we give notice of
redemption and during the entire period thereafter until the time we redeem the
warrants we have an effective registration statement covering the shares of
common stock issuable upon the exercise of the warrants and a current prospectus
relating to such common stock is available.
We will
likely redeem the warrants if the market price of our common stock reaches
$17.50 per share for the necessary trading period, since doing so would allow us
to decrease the dilutive effect of the warrants. Redemption of the warrants
could force the warrant holders to exercise the warrants, whether by paying the
exercise price in cash or through a cashless exercise at a time when it may be
disadvantageous for the holders to do so, to sell the warrants at the then
current market price when they might otherwise wish to hold the warrants, or to
accept the nominal redemption price which, at the time the warrants are called
for redemption, is likely to be substantially less than the market value of the
warrants. We expect most purchasers of our warrants will hold their securities
through one or more intermediaries and consequently you are unlikely to receive
notice directly from us that the warrants are being redeemed. If you fail to
receive notice of redemption from a third party and your warrants are redeemed
for nominal value, you will not have recourse to us.
26
Our
management’s ability to require holders of our warrants to exercise such
warrants on a cashless basis will cause holders to receive fewer shares of
common stock upon their exercise of the warrants than they would have received
had they been able to pay the exercise price of their warrants in
cash.
If we
call our warrants for redemption after the redemption criteria described
elsewhere in this prospectus have been satisfied, our management will have the
option to require any holder that wishes to exercise his warrant to do so on a
“cashless basis.” In such event, each holder would pay the exercise price by
surrendering the warrants for that number of shares of common stock equal to the
quotient obtained by dividing (x) the product of the number of shares of common
stock underlying the warrants, multiplied by the difference between the exercise
price of the warrants and the fair market value and (y) the fair market value.
The “fair market value” shall mean the average reported last sales price of our
common stock for the 10 trading days ending on the third trading day prior to
the date on which notice of redemption is sent to the holders of the warrants.
If our management chooses to require holders to exercise their warrants on a
cashless basis, the number of shares of common stock received by a holder upon
exercise will be fewer than it would have been had such holder exercised his
warrant for cash. This will have the effect of reducing the potential “upside”
of the holder’s investment in our company.
Our
outstanding warrants may have an adverse effect on the market price of common
stock and make it more difficult to effect a business transaction.
In
connection with this offering, we will be issuing warrants to purchase up to
5,000,000 shares of common stock (5,750,000 if the underwriters’ over-allotment
option is exercised in full). In addition, we will sell to the sponsor insider
warrants to purchase up to 3,000,000 shares of common stock on or before the
date of this prospectus. To the extent we issue shares of common stock to effect
a business transaction, the potential for the issuance of a substantial number
of additional shares of common stock upon exercise of these warrants could make
us a less attractive acquisition vehicle to a target business. Such warrants,
when exercised, will increase the number of issued and outstanding shares of our
common stock and reduce the value of the shares of common stock issued to
complete the business transaction. Therefore, our warrants may make it more
difficult to effectuate a business transaction or increase the cost of acquiring
the target business.
An
investor will only be able to exercise a warrant if the issuance of common stock
upon such exercise has been registered or qualified or is deemed exempt under
the securities laws of the state of residence of the holder of the
warrants.
No
warrants will be exercisable and we will not be obligated to issue shares of
common stock unless the common stock issuable upon such exercise has been
registered or qualified or deemed to be exempt under the securities laws of the
state of residence of the holder of the warrants. Because the exemptions from
qualification in certain states for resales of warrants and for issuances of
common stock by the issuer upon exercise of a warrant may be different, a
warrant may be held by a holder in a state where an exemption is not available
for issuance of common stock upon an exercise and the holder will be precluded
from exercise of the warrant. As a result, the warrants may be
deprived of any value, the market for the warrants may be limited and the
holders of warrants may not be able to exercise their warrants if the common
stock issuable upon such exercise is not qualified or exempt from qualification
in the jurisdictions in which the holders of the warrants reside.
We
may amend the terms of the warrants in a manner that may be adverse to holders
with the approval by the holders of a majority of the then outstanding
warrants.
Our warrants will be issued in
registered form under a warrant agreement between Continental Stock Transfer
& Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of
any holder to cure any ambiguity or correct any defective provision, but
requires the approval by the holders of a majority of the then outstanding
warrants in order to make any change that adversely affects the interests of the
registered holders. Accordingly, we may amend the terms of the
warrants in an adverse way to a holder if a majority of the holders approve of
such amendment.
Our
determination of the offering price of our units and of the aggregate amount of
proceeds we are raising in this offering is more arbitrary than would typically
be the case if we were an operating company rather than an acquisition
vehicle.
Prior to
this offering there has been no public market for our securities. The public
offering price of the units, the terms of the warrants, the aggregate proceeds
we are raising and the amount to be placed in trust were the result of a
negotiation between the underwriters and us. Factors that were considered in
making these determinations include:
|
·
|
the
information presented in this prospectus and otherwise available to the
underwriters;
|
|
·
|
the
history and prospects of companies whose principal business is the
acquisition of other companies;
|
27
|
·
|
the
ability of our management and their experience in identifying operating
companies;
|
|
·
|
prior
offerings of those companies;
|
|
·
|
our
prospects for acquiring an operating business at attractive
values;
|
|
·
|
the
present state of our development and our current financial condition and
capital structure;
|
|
·
|
the
recent market prices of, and the demand for, publicly traded common stock
of generally comparable companies;
|
|
·
|
the
general conditions of the securities markets at the time of the offering;
and
|
|
·
|
other
factors as were deemed relevant.
|
Although
these factors were considered, the determination of our per unit offering price
and aggregate proceeds is more arbitrary than would typically be the case if we
were an operating company. In addition, because we have not identified any
potential target businesses, our assessment of the financial requirements
necessary to complete a business transaction may prove inaccurate, in which case
we may not have sufficient funds to consummate a business transaction and we
would be forced to either find additional financing or liquidate.
You
will experience immediate and substantial dilution from the purchase of our
common stock.
The
difference between the public offering price per share of our common stock
(allocating all of the unit purchase price to the common stock and none to the
warrant included in the unit) and the pro forma net tangible book value per
share of our common stock after this offering constitutes the dilution to you
and other investors in this offering. The fact that our sponsor acquired its
shares of common stock at a nominal price significantly contributed to this
dilution. Assuming this offering is completed and no value is ascribed to the
warrants included in the units, you and the other new investors will incur an
immediate and substantial dilution of approximately 47.73% or $4.77 per
share (the difference between the pro forma net tangible book value per share
after this offering of $5.23 and the initial offering price of $10.00 per
unit).
Provisions
in our amended and restated certificate of incorporation and bylaws and Delaware
law may inhibit a takeover of us, which could limit the price investors might be
willing to pay in the future for our common stock and could entrench
management.
Our
amended and restated certificate of incorporation and bylaws contain provisions
that may discourage unsolicited takeover proposals that stockholders may
consider to be in their best interests. Our board of directors is divided into
two classes, each of which will generally serve for a term of two years with
only one class of directors being elected in each year. As a result, at a given
annual meeting only a minority of the board of directors may be considered for
election. Since our “staggered board” may prevent our stockholders from
replacing a majority of our board of directors at any given annual meeting, it
may entrench management and discourage unsolicited stockholder proposals that
may be in the best interests of stockholders. Moreover, our board of directors
has the ability to designate the terms of and issue new series of preferred
stock.
We are
also subject to anti-takeover provisions under Delaware law, which could delay
or prevent a change of control. Together these provisions may make more
difficult the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for
our securities.
Compliance
with the Sarbanes-Oxley Act of 2002 will require substantial financial and
management resources and may increase the time and costs of completing an
acquisition.
Section
404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on
our system of internal controls and requires that we have such system of
internal controls audited beginning with our Annual Report on Form 10-K for the
year ending December 31, 2011. If we fail to maintain the adequacy of our
internal controls, we could be subject to regulatory scrutiny, civil or criminal
penalties and/or stockholder litigation. Any inability to provide reliable
financial reports could harm our business. Recent revisions to section 1-202 and
2-202 of Regulation S-X and Item 308 of Regulations S-B and S-K require the
expression of a single opinion directly on the effectiveness of our internal
control over financial reporting from our independent registered public
accounting firm. Section 404 of the Sarbanes-Oxley Act also requires that our
independent registered public accounting firm report on management’s evaluation
of our system of internal controls. A target company may not be in compliance
with the provisions of the Sarbanes-Oxley Act regarding adequacy of their
internal controls. The development of the internal controls of any such entity
to achieve compliance with the Sarbanes-Oxley Act may increase the time and
costs necessary to complete any such acquisition. Furthermore, any failure to
implement required new or improved controls, or difficulties encountered in the
implementation of adequate controls over our financial processes and reporting
in the future, could harm our operating results or cause us to fail to meet our
reporting obligations. Inferior internal controls could also cause investors to
lose confidence in our reported financial information, which could have a
negative effect on the trading price of our securities.
28
We
do not currently intend to hold an annual meeting of stockholders until after
our consummation of a business transaction.
We do not
currently intend to hold an annual meeting of stockholders until after we
consummate a business transaction, and thus may not be in compliance with
Section 211(b) of the Delaware General Corporation Law, which requires an annual
meeting of stockholders be held for the purposes of electing directors in
accordance with a company’s bylaws unless such election is made by written
consent in lieu of such a meeting. Therefore, if our stockholders want us to
hold an annual meeting prior to our consummation of a business transaction, they
may attempt to force us to hold one by submitting an application to the Delaware
Court of Chancery in accordance with Section 211(c) of the Delaware General
Corporation Law.
The
grant of registration rights to our sponsor may make it more difficult to
complete our initial business transaction, and the future exercise of such
rights may adversely affect the market price of our common stock.
Pursuant
to an agreement to be entered into concurrently with the issuance and sale of
the securities in this offering, our sponsor and its permitted transferees can
demand that we register the initial shares and the insider warrants, and the
shares of common stock issuable upon exercise of the insider warrants. The
registration rights will be exercisable with respect to the initial shares and
the insider warrants and the shares of common stock issuable upon exercise of
such insider warrants at any time commencing upon the date that such shares are
released from escrow. We will bear the cost of registering these securities. If
our sponsor exercises its registration rights in full, there will be an
additional 555,556 shares of common stock (assuming no exercise of the
underwriters’ over-allotment option) and up to 3,000,000 shares of common stock
issuable on exercise of the insider warrants eligible for trading in the public
market. The registration and availability of such a significant number of
securities for trading in the public market may have an adverse effect on the
market price of our common stock. In addition, the existence of the registration
rights may make our initial business transaction more costly or difficult to
conclude. This is because the stockholders of the target business may increase
the equity stake they seek in the combined entity or ask for more cash
consideration to offset the negative impact on the market price of our common
stock that is expected when the securities owned by our sponsor are
registered.
Because
we must furnish our stockholders with target business financial statements
prepared in accordance with and reconciled to U.S. generally accepted accounting
principles, we will not be able to complete a business transaction with some
prospective target businesses unless their financial statements are first
reconciled to U.S. generally accepted accounting principles.
The
federal securities laws require that a business transaction meeting certain
financial significance tests include historical and/or pro forma financial
statement disclosure in periodic reports and proxy materials submitted to
stockholders. We will be required to provide historical and /or pro forma
financial information to our stockholders when seeking approval of a business
transaction with one or more target businesses. These financial statements must
be prepared in accordance with, or be reconciled to, U.S. generally accepted
accounting principles, or GAAP, and the historical financial statements must be
audited in accordance with the standards of the Public Company Accounting
Oversight Board (United States), or PCAOB. These financial statement
requirements may limit the pool of potential target businesses we may
acquire.
Because
of our limited resources and the significant competition for business
transaction opportunities, including numerous companies with a business plan
similar to ours, it may be more difficult for us to complete a business
transaction.
Based on
publicly available information, approximately 163 similarly structured blank
check companies have completed initial public offerings since August 2003, and
numerous others have filed registration statements. Of these companies, 84
companies have consummated a business transaction, while 10 other companies have
announced that they have entered into definitive agreements or letters of intent
with respect to potential business transactions, but have not yet consummated
such business transactions and another 55 have already or will be
liquidating. Accordingly, there are approximately 14 blank check companies with
approximately $4.1 billion in trust accounts that are seeking to enter into a
business transaction. This will subject us to competition from a considerable
number of companies seeking to consummate a business transaction. Because of
this competition, we may not be able to effectuate a business transaction within
the required time period. Further, the fact that only 94 of such companies have
either consummated a business transaction or entered into a definitive agreement
for a business transaction may indicate that there are fewer attractive target
businesses available to such entities or that many privately-held target
businesses are not inclined to enter into these types of transactions with
publicly-held blank check companies like ours.
29
We expect
to encounter intense competition from other entities having a business objective
similar to ours, including private investors (which may be individuals or
investment partnerships), other blank check companies and other entities,
domestic and international, competing for the type of businesses we intend to
acquire. Many of these individuals and entities are well established and have
extensive experience in identifying and effecting, directly or indirectly,
acquisitions of companies operating in or providing services to various
industries. Many of these competitors possess greater technical, human and other
resources, or more local industry knowledge, than we do and our financial
resources will be relatively limited when contrasted with those of many of these
competitors. While we believe there are numerous target businesses we could
potentially acquire with the net proceeds of this offering, our ability to
compete with respect to the acquisition of certain target businesses that are
sizable will be limited by our available financial resources. This inherent
competitive limitation gives others an advantage in pursuing the acquisition of
certain target businesses. Furthermore, the obligation we have to seek
stockholder approval of a business transaction may delay the consummation of a
transaction. Also, our obligation to pay cash for the shares of common stock put
back to us in certain instances may reduce the resources available for a
business transaction. Any of these obligations may place us at a competitive
disadvantage in successfully negotiating a business transaction.
30
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements. All statements other than
statements of historical fact are, or may be deemed to be, forward looking
statements. Such forward-looking statements include statements regarding, among
others, (a) our expectations about possible business transactions, (b) our
growth strategies, (c) our future financing plans, and (d) our anticipated needs
for expenses. Forward-looking statements, which involve assumptions and describe
our future plans, strategies and expectations, are generally identifiable by use
of the words “may,” “will,” “should,” “expect,” “anticipate,” “approximate,”
“estimate,” “believe,” “intend,” “plan,” “budget,” “could,” “forecast,” “might,”
“predict,” “shall” or “project,” or the negative of these words or other
variations on these words or comparable terminology.
Forward-looking
statements are based on our current expectations and assumptions regarding our
business, potential target businesses, the economy and other future conditions.
Because forward-looking statements relate to the future, by their nature, they
are subject to inherent uncertainties, risks and changes in circumstances that
are difficult to predict. Our actual results may differ materially from those
contemplated by the forward-looking statements. You should not rely on any of
these forward-looking statements as statements of historical fact or as
guarantees or assurances of future performance. Important factors that could
cause actual results to differ materially from those in the forward-looking
statements include changes in local, regional, national or global political,
economic, business, competitive, market (supply and demand) and regulatory
conditions and the following:
|
·
|
our
status as a development stage
company;
|
|
·
|
the
reduction of the proceeds held in the trust account due to third party
claims;
|
|
·
|
our
selection of a prospective target business or
asset;
|
|
·
|
our
issuance of our capital shares or incurrence of debt to complete a
business transaction;
|
|
·
|
our
ability to consummate an attractive business transaction due to our
limited resources and the significant competition for business transaction
opportunities;
|
|
·
|
conflicts
of interest of our officers and
directors;
|
|
·
|
potential
current or future affiliations of our officers and directors with
competing businesses;
|
|
·
|
our
ability to obtain additional financing if
necessary;
|
|
·
|
our
sponsor’s ability to control or influence the outcome of matters requiring
stockholder approval due to its substantial interest in
us;
|
|
·
|
the
adverse effect the outstanding warrants may have on the market price of
our common stock;
|
|
·
|
the
adverse effect on the market price our common stock due to the existence
of registration rights with respect to the securities owned by our
sponsor;
|
|
·
|
the
lack of a market for our
securities;
|
|
·
|
our
dependence on our key personnel;
|
|
·
|
business
and market outlook; and
|
|
·
|
costs
of complying with applicable laws.
|
These
risks and others described under “Risk Factors” are not exhaustive.
Any
forward-looking statement made by us in this prospectus speaks only as of the
date on which we make it, and is expressly qualified in its entirety by the
foregoing cautionary statements. Factors or events that could cause our actual
results to differ may emerge from time to time, and it is not possible for us to
predict all of them. We undertake no obligation to publicly update any
forward-looking statement, whether as a result of new information, future
developments or otherwise.
31
USE
OF PROCEEDS
We
estimate that the net proceeds of this offering will be as set forth in the
following table:
Without
Over-
Allotment
Option
|
Over-Allotment
Option
Exercised in Full
|
|||||||
Gross
proceeds
|
||||||||
Proceeds
from units offered to the public(1)
|
$ | 50,000,000 | $ | 57,500,000 | ||||
Proceeds
from private placement
|
1,500,000 | 1,500,000 | ||||||
Total
gross proceeds
|
$ | 51,500,000 | 59,000,000 | |||||
Estimated
offering expenses(2)
|
||||||||
Underwriting
discount(3)
|
$ | 1,500,000 | $ | 1,725,000 | ||||
Legal
fees and expenses
|
$ | 250,000 | $ | 250,000 | ||||
Printing
and engraving expenses
|
50,000 | $ | 50,000 | |||||
Accounting
fees and expenses
|
37,500 | 37,500 | ||||||
SEC
filing fee
|
6,898 | 6,898 | ||||||
FINRA
filing fee
|
12,862 | 12,862 | ||||||
Blue
Sky filing fees
|
35,000 | 35,000 | ||||||
Miscellaneous
expenses
|
57,739 | 57,739 | ||||||
Total
offering expenses
|
$ | 1,950,000 | $ | 2,175,000 | ||||
Net
proceeds
|
$ | 49,550,000 | $ | 56,825,000 | ||||
Net
offering proceeds not held in trust
|
800,000 | 800,000 | ||||||
Total
proceeds held in trust
|
$ | 48,750,000 | 56,025,000 | |||||
Percentage
of public offering proceeds held in trust
|
97.5 | % | 97.4 | % |
Amount
|
Percentage
|
|||||||
Use
of net proceeds not held in trust (4)
|
||||||||
Due
diligence (excluding accounting and legal due diligence) of prospective
target(s)
|
$ | 100,000 | 12.5 | % | ||||
Legal
and accounting expenses attendant to the due diligence investigations,
structuring and negotiations of an initial business
transaction
|
300,000 | 37.5 | % | |||||
Administrative
services and support payable to our sponsor ($7,500 per month for up to 15
months)
|
112,500 | 14 | % | |||||
Reserve
for liquidation expenses
|
30,000 | 3.75 | % | |||||
Other
miscellaneous expenses, D&O insurance, audit fees and
reserves
|
257,500 | 32.19 | % | |||||
Total
|
$ | 800,000 | 100 | % |
(1) Includes
amounts payable to public stockholders holding up to 4,400,000 of the shares
sold in this offering (or 5,060,000 shares if the underwriters’ over allotment
option is exercised in full) who properly exercise their put rights. Such
amounts may become payable to our public stockholders who have properly
exercised their put rights upon our successful consummation of our initial
business transaction. Assuming a per share put price of $9.75 per share (or
approximately $9.74 per share stock if the underwriters’ over allotment option
is exercised in full), $42,900,000 of the proceeds of this offering (or
approximately $49,284,400 if underwriters’ over allotment option is exercised in
full) would be payable to such stockholders.
(2) A
portion of the offering expenses have been pre-funded with the proceeds of a
$10,000 loan from our sponsor. This loan will be repaid out of the proceeds of
this offering upon the consummation of this offering.
32
(3) No
discounts or commissions will be paid with respect to the purchase of the
insider warrants. For purposes of presentation, the underwriting
discount is reflected as the amount payable to the underwriters upon
consummation of this offering. The underwriting fee is equal to 3% of
the gross proceeds from the sale of units offered to the
public. Solely in the event we consummate our initial business
transaction, the following additional contingent fees will become payable to
Morgan Joseph from the amounts held in the trust account: (A) an advisory fee
equal to 1% of the gross proceeds from the sale of units offered to the public
(which fee shall be increased to 1.5% if we consummate our initial business
transaction with a business or asset introduced to us by Morgan Joseph) and (B)
a contingent placement fee equal to up to 2.5% of the aggregate amount of the
funds released from the trust account to us or to our target upon consummation
of our initial business transaction. Assuming no exercise of the underwriters’
over-allotment option, no consummation of an initial business transaction with a
business or asset introduced to us by Morgan Joseph, and 88% of our public
stockholders put their shares back to us for cash, we estimate the 1% advisory
fee to equal $500,000 and a 2.5% contingent fee to equal $133,750.
(4) These
expenses are estimates only. Our actual expenditures for some or all of these
items may differ from the estimates set forth herein. For example, we may incur
greater legal and accounting expenses than our current estimates in connection
with negotiating and structuring a business transaction based upon the level of
complexity of such business transaction. In the event we identify an
acquisition target in a specific industry subject to specific regulations, we
may incur additional expenses associated with legal due diligence and the
engagement of special legal counsel. In addition, our staffing needs may vary
and as a result, we may engage a number of consultants to assist with legal and
financial due diligence. We do not anticipate any change in our intended use of
proceeds, other than fluctuations among the current categories of allocated
expenses, which fluctuations, to the extent they exceed current estimates for
any specific category of expenses, would not be available for our
expenses.
Of the
net proceeds of this offering, an aggregate of $48,750,000 (or $56,025,000 if
the underwriters’ over-allotment option is exercised in full) will be deposited
into the trust account at [Deutsche Bank], maintained by Continental Stock
Transfer & Trust Company, as trustee. None of the funds held in trust will
be released from the trust account, other than to pay taxes, until the earlier
of (i) the consummation of a business transaction and (ii) the redemption of
100% of our public shares of common stock for a per share pro rata portion of
the trust account approximately 15 months from the date hereof. The proceeds
held in the trust account (net of taxes but exclusive of any contingent fees
payable to Morgan Joseph or used to pay public stockholders who have exercised
their put rights) may be used as consideration to pay the sellers of a target
business with which we ultimately complete a business transaction or, if there
are insufficient funds not held in trust, to pay other expenses relating to such
transaction such as reimbursement to insiders for out-of-pocket expenses, third
party due diligence expenses or potential finders fees, in each case only upon
the consummation of a business transaction. In the event there are funds
remaining in the trust account after satisfaction of all of such obligations,
such funds may be used to finance operations of the target business or to effect
other acquisitions, as determined by our board of directors at that time. All
amounts held in the trust account will be released to us on the closing of our
initial business transaction with a target business, subject to any amounts
payable upon the exercise of put rights.
Our
sponsor and certain of its affiliates share office space and share the cost of
secretarial, reception, telecommunication, equipment, supplies, and such other
office-related items as they deem appropriate. In return for the $7,500 that is
customarily permitted to be paid between blank check companies and their
sponsors for administrative related and general office services expenses in
financings of this nature, our sponsor has agreed to permit us to use its office
space and services under its existing office lease. This agreement commences on
the date of this prospectus and shall continue until the earliest to occur of
the consummation of a business transaction and 15 months from the date of this
prospectus.
We intend
to use a portion of the $800,000 not held in trust for due diligence, legal,
accounting, fees and expenses of the acquisition including investment banking
fees, and other expenses, including structuring and negotiating a business
transaction, as well as a possible down payment, reverse break up fees (a
provision which requires a payment to the target company if the financing for an
acquisition is not obtained), lock-up or “no-shop” provision (a provision
designed to keep target businesses from “shopping” around for transactions with
other companies on terms more favorable to such target businesses), if
necessary. While we do not have any current intention to use these funds as a
down payment or to fund a “no-shop” provision with respect to a particular
proposed business transaction, if we were to enter into such a an agreement
where we paid for the right to receive exclusivity from a target business, the
amount that would be used as a down payment or to fund a “no-shop” provision
would be determined based on the terms of the specific business transaction and
the amount of our available funds at the time. Our forfeiture of such funds
(whether as a result of our breach or otherwise) could result in our not having
sufficient funds to continue searching for, or conducting due diligence with
respect to, potential target businesses. In addition to the use of funds
described above, we could also use a portion of these funds to pay fees to
consultants to assist us with our search for a target business.
We may
not use all of the proceeds in the trust account in connection with a business
transaction, either because the consideration for the business transaction is
less than the proceeds in the trust account or because we finance a portion of
the consideration with our capital stock or the issuance of our debt securities.
In such event, the proceeds held in the trust account as well as any other net
proceeds not expended will be used to finance our operations, which may include
the target business(es) that we acquire in the business transaction, to effect
other acquisitions, or for expenses, as determined by our board of directors at
that time. We may use these funds, among other things, for director and officer
compensation, change-in-control payments or payments to affiliates, to finance
the operations of the target business, to make other acquisitions and to pursue
our growth strategy.
33
To the
extent that our capital stock or the issuance of our debt securities are used in
whole or in part as consideration to effect a business transaction, or in the
event that indebtedness from third parties is used, in whole or in part, as
consideration to effect a business transaction, the proceeds held in the trust
account which are not used to consummate a business transaction will be
disbursed to the combined company and will, along with any other net proceeds
not expended, be used to finance our operations. In the event that third party
indebtedness is used as consideration, our officers and directors would not be
personally liable for the repayment of such indebtedness.
Our
sponsor has loaned to us $10,000, which was used to pay a portion of the
expenses of this offering referenced in the line items above for SEC filing
fees, FINRA filing fees, and legal and audit fees and expenses. The loan will be
payable without interest upon the earlier of December 31, 2010 or on the closing
of this offering. The loan will be repaid out of the proceeds of this offering
not held in the trust account.
The
proceeds held in the trust account may be invested by the trust account agent
only in United States “government securities” within the meaning of Section
2(a)(16) of the Investment Company Act of 1940 with a maturity of 180 days or
less, or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the Investment Company Act of 1940. By restricting the
investment of the proceeds to these instruments, we intend to avoid being deemed
an investment company within the meaning of the Investment Company Act of
1940.
Other
than the $7,500 per month general and administrative services fees described
above, no compensation of any kind (including finders, consulting or other
similar fees or the issuance of any of our securities) will be paid to any of
our sponsor, officers, directors or any of our or their affiliates, prior to, or
for any services that they render in order to effectuate, or in connection with
the consummation of, a business transaction. However, such persons will receive
reimbursement, subject to board approval, for any out-of-pocket expenses
incurred by them in connection with activities on our behalf, such as
identifying potential target businesses, performing business due diligence on
suitable target businesses and business transactions, as well as traveling to
and from the offices, plants or similar locations of prospective target
businesses to examine their operations. Reimbursement for such expenses will be
paid by us out of the funds not held in the trust account and currently
allocated in the above table to “Legal and accounting expenses attendant to the
due diligence investigations, structuring and negotiations of a business
transaction,” “Due diligence (excluding accounting and legal due diligence) of
prospective targets” and “Other miscellaneous expenses, D&O insurance and
reserves.” Since the role of present management after a business transaction is
uncertain, we have no ability to determine what remuneration, if any, will be
paid to those persons after a business transaction.
A public
stockholder will be entitled to receive funds from the trust account (including
interest earned on such public stockholder’s portion of the trust account, but
net of taxes) only in the event of our liquidation, if such public stockholder
properly put his shares to us for cash in accordance with the conditions set
forth in this prospectus or if we redeem 100% of our public shares of common
stock for a per share pro rata portion of the trust account, including a portion
of the interest earned thereon, but net of any taxes (which redemption would
completely extinguish such holders’ rights as stockholders, including the right
to receive further liquidation distributions, if any) if we do not consummate a
business transaction within 15 months from the date of this prospectus. In no
other circumstances will a public stockholder have any right or interest of any
kind to or in the trust account. Our sponsor has waived its right to put back to
us any of its initial shares for a pro rata share of the trust account.
Additionally, our sponsor, directors and officers have agreed not to exercise
their put rights with respect to shares acquired during or subsequent to this
offering. Our sponsor has waived its rights to participate in any redemption
with respect to its initial shares upon our redemption of shares sold in this
offering if we fail to consummate an initial business transaction within 15
months. However, if our sponsor or any of our officers, directors or affiliates
acquire shares in or after this offering, they will be entitled to a pro rata
share of the trust account with respect to such shares upon our redemption in
the event we do not consummate a business transaction within the required time
period.
34
DIVIDEND
POLICY
We have
not paid any cash dividends on our common stock to date and do not intend to pay
cash dividends prior to the completion of a business transaction. The payment of
cash dividends in the future will be dependent upon our revenues and earnings,
if any, capital requirements and general financial condition subsequent to
completion of a business transaction. The payment of any dividends subsequent to
a business transaction will be within the discretion of our board of directors
at such time. It is the present intention of our board of directors to retain
all earnings, if any, for use in our business operations and, accordingly, our
board of directors does not anticipate declaring any dividends in the
foreseeable future. In addition, our board of directors is not currently
contemplating and does not anticipate declaring any stock dividends in the
foreseeable future, except if we increase the size of the offering pursuant to
Rule 462(b) under the Securities Act, in which case we will effect a stock
dividend in such amount to maintain our sponsor’s ownership at 10% of our issued
and outstanding shares of our common stock, upon the consummation of this
offering. Further, if we incur any indebtedness, our ability to declare
dividends may be limited by restrictive covenants we may agree to in connection
therewith.
35
DILUTION
The
difference between the public offering price per share of common stock, assuming
no value is attributed to the warrants included in the units we are offering
pursuant to this prospectus, and the pro forma net tangible book value per share
of our common stock after this offering constitutes the dilution to investors in
this offering. Net tangible book value per share is determined by dividing our
net tangible book value, which is our total tangible assets less total
liabilities (including the value of common stock which may be put to us for
cash), by the number of outstanding shares of our common stock.
At
November 11, 2009, our net tangible book value was ($1,076) or
approximately ($.002) per share of common stock. After giving effect to the sale
of 5,000,000 shares of common stock included in the units we are offering by
this prospectus, the deduction of underwriting discounts and commissions and
estimated expenses of this offering, our pro forma net tangible book value at
November 11, 2009 would have been $6,040,174 or $5.23 per share,
representing an immediate increase in net tangible book value (as decreased by
the value of the approximately 4,400,000 shares of common stock that may be put
to us for cash, assuming no exercise of the underwriters’ over-allotment option)
of $5.23 per share to our sponsor and an immediate dilution of $4.77 per share
or 47.73% to new investors not exercising their put rights.
The
following table illustrates the dilution to the new investors on a per share
basis, assuming no value is attributed to the warrants included in the
units:
Public
offering price
|
$ | 10.00 | ||||||
Net
tangible book value before this offering
|
$ | .002 | ||||||
Increase
attributable to new investors
|
5.23 | |||||||
Pro
forma net tangible book value after this offering
|
5.23 | |||||||
Dilution
to new investors
|
$ | 4.77 |
For
purposes of presentation, we have reduced our pro forma net tangible book value
after this offering (assuming no exercise of the underwriters’ over-allotment
option) by $48,750,000 because holders of 88% of our public shares may elect to
put their shares back to us for cash at a per share put price equal to the
amount in the trust account calculated as of two business days prior to the
consummation of the proposed business transaction, net of taxes, divided by the
number of shares of common stock sold in this offering.
The
following table sets forth information with respect to our sponsor and the new
investors:
Total shares(1)
|
Total consideration
|
Average
price per
share (1)
|
||||||||||||||||||
Number
|
%
|
Amount
|
%
|
|||||||||||||||||
Sponsor
|
555,556 | 10 | % | $ | 25,000 | 0.01 | % | $ | 0.05 | |||||||||||
New
investors
|
5,000,000 | 90 | 50,000,000 | 99.99 | $ | 10.00 | ||||||||||||||
Total
|
5,555,556 | 100 | % | $ | 50,025,000 | 100.00 | % |
(1) Assumes
no exercise of the underwriters’ over-allotment option and that 83,333 initial
shares of common stock have been forfeited by our sponsor as a result
thereof.
36
The pro
forma net tangible book value after the offering is calculated as
follows:
Numerator:
|
||||
Net
tangible book value before this offering
|
$ | (1,076 | ) | |
Proceeds
from this offering and sale of insider warrants
|
49,550,000 | |||
Offering
costs incurred in advance and excluded from net tangible book value before
this offering
|
25,000 | |||
Less:
Defered Underwriters Fee
|
(633,750 | ) | ||
Less:
Proceeds held in the trust account which may be put to us for cash ($9.75
x 4,400,000 shares)
|
$ | (42,900,000 | ) | |
6,040,174 |
Denominator:
|
||||
Shares
of common stock outstanding prior to this offering(1)
|
555,556 | |||
Shares
of common stock included in the units offered
|
5,000,000 | |||
Less:
Shares of common stock subject to put right ([4,400,000]
× 100%)
|
(4,400,000 | ) | ||
$ | 1,155,556 |
(1) Assumes
no exercise of the underwriters’ over-allotment option and that 83,333 initial
shares of common stock have been forfeited by our sponsor as a result
thereof.
37
CAPITALIZATION
The
following table sets forth our capitalization as of November 11, 2009 and our
capitalization as adjusted to give effect to this offering and the sale of the
insider warrants and the application of the estimated net proceeds therefrom as
described in “Use of Proceeds” (excluding the expected interest income on the
proceeds held in trust):
Actual
|
As
Adjusted
|
|||||||
Total
debt
|
$ | 10,000 | $ | — | ||||
Note
payable to shareholder (1)
|
10,000 | |||||||
Contingent
Fees ($0.30 per share) (2)
|
633,750 | |||||||
Common
Stock, 83,333 shares subject to forfeiture, actual; 4,400,000 shares
subject to possible put right at $9.75 per share, as
adjusted
|
$ | — | $ | 42,900,000 | ||||
Stockholders’
equity:
|
||||||||
Preferred
Stock, $0.0001 par value, 1,000,000 shares authorized; 0 issued
and outstanding, actual and as adjusted
|
$ | — | $ | — | ||||
Common
Stock, $0.0001 par value, 100,000,000 shares authorized, 555,556 shares
issued and outstanding (assuming no exercise of the underwriters’
over-allotment option), actual; 100,000,000 shares authorized, 5,555,556
shares issued and outstanding (assuming no exercise of the underwriters’
over-allotment option), including 4,400,000 shares subject to possible put
right, as adjusted(3)
|
64 | 556 | ||||||
Additional
paid-in capital
|
24,936 | 6,040,694 | ||||||
Deficit
accumulated during the development stage
|
(1,076 | ) | (1,076 | ) | ||||
Total
stockholders’ equity
|
$ | 23,924 | $ | 6,040,174 | ||||
Total
capitalization
|
$ | 33,924 | $ | 49,573,924 |
(1) Amounts
loaned pursuant to the promissory note issued to our sponsor are due on the
earlier of December 31, 2010 and the closing of this offering.
(2) Excludes
contingent fees payable to Morgan Joseph solely in the event we consummate a
business transaction, as follows (A) an advisory fee equal to 1% of the gross
proceeds from the sale of units offered to the public (which fee shall be
increased to 1.5% if we consummate our initial business transaction with a
business or asset introduced to us by Morgan Joseph) and (B) a contingent
placement fee equal to up to 2.5% of the aggregate amount of the funds released
from the trust account to us or to our target upon consummation of our initial
business transaction.
(3) If
we consummate a business transaction, the put rights afforded to our
stockholders may result in the conversion into cash of no more than 88% of the
aggregate number of shares sold in this offering at a per-share put price equal
to the amount in the trust account, as of two business days prior to the
consummation of the proposed business transaction, divided by the number of
shares sold in this offering.
38
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
We are a
newly-organized blank check company formed on October 29, 2009, for the purpose
of acquiring one or more operating businesses or assets, through a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization,
exchangeable share transaction or other similar business transaction. We do not
have any specific merger, capital stock exchange, asset acquisition, stock
purchase, reorganization, exchangeable share transaction or other similar
business transaction under consideration and we have not, nor has anyone on our
behalf, contacted any prospective target business or had any discussions, formal
or otherwise, with respect to such a transaction.
We intend
to use cash from the proceeds of this offering, our capital stock, incurred
debt, or a combination of cash, capital stock and debt, in effecting our initial
business transaction. The issuance of additional shares of our capital
stock:
|
·
|
may
significantly reduce the equity interest of investors in this
offering;
|
|
·
|
may
subordinate the rights of holders of common stock if preferred stock is
issued with rights senior to those afforded to the holders of our common
stock;
|
|
·
|
may
likely cause a change in control if a substantial number of our shares of
common stock are issued, which may affect, among other things, our ability
to use our net operating loss carry forwards, if any, and most likely will
also result in the resignation or removal of our present officers and
directors; and
|
|
·
|
may
adversely affect prevailing market prices for our common stock and/or
warrants.
|
Similarly,
if we incur substantial debt, it could result in:
|
·
|
default
and foreclosure on our assets if our operating cash flow after a business
transaction is insufficient to pay our debt
obligations;
|
|
·
|
acceleration
of our obligations to repay the indebtedness even if we have made all
principal and interest payments when due if the debt security contains
covenants that require the maintenance of certain financial ratios or
reserves and any such covenant is breached without a waiver or
renegotiation of that covenant;
|
|
·
|
our
immediate payment of all principal and accrued interest, if any, if the
debt security is payable on demand;
|
|
·
|
covenants
that limit our ability to acquire capital assets or make additional
acquisitions;
|
|
·
|
our
inability to obtain additional financing, if necessary, if the debt
security contains covenants restricting our ability to obtain additional
financing while such security is
outstanding;
|
|
·
|
our
inability to pay dividends on our common
stock;
|
|
·
|
using
a substantial portion of our cash flow to pay principal and interest on
our debt, which will reduce the funds available for dividends on our
common stock if declared, expenses, capital expenditures, acquisitions and
other general corporate purposes;
|
|
·
|
limitations
on our flexibility in planning for and reacting to changes in our business
and in the industry in which we
operate;
|
|
·
|
increased
vulnerability to adverse changes in general economic, industry and
competitive conditions and adverse changes in government regulation;
and
|
|
·
|
limitations
on our ability to borrow additional amounts for expenses, capital
expenditures, acquisitions, debt service requirements, execution of our
strategy and other purposes and other disadvantages compared to our
competitors who have less debt.
|
Results
of Operations and Known Trends or Future Events
We have
neither engaged in any operations nor generated any revenues to date. Our entire
activity since inception has been to prepare for our proposed fundraising
through an offering of our equity securities. Following this offering, we will
not generate any operating revenues until after completion of our initial
business transaction, at the earliest. We will generate non-operating income in
the form of interest income on cash and cash equivalents after this offering.
After this offering, we expect to incur increased expenses as a result of being
a public company (for legal, financial reporting, accounting and auditing
compliance), as well as for due diligence expenses. We expect our expenses to
increase substantially after the closing of this offering and the private
placement of the insider warrants.
39
Related
Party Transactions
Our
sponsor has loaned $10,000 to us as of the date of this prospectus to pay a
portion of our expenses related to this offering, such as SEC filing fees, FINRA
filing fees and legal and accounting fees and expenses. The loan will be payable
without interest on the earlier of December 31, 2010 or the closing of this
offering. We intend to repay this loan from the proceeds of this offering not
being placed in the trust account.
Our
sponsor and certain of its affiliates share office space and share the cost of
secretarial, reception, telecommunication, equipment, supplies, and such other
office-related items as they deem appropriate. In return for the $7,500 that is
customarily permitted to be paid between blank check companies and their
sponsors in financings of this nature for administrative related and general
office services expenses, our sponsor has agreed to permit us to use its office
space and services under its existing office lease. This agreement commences on
the date of this prospectus and shall continue until the earliest to occur of
the consummation of a business transaction and 15 months from the date of this
prospectus.
Mark D.
Klein, our chief executive officer and president, and Paul D. Lapping, our chief
financial officer, treasurer, secretary and director, have agreed that they will
be liable to us if and to the extent any claims by a vendor for services
rendered or products sold to us, or a prospective target business with which we
have discussed entering into a transaction agreement reduce the amounts in the
trust account to below $9.75 per share (or approximately $9.74 per share if the
underwriter’s over-allotment option is exercised in full), except as to any
claims by a third party who executed a waiver of any and all rights to seek
access to the trust account and except as to any claims under our indemnity of
the underwriters of this offering against certain liabilities, including
liabilities under the Securities Act. In the event that an executed waiver is
deemed to be unenforceable against a third party, Messrs. Klein and Lapping will
not be responsible to the extent of any liability for such third party
claims.
In
addition, in the event we are forced to liquidate and do not have sufficient
funds from our remaining assets outside of the trust account, our sponsor has
agreed to advance us the funds necessary to pay any and all costs involved or
associated with the process of liquidation and the return of the funds in the
trust account to our public stockholders (currently anticipated to be no more
than approximately $30,000) and has agreed not to seek repayment for such
expenses.
Liquidity
and Capital Resources
Our
liquidity needs have been satisfied to date by our sponsor through its payment
of $25,000 for the purchase of 638,889 shares of our common stock (up to 83,333
of which shares are subject to forfeiture if the underwriters’ over-allotment
option is not exercised in full), and its advance of $10,000.
We
estimate that the net proceeds from the sale of the units in this offering will
be approximately $48,750,000 (or $56,025,000 if the underwriters’ over-allotment
option is exercised in full), after giving effect to $800,000 from the proceeds
of this offering not being held in trust.
We intend
to use substantially all of the funds held in the trust account (net of taxes),
to consummate our initial business transaction. To the extent that our capital
stock or debt is used, in whole or in part, as consideration to consummate our
initial business transaction, the remaining proceeds held in the trust account
will be used as working capital to finance the operations of the target business
or businesses, make other acquisitions and pursue our growth
strategies.
We
believe that, upon the date of this prospectus, the $800,000 not held in trust
will be sufficient to allow us to operate for at least the next 15 months. Over
this time period, we will be using these funds for identifying and evaluating
prospective acquisition candidates, performing business due diligence on
prospective target businesses, traveling to and from the property and asset
locations of prospective target businesses, reviewing corporate, title,
environmental, financial documents and material agreements regarding prospective
target businesses, audit fees and structuring, negotiating and consummating the
business transaction. In order to meet our working capital needs following the
consummation of this offering, certain of our officers and directors may, but
are not obligated to, loan us funds, from time to time, or at any time, in
whatever amount such officer or director deems reasonable in their sole
discretion, which may be convertible into warrants of the post business
transaction entity at a price of $0.50 per warrant. The warrants
would be identical to the insider warrants. The holders of a majority
of such warrants (or underlying shares) will be entitled to demand that we
register these securities pursuant to an agreement to be entered into at the
time of the loan. The holders of a majority of these securities would
have certain “piggy-back” registration rights with respect to registration
statements filed subsequent to such date. We will bear the expense
incurred with the filing of any such registration statements.
40
We
estimate that we will incur approximately:
|
·
|
$100,000
of expenses for the due diligence (excluding accounting and legal due
diligence) of prospective target businesses by our officers, directors and
sponsor;
|
|
·
|
$300,000
of legal and accounting expenses attendant to the due diligence
investigations, structuring and negotiating of an initial business
transaction;
|
|
·
|
$112,500
for administrative services and support payable to our sponsor ($7,500 per
month for 15 months);
|
|
·
|
$30,000
reserve for liquidation expenses;
and
|
|
·
|
$257,500
that will be used for other miscellaneous expenses and reserves, including
for director and officer liability insurance premium, audit fees, as well
as stock transfer agent
expenses.
|
These
amounts are estimates and may differ materially from our actual expenses. In
addition, we could use a portion of the funds not being placed in trust to pay
commitment fees for financing, fees to consultants to assist us with our search
for a target business or as a down payment or to fund a “no-shop” provision (a
provision designed to keep target businesses from “shopping” around for
transactions with other companies on terms more favorable to such target
businesses) with respect to a particular proposed business transaction, although
we do not have any current intention to do so. If we entered into an agreement
where we paid for the right to receive exclusivity from a target business, the
amount that would be used as a down payment or to fund a “no-shop” provision
would be determined based on the terms of the specific business transaction and
the amount of our available funds at the time. Our forfeiture of such funds
(whether as a result of our breach or otherwise) could result in our not having
sufficient funds to continue searching for, or conducting due diligence with
respect to, prospective target businesses.
We do not
believe we will need to raise additional funds following the date of this
prospectus until the consummation of our initial business transaction to meet
the expenditures required for operating our business. However, we may need to
raise additional funds through a private offering of debt or equity securities
if such funds are required to consummate a business transaction that is
presented to us. Subject to compliance with applicable securities laws, we would
only consummate such financing simultaneously with the consummation of our
initial business transaction.
We have
evaluated the appropriate accounting treatment for the insider warrants and the
warrants attached to the public units. As we are not required to net-cash settle
such warrants under any circumstances, including when we are unable to maintain
sufficient registered shares to settle such warrants, the terms of the warrants
satisfy the applicable requirements of paragraph 11 of SFAS 133, which provides
guidance on identifying those contracts that should not be accounted for as
derivative instruments, and paragraphs 12-33 of EITF 00-19. Accordingly, we
intend to classify such instruments within permanent equity as additional
paid-in capital.
We
believe the purchase price of the insider warrants is greater than the fair
value of such warrants. Therefore, we will not be required to incur a
compensation expense in connection with the purchase by our sponsors of the
insider warrants.
Controls
and Procedures
We have
determined that our system of internal controls is appropriate for our business
as of the date of the prospectus, due to the number and nature of the
transactions included in our financial statements.
As of the
date of this prospectus, we have not completed an assessment, nor have our
auditors tested our system of internal control. We expect that we will be
required to comply with the internal control requirements of the Sarbanes-Oxley
Act for the fiscal year ending December 31, 2011.
We expect
to reassess our controls at the time of the offering, and, if necessary,
implement additional controls in order that our internal control system can
continue to be effective for the period prior to a business transaction.
Additionally, we expect to assess the internal controls of our target business
or businesses prior to the completion of our business transaction and, if
necessary, to implement and test additional controls as we may determine are
necessary in order to state that we continue to maintain an effective system of
internal controls. Our control structure after the acquisition of a target
business may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding the adequacy of internal controls. Many small and mid-sized target
businesses we may consider for a business transaction may have internal controls
that are deficient in areas such as:
41
|
·
|
staffing
for financial, accounting and external reporting areas, including
segregation of duties;
|
|
·
|
reconciliation
of accounts;
|
|
·
|
proper
recording of expenses and liabilities in the period to which they
relate;
|
|
·
|
evidence
of internal review and approval of accounting
transactions;
|
|
·
|
documentation
of processes, assumptions and conclusions underlying significant
estimates; and
|
|
·
|
documentation
of accounting policies and
procedures.
|
Because
it will take time, management involvement and perhaps outside resources to
determine what internal control improvements are necessary for us to meet
regulatory requirements and market expectations for our operation of a target
business, we may incur significant expense in meeting our public reporting
responsibilities, particularly in the areas of designing, enhancing or
remediating internal and disclosure controls. Doing so effectively may also take
longer than we expect, thus increasing our exposure to financial fraud or
erroneous financing reporting.
Once our
management’s assessment on internal controls is in process, we will retain our
independent registered public accounting firm to audit and render an opinion on
such assessment when required by Section 404. The independent registered public
accounting firm may identify additional issues concerning our internal controls
or a target business’s internal controls while performing their audit of
internal control over financial reporting. The results of management’s
assessment and/or the audit of management’s assessment by our independent
registered public accounting firm, may result in the identification of
additional deficiencies in internal controls and we may incur additional expense
in designing, enhancing and remediating internal and disclosure
controls.
Quantitative
And Qualitative Disclosures About Market Risk
The net
proceeds of this offering, including amounts in the trust account, will be
invested in U.S. government treasury bills with a maturity of 180 days or less
or in money market funds meeting certain conditions under Rule 2a-7 under the
Investment Company Act. Due to the short-term nature of these investments, we
believe there will be no associated material exposure to interest rate
risk.
Off-Balance
Sheet Arrangements; Commitments And Contractual Obligations; Quarterly
Results
As of
November 11, 2009, we did not have any off-balance sheet arrangements as defined
in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or
contractual obligations. No unaudited quarterly operating data is included in
this prospectus as we have conducted no operations to date.
Recent
Accounting Pronouncements
In June
2006, the Financial Accounting Standards Board, or FASB, issued FASB
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes—an
interpretation of FASB Statement No. 109”, or “FIN 48”. FIN 48 prescribes a
recognition threshold and measurement attribute for financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return, and also provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods, disclosure, and
transition. FIN 48 is effective for fiscal years beginning after December 15,
2006. We adopted the provisions of FIN 48 from our inception (October 29, 2009).
The adoption of FIN 48 had no effect on our financial position or results of
operations.
In
September 2006, the FASB issued FASB Statement No. 157, “Fair Value
Measurements,” or “SFAS 157”. The standard provides guidance for using fair
value to measure assets and liabilities. The standard also responds to
investors’ requests for expanded information about the extent to which companies
measure assets and liabilities at fair value, the information used to measure
fair value, and the effect of fair value measurements on earnings. The standard
applies whenever other standards require or permit assets or liabilities to be
measured at fair value. The standard does not expand the use of fair value in
any new circumstances. SFAS 157 must be adopted prospectively as of the
beginning of the year it is initially applied. SFAS 157 is effective for
financial statements issued for fiscal years beginning after November 15, 2007,
and interim periods within those fiscal years. We are still evaluating the
impact that this standard will have on our financial position and results of
operations.
42
In
February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities—Including an amendment of FASB
Statement No. 115,” or SFAS 159. SFAS 159 creates a “fair value option” under
which an entity may elect to record certain financial assets or liabilities at
fair value upon their initial recognition. Subsequent changes in fair value
would be recognized in earnings as those changes occur. The election of the fair
value option would be made on a contract-by contract basis and would need to be
supported by concurrent documentation or a preexisting documented policy. SFAS
159 requires an entity to separately disclose the fair value of these items on
the balance sheet or in the footnotes to the financial statements and to provide
information that would allow the financial statement user to understand the
impact on earnings from changes in the fair value. SFAS 159 is effective for us
beginning with fiscal year 2009. We are currently evaluating the impact that the
adoption of SFAS 159 will have on our financial position and results of
operation.
43
PROPOSED
BUSINESS
Introduction
57th
Street General Acquisition Corp. is a newly-organized, blank check company
formed on October 29, 2009 for the purpose of acquiring, through a merger,
capital stock exchange, asset acquisition, stock purchase, reorganization,
exchangeable share transaction or other similar business transaction an
unidentified operating business or assets. We do not have any specific merger
capital stock exchange, asset acquisition, stock purchase, reorganization,
exchangeable share transaction or other similar business transaction under
consideration and we have not, nor has anyone on our behalf, contacted any
prospective target business or had any discussions, formal or otherwise, with
respect to such a transaction.
We will
seek to capitalize on the significant strength of our management team. Each of
our executive officers and directors has over 20 years of experience advising,
acquiring, financing and selling private and public companies in a variety of
industries and has prior experience with a blank check company. We believe that
our extensive contacts and sources, ranging from private and public company
contacts, private equity funds, and investment bankers to attorneys, accountants
and business brokers, will allow us to generate acquisition opportunities. In
addition, our executive officers and the majority of our directors have already
been involved in the successful initial public offering and the subsequent
consummation of a business combination for a blank check company, Great American
Group, Inc. (formerly, Alternative Asset Management Acquisition
Corp.). Our executive officers played a key role throughout the
business combination transaction for Great American Group, Inc, including
assisting in identifying numerous suitable acquisition candidates including the
ultimate target, structuring and negotiating the transaction and assisting in
the proxy solicitation of stockholder approval for such
acquisition.
We do not
have any specific initial business transaction under consideration, and we have
not nor has anyone on our behalf, contacted any prospective target business or
had any discussions, formal or otherwise, with respect to such a transaction.
From the period prior to our formation through the date of this prospectus,
there have been no communications or discussions between any of our officers and
directors or our sponsor and any of their potential contacts or relationships
regarding a potential initial business transaction. Additionally, we have not,
nor has anyone on our behalf, taken any measure, directly or indirectly, to
contact any suitable acquisition candidate, nor have we engaged or retained any
agent or other representative to do the same.
Business
Strategy
We will
use the same disciplined approach that our management team has used in the past
when acquiring target businesses. We have identified the
following criteria that we believe are important and that we intend to use in
evaluating business transaction opportunities. While we intend to utilize these
criteria in evaluating business transaction opportunities, we expect that no
individual criterion will entirely determine a decision to pursue a particular
opportunity. Further, any particular business transaction opportunity which we
ultimately determine to pursue may not meet one or more of these
criteria:
|
·
|
History of
profitability and free cash flow. We will seek to
acquire one or more businesses or assets that have a history of, or
potential for, strong, stable free cash flow generation. We will focus on
companies that have predictable and recurring revenue
streams.
|
|
·
|
Strong
management team. We will seek to acquire one or more
businesses or assets that have strong, experienced management teams or
those that provide a platform for us to assemble an effective and
experienced management team. We will focus on management teams with a
proven track record of driving revenue growth, enhancing profitability and
creating value for their
stockholders.
|
|
·
|
Opportunities
for add-on acquisitions. We will seek to acquire one or
more businesses or assets that we can grow both organically and through
acquisitions. In addition, our ability to source proprietary opportunities
and execute transactions will help the business we acquire grow through
acquisition, and thus serve as a platform for further add-on
acquisitions.
|
|
·
|
Spin-offs /
divestitures from larger companies. We will
focus on one or more businesses or assets that are part of larger
companies where the owners seek to divest or spin-off in order to monetize
their investment.
|
|
·
|
Defensible
business niche. We will focus on one or more businesses
or assets that have a leading or niche market position and that
demonstrate advantages when compared to their competitors, which may help
to protect their market position and profitability and deliver strong free
cash flow.
|
|
·
|
Diversified
customer and supplier base. We will
pursue one or more businesses or assets that have a diversified customer
and supplier base. Companies with a diversified customer and supplier base
are generally better able to endure economic downturns, industry
consolidation, changing business preferences and other factors that may
negatively impact their customers, suppliers and
competitors.
|
44
We have
not established any other specific attributes or criteria (financial or
otherwise) for business transaction opportunities. In evaluating business
transaction opportunities, we may also consider a variety of factors, including
one or more of the following:
|
·
|
financial
condition and results of
operations;
|
|
·
|
growth
potential;
|
|
·
|
experience
and skill of management and availability of additional
personnel;
|
|
·
|
capital
requirements;
|
|
·
|
stage
of development of the business and its products or
services;
|
|
·
|
existing
distribution arrangements and the potential for
expansion;
|
|
·
|
degree
of current or potential market acceptance of the products or
services;
|
|
·
|
proprietary
aspects of products and the extent of intellectual property or other
protection for products or
formulas;
|
|
·
|
impact
of regulation on the business;
|
|
·
|
regulatory
environment of the industry;
|
|
·
|
seasonal
sales fluctuations and the ability to offset these fluctuations through
other business transactions; and
|
|
·
|
costs
associated with effecting the business
transaction.
|
Competitive
strengths
We
believe our specific competitive strengths to be the following:
|
·
|
Prior Blank
Check Company Experience. Our management team,
including our executive officers and the majority of our directors, has
already been involved in the successful initial public offering and the
subsequent consummation of a business combination for a prior blank check
company, Great American Group, Inc. (formerly, Alternative Asset
Management Acquisition Corp., which we refer to as AAMAC. AAMAC completed
an initial public offering in August 2007, raising gross proceeds of
$414 million at an offering price of $10.00 per unit. In August 2008,
AAMAC acquired Great American Group, a leading provider of asset
disposition solutions and valuation and appraisal services to a wide range
of retail, wholesale and industrial clients, as well as lenders, capital
providers, private equity investors and professional service
firms. Messrs. Levitt and Klein, our Chairman and Chief
Executive Officer, respectively, played a key role throughout the business
combination transaction, including assisting in identifying various
suitable acquisition candidates, including the ultimate target,
structuring and negotiating the transaction and assisting in the proxy
solicitation of stockholder approval for such acquisition. They continue
to serve as independent directors of Great American Group, Inc. We believe
our management’s prior acquisition experience with a blank check company
represents a significant competitive
advantage.
|
|
·
|
Extensive
Public, Private Equity and Mergers and Acquisitions
Contacts. Our management team has an extensive base of
contacts in the public and private equity markets and mergers and
acquisitions industry that they have developed through their collective
experience. We believe that the members of our management team have strong
working relationships with principals as well as intermediaries who
constitute our most likely source of identifying prospective business
transactions. In addition, our management team, through its present and
historical membership on various boards of directors, has developed a
network of business relationships with members on the board of directors
of other businesses, which greatly extends our access to privately held
companies. We believe that these contacts will be important in generating
acquisition opportunities for us.
|
45
|
·
|
Management
Operating and Investing Experience. Each of our
executive officers and directors has over 20 years of experience advising,
acquiring, financing and selling private and public companies in various
industries. Furthermore, our management team has extensive experience
working together closely. Our experience with sourcing, due diligence,
structuring, negotiating and closing acquisition and growth financing
transactions spans both the public and private markets. Our
management team has acquisition and operating experience in a number of
businesses in various industries (such as industrial manufacturing,
retail, real estate, financial services, healthcare, business services and
consumer products). We believe that this breadth of experience provides us
with a competitive advantage in evaluating businesses and acquisition
opportunities over managers who have little or no direct operating
experience.
|
Status
as a public company
We
believe our structure will make us an attractive business transaction partner to
prospective target businesses. As an existing public company, we will offer a
target business an alternative to the traditional initial public offering
through a merger or other business transaction. In this situation, the owners of
the target business would exchange their shares of stock in the target business
for shares of our stock. We believe target businesses will find this path to be
less expensive, and offer greater certainty of becoming a public company than
the typical initial public offering process. In an initial public offering,
there are typically expenses incurred in marketing, roadshow and public
reporting efforts that will likely not be present to the same extent in
connection with a business transaction with us. Furthermore, once a proposed
business transaction is approved by our stockholders and the transaction is
consummated, the target business will have effectively become public, whereas an
initial public offering is always subject to the underwriters’ ability to
complete the offering, as well as general market conditions that could prevent
the offering from occurring. Once public, we believe the target business would
have greater access to capital and additional means of creating management
incentives that are better aligned with stockholders’ interests than it would as
a private company. It can offer further benefits by augmenting a company’s
profile among potential new customers and vendors and aid in attracting talented
employees.
Strong
financial position and flexibility
With a
trust account initially in the amount of $48,750,000 and a public market for our
common stock, we offer a target business a variety of options to facilitate a
future business transaction and fund growth and expansion of business
operations. Because we are able to consummate a business transaction using our
capital stock, debt or a combination of the foregoing, we have the flexibility
to use an efficient structure allowing us to tailor the consideration to be paid
to the target business to address the needs of the parties. However, if our
business transaction requires us to use substantially all of our cash to pay the
purchase price, we may need to arrange third party financing to help fund our
business transaction. Since we have no specific business transaction under
consideration, we have not taken any steps to secure third party financing, and
would only do so simultaneously with the consummation of our initial business
transaction. Accordingly, our flexibility in structuring a business transaction
will be subject to these contingencies.
Effecting
A Business Transaction
General
We are a
newly-organized blank check company formed for the purpose of acquiring, through
a merger, capital stock exchange, asset acquisition, stock purchase,
reorganization, exchangeable share transaction or other similar business
transaction an unidentified operating business or assets. Our sponsor, officers
and directors have agreed that we will only have 15 months from the date of this
prospectus to consummate our initial business transaction. If we do
not consummate a business transaction within such 15 month period, we shall (i)
cease all operations except for the purposes of winding up, (ii) redeem 100% of
our public shares of common stock for a per share pro rata portion of the trust
account (initially approximately $9.75 per share, or approximately $9.74 per
share if the underwriters’ over-allotment option is exercised in full), plus a
portion of the interest earned on the trust account but net of any taxes and
(iii) as promptly as possible following such redemption, dissolve and liquidate
the balance of our net assets to our remaining stockholders, as part of our plan
of dissolution and liquidation. We do not have any specific merger
capital stock exchange, asset acquisition, stock purchase, reorganization,
exchangeable share transaction or other similar business transaction under
consideration and we have not, nor has anyone on our behalf, contacted any
prospective target business or had any discussions, formal or otherwise, with
respect to such a transaction.
We intend
to utilize cash derived from the proceeds of this offering, our capital stock,
debt or a combination of these in effecting a business transaction. Although
substantially all of the net proceeds of this offering are intended to be
applied generally toward effecting a business transaction as described in this
prospectus, the proceeds are not otherwise being designated for any more
specific purposes. Accordingly, investors in this offering are investing without
first having an opportunity to evaluate the specific merits or risks of any one
or more business transactions.
46
We
anticipate structuring a business transaction to acquire 100% of the equity
interests or assets of the target business or businesses. We may, however,
structure a business transaction to acquire less than 100% of such interests or
assets of the target business but will not acquire less than a controlling
interest. We will acquire a controlling interest either through the acquisition
of at least 50.1% of the voting equity interests in the target or through the
acquisition of a significant voting equity interest that enables us to exercise
a greater degree of control over the target than any other person or group. In
the event we acquire less than a majority of the voting equity interests in the
target, we may seek an even greater degree of control through contractual
arrangements with the target and/or other target equity holders, or through
special rights associated with the target equity security that we hold, which
arrangements or rights may grant us the ability, among other things, to appoint
certain members of the board (or equivalent governing body) or management of the
target or the ability to approve certain types of significant transactions that
the target may seek to enter into.
We intend
to furnish our public stockholders with a notice containing substantially the
same material required in a Schedule 14C information statement setting forth the
details of our proposed business transaction. Following our mailing of such
notice, our public stockholders will have the right, up until the date provided
in such notice (which date shall not be less than 10 days from the mailing
thereof), to elect to put their shares back to us for cash. We will
consummate our initial business transaction only if no more than 88% of our
public shares are put to us for cash. Upon the consummation of our
business transaction, each of our public stockholders who properly elect to put
their shares back to us for cash will receive the pro-rata portion of the trust
account attributable to their shares of common stock, less taxes.
We will
proceed with the consummation of a business transaction only if (i) our board of
directors approves such business transaction and authorizes the mailing of a
notice in connection with the proposed business transaction and (ii) holders of
no more than 88% of our public shares elect to put their shares back to us for
cash.
In the
event we are required to seek stockholder approval to effect our business
transaction, we will distribute proxy materials to our public stockholders and
proceed with a business transaction only if (i) a majority of the outstanding
shares of common stock voted (calculated as of the close of business on the date
set forth in the relevant proxy materials as the last date on which stockholders
may vote their shares of common stock) are voted in favor of the business
transaction and (ii) holders of no more than 88% of our public shares elect to
put their shares back to us for cash. Our sponsor, officers,
directors or their affiliates may participate in privately-negotiated
transactions (as described in this prospectus), which could result in the
approval of a business transaction even if more than 50% of our stockholders
indicated their intention to vote against the business transaction.
We may
seek to raise additional funds through a private offering of debt or equity
securities in connection with the consummation of our initial business
transaction, and we may effect an initial business transaction using the
proceeds of such offering rather than using the amounts held in the trust
account. Subject to compliance with applicable securities laws, we would only
consummate such financing simultaneously with the consummation of our business
transaction. In the case of an initial business transaction funded with assets
other than the trust account assets, our notice disclosing the business
transaction would disclose the terms of the financing and, only if required by
law, regulation or a rule of the OTC Bulletin Board, we would seek stockholder
approval of such financing. In the absence of a requirement by law, regulation
or a rule of the OTC Bulletin Board, we would not seek separate stockholder
approval of such financing inasmuch as the financing portion of any initial
business transaction would be disclosed in our notice materials. There are no
prohibitions on our ability to raise funds privately or through loans in
connection with our initial business transaction. At this time, we are not a
party to any arrangement or understanding with any third party with respect to
raising any additional funds through the sale of securities or
otherwise.
We
have not identified a target business
To date,
we have not selected any target business on which to concentrate our search for
a business transaction. None of our officers, directors, promoters and other
affiliates has taken any action to identify or contact a potential business
transaction candidate or is currently engaged in discussions on our behalf with
representatives of other companies regarding the possibility of a potential
merger, capital stock exchange, asset or stock acquisition or other similar
business transaction with us, nor have we, nor any of our agents or affiliates,
been approached by any candidates (or representatives of any candidates) with
respect to a possible acquisition transaction with us. Additionally, we have
not, nor has anyone on our behalf, taken any measure, directly or indirectly, to
identify or locate any suitable target business, nor have we engaged or retained
any agent or other representative to identify or locate an acquisition
candidate. We have not established any specific attributes or criteria
(financial or otherwise) for prospective target businesses. We have also not
conducted any research with respect to identifying the number and
characteristics of the potential acquisition candidates. As a result, we cannot
assure you that we will be able to locate a target business or that we will be
able to engage in a business transaction on favorable terms.
47
Because
we are not subject to a limitation that a target business have any specific fair
market enterprise value at the time of our signing a definitive agreement in
connection with our initial business transaction, we will have virtually
unrestricted flexibility in identifying and selecting a prospective transaction
candidate. However, in any proposed business transaction, we must initially
acquire a controlling interest in the target business. We will acquire a
controlling interest either through the acquisition of at least 50.1% of the
voting equity interests in the target or through the acquisition of a
significant voting equity interest that enables us to exercise a greater degree
of control over the target than any other person or group. In the event we
acquire less than a majority of the voting equity interests in the target, we
may seek an even greater degree of control through contractual arrangements with
the target and/or other target equity holders, or through special rights
associated with the target equity security that we hold, which arrangements or
rights may grant us the ability, among other things, to appoint certain members
of the board (or equivalent governing body) or management of the target or the
ability to approve certain types of significant transactions that the target may
seek to enter into. We intend to pursue a transaction in which our stockholders
would continue to own a controlling interest of our company. There is no basis
for investors in this offering to evaluate the possible merits or risks of any
target business with which we may ultimately complete a business transaction. To
the extent we effect a business transaction with a financially unstable asset or
property, including entities without established records of sales or earnings,
we may be affected by numerous risks inherent in the business and operations of
such financially unstable property or asset. Although our management will
endeavor to evaluate the risks inherent in a particular target business, we
cannot assure you that we will properly ascertain or assess all significant risk
factors.
Sources
of target businesses
While we
have not yet identified any candidates for a business transaction, we believe
that there are numerous acquisition candidates for us to target. Following the
consummation of the offering, we expect to generate a list of prospective target
opportunities from a host of different sources. We anticipate that target
business candidates will be brought to our attention from various unaffiliated
sources, including investment bankers, venture capital funds, private equity
funds, leveraged buyout funds, management buyout funds and other members of the
financial community who are aware that we are seeking a business transaction
partner via public relations and marketing efforts, direct contact by management
or other similar efforts. Target businesses may also be brought to our attention
by unaffiliated sources as a result of being solicited by us through calls,
mailings or advertisements. Any finder or broker would only be paid a fee upon
the consummation of a business transaction. We expect the fee to be paid to such
persons would be determined in an arm’s length negotiation between the finder or
broker and us based on market conditions at the time we enter into an agreement
with such finder or broker. While we do not presently anticipate engaging the
services of professional firms that specialize in acquisitions on any formal
basis, we may decide to engage such firms in the future or we may be approached
on an unsolicited basis, in which event their compensation may be
paid from the offering proceeds not held in trust. Target businesses also will
be brought to our attention by our officers and directors, through their network
of joint venture partners and other industry relationships located in the United
States and elsewhere that regularly, in the course of their daily business
activities, see numerous varied opportunities. In no event will any of our
sponsor, officers or directors, or any of our or their respective affiliates be
paid any finder’s fee, consulting fee or any other form of compensation,
including the issuance of any of our securities, prior to, or for any services
they render, in order to effectuate the consummation of a business transaction.
Furthermore, we have adopted a policy prohibiting our sponsor, officers and
directors or any of our or their affiliates from receiving any finder’s fee or
other compensation from a target company for services rendered in connection
with a business transaction.
While we
do not intend to pursue an initial business transaction with a target business
that is affiliated with our sponsor, officers or directors, or any of our or
their affiliates, we are not prohibited from pursuing such a transaction. In the
event we seek to complete an initial business transaction with such a target
business, we would obtain an opinion from an independent investment banking firm
which is a member of FINRA that such an initial business transaction is fair to
our stockholders from a financial point of view. Generally, such opinion is
rendered to a company’s board of directors and investment banking firms may take
the view that stockholders may not rely on the opinion. Such view will not
impact our decision on which investment banking firm to hire.
Selection
of a target business and structuring of a business transaction
In
evaluating a prospective target business, our management will consider, among
other factors, the following factors likely to affect the performance of the
investment. We have not conducted any specific research to date with respect to
our potential acquisition candidates nor have we conducted any research with
respect to identifying the number and characteristics of the potential
acquisition candidates or the likelihood or probability of success of any
proposed business transaction. Since we have not yet analyzed the businesses
available for acquisition nor have we identified a target business, we have not
established any other specific attributes or criteria (financial or otherwise)
for the evaluation of prospective target businesses. We intend to pursue a
transaction in which our stockholders would continue to own a controlling
interest of our company. However, we could pursue a transaction, such as a
reverse merger or other similar transaction, in which we issue a substantial
number of new shares and, as a result, our stockholders immediately prior to
such transaction could own less than a majority of our outstanding shares
subsequent to such transaction.
48
Investment
Criteria
The
criteria set forth in “Proposed Business—Business Strategy” are not intended to
be exhaustive. Any evaluation relating to the merits of a particular business
transaction will be based, to the extent relevant, on the above factors as well
as other considerations deemed relevant by our management in effecting a
business transaction consistent with our business objective. In evaluating a
prospective target business, we will conduct an extensive due diligence review
which will encompass, among other things, meetings with incumbent management,
inspection of facilities and assets, as well as a review of all relevant
financial and other information which is made available to us. This due
diligence review will be conducted either by our management or by unaffiliated
third parties we may engage, although we have no current intention to engage any
such third parties. We will also seek to have all owners of any prospective
target business execute agreements with us waiving any right, title, interest or
claim of any kind in or to any monies held in the trust account. If any
prospective business or owner refused to execute such agreement, it is unlikely
we would continue negotiations with such business or owner, and in no event will
we enter into a definitive agreement for our initial business transaction
without such a waiver agreement.
At the
first meeting of the board of directors promptly following the closing of this
offering, we intend to establish policies and procedures for seeking and
evaluating appropriate business acquisition candidates. As part of our intended
processes, we may create a contact database indicating the materials received by
any prospective target candidates, when such materials were evaluated, the
parties primarily responsible for such evaluation and the reasons such candidate
was either rejected or the issues that, upon initial evaluation, require further
investigation. As the evaluation process progresses, numerous other factors,
which are expected to vary with each potential candidate we evaluate, are
expected to be relevant to a final determination of whether to move forward with
any particular acquisition candidate.
In the
case of all possible acquisitions, we will seek to determine whether the
transaction is advisable and in the best interests of us and our stockholders.
We believe it is possible that our attractiveness as a potential buyer of
businesses may increase after the consummation of an initial transaction and
there may or may not be additional business transaction opportunities as we grow
and integrate our acquisitions. We may or may not make future acquisitions.
Fundamentally, however, we believe that, following an initial transaction, we
could learn of, identify and analyze acquisition targets in the same way after
an initial transaction as we will before an initial transaction. To the extent
we are able to identify multiple acquisition targets and options as to which
business or assets to acquire as part of an initial transaction, we intend to
seek to consummate the acquisition which is most attractive and provides the
greatest opportunity for creating stockholder value. The determination of which
entity is the most attractive would be based on our analysis of a variety of
factors, including whether such acquisition would be in the best interests of
our securityholders, the purchase price, the terms of the sale, the perceived
quality of the assets and the likelihood that the transaction will
close.
The time
and costs required to select and evaluate a target business and to structure and
complete the business transaction cannot presently be ascertained with any
degree of certainty. Any costs incurred with respect to the identification and
evaluation of a prospective target business with which a business transaction is
not ultimately completed will result in a loss to us and reduce the amount of
capital available to otherwise complete a business transaction.
Possible
lack of business diversification
We may
seek to effect business transactions with more than one target business, and
there is no required minimum valuation standard for any target at the time of
such acquisition, as discussed above. We expect to complete only a single
business transaction, although this process may entail the simultaneous
acquisitions of several operating businesses. Therefore, at least initially, the
prospects for our success may be entirely dependent upon the future performance
of a single business operation. Unlike other entities that may have the
resources to complete several business transactions of entities or assets
operating in multiple industries or multiple areas of a single industry, it is
probable that we will not have the resources to diversify our operations or
benefit from the possible spreading of risks or offsetting of losses. By
consummating a business transaction with only a single entity or asset, our lack
of diversification may:
|
·
|
subject
us to numerous economic, competitive and regulatory developments, any or
all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to a business transaction;
and
|
|
·
|
result
in our dependency upon the development or market acceptance of a single or
limited number of products, processes or
services.
|
In the
event we ultimately determine to simultaneously acquire several businesses or
assets and such businesses or assets are owned by different sellers, we will
need for each of such sellers to agree that our purchase of its business or
assets is contingent on the simultaneous closings of the other acquisitions,
which may make it more difficult for us, and delay our ability, to complete the
business transaction. With multiple acquisitions, we could also face additional
risks, including additional burdens and costs with respect to possible multiple
negotiations and due diligence investigations (if there are multiple sellers)
and the additional risks associated with the subsequent assimilation of the
businesses or assets into a single operating business.
49
Limited
ability to evaluate the target business’s management
Although
we intend to closely scrutinize the incumbent management of a prospective target
business when evaluating the desirability of effecting a business transaction,
we cannot assure you that our assessment will prove to be correct. In addition,
we cannot assure you that new members that join our management following a
business transaction will have the necessary skills, qualifications or abilities
to manage a public company. Furthermore, the future role of our officers and
directors, if any, in the target business following a business transaction
cannot presently be stated with any certainty. While our current officers and
directors may remain associated in senior management or advisory positions with
us following a business transaction, they may not devote their full time and
efforts to our affairs subsequent to a business transaction. Moreover, they
would only be able to remain with us after the consummation of a business
transaction if they are able to negotiate employment or consulting agreements in
connection with such business transaction. Such negotiations would take place
simultaneously with the negotiation of the business transaction and could
provide for such individuals to receive compensation in the form of cash
payments and/or our securities for services they would render to us after the
consummation of the business transaction. While the personal and financial
interests of such individuals may influence their motivation in identifying and
selecting a target business, the ability of such individuals to remain with us
after the consummation of a business transaction will not be the determining
factor in our decision as to whether or not we will proceed with any potential
business transaction. Additionally, we cannot assure you that our officers and
directors will have significant experience or knowledge relating to the
operations of the particular target business.
Following
a business transaction, we may seek to recruit additional managers to supplement
or replace the incumbent management of the target business. We cannot assure you
that we will have the ability to recruit such managers, or that any such
managers we do recruit will have the requisite skills, knowledge or experience
necessary to enhance the incumbent management.
No
opportunity for stockholder approval of business transaction
We will
not seek stockholder approval before we effect our initial business transaction
unless the business transaction would require stockholder approval under
applicable state law. We will mail our public stockholders a notice
setting forth the details of a proposed business
transaction. Following our mailing of such notice, our public
stockholders will have the right, up until the date provided in such notice
(which date shall not be less than 10 days from the mailing thereof), to elect
to put their shares back to us for cash. We intend to prepare such
notice in substantially the same form as a Schedule 14C information statement
prepared in accordance with the Exchange Act, which will include, among other
matters [a description of the operations of the target business, and if
applicable, historical financial statements of a target business].
We will
not submit an initial business transaction to our stockholders for approval
unless we are required to do so under applicable law. In
connection with seeking stockholder approval of a business transaction, we would
also submit to our stockholders for approval a proposal to amend our amended and
restated certificate of incorporation to provide for our corporate life to
continue perpetually following the consummation of such business
transaction. If we are required to seek stockholder approval of our
business transaction, we will proceed with such business transaction only if a
majority of the outstanding shares of common stock voted (calculated as of the
close of business on the date set forth in the relevant proxy materials as the
last date on which stockholders may vote their shares of common stock) are voted
in favor of the business transaction and a majority of our outstanding shares of
common stock approve an amendment to our amended and restated certificate of
incorporation to provide for our perpetual corporate existence, and any other
proposal requiring approval of a majority of our outstanding shares of
stock. Our sponsor, officers, directors or their affiliates may
participate in privately-negotiated transactions (as described in this
prospectus), which could result in the approval of a business transaction even
if a majority of the shares of common stock voted by our public stockholders
indicate their intention to vote against the business transaction, regardless of
whether they elect to exercise their put rights. Voting in connection
with the business transaction alone will not result in a stockholder’s exercise
of their put rights for a per share pro rata portion of the trust account (net
of taxes). Such stockholder must have also exercised its put rights described
elsewhere in this prospectus. Any vote to extend the corporate life to continue
perpetually following the consummation of a business transaction will be taken
only if the business transaction is approved. We will only consummate a business
transaction if stockholders vote both in favor of such business transaction and
in favor of an amendment to our amended and restated certificate of
incorporation to provide for our perpetual existence. Under Delaware law, the
approval of the proposal to amend our amended and restated certificate of
incorporation to provide for our perpetual existence in connection with an
initial business transaction would require the affirmative vote of a majority of
the shares of common stock outstanding.
If a
stockholder vote is required to approve any business transaction, our sponsor
has agreed to vote its initial shares in favor of approving a business
transaction. Under such circumstances, our sponsor and our officers and
directors have also agreed to vote any shares of common stock acquired by them
in this offering or in the aftermarket in favor of a business transaction
submitted to our stockholders for approval.
50
Given the
interest that they have in approval of the business transaction, it is possible
that our sponsor, officers, directors and their respective affiliates may
acquire securities from public stockholders who have elected to put their shares
back to us for cash in order to obtain the requisite level of shares we are
required to maintain so that we can proceed with the consummation of our
business transaction. Although our sponsor, officers, directors and their
respective affiliates have no intention of entering into stock purchase
arrangements with our public stockholders subsequent to this offering, they may
do so in the future, both as an expression of confidence in the value of our
shares of common stock following our initial business transaction and as a means
of increasing the likelihood that we will be able to proceed with our initial
business transaction, as the case may be. Such purchases, should they occur at
all, may be negotiated after the time when stockholders elected to put their
shares back to us for cash. Any shares purchased from stockholders by our
sponsor, officers, directors or their respective affiliates would be purchased
for cash or other consideration at a price to be negotiated between such
stockholders on the one hand and our sponsor, officers, directors or their
respective affiliates on the other hand. Such price would depend on a variety of
factors including, but not limited to, the size of the stockholder’s position in
our company and the method and timing of payment to such stockholder. The
proceeds of our trust account may be used to facilitate such
purchases.
Any
privately negotiated transaction to purchase shares from a stockholder who would
otherwise choose to put their shares back to us for cash, would include a
contractual acknowledgement that such stockholder, although still the record
holder of our shares is no longer the beneficial owner thereof and therefore
agrees to refrain from putting their common stock to us as directed by the
purchaser of such securities. All such privately negotiated transactions (should
they occur at all) would be isolated transactions conducted in compliance with
all applicable securities laws, each to be privately negotiated with one or a
discrete group of stockholders who have elected, or otherwise indicated their
intention, to exercise their put rights.
Investors
are cautioned that neither our sponsor, officers, directors and their respective
affiliates, nor any third parties, have agreed to purchase any such shares, and
their failure to so agree at the applicable time could adversely impair our
ability to consummate a business transaction. Moreover, even if our sponsor,
officers, directors and their respective affiliates were to undertake such
purchases, such purchases could be subject to limitations under applicable
securities laws and regulations, including Regulation M and regulations
regarding tender offers. The inability of such persons to effect such purchases
could adversely impair our ability to consummate the business
transaction.
Our
sponsor, officers, directors and/or their affiliates anticipate that they will
identify the stockholders with whom the sponsor, officers, directors or their
affiliates may pursue privately negotiated purchases by either the stockholders
contacting us directly or by our receipt of put requests submitted by
stockholders following our mailing of a notice, or a proxy, as applicable, in
connection with our initial business transaction. To the extent that
our sponsor, officers, directors or their affiliates enter into a private
purchase, they would identify and contact only potential selling stockholders
who have expressed their election to put their shares of common stock back to us
for cash. Pursuant to the terms of such arrangements, any shares so purchased by
our sponsor, officers, directors and/or their affiliates would then revoke their
election to put such shares. The terms of such purchases would operate to
facilitate our ability to consummate a proposed business transaction by
potentially reducing the number of shares put to us for cash.
Upon the
completion of our business transaction, unless required by Delaware law, the
federal securities law, and the rules and regulations promulgated thereunder, or
the rules and regulations of an exchange upon which our securities are listed,
we do not presently intend to seek stockholder approval for any subsequent
acquisitions.
Put
rights
Unlike
other blank check companies, we will allow holders of no more than 88% of our
public shares of common stock to put their shares back to us for a per share pro
rata portion of the trust account (initially approximately $9.75 per share, or
approximately $9.74 per share if the underwriters’ over-allotment option is
exercised in full), plus a portion of the interest earned on the trust account
but net of any taxes.
Our
public stockholders will be able to put their shares back to us for cash as
follows: (i) in connection with our distribution of a notice setting
forth the details of a proposed business transaction, within the period set
forth in such notice; or (ii) in connection with our mailing of proxy materials
setting forth the details of a proposed business transaction, should we be
required by law to issue such proxy materials, at any time after the mailing to
our public stockholders of the proxy statement and up to two business days prior
to the vote taken with respect to a proposal to approve such business
transaction at a meeting held for that purpose; however, in no event will
a request to put such shares be granted unless the business
transaction is consummated, approved and completed, as applicable.
We intend
to distribute a notice (setting forth substantially the same information that
would be contained in a Schedule 14C information statement prepared in
accordance with the Exchange Act) to our public stockholders, and do not intend
to seek stockholder approval in connection with our proposed business
transaction, unless required to do so by law. Each of our public
stockholders properly electing to put their shares back to us for cash by the
date set forth in the notice we mail to such stockholders (which date shall be
at least 10 days from the mailing thereof) shall be entitled to receive a per
share pro rata distribution of the trust account, together with any pro rata
interest earned thereon but net of taxes, upon the consummation of our business
transaction. We will not grant any request to put such shares in the
event such business transaction is not consummated, or if a public stockholder
does not properly elect to exercise their put rights rights, as set forth in our
notice.
51
Notwithstanding
the foregoing, our amended and restated certificate of incorporation provides
that a public stockholder, together with any affiliate of his or any other
person with whom he is acting in concert or as a ‘‘group’’ (as defined under
Section 13 of the Exchange Act), will be restricted from seeking put rights with
respect to more than an aggregate of 10% of the shares sold in this
offering. We believe this restriction will discourage stockholders
from accumulating large blocks of shares, and subsequent attempts by such
holders to use their put right as a means to force us or our management to
purchase their shares at a significant premium to the then current market price
or on other undesirable terms. Absent this provision, a public
stockholder holding more than an aggregate of 10% of the shares sold in this
offering could threaten to seek to exercise its put rights if such holder’s
shares are not purchased by us or our management at a premium to the then
current market price or on other undesirable terms. By limiting our
stockholders’ ability to put back to us no more than 10% of the shares sold in
this offering, we believe we will limit the ability of a small group of
stockholders to unreasonably attempt to block our ability to consummate a
business transaction which is favored by our other public stockholders or board
of directors. In the event we are required to seek stockholder
approval of our business transaction, however, we would not be restricting our
stockholders’ ability to vote all of their shares for or against a business
transaction.
In the
event we are required to seek stockholder approval to effect our business
transaction and distribute proxy materials, we will proceed with a business
transaction only if (i) a majority of the outstanding shares of common stock
voted (calculated as of the close of business on the date set forth in the
relevant proxy materials as the last date on which stockholders may vote their
shares of common stock) are voted in favor of the business transaction and (ii)
holders of no more than 88% of our public shares elect to put their shares back
to us for cash. Our sponsor, officers, directors or their affiliates
may participate in privately-negotiated transactions (as described in this
prospectus), which could result in the approval of a business transaction even
if more than 50% of our stockholders indicated their intention to vote against
the business transaction. If we are unable to consummate a business
transaction within such 15 month period, we will (i) cease all operations except
for the purposes of winding up, (ii) redeem 100% of our public shares of common
stock for a per share pro rata portion of the trust account, including a portion
of the interest earned thereon, but net of any taxes (which redemption would
completely extinguish such holders’ rights as stockholders, including the right
to receive further liquidation distributions, if any) and (iii) as promptly as
possible following such redemption, dissolve and liquidate the balance of our
net assets to our remaining stockholders, as part of our plan of dissolution and
liquidation.
In the
event we are required by law to seek stockholder approval to our public
stockholders in connection with a proposed business transaction, public
stockholders voting in favor of the business transaction and electing to
exercise its put rights shall be entitled to receive a per share pro rata
distribution of the trust account (together with a pro rata portion of any
interest earned thereon), and our public stockholders voting against the
business transaction and electing to exercise their put rights shall be entitled
to receive a per share pro rata distribution of the trust account (exclusive of
any interest earned on the trust account); however, such requests for put rights
shall only be granted and distributed upon the consummation of our business
transaction.
The
foregoing “put right” is different from the “conversion” thresholds used by most
blank check companies. Traditionally, blank check companies would not be able to
consummate a business transaction if the holders of the company’s public shares
voted against a proposed business transaction and elected to convert more than a
much smaller percentage of the shares sold in such company’s initial public
offering, which percentage threshold is typically between 19.99% and
39.99%. As a result, many blank check companies are unable to
complete business transactions because the amount of shares voted by their
public stockholders electing conversion exceeded the maximum conversion
threshold pursuant to which such company could proceed with a business
transaction.
Additionally,
we may require our public stockholders seeking to exercise their put rights,
whether they are record holders or hold their shares in “street name,” to either
tender their certificates to our transfer agent prior to the date set forth in
the notice mailed to such holders (which date shall be at least 10 days from the
mailing thereof), or at a date which is up to two business days prior to the
vote on the proposal to approve the business transaction, as applicable, or to
deliver their shares to the transfer agent electronically using Depository Trust
Company’s DWAC (Deposit/Withdrawal At Custodian) System, at the holder’s option.
The notice or proxy materials, as applicable, that we will furnish to holders of
our public shares in connection with our initial business transaction will
indicate whether we are requiring public stock holders to satisfy such delivery
requirements. Accordingly, a public stockholder would have from the time we send
out our notice, or proxy materials, as applicable, through a date which is set
forth in the notice mailed to our holders, or up to two days prior to the vote
on the business transaction, as applicable, to tender his shares if he wishes to
seek to exercise his put rights.
52
In order
to physically deliver their common stock certificates, stockholders may have to
comply with the following steps. If the shares are held in “street name”,
stockholders must instruct their account executive at the stockholders’ bank or
broker to withdraw the shares from the stockholders’ account and request that a
physical certificate be issued in the stockholders’ name. Our transfer agent
will be available to assist with the process. No later than the date set forth
in the notice mailed to our holders (which date shall be at least 10 days from
the mailing thereof), or two business days prior to the stockholder meeting if
we distribute proxy materials, as applicable, the written instructions stating
that the stockholder wishes to put his shares to us for a pro rata share of the
trust account and confirming that the stockholder has held the shares since the
record date and will continue to hold them through the stockholders meeting, if
applicable. Requests to put shares to us for cash upon delivery of certificates
that have not been tendered in accordance with these procedures will not be
honored. It is our understanding that stockholders should generally allot at
least two weeks to obtain physical certificates from the transfer agent.
However, because we do not have any control over this process or over the
brokers or Depository Trust Company, it may take significantly longer than two
weeks to obtain a physical stock certificate. If it takes longer than we
anticipate to obtain a physical certificate, such stockholders who wish to put
their shares back to us for cash may be unable to obtain physical certificates
by the deadline for exercising their put rights and thus will be unable to put
their shares back to us for cash. We will only require stockholders to deliver
their certificates prior to the vote if we give stockholders at least two weeks
between the mailing of the proxy solicitation materials and the meeting
date.
There is
a nominal cost associated with the above-referenced tendering process and the
act of certificating the shares or delivering them through the DWAC System. The
transfer agent will typically charge the tendering broker $35.00 and it would be
up to the broker whether or not to pass this cost on to the putting holder.
However, this fee would be incurred regardless of whether or not we require
holders seeking to exercise put rights to tender their shares prior to the
meeting. The need to deliver shares is a requirement of exercising put rights
regardless of the timing of when such delivery must be effectuated. However, in
the event we require stockholders seeking to exercise put rights to tender their
shares prior to the consummation of the proposed business transaction and the
proposed business transactions is not consummated (and therefore we would not be
obligated to pay cash in connection with the tendered shares) this may result in
an increased cost to stockholders.
The
foregoing is different from the procedures used by many blank check
companies. Traditionally, in order to perfect put rights in
connection with a blank check company’s business transaction, the company would
distribute proxy materials for the stockholders’ vote on an initial business
transaction, and a holder could simply vote against a proposed business
transaction and check a box on the proxy card indicating such holder was seeking
to exercise his put rights. After the business transaction was approved, the
company would contact such stockholder to arrange for him to deliver his
certificate to verify ownership. As a result, the stockholder then had an
“option window” after the consummation of the business transaction during which
he could monitor the price of the company’s stock in the market. If the price
rose above the put price, he could sell his shares in the open market before
actually delivering his shares to the company for cancellation. As a result, the
put rights, to which stockholders were aware they needed to commit before the
stockholder meeting, would become a “put” right surviving past the consummation
of the business transaction until the putting holder delivered its certificate.
The requirement for physical or electronic delivery prior to the meeting ensures
that a putting holder’s election to put is irrevocable once the business
transaction is approved.
Any
request to put such shares, once made, may be withdrawn at any time up to the
date set forth in the notice mailed to our stockholders, or the date of the
shareholder meeting, as applicable. Furthermore, if a holder of a public share
of common stock delivered his certificate in connection with an election of
their put rights and subsequently decides prior to the applicable date not to
elect to exercise such put rights, he may simply request that the transfer agent
return the certificate (physically or electronically). It is anticipated that
the funds to be distributed to holders of our public shares of common stock
electing to put their shares back to us for cash will be distributed promptly
after the completion of a business transaction.
If the
initial business transaction is not approved or completed for any reason, then
our public stockholders who elected to exercise their put rights would not be
entitled to put their shares back to us for the applicable pro rata share of the
trust account. In such case, we will promptly return any shares delivered by
public holders who elected to put their shares back to us for cash.
Our
sponsor has waived its right to put back to us any of its initial
shares for a pro rata share of the trust account. Additionally, our sponsor,
directors and officers have agreed not to exercise their put rights with respect
to shares acquired during or subsequent to this offering (since they may not
vote against a business transaction).
If our
initial proposed business transaction is not consummated, we may continue to try
to consummate a business transaction with a different target until 15 months
from the date of this prospectus. If the initial business transaction
is not completed for any reason, then public stockholders who exercised their
put rights would not be entitled to put their shares back to us for cash for a
pro rata share of the aggregate amount then on deposit in the trust account. In
such case, if we have required public stockholders to tender their certificates,
we will promptly return such certificates to the tendering public stockholder.
Public stockholders would be entitled to receive their pro rata share of the
aggregate amount on deposit in the trust account only in the event that the
initial business transaction is consummated. If the proposed business
transaction is not consummated then a stockholder’s election to exercise its put
rights will not be honored, and such put will not be entitled to a cash payment,
even if such put right was properly exercised.
Investors
in this offering who do not sell, or who receive less than an aggregate of
approximately $.25 of net sales proceeds for the warrants included in the units,
and persons who purchase common stock in the aftermarket at a price in excess of
$9.75 per share, may have a disincentive to exercise their put rights because
the amount they would receive upon the exercise of ther put rights could be less
than their original or adjusted purchase price.
53
Redemption
of common stock and liquidation if no initial business transaction
Our
sponsor, officers and directors have agreed that we will only have 15 months
from the date of this prospectus to consummate our initial business
transaction. If we do not consummate a business transaction within
such 15 month period, we shall (i) cease all operations except for the purposes
of winding up, (ii) redeem 100% of our public shares of common stock for a per
share pro rata portion of the trust account (initially approximately $9.75 per
share, or approximately $9.74 per share if the underwriters’ over-allotment
option is exercised in full), plus a portion of the interest earned on the trust
account but net of any taxes (which redemption would completely extinguish such
holders’ rights as stockholders, including the right to receive further
liquidation distributions, if any), subject to the requirements of applicable
law and (iii) as promptly as possible following such redemption, dissolve and
liquidate the balance of our net assets to our remaining stockholders, as part
of our plan of dissolution and liquidation to be adopted in accordance with
Section 281(b) of the Delaware General Corporation Law. Pursuant to
the terms of our certificate of incorporation, our powers following the
expiration of the permitted time period for consummating a business transaction
will automatically thereafter be limited to acts and activities relating to
dissolving and winding up our affairs, including liquidation.
Our
sponsor has waived its right to participate in any redemption with respect to
its initial shares and the common stock underlying the insider warrants upon our
redemption of shares sold in this offering if we fail to consummate a business
transaction within 15 months. However, if our sponsor or any of our officers,
directors or affiliates acquires shares of common stock in or after this
offering, they will be entitled to a pro rata share of the trust account upon
our redemption in the event we do not consummate a business transaction within
the required time period. There will be no liquidating distribution with respect
to our warrants, which will expire worthless in the event we do not consummate a
business transaction. We expect that all costs associated with the
implementation and completion of our liquidation will be funded by any remaining
assets outside of the trust account although we cannot assure you that there
will be sufficient funds for such purpose. If such funds are insufficient, our
sponsor has agreed to advance us the funds necessary to complete such
liquidation (currently anticipated to be approximately $30,000).
Upon
consummation of this offering, and assuming no exercise of the underwriter’s
over-allotment option, we expect to have approximately (i) $48,750,000 of the
offering proceeds deposited in the trust account for the benefit of our public
stockholders and (ii) $800,000 from the proceeds of this offering not held in
the trust account. In the event no business transaction is
consummated within 15 months from the date of this prospectus and we are unable
to redeem 100% of the shares sold in this offering, we intend to submit a plan
of dissolution to our public stockholders, requiring a majority of shares voted
for approval, in which (i) the proceeds held in
our trust account, together with interest, and subject to any reductions set
forth in this prospectus (including taxes), would be distributed to only our
public stockholders on a per share pro rata basis and (ii) the remaining net
assets of the company, if any, would be distributed on a per share pro rata
basis to our stockholders.
If we
were to expend all of the net proceeds of this offering, other than the proceeds
deposited in the trust account, and without taking into account interest, if
any, earned on the trust account, the initial aggregate of the (i) per share
redemption price or (ii) per share liquidation price would be approximately
$9.75 (or approximately $9.74 if the underwriters’ over-allotment option is
exercised in full). The proceeds deposited in the trust account could, however,
become subject to the claims of our creditors which would have higher priority
than the claims of our public stockholders. We cannot assure you that the actual
aggregate of the (i) per share redemption price or (ii) per share liquidation
price will not be less than approximately $9.75, plus interest (net of any
taxes). Under Section 281(b) of the Delaware General Corporation Law, our plan
of distribution must provide for all claims against us to be paid in full or
make provision for payments to be made in full, as applicable, if there are
sufficient assets. These claims must be paid or provided for before we make any
distribution of our remaining assets to our stockholders. While we intend to pay
such amounts, if any, we cannot assure you that we will have funds sufficient to
pay or provide for all creditors’ claims.
Although
we will seek to have all vendors, service providers, prospective target
businesses or other entities we engage execute agreements with us waiving any
right, title, interest or claim of any kind in or to any monies held in the
trust account for the benefit of our public stockholders, there is no guarantee
that they will execute such agreements or even if they execute such agreements
that they would be prevented from bringing claims against the trust account
including but not limited to fraudulent inducement, breach of fiduciary
responsibility or other similar claims, as well as claims challenging the
enforceability of the waiver, in each case in order to gain an advantage with
respect to a claim against our assets, including the funds held in the trust
account. If any third party refused to execute an agreement waiving such claims
to the monies held in the trust account, our management would perform an
analysis of the alternatives available to it and would only enter into an
agreement with a third party that did not execute a waiver if management
believed that such third party’s engagement would be significantly more
beneficial to us than any alternative. Examples of possible instances
where we may engage a third party that refused to execute a waiver include the
engagement of a third party consultant whose particular expertise or skills are
believed by management to be significantly superior to those of other
consultants that would agree to execute a waiver or in cases where management is
unable to find a provider of required services willing to provide the waiver.
.In addition, there is no guarantee that such entities will agree to waive any
claims they may have in the future as a result of, or arising out of, any
negotiations, contracts or agreements with us and will not seek recourse against
the trust account for any reason. In order to protect the amounts held in the
trust account, Mark D. Klein, our chief executive officer and president, and
Paul D. Lapping, our chief financial officer, treasurer, secretary and director,
have agreed that they will be liable to us if and to the extent any claims by a
vendor for services rendered or products sold to us, or a prospective target
business with which we have discussed entering into a transaction agreement
reduce the amounts in the trust account to below $9.75 per share (or
approximately $9.74 per share if the underwriter’s over-allotment option is
exercised in full), except as to any claims by a third party who executed a
waiver of any and all rights to seek access to the trust account and except as
to any claims under our indemnity of the underwriters of this offering against
certain liabilities, including liabilities under the Securities Act. In the
event that an executed waiver is deemed to be unenforceable against a third
party, Messrs. Klein and Lapping will not be responsible to the extent of any
liability for such third party claims. We cannot assure you, however,
that Messrs. Klein and Lapping would be able to satisfy those
obligations.
54
In the
event that the proceeds in the trust account are reduced below $9.75 per share
(or approximately $9.74 per share if the underwriter’s over-allotment option is
exercised in full) in the event we redeem 100% of our public shares of common
stock for a per share pro rata portion of the trust account, or upon our liquation and
Messrs. Klein and Lapping assert that they are unable to satisfy their
obligations or that they have no indemnification obligations related to a
particular claim, our independent directors, if any, would determine whether to
take legal action against Messrs. Klein and Lapping to enforce their
indemnification obligations. While we currently expect that our independent
directors would take legal action on our behalf against Messrs. Klein and
Lapping to enforce their indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment may choose not
to do so in any particular instance. Accordingly, we cannot assure you that due
to claims of creditors the actual value of the per share redemption price (or
per share liquidation distribution if we are unable to effect our redemption)
will not be less than $9.75 per share (or approximately $9.74 per share if the
underwriters’ overallotment option is exercised in full).
We will
seek to reduce the possibility that Messrs. Klein and Lapping will have to
indemnify the trust account due to claims of creditors by endeavoring to have
all vendors, service providers and prospective target businesses as well as
other entities execute agreements with us waiving any right, title, interest or
claim of any kind in or to monies held in the trust account. Messrs. Klein and
Lapping will also not be liable as to any claims under our indemnity of the
underwriters of this offering against certain liabilities, including liabilities
under the Securities Act. We will have access to up to $800,000 from the
proceeds of this offering, with which to pay any such potential claims
(including costs and expenses incurred in connection with our liquidation,
currently estimated to be no more than approximately $30,000). In the event that
we liquidate and it is subsequently determined that the reserve for claims and
liabilities is insufficient, stockholders who received a return of funds from
the liquidation of our trust account could be liable for claims made by
creditors.
Under the
Delaware General Corporation Law, stockholders may be held liable for claims by
third parties against a corporation to the extent of distributions received by
them in a dissolution. The pro rata portion of our trust account distributed to
our public stockholders upon our redemption of 100% of our public shares of
common stock in the event we do not consummate our initial business transaction
within 15 months from the date of this prospectus may be considered a
liquidation distribution under Delaware law. If the corporation
complies with certain procedures set forth in Section 280 of the Delaware
General Corporation Law intended to ensure that it makes reasonable provision
for all claims against it, including a 60-day notice period during which any
third-party claims can be brought against the corporation, a 90-day period
during which the corporation may reject any claims brought, and an additional
150-day waiting period before any liquidating distributions are made to
stockholders, any liability of stockholders with respect to a liquidating
distribution is limited to the lesser of such stockholder’s pro rata share of
the claim or the amount distributed to the stockholder, and any liability of the
stockholder would be barred after the third anniversary of the dissolution.
However, as stated above, if we do not effect a business transaction
by , 2012 [15 months from the date of this
prospectus], we shall (i) cease all operations except for the purposes of
winding up, (ii) redeem 100% of our public shares of common stock for a per
share pro rata portion of the trust account, including a portion of the interest
earned thereon, but net of any taxes (which redemption would completely
extinguish such holders’ rights as stockholders, including the right to receive
further liquidation distributions, if any) and (iii) as promptly as possible
following such redemption, dissolve and liquidate the balance of our net assets
to our remaining stockholders, as part of our plan of dissolution and
liquidation. Accordingly, it is our intention to make liquidating distributions
to our stockholders as soon as reasonably possible following our 15th month
and, therefore, we do not intend to comply with those procedures. As such, our
stockholders could potentially be liable for any claims to the extent of
distributions received by them (but no more) and any liability of our
stockholders may extend well beyond the third anniversary of such date. Because
we will not be complying with Section 280, Section 281(b) of the Delaware
General Corporation Law requires us to adopt a plan, based on facts known to us
at such time, that will provide for our payment of all existing and pending
claims or claims that may be potentially brought against us within the
subsequent 10 years. However, because we are a blank check company, rather than
an operating company, and our operations will be limited to searching for
prospective target businesses to acquire, the only likely claims to arise would
be from our vendors (such as accountants, lawyers, investment bankers, etc.) or
prospective target businesses. As described above, pursuant to the obligation
contained in our underwriting agreement, we will seek to have all vendors,
service providers and prospective target businesses execute agreements with us
waiving any right, title, interest or claim of any kind in or to any monies held
in the trust account. As a result of this obligation, the claims that could be
made against us are significantly limited and the likelihood that any claim that
would result in any liability extending to the trust account is remote. We have
an obligation to pursue indemnification from Messrs. Klein and Lapping pursuant
to the terms of their agreement with us. Further, Messrs. Klein and Lapping may
be liable only to the extent necessary to ensure that the amounts in the trust
account are not reduced below $9.75 per share (or approximately $9.74 per share
if the underwriter’s over-allotment option is exercised in full) less any per
share amounts distributed from our trust account to our public stockholders in
the event we are unable to consummate a business transaction within 15 months
from the date of this prospectus, and will not be liable as to any
claims under our indemnity of the underwriters of this offering against certain
liabilities, including liabilities under the Securities Act. In the event that
an executed waiver is deemed to be unenforceable against a third party, Messrs.
Klein and Lapping will not be responsible to the extent of any liability for
such third party claims.
55
If we are
forced to file a bankruptcy case or an involuntary bankruptcy case is filed
against us which is not dismissed, the proceeds held in the trust account could
be subject to applicable bankruptcy law, and may be included in our bankruptcy
estate and subject to the claims of third parties with priority over the claims
of our stockholders. To the extent any bankruptcy claims deplete the trust
account, we cannot assure you we will be able to return to our public
stockholders an aggregate of at least $9.75 per share. Additionally, if we are
forced to file a bankruptcy case or an involuntary bankruptcy case is filed
against us which is not dismissed, any distributions received by stockholders
could be viewed under applicable debtor/creditor and/or bankruptcy laws as
either a “preferential transfer” or a “fraudulent conveyance.” As a result, a
bankruptcy court could seek to recover all amounts received by our stockholders.
Furthermore, because we intend to distribute the proceeds held in the trust
account to our public stockholders promptly after the termination of our
corporate existence, this may be viewed or interpreted as giving preference to
our public stockholders over any potential creditors with respect to access to
or distributions from our assets. Furthermore, our board may be viewed as having
breached its fiduciary duty to our creditors and/or may have acted in bad faith,
and thereby exposing itself and our company to claims of punitive damages, by
paying public stockholders from the trust account prior to addressing the claims
of creditors. We cannot assure you that claims will not be brought against us
for these reasons.
Our
public stockholders will be entitled to receive funds from the trust account
only in the event of our redemption of 100% of our public shares or if they seek
to put their respective shares to us for cash upon the approval of the business
transaction. In no other circumstances will a stockholder have any right or
interest of any kind to or in the trust account. In the event we are required to
seek stockholder approval in connection with our initial business transaction, a
stockholder’s voting in connection with the business transaction alone will not
result in a stockholder’s putting its shares to us for an applicable pro rata
share of the trust account. Such stockholder must have also exercised its put
rights described above.
Competition
In
identifying, evaluating and selecting a target business for an initial business
transaction, we may encounter intense competition from other entities having a
business objective similar to ours including other blank check companies,
private equity groups and leveraged buyout funds, and operating businesses
seeking strategic acquisitions. Many of these entities are well established and
have extensive experience identifying and effecting business transactions
directly or through affiliates. Moreover, many of these competitors possess
greater financial, technical, human and other resources than us. Our ability to
acquire larger target businesses will be limited by our available financial
resources. This inherent limitation gives others an advantage in pursuing the
acquisition of a target business. Furthermore, our obligation to pay cash in
connection with 88% of our shares held by our public stockholders who exercise
their put rights may reduce the resources available to us for an initial
business transaction and our outstanding warrants, and the future dilution they
potentially represent, may not be viewed favorably by certain target businesses.
Either of these factors may place us at a competitive disadvantage in
successfully negotiating an initial business transaction.
Facilities
We
currently maintain our executive offices at 590 Madison Avenue, 35th Floor, New
York, New York 10022. The cost for this space is included in the $7,500
per-month fee described above that 57th Street
GAC Holdings LLC charges us for general and administrative services. We believe,
based on rents and fees for similar services in the New York metropolitan area
that the fee charged by 57th Street
GAC Holdings LLC is at least as favorable as we could have obtained from an
unaffiliated person. We consider our current office space adequate for our
current operations.
Employees
and Directors
We
currently have 2 executive officers. These individuals are not obligated to
devote any specific number of hours to our matters and intend to devote only as
much time as they deem necessary to our affairs. The amount of time they will
devote in any time period will vary based on whether a target business has been
selected for the initial business transaction and the stage of the initial
business transaction process the company is in. Accordingly, once management
locates a suitable target business to acquire, they will spend more time
investigating such target business and negotiating and processing the initial
business transaction (and consequently spend more time on our affairs) than they
would prior to locating a suitable target business. We expect our executive
officers to devote a reasonable amount of time to our business. We do
not intend to have any full time employees prior to the consummation of an
initial business transaction.
56
Periodic
Reporting and Audited Financial Statements
We have
registered our units, common stock and warrants under the Exchange Act and have
reporting obligations, including the requirement that we file annual, quarterly
and current reports with the SEC. In accordance with the requirements of the
Exchange Act, our annual reports will contain financial statements audited and
reported on by our independent registered public accountants.
We will
provide stockholders with audited financial statements of the prospective target
business to be acquired as part of the notice or proxy solicitation materials,
as applicable, sent to stockholders to assist them in assessing each specific
target business we seek to acquire. While the requirement of having available
financial information for the target business may limit the pool of potential
acquisition candidates, given the broad range of target businesses we may
consummate a business transaction with, we do not believe that the narrowing of
the pool will be material.
We will
be required to have our internal control procedures audited for the fiscal year
ending December 31, 2011 as required by the Sarbanes-Oxley Act. A target
business may not be in compliance with the provisions of the Sarbanes-Oxley Act
regarding adequacy of their internal controls. The development of the internal
controls of any such entity to achieve compliance with the Sarbanes-Oxley Act
may increase the time and costs necessary to complete any such
acquisition.
Legal
proceedings
There is
no litigation currently pending or, to our knowledge, contemplated against us,
our sponsor or any of our officers or directors in their capacities as
such.
Comparison
to Offerings of Blank Check Companies
The
following table compares and contrasts the terms of our offering and the terms
of an offering of blank check companies under Rule 419 promulgated by the SEC
assuming that the gross proceeds, underwriting discounts and underwriting
expenses for the Rule 419 offering are the same as this offering and that the
underwriters will not exercise their over-allotment option. None of the terms of
a Rule 419 offering will apply to this offering.
Terms
of Our Offering
|
Terms
Under a Rule 419 Offering
|
|||
Escrow
of offering proceeds:
|
$48,750,000
of the net offering proceeds will be deposited into the trust account at
[Deutsche Bank], maintained by Continental Stock Transfer & Trust
Company, acting as trustee. A portion of such offering proceeds
consists of contingent fees payable by us to Morgan Joseph in the event we
consummate a business transaction.
|
$43,079,625
of the offering proceeds would be required to be deposited into either an
escrow account with an insured depositary institution or in a separate
bank account established by a broker-dealer in which the broker-dealer
acts as trustee for persons having the beneficial interests in the
account.
|
||
Investment
of net proceeds:
|
The
$48,750,000 of offering proceeds held in the trust account will only be
invested in United States “government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940 with a maturity of
180 days or less, or in money market funds meeting certain conditions
under Rule 2a-7 promulgated under the Investment Company Act of
1940.
|
Proceeds
could be invested only in specified securities such as a money market fund
meeting conditions of the Investment Company Act of 1940 or in securities
that are direct obligations of, or obligations guaranteed as to principal
or interest by, the United States.
|
||
Limitation
on fair value or net assets of target business:
|
We
are not required to set a minimum valuation on either the fair
market value or net assets of a target business.
|
We
would be restricted from acquiring a target business unless the fair value
of such business or net assets to be acquired represent at least 80% of
the maximum offering
proceeds.
|
57
Trading
of securities issued:
|
The
units will begin trading on or promptly after the date of this prospectus.
Each of the shares of our common stock and warrants shall trade separately
on the fifth business day following the earlier to occur of: the
expiration of the underwriters’ over-allotment option; its exercise in
full; or the announcement by the underwriters of their intention not to
exercise all or any remaining portion of the over-allotment
option.
In
no event will the shares of our common stock and warrants begin to trade
separately until we have filed a Current Report on Form 8-K with the SEC
containing an audited balance sheet reflecting our receipt of the gross
proceeds of this offering. We will file this Form 8-K promptly after the
consummation of this offering, which is anticipated to take place four
business days from the date of this prospectus. If the over-allotment
option is exercised following the initial filing of such Form 8-K, a
second or amended Form 8-K will be filed to provide information to reflect
the exercise of the underwriters’ over-allotment option.
|
No
trading of the units or the underlying shares of our common stock and
warrants would be permitted until the completion of a business
transaction. During this period, the securities would be held in the
escrow or trust account.
|
||
Exercise
of the warrants:
|
The
warrants cannot be exercised until the later of 30 days after completion
of our initial business transaction and one year from the date of this
prospectus and, accordingly, will be exercised only after the trust
account has been terminated and distributed.
|
The
warrants could be exercised prior to the completion of a business
transaction, but securities received and cash paid in connection with the
exercise would be deposited in the escrow or trust
account.
|
||
Election
to remain an investor:
|
We
will give our public stockholders holding no more than 88% of our public
shares the opportunity to evaluate our proposed business transaction as
set forth in the notice, and by the date set forth in such notice, to
elect whether to remain an investor in our securities, or exercise their
put rights and tender their shares. Unless otherwise required
by law, our stockholders will not have the opportunity to vote on our
business transaction. In the event we are required to seek
stockholder approval in connection with our initial business transaction,
we will send each stockholder a proxy statement containing information
required by the SEC. In those circumstances, a stockholder who follows the
procedures described in the proxy statement will be given the right to put
his shares of common stock to us for a pro rata share of the trust account
(net of taxes).
|
A
prospectus containing information required by the SEC would be sent to
each investor. Each investor would be given the opportunity to notify the
company, in writing, within a period of no less than 20 business days and
no more than 45 business days from the effective date of the
post-effective amendment, to decide whether he elects to remain a
stockholder of the company or requires the return of his investment. If
the company has not received the notification by the end of the 45th
business day, funds and interest or dividends, if any, held in the trust
account or escrow account would automatically be returned to the
stockholder. Unless a sufficient number of investors elect to remain
investors, all of the deposited funds in the trust account or escrow
account must be returned to all investors and none of the securities will
be
issued.
|
58
Business
transaction deadline:
|
If
we are unable to complete a business transaction
by ,
2012 [15 months from the date of this prospectus], we shall (i) cease all
operations except for the purposes of winding up, (ii) redeem 100% of our
public shares of common stock for a per share pro rata portion of the
trust account, including a portion of the interest earned thereon, but net
of any taxes (which redemption would completely extinguish such holders’
rights as stockholders, including the right to receive further liquidation
distributions, if any) and (iii) as promptly as possible following such
redemption, dissolve and liquidate the balance of our net assets to our
remaining stockholders, as part of our plan of dissolution and
liquidation.
|
If
an acquisition has not been consummated within 18 months after the
effective date of the registration statement, funds held in the trust
account or escrow account would be returned to investors.
|
||
Release
of funds:
|
The
proceeds held in the trust account will not be released until the earlier
of the completion of a business transaction or our dissolution and
liquidation upon failure to effect a business transaction within the
allotted time, except that to the extent the trust account earns interest
or we are deemed to have earned income in connection therewith, we will be
permitted to seek disbursements from the trust account to pay taxes on
such interest.
|
The
proceeds held in the escrow account, would not be released until the
earlier of the completion of a business transaction or the failure to
effect a business transaction within the allotted time.
|
||
Interest
on proceeds held in the trust account:
|
Interest
earned may be disbursed to fund any taxes payable on interest earned on
this trust account.
|
Interest
earned on proceeds held in the trust account would be held in the trust
account for the sole benefit of the stockholders and would not be released
until the earlier of the completion of a business transaction or the
failure to effect a business transaction within the allotted time stated
above.
|
59
MANAGEMENT
Directors
and Executive Officers
Our
directors and executive officers as of the date of this prospectus are as
follows:
Name
|
Age
|
Position
|
||
Michael
J. Levitt
|
51
|
Chairman
of the Board
|
||
Mark
D. Klein
|
47
|
Chief
Executive Officer, President and Director
|
||
Paul
D. Lapping
|
47
|
Chief
Financial Officer, Treasurer, Secretary and
Director
|
||
Jonathan
I. Berger
|
40
|
Director
|
||
Frederick
G. Kraegel
|
61
|
Director
|
||
Leonard
A. Potter
|
48
|
Director
|
Michael J. Levitt has been
Chairman since inception. In 2001, Mr. Levitt founded Stone Tower Capital LLC
(“STC”), an alternative investment firm focused on credit and credit-related
assets, and is responsible for the overall strategic direction of STC and the
development of the firm’s investment philosophies. At September 30, 2009,
Stone Tower managed, through its affiliates, approximately $40 billion in
credit-related assets across various investment vehicles. Previously, Mr.
Levitt was a partner in the New York office of Hicks, Muse, Tate & Furst
Incorporated, where he was involved in many of the firm's investments and
managed the firm’s relationships with banking firms. Prior thereto,
Mr. Levitt served as the Co-Head of the Investment Banking Division of Smith
Barney Inc. with responsibility for the advisory, private equity sponsor and
leveraged finance activities of the firm. Mr. Levitt began his
investment banking career at, and ultimately served as a Managing Director of,
Morgan Stanley & Co., Inc. Mr. Levitt oversaw the firm’s
corporate finance and advisory businesses related to private equity firms and
non-investment grade companies. Mr. Levitt also serves as a member of
the board of directors of Great American Group, Inc. Mr. Levitt has a Bachelors
of Business Administration degree from the University of Michigan and a Juris
Doctor Degree from the University of Michigan Law School. Mr. Levitt
serves on the University of Michigan investment advisory board.
Mark D. Klein has been Chief
Executive Officer, President and a Director since inception. Between March 2007
and July 2009, Mr. Klein was the Chief Executive Officer, President and a
Director of Alternative Asset Management Corporation, a special purpose
acquisition company he helped form in 2007 and which recently completed a merger
with Great American Group LLC. Mr. Klein is also a registered
representative at Ladenburg Thalmann & Co. Inc., a Managing Member of the
LTAM Titan Fund, a fund of funds hedge fund and is one of the principals of
Aldebaran Investment, LLC, a private fund investing in special purpose
acquisition companies. From April 2007 until August 2008, Mr. Klein was the
Chief Executive Officer of Hanover Group US LLC, an indirect US subsidiary of
the Hanover Group. Prior to joining Hanover in 2007, Mr. Klein was Chairman of
Ladenburg Thalmann & Co. Inc., a leading underwriter of blank check
companies, which is engaged in retail and institutional securities brokerage,
investment banking and asset management services. From March 2005 to September
2006, he was Chief Executive Officer and President of Ladenburg Thalmann
Financial Services, Inc., the parent of Ladenburg Thalmann & Co. Inc., and
Chief Executive Officer of Ladenburg Thalmann Asset Management Inc., a
subsidiary of Ladenburg Financial Services, Inc. Prior to joining Ladenburg
Thalmann, from June 2000 to March 2005, Mr. Klein served as the Chief Executive
Officer and President of NBGI Asset Management, Inc. and NBGI Securities, which
were the US subsidiaries of the National Bank of Greece, the largest financial
institution in Greece. Prior to joining NBGI, Mr. Klein was President and
Founder of Newbrook Capital Management, Founder and Managing Member of
Independence Holdings Partners, LLC, a private equity fund of funds company, and
Founder and General Partner of Intrinsic Edge Partners, a long/short equity
hedge fund. Prior to the formation of Newbrook Capital Management and
Independence Holdings Partners, LLC, Mr. Klein was a Senior Portfolio Manager
for PaineWebber and Smith Barney Shearson. Mr. Klein also serves as a member of
the board of directors of Great American Group, Inc. Mr. Klein is a
graduate of J.L. Kellogg Graduate School of Management at Northwestern
University, with a Masters of Management Degree and also received a Bachelors of
Business Administration Degree with high distinction from Emory
University.
60
Paul D. Lapping has been Chief
Financial Officer, Treasurer, Secretary and Director since inception. Between
March 2007 and July 2009, Mr. Lapping was the Chief Financial Officer, Treasurer
and Secretary of AAMAC, a special purpose acquisition company which recently
completed a merger with Great American Group LLC. From August 2003 to
June 2006, Mr. Lapping served as the president of Lapping Investments, LLC, a
personal investment fund targeting lower middle market leveraged buyouts. From
April 2007 until August 2008, Mr. Lapping served as a Managing Director of
Hanover Group US LLC. From April 2000 to November 2003, Mr. Lapping was a
general partner of Minotaur Partners II, L.P., a private investment partnership
Mr. Lapping formed to invest equity in small and middle-market marketing driven
companies with an emphasis on emerging technologies. From December 1995 to
January 2002, Mr. Lapping was a general partner of Merchant Partners, LP, a
private investment partnership focused on direct marketing, business and
consumer services companies. Prior to joining Merchant Partners, Mr. Lapping
served in various corporate development roles with Montgomery Ward Holding
Corp., a retail, catalog, direct marketing and home shopping company, and Farley
Industries, Inc., a management company providing services to Farley Inc., a
private investment fund holding company, and its related entities including
Fruit of the Loom, Inc., Farley Metals, Inc., Acme Boot Company and West
Point-Pepperell, Inc. Mr. Lapping also served in various positions with Golder,
Thoma and Cressey, a private equity firm, and with the merger and acquisition
group of Salomon Brothers Inc. Mr. Lapping received a Bachelor of Science from
the University of Illinois and a Masters of Management Degree from the Kellogg
School of Business at Northwestern University.
Jonathan I. Berger has been a
Director since inception. Mr. Berger is currently a Partner and Chief Investment
Officer of Stone Tower Capital LLC, where he oversees Stone Tower investment
activities and portfolios in corporate credit funds, as well as chairing all of
the firm’s investment committees. Mr. Berger has over 18 years of
experience in the private and public debt and equity markets, primarily as an
investor managing capital for institutions such as pension funds, endowments,
foundations, banks, fund of funds and large family offices. From 1997 to 2006,
Mr. Berger played a leading role at Pegasus Capital Advisors, LP (“Pegasus”) as
a co-founder and partner. Pegasus is a private equity firm managing over $1.1
billion that focuses on special situation investments in middle-market
businesses. Prior to Pegasus, Mr. Berger was a Vice President in the High Yield
and Distressed Securities Group at UBS Securities LLC (“UBS”). At UBS, he was
involved in investing in distressed and high yield securities and had additional
responsibilities in high yield financings, transaction opportunity creation and
structure negotiations. Prior to UBS, Mr. Berger was a principal at Rosecliff,
Inc., a private equity fund focused on buyouts of middle market companies.
Previously, Mr. Berger worked in the Leveraged Finance Group of Salomon Brothers
Inc. and at Nantucket Holding Company, a merchant banking group focused on
investing in financial and operational turnaround situations. Mr. Berger
graduated from the University of Pennsylvania’s Wharton School of Business in
1991 with a Bachelor of Science Degree in Economics with a Concentration in
Finance.
Frederick G. Kraegel has been
a Director since inception. Mr. Kraegel has extensive experience in evaluating
businesses and in working with companies with complex financial issues. He has
been with Bridge Associates LLC since February 2003, currently is a Senior
Director and in such capacity has served in a number of roles including as
financial advisor to the Chapter 7 Trustee of Refco, LLC. Mr. Kraegel was an
independent consultant from July 2002 to February 2003. From July 2001 to July
2002 Mr. Kraegel was Executive Vice President, Chief Administrative Officer and
Director of AMF Bowling Worldwide, Inc. where he was hired to provide direction
for the Chapter 11 process and financial, information technology and real estate
functions. Mr. Kraegel was President and Director of Acme Markets of Virginia,
Inc. from 2000 to 2001 and led the effort in which the retail operations of the
32-store chain were sold. In 1998, he was hired as Senior Vice President and
Chief Financial Officer of Factory Card Outlet Corp., a public company, to
direct the financial restructuring of the company including the filing a Chapter
11 proceeding in 1999; Mr. Kraegel left the company in 2000 prior to its
emergence from bankruptcy in 2002. Mr. Kraegel was a partner at Peat, Marwick
Mitchell & Co. (now KPMG LLP) and is a CPA. Mr. Kraegel graduated from
Valparaiso University in 1970 with a Bachelor of Science Degree in Business
Administration with a concentration in Accounting. Mr. Kraegel serves on the
boards of Concordia Plan Services, Inc., Thrivent Financial for Lutherans and
Valparaiso University.
Leonard A. Potter has
been a Director since inception. Mr. Potter is currently an independent
investor. From December 2002 through July 2009, Mr. Potter was a Managing
Director of Private Equity at Soros Fund Management LLC where, from May 2005
through July 2009, Mr. Potter served as co-head of the Private Equity group and
a member of the Private Equity Investment Committee. From September 1998 until
joining SFM in 2002, Mr. Potter was a Managing Director of Alpine Consolidated
LLC, a private merchant bank, and from April 1996 through September 1998, Mr.
Potter founded and served as a Managing Director of Capstone Partners LLC, a
private merchant bank. Prior to founding Capstone Partners, Mr. Potter was an
attorney specializing in mergers, acquisitions and corporate finance at Morgan,
Lewis & Bockius and Willkie Farr & Gallagher. Mr. Potter has
previously served as a director of several public companies and currently serves
as a director of a number of private companies. Mr. Potter has a Bachelors of
Arts Degree from Brandeis University and a Juris Doctor Degree. from the Fordham
University School of Law.
Number
and Terms of Office of Directors
Our board
of directors is divided into two classes with only one class of directors being
elected in each year and each class serving a three-year term. The term of
office of the first class of directors, consisting of Messrs. Berger, Kraegel,
and Potter, will expire at our first annual meeting of stockholders. The term of
office of the second class of directors, consisting of Messrs. Levitt, Klein and
Lapping, will expire at the second annual meeting of stockholders. These
individuals will play a key role in identifying and evaluating prospective
acquisition candidates, selecting the target business, and structuring,
negotiating and consummating our initial business transaction. Collectively,
through their positions described above, our directors have extensive experience
in the alternative asset management and private equity businesses.
61
We do not
currently intend to hold an annual meeting of stockholders until after we
consummate a business transaction, and thus may not be in compliance with
Section 211(b) of the Delaware General Corporation Law. Therefore, if our
stockholders want us to hold an annual meeting prior to our consummation of a
business transaction, they may attempt to force us to hold one by submitting an
application to the Delaware Court of Chancery in accordance with Section 211(c)
of the Delaware General Corporation Law.
Compensation
for Officers and Directors
No
executive officer has received any cash compensation for services rendered. No
compensation of any kind, including finder’s and consulting fees, will be paid
to any of our existing stockholders, including our officers and directors, or
any of their respective affiliates, for services rendered prior to or in
connection with a business transaction. However, these individuals will be
reimbursed for any out-of-pocket expenses incurred in connection with activities
on our behalf such as identifying prospective target businesses and performing
due diligence on suitable business transactions. There is no limit on the amount
of these out-of-pocket expenses and there will be no review of the
reasonableness of the expenses by anyone other than our board of directors,
which includes persons who may seek reimbursement, or a court of competent
jurisdiction if such reimbursement is challenged. If all of our directors are
not deemed “independent,” we will not have the benefit of independent directors
examining the propriety of expenses incurred on our behalf and subject to
reimbursement.
After our
business transaction, our executive officers and directors who remain with us
may be paid consulting, management or other fees from the combined company with
any and all amounts being fully disclosed to stockholders, to the extent then
known, in the notice furnished to our stockholders. It is unlikely, however,
that the amount of such compensation will be known at the time of a stockholder
meeting held to consider a business transaction, as it will be up to the
directors of the post-combination business to determine executive and director
compensation. Any compensation to be paid to our chief executive officer and
other officers will be determined, or recommended to the board of directors for
determination, either by a compensation committee constituted solely by
independent directors or by a majority of the independent directors on our board
of directors, in accordance with the rules of the OTC Bulletin
Board.
Board
Committees
Our board
of directors intends to establish an audit committee and a compensation
committee upon consummation of a business transaction. At that time our board of
directors intends to adopt charters for these committees. Prior to such time we
do not intend to establish either one. Accordingly, there will not be a separate
committee comprised of some members of our board of directors with specialized
accounting and financial knowledge to meet, analyze and discuss solely financial
matters concerning prospective target businesses. We do not feel a compensation
committee is necessary prior to a business transaction as there will be no
salary, fees or other compensation being paid to our officers or directors prior
to a business transaction other than as disclosed in this
prospectus.
Code
of Conduct
We have
adopted a code of conduct and ethics applicable to our directors, officers and
employees in accordance with applicable federal securities laws.
Conflicts
of Interest
Potential
investors should also be aware of the following other potential conflicts of
interest:
|
·
|
None
of our officers and directors is required to commit their full time to our
affairs and, accordingly, they may have conflicts of interest in
allocating their time among various business
activities.
|
|
·
|
Our
directors and members of our management team may become aware of business
opportunities that may be appropriate for presentation to us as well as
the other entities with which they are or may be affiliated. Some of our
officers and directors are now and may in the future become affiliated
with entities, including other blank check companies, engaged in business
activities similar to those intended to be conducted by our company. We
have entered into a business opportunity right of first review agreement
with Mark Klein and Paul Lapping, which provides that from the date of
this prospectus until the earlier of the consummation of our initial
business transaction or our liquidation in the event we do not consummate
an initial business transaction, we will have a right of first review with
respect to suitable business transaction opportunities of which Messrs.
Klein and Lapping (subject to any fiduciary obligations they may have),
and companies or other entities which they manage or control become aware.
Due to existing and future affiliations, our other directors may have
fiduciary obligations to present potential business opportunities to other
entities with which they are affiliated prior to presenting them to us.
Other than Mr. Klein and Lapping, our directors have not entered into a
similar right of first review
agreements.
|
62
|
·
|
The
sponsor’s initial shares and insider warrants are subject to transfer
restrictions (and in the case of the insider warrants, restrictions on
exercise) and will not be released from escrow until specified dates after
consummation of our initial business transaction. In addition, the insider
warrants purchased by the sponsors and any warrants which our initial
stockholders, sponsor, officers and directors may purchase in this
offering or in the aftermarket will expire worthless if an initial
business transaction is not consummated. Additionally, our initial
stockholders, including our directors, will not receive liquidation
distributions with respect to any of their founders’ common stock. For the
foregoing reasons, our board may have a conflict of interest in
determining whether it is appropriate to effect an initial business
transaction with a particular target
business.
|
|
·
|
Our
officers and directors may have a conflict of interest with respect to
evaluating a particular business transaction if the retention or
resignation of any such officers and directors were included by a target
business as a condition to any agreement with respect to an initial
business transaction.
|
In
general, officers and directors of a corporation incorporated under the laws of
the State of Delaware are required to present business opportunities to a
corporation if:
|
·
|
the
corporation could financially undertake the
opportunity;
|
|
·
|
the
opportunity is within the corporation’s line of business;
and
|
|
·
|
it
would not be fair to the corporation and its stockholders for the
opportunity not to be brought to the attention of the
corporation.
|
As a
result of multiple business affiliations, our officers and directors may have
similar legal obligations relating to presenting business opportunities meeting
the above-listed criteria to multiple entities. In addition, conflicts of
interest may arise when our board evaluates a particular business opportunity
with respect to the above-listed criteria. We cannot assure you that any of the
above mentioned conflicts will be resolved in our favor.
Our other
directors, have not undertaken an obligation similar to the rights of first
review provided by Messrs. Klein and Lapping. Mr. Levitt, our
chairman, is, and following this offering, will continue to be:
|
·
|
partner,
chairman, and chief executive officer of Stone Tower Capital LLC, an
alternative asset management firm, which manages several investment funds
through affiliates; and
|
Mr.
Berger, a director, is, and following this offering will continue to be partner
and chief investment officer of Stone
Tower Capital LLC.
As a
result of these affiliations, Messrs. Levitt and Berger may have preexisting
fiduciary, contractual or other obligations to those entities that may cause
them to have conflicts in presenting to us specific business opportunities that
may be attractive to us. Because of these potential preexisting obligations, we
have agreed that neither of Messrs. Levitt or Berger will have an obligation to
present to us any specific business opportunity.
In the
event we are required to submit our initial business transaction to our public
stockholders for a vote, all of the initial stockholders, have agreed to vote
the initial shares in favor of our initial business transaction. In addition,
they have agreed to waive their respective rights to participate in any
liquidation distribution with respect to their initial shares of common stock.
If they purchase shares of common stock as part of this offering or in the open
market, however, they would be entitled to vote such shares as they choose on a
proposal to approve an initial business transaction; however, in no event could
they exercise put rights and put their shares back to us for cash into a portion
of the trust account.
63
Although
we do not intend to enter into a business transaction with a target business
that is affiliated with our sponsor, our directors or officers, we are not
prohibited from doing so. In the event we enter into such a transaction, we will
obtain an opinion from an independent investment banking firm that is a member
of FINRA that such a business transaction is fair to our stockholders from a
financial point of view. Furthermore, in no event will any of our
initial stockholders, sponsors, officers or directors, or any of their
respective affiliates, be paid any finder’s fee, consulting fee or other
compensation prior to, or for any services they render in order to effectuate,
the consummation of an initial business transaction.
Conflict
of Interest Relating to Underwriting Activities
Mark D.
Klein, our chief executive officer and president, is an affiliate of Ladenburg
Thalmann & Co. Inc.,
a member of FINRA, and will economically own in excess of 10% of our
securities. Ladenburg Thalmann & Co. Inc is one the underwriters
of this offering. Therefore, FINRA requires this offering to be made
in compliance with the applicable provisions of Rule 2720 of the FINRA Rules.
Pursuant to that rue, the appointment of a “qualified independent underwriter”
(as such term is defined in Rule 2720) is not necessary in connection with this
offering because Morgan Joseph, the FINRA member primarily responsible for
managing this offering does not have a conflict of interest, is not an affiliate
of any member that has a conflict of interest and meets the requirements of
paragraph (f)(12)(E) of Rule 2720.
64
PRINCIPAL
STOCKHOLDERS
The
following table sets forth information regarding the beneficial ownership of our
common stock as of the date of this prospectus and as adjusted to reflect the
sale of insider warrants and the sale of our common stock included in the units
offered by this prospectus (assuming none of the individuals listed purchase
units in this offering) by:
|
·
|
each
person known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock;
|
|
·
|
each
of our officers and directors; and
|
|
·
|
all
our officers and directors as a
group.
|
Unless
otherwise indicated, we believe that all persons named in the table have sole
voting and investment power with respect to all shares of common stock
beneficially owned by them.
Prior
to the Offering
|
After
the Offering(1)
|
|||||||||||||||
Name
and Address of Beneficial Owners(2)
|
Amount
and
nature
of
beneficial
ownership(3)
|
Percentage
of
outstanding
common
stock
|
Amount
and
nature
of
beneficial
ownership
|
Percentage
of
outstanding
common
stock
|
||||||||||||
57th
Street GAC Holdings LLC(3)
|
638,889 | 100 | % | 555,556 | 10 | % | ||||||||||
Michael
J. Levitt (3)
|
638,889 | 100 | % | 555,556 | 10 | % | ||||||||||
Mark
D. Klein (3)
|
638,889 | 100 | % | 555,556 | 10 | % | ||||||||||
Paul
D. Lapping (3)
|
638,889 | 100 | % | 555,556 | 10 | % | ||||||||||
Jonathan
I. Berger (3)
|
638,889 | 100 | % | 555,556 | 10 | % | ||||||||||
Frederick
G. Kraegel (3)
|
638,889 | 100 | % | 555,556 | 10 | % | ||||||||||
Leonard
A. Potter (3)
|
638,889 | 100 | % | 555,556 | 10 | % | ||||||||||
— | ||||||||||||||||
All
directors and officers as a group (4 persons)
|
638,889 | 100 | % | 10 | % |
(1) Assumes
only the sale of 5,000,000 units in this offering and the sale of 3,000,000
insider warrants, but not the exercise of the 5,000,000 warrants included in
such units or the 3,000,000 warrants purchased by our sponsor. Assumes the
underwriters’ over-allotment option has not been exercised and, therefore,
83,333 shares of common stock have been forfeited by our sponsor as a
result.
(2) Unless
otherwise indicated, the business address of each of the stockholders is 590
Madison Avenue, 35th Floor, New York, New York 10022.
(3) The
members of 57th Street GAC Holdings LLC are Michael J. Levitt, Mark D. Klein,
Paul D. Lapping, Jonathan I. Berger, Frederick G. Kraegel and Leonard A.
Potter. As a result, each of Messrs. Levitt, Klein, Lapping, Berger,
Kraegel and Potter may be deemed to be beneficial owners of any shares deemed to
be beneficially owned by 57th Street GAC Holdings LLC. Each of Messrs. Levitt,
Klein, Lapping, Berger, Kraegel and Potter disclaim beneficial ownership of any
shares in which he does not have a pecuniary interest.
Our
sponsor, 57th Street GAC Holdings LLC, has agreed to purchase 3,000,000 insider
warrants prior to the date of this prospectus at the price of $0.50 per warrant
for a purchase price of $1,500,000 in a private placement to occur on or before
the date of this prospectus. All of the proceeds received from the sale of the
insider warrants will be financed from sponsor funds and not from borrowed
funds. The purchase price of the insider warrants will be added to the proceeds
from this offering to be held in the trust account. The insider warrants will be
identical to those warrants sold in this offering except that if held by our
sponsor or its permitted assigns, they (i) may be exercised for cash or on a
cashless basis and (ii) are not subject to redemption. On the date of this
prospectus, our sponsor will place the insider warrants into an escrow account
maintained by Continental Stock Transfer & Trust Company acting as escrow
agent. The sponsors have agreed not to sell or otherwise transfer any of the
insider warrants until the date that is 30 days after the date we complete our
initial business transaction; provided however that the transfers can be made to
permitted transferees who agree in writing to be bound by such transfer
restrictions. For so long as the insider warrants are subject to such transfer
restrictions they will be held in an escrow account maintained by Continental
Stock Transfer & Trust Company. Permitted transferees means:
immediate family members of the holder and trusts established by the holder for
estate planning purposes; and affiliates of the holder.
65
In
addition, if we increase the size of the offering pursuant to Rule 462(b) under
the Securities Act, we may effect a dividend in such amount to maintain our
sponsor’s collective ownership at 10% of our issued and outstanding shares of
common stock upon consummation of the offering. If we decrease the size of the
offering we will effect a reverse split of our common stock to maintain our
sponsor’s collective ownership at 10% of our issued and outstanding shares of
common stock upon the date of this prospectus, in each case without giving
effect to the private placement of the insider warrants.
If the
underwriters do not exercise all or a portion of the over-allotment option, our
sponsor will be required to forfeit up to 83,333 shares of common stock. Our
sponsor will be required to forfeit only a number of shares necessary to
maintain its 10% ownership interest in our common stock after giving effect to
the offering and the exercise, if any, of the underwriters’ over-allotment
option.
On the
date of this prospectus, our sponsor will place the initial shares into an
escrow account maintained by Continental Stock Transfer & Trust Company
acting as escrow agent. Other than transfers made to permitted transferees
(i.e., immediate family members of the holder and trusts established
by the holder for estate planning purposes; and affiliates of the holder) who
agree in writing to be bound to the transfer restrictions, agree to vote in
favor of our initial business transaction in the event we seek stockholder
approval in connection with our initial business transaction and waive any
rights to participate in any liquidation distribution if we fail to consummate
an initial business transaction, the initial shares will not be released from
escrow until one year following our business transaction, unless we were to
consummate a transaction after the consummation of the initial business
transaction that results in all of our stockholders having the right to exchange
their ordinary shares for cash, securities or other property. However, the
holders of initial shares will retain all other rights as our stockholders,
including, without limitation, the right to vote such initial shares and the
right to receive cash dividends, if declared. If dividends are declared and
payable in shares of common stock, such dividends will also be placed in escrow.
If we are unable to effect a business transaction and liquidate, our sponsor
will not receive any portion of the liquidation proceeds with respect to common
stock owned by it prior to this offering, including the common stock underlying
the insider warrants.
57th
Street GAC Holdings LLC and each of Messrs. Klein and Lapping are deemed to
be our “parents” and “promoters,” as these terms are defined under the federal
securities laws.
66
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
On
October 30, 2009, we issued 638,889 shares of our common stock to Our sponsor,
57th Street GAC Holdings LLC, a limited liability company controlled by certain
of our officers and directors, for an aggregate amount of $25,000 in cash, at a
purchase price of approximately $0.039 per share. Of these initial shares, up to
83,333, are subject to forfeiture if the underwriters’ over-allotment option is
not exercised in full. The initial shares will not be released from escrow until
one year following the consummation of our initial business
transaction.
Our
sponsor has agreed to purchase 3,000,000 warrants, or insider warrants, at the
price of $0.50 per warrant for a purchase price of $1,500,000 in a private
placement to be completed on or before the date of this prospectus. All of the
proceeds received from the sale of the insider warrants will be financed from
sponsor funds and not from borrowed funds. The purchase price of the insider
warrants will be added to the proceeds from this offering to be held in the
trust account pending our completion of an initial business transaction. The
insider warrants will be identical to those warrants sold in this offering
except that if held by our sponsor or its permitted assigns, they (i) may be
exercised for cash or on a cashless basis and (ii) are not subject to
redemption. In addition, the insider warrants (including the underlying shares
of common stock) will be held in escrow until 30 days following the consummation
of our initial business transaction. If we do not complete an initial business
transaction that meets the criteria described in this prospectus, the $1,500,000
purchase price of the insider warrants will be included as a part of the
liquidation amount payable to our public stockholders as such amounts will be
held in our trust account and the insider warrants will expire
worthless.
The
insider warrants will be sold in a private placement pursuant to Section 4(2) or
Regulation D of the Securities Act and will be exempt from registration
requirements under the federal securities laws. As such, the holders of these
insider warrants will be able to exercise them even if, at the time of exercise,
an effective registration statement and a current prospectus relating to the
common stock issuable upon exercise of such warrants is not available. Our
insider warrants will become freely tradable only after they are
registered.
In order
to protect the amounts held in the trust account, Mark D. Klein, our chief
executive officer and president, and Paul D. Lapping, our chief financial
officer, treasurer, secretary and director, have agreed to indemnify us for all
claims of creditors, to the extent that we fail to obtain waivers from vendors,
service providers and prospective target business to the extent necessary to
ensure that the amounts in the trust account available for distribution to our
stockholders below $9.75 per share (or approximately $9.74 per share if the
underwriter’s over-allotment option is exercised in full), except as to any
claims by a third party who executed a waiver of any and all rights to seek
access to the trust account and except as to any claims under our indemnity of
the underwriters of this offering against certain liabilities, including
liabilities under the Securities Act. In the event that an executed waiver is
deemed to be unenforceable against a third party, Messrs. Klein and Lapping will
not be responsible to the extent of any liability for such third party
claims. In the event that the proceeds in the trust account are
reduced below $9.75 per share (or approximately $9.74 per share if the
underwriter’s over-allotment option is exercised in full) in the event we redeem
100% of our public shares of common stock for a per share pro rata portion of
the trust account, or upon our liquation and
Messrs. Klein and Lapping assert that they are unable to satisfy their
obligations or that they have no indemnification obligations related to a
particular claim, our independent directors, if any, would determine whether to
take legal action against Messrs. Klein and Lapping to enforce their
indemnification obligations. While we currently expect that our independent
directors would take legal action on our behalf against Messrs. Klein and
Lapping to enforce their indemnification obligations to us, it is possible that
our independent directors in exercising their business judgment may choose not
to do so in any particular instance. Accordingly, we cannot assure you that due
to claims of creditors the actual value of the (i) per share redemption price or
(ii) per share liquidation price will not be less than $9.75 per share (or
approximately $9.74 per share if the underwriters’ overallotment option is
exercised in full).
In order
to meet our working capital needs following the consummation of this offering,
certain of our officers and directors may, but are not obligated to, loan us
funds, from time to time, or at any time, in whatever amount such officer or
director deems reasonable in their sole discretion, may be convertible into
warrants of the post business transaction entity at a price of $0.50 per
warrant. The warrants would be identical to the insider
warrants. The holders of a majority of such warrants (or underlying
shares) will be entitled to demand that we register these securities pursuant to
an agreement to be entered into at the time of the loan. The holders
of a majority of these securities would have certain “piggy-back” registration
rights with respect to registration statements filed subsequent to such
date. We will bear the expense incurred with the filing of any such
registration statements.
Our
sponsor has loaned $10,000 to us as of the effective date of the registration
statement to pay a portion of our expenses related to this offering, such as SEC
filing fees. FINRA filing fees and legal and accounting fees and expenses. The
loan will be payable without interest on the earlier of December 31, 2010 or the
closing of this offering. We will repay this loan from the proceeds of this
offering not being placed in trust.
We have
agreed to pay a monthly fee of $7,500, to our sponsor, for office space and
general and administrative services, including but not limited to receptionist,
secretarial and general office services. This agreement commences on the date of
this prospectus and shall continue until the earliest to occur of the
consummation of a business transaction and 15 months from the date of this
prospectus..
67
We will
reimburse our officers and directors for any reasonable out-of-pocket business
expenses incurred by them in connection with certain activities on our behalf
such as identifying and investigating possible target businesses and business
transactions. Reimbursable out-of-pocket expenses incurred by our officers and
directors will not be repaid out of proceeds held in the trust account until
these proceeds are released to us upon the completion of a business transaction,
provided there are sufficient funds available for reimbursement after such
consummation. The financial interest of such persons could influence their
motivation in selecting a target business and thus, there may be a conflict of
interest when determining whether a particular business transaction is in our
public stockholders’ best interest.
Other
than the reimbursable out-of-pocket expenses payable to our officers and
directors and the $7,500 per month payable to our sponsor for office space and
general and administrative services, no compensation, reimbursements, cash
payments or fees of any kind, including finders, consulting fees or other
similar compensation, including the issuance of any of our securities, will be
paid to our sponsor, officers or directors, or to any of our or their respective
affiliates prior to or with respect to a business transaction.
After the
consummation of a business transaction, if any, some of our officers and
directors may enter into employment agreements, the terms of which shall be
negotiated and which we expect to be comparable to employment agreements with
other similarly-situated companies. Further, after the consummation of a
business transaction, if any, to the extent our directors remain as directors of
the resulting business, we anticipate that they will receive compensation
comparable to directors at other similarly-situated companies.
68
DESCRIPTION
OF SECURITIES
General
Our
amended and restated certificate of incorporation authorizes the issuance of up
to 100,000,000 shares of common stock, par value $0.0001 per share, and
1,000,000 shares of preferred stock, par value $0.0001 per share. Prior to the
effective date of the registration statement, 638,889 shares of common stock
will be outstanding, held by our sponsor (up to 83,333 of which are subject
forfeiture if the underwriters’ over-allotment option is not exercised in
full). No shares of preferred stock are currently
outstanding.
Units
and shares of common stock
Each unit
consists of one share of our common stock and one warrant. Each warrant entitles
its holder to purchase one share of our common stock.
The units
will begin trading on or promptly after the date of this prospectus. The shares
of common stock and warrants comprising the units will begin separate trading on
the fifth business day following the earlier to occur of the expiration of the
underwriters’ over-allotment option, its exercise in full, or the announcement
by the underwriters of their intention not to exercise all or any remaining
portion of the over-allotment option, subject to our having filed the Form 8-K
described below and having issued a press release announcing when such separate
trading will begin.
In no
event will the shares of our common stock and warrants begin to trade separately
until we have filed a Current Report on Form 8-K with the SEC containing an
audited balance sheet reflecting our receipt of the gross proceeds of this
offering. We intend to file this Form 8-K promptly after the date of this
offering, which is anticipated to take place four business days from the date of
this prospectus. The audited balance sheet will include proceeds we receive from
the exercise of the underwriters’ over-allotment option if the over-allotment
option is exercised prior to the filing of the Form 8-K. If the over-allotment
option is exercised following the filing of such Form 8-K, a second or amended
Form 8-K will be filed to provide updated information reflecting the exercise of
the over-allotment option. Although we will not distribute copies of the Form
8-K to individual unit holders, the Form 8-K will be available on the SEC’s
website after filing. See the section appearing elsewhere in this prospectus
entitled “Where You Can Find Additional Information.”
Following
the date that the shares of our common stock and warrants are eligible to trade
separately, the units will continue to be listed for trading, and any security
holder may elect to separate a unit and trade the shares of common stock or
warrants separately or as a unit. Even if the component parts of the units are
separated and traded separately, the units will continue to be listed as a
separate security, and consequently, any subsequent security holder owning
shares of our common stock and warrants may elect to combine them together and
trade them as a unit. Security holders will have the ability to trade our
securities as units until such time as the warrants expire or are
redeemed.
Common
Stock
While we
have no current intention of seeking stockholder approval of our initial
business transaction, and do not intend to seek stockholder approval in
connection with such business transaction unless we are required to do so by
law, common stockholders of record are entitled to one vote for each share held
on all matters to be voted on by stockholders. In connection with a stockholder
vote to approve our initial business transaction, if any, our sponsor has agreed
to vote its initial shares in favor of our initial business transaction. In
addition, our sponsor, officers and directors have also agreed to vote any
shares of common stock acquired in this offering or in the aftermarket in favor
of our initial business transaction submitted to our stockholders for approval,
if any. Accordingly, our sponsor, officers and directors will not be able to
exercise put rights with respect to any potential initial business
transaction.
In the
event we are required to seek stockholder approval in connection with a business
transaction, we shall, in accordance with Article Sixth of our amended and
restated certificate of incorporation, proceed with the business transaction
only if a majority of the outstanding shares of common stock voted are voted in
favor of the business transaction. However, our sponsor’s, officers’,
directors’ or their affiliates’ participation in privately-negotiated
transactions (as described in this prospectus), if any, could result in the
approval of a business transaction even if a majority of our public stockholders
vote, or indicate their intention to vote against, such business transaction.
For purposes of seeking approval of the majority of our outstanding shares of
common stock, non-votes will have no effect on the approval of a business
transaction once a quorum is obtained. We intend to give approximately 30 (but
not less than 10 nor more than 60) days prior written notice of any such
meeting, if required, at which a vote shall be taken to approve a business
transaction. In addition, we will not proceed with a business transaction unless
the proposal to amend our amended and restated certificate of incorporation to
provide for our perpetual corporate existence, and any other proposal requiring
approval of a majority of our outstanding shares of stock. in connection with an
initial business transaction is approved by a majority of our outstanding shares
of common stock.
69
Our board
of directors is divided into two classes, each of which will generally serve for
a term of two years with only one class of directors being elected in each year.
There is no cumulative voting with respect to the election of directors, with
the result that the holders of more than 50% of the shares of common stock
eligible to vote for the election of directors can elect all of the
directors.
Pursuant
to our amended and restated certificate of incorporation, if we do not
consummate a business transaction within 15 months from the date of this
prospectus, we will (i) cease all operations except for the purposes of winding
up, (ii) redeem 100% of our public shares of common stock for a per share pro
rata portion of the trust account, including a portion of the interest earned
thereon, but net of any taxes (which redemption would completely extinguish such
holders’ rights as stockholders, including the right to receive further
liquidation distributions, if any) and (iii) as promptly as possible following
such redemption, dissolve and liquidate the balance of our net assets to our
remaining stockholders, as part of our plan of dissolution and
liquidation. Our sponsor has waived its rights to participate in any
redemption with respect to its initial shares.
Our
stockholders are entitled to receive ratable dividends when, as and if declared
by the board of directors out of funds legally available therefor. In the event
of a liquidation, dissolution or winding up of the company after a business
transaction, our stockholders are entitled to share ratably in all assets
remaining available for distribution to them after payment of liabilities and
after provision is made for each class of stock, if any, having preference over
the common stock. Our stockholders have no redemption, preemptive or other
subscription rights. There are no sinking fund or redemption provisions
applicable to the common stock, except that public stockholders have the right
to put their shares of common stock back to us for cash equal to their per share
pro rata portion of the trust account, together with interest (but net of taxes)
if they vote in favor of our business transaction and elect such put rights by
the date set forth in the notice mailed to our stockholders (which date shall be
at least 10 days from the mailing thereof) setting forth the details of a
proposed business transaction, and excluding interest (and net of taxes) if they
vote against our business transaction; in each case, only if such business
transaction is approved and consummated. The actual per share
put price will be equal to the amount in the trust account (net of any taxes
due) calculated as of two business days prior to the consummation of the
proposed business transaction (including the $1,500,000 from the purchase of the
insider warrants by our sponsor) divided by the number of shares of common stock
sold in this offering. Public stockholders who put their shares of common stock
back to us for a pro rata share of the trust account still have the right to
exercise the warrants that they received as part of the units. Our sponsor has
waived its right to put back to us any of its initial shares for a pro rata
share of the trust account.
Due to
the fact that our amended and restated certificate of incorporation authorizes
the issuance of up to 100,000,000 shares of common stock, if we were to enter
into a business transaction, we may (depending on the terms of such a business
transaction) be required to increase the number of shares of common stock which
we are authorized to issue at the same time as our stockholders vote on the
business transaction.
We do not
currently intend to hold an annual meeting of stockholders until after we
consummate a business transaction, and thus may not be in compliance with
Section 211(b) of the Delaware General Corporation Law. Therefore, if our
stockholders want us to hold an annual meeting prior to our consummation of a
business transaction, they may attempt to force us to hold one by submitting an
application to the Delaware Court of Chancery in accordance with Section 211(c)
of the Delaware General Corporation Law.
Preferred
Stock
Our
amended and restated certificate of incorporation authorizes the issuance of
1,000,000 shares of blank check preferred stock with such designation, rights
and preferences as may be determined from time to time by our board of
directors. No shares of preferred stock are currently issued or
outstanding. Accordingly, our board of directors is empowered,
without stockholder approval, to issue preferred stock with dividend,
liquidation, redemption, voting or other rights which could adversely affect the
voting power or other rights of the holders of common stock. However, the
underwriting agreement prohibits us, prior to a business transaction, from
issuing preferred stock which participates in any manner in the proceeds of the
trust account, or which votes as a class with the common stock on a business
transaction. We may issue some or all of the preferred stock to effect a
business transaction. In addition, the preferred stock could be utilized as a
method of discouraging, delaying or preventing a change in control of us.
Although we do not currently intend to issue any shares of preferred stock, we
cannot assure you that we will not do so in the future.
Warrants
Public
Stockholder Warrants
Prior to
the date of this prospectus, there will be 3,000,000 warrants outstanding,
composed of 3,000,000 insider warrants.
70
Each
warrant entitles the registered holder to purchase one share of our common stock
at a price of $11.50 per share, subject to adjustment as discussed below, at any
time commencing on the later of:
|
·
|
the
completion of a business transaction;
and
|
|
·
|
one
year from the date of this
prospectus.
|
The
warrants will expire five years from the date of our business transaction at
5:00 p.m., New York City time, or earlier upon redemption or liquidation of the
trust account.
Holders
of our public warrants will be able to exercise the warrants only if we have an
effective registration statement covering the shares of common stock issuable
upon exercise of the warrants and a current prospectus relating to such common
stock and such shares of common stock are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of warrants reside. Although we have undertaken in the warrant
agreement, and therefore have a contractual obligation, to use our best efforts
to maintain an effective registration statement covering the shares of common
stock issuable upon exercise of the warrants following completion of this
offering, and we intend to comply with our undertaking, we cannot assure you
that we will be able to do so. The expiration of warrants prior to exercise
would result in each unit holder paying the full unit purchase price solely for
the shares of common stock underlying the unit.
We may
redeem the outstanding warrants (excluding any insider warrants held by our
sponsor or its permitted assigns) without the consent of any third party or the
representatives of the underwriters:
|
·
|
in
whole and not in part;
|
|
·
|
at
a price of $0.01 per warrant at any time after the warrants become
exercisable;
|
|
·
|
upon
not less than 30 days prior written notice of redemption;
and
|
|
·
|
if,
and only if, the last sales price of our common stock equals or exceeds
$17.50 per share (subject to adjustment for splits, dividends,
recapitalization and other similar events) for any 20 trading days within
a 30 trading day period ending three business days before we send the
notice of redemption;
|
provided
that on the date we give notice of redemption and during the entire period
thereafter until the time we redeem the warrants, we have an effective
registration statement covering shares of common stock issuable upon exercise of
the warrants and a current prospectus relating to such common
stock.
If we
call the warrants for redemption, we will have the option to require all holders
that subsequently wish to exercise warrants to do so on a “cashless basis.” In
such event, each holder would pay the exercise price by surrendering the
warrants for that number of shares of common stock equal to the quotient
obtained by dividing (x) the product of the number of shares of common stock
underlying the warrants, multiplied by the difference between the exercise price
of the warrants and the fair market value by (y) the fair market value. The
“fair market value” shall mean the average reported last sale price of the
common stock for the 10 trading days ending on the third trading day prior to
the date on which the notice of redemption is sent to the holders of
warrants.
The
warrants will be issued in registered form under a warrant agreement between
Continental Stock Transfer & Trust Company, as warrant agent, and
us. The warrant agreement provides that the terms of the warrants
maybe amended without the consent of any holder to cure any ambiguity or correct
any defective provision, but requires the approval by the holders of a majority
of the then outstanding warrants in order to make any change that adversely
affects the interests of the registered holders. The material provisions of the
warrants are set forth herein and a copy of the warrant agreement has been filed
as an exhibit to the registration statement of which this prospectus is a
part.
The
redemption provisions for our warrants have been established at a price which is
intended to provide a reasonable premium to the initial exercise price and
provide a sufficient differential between the then-prevailing common stock price
and the warrant exercise price to absorb any negative market reaction to our
redemption of the warrants. There can be no assurance, however, that the price
of the common stock will exceed either $17.50 or the warrant exercise price of
$11.50 after we call the warrants for redemption and the price may in fact
decline as a result of the limited liquidity following any such call for
redemption.
The
exercise price and number of shares of common stock issuable on exercise of the
warrants may be adjusted in certain circumstances, including in the event of a
stock dividend, extraordinary dividend or our recapitalization, reorganization,
merger or consolidation. However, the warrants will not be adjusted for
issuances of common stock at a price below their respective exercise
prices.
71
The
warrants may be exercised upon surrender of the warrant certificate on or before
the expiration date at the offices of the warrant agent, with the exercise form
on the reverse side of the warrant certificate completed and executed as
indicated, accompanied by full payment of the exercise price, by certified or
official bank check payable to us, for the number of warrants being exercised,
or through a net cashless exercise (when permitted). The warrant holders do not
have the rights or privileges of holders of common stock and any voting rights
until they exercise their warrants and receive shares of common stock. After the
issuance of shares of common stock upon exercise of the warrants, each holder
will be entitled to one vote for each share held of record on all matters to be
voted on by stockholders.
No
fractional shares of common stock will be issued upon exercise of the warrants.
If, upon exercise of the warrants, a holder would be entitled to receive a
fractional interest in a share, we will, upon exercise, round up to the nearest
whole number the number of shares of common stock to be issued to the warrant
holder.
Insider
Warrants
Our
sponsor has agreed to purchase 3,000,000 warrants, or insider warrants, from us
at a price of $0.50 per warrant in a private placement to be completed on or
before the date of this prospectus. All of the proceeds received from the sale
of the insider warrants ($1,500,000) will be placed in the trust account. The
insider warrants will be identical to those warrants sold in this offering
except that if held by our sponsor or its permitted assigns, they (i) may be
exercised for cash or on a cashless basis and (ii) are not subject to
redemption. In addition, the insider warrants will be held in escrow until 30
days following the consummation of a business transaction. The proceeds from the
sale of the insider warrants will be held in our trust account for the benefit
of our public stockholders. If we do not complete one or more
business transactions as described in this prospectus, the insider warrants will
become worthless.
The
insider warrants will be sold in a private placement pursuant to Regulation D of
the Securities Act and will be exempt from registration requirements under the
federal securities laws. As such, the holders of these insider warrants will be
able to exercise them even if, at the time of exercise, an effective
registration statement and a current prospectus relating to the common stock
issuable upon exercise of such warrants is not available.
The
insider warrants will become worthless if we do not consummate a business
transaction. The personal and financial interests of our affiliates may
influence their motivation in identifying and selecting a target business and
completing a business transaction in a timely manner. Consequently, our
officers’ and directors’ discretion in identifying and selecting a suitable
target business may result in a conflict of interest when determining whether
the terms, conditions and timing of a particular business transaction are
appropriate and in our stockholders’ best interest.
Our
Transfer Agent and Warrant Agent
The
transfer agent for our securities and warrant agent for our warrants is
Continental Stock Transfer & Trust Company, 17 Battery Place, New York, New
York 10004.
Amendments
to our Certificate of Incorporation
Our
amended and restated certificate of incorporation contains certain requirements
and restrictions relating to this offering that will apply to us until the
consummation of our business transaction. Specifically, our amended and restated
certificate of incorporation provides, among other things, that:
|
·
|
upon
the date of this prospectus, $48,750,000, or $56,025,000 if the
underwriters’ over-allotment option is exercised in full shall be placed
into the trust account;
|
|
·
|
if
a business transaction is not consummated within 15 months of the date of
this prospectus, we will (i) cease all operations except for the purposes
of winding up, (ii) redeem 100% of our public shares of common stock for a
per share pro rata portion of the trust account, including a portion of
the interest earned thereon, but net of any taxes (which redemption would
completely extinguish such holders’ rights as stockholders, including the
right to receive further liquidation distributions, if any) and (iii) as
promptly as possible following such redemption, dissolve and liquidate the
balance of our net assets to our remaining stockholders, as part of our
plan of dissolution and
liquidation;
|
72
|
·
|
prior
to our initial business transaction, we may not issue additional stock
that participates in any manner in the proceeds of the trust account, or
that votes as a class with the common stock sold in this offering on a
business transaction;
|
|
·
|
we
may not enter into any transaction with affiliates without the prior
approval by a majority of our disinterested, independent directors or the
members of our board of directors who do not have an interest in the
transaction, in either case who had access, at our expense, to our
attorneys or independent legal counsel, and unless our disinterested,
independent directors determine that the terms of such transaction are no
less favorable to us than those that would be available to us with respect
to such a transaction from unaffiliated third parties;
and
|
|
·
|
although
we do not intend to enter into a business transaction with a target
business that is affiliated with our sponsor, our directors or officers,
we are not prohibited from doing so. In the event we enter into such a
transaction, we will obtain an opinion from an independent investment
banking firm that is a member of FINRA that such a business transaction is
fair to our stockholders from a financial point of
view.
|
In the
event we are required to seek stockholder approval in connection with our
business transaction, our amended and restated certificate of incorporation
provides that:
|
·
|
we
may consummate our initial business transaction if approved by a majority
of the shares of common stock voted by our public stockholders at a duly
held stockholders meeting and holders of no more than 88% of our public
shares elect to put their shares of common stock back to us for
cash;
|
|
·
|
if
a proposed business transaction is approved and consummated, public
stockholders who exercised their put rights and voted against the business
transaction may put their shares back to us for cash of common stock for
cash at the put price on the closing date of such business
transaction.
|
Quotation
of Securities
We have
applied to have our units, common stock and warrants quoted on the on the OTC
Bulletin Board under the symbols “[UNIT SYMBOL]”, “[COMMON STOCK SYMBOL]”,
“[WARRANT SYMBOL]”, respectively. We anticipate that our units will be quoted on
the OTC Bulletin Board on or promptly after the effective date of the
registration statement. Following the date the shares of our common stock and
warrants are eligible to trade separately, we anticipate that the shares of our
common stock and warrants will be quoted separately and as a unit on the on the
OTC Bulletin Board.
Delaware
Anti-Takeover Law
We will
be subject to the provisions of Section 203 of the Delaware General Corporation
Law regulating corporate takeovers upon consummation of this offering. This
statute prevents certain Delaware corporations, under certain circumstances,
from engaging in a “business transaction” with:
|
·
|
a
stockholder who owns 15% or more of our outstanding voting stock
(otherwise known as an “interested
stockholder”);
|
|
·
|
an
affiliate of an interested stockholder;
or
|
|
·
|
an
associate of an interested stockholder, for three years following the date
that the stockholder became an interested
stockholder.
|
A
“business transaction” includes a merger or sale of more than 10% of our assets.
However, the above provisions of Section 203 do not apply if:
|
·
|
our
board of directors approves the transaction that made the stockholder an
“interested stockholder,” prior to the date of the
transaction;
|
|
·
|
after
the completion of the transaction that resulted in the stockholder
becoming an interested stockholder, that stockholder owned at least 85% of
our voting stock outstanding at the time the transaction commenced, other
than statutorily excluded shares of common stock;
or
|
73
|
·
|
on
or subsequent to the date of the transaction, the business transaction is
approved by our board of directors and authorized at a meeting of our
stockholders, and not by written consent, by an affirmative vote of at
least two-thirds of the outstanding voting stock not owned by the
interested stockholder.
|
74
SHARES
ELIGIBLE FOR FUTURE SALE
Immediately
after this offering, we will have 5,555,556 shares of our common stock
outstanding, or 6,216,216 shares if the underwriters’ over-allotment option is
exercised in full. Of these shares, the 5,000,000 shares of common stock sold in
this offering, or 5,750,000 shares of common stock if the underwriters’
over-allotment option is exercised in full, will be freely tradable without
restriction or further registration under the Securities Act, except for any
shares of common stock purchased by one of our affiliates within the meaning of
Rule 144 under the Securities Act. All of the remaining 555,556 shares of common
stock (or 638,889 if the underwriters’ over-allotment option is exercised in
full) are restricted securities under Rule 144, in that they were issued in
private transactions not involving a public offering. Notwithstanding this
restriction, those shares of common stock have been placed in escrow until one
year following our initial business transaction and will only be released prior
to that date under limited exceptions. See “Principal Stockholders.”
Additionally, on or before the date of this prospectus, there will be 3,000,000
insider warrants outstanding that upon full exercise will result in the issuance
of 3,000,000 shares of common stock to the holders of the insider warrants. The
insider warrants (including the shares of common stock underlying such warrants)
will be placed in escrow until 30 days following the consummation of our initial
business transaction and will only be released prior to that date under limited
exceptions. See “Principal Stockholders.” Such initial shares of common stock,
insider warrants and the underlying shares of common stock are entitled to
registration rights as described below under “Registration Rights.”
Rule
144
The SEC
has recently adopted amendments to Rule 144 which became effective on February
15, 2008 and apply to securities acquired both before and after that date. Under
these amendments, a person who has beneficially owned restricted shares of our
common stock or warrants for at least six months would be entitled to sell their
securities provided that (i) such person is not deemed to have been one of our
affiliates at the time of, or at any time during the three months preceding, a
sale and (ii) we are subject to the Exchange Act periodic reporting requirements
for at least three months before the sale.
Persons
who have beneficially owned restricted shares of our common stock or warrants
for at least six months but who are our affiliates at the time of, or at any
time during the three months preceding, a sale, would be subject to additional
restrictions, by which such person would be entitled to sell within any
three-month period only a number of securities that does not exceed the greater
of either of the following:
|
·
|
1%
of the total number of shares of our common stock then outstanding, which
will equal 55,555 shares of our common stock immediately after this
offering or 62,162 shares of our common stock if the underwriters’ over-
allotment is exercised in full; or
|
|
·
|
the
average weekly trading volume of the shares of our common stock during the
four calendar weeks preceding the filing of a notice on Form 144 with
respect to the sale.
|
Sales
under Rule 144 are also limited by manner of sale provisions, notice
requirements and the availability of current public information about
us.
Restrictions
on the Use of Rule 144 by Shell Companies or Former Shell Companies
Historically,
the SEC has taken the position that Rule 144 is not available for the resale of
securities initially issued by companies that are, or previously were, blank
check companies like us, to their promoters or affiliates despite technical
compliance with the requirements of Rule 144. The SEC has codified and expanded
this position in the amendments discussed above by prohibiting the use of Rule
144 for resale of securities issued by shell companies (other than business
transaction related shell companies) or issuers that have been at any time
previously a shell company. The SEC has provided an important exception to this
prohibition, however, if the following conditions are met:
|
·
|
the
issuer of the securities that was formerly a shell company has ceased to
be a shell company;
|
|
·
|
the
issuer of the securities is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange
Act;
|
|
·
|
the
issuer of the securities has filed all Exchange Act reports and material
required to be filed, as applicable, during the preceding 12 months (or
such shorter period that the issuer was required to file such reports and
materials), other than Form 8-K reports;
and
|
|
·
|
at
least one year has elapsed from the time that the issuer filed current
Form 10 type information with the SEC reflecting its status as an entity
that is not a shell company.
|
75
As a
result, our sponsor will be able to sell the initial shares and sponsor warrants
pursuant to Rule 144 without registration one year after we have completed our
initial business transaction.
Registration
Rights
Our
sponsor and its permitted transferees will be entitled to registration rights
pursuant to a registration rights agreement to be signed on or before the date
of this prospectus. Our sponsor will be entitled to demand
registration rights and certain “piggy-back” registration rights with
respect to the initial shares and the insider warrants and the common stock
underlying the insider warrants, commencing, in the case of the initial shares,
one year after the consummation of our initial business transaction and
commencing, in the case of the insider warrants and the respective common stock
underlying the insider warrants, 30 days after the consummation of our initial
business transaction.
76
UNDERWRITING
In
accordance with the terms and subject to the conditions contained in an
underwriting agreement, we have agreed to sell to the underwriters named below,
for which Morgan Joseph is acting as representative, and sole book-running
manager, and the underwriters have severally, and not jointly, agreed to
purchase, on a firm commitment basis the number of units offered in this
offering set forth opposite their respective names below:
Underwriters
|
Number
of
Units
|
|||
Morgan
Joseph & Co. Inc.
|
||||
Ladenburg
Thalmann & Co. Inc.
|
||||
Total
|
5,000,000
|
A copy of
the underwriting agreement has been filed as an exhibit to the registration
statement of which this prospectus forms a part.
The
underwriting agreement provides that the underwriters are obligated to purchase
all the units set forth opposite their name in the offering if any are
purchased, other than those units covered by the over-allotment option described
below.
We have
granted the representative of the underwriters a 45-day option to purchase up to
750,000 additional units at the initial public offering price less the
underwriting discounts and commissions. The option may be exercised only to
cover any over-allotments of units.
We
estimate that the total out of pocket expenses for this offering, excluding
underwriting discounts and commissions, will be approximately $450,000, all of
which will be payable by us. These expenses will be partially funded by a loan
of $10,000 made by our sponsor, 57th Street GAC Holdings LLC, which loan will be
repaid from the proceeds of this offering. We have been advised
by the representative of the underwriters that the underwriters do not expect
sales to accounts over which the underwriters have discretionary authority to
exceed 5% of the shares of common stock being offered.
The
underwriters may deliver prospectuses via e-mail both as a PDF document and by a
link to the Securities and Exchange Commission’s website and websites hosted by
the underwriters and other parties, and the prospectus may also be made
available on websites maintained by selected dealers and selling group members
participating in this offering. The underwriters may agree to allocate a number
of units to underwriters and selling group members for sale to their online
brokerage account holders. Internet distributions may be allocated by the
representative to underwriters and selling group members that may make Internet
distributions on the same basis as other allocations.
State
Blue Sky Information
We
will offer and sell the units to retail customers only in Colorado, Delaware,
the District of Columbia, Florida, Georgia, Hawaii, Illinois, Louisiana,
Maryland, New York and Rhode Island. We have applied to have the units
registered for sale, or we are relying on exemptions from registration in the
states mentioned above. In states that require registration, we will not sell
the units to retail customers in these states until such registration is
effective in each of these states (including in Colorado, pursuant to
11-51-302(6) of the Colorado Revised Statutes).
If you
are not an institutional investor, you may purchase our securities in this
offering only in the jurisdictions described directly above. Institutional
investors in every state except in Idaho may purchase the units in this offering
pursuant to exemptions provided to such entities under the Blue Sky laws of
various states. The definition of an “institutional investor” varies from state
to state but generally includes financial institutions, broker-dealers, banks,
insurance companies and other qualified entities.
The
National Securities Markets Improvement Act of 1996 (“NSMIA”), which is a
federal statute, prevents or preempts the states from regulating transactions in
certain securities, which are referred to as “covered securities”. This statute
allows the states to investigate companies if there is a suspicion of fraud or
deceit, or unlawful conduct by a broker or dealer, in connection with the sale
of securities. If there is a finding of fraudulent activity, the
states can regulate or bar the sale of covered securities in a particular
case.
77
State
securities laws either require that a company’s securities be registered for
sale or that the securities themselves or the transaction under which they are
issued, are exempt from registration. When a state law provides an exemption
from registration, it is excusing an issuer from the general requirement to
register securities before they may be sold in that state. States, may by rule
or regulation, place conditions on the use of exemptions, so that certain
companies may not be allowed to rely on the exemption for the sale of their
securities. If an exemption is not available and the securities the company
wishes to sell are not covered securities under the federal statute, then the
company must register its securities for sale in the state in
question.
We will
file periodic and annual reports under the Exchange Act. Therefore, under NSMIA,
the states and territories of the United States are preempted from regulating
the resale by stockholders of the units, from and after the effective date, and
the common stock and warrants comprising the units, once they become separately
transferable, because our securities will be covered securities. However, NSMIA
does allow states and territories of the United States to require notice filings
and collect fees with regard to these transactions and a state may suspend the
offer and sale of securities within such state if any such required filing is
not made or fee is not paid. As of the date of this prospectus, the following
states do not require any notice filings or fee payments and stockholders may
resell the units, and the common stock and warrants comprising the units, once
they become separately transferable:
Alabama,
Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida,
Georgia, Hawaii, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Massachusetts, Minnesota, Mississippi, Missouri, Nebraska, Nevada, New Jersey,
New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, Rhode
Island, South Carolina, South Dakota, Utah, Virginia, Virgin Islands,
Washington, West Virginia, Wisconsin and Wyoming.
Additionally,
the stockholders may resell the units, and the common stock and warrants
comprising the units, once they become separately transferable, if the proper
notice filings have been made and fees paid in the following
states:
District
of Columbia, Illinois, Maryland, Michigan, Montana, New Hampshire, North Dakota,
Oregon, Puerto Rico, Tennessee, Texas and Vermont.
As of the
date of this prospectus, we have not determined in which of these states, if
any, we will submit the required filings or pay the required fee. Additionally,
if any of the states that have not yet adopted a statute, rule or regulation
relating to the NSMIA adopts such a statute in the future requiring a filing or
fee or if any state amends its existing statutes, rules or regulations with
respect to its requirements, we would need to comply with those new requirements
in order for the securities to continue to be eligible for resale in those
jurisdictions.
In
addition, aside from the exemption from registration provided by the
NSMIA, we believe that the units, from and after the effective date,
and the common stock and warrants comprising the units, once they become
separately transferable, may be eligible for sale on a secondary market basis in
various states, without any notice filings or fee payments, based upon the
availability of an applicable exemption from the state’s registration
requirements, in certain instances subject to waiting periods, notice filings or
fee payments.
Despite
the exemption from state registration provided by the NSMIA described above, the
state of Idaho deems blank check offerings inherently fraudulent and such
offerings may not be registered or qualify for an exemption from registration in
that state. Although we are not aware of any other state
having used these powers to prohibit or restrict resales of securities issued by
blank check companies generally, certain state securities commissioners view
blank check companies unfavorably and might use these powers, or threaten to use
these powers, to hinder the resale of securities of blank check companies in
their states.
Pricing
of Securities
We have
been advised by the representative that the underwriters propose to offer the
units to the public at the initial offering price set forth on the cover page of
this prospectus. Before this offering, there has been no market for
our securities. The initial public offering price was determined by negotiation
between us and the underwriters and will not necessarily reflect the market
price of our securities following the offering. The principal factors that were
considered in determining the initial public offering price were:
•
|
the
information presented in this prospectus and otherwise available to the
underwriters;
|
•
|
the
history of and prospects of companies whose principal business is the
acquisition of other companies;
|
•
|
prior
offerings of those companies;
|
•
|
the
ability of our management and their experience in identifying operating
companies;
|
78
•
|
our
prospects for acquiring an operating business at attractive
values;
|
•
|
the
present state of our development and our current financial condition and
capital structure;
|
•
|
the
recent market prices of, and the demand for, publicly traded securities of
generally comparable companies;
|
•
|
general
conditions of the securities markets at the time of the offering;
and
|
•
|
other
factors as were deemed relevant.
|
The
factors described above were not assigned any particular weight. Rather, these
factors, together with market valuations and the financial performance of other
publicly traded companies in our industry, were considered as a totality in our
negotiation with the underwriters over our initial public offering price. We
offer no assurances that the initial public offering price will correspond to
the price at which our units will trade in the public market subsequent to the
offering or that an active trading market for the units, common stock or
warrants will develop and continue after the offering.
Over-allotment
and Stabilizing Transactions
Rules of
the SEC may limit the ability of the underwriters to bid for or purchase our
securities before the distribution of the securities is completed. However, the
underwriters may engage in the following activities in accordance with the
rules:
|
·
|
Stabilizing
Transactions. The underwriters may make bids or
purchases for the purpose of pegging, fixing or maintaining the price of
our securities.
|
|
·
|
Over-Allotments and Syndicate
Coverage Transactions. The underwriters may create a
short position in our securities by selling more of our securities than
are set forth on the cover page of this prospectus. If the underwriters
create a short position during the offering, the representative may engage
in syndicate covering transactions by purchasing our securities in the
open market. The representative may also elect to reduce any short
position by exercising all or part of the over-allotment
option.
|
|
·
|
Penalty
Bids. The representative may reclaim a selling
concession from a syndicate member when the units originally sold by the
syndicate member are purchased in a stabilizing or syndicate covering
transaction to cover syndicate short
positions.
|
Stabilization
and syndicate covering transactions may cause the price of the securities to be
higher than they would be in the absence of these transactions. The imposition
of a penalty bid may also have an effect on the prices of the securities if it
discourages resales.
Neither
we nor the underwriters make any representation or prediction as to the effect
the transactions described above may have on the prices of our securities. These
transactions may occur on the OTC Bulletin
Board, in
the over-the-counter market or on any trading market. If any of these
transactions are commenced, they may be discontinued without notice at any
time.
The
distribution of our securities will end upon the underwriters’ cessation of
selling efforts and stabilization activities, provided, however, in the event
the underwriters were to exercise their over-allotment option to purchase
securities in excess of their actual syndicate short position, the distribution
will not be deemed to have been completed until all of the securities have been
sold.
In
connection with this offering, the underwriters may distribute prospectuses
electronically. No forms of prospectus other than printed prospectuses and
electronically distributed prospectuses that are printable in Adobe PDF format
will be used in connection with this offering.
79
Commissions
and Discounts
The
following table summarizes the compensation we will pay:
Per
Unit
|
Total
|
|||||||||||||||
Without
Over-
allotment
|
With
Over-
allotment
|
Without
Over-
allotment
|
With
Over-
allotment
|
|||||||||||||
Underwriting
discounts and commissions paid by us(1)
|
$ | 0.30 | $ | 0.30 | $ | 1,500,000 | $ | 1,725,000 |
(1) The
underwriting fee is equal to 3% of the gross proceeds from the sale of units
offered to the public. Solely in the event we consummate our initial
business transaction, the following additional contingent fees will become
payable to Morgan Joseph from the amounts held in the trust account: (A) an
advisory fee equal to 1% of the gross proceeds from the sale of units offered to
the public (which fee shall be increased to 1.5% if we consummate our initial
business transaction with a business or asset introduced to us by Morgan Joseph)
and (B) a contingent placement fee equal to up to 2.5% of the aggregate amount
of the funds released from the trust account to us or to our target upon
consummation of our initial business transaction. Assuming no exercise of the
underwriters’ over-allotment option, no consummation of an initial business
transaction with a business or asset introduced to us by Morgan Joseph, and 88%
of our public stockholders put their shares back to us for cash, we estimate the
1% advisory fee to equal $500,000 and a 2.5% contingent fee to equal
$133,750.
Other
Terms
We are
not under any contractual obligation to engage the underwriters to provide any
services for us after this offering, and have no present intent to do so.
However, we may pay the underwriters of this offering or any entity with which
they are affiliated a finder’s fee or other compensation for services rendered
to us in connection with the consummation of a business transaction. In
addition, the underwriters may assist us in raising additional capital in the
future for which they will be entitled to receive customary fees.
Special
Conflict Relating to Underwriting Activities
Mark D.
Klein, our chief executive officer and president, is an affiliate of Ladenburg
Thalmann & Co. Inc., a member of FINRA, and will economically own in excess
of 10% of our securities. Ladenburg Thalmann & Co. Inc is one the
underwriters of this offering. Therefore, FINRA requires this offering to
be made in compliance with the applicable provisions of FINRA Rule 2720.
Pursuant to that rule, the appointment of a “qualified independent underwriter”
(as such term is defined in Rule 2720) is not necessary in connection with this
offering because Morgan Joseph, the FINRA member primarily responsible for
managing this offering does not have a conflict of interest, is not an affiliate
of any member that has a conflict of interest and meets the requirements of
paragraph (f)(12)(E) of Rule 2720.
Indemnification
We have
agreed to indemnify the underwriters against liabilities under the Securities
Act, or contribute to payments that the underwriters may be required to make in
that respect.
We have
applied to quote the units on the OTC Bulletin Board under the symbol “[UNIT
SYMBOL]”. Upon separate trading of the securities comprising the units, we
anticipate that the common stock and the warrants will be quoted on the OTC
Bulletin Board under the symbols “[COMMON STOCK SYMBOL]” and “[WARRANT SYMBOL]”,
respectively. Following the date that the shares of our common stock and
warrants are eligible to trade separately, the units will continue to be quoted
for trading, and any security holder may elect to separate a unit and trade the
common stock or warrants separately or as a unit.
The
underwriters and their respective affiliates have from time to time performed,
and may in the future perform, various financial advisory, commercial banking
and investment banking services for us or certain of our affiliates in the
ordinary course of business, for which they received, or will receive, customary
fees and expenses.
80
LEGAL
MATTERS
Ellenoff
Grossman & Schole LLP, New York, New York, is passing on the validity of the
securities offered in this prospectus. McDermott Will & Emery LLP, New York,
New York, is acting as counsel for the underwriters in this
offering.
EXPERTS
The
financial statements of 57th Street General Acquisition Corp. as of November 11,
2009 and for the period from October 29, 2009 (inception) through November 11,
2009, appearing in this prospectus and the related registration statement have
been audited by Rothstein, Kass & Company, P.C., independent registered
public accounting firm, as set forth in their report thereon appearing elsewhere
herein and are included in reliance upon such report given on the authority of
such firm as experts in accounting and auditing.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have
filed with the SEC a registration statement on Form S-1, which includes
exhibits, schedules and amendments, under the Securities Act, with respect to
this offering of our securities. Although this prospectus, which forms a part of
the registration statement, contains all material information included in the
registration statement, parts of the registration statement have been omitted as
permitted by rules and regulations of the SEC. We refer you to the registration
statement and its exhibits for further information about us, our securities and
this offering. The registration statement and its exhibits, as well as our other
reports filed with the SEC, can be inspected and copied at the SEC’s public
reference room at 100 F Street, N.E., Washington, D.C. 20549. The public may
obtain information about the operation of the public reference room by calling
the SEC at 1-800-SEC-0330. In addition, the SEC maintains a web site at
http://www.sec.gov which contains the Form S-1 and other reports, proxy and
information statements and information regarding issuers that file
electronically with the SEC.
81
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
INDEX
TO FINANCIAL STATEMENTS
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Financial
Statements:
|
|
Balance
Sheet
|
F-3
|
Statement
of Operations
|
F-4
|
Statement
of Stockholders’ Equity
|
F-5
|
Statement
of Cash Flows
|
F-6
|
Notes
to Financial Statements
|
F-7
|
F-1
Report
of Independent Registered Public Accounting Firm
To the
Board of Directors and Stockholder of
57th Street General
Acquisition Corp.
We
have audited the accompanying balance sheet of 57th Street General
Acquisition Corp. (a corporation in the development stage) (the “Company”) as of
November 11, 2009 and the related statements of operations, stockholders’ equity
and cash flows for the period from October 29, 2009 (date of inception) to
November 11, 2009. These financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of 57th Street General
Aquisition Corp. (a corporation in the development stage) as of November 11,
2009, and the results of its operations and its cash flows for the period from
October 29, 2009 (date of inception) to November 11, 2009, in conformity with
accounting principles generally accepted in the United States of
America.
/s/ Rothstein,
Kass & Company, P.C.
Roseland,
New Jersey
November
16, 2009
F-2
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
BALANCE
SHEET
November
11, 2009
ASSETS
|
||||
Current
assets
|
||||
Cash
|
$ | 34,924 | ||
Deferred
offering costs
|
25,000 | |||
Total
assets
|
$ | 59,924 | ||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||
Current
liabilities
|
||||
Accrued
expenses
|
$ | 26,000 | ||
Note
payable, stockholder
|
10,000 | |||
Total
liabilities
|
36,000 | |||
Commitments
|
||||
Stockholders’
equity
|
||||
Preferred
stock, $.0001 par value; 1,000,000 shares authorized; no shares issued and
outstanding
|
- | |||
Common
stock, $.0001 par value, 100,000,000 shares authorized; 638,889 shares
issued and outstanding
|
64 | |||
Additional
paid-in capital
|
24,936 | |||
Deficit
accumulated during development stage
|
(1,076 | ) | ||
Total
stockholders’ equity
|
23,924 | |||
Total
liabilities and stockholders’ equity
|
$ | 59,924 |
The
accompanying notes are an integral part of the financial
statements.
F-3
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
Statement
of Operations
For
the period from October 29, 2009 (date of inception) to November 11,
2009
Revenue
|
$ | - | ||
General
and administrative expenses
|
1,076 | |||
Loss
from operations
|
(1,076 | ) | ||
Interest
and dividend income
|
- | |||
Income
before provision for income taxes
|
(1,076 | ) | ||
Provision
for income taxes
|
- | |||
Net
income attributable to other common stockholders
|
$ | (1,076 | ) | |
Weighted
average number of common shares outstanding
|
638,889 | |||
Basic
and diluted net income per share attributable to other common
stockholders
|
$ | (0 | ) |
The accompanying notes are an integral part of the financial
statements.
F-4
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
STATEMENT
OF CHANGES IN STOCKHOLDERS’ EQUITY
For
the period from October 29, 2009 (date of inception) to November 11,
2009
Common
Stock
|
Additional
|
Deficit
accumulated
during
|
Total
|
|||||||||||||||||
Shares
|
Amount
$.0001
par
|
paid-in capital |
development stage |
stockholders’ equity |
||||||||||||||||
Sale
of common stock issued to initial stockholder on November 6, 2009 at $.039
per share
|
638,889 | $ | 64 | $ | 24,936 | $ | - | $ | 25,000 | |||||||||||
For
the period from October 29, 2009 (date of inception) to November 11,
2009
|
— | — | — | (1,076 | ) | (1,076 | ) | |||||||||||||
Balance,
November 11, 2009
|
638,889 | $ | 64 | $ | 24,936 | $ | (1,076 | ) | $ | 23,924 |
The accompanying notes are an integral part of the financial
statements.
F-5
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
Statement
of Operations
For
the period from October 29, 2009 (date of inception) to November 11,
2009
Cash
Flows from Operating Activities
|
||||
Net
loss
|
$ | (1,076 | ) | |
Adjustments
to reconcile net income to net cash used in operating
activities:
|
||||
Changes
in operating assets and liabilities:
|
||||
(Increase)
in deferred offering costs
|
(25,000 | ) | ||
Increase
in accrued expenses
|
26,000 | |||
Net
cash used in operating activities
|
(76 | ) | ||
Cash
Flows from Financing Activities
|
||||
Proceeds
from note payable, stockholder
|
10,000 | |||
Proceeds
from issuance of stock to initial stockholders’
|
25,000 | |||
Net
cash provided by financing activities
|
35,000 | |||
Net
increase in cash
|
34,924 | |||
Cash
at beginning of the period
|
- | |||
Cash
at end of the period
|
$ | 34,924 | ||
Supplemental schedule of non-cash financing activities: | ||||
Accural
of deferred offering costs
|
$ | 25,000 |
The accompanying notes are an integral part of the financial
statements.
F-6
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
NOTES
TO FINANCIAL STATEMENTS
For
the period from October 29, 2009 (date of inception) to November 11,
2009
NOTE
A—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
57th
Street General Acquisition Corp. (a corporation in the development stage) (the
“Company”) was incorporated in Delaware on October 29, 2009. The Company was
formed for the purpose of acquiring, through a merger, capital stock exchange,
asset acquisition, stock purchase, reorganization, exchangeable share
transaction or other similar business transaction, one or more operating
businesses or assets that we have not yet identified (“Business Transaction”).
The Company has neither engaged in any operations nor generated any income to
date. The Company is considered to be in the development stage as defined in
FASB
Accounting Standard Codification, or ASC 915,
“Development
Stage Entities,”
and is subject to the risks associated with activities of development stage
companies. The Company has selected December 31 as its fiscal year
end.
The
Company’s management has broad discretion with respect to the specific
application of the net proceeds of its proposed initial public offering of Units
(as defined in Note C below) (the “Proposed Offering”), although substantially
all of the net proceeds of the Proposed Offering are intended to be generally
applied toward consummating a Business Transaction. Furthermore, there is no
assurance that the Company will be able to successfully affect
a Business Transaction. An amount equal to 97.5% of the gross proceeds of the
Proposed Offering will be held in a trust account (“Trust Account”) and invested
in U.S. “government securities,” within the meaning of Section 2(a)(16) of the
Investment Company Act of 1940 (the “1940 Act”) with a maturity of 180 days or
less, or in money market funds meeting certain conditions under Rule 2a-7
promulgated under the 1940 Act, until the earlier of (i) the consummation of a
Business Transaction or (ii) the distribution of the Trust Account as described
below.
The
Company, after signing a definitive agreement for the acquisition of one or more
target businesses or assets, will not submit the transaction for stockholder
approval, unless otherwise required by law. The Company will proceed with a
Business Transaction if it is approved by its board of
directors. Only in the event that we are required to seek stockholder
approval in connection with our initial business transaction, we will proceed
with a business transaction only if a majority of the outstanding shares of
common stock voted are voted in favor of the Business Transaction. In
connection with such a vote, if a Business Transaction is approved and
consummated, stockholders that vote against the Business Transaction and elect
to put their shares of common stock back to us for cash will be entitled to
receive their pro-rata portion of the Trust Account as follows: (i)
public stockholders voting against the business transaction and electing to put
shares of common stock to us shall be entitled to receive a per share pro rata
portion of the Trust Account (excluding interest and net of taxes) and (ii)
public stockholders voting in favor of the business transaction and electing to
put shares of common stock to us shall be entitled to receive a per share pro
rata portion of the Trust Account (together with interest thereon but net of
taxes). These shares of common stock will be recorded at a fair value and
classified as temporary equity upon the completion of the Proposed Offering, in
accordance with ASC 480. 57th Street GAC Holdings LLC (the “sponsor”) has
agreed, in the event the Company is required to seek stockholder approval of its
business transaction, to vote its initial shares in favor of approving a
business transaction. The sponsor and the Company’s officers and directors have
also agreed to vote shares of common stock acquired by them in this offering or
in the aftermarket in favor of a business transaction submitted to the Company’s
stockholders for approval.
F-7
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
NOTES
TO FINANCIAL STATEMENTS
For
the period from October 29, 2009 (date of inception) to November 11,
2009
The
Company’s sponsor, officers and directors have agreed that the Company will only
have 15 months from the date of this prospectus to consummate its initial
business transaction. If the Company does not consummate a business
transaction within such 15 month period, it shall (i) cease all operations
except for the purposes of winding up; (ii) redeem 100% of our public shares of
common stock for a per share pro rata portion of the trust account, including a
portion of the interest earned thereon, but net of any taxes (which redemption
would completely extinguish such holders’ rights as stockholders, including the
right to receive further liquidation distributions, if any) and (iii) as
promptly as possible following such redemption, dissolve and liquidate the
balance of our net assets to our remaining stockholders, as part of our plan of
dissolution and liquidation. The sponsor has waived its right to participate in
any redemption with respect to its initial shares. However, if the sponsor or
any of the Company’s officers, directors or affiliates acquires shares of common
stock in or after the Proposed Offering, they will be entitled to a pro rata
share of the Trust Account upon the Company’s redemption or liquidation in the
event the Company does not consummate a Business Transaction within the required
time period. In the event of such distribution, it is possible that the per
share value of the residual assets remaining available for distribution
(including Trust Account assets) will be less than the initial public offering
price per Unit in the Proposed Offering.
NOTE
B—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis
of presentation
The
accompanying financial statements are presented in U.S. dollars in conformity
with accounting principles generally accepted in the United States of America
and pursuant to the rules and regulations of the Securities and Exchange
Commission (“SEC”).
Development
stage company
The
Company complies with the reporting requirements of FASB ASC 915, “Development
Stage Entities.” At November 11, 2009, the Company had not commenced any
operations nor generated revenue to date. All activity through November 11, 2009
relates to the Company’s formation and the Proposed Offering. Following such
offering, the Company will not generate any operating revenues until after
completion of a Business Transaction, at the earliest. The Company will generate
non-operating income in the form of interest income on the designated Trust
Account after the Proposed Offering.
F-8
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
NOTES
TO FINANCIAL STATEMENTS
For
the period from October 29, 2009 (date of inception) to November 11,
2009
Net
loss per common share
The
Company complies with accounting and disclosure requirements of FASB ASC 260,
“Earnings Per Share.” Net loss per common share is computed by dividing net loss
applicable to common stockholders by the weighted average number of common
shares outstanding for the period. At November 11, 2009, the Company did not
have any dilutive securities and other contracts that could, potentially, be
exercised or converted into common stock and then share in the earnings of the
Company. As a result, diluted loss per common share is the same as basic loss
per common share for the period.
Concentration
of credit risk
Financial
instruments that potentially subject the Company to concentrations of credit
risk consist of cash accounts in a financial institution, which at times, may
exceed the Federal depository insurance coverage of $250,000. The Company has
not experienced losses on these accounts and management believes the Company is
not exposed to significant risks on such accounts.
Fair
value of financial instruments
The fair
value of the Company’s assets and liabilities, which qualify as financial
instruments under FASB ASC 820, “Fair Value Measurements and Disclosures”
approximates the carrying amounts represented in the balance sheet.
Use
of estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Deferred
offering costs
The
Company complies with the requirements of the ASC
340-10-525-1. Deferred offering costs consist principally of $25,000 of
legal fees incurred through the balance sheet date that are related to the
Proposed Offering and that will be charged to stockholders’ equity upon the
completion of the Proposed Offering or charged to operations if the Proposed
Offering is not completed.
F-9
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
NOTES
TO FINANCIAL STATEMENTS
For
the period from October 29, 2009 (date of inception) to November 11,
2009
Income
tax
The
Company complies with FASB ASC 740, “Income Taxes,” which requires an asset and
liability approach to financial accounting and reporting for income taxes.
Deferred income tax assets and liabilities are computed for differences between
the financial statement and tax bases of assets and liabilities that will result
in future taxable or deductible amounts, based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income. Valuation allowances are established, when necessary, to reduce
deferred tax assets to the amount expected to be realized. The Company did not
establish a valuation allowance as of November 11, 2009 as they were not
material to the financial statements.
Effective
October 29, 2009, the Company adopted the provisions of the FASB ASC
740, Income Taxes. There were no unrecognized tax benefits as of November
11, 2009. FASB ASC
740 prescribes a recognition threshold and a measurement attribute for
the financial statement recognition and measurement of tax positions taken or
expected to be taken in a tax return. For those benefits to be recognized, a tax
position must be more-likely-than-not to be sustained upon examination by taxing
authorities. The Company recognizes accrued interest and penalties related to
unrecognized tax benefits as income tax expense. No amounts were accrued for the
payment of interest and penalties at November 11, 2009. The Company is currently
not aware of any issues under review that could result in significant payments,
accruals or material deviation from its position. The adoption of the provisions
of FASB ASC
740 did not have a material impact on the Company’s financial position
and results of operation and cash flows as of and for the period ended November
11, 2009.
Recently
issued accounting standards
FASB ASC 810. In
December 2007, the Financial Accounting Standards Board, or FASB, issued
Accounting Standard Codification, or ASC, 810, or FASB ASC 810, which requires
companies to measure noncontrolling interests in subsidiaries at fair value and
to classify them as a separate component of equity. FASB ASC 810 is
effective as of each reporting fiscal year beginning after December 15,
2008, and applies only to transactions occurring after the effective
date. We do not believe that the adoption of FASB ASC 810 will have a
material effect on our financial position or results of operations.
FASB ASC 805. In
December 2007, FASB issued FASB ASC 805, which will require companies to
measure assets acquired and liabilities assumed in a business combination at
fair value. In addition, liabilities related to contingent
consideration are to be re-measured at fair value in each subsequent reporting
period. FASB ASC 805 will also require the acquirer in
pre-acquisition periods to expense all acquisition-related
costs. FASB ASC 805 is effective for fiscal years beginning after
December 15, 2008, and is applicable only to transactions occurring after
the effective date. We do not believe that the adoption of FASB ASC
805 will have a material effect on our financial position or results of
operations.
FASB ASC
350-30-35-1. In
April 2008, FASB issued FASB ASC 350-30-35-1. This ASC amends the
factors that should be considered in developing renewal or extension assumptions
used to determine the useful life of a recognized intangible
asset. FASB ASC 350-30-35-1 improves the consistency between the
useful life of a recognized intangible asset and the period of expected cash
flows used to measure the fair value of the asset under other applicable
accounting literature. We do not believe that the adoption of FASB ASC 350-30-35-1 will have a material effect
on our financial position or results of operations.
F-10
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
NOTES
TO FINANCIAL STATEMENTS
For
the period from October 29, 2009 (date of inception) to November 11,
2009
FASB ASC 820. In
April 2009, the FASB issued three related staff positions to clarify the
application of FASB ASC 820 to fair value measurements in the current economic
environment, modify the recognition of other-than-temporary impairments of debt
securities, and require companies to disclose the fair value of financial
instruments in interim periods. The final staff positions are effective for
interim and annual periods ending after June 15, 2009.
·
|
FASB
ASC 820 (transitional 820-10-65-4)—which provides guidance on how to
determine the fair value of assets and liabilities under FASB ASC 820 in
the current economic environment and reemphasizes that the objective of a
fair value measurement remains the price that would be received to sell an
asset or paid to transfer a liability at the measurement
date.
|
·
|
FASB
ASC 320— which modifies the requirements for recognizing
other-than-temporarily impaired debt securities and significantly changes
the existing impairment model for such securities. It also modifies the
presentation of other-than-temporary impairment losses and increases the
frequency of and expands already required disclosures about
other-than-temporary impairment for debt and equity
securities.
|
·
|
FASB
ASC 820-10-50—which requires disclosures of the fair value of financial
instruments within the scope of FASB ASC 820 in interim financial
statements, adding to the current requirement to make those disclosures in
annual financial statements. The staff position also requires that
companies disclose the method or methods and significant assumptions used
to estimate the fair value of financial instruments and a discussion of
changes, if any, in the method or methods and significant assumptions
during the period.
|
We do not
believe that the adoption of these new staff positions had a material impact on
our financial position and results of operations.
FASB ASC 860. In
June 2009, the FASB issued ASC 860, which eliminates the concept of a
qualifying special-purpose entity, creates more stringent conditions for
reporting a transfer of a portion of a financial asset as a sale, clarifies
other sale-accounting criteria, and changes the initial measurement of a
transferor’s interest in transferred financial assets. FASB ASC 860 will be
effective for transfers of financial assets in fiscal years beginning after
November 15, 2009 and in interim periods within those fiscal years with
earlier adoption prohibited. We will adopt FASB ASC 860 on October 1,
2010.
The
Company does not believe that any other recently issued, but not yet effective,
accounting standards if currently adopted would have a material
effect on the accompanying financial statements.
NOTE
C—PROPOSED OFFERING
Pursuant
to the Proposed Offering, the Company will offer for sale up to 5,000,000 units
at $10 per unit (“Units”). Each Unit consists of one share of the Company’s
common stock, $0.0001 par value, and one redeemable common stock purchase
warrant (“Warrant”). Each Warrant will entitle the holder to purchase from the
Company one share of common stock at an exercise price of $11.50 commencing on
the later of (a) one year from the date of the prospectus for the Proposed
Offering or (b) the completion of a Business Transaction, and will expire five
years from the consumation of the Business Transaction. The Warrants will be
redeemable by the Company at a price of $0.01 per Warrant upon 30 days prior
notice after the Warrants become exercisable, only in the event that the last
sale price of the common stock is at least $17.50 per share for any 20 trading
days within a 30 trading day period ending on the third business day prior to
the date on which notice of redemption is given.
F-11
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
NOTES
TO FINANCIAL STATEMENTS
For
the period from October 29, 2009 (date of inception) to November 11,
2009
NOTE
D—RELATED PARTY TRANSACTIONS
The
Company issued a $10,000 unsecured promissory note to the sponsor on November
10, 2009. The note is non-interest bearing and is payable on the earlier of
December
31, 2010 or the consummation of the Proposed Offering. Due to the
short-term nature of the note, the fair value of the note approximates its
carrying amount of $10,000.
On
November 6, 2009, the Company issued to our sponsor 638,889
shares of restricted common stock (up to 83,333
of
which are subject to forfeiture if the underwriters’
over-allotment option is not exercised in full), for an aggregate amount of
$25,000 in cash. The purchase price for each share of common stock
was approximately $0.039 per share. The sponsor has agreed that the
shares of common stock it purchased prior to consummation of the Proposed
Offering will not be sold or transferred until one year following consummation
of a Business Transaction, subject to certain limited exceptions.
The
sponsor has agreed to purchase, in a private placement, 3,000,000 warrants prior
to the Proposed Offering at a price of $0.50 per warrant (a purchase price of
$1,500,000) from the Company. Based on the observable market prices, the Company
believes that the purchase price of $0.50 per warrant for such warrants will
exceed the fair value of such warrants on the date of the purchase. The
valuation is based on comparable initial public offerings by previous blank
check companies. The sponsor has agreed that the warrants it purchased will
not be sold or transferred until 30 days following consummation of a Business
Transaction, subject to certain limited exceptions. If the Company does not
complete a Business Transaction, then the proceeds will be part of the
liquidating distribution to the public stockholders and the warrants issued to
the sponsor will expire worthless. The Company intends to classify the private
placement warrants within permanent equity as additional paid-in capital in
accordance with ASC
815-40-25-13.
Commencing
on the date of the Proposed Offering, the Company plans to enter into an
Administrative Services Agreement with the sponsor for an estimated aggregate
monthly fee of $7,500 for office space, secretarial, and administrative
services. This agreement will expire upon the earlier of the successful
completion of the Company’s Business Transaction or 15 months from the date of
this prospectus.
The
sponsor will be entitled to registration rights pursuant to a registration
rights agreement to be signed on or before
the date of the prospectus for the Proposed Offering. The sponsor will be
entitled to demand registration rights and certain “piggy-back” registration
rights with respect to its shares of common stock, the warrants and the common
stock underlying the warrants, commencing on the date such common stock or
warrants are released from escrow. The Company will bear the expenses incurred
in connection with the filing of any such registration
statements.
F-12
57th
Street General Acquisition Corp.
(a
corporation in the development stage)
NOTES
TO FINANCIAL STATEMENTS
For
the period from October 29, 2009 (date of inception) to November 11,
2009
NOTE
E—COMMITMENTS
The
Company expects to grant the underwriters a 45-day option to purchase up to
750,000 additional Units to cover the over-allotment at the initial public
offering price less the underwriting discounts and commissions.
NOTE
F—PREFERRED STOCK
The
Company is authorized to issue 1,000,000 shares of preferred stock with such
designations, voting and other rights and preferences as may be determined from
time to time by the Board of Directors. As of November 11, 2009, the Company has
not issued shares of preferred stock.
NOTE G—SUBSEQUENT EVENTS
Per ASC
855 these financial statements were approved by management and were
issued on November 16, 2009. Subsequent events have been evaluated through this
date.
F-13
Dealer
Prospectus Delivery Obligation
Until ,
2009, all dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This is
in addition to the dealers’ obligation to deliver a prospectus when acting as
underwriters with respect to their unsold allotments or
subscriptions.
No
dealer, salesperson or any other person is authorized to give any information or
make any representations in connection with this offering other than those
contained in this prospectus and, if given or made, the information or
representations must not be relied upon as having been authorized by
us. This prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the securities offered
by this prospectus, or an offer to sell or a solicitation of an offer to buy any
securities by anyone in any jurisdiction in which the offer of solicitation is
not authorized or is unlawful.
_______________________________
TABLE
OF CONTENTS
Prospectus
Summary
|
3
|
The
Offering
|
7
|
Summary
Financial Data
|
14
|
Risk
Factors
|
15
|
Cautionary
Note Regarding Forward-Looking Statements
|
31
|
Use
of Proceeds
|
32
|
Dividend
Policy
|
35
|
Dilution
|
36
|
Capitalization
|
38
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
39
|
Proposed
Business
|
44
|
Management
|
60
|
Principal
Stockholders
|
65
|
Certain
Relationships and Related Party Transactions
|
67
|
Description
of Securities
|
69
|
Shares
Eligible for Future Sale
|
75
|
Material
U.S. Federal Income Tax Considerations
|
|
Underwriting
(Conflicts of Interest)
|
77
|
Notice
to Canadian Residents
|
|
Legal
Matters
|
81
|
Experts
|
81
|
Where
You Can Find Additional Information
|
81
|
$50,000,000
57TH STREET
GENERAL
ACQUISITION
CORP.
5,000,000
Units
_________________
PROSPECTUS
________________
Morgan
Joseph
Sole
Book-Running manager
Ladenburg
Thalmann & Co. Inc.
, 2009
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and
Distribution.
The
estimated expenses payable by us in connection with the offering described in
this registration statement (other than the underwriting discount and
commissions) will be as follows:
SEC
registration fee
|
6,898 | |||
FINRA
filing fee
|
12,862 | |||
Accounting
fees and expenses
|
37,500 | |||
Printing
and engraving expenses
|
50,000 | |||
Legal
fees and expenses
|
250,000 | |||
Blue
Sky
|
35,000 | |||
Miscellaneous(1)
|
57,739 | |||
Total
|
$ | 450,000 |
(1) This
amount represents additional expenses that may be incurred by us in connection
with the offering over and above those specifically listed above, including
distribution and mailing costs.
Item
14. Indemnification of Directors and
Officers.
Our
amended and restated certificate of incorporation provides that all of our
directors, officers, employees and agents will be entitled to be indemnified by
us to the fullest extent permitted by Section 145 of the Delaware General
Corporation Law.
Section
145 of the Delaware General Corporation Law concerning indemnification of
officers, directors, employees and agents is set forth below.
Section
145. Indemnification of officers, directors, employees and agents;
insurance.
(a) A
corporation shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that the person is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust account or other enterprise, against expenses (including
attorneys’ fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by the person in connection with such action, suit or
proceeding if the person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the person’s conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which the
person reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that the person’s conduct was unlawful.
(b) A
corporation shall have power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust account or other enterprise against expenses (including
attorneys’ fees) actually and reasonably incurred by the person in connection
with the defense or settlement of such action or suit if the person acted in
good faith and in a manner the person reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem
proper.
II-1
(c) To
the extent that a present or former director or officer of a corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsections (a) and (b) of this section, or in defense
of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys’ fees) actually and reasonably incurred by such
person in connection therewith.
(d) Any
indemnification under subsections (a) and (b) of this section (unless ordered by
a court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the present or former
director, officer, employee or agent is proper in the circumstances because the
person has met the applicable standard of conduct set forth in subsections (a)
and (b) of this section. Such determination shall be made, with respect to a
person who is a director or officer at the time of such determination, (1) by a
majority vote of the directors who are not parties to such action, suit or
proceeding, even though less than a quorum, or (2) by a committee of such
directors designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (4) by the
stockholders.
(e) Expenses
(including attorneys’ fees) incurred by an officer or director in defending any
civil, criminal, administrative or investigative action, suit or proceeding may
be paid by the corporation in advance of the final disposition of such action,
suit or proceeding upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount if it shall ultimately be determined
that such person is not entitled to be indemnified by the corporation as
authorized in this section. Such expenses (including attorneys’ fees) incurred
by former directors and officers or other employees and agents may be so paid
upon such terms and conditions, if any, as the corporation deems
appropriate.
(f) The
indemnification and advancement of expenses provided by, or granted pursuant to,
the other subsections of this section shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person’s official capacity and
as to action in another capacity while holding such office.
(g) A
corporation shall have power to purchase and maintain insurance on behalf of any
person who is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust
account or other enterprise against any liability asserted against such person
and incurred by such person in any such capacity, or arising out of such
person’s status as such, whether or not the corporation would have the power to
indemnify such person against such liability under this section.
(h) For
purposes of this section, references to “the corporation” shall include, in
addition to the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or merger which,
if its separate existence had continued, would have had power and authority to
indemnify its directors, officers, and employees or agents, so that any person
who is or was a director, officer, employee or agent of such constituent
corporation, or is or was serving at the request of such constituent corporation
as a director, officer, employee or agent of another corporation, partnership,
trust or other enterprise, shall stand in the same position under this section
with respect to the resulting or surviving corporation as such person would have
with respect to such constituent corporation if its separate existence had
continued.
(i) For
purposes of this section, references to “other enterprises” shall include
employee benefit plans; references to “fines” shall include any excise taxes
assessed on a person with respect to any employee benefit plan; and references
to “serving at the request of the corporation” shall include any service as a
director, officer, employee or agent of the corporation which imposes duties on,
or involves services by, such director, officer, employee or agent with respect
to an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a manner such person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner “not opposed to the best interests of the
corporation” as referred to in this section.
(j) The
indemnification and advancement of expenses provided by, or granted pursuant to,
this section shall, unless otherwise provided when authorized or ratified,
continue as to a person who has ceased to be a director, officer, employee or
agent and shall inure to the benefit of the heirs, executors and administrators
of such a person.
(k) The
Court of Chancery is hereby vested with exclusive jurisdiction to hear and
determine all actions for advancement of expenses or indemnification brought
under this section or under any bylaw, agreement, vote of stockholders or
disinterested directors, or otherwise. The Court of Chancery may summarily
determine a corporation’s obligation to advance expenses (including attorneys’
fees).
II-2
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers, and controlling persons pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment of expenses
incurred or paid by a director, officer or controlling person in a successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, we
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to the court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
Paragraph
B of Article [Eighth] of our amended and restated certificate of incorporation
provides:
The
Corporation, to the full extent permitted by Section 145 of the DGCL, as amended
from time to time, shall indemnify all persons whom it may indemnify pursuant
thereto. Expenses (including attorneys’ fees) incurred by an officer or director
in defending any civil, criminal, administrative, or investigative action, suit
or proceeding for which such officer or director may be entitled to
indemnification hereunder shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation as authorized hereby.
Our
bylaws provide for the indemnification of our directors, officers or other
persons in accordance with our amended and restated certificate of
incorporation.
Pursuant
to the Underwriting Agreement filed as Exhibit 1.1 to this Registration
Statement, we have agreed to indemnify the underwriters, and the underwriters
have agreed to indemnify us, against certain civil liabilities that may be
incurred in connection with this offering, including certain liabilities under
the Securities Act.
Item
15. Recent Sales of Unregistered Securities.
During
the past three years, we sold the following shares of common stock without
registration under the Securities Act:
Stockholders
|
Number
of
Shares
|
|||
57th
Street GAC Holdings LLC
|
638,889 | |||
Total
|
638,889 |
Such
shares of common stock were issued to our sponsor on October 30, 2009 in
connection with our organization pursuant to the exemption from registration
contained in Section 4(2) of the Securities Act as they were sold to an
“accredited investor” as defined in Rule 501(a) of the Securities Act. The
shares of common stock issued to our sponsor were sold for an aggregate offering
price of $25,000 at a purchase price of $0.039 per share. No underwriting
discounts or commissions were paid with respect to such sales. Of these
securities, up to 83,333 shares of common stock are subject to forfeiture in the
event that the underwriters’ over-allotment option is not exercised, in
full.
On or
before the date of the prospectus accompanying this registration statement, our
sponsor will purchase 3,000,000 insider warrants from the registrant. These
warrants will be issued pursuant to the exemption from registration contained in
Section 4(2) of the Securities Act as they will be sold to an “accredited
investor” as defined in Rule 501(a) of the Securities Act. No underwriting
discounts or commissions will be paid with respect to such sales. A private
placement subscription agreement has been entered into between the Company and
our sponsor in connection with these insider warrants and is attached as an
exhibit.
In
addition, if we increase the size of the offering pursuant to Rule 462(b) under
the Securities Act, we may effect a stock dividend in such amount to maintain
our sponsor’s collective ownership at 10% of our issued and outstanding shares
of common stock upon consummation of the offering. If we decrease the size of
the offering we will effect a reverse split of our common stock to maintain our
sponsor’s collective ownership at 10% of our issued and outstanding shares of
common stock upon the date of this prospectus, in each case without giving
effect to the sale of warrants to our sponsor as described above. Any such
increased number of shares will be placed into escrow and will be subject to
forfeiture in the event that the underwriter’s over-allotment option is not
exercised, in full. Any such decreased number of shares will be forfeit from
escrow, with the remainder subject to forfeiture in the event that the
underwriter’s over-allotment option is not exercised in full.
II-3
Item
16. Exhibits and Financial Statement
Schedules.
See the
Exhibit Index, which follows the signature page and which is incorporated by
reference herein.
Item
17. Undertakings.
(a) The
undersigned registrant hereby undertakes:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To
include any prospectus required by Section 10(a)(3) of the Securities
Act;
ii. To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement.
iii. To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
(4) That,
for the purpose of determining liability of the registrant under the Securities
Act in a primary offering of securities of the undersigned registrant pursuant
to this registration statement, regardless of the underwriting method used to
sell the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the undersigned
registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
i. Any
preliminary prospectus or prospectus of the undersigned registrant relating to
the offering required to be filed pursuant to Rule 424;
ii. Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned registrant or used or referred to by the undersigned
registrant;
iii. The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned registrant or its securities provided
by or on behalf of the undersigned registrant; and
iv. Any
other communication that is an offer in the offering made by the undersigned
registrant to the purchaser.
(b) The
undersigned hereby undertakes to provide to the underwriter at the closing
specified in the underwriting agreement, certificates in such denominations and
registered in such names as required by the underwriter to permit prompt
delivery to each purchaser.
(c) Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
II-4
(d) The
undersigned registrant hereby undertakes that:
(1) For
purposes of determining any liability under the Securities Act, the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of this registration statement as of the time it was
declared effective.
(2) For
the purpose of determining any liability under the Securities Act, each
post-effective amendment that contains a form of prospectus shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-5
SIGNATURE
Pursuant
to the requirements of the Securities Act, the registrant has duly caused this
Registration Statement on Form S-1 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 16th day of November, 2009.
57th
Street General Acquisition Corp.
|
By:
|
/s/ Mark
D. Klein
|
Name: Mark
D. Klein
|
Title: Chairman,
President and Chief Executive
|
POWER
OF ATTORNEY
KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints [] his true and lawful attorney-in-fact and agent, with
full power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities to sign any and all amendments (including
post-effective amendments) to this registration statement (and to any
registration statement filed pursuant to Rule 462 under the Securities Act of
1933, as amended), and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorney-in-fact and agent or his
substitute, acting alone, may lawfully do or cause to be done by virtue
thereof.
Pursuant
to the requirements of the Securities Act of 1933, as amended, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
Name
|
Position
|
Date
|
||
/s/
Mark
D. Klein
|
(Principal
Executive Officer)
|
November
16, 2009
|
||
Mark
D. Klein
|
||||
/s/
Paul
D. Lapping
|
(Principal
Financial and Accounting
|
November
16, 2009
|
||
Paul
D. Lapping
|
Officer)
|
|||
/s/ Michael J. Levitt | Chairman of the Board |
November
16, 2009
|
||
Michael J. Levitt | ||||
/s/ Jonathan I. Berger | Director |
November
16, 2009
|
||
Jonathan I. Berger | ||||
/s/
Frederick G. Kraegel
|
Director
|
November
16, 2009
|
||
Frederick G. Kraegel | ||||
/s/
Leonard A. Potter
|
Director
|
November
16, 2009
|
||
Leonard A. Potter |
S-1
EXHIBIT
INDEX
Exhibit No.
|
Description
|
|
1.1
|
Form
of Underwriting Agreement.*
|
|
3.1
|
Certificate of Incorporation.* | |
3.2
|
Form
of Amended and Restated Certificate of Incorporation.*
|
|
3.3
|
Form
of Amended and Restated Bylaws.*
|
|
4.1
|
Specimen
Unit Certificate.*
|
|
4.2
|
Specimen
Common Stock Certificate. *
|
|
4.3
|
Specimen
Warrant Certificate. *
|
|
4.4
|
Form
of Warrant Agreement between Continental Stock Transfer & Trust
Company and the Registrant. *
|
|
5.1
|
Opinion
of Ellenoff Grossman & Schole LLP. *
|
|
10.1
|
Form
of Investment Management Trust Account Agreement between Continental Stock
Transfer & Trust Company and the Registrant. *
|
|
10.2
|
Form
of Securities Escrow Agreement among the Registrant, Continental Stock
Transfer & Trust Company, and 57th Street GAC Holdings LLC.
*
|
|
10.3
|
Form
of Registration Rights Agreement among the Registrant and 57th Street GAC
Holdings LLC. *
|
|
10.4
|
Form
of Letter Agreement by and between the Registrant and each of the
directors and officers of the Registrant. *
|
|
10.5
|
Form
of Letter Agreement by and between the Registrant and Mark D. Klein.
*
|
|
10.6
|
Form
of Letter Agreement by and between the Registrant and Paul D. Lapping.
*
|
|
10.7
|
Form
of Letter Agreement by and between the Registrant and 57th Street GAC
Holdings LLC. *
|
|
10.8
|
Administrative
Services Agreement between the Registrant and 57th Street GAC Holdings
LLC. *
|
|
10.9
|
Securities
Purchase Agreement dated October 30, 2009 between the Registrant and
57th Street GAC Holdings LLC. *
|
|
10.10
|
Promissory
Note, dated November 10, issued to 57th Street GAC Holdings LLC in the
amount of $10,000. *
|
|
10.11
|
Insider
Warrants Subscription Agreement between the Registrant and 57th Street GAC
Holdings LLC. *
|
|
14.1
|
Code of Business and Ethics.* | |
23.1
|
Consent
of Rothstein Kass & Company
|
|
23.2
|
Consent
of Ellenoff Grossman & Schole LLP (included in Exhibit
5.1).*
|
*
To be
filed by amendment