Attached files
file | filename |
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EX-3.1 - RMG Networks Holding Corp | v210045_ex3-1.htm |
EX-10.1 - RMG Networks Holding Corp | v210045_ex10-1.htm |
EX-99.1 - RMG Networks Holding Corp | v210045_ex99-1.htm |
EX-23.1 - RMG Networks Holding Corp | v210045_ex23-1.htm |
EX-99.4 - RMG Networks Holding Corp | v210045_ex99-4.htm |
EX-10.9 - RMG Networks Holding Corp | v210045_ex10-9.htm |
EX-99.2 - RMG Networks Holding Corp | v210045_ex99-2.htm |
EX-10.8 - RMG Networks Holding Corp | v210045_ex10-8.htm |
EX-99.3 - RMG Networks Holding Corp | v210045_ex99-3.htm |
As filed with the Securities and Exchange Commission on February 4, 2011 |
File No:
333-
|
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
SCG
Financial Acquisition Corp.
(Exact
name of registrant as specified in its charter)
Delaware
|
6770
|
27-4452594
|
||
(State
or other jurisdiction of
incorporation
or organization)
|
(Primary
Standard Industrial
Classification
Code Number)
|
(I.R.S.
Employer
Identification
Number)
|
615 N.
Wabash Ave.
Chicago,
IL 60611
Tel:
(312) 784-3960
(Address,
including zip code, and telephone number, including
area
code, of registrant’s principal executive offices)
Chairman,
Chief Executive Officer and President
615
N. Wabash Ave.
Chicago,
IL 60611
Tel:
(312) 784-3960
(Name,
address, including zip code, and telephone number, including
area
code, of agent for service)
Copies
to:
Douglas
S. Ellenoff, Esq.
Stuart
Neuhauser, Esq.
Ellenoff
Grossman & Schole LLP
150
East 42nd Street
New
York, New York 10017
Tel:
(212) 370-1300
Fax:
(212) 370-7889
|
Alan
I. Annex, Esq.
Jason
T. Simon, Esq.
Greenberg
Traurig, LLP
MetLife
Building
200
Park Avenue
New
York, NY 10166
Tel:
(212) 801-9200
Fax:
(212) 801-6400
|
Approximate
date of commencement of proposed sale to the public:
As
soon as practicable after the effective date of this 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. ¨
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) 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. ¨
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. ¨
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. ¨
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, par value $.0001 per share,
and one warrant (2)
|
11,500,000
|
$ |
10.00
|
$ |
115,000,000
|
$ |
13,351.50
|
|||||||||
Common
stock included as part of the Units (2)(4)
|
11,500,000
|
—
|
—
|
(3)
|
||||||||||||
Warrants
included as part of the Units (2)(4)
|
11,500,000
|
—
|
—
|
(3)
|
||||||||||||
Total
|
$
|
115,000,000
|
$ |
13,351.50
|
CALCULATION
OF REGISTRATION FEE
(1)
|
Estimated
solely for the purpose of calculating the registration
fee.
|
(2)
|
Includes
1,500,000 units, and 1,500,000 shares of common stock and 1,500,000
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.
SUBJECT TO COMPLETION, DATED FEBRUARY
4,
2011
|
$100,000,000
SCG Financial ACQUISITION CORP.
10,000,000
Units
SCG
Financial Acquisition Corp. is a newly organized blank check company formed for
the purpose of effecting a merger, capital stock exchange, asset acquisition,
stock purchase, reorganization or similar business combination with one or more
businesses, which we refer to throughout this prospectus as our initial business
combination. We have not identified any acquisition target and we have not, nor
has anyone on our behalf, initiated any discussions, research or other measures,
directly or indirectly, with respect to identifying any acquisition
target.
This is
an initial public offering of our securities. We are offering 10,000,000 units.
Each unit has an offering price of $10.00 and consists of one share of our
common stock and one warrant. Each warrant entitles the holder to purchase one
share of our common stock at a price of $11.50, subject to adjustment as
described in this prospectus. The warrants will become exercisable on the later
of 30 days after the completion of our initial business combination or 12 months
from the closing of this offering, and will expire five years after the
completion of our initial business combination or earlier upon redemption or
liquidation, as described in this prospectus. We have also granted the
underwriters a 45-day option to purchase up to an additional 1,500,000 units to
cover over-allotments, if any.
We will
provide our stockholders with the opportunity to redeem their shares of our
common stock upon the consummation of our initial business combination at a
per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account described below, including interest but net of franchise
and income taxes payable, divided by the number of then outstanding shares of
common stock that were sold as part of the units in this offering, which we
refer to as our public shares, subject to the limitations described herein. We
intend to consummate our initial business combination and conduct redemptions of
shares of common stock for cash without a stockholder vote pursuant to the
tender offer rules of the Securities and Exchange Commission, or the SEC. If,
however, a stockholder vote is required by law, or we decide to hold a
stockholder vote for business or other legal reasons, we will offer to redeem
shares in conjunction with a proxy solicitation pursuant to the proxy rules and
not pursuant to the tender offer rules. If we are unable to consummate a
business combination within 21 months from the date of this prospectus (or 24
months from the date of this prospectus if a letter of intent or a definitive
agreement has been executed within 21 months from the date of the prospectus and
the business combination relating thereto has not yet been completed within such
21-month period), we will redeem the public shares at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account,
including interest but net of franchise and income taxes payable (less up to
$100,000 of such net interest to pay dissolution expenses), divided by the
number of then outstanding public shares, subject to applicable law and as
further described herein.
Our
sponsor, SCG Financial Holdings LLC, has committed to purchase an aggregate of
4,000,000 warrants at a price of $0.75 per warrant ($3.0 million in the
aggregate) in a private placement that will occur simultaneously with the
consummation of this offering. We refer to these warrants throughout this
prospectus as the sponsor warrants.
Currently,
there is no public market for our units, common stock or warrants. It is
anticipated that our units will be quoted on the Over-the-Counter Bulletin Board
quotation system, or the OTCBB, under the symbol ‘‘[ ]” on or promptly after the
date of this prospectus. The common stock and warrants comprising the units will
begin separate trading on the 52nd day the date of this prospectus unless
Ladenburg Thalmann & Co. Inc. informs us of its decision to allow earlier
separate trading, subject to our filing 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 and issuing a press release announcing when such
separate trading will begin. Once the securities comprising the units begin
separate trading, the common stock and warrants will be traded on the OTCBB
under the symbols ‘‘[ ]” and ‘‘[ ],” respectively.
Investing
in our securities involves risks. See “Risk Factors” beginning on page 18.
Investors will not be entitled to protections normally afforded to investors in
Rule 419 blank check offerings.
Neither
the Securities and Exchange Commission 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.
Price to
Public
|
Underwriting
Discounts
and Commissions(1)
|
Proceeds, Before
Expenses, to us
|
||||||||
Per
Unit
|
$
|
10.00
|
$
|
0.50
|
$
|
9.50
|
||||
|
|
|||||||||
Total
|
$
|
100,000,000
|
$
|
5,000,000
|
$
|
95,000,000
|
(1)
|
Includes
$0.30 per unit, or approximately $3.0 million in the aggregate
(approximately $3.45 million if the underwriters’ over-allotment option is
exercised in full), payable to the underwriters for deferred underwriting
commissions to be placed in the trust account described below. Such funds
will be released to the underwriters only on completion of an initial
business combination, as described in this
prospectus.
|
Of the
proceeds we receive from this offering and the sale of the sponsor warrants
described in this prospectus, $100 million ($10.00 per share), or approximately
$114.7 million (approximately $9.97 per share) if the underwriters’
over-allotment option is exercised in full, will be deposited into a trust
account maintained by [Transfer Agent], acting as trustee. Except for a portion
of the interest income earned on the trust account balance that may be released
to us to pay any franchise and income taxes payable on such interest and to fund
our working capital requirements, and any amounts necessary to purchase up to
15% of our public shares if we seek stockholder approval of our business
combination, each as described herein, our amended and restated certificate of
incorporation provides that none of the funds held in trust will be released
from the trust account, until the earlier of (i) the completion of our initial
business combination or (ii) the redemption of our public shares if we are
unable to consummate a business combination within 21months from the date of
this prospectus (or 24 months from the date of this prospectus if a letter of
intent or a definitive agreement has been executed within 21 months from the
date of the prospectus and the business combination relating thereto has not yet
been completed within such 21-month period), subject to applicable law. 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.
The
underwriters are offering the units for sale on a firm commitment basis.
The underwriters expect to deliver the units to the purchasers on or about [ ],
2011.
Ladenburg
Thalmann & Co. Inc.
The
date of this prospectus is [ ], 2011
TABLE
OF CONTENTS
You
should rely only on the information contained in this prospectus. We have not,
and the underwriters have not, authorized anyone to provide you with different
information. We are not, and the underwriters are not, making an offer of these
securities in any jurisdiction where the offer is not permitted.
Summary
|
1
|
Summary
Financial Data
|
17
|
Risk
Factors
|
18
|
Cautionary
Note Regarding Forward-Looking Statements
|
37
|
Use
of Proceeds
|
38
|
Dividend
Policy
|
42
|
Dilution
|
43
|
Capitalization
|
45
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
46
|
Proposed
Business
|
50
|
Management
|
72
|
Principal
Stockholders
|
77
|
Certain
Relationships and Related Party Transactions
|
79
|
Description
of Securities
|
81
|
Underwriting
|
89
|
Legal
Matters
|
93
|
Experts
|
93
|
Where
You Can Find Additional Information
|
93
|
Index
to Financial Statements
|
F-1
|
SUMMARY
This
summary only highlights the more detailed information appearing elsewhere in
this prospectus. As this is a summary, it does not contain all of the
information that you should consider in making an investment decision. You
should read this entire prospectus carefully, including the information under
“Risk Factors” and our financial statements and the related notes included
elsewhere in this prospectus, before investing. References in this prospectus to
“we,” “us,” “company” or “our company” refer to SCG Financial Acquisition Corp.
References in this prospectus to our “public shares” are to shares of our common
stock sold as part of the units in this offering (whether they are purchased in
this offering or thereafter in the open market) and references to “public
stockholders” refer to the holders of our public shares, including our sponsor
(as defined below) and management team to the extent our sponsor and/or members
of our management team purchase public shares, provided that our sponsor’s and
member of management’s status as a “public stockholder” shall only exist with
respect to such public shares. References in this prospectus to our “management”
or our “management team” refer to our officers and directors and references to
our “sponsor” refer to SCG Financial Holdings LLC. Unless we tell you otherwise,
the information in this prospectus assumes that the underwriters will not
exercise their over-allotment option.
General
We are a
newly organized blank check company formed for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more businesses,
which we refer to throughout this prospectus as our initial business
combination. We have not identified any acquisition target and we have not, nor
has anyone on our behalf, initiated any discussions, research or other measures,
directly or indirectly, with respect to identifying any acquisition
target.
We seek
to capitalize on the significant global network and investing and operating
expertise of our management team to identify, acquire and operate one or more
financial services businesses operating within or outside of North America,
although we may pursue acquisition opportunities in other sectors. We believe
that the acquisition and operation of an established financial services business
will provide a strong foundation from which to build, through acquisition or
organic growth, a diversified global asset management or financial services
platform. Our Chairman, Chief Executive Officer and President, Gregory H. Sachs
has nearly 25 years experience founding, managing and acquiring financial
services businesses and is the founder and former Chairman and Chief Executive
Officer of Deerfield Capital Management, a fixed income capital management
company. From its founding in 1993 until he stepped down from the business in
2007, Mr. Sachs oversaw the growth of assets under management from $15 million
to approximately $15 billion and the diversification of the firm from a small
fixed income hedge fund manager into a leading global fixed income capital
manager offering structured and hedge fund products and managed accounts. In
addition, Mr. Sachs has also been a member of two public company
boards.
We
anticipate structuring a business combination to acquire 100% of the equity
interest or assets of the target business or businesses. We may, however,
structure a business combination to acquire less than 100% of such interests or
assets of the target business, but we will only consummate such business
combination if we (or our stockholders, if we are not the surviving corporation)
will become the controlling stockholder of the target. We will not consider any
transaction that does not meet such criteria. Even though we will own a
controlling interest in the target, our stockholders prior to the business
combination may collectively own a minority interest in the post business
combination company, depending on valuations ascribed to the target and us in
the business combination transaction.
Our
management team intends to focus on increasing stockholder value by growing
revenue (through organic growth and acquisitions) and improving the efficiency
of business operations. Consistent with this strategy, we believe the following
general criteria and guidelines are important in evaluating prospective target
businesses. We will use these criteria and guidelines in evaluating acquisition
opportunities, but we may decide to enter into a business combination with a
target business that does not meet these criteria and guidelines.
· Opportunities for Platform
Growth: We will seek to acquire one or more businesses or assets that we
can grow both organically and through acquisitions. Particularly in regard to
the financial services sector, such companies could include, for example, a
private trading company / market-making organization, a broker-dealer, a
re-insurance company, a mortgage or real estate firm, an electronic trading
firm, a private wealth management company, a specialty finance company or an
asset management company.
1
· History of and Potential for Strong
Free Cash Flow Generation: We will seek to acquire one or more businesses
that have the potential to generate strong free cash flow (i.e. companies that
typically generate cash in excess of that required to maintain or expand the
business’s asset base). We will focus on one or more businesses that have
recurring revenue streams and low working capital and capital expenditure
requirements. We may also seek to prudently leverage this cash flow in order to
enhance stockholder value.
· Established Companies with Proven
Track Records: We will seek to acquire established companies with sound
historical financial performance. We will typically focus on companies with a
history of strong operating and financial results. We do not intend to acquire
start-up companies.
· Experienced and Motivated Management
Teams: We will seek to acquire businesses that have strong, experienced
management teams with a substantial personal economic stake in the performance
of the acquired business. We will focus on management teams with a proven track
record of driving revenue growth, enhancing profitability and generating strong
free cash flow. We expect that the operating expertise of our officers and
directors will complement, not replace the target’s management
team.
· Strong Competitive Industry
Position: We will seek to acquire businesses that have strong
fundamentals. The factors we will consider include growth prospects, competitive
dynamics, level of consolidation, need for capital investment and barriers to
entry. We will focus on companies that have a leading or niche market position.
We will analyze the strengths and weaknesses of target businesses relative to
their competitors, focusing on product quality, customer loyalty, cost
impediments associated with customers switching to competitors, patent
protection and brand positioning. We will seek to acquire one or more businesses
that demonstrate advantages when compared to their competitors, which may help
to protect their market position and profitability.
These
criteria are not intended to be exhaustive. Any evaluation relating to the
merits of a particular initial business combination may be based, to the extent
relevant, on these general guidelines as well as other considerations, factors
and criteria that our management may deem relevant. In the event that we decide
to enter into a business combination with a target business that does not meet
the above criteria and guidelines, we will disclose that the target business
does not meet the above criteria in our stockholder communications related to
our initial business combination, which, as discussed in this prospectus, would
be in the form of tender offer documents or proxy solicitation materials that we
would file with the SEC.
Over the
course of their careers, our management team and board of directors have
developed a global network of strong contacts and working relationships with
principals as well as intermediaries who constitute our most likely source of
identifying prospective business transactions. Our management team and board of
directors is comprised of members each with over 20 years of experience in
operating, advising, acquiring, financing and selling private and public
companies in numerous industries. In particular, our Chairman, Chief Executive
Officer and President, Gregory H. Sachs, has extensive experience partnering
both in the United States and abroad with “Blue Chip” financial institutions,
public and private institutional investors and ultra-high-net-worth individuals.
We believe that this network of contacts and relationships will provide us with
an important source of investment opportunities and will provide our management
team with a steady flow of proprietary referrals or referrals where a limited
group of investors may be invited to participate in a sale process. We will use
this global network not only to source an initial business combination but also
to grow the acquired platform.
We
anticipate that target business candidates will be brought to our attention from
various unaffiliated sources, including investment market participants, private
equity funds and large business enterprises seeking to divest non-core assets or
divisions.
In
evaluating a prospective target business, we expect to conduct an extensive due
diligence review which will encompass, as applicable and among other things,
meetings with incumbent management and employees, document reviews, interviews
of customers and suppliers, inspection of facilities, as well as review of
financial and other information which will be made available to us.
2
We are
not prohibited from pursuing an initial business combination with a company that
is affiliated with our sponsor, officers or directors. In the event we seek to
complete an initial business combination with such a company, we, or a committee
of independent directors, would obtain an opinion from an independent investment
banking firm which is a member of the Financial Industry Regulatory Authority,
or FINRA, that such an initial business combination is fair to our stockholders
from a financial point of view.
Each of
our officers and directors has agreed, pursuant to a written agreement with us,
that until the earliest of our initial business combination, our redemption of
our public shares if we fail to complete our initial business combination within
21 months from the date of this prospectus (or 24 months from the date of this
prospectus if a letter of intent or a definitive agreement has been executed
within 21 months from the date of the prospectus and the business combination
relating thereto has not yet been completed within such 21-month period) or such
time as he ceases to be an officer, to present to us for our consideration,
prior to presentation to any other entity, any business opportunity with an
enterprise value of $80 million or more, subject to any pre-existing fiduciary
or contractual obligations he might have. As more fully discussed in "Management
— Conflicts of Interest," if any of our officers or directors becomes aware of a
business combination opportunity that falls within the line of business of any
entity to which he has pre-existing fiduciary or contractual obligations, he may
be required to present such business combination opportunity to such entity
prior to presenting such business combination opportunity to us. Certain of our
directors currently have certain relevant fiduciary duties or contractual
obligations that may take priority over their duties to us. In addition, our
officers and directors have agreed not to participate in the formation of, or
become an officer or director of, any blank check company until we have entered
into a definitive agreement regarding our initial business combination or we
have failed to complete our initial business combination within 21 (or 24)
months from the date of this prospectus.
Our
executive offices are located at 615 N. Wabash Ave., Chicago, Illinois and our
telephone number is (312) 784-3960.
3
The
Offering
In
making your decision on whether to invest in our securities, you should take
into account not only the backgrounds of the members of our management team, but
also the special risks we face as a blank check company and the fact that this
offering is not being conducted in compliance with Rule 419 promulgated under
the Securities Act of 1933, as amended, or the Securities Act. You will not be
entitled to protections normally afforded to investors in Rule 419 blank check
offerings. You should carefully consider these and the other risks set forth in
the section below entitled "Risk Factors" beginning on page 18 of this
prospectus.
Securities
offered
|
10,000,000
units, at $10.00 per unit, each unit consisting of:
|
|
· one
share of common stock; and
|
||
· one
warrant.
|
||
Proposed
OTCBB symbols
|
Units:
“ ”
|
|
Common
Stock:
“ ”
|
||
Warrants:
“ ”
|
||
Trading
commencement and separation
of common stock and warrants
|
The
units will begin trading on or promptly after the date of this prospectus.
The common stock and warrants comprising the units will begin separate
trading on the 52nd day following the date of this prospectus unless
Ladenburg Thalmann & Co. Inc. informs us of its decision to allow
earlier separate trading, subject to our having filed the Current Report
on Form 8-K described below and having issued a press release announcing
when such separate trading will begin.
|
|
Separate
trading of the common stock and warrants is prohibited until we
have
filed a Current Report on Form
8-K
|
In
no event will the common stock and warrants be traded 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 at the closing
of this offering. We will file the Current Report on Form 8-K promptly
after the closing of this offering, which is anticipated to take place
three business days from the date of this prospectus. If the underwriters'
over-allotment option is exercised following the initial filing of such
Current Report on Form 8-K, a second or amended Current Report on Form 8-K
will be filed to provide updated financial information to reflect the
exercise of the underwriters' over-allotment option.
|
|
Units:
|
||
Number
outstanding before this offering
|
0
|
|
Number
outstanding after this offering
|
10,000,000
|
|
Common
stock:
|
||
Number
outstanding before this offering
|
2,190,477(1)(2)
|
|
Number
outstanding after this offering
|
11,904,762(2)(3)
|
(1)
|
This
number includes an aggregate of 285,715 founder shares held by our sponsor
that are subject to forfeiture to the extent that the over-allotment
option is not exercised by the
underwriters.
|
(2)
|
This
number includes a portion of the founder shares in an amount equal to 3.0%
of our issued and outstanding shares after this offering and the
expiration of the underwriters' over-allotment option that are subject to
forfeiture by our sponsor in the event the last sales price of our stock
does not equal or exceed $12.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any
20 trading days within any 30-trading day period within 24 months
following the closing of our initial business
combination.
|
4
(3)
|
Assumes
no exercise of the underwriters' over-allotment option and the resulting
forfeiture of 285,715 founder
shares.
|
Warrants:
|
||
Number
of sponsor warrants to be sold simultaneously with closing of this
offering
|
4,000,000
|
|
Number
of warrants to be outstanding after this offering and the private
placement
|
14,000,000(1)
|
|
(1)Assumes
no exercise of the underwriters' over-allotment option.
|
||
Exercisability
|
Each
warrant offered in this offering is exercisable to purchase one share of
our common stock.
|
|
Exercise
price
|
$11.50
per share, subject to adjustments as described herein.
|
|
Exercise
period
|
The
warrants will become exercisable on the later of:
· 30
days after the completion of our initial business combination,
or
· 12
months from the closing of this offering;
provided
in each case that we have an effective registration statement under the
Securities Act covering the shares of common stock issuable upon exercise
of the warrants and a current prospectus relating to them is available,
and such shares are registered, qualified or exempt from registration
under the securities laws of the state of residence of the
holder.
We
are not registering the shares of common stock issuable upon exercise of
the warrants at this time. However, we have agreed to use our best efforts
to file and have an effective registration statement covering the shares
of common stock issuable upon exercise of the warrants, to maintain a
current prospectus relating to those shares of common stock until the
warrants expire or are redeemed and to register the shares of common stock
that are issuable upon exercise of the warrants under state blue sky laws,
to the extent an exemption is not available.
The
warrants will expire at 5:00 p.m., New York time, five years after the
completion of our initial business combination or earlier upon redemption
or liquidation. On the exercise of any warrant, the warrant exercise price
will be paid directly to us and not placed in the trust
account.
|
|
Redemption
of warrants
|
Once
the warrants become exercisable, we may redeem the outstanding warrants
(except as described herein with respect to the sponsor
warrants):
· in
whole and not in part;
· at
a price of $0.01 per warrant;
· upon
a minimum of 30 days' prior written notice of redemption, or the 30-day
redemption period;
and
|
5
· if,
and only if, the last sale price of our common stock equals or exceeds
$17.50 per share for any 20 trading days within a 30 trading day period
ending on the third business day before we send the notice of redemption
to the warrant holders.
We
will not redeem the warrants unless an effective registration statement
covering the shares of common stock issuable upon exercise of the warrants
is current and available throughout the 30-day redemption
period.
If
we call the warrants for redemption as described above, our management
will have the option to require all holders that 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" (defined below) by (y) the fair market value.
The "fair market value" means 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.
None
of the sponsor warrants will be redeemable by us so long as they are held
by our sponsor or their permitted transferees.
|
||
Founder
shares
|
In
January 2011, our sponsor purchased an aggregate of 2,190,477 founder
shares for an aggregate purchase price of $25,000, or approximately $0.01
per share. The founder shares held by our sponsor include an aggregate of
285,715 shares subject to forfeiture to the extent that the underwriters'
over-allotment option is not exercised in full, so that our sponsor will
own 16.0% of our issued and outstanding shares after this offering
(assuming it does not purchase any units in this offering and it is not
required to forfeit its founder earn out shares, as described in this
prospectus). In addition, the founder earn out shares (equal to 3.0% of
our issued and outstanding shares after this offering and the expiration
of the underwriters' over-allotment option) will be subject to forfeiture
by our sponsor in the event the last sales price of our stock does not
equal or exceed $12.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20
trading days within any 30-trading day period within 24 months following
the closing of our initial business combination.
The
founder shares are identical to the shares of common stock included in the
units being sold in this offering, except that:
·
the founder shares are subject to certain transfer
restrictions, as described in more detail below, and
· our
sponsor has agreed: (i) to waive its redemption rights with respect to its
founder shares and public shares in connection with the consummation of a
business combination and (ii) to waive its redemption rights with respect
to its founder shares if we fail to consummate a business combination
within 21 months from the date of this prospectus (or 24 months from the
date of this prospectus if a letter of intent or a definitive agreement
has been executed within 21 months from the date of the prospectus and the
business combination relating thereto has not yet been completed within
such 21-month period); however, our sponsor will be entitled to redemption
rights with respect to any public shares held by it if we fail to
consummate a business combination within such time
period.
|
6
If
we submit our initial business combination to our public stockholders for
a vote, our sponsor has agreed to vote its founder shares and any public
shares purchased during or after the offering in favor of our initial
business combination.
|
||
Transfer
restrictions on founder shares
|
Our
sponsor has agreed not to transfer, assign or sell any of its founder
shares until: (i) one year after the completion of our initial business
combination or earlier if, subsequent to our business combination, the
last sales price of our common stock equals or exceeds $12.00 per share
(as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any
30-trading day period commencing at least 150 days after our initial
business combination, or (ii) the date on which we consummate a
liquidation, merger, stock exchange or other similar transaction after our
initial business combination that results in all of our stockholders
having the right to exchange their shares of common stock for cash,
securities or other property (except as described herein under "Principal
Stockholders — Transfers of Common Stock and
Warrants").
|
|
Sponsor
warrants
|
Our
sponsor has committed to purchase an aggregate of 4,000,000 sponsor
warrants, each exercisable to purchase one share of our common stock at
$11.50 per share, at a price of $0.75 per warrant ($3.0 million in the
aggregate) in a private placement that will occur simultaneously with the
closing of this offering. The purchase price of the sponsor warrants will
be added to the proceeds from this offering to be held in the trust
account. If we do not complete a business combination within 21 months
from the date of this prospectus (or 24 months from the date of this
prospectus if a letter of intent or a definitive agreement has been
executed within 21 months from the date of the prospectus and the business
combination relating thereto has not yet been completed within such
21-month period), the proceeds of the sale of the sponsor warrants will
used to fund the redemption of our public shares (subject to the
requirements of applicable law) and the sponsor warrants will expire
worthless.
|
|
Transfer
restrictions on sponsor warrants
|
The
sponsor warrants (including the common stock issuable upon exercise of the
sponsor warrants) will not be transferable, assignable or salable until 30
days after the completion of our initial business combination and they
will be non-redeemable so long as they are held by our sponsor or its
permitted transferees (except as described herein under "Principal
Stockholders — Transfers of Common Stock and Warrants"). If the sponsor
warrants are held by someone other than our sponsor or its permitted
transferees, the sponsor warrants will be redeemable by us and exercisable
by such holders on the same basis as the warrants included in the units
being sold in this offering.
|
|
Proceeds
to be held in trust account
|
$100.0
million, or $10.00 per unit of the proceeds of this offering and the
proceeds of the private placement of the sponsor warrants ($114.7 million,
or approximately $9.97 per unit, if the underwriters' over-allotment
option is exercised in full) will be placed in a segregated trust account
with [Transfer Agent] acting as trustee. These proceeds include
approximately $3.0 million (or approximately $3.45 million if the
underwriters' over-allotment option is exercised in full) in deferred
underwriting commissions.
|
7
We
may increase the initial amount held in the trust account from
approximately $10.00 per unit prior to the effectiveness of the
registration statement of which this prospectus forms a part. In such
case, we expect that the increase would be funded by an increase in the
amount of the deferral of the underwriting commissions payable in
connection with this offering, the purchase of warrants by the
underwriters and/or an increase in the number of sponsor warrants to be
purchased by our sponsor at a price of $0.75 per warrant and/or a
reduction from $600,000 of the amount initially available to us for
working capital that is not held in the trust account on an equal basis.
Public stockholders would own a smaller percentage of our outstanding
common stock on a fully diluted basis to the extent that our sponsor
purchases additional warrants. We do not intend to reduce the initial
amount to be held in the trust account.
Except
for a portion of the interest income that may be released to us to pay any
income or franchise taxes and to fund our working capital requirements,
and any amounts necessary to purchase up to 15% of our public shares if we
seek stockholder approval of our business combination, as discussed below
and subject to the requirements of law, none of the funds held in trust
will be released from the trust account until the earlier of (i) the
completion of our initial business combination or (ii) the redemption of
our public shares if we are unable to consummate a business combination
within 21 months from the date of this prospectus (or 24 months from the
date of this prospectus if a letter of intent or a definitive agreement
has been executed within 21 months from the date of the prospectus and the
business combination relating thereto has not yet been completed within
such 21-month period). 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.
|
||
Anticipated
expenses and funding sources
|
Unless
and until we complete our initial business combination, no proceeds held
in the trust account, other than up to $1.25 million, subject to
adjustment as described herein, of the interest earned on the trust
account (net of franchise and income taxes payable), and any amounts
necessary to purchase up to 15% of our public shares if we seek
stockholder approval of our business combination, will be available for
our use and we may pay our expenses only from:
· such
interest; and
· the
net proceeds of this offering not held in the trust account, which will be
$600,000 in working capital after the payment of approximately $400,000 in
expenses relating to this offering.
If
the underwriters exercise their over-allotment option or the size of this
offering is increased, the maximum amount of interest income we may
withdraw from the trust account will proportionately increase. In
addition, if the size of this offering is decreased, the maximum amount of
interest income we may withdraw from the trust account will
proportionately decrease.
|
8
Conditions
to consummating our initial business combination
|
There
is no limitation on our ability to raise funds privately or through loans
in connection with our initial business combination. Because, unlike many
blank check companies, we do not have the limitation that a target
business have a minimum fair market enterprise value equal to a specified
percentage of the net assets held in the trust account at the time of our
signing a definitive agreement in connection with our initial business
combination, our management will have virtually unrestricted flexibility
in identifying and selecting one or more prospective target businesses. We
will consummate our initial business combination only if we will become
the controlling stockholder of the target or are otherwise not required to
register as an investment company under the Investment Company Act of
1940, as amended, or the Investment Company Act. Even though we (or our
stockholders, if we are not the surviving corporation) will own a
controlling interest in the target, our stockholders prior to the business
combination may collectively own a minority interest in the post business
combination company, depending on valuations ascribed to the target and us
in the business combination
transaction.
|
9
Permitted
purchases of public shares by us prior to the consummation of our initial
business combination using amounts held in the trust account
|
Unlike
many blank check companies, if we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with
our business combination pursuant to the tender offer rules, prior to the
consummation of a business combination, our amended and restated
certificate of incorporation will permit the release to us from the trust
account amounts necessary to purchase up to 15% of the shares sold in this
offering (1,500,000 shares, or 1,725,000 shares if the underwriters' over-
allotment option is exercised in full) at any time commencing after the
filing of a preliminary proxy statement for our initial business
combination and ending on the date of the stockholder meeting to approve
the initial business combination. Purchases will be made only in open
market transactions at times when we are not in possession of any material
non-public information and may not be made during a restricted period
under Regulation M under the Securities Exchange Act of 1934, as amended,
or the Exchange Act. It is intended that purchases will comply with Rule
10b-18 under the Exchange Act, which provides a safe harbor for purchases
made under certain conditions, including with respect to timing, pricing
and volume of purchases. If the conditions of Rule 10b-18, as in effect at
the time we wish to make such purchases, are not satisfied, it is likely
that we will not make such purchases. Any purchases we make will be at
prices (inclusive of commissions) not to exceed the per-share amount then
held in the trust account (approximately $10.00 per share or approximately
$9.97 per share if the underwriters' over-allotment option is exercised in
full). We can purchase any or all of the 1,500,000 shares (or 1,725,000
shares if the underwriters' over-allotment option is exercised in full) we
are entitled to purchase. It will be entirely in our discretion as to how
many shares are purchased. Purchasing decisions will be made based on
various factors, including the then current market price of our common
stock and the terms of the proposed business combination. All shares
purchased by us will be immediately cancelled. Such open market purchases,
if any, would be conducted by us to minimize any disparity between the
then current market price of our common stock and the per-share amount
held in the trust account. A market price below the per-share trust amount
could provide an incentive for purchasers to buy our shares after the
filing of our preliminary proxy statement at a discount to the per share
amount held in the trust account for the sole purpose of voting against
our initial business combination and exercising redemption rights for the
full per-share amount held in the trust account. Such trading activity
could enable such investors to block a business combination by making it
difficult for us to obtain the approval of such business combination by
the vote of a majority of our outstanding shares of common stock that are
voted.
|
10
Other
permitted purchases of public shares by us or our
affiliates
|
In
addition to the permitted purchases of public shares by us prior to the
consummation of the initial business combination using amounts held in the
trust account, as described above, if we seek stockholder approval of our
initial business combination and we do not conduct redemptions in
connection with our business combination pursuant to the tender offer
rules, we may enter into privately negotiated transactions to purchase
public shares from stockholders following consummation of the initial
business combination with proceeds released to us from the trust account
immediately following consummation of the initial business combination.
Our sponsor, directors, officers, advisors or their affiliates may also
purchase shares in privately negotiated transactions either prior to or
following the consummation of our initial business combination. Neither we
nor our directors, officers, advisors or their affiliates will make any
such purchases when we or they are in possession of any material nonpublic
information not disclosed to the seller or during a restricted period
under Regulation M under the Exchange Act. It is intended that any
purchases made by us will comply with Rule 10b-18 under the Exchange Act,
which provides a safe harbor for purchases made under certain conditions,
including with respect to timing, pricing and volume of purchases. If the
conditions of Rule 10b-18, as in effect at the time we wish to make such
purchases, are not satisfied, it is likely that we will not make such
purchases. Although neither we nor they currently anticipate paying any
premium purchase price for such public shares, in the event we or they do,
the payment of a premium may not be in the best interest of those
stockholders not receiving any such additional consideration. In addition,
the payment of a premium by us after the consummation of our initial
business combination may not be in the best interest of the remaining
stockholders who do not redeem their shares, because such stockholders
will experience a reduction in book value per share compared to the value
received by stockholders that have their shares purchased by us at a
premium. Except for the limitations described above on use of trust
proceeds released to us prior to consummating our initial business
combination, there is no limit on the amount of shares that could be
acquired by us or our affiliates, or the price we or they may pay, if we
hold a stockholder vote.
|
|
Redemption
rights for public stockholders upon consummation of our initial business
combination
|
We
will provide our stockholders with the opportunity to redeem their shares
of common stock upon the consummation of our initial business combination
at a per-share price, payable in cash, equal to the aggregate amount then
on deposit in the trust account, including interest but net of franchise
and income taxes payable, divided by the number of then outstanding public
shares, subject to the limitations described herein. The amount in the
trust account is initially anticipated to be approximately $10.00 per
public share (or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full), which is approximately equal
to the per-unit offering price of $10.00 (approximately $0.03 less if the
underwriters’ over-allotment option is exercised in full). There will be
no redemption rights upon the consummation of our initial business
combination with respect to our warrants. Our sponsor has agreed to waive
its redemption rights with respect to its founder shares and any public
shares it may acquire in connection with, or following the consummation
of, this offering in connection with a tender offer or stockholder
vote.
|
|
Manner
of conducting redemptions
|
Unlike
many blank check companies that hold stockholder votes and conduct proxy
solicitations in conjunction with their business combinations and related
redemptions of public shares for cash upon consummation of such initial
business combinations even when a vote is not required by law, if a
stockholder vote is not required by law and we do not decide to hold a
stockholder vote for business or other legal reasons, we will, pursuant to
our amended and restated certificate of incorporation:
· conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange
Act, which regulate issuer tender offers, and
· file
tender offer documents with the SEC prior to consummating our initial
business combination which contain substantially the same financial and
other information about the initial business combination and the
redemption rights as is required under Regulation 14A of the Exchange Act,
which regulates the solicitation of
proxies.
|
11
In
the event we conduct redemptions pursuant to the tender offer rules, our
offer to redeem shall remain open for at least 20 business days, in
accordance with Rule 14e-1(a) under the Exchange Act, and we will not be
permitted to consummate our initial business combination until the
expiration of the tender offer period.
|
||
If,
however, stockholder approval of the transaction is required by law, or we
decide to obtain stockholder approval for business or other legal reasons,
we will:
· conduct
the redemptions in conjunction with a proxy solicitation pursuant to
Regulation 14A of the Exchange Act, which regulates the solicitation of
proxies, and not pursuant to the tender offer rules, and
· file
proxy materials with the SEC.
If
we seek stockholder approval, we will consummate our initial business
combination only if a majority of the outstanding shares of common stock
voted are voted in favor of the business combination. In such case, our
sponsor has agreed to vote its founder shares and any public shares
purchased during or after the offering in favor of our initial business
combination. Additionally, each public stockholder may elect to redeem
their public shares irrespective of whether they vote for or against the
proposed transaction; provided, however, our public stockholders voting in
favor of our initial business combination may elect to exercise their
redemption rights and shall be entitled to receive cash equal to their pro
rata share of the aggregate amount then on deposit in the trust account,
including any amounts representing interest earned on the trust account,
less taxes and up to $1.25 million withdrawn for working capital purposes,
but our public stockholders voting against the business combination and
electing to exercise their redemption rights shall only be entitled to
receive cash equal to their pro rata share of the aggregate amount in the
trust account less taxes and interest earned on the proceeds placed in the
trust account.
Many
blank check companies would not be able to consummate a business
combination if the holders of the company's public shares voted against a
proposed business combination and elected to redeem or convert more than a
specified percentage of the shares sold in such company's initial public
offering, which percentage threshold has typically been between 19.99% and
39.99%. As a result, many blank check companies have been unable to
complete business combinations 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
combination. Since we have no specified maximum redemption threshold
contained in our amended and restated certificate of incorporation, our
structure is different in this respect from the structure that has been
used by many blank check companies. However, in no event will we redeem
our public shares in an amount that would cause our net tangible assets to
be less than $5,000,001. In such case, we would not proceed with the
redemption of our public shares and the related business combination, and
instead may search for an alternate business
combination.
|
12
Limitation
on redemption and voting rights of stockholders holding 10% or more of the
shares sold in the offering if we hold stockholder vote
|
Notwithstanding
the foregoing redemption rights, if we seek stockholder approval of our
initial business combination and we do not conduct redemptions in
connection with our business combination pursuant to the tender offer
rules, our amended and restated certificate of incorporation provides that
a public stockholder, together with any affiliate of such stockholder or
any other person with whom such stockholder is acting in concert or as a
"group" (as defined under Section 13 of the Exchange Act), will be
restricted from redeeming its shares with respect to more than an
aggregate of 10% of the shares sold in this offering. Moreover, any
individual stockholder or “group” will also be restricted from voting
public shares in excess of an aggregate of 10% of the public shares sold
in this offering, and all additional such shares in excess of 10%, which
we refer to as the “Excess Shares”, which would then be voted by our
management in favor of all proposals submitted for consideration at such
meeting and will not be redeemed for cash.
We
believe the restrictions described above will discourage stockholders from
accumulating large blocks of shares, and subsequent attempts by such
holders to use their ability to redeem their shares 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 these
provisions, a public stockholder holding more than an aggregate of 10% of
the shares sold in this offering could threaten to exercise its redemption
rights or vote against a business combination 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 redeem or vote 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 combination, particularly in connection with a business
combination with a target that requires as a closing condition that we
have a minimum net worth or a certain amount of cash.
|
|
Release
of funds in trust account on closing of our initial business
combination
|
On
the closing of our initial business combination, all amounts held in the
trust account will be released to us. We will use these funds to pay
amounts due to any public stockholders who exercise their redemption
rights as described above under "Redemption rights for public stockholders
upon consummation of our initial business combination" and to pay the
underwriters their deferred underwriting commissions. Funds released from
the trust account to us can be used to pay all or a portion of the
purchase price of the business or businesses we acquire in our initial
business combination. If our initial business combination is paid for
using stock or debt securities, or not all of the funds released from the
trust account are used for payment of the purchase price in connection
with our business combination, we may apply the cash released to us from
the trust account that is not applied to the purchase price for general
corporate purposes, including for maintenance or expansion of operations
of acquired businesses, the payment of principal or interest due on
indebtedness incurred in consummating the initial business combination, to
fund the purchase of other companies or for working
capital.
|
13
Redemption
of public shares and distribution and liquidation if no initial business
combination
|
Our
sponsor, officers and directors have agreed that we will have only 21
months from the date of this prospectus (or 24 months from the date of
this prospectus if a letter of intent or a definitive agreement has been
executed within 21 months from the date of the prospectus and the business
combination relating thereto has not yet been completed within such
21-month period) to consummate our initial business combination. If we are
unable to consummate a business combination within such 21 (or 24) month
period, we will: (i) cease all operations except for the purpose of
winding up, (ii) as promptly as reasonably possible but not more than ten
business days thereafter, redeem the public shares, at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest but net of franchise and income taxes
payable (less up to $100,000 of such net interest to pay dissolution
expenses), divided by the number of then outstanding public shares, which
redemption will completely extinguish public stockholders' rights as
stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly
as reasonably possible following such redemption, subject to the approval
of our remaining stockholders and our board of directors, dissolve and
liquidate, subject in each case to our obligations under Delaware law to
provide for claims of creditors and the requirements of other applicable
law. There will be no redemption rights or liquidating distributions with
respect to our warrants, which will expire worthless if we fail to
consummate a business combination within the 21 (or 24) month time
period.
Our
sponsor has waived its redemption rights with respect to its founder
shares if we fail to consummate an initial business combination within 21
months from the date of this prospectus (or 24 months from the date of
this prospectus if a letter of intent or a definitive agreement has been
executed within 21 months from the date of the prospectus and the business
combination relating thereto has not yet been completed within such
21-month period). However, if our sponsor, or any of our officers,
directors or affiliates, should acquire public shares in or after this
offering, they will be entitled to redemption rights with respect to such
public shares if we fail to consummate a business combination within the
required time period.
The
underwriters have agreed to waive their rights to their deferred
underwriting commission held in the trust account in the event we do not
consummate a business combination within 21 (or 24) months from the date
of this prospectus and, in such event, such amounts will be included with
the funds held in the trust account that will be available to fund the
redemption of our public shares.
|
|
Limited
payments to insiders
|
There
will be no finder's fees, reimbursements or cash payments made to our
sponsor, officers, directors, or our or their affiliates for services
rendered to us prior to or in connection with the consummation of our
initial business combination, other than:
· Repayment
of a $75,000 in loans made to us by our sponsor, to cover offering-related
and organizational expenses;
· A
payment of an aggregate of $7,500 per month to Sachs Capital Group LP, an
affiliate of our sponsor, for office space, secretarial and administrative
services;
· A
payment of up to $7,500 per month to Sachs Capital Group LP or our sponsor
for additional overhead expenses incurred on our
behalf;
|
14
· Reimbursement
for any out-of-pocket expenses related to identifying, investigating and
consummating an initial business combination, provided that no proceeds of
this offering held in the trust account may be applied to the payment of
such expenses prior to the consummation of a business combination, except
to the extent paid out of up to $1.25 million (subject to adjustment as
described herein) of interest earned on the trust account that may be
released to us to fund working capital requirements; and
· Repayment
of loans made by our sponsor or an affiliate of our sponsor or certain of
our officers and directors to finance transaction costs in connection with
an intended initial business combination, provided that if we do not
consummate an initial business combination, we may use a portion of the
working capital held outside the trust account to repay such loaned
amounts but no proceeds from our trust account would be used for such
repayment. The terms of such loans by our officers and directors, if any,
have not been determined and no written agreements exist with respect to
such loans.
Our
independent directors will review on a quarterly basis all payments that
were made to our sponsor, officers, directors or our or their
affiliates.
|
15
Risks
We are a
newly formed company that has conducted no operations and has generated no
revenues. Until we complete our initial business combination, we will have no
operations and will generate no operating revenues. In making your decision
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 and has certain terms and conditions that
deviate from many blank check offerings. Accordingly, you will not be entitled
to protections normally afforded to investors in Rule 419 blank check offerings
or to investors in many other blank check companies. For additional information
concerning how Rule 419 blank check offerings differ from this offering, please
see "Proposed Business — Comparison of This Offering to Those of Blank Check
Companies Subject to Rule 419." For additional information concerning how many
blank check offerings differ from this offering, please see "Proposed Business —
Comparison of This Offering to Those of Many Blank Check Companies Not Subject
to Rule 419." You should carefully consider these and the other risks set forth
in the section entitled "Risk Factors" within this prospectus.
16
Summary
Financial Data
The
following table summarizes the relevant financial data for our business and
should be read with our financial statements, which are included in this
prospectus. We have not had any significant operations to date, so only balance
sheet data is presented.
January 28, 2011
|
||||||||
Actual
|
As
Adjusted
|
|||||||
Balance Sheet Data: | ||||||||
Working
capital (deficiency)
|
$ | (22,500 | ) | $ | 97,625,000 | |||
Total
assets
|
110,000 | 100,625,000 | ||||||
Total
liabilities
|
85,000 | 3,000,000 | ||||||
Value
of common stock that may be redeemed in connection with
our
|
||||||||
initial
business combination (approximately $10.00 per share)
|
—
|
92,624,990 | ||||||
Stockholder's
equity (1)
|
25,000 | 5,000,010 |
(1)
Excludes shares subject to redemption in connection with our initial business
combination.
The "as
adjusted" information gives effect to the sale of the units in this offering,
the sale of the sponsor warrants, repayment of the $75,000 loan made to us by
our sponsor and the payment of the estimated expenses of this offering. The "as
adjusted" total assets amount includes the $100.0 million held in the trust
account for the benefit of our public stockholders, which amount, less deferred
underwriting commissions, will be available to us only upon the consummation of
a business combination within 21 months from the date of this prospectus (or 24
months from the date of this prospectus if a letter of intent or a definitive
agreement has been executed within 21 months from the date of the prospectus and
the business combination relating thereto has not yet been completed within such
21-month period). The "as adjusted" working capital and "as adjusted" total
assets include approximately $3.0 million being held in the trust account
(approximately $3.45 million if the underwriters' over-allotment option is
exercised in full) representing deferred underwriting commissions.
If no
business combination is consummated within 21 months from the date of this
prospectus (or 24 months from the date of this prospectus if a letter of intent
or a definitive agreement has been executed within 21 months from the date of
the prospectus and the business combination relating thereto has not yet been
completed within such 21-month period), the proceeds held in the trust account,
including the deferred underwriting commissions and all interest thereon, net of
franchise and income taxes payable, up to $100,000 of such net interest to pay
dissolution expenses, any interest income released to us to fund our working
capital requirements and any amounts released to purchase up to 15% of our
public shares if we seek stockholder approval of our business combination, as
described in this prospectus, will be used to fund the redemption of our public
shares. Our sponsor has agreed to waive its redemption rights with respect to
their founder shares if we fail to consummate a business combination within such
21 (or 24) month time period.
17
RISK
FACTORS
An
investment in our securities involves a high degree of risk. You should consider
carefully all of the risks described below, together with the other information
contained in this prospectus, before making a decision to invest in our units.
If any of the following events occur, our business, financial condition and
operating results may be materially adversely affected. In that event, the
trading price of our securities could decline, and you could lose all or part of
your investment.
We
are a newly formed development stage company with no operating history and no
revenues, and you have no basis on which to evaluate our ability to achieve our
business objective.
We are a
recently formed development stage company with no operating results, and we will
not commence operations until obtaining funding through this offering. Because
we lack an operating history, you have no basis upon which to evaluate our
ability to achieve our business objective of completing our initial business
combination with one or more target businesses. We have no plans, arrangements
or understandings with any prospective target business concerning a business
combination and may be unable to complete a business combination. If we fail to
complete a business combination, we will never generate any operating
revenues.
Our
public stockholders may not be afforded an opportunity to vote on our proposed
business combination, unless such vote is required by law, which means we may
consummate our initial business combination even though a majority of our public
stockholders do not support such a combination.
We may
not hold a stockholder vote before we consummate our initial business
combination unless the business combination would require stockholder approval
under applicable state law or if we decide to hold a stockholder vote for
business or other legal reasons. Accordingly, we may consummate our initial
business combination even if holders of a majority of our public shares do not
approve of the business combination we consummate.
If
we seek stockholder approval of our initial business combination, our sponsor
has agreed to vote in favor of such initial business combination, regardless of
how our public stockholders vote.
Unlike
many other blank check companies in which the founders agree to vote their
founder shares in accordance with the majority of the votes cast by the public
stockholders in connection with an initial business combination, our sponsor has
agreed to vote its founder shares, as well as any public shares purchased during
or after the offering, in favor of our initial business combination. Our sponsor
will own 16% of our outstanding shares of common stock immediately following the
consummation of this offering. Accordingly, if we seek stockholder approval of
our initial business combination, it is more likely that the necessary
stockholder approval will be received than would be the case if our sponsor
agreed to vote its founder shares in accordance with the majority of the votes
cast by our public stockholders.
Your
only opportunity to affect the investment decision regarding a potential
business combination will be limited to the exercise of your right to redeem
your shares from us for cash, unless we seek stockholder approval of the
business combination.
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 combination without seeking
stockholder approval, public stockholders may not have the right or opportunity
to vote on the business combination, unless we seek such stockholder vote.
Accordingly, your only opportunity to affect the investment decision regarding a
potential business combination may be limited to exercising your redemption
rights within the period of time (which will be at least 20 business days) set
forth in our tender offer documents mailed to our public stockholders in which
we describe our business combination.
The
ability of our public stockholders to redeem their shares for cash may make our
financial condition unattractive to potential business combination targets,
which may make it difficult for us to enter into a business combination with a
target.
We may
enter into a transaction agreement with a prospective target that requires as a
closing condition that we have a minimum net worth or a certain amount of cash.
If too many public stockholders exercise their redemption rights, we may not be
able to meet such closing condition, and as a result, would not be able to
proceed with the business combination. Furthermore, in no event will we redeem
our public shares in an amount that would cause our net tangible assets to be
less than $5,000,001. Our amended and restated certificate of incorporation
requires us to provide all of our stockholders with an opportunity to redeem all
of their shares in connection with the consummation of any initial business
combination, although our sponsor has agreed to waive its redemption rights with
respect to their founder shares and public shares in connection with the
consummation of an initial business combination. Consequently, if accepting all
properly submitted redemption requests would cause our net tangible assets to be
less than $5,000,001 or such greater amount necessary to satisfy a closing
condition as described above, we would not proceed with such redemption and the
related business combination and may instead search for an alternate business
combination. Prospective targets would be aware of these risks and, thus, may be
reluctant to enter into a business combination transaction with us.
18
The
ability of a larger number of our stockholders to exercise redemption rights may
not allow us to consummate the most desirable business combination or optimize
our capital structure.
If our
business combination 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
redemption rights, we may either need to reserve part of the trust account for
possible payment upon such redemption, or we may need to arrange third party
financing to help fund our business combination in case a larger percentage of
stockholders exercise their redemption rights than we expect. If the acquisition
involves the issuance of our stock as consideration, we may be required to issue
a higher percentage of our stock to the target or its stockholders to make up
for the failure to satisfy a minimum cash requirement. 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 combination available to
us.
The
requirement that we complete a business combination within 21 (or 24) months
from the date of this prospectus may give potential target businesses leverage
over us in negotiating a business combination and may decrease our ability to
conduct due diligence on potential business combination targets as we approach
our dissolution deadline, which could undermine our ability to consummate a
business combination on terms that would produce value for our
stockholders.
Any
potential target business with which we enter into negotiations concerning a
business combination will be aware that we must consummate a business
combination within 21 months from the date of this prospectus (or 24 months from
the date of this prospectus if a letter of intent or a definitive agreement has
been executed within 21 months from the date of the prospectus and the business
combination relating thereto has not yet been completed within such 21-month
period). Consequently, such target businesses may obtain leverage over us in
negotiating a business combination, knowing that if we do not complete a
business combination with that particular target business, we may be unable to
complete a business combination with any target business. This risk will
increase as we get closer to the timeframe described above. In addition, we may
have limited time to conduct due diligence and may enter into a business
combination on terms that we would have rejected upon a more comprehensive
investigation.
We
may not be able to consummate a business combination within 21 (or 24) months
from the date of this prospectus, in which case we would cease all operations
except for the purpose of winding up and we would redeem our public shares and
liquidate.
Our
sponsor, officers and directors have agreed that we must complete our initial
business combination within 21 months from the date of this prospectus (or 24
months from the date of this prospectus if a letter of intent or a definitive
agreement has been executed within 21 months from the date of the prospectus and
the business combination relating thereto has not yet been completed within such
21-month period). We may not be able to find a suitable target business and
consummate a business combination within such time period. If we have not
consummated a business combination within such 21 (or 24) month period, we will:
(i) cease all operations except for the purpose of winding up, (ii) as promptly
as reasonably possible but not more than ten business days thereafter, redeem
the public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest, but net of
franchise and income taxes payable (less up to $100,000 of such net interest to
pay dissolution expenses), divided by the number of then outstanding public
shares, which redemption will completely extinguish public stockholders' rights
as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable law.
If
we are unable to complete our initial business combination within the prescribed
time frame, our public stockholders may receive less than $10.00 per share on
our redemption and our warrants will expire worthless.
If the
underwriters' over-allotment option is exercised in full, the amount held in the
trust account will initially be less than $10.00 per share. If we are unable to
complete our initial business combination within the prescribed time frame and
are forced to redeem the public shares, the per-share redemption amount received
by stockholders at such time may also be less than $10.00 because of the
expenses of this offering, our general and administrative expenses and the
anticipated costs of seeking our initial business combination. For example, if
the underwriters' over-allotment option is exercised in full, and we were unable
to conclude our initial business combination and 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, net
of franchise and income taxes payable and net of up to $1.25 million (subject to
adjustment as described herein), in interest income on the trust account balance
previously released to us to fund working capital requirements, the per-share
redemption amount received by stockholders would be $9.97, which is
approximately $0.03 less than the per-unit offering price of $10.00.
Furthermore, whether or not the underwriters exercise the over-allotment option,
our outstanding warrants are not entitled to participate in any redemption and
the warrants will therefore expire worthless if we are unable to consummate a
business combination within the 21 month time period (or 24 months from the date
of this prospectus if a letter of intent or a definitive agreement has been
executed within 21 months from the date of the prospectus and the business
combination relating thereto has not yet been completed within such 21-month
period).
19
Our
purchase of common stock in the open market may support the market price of the
common stock and/ or warrants during the buyback period and, accordingly, the
termination of the support provided by such purchases may materially adversely
affect the market price of the units, common stock and/or warrants.
Unlike
many blank check companies, if we seek stockholder approval of our initial
business combination, prior to the consummation of a business combination, our
amended and restated certificate of incorporation will permit the release to us
from the trust account amounts necessary to purchase up to 15% of the shares
sold in this offering (1,500,000 shares, or 1,725,000 shares if the
over-allotment option is exercised in full) at any time commencing after the
filing of a preliminary proxy statement for our initial business combination and
ending on the date of the stockholder meeting to approve the initial business
combination. Purchases will be made only in open market transactions at times
when we are not in possession of material non-public information and will not be
made during a restricted period under Regulation M under the Exchange Act.
Consequently, if the market does not view our initial business combination
positively, these purchases may have the effect of counteracting the market's
view of our initial business combination, which would otherwise be reflected in
a decline in the market price of our securities. The termination of the support
provided by these purchase may materially adversely affect the market price of
our securities.
If
we seek stockholder approval of our business combination, we, our sponsor,
directors, officers, advisors and their affiliates may elect to purchase shares
from stockholders, in which case we or they may influence a vote in favor of a
proposed business combination that you do not support.
If we
seek stockholder approval of our business combination and we do not conduct
redemptions in connection with our business combination pursuant to the tender
offer rules, we may enter into privately negotiated transactions to purchase
public shares following consummation of the business combination from
stockholders who would have otherwise elected to have their shares redeemed in
conjunction with a proxy solicitation pursuant to the proxy rules. Our sponsor,
directors, officers, advisors or their affiliates may also purchase shares in
privately negotiated transactions either prior to or following the consummation
of our initial business combination. Neither we nor our directors, officers,
advisors or their affiliates will make any such purchases when we or they are in
possession of any material non-public information not disclosed to the seller.
Such a purchase 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 its redemption
rights. In the event that we or our sponsor, directors, officers, advisors or
their affiliates purchase shares in privately negotiated transactions from
public stockholders who have already elected to exercise their redemption
rights, such selling stockholders would be required to revoke their prior
elections to redeem their shares. Although neither we nor they currently
anticipate paying any premium purchase price for such public shares, in the
event we or they do, the payment of a premium may not be in the best interest of
those stockholders not receiving any such additional consideration. In addition,
the payment of a premium by us after the consummation of our initial business
combination may not be in the best interest of the remaining stockholders who do
not redeem their shares. Such stockholders will experience a reduction in book
value per share compared to the value received by stockholders that have their
shares purchased by us at a premium. In addition, in the event we seek
stockholder approval of our business combination, our amended and restated
certificate of incorporation will permit the release to us from the trust
account amounts necessary to purchase up to 15% of the shares sold in this
offering (1,500,000 shares, or 1,725,000 shares if the underwriters' over-
allotment option is exercised in full). It is intended that purchases will
comply with Rule 10b-18 under the Exchange Act, which provides a safe harbor for
purchases made under certain conditions, including with respect to timing,
pricing and volume of purchases. If the conditions of Rule 10b-18, as in effect
at the time we wish to make such purchases, are not satisfied, it is likely that
we will not make such purchases. Any purchases we make will be at prices
(inclusive of commissions) not to exceed the per-share amount then held in the
trust account (approximately $10.00 per share or approximately $9.97 per share
if the underwriters' over-allotment option is exercised in full).
The
purpose of such purchases would be to: (i) increase the likelihood of obtaining
stockholder approval of the business combination or (ii), where the purchases
are made by our sponsor, directors, officers, advisors or their affiliates, to
satisfy a closing condition in an agreement with a target that requires us to
have a minimum net worth or a certain amount of cash at the closing of the
business combination, where it appears that such requirement would otherwise not
be met. This may result in the consummation of a business combination that may
not otherwise have been possible. In addition, purchases in the open market
would provide liquidity to those public stockholders whose shares are so
purchased in advance of the closing of the business combination.
Our
purchases of common stock in the open market or in privately negotiated
transactions would reduce the funds available to us after the business
combination.
If we
seek stockholder approval of our business combination and we do not conduct
redemptions in connection with our business combination pursuant to the tender
offer rules, we may privately negotiate transactions to purchase shares
effective immediately following the consummation of the business combination
from stockholders who would have otherwise elected to have their shares redeemed
in conjunction with a proxy solicitation pursuant to the proxy rules with
proceeds released to us from the trust account immediately following
consummation of the initial business combination. In addition, in the event we
seek stockholder approval of our business combination, our amended and restated
certificate of incorporation will permit the release to us from the trust
account amounts necessary to purchase to 15% of the shares sold in this offering
(1,500,000 shares, or 1,725,000 shares if the underwriters' over-allotment
option is exercised in full). It is intended that purchases will comply with
Rule 10b-18 under the Exchange Act, which provides a safe harbor for purchases
made under certain conditions, including with respect to timing, pricing and
volume of purchases. If the conditions of Rule 10b-18, as in effect at the time
we wish to make such purchases, are not satisfied, it is likely that we will not
make such purchases. Any purchases we make will be at prices (inclusive of
commissions) not to exceed the per-share amount then held in the trust account
(approximately $10.00 per share or approximately $9.97 per share if the
underwriters' over-allotment option is exercised in full). 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 combination.
20
Purchases
of common stock in the open market or in privately negotiated transactions by us
or our sponsor, directors, officers, advisors or their affiliates may make it
difficult for us to list our common stock on a national securities
exchange.
If we or
our sponsor, directors, officers, advisors or their affiliates purchase shares
of our common stock in the open market or in privately negotiated transactions,
it would reduce the public "float" of our common stock and the number of
beneficial holders of our securities, which may make it difficult to obtain the
quotation, listing or trading of our securities on a national securities
exchange if we determine to apply for such quotation or listing in connection
with the business combination.
Our
purchases of common stock in the open market or in privately negotiated
transactions may have negative economic effects on our remaining public
stockholders.
If we
seek stockholder approval of our business combination and purchase shares in
privately negotiated or market transactions from stockholders who would have
otherwise elected to have their shares redeemed in conjunction with a proxy
solicitation pursuant to the proxy rules for a per-share pro rata portion of the
trust account, our remaining public stockholders will bear the economic burden
of the franchise and income taxes payable (as well as, in the case of purchases
which occur prior to the consummation of our initial business combination, up to
$100,000 of net interest that may be released to us from the trust account to
fund our dissolution expenses in the event we do not complete our initial
business combination within 21months from the date of this prospectus (or 24
months from the date of this prospectus if a letter of intent or a definitive
agreement has been executed within 21 months from the date of the prospectus and
the business combination relating thereto has not yet been completed within such
21-month period)). In addition, our remaining public stockholders following the
consummation of a business combination will bear the economic burden of the
deferred underwriting commission as well as the amount of any premium we may pay
to the per-share pro rata portion of the trust account using funds released to
us from the trust account following the consummation of the business
combination. This is because the stockholders from whom we purchase shares in
open market or in privately negotiated transactions may receive a per share
purchase price payable from the trust account that is not reduced by a pro rata
share of the franchise and income taxes payable on the interest earned by the
trust account, the up to $100,000 of dissolution expenses or the deferred
underwriting commission and, in the case of purchases at a premium, have
received such premium.
You
will not have any rights or interests in funds from the trust account, except
under certain limited circumstances. To liquidate your investment, therefore,
you may be forced to sell your public shares or warrants, potentially at a
loss.
Our
public stockholders will be entitled to receive funds from the trust account
only upon the earlier to occur of: (i) our consummation of an initial business
combination, and then only in connection with those shares of our common stock
that such stockholder properly elected to redeem, subject to the limitations
described herein, or (ii) the redemption of our public shares if we are unable
to consummate an initial business combination within 21 months from the date of
this prospectus (or 24 months from the date of this prospectus if a letter of
intent or a definitive agreement has been executed within 21 months from the
date of the prospectus and the business combination relating thereto has not yet
been completed within such 21-month period), subject to applicable law and as
further described herein. In addition, if our plan to redeem our public shares
if we are unable to consummate an initial business combination within 21 (or 24)
months from the date of this prospectus is not consummated for any reason,
compliance with Delaware law may require that we submit a plan of dissolution to
our then-existing stockholders for approval prior to the distribution of the
proceeds held in our trust account. In that case, public stockholders may be
forced to wait beyond 21 (or 24) months before they receive funds from our trust
account. In no other circumstances will a public stockholder have any right or
interest of any kind in the trust account. Accordingly, to liquidate your
investment, you may be forced to sell your public shares or warrants,
potentially at a loss.
We
do not intend to establish an audit committee or a compensation committee until
the consummation of an initial business combination. Until such time, no formal
committee of independent directors will review matters related to our business,
and such lack of review could negatively impact our business.
Our
independent directors will join upon the closing of this offering. Upon
consummation of an initial business combination, our board of directors intends
to establish an audit committee and a compensation committee, and adopt charters
for these committees. Prior to such time we do not intend to establish either
committee. 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 nor will there be a separate formal committee to
review the reasonableness of expense reimbursement requests by anyone other than
our board of directors, which includes persons who may seek such reimbursements.
The absence of such committees to review the matters discussed above until the
consummation of our initial business combination could negatively impact our
operations and profitability.
Our
securities will be quoted on the Over-the-Counter Bulletin Board quotation
system, which will limit the liquidity and price of our securities more than if
our securities were quoted or listed on the NYSE Amex Market or another national
securities exchange and result in our stockholders not receiving the benefit of
our being subject to the listing standards of a national securities
exchange.
Our
units, common stock and warrants will be traded in the over-the-counter market
and will be quoted on the Over-the-Counter Bulletin Board quotation system, or
the OTCBB, which is a FINRA-sponsored and operated inter-dealer automated
quotation system for equity securities not included in the NYSE Amex Market.
Quotation of our securities on the OTCBB will limit the liquidity and price of
our securities more than if our securities were quoted or listed on the NYSE
Amex Market or another national securities 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.
21
We do not
currently meet the listing standards for the NYSE Amex Market or any another
national securities exchange. The OTCBB does not impose listing standards or
requirements. If our securities were listed on the NYSE Amex Market or another
national securities exchange, we would be subject to a number of listing
standards, including requirements relating to our minimum unaffiliated market
capitalization and common stock trading price, the independence of a majority of
our board of directors, requirements regarding committees of our board and
certain other stockholder approval and corporate governance requirements. In
addition, we would be subject to any special stock exchange requirements
applicable to blank check companies, such as requirements that we obtain
stockholder approval of our initial business combination and that we do not
enter into an initial business combination that has an acquisition value less
than 80% of the funds in the trust account.
You
will not be entitled to protections normally afforded to investors of many other
blank check companies.
Since the
net proceeds of this offering are intended to be used to complete an initial
business combination with a target business that has not been identified, we may
be deemed to be a "blank check" company under the United States securities laws.
However, we will have net tangible assets in excess of $5.0 million upon the
successful consummation of this offering and will file a Current Report on Form
8-K, including an audited balance sheet demonstrating this fact, we are exempt
from rules promulgated by the SEC to protect investors in blank check companies,
such as Rule 419. Accordingly, investors will not be afforded the benefits or
protections of those rules. Among other things, this means our units will be
immediately tradable and we will have a longer period of time to complete a
business combination than do companies subject to Rule 419. Moreover, offerings
subject to Rule 419 would prohibit the release of any interest earned on funds
held in the trust account to us and, if we seek stockholder approval of our
initial business combination, the release of funds to us to purchase up to 15%
of our public shares pursuant to our amended and restated certificate of
incorporation, unless and until the funds in the trust account were released to
us in connection with our consummation of an initial business combination. For a
more detailed comparison of our offering to offerings that comply with Rule 419,
please see "Proposed Business — Comparison of This Offering to Those of Blank
Check Companies Subject to Rule 419."
Because
of our limited resources and the significant competition for business
combination opportunities, it may be more difficult for us to complete a
business combination. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately $10.00 per
share (or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full) on our redemption, and our warrants
will expire worthless.
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 types 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, if we are obligated to pay cash for the
shares of common stock redeemed and, in the event we seek stockholder approval
of our business combination, we make purchases of our common stock in the open
market in a manner intended to comply with Rule 10b-18 under the Exchange Act,
which provides a safe harbor for purchases made under certain conditions,
including with respect to timing, pricing and volume of purchases, using
available funds from the trust account, then the resources available to us for a
business combination may be reduced. Any of these obligations may place us at a
competitive disadvantage in successfully negotiating a business combination. If
we are unable to complete our initial business combination, our public
stockholders may receive only approximately $10.00 per share (or approximately
$9.97 per public share if the underwriters’ over-allotment option is exercised
in full) on our redemption, and our warrants will expire worthless.
If
the net proceeds of this offering not being held in the trust account, together
with the up to $1.25 million (subject to adjustment as described herein) of
interest in the trust account (net of franchise and income taxes payable) which
may be released to us for working capital purposes, are insufficient to allow us
to operate for at least the next 21 (or 24) months, we may be unable to complete
our initial business combination.
The funds
available to us outside of the trust account, plus the interest earned on the
funds held in the trust account that may be available to us, may not be
sufficient to allow us to operate for at least the next 21 (or 24) months,
assuming that our initial business combination is not consummated during that
time. We believe that, upon closing of this offering, the funds available to us
outside of the trust account, plus the interest earned on the funds held in the
trust account that may be available to us, will be sufficient to allow us to
operate for at least the next 21 (or 24) months, assuming that our initial
business combination is not consummated during that time. However, we cannot
assure you that our estimate will be accurate. We could use a portion of the
funds available to us to pay fees to consultants to assist us with our search
for a target business. We could also use a portion of the funds as a down
payment or to fund a "no-shop" provision (a provision in letters of intent
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 combination, although we do not have any
current intention to do so. If we entered into a letter of intent 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), we might not have sufficient funds to continue searching for, or
conduct due diligence with respect to, a target business. If we are unable to
complete our initial business combination, our public stockholders may only
receive approximately $10.00 per share (or approximately $9.97 per public share
if the underwriters’ over-allotment option is exercised in full) on our
redemption, and our warrants will expire worthless.
22
The
current low interest rate environment could limit the amount available to fund
our search for a target business or businesses and complete our initial business
combination since we will depend on interest earned on the trust account to fund
our search, to pay our franchise and income taxes and to complete our initial
business combination.
Of the
net proceeds of this offering, only $600,000 will be available to us initially
outside the trust account to fund our working capital requirements. In the event
that our offering expenses exceed our estimate of $400,000, we may fund such
excess with funds from the $600,000 not to be held in the trust account. In such
case, the amount of funds we intend to be held outside the trust account would
decrease by a corresponding amount. Conversely, in the event that the offering
expenses are less than our estimate of $400,000, the amount of funds we intend
to be held outside the trust account would increase by a corresponding amount.
We will depend on sufficient interest being earned on the proceeds held in the
trust account to provide us with up to $1.25 million, subject to adjustment in
the event the size of the offering changes as a result of the underwriters'
exercise of any portion of the over-allotment option or if we otherwise decide
to change the size of this offering, of additional working capital we may need
to identify one or more target businesses and to complete our initial business
combination, as well as to pay any franchise and income taxes that we may owe.
The current low interest rate environment may make it more difficult for us to
have sufficient funds available to structure, negotiate or close our initial
business combination. In such event, we would need to borrow funds from our
sponsor or management team to operate or may be forced to liquidate. Neither our
sponsor nor our management team is under any obligation to advance funds to us
in such circumstances. If we are unable to complete our initial business
combination, our public stockholders may only receive approximately $10.00 per
share (or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full) on our redemption, and our warrants
will expire worthless.
Subsequent
to our consummation of our initial business combination, we may be required to
subsequently take write-downs or write-offs, restructuring and impairment or
other charges that could have a significant negative effect on our financial
condition, results of operations and our stock price, which could cause you to
lose some or all of your investment.
Even if
we conduct extensive due diligence on a target business with which we combine,
we cannot assure you that this diligence will surface all material issues that
may be present inside a particular target business, that it would be possible to
uncover all material issues through a customary amount of due diligence, or that
factors outside of the target business and outside of our control will not later
arise. As a result of these factors, we may be forced to later write-down or
write-off assets, restructure our operations, or incur impairment or other
charges that could result in our reporting losses. Even if our due diligence
successfully identifies certain risks, unexpected risks may arise and previously
known risks may materialize in a manner not consistent with our preliminary risk
analysis. Even though these charges may be non-cash items and not have an
immediate impact on our liquidity, the fact that we report charges of this
nature could contribute to negative market perceptions about us or our
securities. In addition, charges of this nature may cause us to violate net
worth or other covenants to which we may be subject as a result of assuming
pre-existing debt held by a target business or by virtue of our obtaining
post-combination debt financing.
If
third parties bring claims against us, the proceeds held in the trust account
could be reduced and the per-share redemption amount received by stockholders
may be less than approximately $10.00 per share.
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, prospective target businesses or other entities with which we do
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 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 refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform
an analysis of the alternatives available to it and will only enter into an
agreement with a third party that has not executed a waiver if management
believes that such third party's engagement would be significantly more
beneficial to us than any alternative.
23
Examples
of possible instances where we may engage a third party that refuses 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, 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. Upon redemption of our public shares,
if we are unable to complete a business combination within the required time
frame, or upon the exercise of a redemption right in connection with a business
combination, we will be required to provide for payment of claims of creditors
that were not waived that may be brought against us within the 10 years
following redemption. Accordingly, the per-share redemption amount received by
public stockholders could be less than the approximately $10.00 per share
initially held in the trust account (or approximately $9.97 per share if the
underwriters' over-allotment option is exercised in full), due to claims of such
creditors. Mr. Sachs has agreed that he 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 $10.00
per share 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 waiver is deemed to be unenforceable against a third
party, Mr. Sachs will not be responsible to the extent of any liability for such
third party claims. However, we have not asked Mr. Sachs to reserve for such
indemnification obligations and we cannot assure you that Mr. Sachs would be
able to satisfy those obligations. With the exception of Mr. Sachs as described
above, none of our officers will indemnify us for claims by third parties
including, without limitation, claims by vendors and prospective target
businesses.
Our
directors may decide not to enforce Mr. Sachs’ 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 $10.00 per public
share (or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full) and Mr. Sachs’ asserts that he is
unable to satisfy its obligations or that it has no indemnification obligations
related to a particular claim, our independent directors would determine whether
to take legal action against Mr. Sachs to enforce its indemnification
obligations. While we currently expect that our independent directors would take
legal action on our behalf against Mr. Sachs to enforce its 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 independent 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 $10.00 per share.
If,
after we distribute the proceeds in the trust account to our public
stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, a bankruptcy court may seek
to recover such proceeds, and the members of our board of directors may be
viewed as having breached their fiduciary duties to our creditors, thereby
exposing the members of our board of directors and us to claims of punitive
damages.
If, after
we distribute the proceeds in the trust account to our public stockholders, we
file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that 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.
In addition, our board of directors may be viewed as having breached its
fiduciary duty to our creditors and/or having 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.
If,
before distributing the proceeds in the trust account to our public
stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that is not dismissed, the claims of creditors in
such proceeding may have priority over the claims of our stockholders and the
per-share amount that would otherwise be received by our stockholders in
connection with our liquidation may be reduced.
If,
before distributing the proceeds in the trust account to our public
stockholders, we file a bankruptcy petition or an involuntary bankruptcy
petition is filed against us that 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, the per-share amount that would otherwise be
received by our stockholders in connection with our liquidation may be
reduced.
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 combination.
If we are
deemed to be an investment company under the Investment Company Act, our
activities may be restricted, including:
·
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
combination.
In
addition, we may have imposed upon us burdensome requirements,
including:
·
registration as an investment company;
24
·
adoption of a specific form of corporate structure; and
·
reporting, record keeping, voting, proxy and disclosure requirements and other
rules and regulations.
We do not
believe that our anticipated principal activities will subject us to the
Investment Company Act. The proceeds held in the trust account may be invested
by the trustee only 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. Because the investment of the proceeds will be
restricted to these instruments, we believe we will meet the requirements for
the exemption provided in Rule 3a-1 promulgated under 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 expenses for
which we have not allotted funds and may hinder our ability to consummate a
business combination. If we are unable to complete our initial business
combination, our public stockholders may only receive approximately $10.00 per
share (or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full) on our redemption, and our warrants
will expire worthless.
Changes
in laws or regulations, or a failure to comply with any laws and regulations,
may adversely affect our business, investments and results of
operations.
We are
subject to laws and regulations enacted by national, regional and local
governments. In particular, we will be required to comply with certain SEC and
other legal requirements. Compliance with, and monitoring of, applicable laws
and regulations may be difficult, time consuming and costly. Those laws and
regulations and their interpretation and application may also change from time
to time and those changes could have a material adverse effect on our business,
investments and results of operations. In addition, a failure to comply with
applicable laws or regulations, as interpreted and applied, could have a
material adverse effect on our business and results of operations.
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.
Under the
Delaware General Corporation Law, or DGCL, 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 the redemption of our public shares
in the event we do not consummate our initial business combination within 21 (or
24) months from the date of this prospectus may be considered a liquidation
distribution under Delaware law. If a corporation complies with certain
procedures set forth in Section 280 of the DGCL 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, it is our intention to redeem our public shares as soon as reasonably
possible following our 21st (or 24th) month in the event we do not consummate an
initial business combination and, therefore, we do not intend to comply with
those procedures.
Because
we will not be complying with Section 280, Section 281(b) of the DGCL 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 10 years following our dissolution.
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 lawyers, investment bankers, etc.) or prospective target businesses. If
our plan of distribution complies with Section 281(b) of the DGCL, 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
likely be barred after the third anniversary of the dissolution. We cannot
assure you that we will properly assess all claims that may be potentially
brought against us. 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 beyond the third anniversary of such
date. Furthermore, if the pro rata portion of our trust account distributed to
our public stockholders upon the redemption of our public shares in the event we
do not consummate our initial business combination within 21 (or 24) months from
the date of this prospectus is not considered a liquidation distribution under
Delaware law and such redemption distribution is deemed to be unlawful, then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of
creditors could then be six years after the unlawful redemption distribution,
instead of three years, as in the case of a liquidation
distribution.
We
do not currently intend to hold an annual meeting of stockholders until after
our consummation of a business combination and you will not be entitled to any
of the corporate protections provided by such a meeting.
We do not
currently intend to hold an annual meeting of stockholders until after we
consummate a business combination, and thus may not be in compliance with
Section 211(b) of the DGCL, 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 combination, 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 DGCL.
25
We
are not registering the shares of common stock issuable upon exercise of the
warrants under the Securities Act or any state securities laws at this time, and
such registration may not be in place when an investor desires to exercise
warrants, thus precluding such investor from being able to exercise its warrants
and causing such warrants to expire worthless.
We are
not registering the shares of common stock issuable upon exercise of the
warrants under the Securities Act or any state securities laws at this time.
However, under the terms of the warrant agreement, we have agreed to use our
best efforts to file a registration statement under the Securities Act covering
such shares and maintain a current prospectus relating to the common stock
issuable upon exercise of the warrants, and to use our best efforts to take such
action as is necessary to register or qualify for sale, in those states in which
the warrants were initially offered by us, the shares issuable upon exercise of
the warrants, to the extent an exemption is not available. We cannot assure you
that we will be able to do so. If the shares issuable upon exercise of the
warrants are not registered under the Securities Act, we will be required to
permit holders to exercise their warrants on a cashless basis, under certain
circumstances specified in the warrant agreement. However, no warrant will be
exercisable for cash or on a cashless basis, and we will not be obligated to
issue any shares to holders seeking to exercise their warrants, unless the
issuance of the shares upon such exercise is registered or qualified under the
securities laws of the state of the exercising holder, unless an exemption is
available. In no event will we be required to issue cash, securities or other
compensation in exchange for the warrants in the event that we are unable to
register or qualify the shares underlying the warrants under the Securities Act
or applicable state securities laws. If the issuance of the shares upon exercise
of the warrants is not so registered or qualified, the holder of such warrant
shall not be entitled to exercise such warrant and such warrant may have no
value and expire worthless. In such event, holders who acquired their warrants
as part of a purchase of units will have paid the full unit purchase price
solely for the shares of common stock included in the units. If and when the
warrants become redeemable by us, we may exercise our redemption right even if
we are unable to register or qualify the underlying shares of common stock for
sale under all applicable state securities laws.
The
grant of registration rights to our sponsor may make it more difficult to
complete our initial business combination, 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 founder shares, holders of our sponsor warrants and
their permitted transferees can demand that we register the sponsor warrants and
the shares of common stock issuable upon exercise of the sponsor warrants and
holders of warrants that may be issued upon conversion of working capital loans
may demand that we register such warrants or the common stock issuable upon
conversion of such warrants. The registration rights will be exercisable with
respect to the founder shares and the sponsor warrants and the shares of common
stock issuable upon exercise of such sponsor warrants. We will bear the cost of
registering these securities. 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 combination
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 or its permitted transferees are registered.
Because
we have not selected a particular segment of the financial services sector or
any specific target businesses with which to pursue a business combination, you
will be unable to ascertain the merits or risks of any particular target
business' operations.
We will
seek to consummate a business combination with an operating company in the
financial services sector in North America, but may also pursue acquisition
opportunities in other sectors or geographic regions, except that we will not,
under our amended and restated certificate of incorporation, be permitted to
effectuate a business combination with another blank check company or similar
company with nominal operations. Because we have not yet identified or
approached any specific target business with respect to a business combination,
there is no basis to evaluate the possible merits or risks of any particular
target business's operations, results of operations, cash flows, liquidity,
financial condition or prospects. To the extent we consummate our business
combination, we may be affected by numerous risks inherent in the business
operations with which we combine. For example, if we combine with a financially
unstable business or an entity lacking an established record of sales or
earnings, we may be affected by the risks inherent in the business and
operations of a financially unstable or a development stage entity. Although our
officers and directors will endeavor to evaluate the risks inherent in a
particular target business, we cannot assure you that we will properly ascertain
or assess all of the significant risk factors or that we will have adequate time
to complete due diligence. Furthermore, some of these risks may be outside of
our control and leave us with no ability to control or reduce the chances that
those risks will adversely impact a target business. We also cannot assure you
that an investment in our units will ultimately prove to be more favorable to
investors than a direct investment, if such opportunity were available, in an
acquisition target.
26
We
may seek investment opportunities in sectors outside of the financial services
sector (which may or may not be outside of our management's area of
expertise).
Although
we intend to focus on identifying business combination candidates in the
financial services sector, we will consider a business combination outside of
the financial services sector if a business combination candidate is presented
to us and we determine that such candidate offers an attractive investment
opportunity for our company. Although our management will endeavor to evaluate
the risks inherent in any particular business combination candidate, we cannot
assure you that we will adequately ascertain or assess all of the significant
risk factors. We also cannot assure you that an investment in our units will not
ultimately prove to be less favorable to investors in this offering than a
direct investment, if an opportunity were available, in a business combination
candidate. In the event we elect to pursue an investment outside of the
financial services sector, our management's expertise in the financial services
industry would not be directly applicable to its evaluation or operation, and
the information contained herein regarding the financial services industry would
not be relevant to an understanding of the business that we elect to
acquire.
Although
we identified general criteria and guidelines that we believe are important in
evaluating prospective target businesses, we may enter into a business
combination with a target does not meet such criteria and guidelines, and as a
result, the target business with which we enter into our initial business
combination may not have attributes entirely consistent with our general
criteria and guidelines.
Although
we have identified specific criteria and guidelines for evaluating prospective
target businesses, it is possible that a target business with which we enter
into a business combination will not have all of these positive attributes. If
we consummate a business combination with a target that does not meet some or
all of these guidelines, such combination may not be as successful as a
combination with a business that does meet all of our general criteria and
guidelines. In addition, if we announce a prospective business combination with
a target that does not meet our general criteria and guidelines, a greater
number of stockholders may exercise their redemption rights, which may make it
difficult for us to meet any closing condition with a target business that
requires us to have a minimum net worth or a certain amount of cash. In
addition, if stockholder approval of the transaction is required by law, or we
decide to obtain stockholder approval for business or other legal reasons, it
may be more difficult for us to attain stockholder approval of our initial
business combination if the target business does not meet our general criteria
and guidelines. If we are unable to complete our initial business combination,
our public stockholders may only receive approximately $10.00 per share (or
approximately $9.97 per public share if the underwriters’ over-allotment option
is exercised in full) on our redemption, and our warrants will expire
worthless.
Unlike
many blank check companies, we are not required to acquire a target with a
valuation equal to a certain percentage of the amount held in the trust account.
Management's unrestricted flexibility in identifying and selecting a prospective
acquisition candidate, along with our management's financial interest in
consummating an initial business combination, may lead management to enter into
an acquisition agreement that is not in the best interest of our
stockholders.
Many
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 held in the trust account of the blank check company at the time of entry
into a definitive agreement for a business combination. Because we do not have
the requirement that a target business have a minimum fair market enterprise
value equal to a certain percentage of the net assets held in the trust account
at the time of our signing a definitive agreement in connection with our initial
business combination, we will have virtually unrestricted flexibility in
identifying and selecting a prospective acquisition candidate. Investors will be
relying on management's ability to identify business combinations, evaluate
their merits, conduct or monitor diligence and conduct negotiations. In
addition, we may consummate a business combination with a target whose
enterprise value is significantly less than the amount of money held in the
trust account, thereby resulting in our ability to use the remaining funds in
the trust account to make additional acquisitions without seeking stockholder
approval or providing redemption rights.
Management's
unrestricted flexibility in identifying and selecting a prospective acquisition
candidate, along with management's financial interest in consummating an initial
business combination, may lead management to enter into an acquisition agreement
that is not in the best interest of our stockholders, which would be the case if
the trading price of our shares of common stock after giving effect to such
business combination was less than the per-share trust liquidation value that
our stockholders would have received if we had dissolved without consummating a
business combination.
We
are not required to obtain an opinion from an independent investment banking
firm, and consequently, you may have no assurance from an independent source
that the price we are paying for the business is fair to our stockholders from a
financial point of view.
Unless we
consummate a business combination with an affiliated entity, we are not required
to obtain an opinion from an independent investment banking firm that the price
we are paying is fair to our stockholders from a financial point of view. If no
opinion is obtained, our stockholders will be relying on the judgment of our
board of directors, who will determine fair market value based on standards
generally accepted by the financial community. Such standards used will be
disclosed in our tender offer documents or proxy solicitation materials, as
applicable, related to our initial business combination.
27
We
may issue additional common or preferred shares to complete our initial business
combination or under an employee incentive plan after consummation of our
initial business combination, which would dilute the interest of our
stockholders and likely present other risks.
Our
amended and restated certificate of incorporation authorizes the issuance of up
to 250,000,000 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, there will be 224,095,238 (assuming that the underwriters
have not exercised their over-allotment option) authorized but unissued shares
of common stock available for issuance and not reserved for issuance upon
exercise of outstanding warrants. We may issue a substantial number of
additional shares of common or preferred stock to complete our initial business
combination or under an employee incentive plan after consummation of our
initial business combination. The issuance of additional shares of common or
preferred stock:
·
|
may
significantly dilute 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 our common
stock;
|
·
|
could
cause a change in control if a substantial number of common stock is
issued, which may affect, among other things, our ability to use our net
operating loss carry forwards, if any, and could result in the resignation
or removal of our present officers and directors;
and
|
·
|
may
adversely affect prevailing market prices for our units, common stock
and/or warrants.
|
Resources
could be wasted in researching acquisitions that are not consummated, which
could materially adversely affect subsequent attempts to locate and acquire or
merge with another business. If we are unable to complete our initial business
combination, our public stockholders may only receive approximately $10.00 per
share (or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full) on our redemption, and our warrants
will expire worthless.
We
anticipate that 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 others. If we
decide not to complete a specific initial business combination, the costs
incurred up to that point for the proposed transaction likely would not be
recoverable. Furthermore, if we reach an agreement relating to a specific target
business, we may fail to consummate our initial business combination 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 acquire or merge with another business.
In addition, in the event we seek stockholder approval of our business
combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our amended and restated
certificate of incorporation will permit the release to us from the trust
account amounts necessary to purchase up to 15% of the shares sold in this
offering, in the open market in a manner intended to comply with Rule 10b-18
under the Exchange Act, which provides a safe harbor for purchases made under
certain conditions, including with respect to timing, pricing and volume of
purchases. If such business combination is not consummated, these purchases
would have the effect of reducing the funds available in the trust account for
future business combinations. If we are unable to complete our initial business
combination, our public stockholders may only receive approximately $10.00 per
share (or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full) on our redemption, and our warrants
will expire worthless.
We
are dependent upon our officers and directors and their loss could adversely
affect our ability to operate.
Our
operations are dependent upon a relatively small group of individuals and, in
particular, our officers and directors. We believe that our success depends on
the continued service of our officers and directors, at least until we have
consummated a business combination. In addition, our officers and directors are
not required to commit any specified amount of time to our affairs and,
accordingly, will have conflicts of interest in allocating management time among
various business activities, including identifying potential business
combinations and monitoring the related due diligence. We do not have an
employment agreement with, or key-man insurance on the life of, any of our
directors or officers. The unexpected loss of the services of one or more of our
directors or officers could have a detrimental effect on us.
Our
ability to successfully effect our initial business combination and to be
successful thereafter will be totally dependent upon the efforts of our key
personnel, some of whom may join us following our initial business combination.
The loss of key personnel could negatively impact the operations and
profitability of our post-combination business.
Our
ability to successfully effect our initial business combination is dependent
upon the efforts of our key personnel. The role of our key personnel in the
target business, however, cannot presently be ascertained. Although some of our
key personnel may remain with the target business in senior management or
advisory positions following a business combination, it is likely that some or
all of the management of the target business will remain in place. While we
intend to closely scrutinize any individuals we engage after a business
combination, we cannot assure you that our assessment of these individuals will
prove to be correct. These individuals may be unfamiliar with the requirements
of operating a company regulated by the SEC, which could cause us to have to
expend time and resources helping them become familiar with such
requirements.
28
Our
key personnel may negotiate employment or consulting agreements with a target
business in connection with a particular business combination. These agreements
may provide for them to receive compensation following a business combination
and as a result, may cause them to have conflicts of interest in determining
whether a particular business combination is the most advantageous.
Our key
personnel may be able to remain with the company after the consummation of a
business combination only if they are able to negotiate employment or consulting
agreements in connection with the business combination. Such negotiations would
take place simultaneously with the negotiation of the business combination 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 combination. The personal and financial interests
of such individuals may influence their motivation in identifying and selecting
a target business. However, we believe the ability of such individuals to remain
with us after the consummation of a business combination will not be the
determining factor in our decision as to whether or not we will proceed with any
potential business combination. There is no certainty, however, that any of our
key personnel will remain with us after the consummation of a business
combination. We cannot assure you that any of our key personnel will remain in
senior management or advisory positions with us. The determination as to whether
any of our key personnel will remain with us will be made at the time of our
initial business combination.
We
may have a limited ability to assess the management of a prospective target
business and, as a result, may effect a business combination with a target
business whose management may not have the skills, qualifications or abilities
to manage a public company.
When
evaluating the desirability of effecting a business combination with a
prospective target business, our ability to assess the target business'
management may be limited due to a lack of time, resources or information. Our
assessment of the capabilities of the target's management, therefore, may prove
to be incorrect and such management may lack the skills, qualifications or
abilities we suspected. Should the target's management not possess the skills,
qualifications or abilities necessary to manage a public company, the operations
and profitability of the post-combination business may be negatively
impacted.
The
officers and directors of an acquisition candidate may resign upon consummation
of a business combination. The loss of an acquisition target's key personnel
could negatively impact the operations and profitability of our post-combination
business.
The role
of an acquisition candidate's key personnel upon the consummation of a business
combination cannot be ascertained at this time. Although we contemplate that
certain members of an acquisition candidate's management team will remain
associated with the acquisition candidate following a business combination, it
is possible that members of the management of an acquisition candidate will not
wish to remain in place.
Our
officers and directors will allocate their time to other businesses thereby
causing conflicts of interest in their determination as to how much time to
devote to our affairs. This conflict of interest could have a negative impact on
our ability to consummate a business combination.
Our
executive officers and directors are not required to, and will not, commit their
full time to our affairs, which may result in a conflict of interest in
allocating their time between our operations and the search for a business
combination on the one hand and their other businesses on the other hand. We do
not intend to have any full-time employees prior to the consummation of our
business combination. Each of our executive officers is engaged in several other
business endeavors for which he is entitled to substantial compensation and our
executive officers are not obligated to contribute any specific number of hours
per week to our affairs.
Our
independent directors also serve as officers and board members for other
entities. If our executive officers' and directors' other business affairs
require them to devote substantial amounts of time to such affairs in excess of
their current commitment levels, it could limit their ability to devote time to
our affairs which may have a negative impact on our ability to consummate our
business combination.
Our
officers and directors may in the future become affiliated with entities engaged
in business activities similar to those intended to be conducted by us and,
accordingly, may have conflicts of interest in allocating their time and
determining to which entity a particular business opportunity should be
presented.
Following
the completion of this offering and until we consummate our business
combination, we intend to engage in the business of identifying and combining
with one or more businesses. Our executive officers and directors may in the
future become, affiliated with entities that are engaged in a similar business.
Certain of our directors serve as officers and board members for other entities.
As a result, our directors may compete with us for attractive opportunities for
business combinations. In each case, our directors' existing directorships or
other responsibilities may give rise to contractual or fiduciary obligations
that take priority over any obligation owed to us.
Our
amended and restated certificate of incorporation will provide that the doctrine
of corporate opportunity, or any other analogous doctrine, will not apply
against us or any of our officers or directors or in circumstances that would
conflict with any fiduciary duties or contractual obligations they may have as
of the date of this prospectus. See "Management — Conflicts of Interest."
Accordingly, business opportunities that may be attractive to the entities
described above will not be presented to us unless such entities have declined
to accept such opportunities.
29
In
addition, our officers and directors may become involved with subsequent blank
check companies similar to our company, although they have agreed not to
participate in the formation of, or become an officer or director of, any blank
check company until we have entered into a definitive agreement regarding our
initial business combination or we have failed to complete our initial business
combination within 21 (or 24) months from the date of this prospectus. Our
directors may become aware of business opportunities which may be appropriate
for presentation to us and the other entities to which they owe certain
fiduciary duties. Accordingly, they may have conflicts of interest in
determining to which entity a particular business opportunity should be
presented. We cannot assure you that these conflicts will be resolved in our
favor or that a potential target business would not be presented to another
entity prior to its presentation to us.
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 or financial
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. In fact, we may enter
into a business combination with a target business that is affiliated with our
sponsor, our directors or officers, although we do not intend to do so. 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.
We
may engage in a business combination with one or more target businesses that
have relationships with entities that may be affiliated with our executive
officers, directors or existing holders which may raise potential conflicts of
interest.
In light
of the involvement of our sponsor, officers and directors with other entities,
we may decide to acquire one or more businesses affiliated with our sponsor,
officers and directors. Our directors also serve as officers and board members
for other entities. Such entities may compete with us for business combination
opportunities. Our sponsor, officers and directors are not currently aware of
any specific opportunities for us to consummate a business combination with any
entities with which they are affiliated, and there have been no preliminary
discussions concerning a business combination with any such entity or entities.
Although we will not be specifically focusing on, or targeting, any transaction
with any affiliated entities, we would pursue such a transaction if we
determined that such affiliated entity met our criteria for a business
combination as set forth in "Proposed Business — Effecting our initial business
combination — Selection of a target business and structuring of our initial
business combination" and such transaction was approved by a majority of our
disinterested directors. Despite our agreement to obtain an opinion from an
independent investment banking firm regarding the fairness to our stockholders
from a financial point of view of a business combination with one or more
domestic or international businesses affiliated with our executive officers,
directors or existing holders, potential conflicts of interest still may exist
and, as a result, the terms of the business combination may not be as
advantageous to our public stockholders as they would be absent any conflicts of
interest.
Since
our sponsor will lose its entire investment in us if a business combination is
not consummated 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
combination.
In
January 2011, our sponsor purchased an aggregate of 2,190,477 founder shares for
an aggregate purchase price of $25,000, or approximately $0.01 per share. The
founder shares include an aggregate of 285,715 shares subject to forfeiture to
the extent that the underwriters' over-allotment option is not exercised in
full. The founder shares will be worthless if we do not consummate an initial
business combination. In addition, our sponsor has committed to purchase an
aggregate of 4,000,000 sponsor warrants, each exercisable for one share of our
common stock at $11.50 per share, for a purchase price of $3.0 million, or $0.75
per warrant, that will also be worthless if we do not consummate a business
combination. In addition, the founder earn out shares (equal to 3.0% of our
issued and outstanding shares after this offering and the expiration of the
underwriters' over-allotment option) will be subject to forfeiture by our
sponsor in the event the last sales price of our stock does not equal or exceed
$12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period within 24 months following the closing of our initial
business combination. The personal and financial interests of our officers and
directors may influence their motivation in identifying and selecting a target
business combination, completing an initial business combination and influencing
the operation of the business following the initial business
combination.
We
may issue notes or other debt securities, or otherwise incur substantial debt,
to complete a business combination, which may adversely affect our leverage and
financial condition and thus negatively impact the value of our stockholders'
investment in us.
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 combination. The incurrence of
debt could have a variety of negative effects, including:
·
|
default
and foreclosure on our assets if our operating revenues after an initial
business combination are insufficient to repay our debt
obligations;
|
30
·
|
acceleration
of our obligations to repay the indebtedness even if we make all principal
and interest payments when due if we breach certain covenants that require
the maintenance of certain financial ratios or reserves 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;
|
·
|
our
inability to obtain necessary additional financing if the debt security
contains covenants restricting our ability to obtain such financing while
the debt 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.
|
We
may only be able to complete one business combination with the proceeds of this
offering, which will cause us to be solely dependent on a single business which
may have a limited number of products or services. This lack of diversification
may negatively impact our operations and profitability.
The net
proceeds from this offering will provide us with approximately $97.0 million (or
approximately $111.25 million if the underwriters' over-allotment option is
exercised in full) that we may use to complete a business combination (excluding
the $3.0 million, or $3.45 million if the over-allotment is exercised in full,
contingent fee being held in the trust account).
We may
effectuate an initial business combination with a single target business or
multiple target businesses simultaneously. However, we may not be able to
effectuate a business combination with 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. By consummating an
initial business combination with only a single entity, our lack of
diversification may subject us to numerous economic, competitive and regulatory
developments. Further, we would not be able to diversify our operations or
benefit from the possible spreading of risks or offsetting of losses, unlike
other entities which may have the resources to complete several business
combinations in different industries or different areas of a single industry.
Accordingly, the prospects for our success may be:
·
solely dependent upon the performance of a single business, property or asset,
or
·
dependent upon the development or market acceptance of a single or limited
number of products, processes or services.
This 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 an
initial business combination.
We
may attempt to simultaneously consummate business combinations with multiple
prospective targets, which may hinder our ability to consummate an initial
business combination and give rise to increased costs and risks that could
negatively impact our operations and profitability.
If we
determine to simultaneously acquire several businesses that are owned by
different sellers, we will need for each of such sellers to agree that our
purchase of its business is contingent on the simultaneous closings of the other
business combinations, which may make it more difficult for us, and delay our
ability, to complete the initial business combination. With multiple business
combinations, 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 operations and services or
products of the acquired companies in a single operating business. If we are
unable to adequately address these risks, it could negatively impact our
profitability and results of operations.
31
We
may attempt to consummate our initial business combination with a private
company about which little information is available, which may result in a
business combination with a company that is not as profitable as we suspected,
if at all.
In
pursuing our acquisition strategy, we may seek to effectuate our initial
business combination with a privately held company. By definition, very little
public information exists about private companies, and we could be required to
make our decision on whether to pursue a potential initial business combination
on the basis of limited information, which may result in a business combination
with a company that is not as profitable as we suspected, if at
all.
We
may not be able to maintain control of a target business after our initial
business combination. We cannot provide assurance that, upon loss of control of
a target business, new management will possess the skills, qualifications or
abilities necessary to profitably operate such business.
We may
structure a business combination to acquire less than 100% of the equity
interests or assets of a target business, but we will only consummate such
business combination if we (or our stockholders, if we are not the surviving
corporation) will become the controlling stockholder of the target or are
otherwise not required to register as an investment company under the Investment
Company Act. Even though we will own a controlling interest in the target, our
stockholders prior to the business combination may collectively own a minority
interest in the post business combination company, depending on valuations
ascribed to the target and us in the business combination transaction. In
addition, 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.
Unlike
many blank check companies, we do not have a specified maximum redemption
threshold. The absence of such a redemption threshold will make it easier for us
to consummate a business combination with which a substantial majority of our
stockholders do not agree.
Since we
have no specified maximum redemption threshold contained in our amended and
restated certificate of incorporation, our structure is different in this
respect from the structure that has been used by many blank check companies.
Many blank check companies would not be able to consummate a business
combination if the holders of the company's public shares voted against a
proposed business combination and elected to redeem or convert more than a
specified percentage of the shares sold in such company's initial public
offering, which percentage threshold has typically been between 19.99% and
39.99%. As a result, many blank check companies have been unable to complete
business combinations 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 combination. As a
result, we may be able to consummate a business combination even though a
substantial majority of our public stockholders do not agree with the
transaction and have redeemed their shares or, if we seek stockholder approval
of our initial business combination and do not conduct redemptions in connection
with our business combination pursuant to the tender offer rules, have entered
into privately negotiated agreements to sell their shares to us or our sponsor,
officers, directors, advisors or their affiliates. However, in no event will we
redeem our public shares in an amount that would cause our net tangible assets
to be less than $5,000,001. In such case, we would not proceed with the
redemption of our public shares and the related business combination, and
instead may search for an alternate business combination.
The
exercise price for the public warrants is higher than in many similar blank
check company offerings in the past, and, accordingly, the warrants are more
likely to expire worthless.
The
exercise price of the warrants is higher than is typical in many similar blank
check companies. Historically, the exercise price of a warrant was generally a
fraction of the purchase price of the units in the initial public offering. The
exercise price for our public warrants is $11.50 per share. As a result, the
warrants are less likely to ever be in the money and more likely to expire
worthless.
In
order to effectuate a business combination, blank check companies have, in the
recent past, amended various provisions of their charters and modified governing
instruments. We cannot assure you that we will not seek to amend our amended and
restated certificate of incorporation or governing instruments in a manner that
will make it easier for us to consummate a business combination that our
stockholders may not support.
In order
to effectuate a business combination, blank check companies have, in the recent
past, amended various provisions of their charters and modified governing
instruments. For example, blank check companies have amended the definition of
business combination, increased redemption thresholds and changed industry
focus. We cannot assure you that we will not seek to amend our charter or
governing instruments in order to effectuate our initial business
combination.
The
provisions of our amended and restated certificate of incorporation that relate
to our pre-business combination activity may be amended with the approval of 65%
of our stockholders, which is a lower amendment threshold than that of many
blank check companies. It may be easier for us, therefore, to amend our amended
and restated certificate of incorporation to facilitate the consummation of an
initial business combination that our stockholders may not support.
Many
blank check companies have a provision in their charter which prohibits the
amendment of certain of its provisions, including those which relate to a
company's pre-business combination activity, without approval by a certain
percentage of the company's stockholders. Typically, amendment of these
provisions requires approval by between 90% and 100% of the company's public
stockholders. Our amended and restated certificate of incorporation provides
that any of its provisions, including those related to pre-business combination
activity, may be amended if approved by 65% of our stockholders. Our sponsor,
who will beneficially own 16.0% of our common stock upon the closing of this
offering (assuming it does not purchase any units in this offering), will
participate in any vote to amend our amended and restated certificate of
incorporation and will have the discretion to vote in any manner they choose. As
a result, we may be able to amend the provisions of our amended and restated
certificate of incorporation which govern our pre-business combination behavior
more easily that many blank check companies, and this may increase our ability
to consummate a business combination with which you do not agree.
32
We
may be unable to obtain additional financing to complete our initial business
combination or to fund the operations and growth of a target business, which
could compel us to restructure or abandon a particular business combination. If
we are unable to complete our initial business combination, our public
stockholders may only receive approximately $10.00 per share (or approximately
$9.97 per public share if the underwriters’ over-allotment option is exercised
in full) on our redemption, and our warrants will expire worthless.
Although
we believe that the net proceeds of this offering, including the interest earned
on the proceeds held in the trust account that may be available to us for a
business combination, will be sufficient to allow us to consummate our initial
business combination, 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 our initial business combination, the depletion of
the available net proceeds in search of a target business, the obligation to
repurchase for cash a significant number of shares from stockholders who elect
redemption in connection with our initial business combination or the terms of
negotiated transactions to purchase shares in connection with our initial
business combination, we will be required to seek additional financing. We
cannot assure you that such financing will be available on acceptable terms, if
at all. The current economic environment has made it especially difficult for
companies to obtain acquisition financing. To the extent that additional
financing proves to be unavailable when needed to consummate our initial
business combination, we would be compelled to either restructure the
transaction or abandon that particular initial business combination and seek an
alternative target business candidate. If we are unable to complete our initial
business combination, our public stockholders may only receive approximately
$10.00 per share (or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full) on our redemption, and our warrants
will expire worthless. In addition, even if we do not need additional financing
to consummate our initial business combination, we may require such financing to
fund the operations or growth of the target business. The failure to secure
additional financing could have a material adverse effect on the continued
development or growth of the target business. None of our officers, directors or
stockholders is required to provide any financing to us in connection with or
after a business combination.
Our
sponsor controls a substantial interest in us and thus may exert a substantial
influence on actions requiring a stockholder vote, potentially in a manner that
you do not support.
Upon
closing of this offering, our sponsor will own 16.0% of our issued and
outstanding shares of common stock (assuming it does not purchase any units in
this offering. Accordingly, it may exert a substantial influence on actions
requiring a stockholder vote, potentially in a manner that you do not support,
including amendments to our amended and restated certificate of incorporation.
If our sponsor purchases units in this offering or if we or our sponsor purchase
any additional shares of common stock in the aftermarket or in privately
negotiated transactions, this would increase their control. Neither our sponsor
nor, to our knowledge, any of our officers or directors, has any current
intention to purchase additional securities, other than as disclosed in this
prospectus. Factors that would be considered in making such additional purchases
would include consideration of the current trading price of our common stock. In
addition, our board of directors, whose members were elected by our sponsor, is
and will be divided into three classes, each of which will generally serve for a
term of three 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 elect new
directors prior to the consummation of a business combination, in which case all
of the current directors will continue in office until at least the consummation
of the business combination. 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. Accordingly,
our sponsor will continue to exert control at least until the consummation of
our initial business combination.
Our
sponsor paid an aggregate of $25,000, or approximately $0.01 per founder share
and, accordingly, you will experience immediate and substantial dilution from
the purchase of our common stock.
The
difference between the public offering price per share (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 the other investors in
this offering. Our sponsor acquired the founder shares at a nominal price,
significantly contributing to this dilution. Upon closing of this offering, and
assuming no value is ascribed to the warrants included in the units, you and the
other public stockholders will incur an immediate and substantial dilution of
approximately 81.08% or $8.11 per share (the difference between the pro forma
net tangible book value per share of $1.89 and the initial offering price of
$10.00 per unit).
We
may amend the terms of the warrants in a manner that may be adverse to holders
with the approval by the holders of at least 65% of the then outstanding public
warrants.
Our
warrants will be issued in registered form under a warrant agreement between
[Transfer Agent], 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 at least 65% of the then outstanding public warrants to make
any change that adversely affects the interests of the registered holders.
Accordingly, we may amend the terms of the warrants in a manner adverse to a
holder if holders of at least 65% of the then outstanding public warrants
approve of such amendment. Although our ability to amend the terms of the
warrants with the consent of at least 65% of the then outstanding warrants is
unlimited, examples of such amendments could be amendments to, among other
things, increase the exercise price of the warrants, shorten the exercise period
or decrease the number of shares of our common stock purchasable upon exercise
of a warrant.
33
We
may redeem your unexpired warrants prior to their exercise at a time that is
disadvantageous to you, thereby making your warrants worthless.
We have
the ability to redeem outstanding warrants at any time after they become
exercisable and prior to their expiration, at a price of $0.01 per warrant,
provided that the last reported sales price of the common stock equals or
exceeds $17.50 per share for any 20 trading days within a 30 trading-day period
ending on the third business day prior to proper notice of such 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 under the Securities Act covering the shares of common
stock issuable upon exercise of the warrants and a current prospectus relating
to them is available. If and when the warrants become redeemable by us, we may
exercise our redemption right even if we are unable to register or qualify the
underlying securities for sale under all applicable state securities laws.
Redemption of the outstanding warrants could force you: (i) to exercise your
warrants and pay the exercise price therefor at a time when it may be
disadvantageous for you to do so, (ii) to sell your warrants at the then-current
market price when you might otherwise wish to hold your warrants or (iii) to
accept the nominal redemption price which, at the time the outstanding warrants
are called for redemption, is likely to be substantially less than the market
value of your warrants. None of the sponsor warrants will be redeemable by us so
long as they are held by members of the sponsor or their permitted
transferees.
Our
warrants may have an adverse effect on the market price of our common stock and
make it more difficult to effectuate a business combination.
We will
be issuing warrants to purchase 10,000,000 shares of our common stock (or up to
11,500,000 shares of common stock if the underwriters' over-allotment option is
exercised) as part of the units offered by this prospectus and, simultaneously
with the closing of this offering, we will be issuing in a private placement an
aggregate of 4,000,000 sponsor warrants, each exercisable to purchase one share
of common stock at $11.50 per share. In addition, if the sponsor makes any
working capital loans, it may convert those loans into up to an additional
666,667 sponsor warrants. To the extent we issue shares of common stock to
effectuate 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.
The
sponsor warrants are identical to the warrants sold as part of the units in this
offering except that, so long as they are held by our sponsor or its permitted
transferees, (i) they will not be redeemable by us, (ii) they (including the
common stock issuable upon exercise of these warrants) may not, subject to
certain limited exceptions, be transferred, assigned or sold by the sponsor
until 30 days after the completion of our initial business combination and (iii)
they may be exercised by the holders on a cashless basis.
The
determination of the offering price of our units and the size of this offering
is more arbitrary than the pricing of securities and size of an offering of an
operating company in a particular industry. You may have less assurance,
therefore, that the offering price of our units properly reflects the value of
such units than you would have in a typical offering of an operating
company.
Prior to
this offering there has been no public market for any of our securities. The
public offering price of the units and the terms of the warrants were negotiated
between us and the underwriters. In determining the size of this offering,
management held customary organizational meetings with representatives of the
underwriters, both prior to our inception and thereafter, with respect to the
state of capital markets, generally, and the amount the underwriters believed
they reasonably could raise on our behalf. Factors considered in determining the
size of this offering, prices and terms of the units, including the common stock
and warrants underlying the units, include:
·
|
the
history and prospects of companies whose principal business is the
acquisition of other companies;
|
·
|
prior
offerings of those companies;
|
·
|
our
prospects for acquiring an operating business at attractive
values;
|
·
|
a
review of debt to equity ratios in leveraged
transactions;
|
·
|
our
capital structure;
|
·
|
an
assessment of our management and their experience in identifying operating
companies;
|
·
|
general
conditions of the securities markets at the time of this offering;
and
|
·
|
other
factors as were deemed relevant.
|
34
Although
these factors were considered, the determination of our offering price is more
arbitrary than the pricing of securities of an operating company in a particular
industry since we have no historical operations or financial
results.
There
is currently no market for our securities and a market for our securities may
not develop, which would adversely affect the liquidity and price of our
securities.
There is
currently no market for our securities. Stockholders therefore have no access to
information about prior market history on which to base their investment
decision. Following this offering, the price of our securities may vary
significantly due to one or more potential business combinations and general
market or economic conditions. Furthermore, an active trading market for our
securities may never develop or, if developed, it may not be sustained. You may
be unable to sell your securities unless a market can be established and
sustained.
Because
we must furnish our stockholders with target business financial statements, we
may lose the ability to complete an otherwise advantageous initial business
combination with some prospective target businesses.
The
federal proxy rules require that a proxy statement with respect to a vote on a
business combination meeting certain financial significance tests include
historical and/or pro forma financial statement disclosure in periodic reports.
We will include the same financial statement disclosure in connection with our
tender offer documents, whether or not they are required under the tender offer
rules. These financial statements must be prepared in accordance with, or be
reconciled to, accounting principles generally accepted in the United States of
America, 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 some targets may be
unable to provide such statements in time for us to disclose such statements in
accordance with federal proxy rules and consummate our initial business
combination within our 21 (or 24) month time frame.
If
you are not an institutional investor, you may purchase our securities in this
offering only if you reside within certain states in which we will apply to have
the securities registered. Although resales of our securities are exempt from
state registration requirements, state securities commissioners who view blank
check offerings unfavorably may attempt to hinder resales in their
states.
We have
applied to register our securities, or will rely on an exemption from
registration, to offer and sell the units to retail customers only in Colorado,
Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana,
Louisiana, Minnesota, Missouri, New York, Rhode Island, South Carolina, South
Dakota, Utah, Virginia, Wisconsin, and Wyoming. In the states where we have
applied to have the units registered for sale, we will not sell the units to
retail customers in these states unless and until such registration is
effective. If you are not an "institutional investor," you must be a resident of
one of these jurisdictions to purchase our securities in the offering. We may
offer and sell the units to institutional investors in every state except Idaho
in this offering pursuant to an exemption provided for sales to these investors
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. Under the National Securities Markets Improvement Act of 1996, states
are pre-empted from regulating transactions in certain categories of securities
that are designated as “covered securities.” Since we will file periodic and
annual reports under the Securities Exchange Act of 1934, our securities will be
considered covered securities. Therefore, the resale of the units and, once they
become separately transferable, the common stock and warrants comprising the
units are exempt from state registration requirements. However, each state
retains 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
state. For a complete discussion of the Blue Sky state securities laws and
registrations affecting this offering, please see the section entitled
"Underwriting — State Blue Sky Information" herein
Compliance
obligations under the Sarbanes-Oxley Act of 2002 may make it more difficult for
us to effectuate a business combination, require substantial financial and
management resources, and increase the time and costs of completing an
acquisition.
Section
404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, 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. The fact that we are a blank
check company makes compliance with the requirements of the Sarbanes-Oxley Act
particularly burdensome on us as compared to all public companies because a
target company with which we seek to complete a business combination may not be
in compliance with the provisions of the Sarbanes-Oxley Act regarding adequacy
of its 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.
35
Provisions
in our amended and restated certificate of incorporation 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 contains provisions that may
discourage unsolicited takeover proposals that stockholders may consider to be
in their best interests. These provisions include a staggered board
of directors and the ability of the board of directors to designate the terms of
and issue new series of preferred shares, which 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.
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.
36
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
statements contained in this prospectus that are not purely historical are
forward-looking statements. Our forward-looking statements include,
but are not limited to, statements regarding our or our management's
expectations, hopes, beliefs, intentions or strategies regarding the
future. In addition, any statements that refer to projections,
forecasts or other characterizations of future events or circumstances,
including any underlying assumptions, are forward-looking
statements. The words "anticipate," "believe," "continue," "could,"
"estimate," "expect," "intends," "may," "might," "plan," "possible,"
"potential," "predict," "project," "should," "would" and similar expressions may
identify forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking. Forward-looking
statements in this prospectus may include, for example, statements
about:
|
·
|
our
ability to complete our initial business
combination;
|
|
·
|
our
success in retaining or recruiting, or changes required in, our officers,
key employees or directors following our initial business
combination;
|
|
·
|
our
officers and directors allocating their time to other businesses and
potentially having conflicts of interest with our business or in approving
our initial business combination, as a result of which they would then
receive expense reimbursements;
|
|
·
|
our
potential ability to obtain additional financing to complete our initial
business combination;
|
|
·
|
our
pool of prospective target
businesses;
|
|
·
|
the
ability of our officers and directors to generate a number of potential
investment opportunities;
|
|
·
|
our
public securities' potential liquidity and
trading;
|
|
·
|
the
lack of a market for our
securities;
|
|
·
|
the
use of proceeds not held in the trust account or available to us from
interest income on the trust account balance;
or
|
|
·
|
our
financial performance following this
offering.
|
The
forward-looking statements contained in this prospectus are based on our current
expectations and beliefs concerning future developments and their potential
effects on us. There can be no assurance that future developments
affecting us will be those that we have anticipated. These
forward-looking statements involve a number of risks, uncertainties (some of
which are beyond our control) or other assumptions that may cause actual results
or performance to be materially different from those expressed or implied by
these forward- looking statements. These risks and uncertainties
include, but are not limited to, those factors described under the heading "Risk
Factors" beginning on page 18. Should one or more of these risks or
uncertainties materialize, or should any of our assumptions prove incorrect,
actual results may vary in material respects from those projected in these
forward-looking statements. We undertake no obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required under applicable
securities laws.
37
USE
OF PROCEEDS
We are
offering 10,000,000 units at an offering price of $10.00 per unit. We
estimate that the net proceeds of this offering together with the funds we will
receive from the sale of the sponsor warrants (all of which will be deposited
into the trust account) will be used 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)
|
$ | 100,000,000 | $ | 115,000,000 | ||||
Proceeds
from private placement
|
3,000,000 | 3,000,000 | ||||||
Total
gross proceeds
|
$ | 103,000,000 | $ | 118,000,000 | ||||
Estimated
offering expenses (2)
|
||||||||
Underwriting
commissions (2% of gross proceeds from units offered to public, excluding
deferred portion)(3)
|
$ | 2,000,000 | $ | 2,300,000 | ||||
Legal
fees and expenses
|
250,000 | 250,000 | ||||||
Printing
and engraving expenses
|
32,000 | 32,000 | ||||||
Accounting
fees and expenses
|
50,000 | 50,000 | ||||||
SEC/FINRA
expenses
|
25,352 | 25,352 | ||||||
Blue
Sky fees and expenses
|
40,000 | 40,000 | ||||||
Miscellaneous
expenses
|
2,648 | 2,648 | ||||||
Total
offering expenses
|
$ | 2,400,000 | $ | 2,700,000 | ||||
Proceeds
after offering expenses
|
$ | 100,600,000 | $ | 115,300,000 | ||||
Held
in trust account
|
100,000,000 | 114,700,000 | ||||||
%
of public offering proceeds held in trust
|
100.00 | % | 99.74 | % | ||||
Not
held in trust account
|
$ | 600,000 | $ | 600,000 |
The
following table shows the use of the $600,000 of net proceeds not held in the
trust account and up to an additional $1.25 million, subject to
proportionate adjustment in the event the size of the offering changes as a
result of the underwriters’ exercise of any portion of the over-allotment option
or we otherwise decide to make such a change prior to the effectiveness of the
registration statement of which this prospectus forms a part, of interest earned
on our trust account (net of income and franchise taxes payable) that may be
released to us to cover operating expenses (4).
Amount
|
Percentage
|
|||||||
Use
of net proceeds not held in trust
|
||||||||
Legal,
accounting, due diligence, travel, and other expenses in connection with
any business combination (5)
|
$ | 1,100,000 | 59.46 | % | ||||
Legal
and accounting fees related to regulatory reporting
obligations
|
150,000 | 8.11 | % | |||||
Administrative
services and support payable to our sponsor ($7,500 per month for up to 24
months)
|
180,000 | 9.73 | % | |||||
Printing
|
40,000 | 2.16 | % | |||||
Consulting
and travel for search for business combination target
|
40,000 | 2.16 | % | |||||
Directors’
and officers’ insurance
|
100,000 | 5.41 | % | |||||
Other
miscellaneous expenses (6)
|
240,000 | 12.97 | % | |||||
Total
|
$ | 1,850,000 | 100.00 | % |
38
(1)
|
Includes
amounts payable to public stockholders who properly redeem their shares in
connection with our successful consummation of our initial business
combination.
|
(2)
|
In
addition, a portion of the offering expenses have been paid from the
proceeds of a $75,000 loan from our sponsor, as described in this
prospectus. This loan will be repaid upon consummation of this
offering out of the $400,000 of offering proceeds that has been allocated
for the payment of offering expenses other than underwriting commissions,
if possible. In the event that offering expenses are less than
set forth in this table, any such amounts will be used for post-closing
working capital expenses.
|
(3)
|
The
underwriters have agreed to defer approximately $3.0 million of their
underwriting commissions (or approximately $3.45 million if the
underwriters' over-allotment option is exercised in full), which equals
3.0% of the gross proceeds from the units offered to the public, until
consummation of initial business combination. Upon consummation
of our initial business combination, approximately $3.0 million, which
constitutes the underwriters' deferred commissions (or approximately $3.45
million if the underwriters' over-allotment option is exercised in full)
will be paid to the underwriters from the funds held in the trust account,
and the remaining funds will be released to us and can be used to pay all
or a portion of the purchase price of the business or businesses with
which our initial business combination occurs or for general corporate
purposes, including payment of principal or interest on indebtedness
incurred in connection with our initial business combination, to fund the
purchases of other companies or for working
capital.
|
(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 combination based upon the level of complexity of
such business combination. 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. The amount of interest available to us from
the trust account may be less than $1.25 million as a result of the
current interest rate environment.
|
(5)
|
Includes
estimated amounts that may also be used in connection with our initial
business combination to fund a "no shop" provision and commitment fees for
financing.
|
(6)
|
Includes
up to $180,000 ($7,500 per month) which may be paid to Sachs Capital Group
LP, an affiliate of our sponsor, or our sponsor, for additional overhead
expenses incurred on our behalf.
|
A total
of approximately $100 million (or approximately $114.7 million if the
underwriters' over- allotment option is exercised in full) of the net proceeds
from this offering and the sale of the sponsor warrants described in this
prospectus, including approximately $3.0 million (or approximately $3.45 million
if the underwriters' over-allotment option is exercised in full) of deferred
underwriting commissions, will be placed in a trust account with [Transfer
Agent] acting as trustee and will be invested only 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. Except for a portion of the interest income that may be released
to us to pay any income and franchise taxes and to fund our working capital
requirements, as discussed below, and any amounts necessary to purchase up to
15% of our public shares if we seek stockholder approval of our business
combination as will be permitted under our amended and restated certificate of
incorporation, none of the funds held in the trust account will be released,
subject to the requirements of law, until the earlier of: (i) the completion of
our initial business combination or (ii) the redemption of our public shares if
we are unable to consummate a business combination within 21 (or 24) months from
the date of this prospectus.
We may
increase the initial amount held in the trust account from approximately $10.00
per unit prior to the effectiveness of the registration statement of which this
prospectus forms a part. In such case, we expect that the increase
would be funded by an increase in the amount of the deferral of the underwriting
commissions payable in connection with this offering, the purchase of warrants
by the underwriters and/or an increase in the number of sponsor warrants to be
purchased by our sponsor at a price of $0.75 per warrant and/or a reduction from
$600,000 of the amount initially available to us for working capital that is not
held in the trust account on an equal basis. Public stockholders
would own a smaller percentage of our outstanding common stock on a fully
diluted basis to the extent that our sponsor purchases additional
warrants. We do not intend to reduce the initial amount to be held in
the trust account. Public stockholders would own a smaller percentage
of our outstanding common stock on a fully diluted basis to the extent that our
sponsor purchases additional warrants. We do not intend to reduce the
initial amount to be held in the trust account.
39
The net
proceeds held in the trust account may be used as consideration to pay the
sellers of a target business with which we ultimately complete a business
combination. If our initial business combination is paid for using
stock or debt securities, or not all of the funds released from the trust
account are used for payment of the purchase price in connection with our
business combination, we may apply the cash released from the trust account that
is not applied to the purchase price for general corporate purposes, including
for maintenance or expansion of operations of acquired businesses, the payment
of principal or interest due on indebtedness incurred in consummating the
initial business combination, to fund the purchase of other companies or for
working capital.
We
believe that amounts not held in trust, as well as the interest income of up to
$1.25 million, subject to proportionate adjustment in the event the size of the
offering changes as a result of the underwriters' exercise of any portion of the
over-allotment option or we otherwise decided to make such a change prior to the
effectiveness of the registration statement of which this prospectus forms a
part, earned on the trust account balance (net of franchise and income taxes
payable) that may be released to fund our working capital requirements will be
sufficient to pay the costs and expenses to which such proceeds are
allocated. This belief is based on the fact that while we may begin
preliminary due diligence of a target business in connection with an indication
of interest, we intend to undertake in-depth due diligence, depending on the
circumstances of the relevant prospective acquisition, only after we have
negotiated and signed a letter of intent or other preliminary agreement that
addresses the terms of a business combination. However, if our
estimate of the costs of undertaking in-depth due diligence and negotiating a
business combination is less than the actual amount necessary to do so, or the
amount of interest available to use from the trust account is less than $1.25
million as a result of the current interest rate environment, we may be required
to raise additional capital, the amount, availability and cost of which is
currently unascertainable. In this event, we could seek such
additional capital through loans or additional investments from members of our
management team, but such members of our management team are not under any
obligation to advance funds to, or invest in, us. If the underwriters
exercise their over-allotment option or the size of this offering is increased,
the maximum amount of interest income we may withdraw from the trust account
will proportionately increase (for example, if the underwriters’ over-allotment
option is exercised in full, the size of the offering will increase by 15%, and
the maximum amount of interest income we may withdraw from the trust account
will increase to approximately $1.44 million). In addition, if the
size of this offering is decreased, the maximum amount of interest income we may
withdraw from the trust account will proportionately decrease. We
will use any proportionate increase in interest income to cover our working
capital expenses. While we currently do not know what our future
working capital expenses will be and while they will not necessarily be
proportionate to the size of the offering, we believe that any additional
interest income released to us would facilitate our ability to finance the
exploration and consideration of a greater number of potential acquisition
targets.
Commencing
on the date that our securities are first quoted on the OTCBB, we have agreed to
pay Sachs Capital Group LP, an entity beneficially owned and controlled by
Gregory H. Sachs, our Chairman, Chief Executive Officer and President, a total
of $7,500 per month for office space, administrative services and secretarial
support. This arrangement is being agreed to by Sachs Capital Group
LP for our benefit and is not intended to provide Sachs Capital Group LP (or Mr.
Sachs) compensation in lieu of salary or other remuneration. We
believe that such fees are at least as favorable as we could have obtained from
an unaffiliated person. Upon completion of our initial business
combination or our liquidation, we will cease paying these monthly
fees.
As of the
date of this prospectus, our sponsor has loaned to us a total of $75,000 to be
used for a portion of the expenses of this offering. These loans are
non-interest bearing, unsecured and are due at the earlier of December 30, 2011
or the closing of this offering. The loan will be repaid upon the
closing of this offering out of the $400,000 of offering proceeds that has been
allocated to the payment of offering expenses.
In
addition, in order to finance transaction costs in connection with an intended
initial business combination, our sponsor or an affiliate of our sponsor or
certain of our officers and directors may, but are not obligated to, loan us
funds as may be required. If we consummate an initial business
combination, we would repay such loaned amounts. In the event that
the initial business combination does not close, we may use a portion of the
working capital held outside the trust account to repay such loaned amounts but
no proceeds from our trust account would be used to repay such loaned
amounts. Up to $500,000 of such loans may be convertible into
warrants of the post business combination entity at a price of $0.75 per warrant
at the option of the lender. The warrants would be identical to the
sponsor warrants. The terms of such loans by our officers and
directors, if any, have not been determined and no written agreements exist with
respect to such loans.
Unlike
many blank check companies, if we seek stockholder approval of our initial
business combination and we do not conduct redemptions in connection with our
business combination pursuant to the tender offer rules, prior to the
consummation of a business combination, our amended and restated certificate of
incorporation will permit the release to us from the trust account of amounts
necessary to purchase up to 15% of the shares sold in this offering (1,500,000
shares, or 1,725,000 shares if the underwriters' over-allotment option is
exercised in full) at any time commencing after the filing of a preliminary
proxy statement for our initial business combination and ending on the date of
the stockholder meeting to approve the initial business
combination. Purchases will be made only in open market transactions
at times when we are not in possession of any material non-public information
and may not be made during a restricted period under Regulation M under the
Exchange Act. It is intended that purchases will comply with Rule
10b-18 under the Exchange Act, which provides a safe harbor for purchases made
under certain conditions, including with respect to timing, pricing and volume
of purchases. If the conditions of Rule 10b-18, as in effect at the
time we wish to make such purchases, are not satisfied, it is likely that we
will not make such purchases. Any purchases we make will be at prices
(inclusive of commissions) not to exceed the per-share amount then held in the
trust account (approximately $10.00 per share or approximately $9.97 per share
if the underwriters' over-allotment option is exercised in full). We
can purchase any or all of the 1,500,000 shares (or 1,725,000 shares if the
underwriters' over-allotment option is exercised in full) we are entitled to
purchase. It will be entirely in our discretion as to how many shares
are purchased. Purchasing decisions will be made based on various
factors, including the then current market price of our common stock and the
terms of the proposed business combination. All shares purchased by
us will be immediately cancelled. Such open market purchases, if any,
would be conducted by us to minimize any disparity between the then current
market price of our common stock and the per-share amount held in the trust
account. A market price below the per-share trust amount could
provide an incentive for purchasers to buy our shares after the filing of our
preliminary proxy statement at a discount to the per- share amount held in the
trust account for the sole purpose of voting against our initial business
combination and exercising redemption rights for the full per share amount held
in the trust account. Such trading activity could enable such
investors to block a business combination by making it difficult for us to
obtain the approval of such business combination by the vote of a majority of
our outstanding shares of common stock.
40
If we
seek stockholder approval of our initial business combination and we do not
conduct redemptions in connection with our business combination pursuant to the
tender offer rules, we may enter into privately negotiated transactions to
purchase public shares from stockholders following consummation of the initial
business combination with proceeds released to us from the trust account
immediately following consummation of the initial business
combination. Our sponsor, directors, officers, advisors or their
affiliates may also purchase shares in privately negotiated transactions either
prior to or following the consummation of our initial business
combination. Neither we nor our directors, officers, advisors or
their affiliates will make any such purchases when we or they are in possession
of any material non-public information not disclosed to the
seller. Although we do not currently anticipate paying any premium
purchase price for such public shares, in the event we do, the payment of a
premium may not be in the best interest of those stockholders not receiving any
such additional consideration. In addition, the payment of a premium
by us after the consummation of our initial business combination may not be in
the best interest of the remaining stockholders who do not redeem their
shares. Such stockholders will experience a reduction in book value
per share compared to the value received by stockholders that have their shares
purchased by us at a premium. Except for the limitations described
above on use of trust proceeds released to us prior to consummating our initial
business combination, there is no limit on the amount of shares that could be
acquired by us or our affiliates, or the price we or they may pay, if we hold a
stockholder vote.
In no
event will we redeem our public shares in an amount that would cause our net
tangible assets to be less than $5,000,001. In such case, we would
not proceed with the redemption of our public shares or the business
combination, and instead may search for an alternate business
combination.
A public
stockholder will be entitled to receive funds from the trust account only upon
the earlier to occur of: (i) our consummation of an initial business
combination, and then only in connection with those shares of our common stock
that such stockholder properly elected to redeem, subject to the limitations
described herein or (ii) the redemption of our public shares if we are unable to
consummate an initial business combination within 21 (or 24) months following
the date of this prospectus, subject to applicable law and as further described
herein. 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 agreed to waive its redemption rights with respect to its founder
shares and public shares in connection with the consummation of a business
combination. In addition, our sponsor has agreed to waive its
redemption rights with respect to its founder shares if we fail to consummate a
business combination within 21 (or 24) months from the closing of this
offering. However, if our sponsor or any of our officers, directors
or affiliates acquires public shares in or after this offering, they will be
entitled to redemption rights with respect to such public shares if we fail to
consummate a business combination within the required time
period.
41
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 an initial business
combination. 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 an initial business
combination. The payment of any cash dividends subsequent to an
initial business combination will be within the discretion of our board of
directors at such time. 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 immediately prior to the consummation of the offering in such amount as
to maintain our sponsors’ ownership at 16.0% of the issued and outstanding
shares of our common stock upon the consummation of this
offering. Further, if we incur any indebtedness in connection with a
business combination, our ability to declare dividends may be limited by
restrictive covenants we may agree to in connection therewith.
42
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 or the sponsor warrants, 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. Such
calculation does not reflect any dilution associated with the sale and exercise
of warrants, including the sponsor warrants, which would cause the actual
dilution to the public stockholders to be higher, particularly where a cashless
exercise is utilized. In addition, such calculation does not reflect
any dilution associated with purchases we may make prior to the consummation of
our initial business combination of up to 15% of the shares sold in this
offering using the trust proceeds. 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 redeemed for cash), by the number of outstanding shares of our
common stock.
At
January 28, 2011, our net tangible book value was a deficiency of $(22,500), or
approximately $(0.01) per share of common stock. After giving effect
to the sale of 10,000,000 shares of common stock included in the units we are
offering by this prospectus, the sale of the sponsor warrants and the deduction
of underwriting commissions and estimated expenses of this offering, our pro
forma net tangible book value at January 28, 2011 would have been $5,000,010 or
$1.89 per share, representing an immediate increase in net tangible book (as
decreased by the value of the approximately 9,262,499 shares of common stock
that may be redeemed for cash and assuming no exercise of the underwriters'
over-allotment option) value of $8.12 per share to sponsor as of the date of
this prospectus and an immediate dilution of $10.00 per share or 100.0% to our
public stockholders not exercising their redemption rights.
The
following table illustrates the dilution to the public stockholders on a
per-share basis, assuming no value is attributed to the warrants included in the
units or the sponsor warrants:
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 9,262,499 because holders of up to approximately 92.6% of our public
shares may redeem their shares for a pro rata share of the aggregate amount then
on deposit in the trust account at a per share redemption price equal to the
amount in the trust account as set forth in our tender offer or proxy materials
(initially anticipated to be the aggregate amount held in trust two days prior
to the commencement of our tender offer or stockholders meeting, including
interest less franchise and income taxes payable), divided by the number of
shares of common stock sold in this offering.
Public
offering price
|
$
|
10.00
|
||||
Net
tangible book value before this offering
|
(0.01
|
) |
|
|||
Increase
attributable to public stockholders
|
8.12
|
|||||
Decrease
attributable to public shares subject to redemption
|
(10.00
|
) | ||||
Pro
forma net tangible book value after this offering and the sale of the
sponsor warrants
|
1.89
|
|||||
Dilution
to public stockholders
|
$
|
8.11
|
The
following table sets forth information with respect to our sponsor and the
public stockholders:
Shares Purchased
|
Total Consideration
|
Average
Price per
|
||||||||||||||||||
Number
|
Percentage
|
Amount
|
Percentage
|
Share
|
||||||||||||||||
Sponsor
|
1,904,762 | 16.0 | % | $ | 25,000 | 0.02 | % | $ | 0.01 | |||||||||||
Public
Stockholders
|
10,000,000 | 84.0 | % | 100,000,000 | 99.98 | % | $ | 10.00 | ||||||||||||
11,904,762 | 100.0 | % | $ | 100,025,000 | 100.0 | % | $ | 8.40 |
43
The Pro
forma net tangible book value per share after the offering is calculated as
follows:
Numerator:
|
||||
Net
tangible book value before this offering
|
$ | (22,500 | ) | |
Proceeds
from this offering, net of expenses
|
97,600,000 | |||
Proceeds
from the sale of sponsor warrants
|
3,000,000 | |||
Offering
costs excluded from net tangible book value before this
offering
|
47,500 | |||
Less:
deferred underwriters’ commissions payable
|
(3,000,000 | ) | ||
Less:
amount of common stock subject to redemption to maintain net tangible
assets of $5,000,001
|
(92,624,990 | ) | ||
$ | 5,000,010 | |||
Denominator:
|
||||
Shares
of common stock outstanding prior to this offering
|
2,190,477 | |||
Shares
forfeited if over-allotment is not exercised
|
(285,715 | ) | ||
Shares
of common stock included in the units offered
|
10,000,000 | |||
Less:
shares subject to redemption to maintain net tangible assets of
$5,000,001
|
(9,262,499 | ) | ||
2,642,263 |
44
CAPITALIZATION
The
following table sets forth our capitalization at January 28, 2011 and as
adjusted to give effect to the filing of our amended and restated certificate of
incorporation, the sale of our units and the sponsor warrants and the
application of the estimated net proceeds derived from the sale of such
securities:
January 28, 2011
|
||||||||
Actual
|
As Adjusted(1)
|
|||||||
Deferred
underwriting commissions
|
$ | — | $ | 3,000,000 | ||||
Notes
payable to affiliate(2)
|
75,000 | — | ||||||
Common
stock, subject to redemption(3)
|
— | 92,624,990 | ||||||
Stockholder’s
equity (deficit):
|
||||||||
Preferred
stock, $0.0001 par value, 1,000,000 shares authorized; none issued or
outstanding
|
— | — | ||||||
Common
stock, $0.0001 par value, 100,000,000 shares authorized; 2,190,477 shares
issued and outstanding; 100,000,000 shares authorized; 11,904,762 shares
issued and outstanding, as adjusted
|
219 | 1,190 | (4) | |||||
Additional
paid-in capital
|
24,781 | 4,998,820 | ||||||
Deficit
accumulated during the development stage
|
- | - | ||||||
Total
stockholder’s equity
|
25,000 | 5,000,010 | ||||||
Total
capitalization
|
$ | 100,000 | $ | 100,625,000 |
(1)
|
Includes
the $3.0 million we will receive from the sale of the sponsor
warrants.
|
(2)
|
Note
payable to affiliate is a promissory note issued in the amount of $75,000
in the aggregate to our sponsor. The note is non-interest
bearing and is payable on the earlier of December 30, 2011 or the
consummation of this offering.
|
(3)
|
Upon
the consummation of our initial business combination, we will provide our
stockholders with the opportunity to redeem their public shares for cash
equal to their pro rata share of the aggregate amount then on deposit in
the trust account, including interest less franchise and income taxes
payable, subject to the limitations described herein whereby our net
tangible assets will be maintained at a minimum of
$5,000,001.
|
(4)
|
Assumes
the over-allotment option has not been exercised and an aggregate of
285,715 founder shares held by our sponsor has been forfeited, but no
forfeiture of the founder earn out
shares.
|
45
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND
RESULTS OF OPERATIONS
Overview
We are a
blank check company formed for the purpose of effecting a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or similar business
combination with one or more businesses. We have not identified any acquisition
target and we have not, nor has anyone on our behalf, initiated any discussions,
research or other measures, directly or indirectly, with respect to identifying
any acquisition target. We intend to effectuate our initial business combination
using cash from the proceeds of this offering and the private placement of the
sponsor warrants, our capital stock, debt or a combination of cash, stock and
debt.
The
issuance of additional shares of our stock in a business
combination:
|
·
|
may
significantly dilute 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 our common
stock;
|
|
·
|
could
cause a change in control if a substantial number of shares of our common
stock is issued, which may affect, among other things, our ability to use
our net operating loss carry forwards, if any, and could result in the
resignation or removal of our present officers and
directors;
|
|
·
|
may
have the effect of delaying or preventing a change of control of us by
diluting the stock ownership or voting rights or a person seeking to
obtain control of us; and
|
|
·
|
may
adversely affect prevailing market prices for our common stock and/or
warrants.
|
Similarly, if we issue debt securities, it could result in:
|
·
|
default
and foreclosure on our assets if our operating revenues after an initial
business combination are insufficient to repay our debt
obligations;
|
|
·
|
acceleration
of our obligations to repay the indebtedness even if we make all principal
and interest payments when due if we breach certain covenants that require
the maintenance of certain financial ratios or reserves 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;
|
|
·
|
our
inability to obtain necessary additional financing if the debt security
contains covenants restricting our ability to obtain such financing while
the debt 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.
|
As
indicated in the accompanying financial statements, at January 28, 2011, we had
$62,500 in cash and deferred offering costs of $47,500. Further, we expect to
continue to incur significant costs in the pursuit of our acquisition plans. We
cannot assure you that our plans to raise capital or to consummate our initial
business combination will be successful.
Results
of Operations and Known Trends or Future Events
We have
neither engaged in any operations nor generated any revenues to
date. Our only activities since inception have been organizational
activities and those necessary to prepare for this
offering. Following this offering, we will not generate any operating
revenues until after completion of our initial business
combination. We will generate non-operating income in the form of
interest income on cash and cash equivalents after this
offering. There has been no significant change in our financial or
trading position and no material adverse change has occurred since the date of
our audited financial statements. 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.
46
Liquidity
and Capital Resources
Our
liquidity needs have been satisfied to date through receipt of $25,000 from the
sale of the founder shares to our sponsor and a loan from our sponsor in the
amount of $75,000. We estimate that the net proceeds from: (i) the sale of
the units in this offering, after deducting offering expenses of approximately
$400,000, but including deferred underwriting commissions of approximately
$3.0 million (or approximately $3.45 million if the underwriters’
over-allotment option is exercised in full), and (ii) the sale of the
sponsor warrants for a purchase price of $3.0 million, will be
approximately $100.6 million (or approximately $115.3 million if the
underwriters’ over-allotment option is exercised in full). Approximately
$100.0 million (or approximately $114.7 million if the underwriters’
over-allotment option is exercised in full), will be held in the trust account,
which includes approximately $3.0 million (or approximately
$3.45 million if the underwriters’ over-allotment option is exercised in
full) of deferred underwriting commissions. The remaining $600,000 will not be
held in the trust account. In the event that our offering expenses exceed our
estimate of $400,000, we may fund such excess with funds from the $600,000 not
to be held in the trust account. In such case, the amount of funds we intend to
be held outside the trust account would decrease by a corresponding amount.
Conversely, in the event that the offering expenses are less than our estimate
of $400,000, the amount of funds we intend to be held outside the trust account
would increase by a corresponding amount.
We intend
to use substantially all of the funds held in the trust account, including any
amounts representing interest earned on the trust account (net of franchise and
income taxes payable and deferred underwriting commissions) to consummate our
initial business combination. We may use interest earned on the trust account to
pay franchise taxes and income taxes. We estimate our annual franchise tax
obligations, based on the number of shares of our common stock authorized and
outstanding after the completion of this offering to be $180,000. Our annual
income tax obligations will depend on the amount of interest and other income
earned on the amounts held in the trust account. To the extent that our capital
stock or debt is used, in whole or in part, as consideration to consummate our
initial business combination, 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.
Prior to
the consummation of our initial business combination, we will have available to
us the $600,000 of proceeds held outside the trust account and up to
$1.25 million, subject to adjustment as described herein, in interest
income on the balance of the trust account (net of franchise and income taxes
payable) that will be released to us to fund our working capital requirements.
We will use these funds to identify and evaluate target businesses, perform
business due diligence on prospective target businesses, travel to and from the
offices, plants or similar locations of prospective target businesses or their
representatives or owners, review corporate documents and material agreements of
prospective target businesses, and structure, negotiate and consummate a
business combination. If the underwriters exercise their over-allotment option
or the size of this offering is increased, the maximum amount of interest income
we may withdraw from the trust account will proportionately
increase. In addition, if the size of this offering is decreased, the
maximum amount of interest income we may withdraw from the trust account will
proportionally decrease.
In
addition, in order to finance transaction costs in connection with an intended
initial business combination, our sponsor or an affiliate of our sponsor or
certain of our officers and directors may, but are not obligated to, loan us
funds as may be required. If we consummate an initial business combination, we
would repay such loaned amounts. In the event that the initial business
combination does not close, we may use a portion of the working capital held
outside the trust account to repay such loaned amounts but no proceeds from our
trust account would be used for such repayment, other than the interest on such
proceeds that may be released to us for working capital purposes. Up to $500,000
of such loans may be convertible into warrants of the post business combination
entity at a price of $0.75 per warrant at the option of the lender. The warrants
would be identical to the sponsor warrants. The terms of such loans by our
officers and directors, if any, have not been determined and no written
agreements exist with respect to such loans.
We expect
our primary liquidity requirements during that period to include approximately
$1,100,000 million for legal, accounting, due diligence, travel and other
expenses associated with structuring, negotiating and documenting successful
business combinations; $7,500 per month for up to 24 months for office
space, administrative services and support payable to Sachs Capital Group LP, an
entity beneficially owned and controlled by Mr. Sachs, our Chairman, Chief
Executive Officer and President; $150,000 for legal and accounting fees related
to regulatory reporting requirements; $40,000 for printing; $40,000 for
consulting and travel for the search for a business combination target;
approximately $100,000 that will be used to purchase directors’ and officers’
insurance and approximately $240,000 for general working capital that will be
used for miscellaneous expenses, including additional overhead expenses incurred
by Sachs Capital Group LP (up to a maximum of $7,500 per month) or our sponsor
on our behalf and reserves.
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 combination, 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 combination 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.
47
We do not
believe we will need to raise additional funds following this offering in order
to meet the expenditures required for operating our business. However, if our
estimates of the costs of undertaking in-depth due diligence and negotiating an
initial business combination is less than the actual amount necessary to do so,
or the amount of interest available to us from the trust account is less than
$1.25 million as a result of the current interest rate environment, we may
have insufficient funds available to operate our business prior to our initial
business combination. Moreover, we may need to obtain additional financing
either to consummate our initial business combination or because we become
obligated to redeem a significant number of our public shares upon consummation
of our initial business combination, in which case we may issue additional
securities or incur debt in connection with such business combination. Subject
to compliance with applicable securities laws, we would only consummate such
financing simultaneously with the consummation of our initial business
combination. In the current economic environment, it has become especially
difficult to obtain acquisition financing. Following our initial business
combination, if cash on hand is insufficient, we may need to obtain additional
financing in order to meet our obligations.
Controls
and Procedures
We are
not currently required to maintain an effective system of internal controls as
defined by Section 404 of the Sarbanes-Oxley Act. We will be required
to comply with the internal control requirements of the Sarbanes-Oxley Act for
the fiscal year ending December 31, 2011. As of the date of this
prospectus, we have not completed an assessment, nor have our auditors tested
our systems, of internal controls. We expect to assess the internal
controls of our target business or businesses prior to the completion of our
initial business combination and, if necessary, to implement and test additional
controls as we may determine are necessary in order to state that we maintain an
effective system of internal controls. 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 combination may have internal controls
that need improvement in areas such as:
|
·
|
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 report on internal controls is complete, we will retain our
independent auditors to audit and render an opinion on such report when required
by Section 404. The independent auditors may identify additional
issues concerning a target business's internal controls while performing their
audit of internal control over financial reporting.
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.
Related
Party Transactions
In
January 2011, our sponsor purchased an aggregate of 2,190,477 founder shares for
an aggregate purchase price of $25,000, or approximately $0.01 per share. The
members of our sponsor are Gregory H. Sachs Revocable Trust Dtd. April 24,
1998 and the 2011 Sachs Family Trust. Gregory H. Sachs, our
Chairman, Chief Executive Officer and President, has sole voting and dispositive
control of the shares of our common stock held by our sponsor.
As of the
date of this prospectus, our sponsor has loaned to us a total of $75,000 for
payment of offering expenses. This loan is non-interest bearing, unsecured and
is due at the earlier of December 30, 2011 or the closing of this offering.
This loan will be repaid upon the closing of this offering out of the $400,000
of offering proceeds that has been allocated for the payment of offering
expenses. We are also obligated, on the date that our securities are first
quoted on the OTCBB, to pay Sachs Capital Group LP, an entity beneficially owned
and controlled by Mr. Sachs, a monthly fee of $7,500 for office space and
general administrative services. In addition, we may pay up to an
additional $7,500 per month to Sachs Capital Group LP or our sponsor for
additional overhead expenses incurred on our behalf.
48
In
addition, in order to finance transaction costs in connection with an intended
initial business combination, our sponsor or an affiliate of our sponsor or
certain of our officers and directors may, but are not obligated to, loan us
funds as may be required. If we consummate an initial business combination, we
would repay such loaned amounts. In the event that the initial business
combination does not close, we may use a portion of the working capital held
outside the trust account to repay such loaned amounts but no proceeds from our
trust account would be used for such repayment, other than the interest that may
be released to us for working capital purposes. Up to $500,000 of such loans may
be convertible into warrants of the post business combination entity at a price
of $0.75 per warrant at the option of the lender. The warrants would be
identical to the sponsor warrants. The terms of such loans by our officers and
directors, if any, have not been determined and no written agreements exist with
respect to such loans.
Our
sponsor has committed to purchase an aggregate of 4,000,000 sponsor warrants at
a price of $0.75 per warrant ($3.0 million in the aggregate) in a private
placement that will occur simultaneously with the closing of this offering. Each
sponsor warrant entitles the holder to purchase one share of our common stock at
$11.50 per share. Our sponsor will be permitted to transfer the sponsor warrants
held by it to our officers and directors, and other persons or entities
affiliated with our sponsor, but the transferees receiving such securities will
be subject to the same agreements with respect to such securities as our
sponsor. Otherwise, these warrants will not, subject to certain limited
exceptions, be transferable or salable by our sponsor until 30 days after
the completion of our initial business combination. The sponsor warrants will be
non-redeemable so long as they are held by members of sponsor or their permitted
transferees. The sponsor warrants may also be exercised by our sponsor or their
permitted transferees for cash or on a cashless basis. Otherwise, the sponsor
warrants have terms and provisions that are identical to those of the warrants
being sold as part of the units in this offering.
Pursuant
to a registration rights agreement we will enter into with our sponsor on or
prior to the date of this prospectus, we may be required to register certain
securities for sale under the Securities Act. These stockholders are entitled
under the registration rights agreement to make up to three demands that we
register certain of our securities held by them for sale under the Securities
Act. In addition, these stockholders have the right to include their securities
in other registration statements filed by us. However, the registration rights
agreement provides that we will not permit any registration statement filed
under the Securities Act to become effective until termination of the applicable
lock-up period, which occurs (i) in the case of the founder shares, upon
the earlier of (A) one year after the completion of our initial business
combination or earlier if, subsequent to our business combination, the last
sales price of our common stock equals or exceeds $12.00 per share (as adjusted
for stock splits, stock dividends, reorganizations, recapitalizations and
the like) for any 20 trading days within any 30-trading day period
commencing at least 150 days after our initial business combination, or
(B) the date on which we consummate a liquidation, merger, stock exchange
or other similar transaction after our initial business combination that
results in all of our stockholders having the right to exchange their shares of
common stock for cash, securities or other property and (ii) in the case of
the sponsor warrants and the respective common stock underlying such warrants,
30 days after the completion of our initial business combination. We will
bear the costs and expenses of filing any such registration
statements.
Off-Balance
Sheet Arrangements; Commitments and Contractual Obligations; Quarterly
Results
As of
January 28, 2011, 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.
49
PROPOSED
BUSINESS
Introduction
We are a
newly organized blank check company formed for the purpose of effecting a
merger, capital stock exchange, asset acquisition, stock purchase,
reorganization or similar business combination with one or more
businesses. We have not identified any acquisition target and we have
not, nor has anyone on our behalf, initiated any discussions, research or other
measures, directly or indirectly, with respect to identifying any acquisition
target.
Business
Strategy
We seek
to capitalize on the significant global network and investing and operating
expertise of our management team to identify, acquire and operate one or more
financial services businesses operating within or outside of North America,
although we may pursue acquisition opportunities in other sectors. We believe
that the acquisition and operation of an established financial services business
will provide a strong foundation from which to build, through acquisition or
organic growth, a diversified global asset management or financial services
platform. Our Chairman, Chief Executive Officer and President, Gregory H. Sachs
has nearly 25 years experience founding, managing and acquiring financial
services businesses and is the founder and former Chairman and Chief Executive
Officer of Deerfield Capital Management, or Deerfield, a fixed income capital
management company. From its founding in 1993 until he stepped down from the
business in 2007, Mr. Sachs oversaw the growth of assets under management from
$15 million to approximately $15 billion and the diversification of the firm
from a small fixed income hedge fund manager into a leading global fixed income
capital manager offering structured and hedge fund products and managed
accounts. In addition, Mr. Sachs has also been a member of two public company
boards.
We
anticipate structuring a business combination to acquire 100% of the equity
interest or assets of the target business or businesses. We may, however,
structure a business combination to acquire less than 100% of such interests or
assets of the target business, but we will only consummate such business
combination if we (or our stockholders, if we are not the surviving corporation)
will become the controlling stockholder of the target. We will not consider any
transaction that does not meet such criteria. Even though we will own a
controlling interest in the target, our stockholders prior to the business
combination may collectively own a minority interest in the post business
combination company, depending on valuations ascribed to the target and us in
the business combination transaction.
Our
management team intends to focus on increasing stockholder value by growing
revenue (through organic growth and acquisitions) and improving the efficiency
of business operations. Consistent with this strategy, we believe the following
general criteria and guidelines are important in evaluating prospective target
businesses. We will use these criteria and guidelines in evaluating acquisition
opportunities, but we may decide to enter into a business combination with a
target business that does not meet these criteria and guidelines.
|
·
|
Opportunities for Platform
Growth: We will seek to acquire one or more businesses or assets
that we can grow both organically and through acquisitions. Particularly
in regard to the financial services sector, such companies could include,
for example, a private trading company / market-making organization, a
broker-dealer, a re-insurance company, a mortgage or real estate firm, an
electronic trading firm, a private wealth management company, a specialty
finance company or an asset management
company.
|
|
·
|
History of and Potential for
Strong Free Cash Flow Generation: We will seek to acquire one or
more businesses that have the potential to generate strong free cash flow
(i.e. companies that typically generate cash in excess of that required to
maintain or expand the business’s asset base). We will focus on one or
more businesses that have recurring revenue streams and low working
capital and capital expenditure requirements. We may also seek to
prudently leverage this cash flow in order to enhance stockholder
value.
|
|
·
|
Established Companies with
Proven Track Records: We will seek to acquire established companies
with sound historical financial performance. We will typically focus on
companies with a history of strong operating and financial results. We do
not intend to acquire start-up
companies.
|
|
·
|
Experienced and Motivated
Management Teams: We will seek to acquire businesses that have
strong, experienced management teams with a substantial personal economic
stake in the performance of the acquired business. We will focus on
management teams with a proven track record of driving revenue growth,
enhancing profitability and generating strong free cash flow. We expect
that the operating expertise of our officers and directors will
complement, not replace the target’s management
team.
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Strong Competitive Industry
Position: We will seek to acquire businesses that have strong
fundamentals. The factors we will consider include growth prospects,
competitive dynamics, level of consolidation, need for capital investment
and barriers to entry. We will focus on companies that have a leading or
niche market position. We will analyze the strengths and weaknesses of
target businesses relative to their competitors, focusing on product
quality, customer loyalty, cost impediments associated with customers
switching to competitors, patent protection and brand positioning. We will
seek to acquire one or more businesses that demonstrate advantages when
compared to their competitors, which may help to protect their market
position and profitability.
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50
These
criteria are not intended to be exhaustive. Any evaluation relating to the
merits of a particular initial business combination may be based, to the extent
relevant, on these general guidelines as well as other considerations, factors
and criteria that our management may deem relevant. In the event that we decide
to enter into a business combination with a target business that does not meet
the above criteria and guidelines, we will disclose that the target business
does not meet the above criteria in our stockholder communications related to
our initial business combination, which, as discussed in this prospectus, would
be in the form of tender offer documents or proxy solicitation materials that we
would file with the SEC.
Competitive
Strengths:
We
believe we have the following competitive strengths:
Management
Expertise
We will
seek to capitalize on the significant investing and management experience of our
management team, including the nearly 25 years of financial services industry
expertise of Gregory H. Sachs, our Chairman, Chief Executive Officer and
President. In 1993, Mr. Sachs founded Deerfield with the backing of a Hong Kong
based partner. Deerfield began operations focused solely on fixed income
arbitrage and relative value trading strategies based on the identification of
anomalies in global fixed income markets. From its initial funding of $15
million, the firm grew within two years to $237 million in assets under
management and had surpassed $1 billion in assets under management within five
years. By December 2007, when Mr. Sachs stepped down, Deerfield had
approximately $15 billion in assets under management and had grown into a
leading diversified global fixed income capital manager offering structured and
hedge fund products and managed accounts. The growth in assets under management
over Mr. Sachs’ tenure represented an annual growth rate of approximately
60%.
Acquisition
Sourcing Expertise and Extensive Industry Contacts
Over the
course of their careers, our management team and board of directors have
developed a global network of strong contacts and working relationships with
principals as well as intermediaries who constitute our most likely source of
identifying prospective business transactions. Our management team and board of
directors is comprised of members each with over 20 years of experience in
operating, advising, acquiring, financing and selling private and public
companies in numerous industries. In particular, our Chairman, Chief Executive
Officer and President, Gregory H. Sachs, has extensive experience partnering
both in the United States and abroad with “Blue Chip” financial institutions,
public and private institutional investors and ultra-high-net-worth individuals.
We believe that this network of contacts and relationships will provide us with
an important source of investment opportunities and will provide our management
team with a steady flow of proprietary referrals or referrals where a limited
group of investors may be invited to participate in a sale process. We will use
this global network not only to source an initial business combination but also
to grow assets under management, client mandates or deposited capital as we grow
the acquired platform.
In
addition, we anticipate that target business candidates will be brought to our
attention from various unaffiliated sources, including investment market
participants, private equity funds and large business enterprises seeking to
divest non-core divisions.
Prior
Public Company Experience
Our
Chairman, Chief Executive Officer and President, Gregory H. Sachs oversaw the
founding, was responsible for managing and was a board member of Deerfield
Capital Corp, a publicly traded (NYSE:DFR) specialty finance affiliate of
Deerfield that invests in various credit related asset classes including
corporate debt instruments and mortgage backed securities. During Mr. Sachs’
tenure, DFR grew from its initial IPO size of $800 million in 2005 to over $8
billion in assets under management at the time Mr. Sachs sold his interest in
2007. From 2004 until 2007, Mr. Sachs was also a board member of The Triarc
Companies (NYSE:TRY), the franchisor of Arby’s and other quick service
restaurants, which had approximately $1.3 billion in revenues at the time that
Mr. Sachs stepped down from the board. Members of our management team
and board of directors, aside from Mr. Sachs, have been or are currently senior
executives for or service providers to numerous public companies.
Status
as a Public Company
We
believe our structure will make us an attractive business combination partner to
target businesses. As an existing public company, we offer a target business an
alternative to the traditional initial public offering through a merger or other
business combination. In this situation, the owners of the target business would
exchange their shares of stock in the target business for shares of our stock or
for a combination of shares of our stock and cash, allowing us to tailor the
consideration to the specific needs of the sellers. Although there are various
costs and obligations associated with being a public company, we believe target
businesses will find this method a more certain and cost effective method to
becoming a public company than the typical initial public offering. In a typical
initial public offering, there are additional expenses incurred in marketing,
road show and public reporting efforts that may not be present to the same
extent in connection with a business combination with us.
51
Furthermore,
once a proposed business combination 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 then have greater access to capital
and an additional means of providing management incentives consistent with
stockholders’ interests. It can offer further benefits by augmenting a company’s
profile among potential new customers and vendors and aid in attracting talented
employees.
Financial
Position
With cash
available for a business combination initially in the amount of approximately
$97.0 million after payment of approximately $3.0 million of deferred
underwriting fees (or $111.25 million after payment of approximately $3.45
million of deferred underwriting fees if the underwriters’ over-allotment option
is exercised in full), we offer a target business a variety of options such as
creating a liquidity event for its owners, providing capital for the potential
growth and expansion of its operations or strengthening its balance sheet by
reducing its debt ratio. Because we are able to consummate a business
combination using our cash, debt or equity securities, or a combination thereof,
we have the flexibility to use the most efficient combination that will allow us
to tailor the consideration to be paid to the target business to fit its needs
and desires. However, we have not taken any steps to secure third party
financing and there can be no assurance it will be available to us.
Effecting
our initial business combination
General
We are
not presently engaged in, and we will not engage in, any operations for an
indefinite period of time following this offering. We intend to
effectuate our initial business combination using cash from the proceeds of this
offering and the private placement of the sponsor warrants, our capital stock,
debt or a combination of these as the consideration to be paid in our initial
business combination. We may seek to consummate our initial business
combination with a company or business that may be financially unstable or in
its early stages of development or growth, which would subject us to the
numerous risks inherent in such companies and businesses.
If our
initial business combination is paid for using stock or debt securities, or not
all of the funds released from the trust account are used for payment of the
purchase price in connection with our business combination or used for
redemptions of purchases of our common stock, we may apply the cash released to
us from the trust account that is not applied to the purchase price for general
corporate purposes, including for maintenance or expansion of operations of
acquired businesses, the payment of principal or interest due on indebtedness
incurred in consummating our initial business combination, to fund the purchase
of other companies or for working capital.
We have
not identified any acquisition target and we have not, nor has anyone on our
behalf, initiated any discussions, research or other measures, with respect to
identifying any acquisition target. 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, directors or our sponsor and any of
their potential contacts or relationships regarding a potential initial business
combination. Additionally, we have not engaged or retained any agent
or other representative to identify or locate any suitable acquisition
candidate, to conduct any research or take any measures, directly or indirectly,
to locate or contact a target business.
Because,
unlike many blank check companies, 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 at the time of our signing a definitive agreement in
connection with our initial business combination, we will have virtually
unrestricted flexibility in identifying and selecting one or more prospective
target businesses. Accordingly, there is no current basis for
investors in this offering to evaluate the possible merits or risks of the
target business with which we may ultimately complete our initial business
combination. Although our management will assess the risks inherent
in a particular target business with which we may combine, we cannot assure you
that this assessment will result in our identifying all risks that a target
business may encounter. Furthermore, some of those risks may be
outside of our control, meaning that we can do nothing to control or reduce the
chances that those risks will adversely impact a target business.
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
combination, and we may effectuate an initial business combination 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 consummate such financing only simultaneously with the consummation of our
business combination. In the case of an initial business combination
funded with assets other than the trust account assets, our tender offer
documents or proxy materials disclosing the business combination would disclose
the terms of the financing and, only if required by law, we would seek
stockholder approval of such financing. There are no prohibitions on
our ability to raise funds privately or through loans in connection with our
initial business combination. 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.
52
Sources
of target businesses
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. Target businesses may be brought to
our attention by such unaffiliated sources as a result of being solicited by us
through calls or mailings. These sources may also introduce us to target
businesses in which they think we may be interested on an unsolicited basis,
since many of these sources will have read this prospectus and know what types
of businesses we are targeting. Our officers and directors, as well as their
affiliates, may also bring to our attention target business candidates that they
become aware of through their contacts as a result of formal or informal
inquiries or discussions they may have, as well as attending trade shows or
conventions. In addition, we expect to receive a number of proprietary deal flow
opportunities that would not otherwise necessarily be available to us as a
result of the track record and business relationships of our officers and
directors. While we do not presently anticipate engaging the services of
professional firms or other individuals that specialize in business acquisitions
on any formal basis, we may engage these firms or other individuals in the
future, in which event we may pay a finder’s fee, consulting fee or other
compensation to be determined in an arm’s length negotiation based on the terms
of the transaction. We will engage a finder only to the extent our management
determines that the use of a finder may bring opportunities to us that may not
otherwise be available to us or if finders approach us on an unsolicited basis
with a potential transaction that our management determines is in our best
interest to pursue. Payment of finder’s fees is customarily tied to completion
of a transaction, in which case any such fee will be paid out of the funds held
in the trust account. In no event, however, will our sponsor or any of our
existing officers or directors, or any entity with which they are affiliated, 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 our initial
business combination (regardless of the type of transaction that it is), other
than the up to $15,000 per month for office space, administrative services and
other incurred expenses relating to our operations payable to Sachs Capital
Group LP, an affiliate of our sponsor. None of our sponsor, officers,
directors and any of their respective affiliates will be allowed to receive any
compensation, finder’s fees or consulting fees from a prospective acquisition
target in connection with a contemplated acquisition of such target by us.
Although some of our officers and directors may enter into employment or
consulting agreements with the acquired business following our initial business
combination, the presence or absence of any such arrangements will not be used
as a criterion in our selection process of an acquisition
candidate.
We are
not prohibited from pursuing an initial business combination with a company that
is affiliated with our sponsor, officers or directors. In the event
we seek to complete an initial business combination with such a company, we, or
a committee of independent directors, would obtain an opinion from an
independent investment banking firm which is a member of FINRA that such an
initial business combination 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.
Unless we
consummate our initial business combination with an affiliated entity, we are
not required to obtain an opinion from an independent investment banking firm
that the price we are paying is fair to our company from a financial point of
view. If no opinion is obtained, our stockholders will be relying on the
judgment of our board of directors, who will determine fair market value and
fairness based on standards generally accepted by the financial community. The
application of such standards would involve a comparison, from a valuation
standpoint, of our business combination target to comparable public companies,
as applicable, and a comparison of our contemplated transaction with such
business combination target to other then-recently announced comparable private
and public company transactions, as applicable. The application of such
standards and the basis of our board of directors’ determination will be
discussed and disclosed in our tender offer or proxy solicitation materials, as
applicable, related to our initial business combination.
Selection
of a target business and structuring of our initial business
combination
Because,
unlike many blank check companies, we do not have the limitation that a target
business have a minimum fair market enterprise value equal to a specified
percentage of the net assets held in the trust account at the time of our
signing a definitive agreement in connection with our initial business
combination, our management will have virtually unrestricted flexibility in
identifying and selecting one or more prospective target businesses, although we
will not be permitted to effectuate our initial business combination with
another blank check company or a similar company with nominal
operations. In any case, we will consummate an initial business
combination in which we become the controlling stockholder of the target or are
otherwise not required to register as an investment company under the Investment
Company Act. 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 combination. To the extent we effect a
business combination with a company or business that may be financially unstable
or in its early stages of development or growth we may be affected by numerous
risks inherent in such company or business. 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.
In
evaluating a prospective target business, we expect to conduct an extensive due
diligence review which will encompass, among other things, meetings with
incumbent management and employees, document reviews, interviews of customers
and suppliers, inspection of facilities, as well as review of financial and
other information which will be made available to us.
The time
required to select and evaluate a target business and to structure and complete
our initial business combination, and the costs associated with this process,
are not currently ascertainable with any degree of certainty. Any
costs incurred with respect to the identification and evaluation of a
prospective target business with which a business combination is not ultimately
completed will result in our incurring losses and will reduce the funds we can
use to complete another business combination. We will not pay any
finders or consulting fees to members of our management team, or any of their
respective affiliates, for services rendered to or in connection with a business
combination.
53
Lack
of business diversification
For an
indefinite period of time after consummation of our initial business
combination, the prospects for our success may depend entirely on the future
performance of a single business. Unlike other entities that have the
resources to complete business combinations with multiple entities in one or
several industries, it is probable that we will not have the resources to
diversify our operations and mitigate the risks of being in a single line of
business. By consummating a business combination with only a single
entity, our lack of diversification may:
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subject
us to negative economic, competitive and regulatory developments, any or
all of which may have a substantial adverse impact on the particular
industry in which we operate after our initial business combination,
and
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cause
us to depend on the marketing and sale of a single product or limited
number of products or services.
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Limited
ability to evaluate the target’s management team
Although
we intend to closely scrutinize the management of a prospective target business
when evaluating the desirability of effecting a business combination with that
business, our assessment of the target business’ management may not prove to be
correct. In addition, the future management may not have the
necessary skills, qualifications or abilities to manage a public
company. Furthermore, the future role of members of our management
team, if any, in the target business cannot presently be stated with any
certainty. While it is possible that one or more of our directors
will remain associated in some capacity with us following a business
combination, it is unlikely that any of them will devote their full efforts to
our affairs subsequent to a business combination. Moreover, we cannot
assure you that members of our management team will have significant experience
or knowledge relating to the operations of the particular target
business. We cannot assure you that any of our key personnel will
remain in senior management or advisory positions with the combined
company. The determination as to whether any of our key personnel
will remain with the combined company will be made at the time of our initial
business combination.
Following
a business combination, we may seek to recruit additional managers to supplement
the incumbent management of the target business. We cannot assure you
that we will have the ability to recruit additional managers, or that additional
managers will have the requisite skills, knowledge or experience necessary to
enhance the incumbent management.
Stockholders
may not have the ability to approve a business combination
We intend
to conduct redemptions without a stockholder vote pursuant to the tender offer
rules of the SEC. Therefore we do not intend to seek stockholder
approval before we effect our initial business combination as not all business
combinations require stockholder approval under applicable state
law.
However,
we will seek stockholder approval, if it is required by law, or we may decide to
seek stockholder approval for business or other legal
reasons. Presented in the table below is a graphic explanation of the
types of initial business combinations we may consider and whether stockholder
approval is currently required under Delaware law for each such
transaction.
Type of Transaction
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Whether Stockholder
Approval is Required
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Purchase
of assets
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No
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Purchase
of stock of target not involving a merger with the company
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No
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Merger
of target into a subsidiary of the company
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No
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Merger
of the company with a target
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Yes
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Permitted
purchases of our securities
If we
seek stockholder approval of our initial business combination and we do not
conduct redemptions in connection with our business combination pursuant to the
tender offer rules, prior to the consummation of a business combination, our
amended and restated certificate of incorporation will permit the release to us
from the trust account amounts necessary to purchase up to 15% of the shares
sold in this offering (1,500,000 shares, or 1,725,000 shares if the
underwriters’ over-allotment option is exercised in full) at any time commencing
after the filing of a preliminary proxy statement for our initial business
combination and ending on the date of the stockholder meeting to approve the
initial business combination. Purchases will be made only in open
market transactions at times when we are not in possession of any material
non-public information and may not be made during a restricted period under
Regulation M under the Exchange Act. It is intended that purchases
will comply with Rule 10b-18 under the Exchange Act, which provides a safe
harbor for purchases made under certain conditions, including with respect to
timing, pricing and volume of purchases. If the conditions of Rule
10b-18, as in effect at the time we wish to make such purchases, are not
satisfied, it is likely that we will not make such purchases. Any
purchases we make will be at prices (inclusive of commissions) not to exceed the
per-share amount then held in the trust account (approximately $10.00 per share
or approximately $9.97 per share if the underwriters’ over-allotment option is
exercised in full). We can purchase any or all of the 1,500,000
shares (or 1,725,000 shares if the underwriters’ over-allotment option is
exercised in full) we are entitled to purchase. It will be entirely
in our discretion as to how many shares are purchased. Purchasing
decisions will be made based on various factors, including the then current
market price of our common stock and the terms of the proposed business
combination. All shares purchased by us will be immediately
cancelled. Such open market purchases, if any, would be conducted by
us to minimize any disparity between the then current market price of our common
stock and the per-share amount held in the trust account. A market
price below the per-share trust amount could provide an incentive for purchasers
to buy our shares after the filing of our preliminary proxy statement at a
discount to the per-share amount held in the trust account for the sole purpose
of voting against our initial business combination and exercising redemption
rights for the full per-share amount held in the trust account. Such
trading activity could enable such investors to block a business combination by
making it difficult for us to obtain the approval of such business combination
by the vote of a majority of our outstanding shares of common stock that are
voted.
54
In
addition, in the event we seek stockholder approval of our business combination
and we do not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, we may enter into privately negotiated
transactions to purchase public shares following the consummation of the
business combination from stockholders who would have otherwise elected to have
their shares redeemed in conjunction with a proxy solicitation pursuant to the
proxy rules for a per-share pro rata portion of the trust
account. Our sponsor, directors, officers, advisors or their
affiliates may also purchase shares in privately negotiated transactions either
prior to or following the consummation of our initial business
combination. Neither we nor our directors, officers, advisors or
their affiliates will make any such purchases when we or they are in possession
of any material non-public information not disclosed to the
seller. Such a purchase 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 its
redemption rights. In the event that we or our sponsor, directors,
officers, advisors or their affiliates purchase shares in privately negotiated
transactions from public stockholders who have already elected to exercise their
redemption rights, such selling stockholders would be required to revoke their
prior elections to redeem their shares.
The
purpose of such purchases would be to (i) increase the likelihood of obtaining
stockholder approval of the business combination or (ii), where the purchases
are made by our sponsor, directors, officers, advisors or their affiliates, to
satisfy a closing condition in an agreement with a target that requires us to
have a minimum net worth or a certain amount of cash at the closing of the
business combination, where it appears that such requirement would otherwise not
be met. This may result in the consummation of a business combination
that may not otherwise have been possible.
As a
consequence of any such purchases by us:
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the
funds in our trust account that are so used will not be available to us
after the business combination;
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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;
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because
the stockholders who sell their shares in a privately negotiated
transaction or pursuant to market transactions as described above may
receive a per share purchase price payable from the trust account that is
not reduced by a pro rata share of the deferred underwriting commissions
or franchise or income taxes payable, our remaining stockholders may bear
the entire payment of such deferred commissions and franchise or income
taxes payable (as well as, in the case of purchases which occur prior to
the consummation of our initial business combination, up to $100,000 of
net interest that may be released to us from the trust account to fund our
dissolution expenses in the event we do not complete our initial business
combination within 21 (or 24) months from the date of this
prospectus). That is, if we seek stockholder approval of our
initial business combination, the redemption price per share payable to
public stockholders who elect to have their shares redeemed will be
reduced by a larger percentage of the franchise or income taxes payable
than it would have been in the absence of such privately negotiated or
market transactions, and stockholders who do not elect to have their
shares redeemed and remain our stockholders after the business combination
will bear the economic burden of the deferred commissions and franchise or
income taxes payable because such amounts will be payable by us;
and
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·
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the
payment of any premium would result in a reduction in book value per share
for the remaining stockholders compared to the value received by
stockholders that have their shares purchased by us at a
premium.
|
Our
sponsor, officers, directors and/or their affiliates anticipate that they will
identify the stockholders with whom our sponsor, officers, directors or their
affiliates may pursue privately negotiated purchases by either the stockholders
contacting us directly or by our receipt of redemption requests submitted by
stockholders following our mailing of tender offer materials in connection with
our initial business combination. To the extent that our sponsor,
officers, directors, advisors or their affiliates enter into a private purchase,
they would identify and contact only potential selling stockholders who have
expressed their election to redeem their shares for a pro rata share of the
trust account or vote against the business combination. Pursuant to
the terms of such arrangements, any shares so purchased by our sponsor,
officers, advisors, directors and/or their affiliates would then revoke their
election to redeem such shares. The terms of such purchases would
operate to facilitate our ability to consummate a proposed business combination
by potentially reducing the number of shares redeemed for cash.
55
Redemption
rights for public stockholders upon consummation of our initial business
combination
We will
provide our stockholders with the opportunity to redeem their shares upon the
consummation of our initial business combination at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account,
including interest but net of franchise and income taxes payable, divided by the
number of then outstanding public shares, subject to the limitations described
herein. The amount in the trust account is initially anticipated to
be approximately $10.00 per public share, or approximately $9.97 per public
share if the underwriters’ over-allotment option is exercised in
full. Our sponsor has agreed to waive its redemption rights with
respect to their founder shares and any public shares it may hold in connection
with the consummation of a business combination.
Manner
of Conducting Redemptions
Unlike
many blank check companies that hold stockholder votes and conduct proxy
solicitations in conjunction with their initial business combinations and
provide for related redemptions of public shares for cash upon consummation of
such initial business combinations even if not required by law, if a stockholder
vote is not required by law and we do not decide to hold a stockholder vote for
business or other legal reasons, we will, pursuant to our amended and restated
certificate of incorporation:
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·
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conduct
the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange
Act, which regulate issuer tender offers,
and
|
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file
tender offer documents with the SEC prior to consummating our initial
business combination which will contain substantially the same financial
and other information about the initial business combination and the
redemption rights as is required under Regulation 14A of the Exchange Act,
which regulates the solicitation of proxies, and we will not be permitted
to consummate our initial business combination until the expiration of the
tender offer period.
|
In the
event we conduct redemptions pursuant to the tender offer rules, our offer to
redeem shall remain open for at least 20 business days, in accordance with Rule
14e-1(a) under the Exchange Act.
When we
conduct a tender offer to redeem our public shares upon consummation of our
initial business combination, in order to comply with the tender offer rules,
the offer will be made to all of our stockholders, not just our public
stockholders. Our sponsor has agreed to waive its redemption rights
with respect to its founder shares and public shares in connection with any such
tender offer.
If,
however, stockholder approval of the transaction is required by law, or we
decide to obtain stockholder approval for business or other legal reasons, we
will:
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·
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conduct
the redemptions in conjunction with a proxy solicitation pursuant to
Regulation 14A of the Exchange Act, which regulates the solicitation of
proxies, and not pursuant to the tender offer rules,
and
|
|
·
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file
proxy materials with the SEC.
|
In the
event that we seek stockholder approval of our initial business combination, we
will distribute proxy materials and, in connection therewith, provide our public
stockholders with the redemption rights described above upon consummation of the
initial business combination.
If we
seek stockholder approval, we will consummate our initial business combination
only if a majority of the outstanding shares of common stock voted are voted in
favor of the business combination. In such case, our sponsor has
agreed to vote its founder shares and any public shares purchased during or
after the offering in favor of our initial business
combination. Additionally, each public stockholder may elect to
redeem their public shares irrespective of whether they vote for or against the
proposed transaction; provided, however, our public stockholders voting in favor
of our initial business combination may elect to exercise their redemption
rights and shall be entitled to receive cash equal to their pro rata share of
the aggregate amount then on deposit in the trust account, including any amounts
representing interest earned on the trust account, less taxes and up to $1.25
million withdrawn for working capital purposes, but our public stockholders
voting against the business combination and electing to exercise their
redemption rights shall only be entitled to receive cash equal to their pro rata
share of the aggregate amount in the trust account less taxes and interest
earned on the proceeds placed in the trust account. In addition,
sponsor has agreed to waive its redemption rights with respect to their founder
shares and public shares in connection with the consummation of a business
combination.
Many
blank check companies would not be able to consummate a business combination if
the holders of the company’s public shares voted against a proposed business
combination and elected to redeem or convert more than a specified maximum
percentage of the shares sold in such company’s initial public offering, which
percentage threshold has typically been between 19.99% and 39.99%. As
a result, many blank check companies have been unable to complete business
combinations 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 combination. Since we have
no such specified maximum redemption threshold, our structure is different in
this respect from the structure that has been used by many blank check
companies. However, in no event will we redeem our public shares in
an amount that would cause our net tangible assets to be less than
$5,000,001. In such case, we would not proceed with the redemption of
our public shares and the related business combination, and instead may search
for an alternate business combination.
56
Limitation
on redemption or voting rights upon consummation of a business combination if we
seek stockholder approval
Notwithstanding
the foregoing, if we seek stockholder approval of our initial business
combination and we do not conduct redemptions in connection with our business
combination pursuant to the tender offer rules, our amended and restated
certificate of incorporation provides that a public stockholder, together with
any affiliate of such stockholder or any other person with whom such stockholder
is acting in concert or as a “group” (as defined under Section 13 of the
Exchange Act), will be restricted from seeking redemption rights with respect to
more than an aggregate of 10% of the shares sold in this
offering. Moreover, any individual stockholder or “group” will also
be restricted from voting public shares in excess of an aggregate of 10% of the
public shares sold in this offering, and all additional such shares in excess of
10%, which we refer to as the “Excess Shares”, which would then be voted by our
management in favor of all proposals submitted for consideration at such meeting
and will not be redeemed for cash. We believe these
restrictions will discourage stockholders from accumulating large blocks of
shares, and subsequent attempts by such holders to use their ability to exercise
their redemption rights or vote against a proposed business combination 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
exercise its redemption rights or voting 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 redeem or vote 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 combination,
particularly in connection with a business combination with a target that
requires as a closing condition that we have a minimum net worth or a certain
amount of cash.
Tendering
stock certificates in connection with a tender offer or redemption
rights
We may
require our public stockholders seeking to exercise their redemption 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 tender offer documents or proxy materials mailed to such holders, or up to
two business days prior to the vote on the proposal to approve the business
combination in the event we distribute proxy materials, 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 tender offer or proxy materials, as applicable, that we
will furnish to holders of our public shares in connection with our initial
business combination will indicate whether we are requiring public stockholders
to satisfy such delivery requirements. Accordingly, a public
stockholder would have from the time we send out our tender offer materials
until the close of the tender offer period, or up to two days prior to the vote
on the business combination if we distribute proxy materials, as applicable, to
tender its shares if it wishes to seek to exercise its redemption
rights. Given the relatively short exercise period, it is advisable
for stockholders to use electronic delivery of their public shares.
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 redeeming holder. However, this fee would be incurred regardless
of whether or not we require holders seeking to exercise redemption rights to
tender their shares. The need to deliver shares is a requirement of
exercising redemption rights regardless of the timing of when such delivery must
be effectuated.
The
foregoing is different from the procedures used by many blank check
companies. In order to perfect redemption rights in connection with
their business combinations, many blank check companies would distribute proxy
materials for the stockholders’ vote on an initial business combination, and a
holder could simply vote against a proposed business combination and check a box
on the proxy card indicating such holder was seeking to exercise his redemption
rights. After the business combination 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 combination during which he could
monitor the price of the company’s stock in the market. If the price
rose above the redemption price, he could sell his shares in the open market
before actually delivering his shares to the company for
cancellation. As a result, the redemption rights, to which
stockholders were aware they needed to commit before the stockholder meeting,
would become “option” rights surviving past the consummation of the business
combination until the redeeming holder delivered its certificate. The
requirement for physical or electronic delivery prior to the meeting ensures
that a redeeming holder’s election to redeem is irrevocable once the business
combination is approved.
Any
request to redeem such shares, once made, may be withdrawn at any time up to the
date set forth in the tender offer materials or the date of the stockholder
meeting set forth in our proxy materials, as applicable. Furthermore,
if a holder of a public share delivered its certificate in connection with an
election of redemption rights and subsequently decides prior to the applicable
date not to elect to exercise such rights, such holder 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 electing to redeem their shares will be
distributed promptly after the completion of a business
combination.
57
If the
initial business combination is not approved or completed for any reason, then
our public stockholders who elected to exercise their redemption rights would
not be entitled to redeem their shares for the applicable pro rata share of the
trust account. In such case, we will promptly return any certificates
delivered by public holders who elected to redeem their shares.
If our
initial proposed business combination is not consummated, we may continue to try
to consummate a business combination with a different target until 21 (or 24)
months from the date of this prospectus.
Redemption
of public shares and liquidation if no initial business combination
Our
sponsor, officers and directors have agreed that we will have only 21 months
from the date of this prospectus to consummate our initial business combination
(or 24 months from the date of this prospectus if a letter of intent or a
definitive agreement has been executed within 21 months from the date of the
prospectus and the business combination relating thereto has not yet been
completed within such 21-month period). If we are unable to
consummate a business combination within such period, our amended and restated
certificate of incorporation provides that we will: (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably possible
but not more than ten business days thereafter, redeem the public shares, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit
in the trust account, including interest but net of franchise and income taxes
payable (less up to $100,000 of such net interest to pay dissolution expenses),
divided by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the
right to receive further liquidation distributions, if any), subject to
applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board
of directors, dissolve and liquidate, subject in each case to our obligations
under Delaware law to provide for claims of creditors and the requirements of
other applicable law.
Our
sponsor has agreed to waive its redemption rights with respect to its founder
shares if we fail to consummate a business combination within 21 (or 24) months
from the date of this prospectus. However, if our sponsor, or any of
our officers, directors or affiliates acquire public shares in or after this
offering, they will be entitled to redemption rights with respect to such public
shares if we fail to consummate a business combination within the required time
period. There will be no redemption rights or liquidating
distributions with respect to our warrants, which will expire worthless in the
event we do not consummate a business combination within the allotted month time
period. We expect that all costs and expenses associated with
implementing our plan of dissolution, as well as payments to any creditors, will
be funded from amounts remaining out of the $600,000 of proceeds held outside
the trust account and from the up to $1.25 million, subject to adjustment in the
event the size of the offering changes as a result of the underwriters’ exercise
of any portion of the over-allotment option or if we otherwise decide to change
the size of this offering, in interest income on the balance of the trust
account (net franchise and income taxes payable) that will be released to us to
fund our working capital requirements, although we cannot assure you that there
will be sufficient funds for such purpose. However, if those funds
are not sufficient to cover the costs and expenses associated with implementing
our plan of dissolution, to the extent that there is any interest accrued in the
trust account not required to pay franchise and income taxes on interest income
earned on the trust account balance, we may request the trustee to release to us
an additional amount of up to $100,000 of such accrued interest to pay those
costs and expenses.
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 per-share redemption amount received by
stockholders upon our dissolution would be approximately $10.00 (or
approximately $9.97 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 per-share redemption amount received by stockholders will not be less
than approximately $10.00, plus interest (net of any franchise and income taxes
payable). Under Section 281(b) of the DGCL, our plan of dissolution
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 with which we do 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 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 refuses to execute an agreement waiving
such claims to the monies held in the trust account, our management will perform
an analysis of the alternatives available to it and will only enter into an
agreement with a third party that has not executed a waiver if management
believes 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 refuses 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, 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, Gregory H. Sachs, our Chairman, Chief Executive
Officer and President, has agreed that he 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 $10.00
per share (or approximately $9.97 per share if the underwriters’ 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, Mr. Sachs will not be responsible to the
extent of any liability for such third party claims. We cannot assure
you, however, that Mr. Sachs would be able to satisfy those
obligations. With the exception of Mr. Sachs as described above, none
of our officers will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target
businesses.
58
In the
event that the proceeds in the trust account are reduced below $10.00 per public
share (or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full) and Mr. Sachs asserts that he is
unable to satisfy any applicable obligations or that he has no indemnification
obligations related to a particular claim, our independent directors would
determine whether to take legal action against Mr. Sachs to enforce his
indemnification obligations. While we currently expect that our
independent directors would take legal action on our behalf against Mr. Sachs to
enforce his 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
will not be less than $10.00 per public share (or approximately $9.97 per public
share if the underwriters’ over-allotment option is exercised in
full).
We will
seek to reduce the possibility that Mr. Sachs will have to indemnify the trust
account due to claims of creditors by endeavoring to have all vendors, service
providers, prospective target businesses or other entities with which we do
business execute agreements with us waiving any right, title, interest or claim
of any kind in or to monies held in the trust account. Mr. Sachs 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 $600,000 from the
proceeds of this offering, and the up to $1.25 million, subject to adjustment in
the event the size of the offering changes as a result of the underwriters’
exercise of any portion of the over-allotment option or if we otherwise decide
to change the size of this offering, in interest income on the balance of the
trust account (net of franchise and income taxes payable) 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
$100,000). In the event that we liquidate and it is subsequently
determined that the reserve for claims and liabilities is insufficient,
stockholders who received funds from our trust account could be liable for
claims made by creditors. In the event that our offering expenses
exceed our estimate of $400,000, we may fund such excess with funds from the
$600,000 not to be held in the trust account. In such case, the
amount of funds we intend to be held outside the trust account would decrease by
a corresponding amount. Conversely, in the event that the offering
expenses are less than our estimate of $400,000, the amount of funds we intend
to be held outside the trust account would increase by a corresponding
amount.
Under the
DGCL, 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 the redemption of our public shares in the event we
do not consummate our initial business combination within 21 months from the
date of this prospectus (or 24 months from the date of this prospectus if a
letter of intent or a definitive agreement has been executed within 21 months
from the date of the prospectus and the business combination relating thereto
has not yet been completed within such 21-month period) may be considered a
liquidation distribution under Delaware law. If the corporation
complies with certain procedures set forth in Section 280 of the DGCL 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.
59
Furthermore,
if the pro rata portion of our trust account distributed to our public
stockholders upon the redemption of our public shares in the event we do not
consummate our initial business combination within 21 (or 24) months from the
date of this prospectus is not considered a liquidation distribution under
Delaware law and such redemption distribution is deemed to be unlawful, then
pursuant to Section 174 of the DGCL, the statute of limitations for claims of
creditors could then be six years after the unlawful redemption distribution,
instead of three years, as in the case of a liquidation
distribution. If we are unable to consummate a business combination
within 21 (or 24) months from the date of this prospectus, we will: (i) cease
all operations except for the purpose of winding up, (ii) as promptly as
reasonably possible but not more than ten business days thereafter, redeem the
public shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest but net of
franchise and income taxes payable (less up to $100,000 of such net interest to
pay dissolution expenses), divided by the number of then outstanding public
shares, which redemption will completely extinguish public stockholders’ rights
as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our
remaining stockholders and our board of directors, dissolve and liquidate,
subject in each case to our obligations under Delaware law to provide for claims
of creditors and the requirements of other applicable
law. Accordingly, it is our intention to redeem our public shares as
soon as reasonably possible following our 21st (or
24th) 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 DGCL 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 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, prospective target businesses or other entities with which we
do 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. 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. Further, Mr.
Sachs may be liable only to the extent necessary to ensure that the amounts in
the trust account are not reduced below $10.00 per public share (or
approximately $9.97 per public share if the underwriters’ 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 combination within 21 (or 24) 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, Mr. Sachs will not be responsible to the
extent of any liability for such third-party claims.
If we
file a bankruptcy petition or an involuntary bankruptcy petition is filed
against us that 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 $10.00 per share
to our public stockholders. Additionally, if we file a bankruptcy
petition or an involuntary bankruptcy petition is filed against us that 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, 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 the redemption of our public shares if we do not consummate
a business combination within 21 (or 24) months from the date of this or if they
redeem their respective shares for cash upon the consummation of the initial
business combination. 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 seek
stockholder approval in connection with our initial business combination, a
stockholder’s voting in connection with the business combination alone will not
result in a stockholder’s redeeming its shares to us for an applicable pro rata
share of the trust account. Such stockholder must have also exercised its
redemption rights described above.
60
Comparison
of redemption or purchase prices in connection with our initial business
combination and if we fail to consummate a business combination.
The
following table compares the redemptions and other permitted purchases of public
shares that may take place in connection with the consummation of our initial
business combination and if we are unable to consummate an initial business
combination within 21 months from the date of this prospectus (or 24 months from
the date of this prospectus if a letter of intent or a definitive agreement has
been executed within 21 months from the date of the prospectus and the business
combination relating thereto has not yet been completed within such 21-month
period).
Redemptions in
Connection with our
Initial Business
Combination
|
Other Permitted
Purchases of Public
Shares by us or our
Affiliates
|
Redemptions if we fail to
Consummate an Initial
Business Combination
|
||||
Calculation
of
redemption
price
|
Redemptions
at the time of our initial business combination may be made pursuant to a
tender offer or in connection with a stockholder vote. The
redemption price will be the same whether we conduct redemptions pursuant
to a tender offer or in connection with a stockholder vote. In
either case, our public stockholders may redeem their public shares for
cash equal to the aggregate amount then on deposit in the trust account
(which is initially anticipated to be approximately $10.00 per public
share, or approximately $9.97 per public share if the underwriters’
over-allotment option is exercised in full), including interest less
franchise and income taxes payable, divided by the number of then
outstanding public shares, subject to the limitation that no redemptions
will take place if all of the redemptions would cause our net tangible
assets to be less than $5,000,001.
|
If
we seek stockholder approval of our initial business combination and we do
not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, prior to the consummation of a
business combination, there can be released to us from the trust account
amounts necessary to purchase up to 15% of the shares sold in this
offering. Such purchases would be at prices not to exceed the
per-share amount then held in the trust account (which is initially
anticipated to be approximately $10.00 per share or approximately $9.97
per share if the underwriters’ over-allotment option is exercised in
full). In addition, if we seek stockholder approval of our
initial business combination, we may enter into privately negotiated
transactions to purchase public shares from stockholders following
consummation of the initial business combination with proceeds released to
us from the trust account immediately following consummation of the
initial business combination. There is no limit to the prices
that we or our sponsor, directors, officers, advisors or their affiliates
may pay in these transactions.
|
If
we are unable to consummate an initial business combination within 21 (or
24) months from the closing of this offering, we will redeem all public
shares at a per-share price, payable in cash, equal to the aggregate
amount, then on deposit in the trust account (which is initially
anticipated to be approximately $10.00 per public share, or approximately
$9.97 per public share if the underwriters’ over-allotment option is
exercised in full), including interest less franchise and income taxes
payable and less up to $100,000 of such net interest to pay dissolution
expenses, divided by the number of then outstanding public
shares.
|
61
Impact
to remaining stockholders
|
|
The
redemptions in connection with our initial business combination will
reduce the book value per share for our remaining stockholders, who will
bear the burden of the deferred underwriting commissions and franchise and
income taxes payable.
|
|
If
the permitted purchases described above are made at prices not exceeding
the per-share amount then held in the trust account, these purchases will
reduce the book value per share for our remaining stockholders following a
business combination, who will bear the burden of the deferred
underwriting commissions and franchise and income taxes
payable. If we make these purchases using funds released to us
from the trust account following consummation of a business combination at
prices that are at a premium to the per-share amount then held in the
trust account, our remaining stockholders will also experience a reduction
in book value per share to the extent of such premiums.
|
|
The
redemption of our public shares if we fail to consummate a business
combination will reduce the book value per share for the shares held by
our sponsor, who will be our only remaining stockholders after such
redemptions.
|
62
Comparison
of This Offering to Those of Blank Check Companies Subject to Rule
419
The
following table compares the terms of this offering to the terms of an offering
by a blank check company subject to the provisions of Rule 419. This
comparison assumes that the gross proceeds, underwriting commissions and
underwriting expenses of our offering would be identical to those of an offering
undertaken by a company subject to Rule 419, and that the underwriters will not
exercise their over-allotment option. None of the provisions of Rule
419 apply to our offering.
Terms of Our Offering
|
Terms Under a Rule 419 Offering
|
|||
Escrow
of offering proceeds
|
Approximately
$100.0 million of the net offering proceeds, which includes the $3.0
million net proceeds from the sale of the sponsor warrants and
approximately $3.0 million in deferred underwriting commissions
(approximately $3.45 million if the underwriters’ over-allotment option is
exercised in full), will be deposited into a trust account with [Transfer
Agent] acting as trustee.
|
Approximately
$90.54 million of the offering proceeds, representing the gross proceeds
of this offering, 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
|
Approximately
$100.0 million of the net offering proceeds, which includes the $3.0
million net proceeds from the sale of the sponsor warrants and
approximately $3.0 million in deferred underwriting commissions
(approximately $3.45 million if the underwriters’ over-allotment option is
exercised in full) held in trust will be invested only 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.
|
Proceeds
could be invested only in specified securities such as a money market fund
meeting conditions of the Investment Company Act or in securities that are
direct obligations of, or obligations guaranteed as to principal or
interest by, the United States.
|
||
Receipt
of interest on escrowed funds
|
Interest
on proceeds from the trust account to be paid to stockholders is reduced
by (i) any income or franchise taxes paid or payable and then (ii) up to
$1.25 million, subject to adjustment as described herein, that can be used
for working capital purposes, and (iii) in the event of our liquidation
for failure to consummate our initial business combination within the
allotted time, up to $100,000 of net interest that may be released to us
should we have no or insufficient working capital to fund the costs and
expenses of our dissolution and liquidation.
|
Interest
on funds in escrow account would be held for the sole benefit of
investors, unless and only after the funds held in escrow were released to
us in connection with our consummation of a business
combination.
|
||
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.
|
The
fair value or net assets of a target business must represent at least 80%
of the maximum offering
proceeds.
|
63
Terms of Our Offering
|
Terms Under a Rule 419 Offering
|
|||
Trading
of securities issued
|
The
units will begin trading on or promptly after the date of this
prospectus. The common stock and warrants comprising the units
will begin separate trading on the 52nd day following the date of this
prospectus unless Ladenburg Thalmann & Co. Inc. informs us of its
decision to allow earlier separate trading, subject to our having filed
the Current Report on Form 8-K described below and having issued a press
release announcing when such separate trading will begin. We
will file the Current Report on Form 8-K promptly after the closing of
this offering, which is anticipated to take place three business days from
the date of this prospectus. If the over-allotment option is
exercised following the initial filing of such Current Report on Form 8-K,
a second or amended Current Report on Form 8-K will be filed to provide
updated financial information to reflect the exercise of the
over-allotment option.
|
No
trading of the units or the underlying common stock and warrants would be
permitted until the completion of a business
combination. 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 the
completion of our initial business combination or 12 months from the
closing of this offering.
|
The
warrants could be exercised prior to the completion of a business
combination, but securities received and cash paid in connection with the
exercise would be deposited in the escrow or trust
account.
|
64
Terms of Our Offering
|
Terms Under a Rule 419 Offering
|
|||
Election
to remain an investor
|
We
will provide our public stockholders with the opportunity to redeem their
public shares for cash equal to their pro rata share of the aggregate
amount then on deposit in the trust account, including interest less
franchise and income taxes payable, upon the consummation of our initial
business combination, subject to the limitations described
herein. We may not be required by law to hold a stockholder
vote. If we are not required by law and do not otherwise decide
to hold a stockholder vote, we will, pursuant to our amended and restated
certificate of incorporation, conduct the redemptions pursuant to the
tender offer rules of the SEC and file tender offer documents with the SEC
which will contain substantially the same financial and other information
about the initial business combination and the redemption rights as is
required under the SEC’s proxy rules. If, however, we hold a
stockholder vote, we will, like many blank check companies, offer to
redeem shares in conjunction with a proxy solicitation pursuant to the
proxy rules and not pursuant to the tender offer rules. If we
seek stockholder approval, we will consummate our initial business
combination only if a majority of the outstanding shares of common stock
voted are voted in favor of the business
combination. Additionally, each public stockholder may elect to
redeem their public shares irrespective of whether they vote for or
against the proposed transaction; provided, however, our public
stockholders voting in favor of our initial business combination may elect
to exercise their redemption rights and shall be entitled to receive cash
equal to their pro rata share of the aggregate amount then on deposit in
the trust account, including any amounts representing interest earned on
the trust account, less taxes and up to $1.25 million withdrawn for
working capital purposes, but our public stockholders voting against the
business combination and electing to exercise their redemption rights
shall only be entitled to receive cash equal to their pro rata share of
the aggregate amount in the trust account less taxes and interest earned
on the proceeds placed in the trust account. In addition, our
sponsor has agreed to waive its redemption rights with respect to their
founder shares and public shares in connection with the consummation of a
business combination.
|
A
prospectus containing information pertaining to the business combination
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 a post-effective amendment to the
company’s registration statement, to decide if he, she or it elects to
remain a stockholder of the company or require the return of his, her or
its 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
or escrow account are automatically returned to the
stockholder. Unless a sufficient number of investors elect to
remain investors, all funds on deposit in the escrow account must be
returned to all of the investors and none of the securities are
issued.
|
65
Terms of Our Offering
|
Terms Under a Rule 419 Offering
|
|||
Business
combination deadline
|
If
we are unable to complete a business combination within 21(or 24) months
from the closing of this offering, we shall: (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public
shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest but net of
franchise and income taxes payable (less up to $100,000 of such net
interest to pay dissolution expenses), divided by the number of then
outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to
receive further liquidation distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our
board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable law.
|
If
an acquisition has not been consummated within 18 months after the
effective date of the company’s registration statement, funds held in the
trust or escrow account are returned to investors.
|
||
Release
of funds
|
|
Except
for up to $1.25 million, subject to adjustment in the event the size of
the offering changes as a result of the underwriters’ exercise of any
portion of the over-allotment option or if we otherwise decide to change
the size of this offering, of the interest income earned on the trust
account balance (net of franchise and income taxes payable) released to us
to pay any income and franchise taxes on such interest and to fund our
working capital requirements, and any amounts necessary to purchase up to
15% of our public shares if we seek stockholder approval of our initial
business combination as will be permitted under our amended and restated
certificate of incorporation and the Investment Trust Management Agreement
with [Transfer Agent], none of the funds held in trust will be released
from the trust account until the earlier of (i) the completion of our
initial business combination or (ii) the redemption of our public shares
if we are unable to consummate a business combination within 21 (or 24)
months from the date of this prospectus (subject to the requirements of
applicable law).
|
|
The
proceeds held in the escrow account are not released until the earlier of
the completion of a business combination or the failure to effect a
business combination within the allotted
time.
|
66
Comparison
of This Offering to Those of Many Blank Check Companies Not Subject to Rule
419
The
following table compares the terms of this offering to the terms of many blank
check companies that are not subject to Rule 419. Each term of this
offering described in the table below is located in our amended and restated
certificate of incorporation other than “— Warrant terms” which is located in
the warrant agreement.
Terms of Our Offering
|
Terms of Many Blank
Check Offerings
|
Impact on Whether a
Particular Business
Combination is
Completed
|
||||
Requirement
to conduct a tender offer or hold a stockholder vote
|
We
will provide our stockholders with the opportunity to redeem their shares
of common stock upon the consummation of our initial business combination
on the terms described in this prospectus. We intend to conduct
these redemptions pursuant to the tender offer rules without filing a
proxy statement with the SEC and without conducting a stockholder vote to
approve our initial business combination, unless stockholder approval is
required by law or we decide to seek stockholder approval for business or
other legal reasons.
|
Many
blank check companies are required to file a proxy statement with the SEC
and hold a stockholder vote to approve their initial business combination
regardless of whether such a vote is required by law. These
blank check companies may not consummate a business combination if the
majority of the company’s public shares voted are voted against a proposed
business combination.
|
Our
ability to consummate our initial business combination without conducting
a stockholder vote in the event that a stockholder vote is not required by
law may increase the likelihood that we will be able to complete our
initial business combination and decrease the ability of public
stockholders to affect whether or not a particular business combination is
completed.
|
|||
Requirement
to vote against a business combination in order to redeem
|
If
we seek stockholder approval in conjunction with the consummation of our
initial business combination, each public stockholder may elect to redeem
their public shares irrespective of whether they vote for or against the
proposed transaction; provided, however, our public stockholders voting in
favor of our initial business combination may elect to exercise their
redemption rights and shall be entitled to receive cash equal to their pro
rata share of the aggregate amount then on deposit in the trust account,
including any amounts representing interest earned on the trust account,
less taxes and up to $1.25 million withdrawn for working capital purposes,
but our public stockholders voting against the business combination and
electing to exercise their redemption rights shall only be entitled to
receive cash equal to their pro rata share of the aggregate amount in the
trust account less taxes and interest earned on the proceeds placed in the
trust account. In addition, our sponsor has agreed to waive its
redemption rights with respect to their founder shares and public shares
in connection with the consummation of a business
combination.
|
Many
blank check companies require public stockholders to vote against the
proposed business combination in order to redeem their
shares.
|
The
ability of our public stockholders to vote in favor of a business
combination and redeem their shares may increase the likelihood that we
will be able to complete our initial business combination and decrease the
ability of public stockholders to affect whether or not a particular
business combination is
completed.
|
67
Terms of Our Offering
|
Terms of Many Blank
Check Offerings
|
Impact on Whether a
Particular Business
Combination is
Completed
|
||||
Redemption
threshold
|
We
do not have a specified maximum redemption threshold apart from the
limitation that we will not redeem our public shares in an amount that
would cause our net tangible assets to be less than
$5,000,001. In such case, we would not proceed with the
redemption of our public shares and the related business combination, and
instead may search for an alternate business combination.
|
Many
blank check companies are not permitted to consummate a business
combination if more than a specified percentage of the shares sold in such
company’s initial public offering, which percentage threshold has
typically been between 19.99% and 39.99%, elect to redeem or convert their
shares in connection with the stockholder vote.
|
The
absence of a redemption threshold in our offering will make it easier for
us to consummate our initial business combination even if a substantial
majority of our stockholders do not agree.
|
|||
Accelerated
deadline to complete business combination
|
We
will only have 21 months from the date of this prospectus to complete our
initial business combination or 24 months from the date of this prospectus
if a letter of intent or a definitive agreement has been executed within
21 months from the date of the prospectus and the business combination
relating thereto has not yet been completed within such 21-month
period.
|
Many
blank check companies have between 24 and 36 months to complete their
initial business combinations.
|
The
21 (or 24) month deadline for us to complete our initial business
combination may decrease the likelihood that we will be able to complete
our initial business combination compared to many blank check companies
but should not impact the ability of our public stockholders to affect
whether or not a particular business combination is
completed.
|
68
Terms of Our Offering
|
Terms of Many Blank
Check Offerings
|
Impact on Whether a
Particular Business
Combination is
Completed
|
||||
Permitted
purchases of shares by us prior to the consummation of our initial
business combination using amounts held in the trust
account
|
If
we seek stockholder approval of our initial business combination and we do
not conduct redemptions in connection with our business combination
pursuant to the tender offer rules, prior to the consummation of a
business combination, there could be released to us from the trust account
amounts necessary to purchase up to 15% of the shares sold in this
offering at any time commencing after the filing of a preliminary proxy
statement for our initial business combination and ending on the date of
the stockholder meeting to approve the initial business
combination.
|
Many
blank check companies are prohibited from utilizing funds from the trust
account to purchase shares from public stockholders prior to the
consummation of their initial business combination.
|
Our
ability to purchase shares prior to the consummation of our initial
business combination using amounts held in the trust account may increase
the likelihood that we will be able to complete our initial business
combination and decrease the ability of public stockholders to affect
whether or not a particular business combination is
completed.
|
|||
Minimum
fair market value of target
|
We
may enter into our initial business combination with a target regardless
of its fair market value so long as we acquire a controlling interest in
the target.
|
Many
blank check companies are required to consummate their initial business
combination with a target whose fair market value is equal to at least 80%
of the amount of money held in the trust account of the blank check
company at the time of entry into a definitive agreement for a business
combination.
|
The
absence of a minimum fair market value requirement in our offering may
increase the likelihood that we will be able to complete our initial
business combination but should not impact the ability of our public
stockholders to affect whether or not a particular business combination is
completed.
|
|||
Warrant
terms
|
|
The
warrants issued in this offering (i) have an exercise price that is above
the initial public offering price of our units and that is subject to
reduction in the event that we pay extraordinary dividends, (ii) do not
expire until five years from the closing of our initial business
combination or earlier upon redemption or liquidation, (iii) require the
consent of holders of 65% of the public warrants to amend their terms and
(iv) may be exercised on a cashless basis if a registration statement
covering shares underlying the warrants is not effective within 60 days
following our initial business combination (subject to compliance with
state blue sky laws).
|
|
The
warrants issued in many blank check offerings (i) have an exercise price
that is lower than the initial public offering price of their units and
that is not subject to reduction in the event that they pay extraordinary
dividends, (ii) expire five years from the closing of the company’s
initial public offering or earlier upon redemption or liquidation, (iii)
only require the consent of holders of a majority of the such warrants to
amend their terms and (iv) are not exercisable unless a registration
statement covering shares underlying the warrants is effective within 60
days following the initial business combination (subject to compliance
with state blue sky laws).
|
|
The
differences in the terms of the warrants issued in our offering may
increase the likelihood that we will be able to complete our initial
business combination to the extent that potential targets view the fact
that the exercise price is above the initial public offering price of our
units favorably but should not impact the ability of our public
stockholders to affect whether or not a particular business combination is
completed.
|
69
Competition
In
identifying, evaluating and selecting a target business for a business
combination, 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
combinations 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
our public stockholders who exercise their redemption rights may reduce the
resources available to us for an initial business combination 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 combination.
Facilities
We
currently maintain our executive offices at 615 N. Wabash Ave., Chicago,
Illinois 60611. The cost for this space is included in the $7,500 per
month fee described above that Sachs Capital Group LP charges us for general and
administrative services. We believe, based on rents and fees for
similar services in the Chicago metropolitan area that the fee charged by Sachs
Capital Group LP 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
We
currently have 2 executive officers. These individuals are not
obligated to devote any specific number of hours to our matters but they intend
to devote as much of their time as they deem necessary to our affairs until we
have completed our initial business combination. The amount of time
they will devote in any time period will vary based on whether a target business
has been selected for our initial business combination and the stage of the
business combination process we are in. We do not intend to have any
full time employees prior to the consummation of our initial business
combination.
Periodic
Reporting and Financial Information
We will
register 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 as part of the tender offer materials or proxy solicitation materials
sent to stockholders to assist them in assessing the target
business. In all likelihood, these financial statements will need to
be prepared in accordance with GAAP. We cannot assure you that any
particular target business identified by us as a potential acquisition candidate
will have financial statements prepared in accordance with GAAP or that the
potential target business will be able to prepare its financial statements in
accordance with GAAP. To the extent that this requirement cannot be
met, we may not be able to acquire the proposed target
business. While this may limit the pool of potential acquisition
candidates, we do not believe that this limitation will be
material.
70
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 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.
Legal
Proceedings
There is
no material litigation, arbitration or governmental proceeding currently pending
against us or any members of our management team in their capacity as such, and
we and the members of our management team have not been subject to any such
proceeding in the 12 months preceding the date of this
prospectus.
71
MANAGEMENT
Directors
and Executive Officers
Our
directors, executive officers and director nominees are as follows:
Name
|
Age
|
Title
|
||
Gregory
H. Sachs
|
45
|
Chairman,
Chief Executive Officer, President
|
||
Michelle
Sibley
|
40
|
Chief
Financial Officer, Treasurer and Secretary
|
||
Kenneth
B. Leonard
|
47
|
Director
Nominee
|
||
Donna
Parlapiano
|
46
|
Director
Nominee
|
||
Marvin
Shrear
|
67
|
Director
Nominee
|
||
Frederick
L. White
|
|
66
|
|
Director
Nominee
|
Gregory H. Sachs has been our
Chairman, Chief Executive Officer and President since inception. Since 2008, he
has been Chairman and Chief Executive officer of Sachs Capital Group LP. From
1993 to 2007 he was Chairman and Chief Executive Officer of Deerfield Capital
Management which he founded and oversaw its growth from a fixed income hedge
fund with $15 million in assets under management to a global diversified fixed
income investment manager with approximately $15 billion in assets under
management. While at Deerfield, Mr. Sachs oversaw the management of Deerfield
Capital Corp, a publicly traded (NYSE:DFR) specialty finance company that
invests in various credit related asset classes. Deerfield Capital Corp. had
assets under management in excess of $8 billion at the time Mr. Sachs sold his
interest in 2007. Prior to founding Deerfield, Mr. Sachs was Vice President and
Trading Manager for Harris Trust and Savings Bank’s Global Fixed Income Trading
Division. Mr. Sachs graduated from the University of Wisconsin at
Madison in 1988 with both an M.S. degree in Quantitative Analysis and Finance
and a B.B.A. degree in Actuarial Science and Quantitative Analysis. He is a
former board member of the Triarc Companies (NYSE: TRY) from 2004 to 2007,
Deerfield Capital Corp. (NYSE: DFR) from 2005 to 2007 and the Futures Industry
Association. Mr. Sachs’ designation as a director and Chairman of our board of
directors was based upon his extensive background in the financial services
industry, his substantial experience in growing businesses and his prior public
company experience.
Michelle Sibley has been our
Chief Financial Officer, Treasurer and Secretary since inception. Ms. Sibley is
currently the Chief Financial Officer at Sachs Capital Group LP where her
responsibilities include oversight of all financial aspects of the business.
Prior to joining Sachs Capital Group LP in 2004, Ms. Sibley was a senior tax
manager in Deloitte & Touche’s tax practice. She has over 10 years of
experience in public accounting, working in Arthur Anderson and Deloitte &
Touche’s Financial Services practices. Ms. Sibley received a B.S. in accounting
from Northern Illinois University in 1993 and is a Certified Public
Accountant.
Kenneth B. Leonard has agreed
to serve on our board of directors upon the closing of this offering. With
nearly 25 years of experience in the Private Equity lending space, Mr. Leonard
has relationships with dozens of private equity firms, investments banks,
business brokers and lenders. Mr. Leonard is currently Managing Director and
Co-head of Dymas Capital Management Company, LLC, a Cerberus Capital affiliate.
Prior to starting Dymas in 2002, Mr. Leonard was head of GE Capital’s Merchant
Banking Syndications Group and, prior to being acquired by GE in 2001, Heller
Financial’s Corporate Finance Syndications Team. Mr. Leonard began his career at
Heller Financial in 1986 where he assisted in the founding of Heller’s
Syndication Team and spent time in portfolio management, underwriting and
originations within the Corporate Finance and Business Credit Groups of Heller.
In 1994 Mr. Leonard moved into Heller Investments, Inc., Heller’s Turnaround
Private Equity Group as an investment professional. Mr. Leonard is a director of
Home Meridian International, a client of Dymas Capital Management Company, LLC.
Mr. Leonard received a B.A. degree from the University of Iowa in 1986 and
received an M.B.A. degree from Northwestern University’s
Kellogg School of Management in 1993. Mr. Leonard’s designation as a
director was based upon his nearly 25 years of experience in evaluating and
financing private equity transactions.
Donna Parlapiano has agreed to
serve on our board of directors upon the closing of this offering. Ms.
Parlapiano is Executive Vice President for Regional Operations and Industry
Relations at AutoNation (NYSE:AN), America’s largest automotive retailer
employing approximately 19,000 people at 206 dealership locations representing
244 franchises, where she joined in 1998. A nearly 25-year veteran of the
automobile industry, Ms. Parlapiano’s responsibilities include dealership
operations and managing relationships with automobile manufacturers. Prior to
joining AutoNation, Ms. Parlapiano held finance, marketing and strategic
management positions with Ford Motor Company from 1986 to 1998. In September
2010, Ms. Parlapiano was named one of the 100 most influential women in US auto
industry by Automotive News. Ms. Parlapiano received a B.S. in Business
Administration from Southern Colorado University in 1986 and an M.B.A. from the
University of Denver in 1991. Ms Parlapiano’s designation as a director was
based upon her senior-level management experience.
72
Marvin Shrear has agreed to
serve on our board of directors upon the closing of this offering. Mr. Shrear
was a Senior Managing Director at Deerfield Capital Management (a financial
services company) from 1993 until his retirement in 2008 where he also served as
Chief Financial Officer. Prior to joining Deerfield, Mr. Shrear was a partner in
the Chicago office of Arthur Andersen & Co., Chief Financial Officer at GNP
Commodities, Inc., and Vice President Finance for FCT Group, Inc. GNP and FCT
were registered futures commission merchants. Mr. Shrear received a B.S.C. in
Accountancy from DePaul University in 1965 and a J.D. from Stanford University
in 1968. He is licensed as a Certified Public Accountant and attorney. Mr.
Shrear’s designation as a director was based upon his senior-level management
and a financial services industry experience.
Frederick L. White has agreed
to serve on our board of directors upon the closing of this offering. Mr. White
is Managing Director, Deputy General Counsel and Chief Compliance Officer of
Deerfield Capital Management. From 2002 to 2008, Mr. White served as Managing
Director, General Counsel and Chief Compliance Officer of Deerfield. From 2004
to 2008, concurrent with his time at Deerfield, Mr. White was also General
Counsel, Senior Vice President and Secretary of Deerfield Capital Corp., a
publicly-traded real estate investment trust (NYSE:DFR) organized and managed by
Deerfield. Before joining Deerfield, Mr. White practiced securities law for more
than 30 years and was a partner at the firms of Drinker, Biddle, Gardner &
Carton (1989-2002); Much, Shelist & Freed (1987-1989); and Kirkland &
Ellis (1979-1987). Before private practice, Mr. White was an attorney with the
Commodity Futures Trading Commission (1975-1979) and the Securities and Exchange
Commission (1970-1975). Mr. White received his undergraduate degree from Cornell
University in 1966 and his J.D. degree from the University of Michigan Law
School in 1969. Mr. White’s designation as a director was based upon his over 40
years of financial services industry experience.
Number
and Terms of Office of Officers and Directors
Our board
of directors is divided into three classes with only one class of directors
being elected in each year and each class (except for those directors appointed
prior to our first annual meeting of stockholders) serving a three-year
term. The term of office of the first class of directors, consisting
of Mr. Leonard will expire at our first annual meeting of
stockholders. The term of office of the second class of directors,
consisting of Ms. Parlapiano and Mr. White, will expire at the second annual
meeting of stockholders. The term of office of the third class of
directors, consisting of Mr. Sachs and Mr. Shrear, will expire at the third
annual meeting of stockholders.
Our
officers are appointed by the board of directors and serve at the discretion of
the board of directors, rather than for specific terms of office. Our
board of directors is authorized to appoint persons to the offices set forth in
our amended and restated bylaws as it deems appropriate. Our amended
and restated bylaws provide that our officers may consist of a chairman of the
board, chief executive officer, president, chief financial officer, vice
presidents, secretary, treasurer and such other offices as may be determined by
the board of directors.
Collectively,
through their positions described above, our officers and directors have
extensive experience in the private equity business and in financial
services. These individuals will play a key role in identifying and
evaluating prospective acquisition candidates, selecting the target businesses,
and structuring, negotiating and consummating their acquisition.
Director
Independence
Although
we are not required to have a majority of independent directors on our board of
directors, we have elected to have a majority of independent
directors. An “independent director” is defined generally as a person
other than an officer or employee of the company or its subsidiaries or any
other individual having a relationship, which, in the opinion of the company’s
board of directors would interfere with the director’s exercise of independent
judgment in carrying out the responsibilities of a director.
We
believe that each of Messrs. Leonard, Shrear and White and Ms. Parlapiano, who
have agreed to join our board of directors and are expected to join our board of
directors upon the closing of this offering, will be independent directors as
such term is defined under the rules of the NYSE Amex and Rule 10A-3 of the
Exchange Act. Although our company will not be listed on the NYSE
Amex upon consummation of this offering, we have voluntarily applied the
definition of director independence used by the NYSE Amex Company Guide in
making the determinations with respect to Messrs. Leonard, Shrear and White and
Ms. Parlapiano. Our independent directors will have regularly
scheduled meetings at which only independent directors are present.
Executive
Officer and Director Compensation
None of
our executive officers or directors received any cash compensation for services
rendered. Commencing on the date that our securities are first quoted
on the OTCBB through the earlier of consummation of our initial business
combination or our liquidation, we will pay Sachs Capital Group LP, an entity
beneficially owned and controlled by Mr. Sachs, a total of $7,500 per month for
office space and administrative services, including secretarial
support. This arrangement is being agreed to by Sachs Capital Group
LP for our benefit and is not intended to provide Sachs Capital Group LP (or Mr.
Sachs) compensation in lieu of a salary. We believe that such fees
are at least as favorable as we could have obtained from an unaffiliated third
party for such services. Other than this $7,500 per month fee and up
to an additional $7,500 per month which may be paid to Sachs Capital Group LP or
our sponsor for additional overhead expenses incurred on our behalf, no
compensation of any kind, including finder’s and consulting fees, will be paid
to our sponsor, executive officers and directors, or any of their respective
affiliates, for services rendered prior to or in connection with the
consummation of an initial business combination. However, these
individuals will be reimbursed for any out-of-pocket expenses incurred in
connection with activities on our behalf such as identifying potential target
businesses and performing due diligence on suitable business
combinations. Our independent directors will review on a quarterly
basis all payments that were made to our sponsor, officers, directors or our or
their affiliates.
73
After the
completion of our initial business combination, directors or members of our
management team 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 tender offer materials or proxy
solicitation materials furnished to our stockholders in connection with a
proposed business combination. It is unlikely the amount of such
compensation will be known at the time, 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 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.
We do not
intend to take any action to ensure that members of our management team maintain
their positions with us after the consummation of our initial business
combination, although it is possible that some or all of our executive officers
and directors may negotiate employment or consulting arrangements to remain with
us after the initial business combination. The existence or terms of
any such employment or consulting arrangements to retain their positions with us
may influence our management’s motivation in identifying or selecting a target
business but we do not believe that the ability of our management to remain with
us after the consummation of an initial business combination will be a
determining factor in our decision to proceed with any potential business
combination. We are not party to any agreements with our executive
officers and directors that provide for benefits upon termination of
employment.
Board
Committees
Our board
of directors intends to establish an audit committee and a compensation
committee upon consummation of a business combination. 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
committee. 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 believe a
compensation committee is necessary prior to a business combination as there
will be no salary, fees or other compensation being paid to our officers or
directors prior to a business combination other than as disclosed in this
prospectus.
Code
of Conduct and Ethics
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
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:
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the
corporation could financially undertake the
opportunity;
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the
opportunity is within the corporation’s line of business;
and
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it
would not be fair to the corporation and its stockholders for the
opportunity not to be brought to the attention of the
corporation.
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Our
amended and restated certificate of incorporation provides, however, that the
doctrine of corporate opportunity, or any other analogous doctrine, will not
apply against us or any of our officers or directors or in circumstances that
would conflict with any fiduciary duties or contractual obligations they may
have currently or in the future in respect of Dymas Capital Management Company
LLC, Home Meridian International, AutoNation, Inc. and Deerfield Capital
Management LLC have invested, or any other fiduciary duties or contractual
obligations they may have as of the date of this prospectus.
Subject
to those fiduciary duties or contractual obligations, each of our officers and
directors (other than our independent directors) has agreed, pursuant to a
written agreement with us, that until the earliest of our initial business
combination, our liquidation or such time as he ceases to be an officer or
director, to present to us for our consideration, prior to presentation to any
other entity, any business opportunity with an enterprise value of $80 million
or more.
Accordingly,
if any of our officers or directors becomes aware of a business combination
opportunity that falls within the line of business of any entity to which he has
pre-existing fiduciary or contractual obligations, he may be required to present
such business combination opportunity to such entity prior to presenting such
business combination opportunity to us or, in the case of a non-compete
obligation, possibly prohibited from referring such opportunity to
us. Certain of our officers and directors currently have certain
relevant fiduciary duties or contractual obligations that may take priority over
their duties to us.
74
Kenneth B. Leonard, who has agreed to
serve on our board of directors upon the closing of this offering, owes
fiduciary duties to Dymas Capital Management Company LLC, a provider of senior,
junior secured, mezzanine and equity capital to private equity-sponsored and
non-sponsored middle-market companies, due to his serving as its Managing
Director and Co-head. Mr. Leonard also owes fiduciary duties to Home
Meridian International, a global furniture design and marketing company, due to
his serving on its board of directors.
Donna Parlapiano, who has
agreed to serve on our board of directors upon the closing of this offering,
owes fiduciary duties to AutoNation, Inc, the largest automotive retailer in the
United States due to her serving as its Executive Vice President.
Frederick L. White, who has
agreed to serve on our board of directors upon the closing of this offering,
owes fiduciary duties to Deerfield Capital Management LLC, an SEC and CFTC-
registered investment advisor, due to his serving as its Managing director,
Deputy General Counsel and Chief Compliance Officer.
We do not
believe that any of the foregoing pre-existing fiduciary duties or contractual
obligations will materially undermine our ability to consummate a business
combination because the foregoing entities have specific industry focuses and
even, within those industries, may have constraints on the size of acquisitions
they would consider.
Each of
our officers and directors may become involved with subsequent blank check
companies similar to our company, although they have agreed not to participate
in the formation of, or become an officer or director of, any blank check
company until we have entered into a definitive agreement regarding our initial
business combination or we have failed to complete our initial business
combination within 21 months from the date of this prospectus (or 24 months from
the date of this prospectus if a letter of intent or a definitive agreement has
been executed within 21 months from the date of the prospectus and the business
combination relating thereto has not yet been completed within such 21-month
period). Prior to this offering, none of our executive officers,
directors or promoters are or have been involved in any blank check
offerings.
Potential
investors should also be aware of the following other potential conflicts of
interest:
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None
of our officers and directors is required to commit his or her full time
to our affairs and, accordingly, may have conflicts of interest in
allocating his or her time among various business
activities.
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In
the course of their other business activities, our officers and directors
may become aware of investment and business opportunities which may be
appropriate for presentation to us as well as the other entities with
which they are affiliated. Our management may have conflicts of
interest in determining to which entity a particular business opportunity
should be presented. For a complete description of our
management’s other affiliations, see “—Directors and Executive
Officers.”
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Our
sponsor purchased founder shares prior to the date of this prospectus and
our sponsor will purchase sponsor warrants in a transaction that will
close simultaneously with the closing of this offering. Our
sponsor has agreed to waive its redemption rights with respect to its
founder shares and public shares in connection with the consummation of a
business combination. Additionally, our sponsor has agreed to
waive its redemption rights with respect to its founder shares if we fail
to consummate a business combination within 21 (or 24) months from the
closing of this offering. If we do not complete our initial
business combination within such 21 (or 24) month time period, the
proceeds of the sale of the sponsor warrants will be used to fund the
redemption of our public shares, and the sponsor warrants will expire
worthless. With certain limited exceptions, the founder shares
and sponsor warrants (including the common stock issuable upon exercise of
the sponsor warrants) will not be transferable, assignable or salable (i)
in the case of the founder shares, by our sponsor until the earlier of (A)
one year after the completion of our initial business combination or
earlier if, subsequent to our business combination, the last sales price
of our common stock equals or exceeds $12.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and the
like) for any 20 trading days within any 30-trading day period commencing
at least 150 days after our initial business combination, or (B) the date
on which we consummate a liquidation, merger, stock exchange or other
similar transaction after our initial business combination that results in
all of our stockholders having the right to exchange their shares of
common stock for cash, securities or other property, and (ii) in the case
of the sponsor warrants and the respective common stock underlying such
warrants, by our sponsor until 30 days after the completion of our initial
business combination. Since Mr. Sachs will indirectly own
shares of our common stock or warrants through our sponsor, he may have a
conflict of interest in determining whether a particular target business
is an appropriate business with which to effectuate a business
combination.
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Our
officers and directors may have a conflict of interest with respect to
evaluating a particular business combination if the retention or
resignation of any such officers and directors was included by a target
business as a condition to any agreement with respect to a business
combination.
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75
We are
not prohibited from pursuing an initial business combination with a company that
is affiliated with our sponsor, officers or directors. In the event
we seek to complete an initial business combination with such a company, we, or
a committee of independent directors, would obtain an opinion from an
independent investment banking firm which is a member of FINRA that such an
initial business combination is fair to our stockholders from a financial point
of view. Furthermore, in no event will our sponsor or any of our
existing 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 our initial
business combination.
We cannot
assure you that any of the above mentioned conflicts will be resolved in our
favor.
In the
event that we submit our initial business combination to our public stockholders
for a vote, sponsor has agreed to vote its founder shares and any shares
purchased during or after the offering in favor of our initial business
combination.
Limitation
on Liability and Indemnification of Officers and Directors
Our
amended and restated certificate of incorporation provides that our officers and
directors will be indemnified by us to the fullest extent authorized by Delaware
law, as it now exists or may in the future be amended. In addition,
our amended and restated certificate of incorporation provides that our
directors will not be personally liable for monetary damages to us for breaches
of their fiduciary duty as directors, unless they violated their duty of loyalty
to us or our stockholders, acted in bad faith, knowingly or intentionally
violated the law, authorized unlawful payments of dividends, unlawful stock
purchases or unlawful redemptions, or derived an improper personal benefit from
their actions as directors.
We will
enter into agreements with our officers and directors to provide contractual
indemnification in addition to the indemnification provided for in our amended
and restated certificate of incorporation. Our amended and restated
bylaws also will permit us to secure insurance on behalf of any officer,
director or employee for any liability arising out of his or her actions,
regardless of whether Delaware law would permit such
indemnification. We will purchase a policy of directors’ and
officers’ liability insurance that insures our officers and directors against
the cost of defense, settlement or payment of a judgment in some circumstances
and insures us against our obligations to indemnify our officers and
directors.
These
provisions may discourage stockholders from bringing a lawsuit against our
directors for breach of their fiduciary duty. These provisions also
may have the effect of reducing the likelihood of derivative litigation against
officers and directors, even though such an action, if successful, might
otherwise benefit us and our stockholders. Furthermore, a
stockholder’s investment may be adversely affected to the extent we pay the
costs of settlement and damage awards against officers and directors pursuant to
these indemnification provisions.
We
believe that these provisions, the insurance and the indemnity agreements are
necessary to attract and retain talented and experienced officers and
directors.
76
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 our common stock included in the units offered by this prospectus, and
assuming no purchase of units in this offering, by:
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each
person known by us to be the beneficial owner of more than 5% of our
outstanding shares of common stock;
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each
of our officers, directors and director nominees that beneficially owns
shares of our common stock; and
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all
our officers and directors as a
group.
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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. The following table does not reflect
record or beneficial ownership of the sponsor warrants as these warrants are not
exercisable within 60 days of the date of this prospectus.
Approximate Percentage of
Outstanding Common Stock
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Name and Address of Beneficial Owner(1)
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Number of Shares
Beneficially Owned
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Before
Offering
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After
Offering(2)
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SCG
Financial Holdings LLC (our sponsor)
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2,190,477 | (3) | 100.0 | % | 16.0 | % | ||||||
Gregory
H. Sachs
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2,190,477 | (3) | 100.0 | % | 16.0 | % | ||||||
Michelle
Sibley
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— | — | — | |||||||||
Kenneth
B. Leonard
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— | — | — | |||||||||
Donna
Parlapiano
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— | — | — | |||||||||
Marvin
Shrear
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— | — | — | |||||||||
Frederick
L. White
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— | — | — | |||||||||
All
directors and executive officers as a group (six
individuals)
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2,190,477 | 100.0 | % | 16.0 | % |
(1)
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Unless
otherwise noted, the business address of each of the following is 615 N.
Wabash Ave., Chicago, Illinois
60611.
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(2)
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Assumes
exercise of the underwriters’ over-allotment option and no resulting
forfeiture of an aggregate of 285,715 founder shares held by our sponsor
and includes a portion of the founder shares in an amount equal to 3.0% of
our issued and outstanding shares after this offering and the expiration
of the underwriters’ over-allotment option that are subject to forfeiture
by our sponsor in the event the last sales price of our stock does not
equal or exceed $12.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20
trading days within any 30-trading day period within 24 months following
the closing of our initial business
combination.
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(3)
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These
shares represent one hundred percent of our shares of common stock held by
our sponsor. The members of our sponsor are Gregory H. Sachs
Revocable Trust Dtd. April 24, 1998 and the 2011 Sachs Family
Trust. Mr. Sachs is the sole beneficiary of the Gregory H.
Sachs Revocable Trust and the children of Mr. Sachs are the beneficiaries
of the 2011 Sachs Family Trust. Mr. Sachs has sole voting and
dispositive control of the shares of our common stock held by our
sponsor.
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Immediately
after this offering (assuming no exercise of the underwriters’ over-allotment
option), our sponsor will beneficially own 16.0% of the then issued and
outstanding shares of our common stock (assuming it does not purchase any units
in this offering). Because of this ownership block, our sponsor may
be able to effectively influence the outcome of all matters requiring approval
by our stockholders, including the election of directors, amendments to our
amended and restated certificate of incorporation and approval of significant
corporate transactions other than approval of our initial business
combination.
To the
extent the underwriters do not exercise the over-allotment option, up to an
aggregate of 285,715 founder shares held by our sponsor will be subject to
forfeiture. Our sponsor will be required to forfeit only a number of
founder shares necessary to maintain our sponsors’ 16.0% ownership interest in
our common stock on a fully-diluted basis after giving effect to the offering
and the exercise, if any, of the underwriters’ over-allotment
option. In addition, the founder earn out shares (equal to 3.0% of
our issued and outstanding shares after this offering and the expiration of the
underwriters’ over-allotment option) will be subject to forfeiture by our
sponsor in the event the last sales price of our stock does not equal or exceed
$12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period within 24 months following the closing of our initial
business combination.
77
Our
sponsor has committed to purchase an aggregate of 4,000,000 sponsor warrants at
a price of $0.75 per warrant ($3.0 million in the aggregate) in a private
placement that will occur simultaneously with the closing of this
offering. Each sponsor warrant entitles the holder to purchase one
share of our common stock at $11.50 per share. The purchase price of
the sponsor warrants will be added to the proceeds from this offering to be held
in the trust account pending our completion of our initial business
combination. If we do not complete our initial business combination
within 21 months from the date of this prospectus (or 24 months from the date of
this prospectus if a letter of intent or a definitive agreement has been
executed within 21 months from the date of the prospectus and the business
combination relating thereto has not yet been completed within such 21-month
period), the proceeds of the sale of the sponsor warrants will be used to fund
the redemption of our public shares, and the sponsor warrants will expire
worthless. The sponsor warrants are subject to the transfer
restrictions described below. The sponsor warrants will not be
redeemable by us so long as they are held by our sponsor or their permitted
transferees. If the sponsor warrants are held by holders other than
our sponsor or its permitted transferees, the sponsor warrants will be
redeemable by us and exercisable by the holders on the same basis as the
warrants included in the units being sold in this offering. The
sponsor warrants may also be exercised by our sponsor or its permitted
transferees on a cashless basis. Otherwise, the sponsor warrants have
terms and provisions that are identical to those of the warrants being sold as
part of the units in this offering.
Our
sponsor and our executive officers and directors are deemed to be our
“promoters” as such term is defined under the federal securities
laws.
Transfers
of Founder Shares and Sponsor Warrants
The
founder shares, sponsor warrants and any shares of common stock and warrants
purchased in this offering or issued upon exercise of the sponsor warrants are
each subject to transfer restrictions pursuant to lockup provisions in the
letter agreements with us and the underwriters to be entered into by our
sponsor. Those lockup provisions provide that such securities are not
transferable or salable (i) in the case of the founder shares, until the earlier
of (A) one year after the completion of our initial business combination or
earlier if, subsequent to our business combination, the last sales price of our
common stock equals or exceeds $12.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for any 20
trading days within any 30-trading day period commencing at least 150 days after
our initial business combination, or (B) the date on which we consummate a
liquidation, merger, stock exchange or other similar transaction after our
initial business combination that results in all of our stockholders having the
right to exchange their shares of common stock for cash, securities or other
property, and (ii) in the case of the sponsor warrants and the respective common
stock underlying such warrants, until 30 days after the completion of our
initial business combination, except in each case (a) to our officers or
directors, any affiliates or family members of any of our officers or directors,
any members of our sponsor, or any affiliates of our sponsor, (b) by gift to a
member of one of the members of our sponsor’s immediate family or to a trust,
the beneficiary of which is a member of one of the members of our sponsor’s
immediate family, an affiliate of our sponsor or to a charitable organization;
(c) by virtue of laws of descent and distribution upon death of one of the
members of our sponsor; (d) pursuant to a qualified domestic relations order;
(e) by virtue of the laws of the state of Delaware or our sponsor’s limited
liability company agreement upon dissolution of our sponsor; (f) in the event of
our liquidation prior to our completion of our initial business combination; or
(g) in the event of our consummation of a liquidation, merger, stock exchange or
other similar transaction which results in all of our stockholders having the
right to exchange their shares of common stock for cash, securities or other
property subsequent to our consummation of our initial business combination;
provided, however, that these permitted transferees must enter into a written
agreement agreeing to be bound by these transfer restrictions.
Registration
Rights
The
holders of the founder shares, sponsor warrants and warrants that may be issued
upon conversion of working capital loans will have registration rights to
require us to register a sale of any of our securities held by them pursuant to
a registration rights agreement to be signed prior to or on the effective date
of this offering. These stockholders will be entitled to make up to
three demands, excluding short form registration demands, that we register such
securities for sale under the Securities Act. In addition, these
stockholders will have “piggy-back” registration rights to include their
securities in other registration statements filed by us. However, the
registration rights agreement provides that we will not permit any registration
statement filed under the Securities Act to become effective until termination
of the applicable lock-up period, which occurs (i) in the case of the founder
shares, upon the earlier of (A) one year after the completion of our initial
business combination or earlier if, subsequent to our business combination, the
last sales price of our common stock equals or exceeds $12.00 per share (as
adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period
commencing at least 150 days after our initial business combination, or (B) the
date on which when we consummate a liquidation, merger, stock exchange or other
similar transaction after our initial business combination that results in all
of our stockholders having the right to exchange their shares of common stock
for cash, securities or other property, and (ii) in the case of the sponsor
warrants and the respective common stock underlying such warrants, 30 days after
the completion of our initial business combination. We will bear the
costs and expenses of filing any such registration statements.
78
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In
January, 2011 we issued an aggregate of 2,190,477 founder shares to our sponsor
for an aggregate purchase price of $25,000 in cash, or approximately $0.01 per
share. If the underwriters determine the size of the offering should
be increased, a stock dividend would be effectuated in order to maintain the
ownership represented by the founder shares at the same percentage, as was the
case before the stock dividend.
If the
underwriters do not exercise all or a portion of their over-allotment option,
our sponsor has agreed, pursuant to a written agreement with us, that it will
forfeit up to an aggregate of 285,715 founder shares in proportion to the
portion of the underwriters’ over-allotment option that was not
exercised. In addition, the founder earn out shares (equal to 3.0% of
our issued and outstanding shares after this offering and the expiration of the
underwriters’ over-allotment option) will be subject to forfeiture by our
sponsor in the event the last sales price of our stock does not equal or exceed
$12.00 per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading days within
any 30-trading day period within 24 months following the closing of our initial
business combination. If such shares are forfeited, we would record
the aggregate fair value of the shares forfeited and reacquired to treasury
stock and a corresponding credit to additional paid-in capital based on the
difference between the fair market value of the forfeited shares and the price
paid to us for such forfeited shares of approximately $2,857. Upon
receipt, such forfeited shares would then be immediately cancelled, which would
result in the retirement of the treasury stock and a corresponding charge to
additional paid-in capital.
Our
sponsor has committed to purchase an aggregate of 4,000,000 sponsor warrants in
a private placement that will occur simultaneously with the closing of this
offering. Each sponsor warrant entitles the holder to purchase one
share of our common stock at $11.50 per share. The sponsor warrants
(including the common stock issuable upon exercise of the sponsor warrants) may
not, subject to certain limited exceptions, be transferred, assigned or sold by
it until 30 days after the completion of our initial business
combination.
Each of
our officers and directors (other than our independent directors) has agreed,
pursuant to a written agreement with us, that until the earliest of our initial
business combination, our liquidation or such time as he ceases to be an officer
or director, to present to us for our consideration, prior to presentation to
any other entity, any business opportunity with an enterprise value of $80
million or more, subject to any pre-existing fiduciary or contractual
obligations he might have. As more fully discussed in “Management —
Conflicts of Interest,” if any of our officers or directors (other than our
independent directors) becomes aware of a business combination opportunity that
falls within the line of business of any entity to which he has pre-existing
fiduciary or contractual obligations, he may be required to present such
business combination opportunity to such entity prior to presenting such
business combination opportunity to us. Certain of our directors
currently have certain relevant fiduciary duties or contractual obligations that
may take priority over their duties to us.
Sachs
Capital Group LP, an entity beneficially owned and controlled by Mr. Sachs, our
Chairman, Chief Executive Officer and President, has agreed to, from the date
that our securities are first quoted on the OTCBB through the earlier of our
consummation of a business combination or our liquidation, make available to us
office space and certain office and secretarial services, as we may require from
time to time. We have agreed to pay Sachs Capital Group LP $7,500 per
month for these services. However, this arrangement is solely for our
benefit and is not intended to provide Mr. Sachs compensation in lieu of
salary. We believe, based on rents and fees for similar services in
the Chicago metropolitan area, that the fee charged by Sachs Capital Group LP is
at least as favorable as we could have obtained from an unaffiliated
person.
Other
than the $7,500 per-month administrative fee paid to Sachs Capital Group LP, up
to $7,500 in monthly additional overhead expenses incurred on or behalf by Sachs
Capital Group LP or our sponsor and reimbursement of any out-of-pocket expenses
incurred in connection with activities on our behalf such as identifying
potential target businesses and performing due diligence on suitable business
combinations, no compensation or fees of any kind, including finder’s fees,
consulting fees or other similar compensation, will be paid to our sponsor,
officers or directors, or to any of their respective affiliates, prior to or
with respect to our initial business combination (regardless of the type of
transaction that it is). Our independent directors will review on a
quarterly basis all payments that were made to our sponsor, officers, directors
or our or their affiliates.
As of the
date of this prospectus our sponsor has also advanced to us an aggregate of
$75,000 to cover expenses related to this offering. This loan will be
payable without interest on the earlier of December 30, 2011 or the closing of
this offering. We intend to repay this loan from the proceeds of this
offering not placed in the trust account.
In
addition, in order to finance transaction costs in connection with an intended
initial business combination, our sponsor or an affiliate of our sponsor or
certain of our officers and directors may, but are not obligated to, loan us
funds as may be required. If we consummate an initial business
combination, we would repay such loaned amounts. In the event that
the initial business combination does not close, we may use a portion of the
working capital held outside the trust account to repay such loaned amounts but
no proceeds from our trust account would be used for such repayment, other than
the interest on such proceeds that may be released to us for working capital
purposes. Up to $500,000 of such loans may be convertible into
warrants of the post business combination entity at a price of $0.75 per warrant
at the option of the lender. The warrants would be identical to the
sponsor warrants. The terms of such loans by our officers and
directors, if any, have not been determined and no written agreements exist with
respect to such loans.
79
After our
initial business combination, members of our management team 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 our stockholders, to the extent
then known, in the tender offer or proxy solicitation materials, as applicable,
furnished to our stockholders. It is unlikely the amount of such
compensation will be known at the time of distribution of such tender offer
materials or at the time of a stockholder meeting held to consider our initial
business combination, as applicable, as it will be up to the directors of the
post-combination business to determine executive and director
compensation.
All
ongoing and future transactions between us and any member of our management team
or his or her respective affiliates will be on terms believed by us at that
time, based upon other similar arrangements known to us, to be no less favorable
to us than are available from unaffiliated third parties. It is our
intention to obtain estimates from unaffiliated third parties for similar goods
or services to ascertain whether such transactions with affiliates are on terms
that are no less favorable to us than are otherwise available from such
unaffiliated third parties. If a transaction with an affiliated third
party were found to be on terms less favorable to us than with an unaffiliated
third party, we would not engage in such transaction.
We have
entered into a registration rights agreement with respect to the founder shares
and sponsor warrants, which is described under the heading “Principal
Stockholders — Registration Rights.”
80
DESCRIPTION
OF SECURITIES
Pursuant
to our amended and restated certificate of incorporation, our authorized
capital stock consists of 250,000,000 shares of common stock, $0.0001 par value,
and 1,000,000 shares of undesignated preferred stock, $0.0001 par
value. The following description summarizes the material terms of our
capital stock. Because it is only a summary, it may not contain all
the information that is important to you.
Units
Each unit
consists of one share of common stock and one warrant. Each warrant
entitles the holder to purchase one share of common stock. The common
stock and warrants comprising the units will begin separate trading on the 52nd
day following the date of this prospectus unless Ladenburg Thalmann & Co.
Inc. informs us of its decision to allow earlier separate trading, subject to
our having filed the Current Report on Form 8-K described below and having
issued a press release announcing when such separate trading will
begin.
In no
event will the common stock and warrants be traded separately until we have
filed with the SEC a Current Report on Form 8-K which includes an audited
balance sheet reflecting our receipt of the gross proceeds of this
offering. We will file a Current Report on Form 8-K which includes
this audited balance sheet upon the consummation of this offering, which is
anticipated to take place three business days after the date of this
prospectus. The audited balance sheet will include proceeds we
received from the exercise of the over- allotment option if such option is
exercised prior to the filing of the Current Report on Form 8-K. If
the underwriters’ over-allotment option is exercised following the initial
filing of such Current Report on Form 8-K, a second or amended Current Report on
Form 8-K will be filed to provide updated financial information to reflect the
exercise of the underwriters’ over-allotment option.
Common
Stock
As of the
date of this prospectus, there were 2,190,477 shares of our common stock
outstanding, all of which were held of record by our sponsor. This
includes an aggregate of 285,715 shares of common stock subject to forfeiture by
our sponsor to the extent that the underwriters’ over- allotment option is not
exercised in full so that our sponsor will own 16.0% of our issued and
outstanding shares after this offering (assuming it does not purchase any units
in this offering and it is not required to forfeit its founder earn out shares,
as described in this prospectus). The members of our sponsor are
Gregory H. Sachs Revocable Trust Dtd. April 24, 1998 and the 2011 Sachs
Family Trust. Gregory H. Sachs, our Chairman, Chief Executive Officer
and President, has sole voting and dispositive control of the shares of our
common stock held by our sponsor. Upon closing of this offering
11,904,762 shares of our common stock will be outstanding (assuming no exercise
of the underwriters’ over-allotment option).
Common
stockholders of record are entitled to one vote for each share held on all
matters to be voted on by stockholders. Our board of directors is
divided into three classes, each of which will generally serve for a term of
three 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 voted
for the election of directors can elect all of the directors. Our
stockholders are entitled to receive ratable dividends when, as and if declared
by the board of directors out of funds legally available therefor.
Because
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
combination, we may (depending on the terms of such a business combination) 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
combination to the extent we seek stockholder approval in connection with a
business combination.
We do not
currently intend to hold an annual meeting of stockholders until after we
consummate a business combination, and thus may not be in compliance with
Section 211(b) of the DGCL. Therefore, if our stockholders want us to
hold an annual meeting prior to our consummation of a business combination, 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 DGCL.
We will
provide our stockholders with the opportunity to redeem their shares upon the
consummation of our initial business combination at a per-share price, payable
in cash, equal to the aggregate amount then on deposit in the trust account,
including interest but net of franchise and income taxes payable, divided by the
number of then outstanding public shares, subject to the limitations described
herein. The amount in the trust account is initially anticipated to
be approximately $10.00 per public share, or approximately $9.97 per public
share if the underwriters’ over-allotment option is exercised in
full. Our sponsor has agreed to waive their redemption rights with
respect to its founder shares and public shares in connection with the
consummation of a business combination. Unlike many blank check
companies that hold stockholder votes and conduct proxy solicitations in
conjunction with their initial business combinations and provide for related
redemptions of public shares for cash upon consummation of such initial business
combinations even when a vote is not required by law, if a stockholder vote is
not required by law and we do not decide to hold a stockholder vote for business
or other legal reasons, we will, pursuant to our amended and restated
certificate of incorporation, conduct the redemptions pursuant to the tender
offer rules of the SEC, and file tender offer documents with the SEC prior to
consummating our initial business combination. Our amended and
restated certificate of incorporation requires these tender offer documents to
contain substantially the same financial and other information about the initial
business combination and the redemption rights as is required under the SEC’s
proxy rules. If, however, a stockholder approval of the transaction
is required by law, or we decide to obtain stockholder approval for business or
other legal reasons, we will, like many blank check companies, offer to redeem
shares in conjunction with a proxy solicitation pursuant to the proxy rules and
not pursuant to the tender offer rules. If we seek stockholder
approval, we will consummate our initial business combination only if a majority
of the outstanding shares of common stock voted are voted in favor of the
business combination. However, the participation of our sponsor,
officers, directors, advisors or their affiliates in privately-negotiated
transactions (as described in this prospectus), if any, could result in the
approval of a business combination even if a majority of our public stockholders
vote, or indicate their intention to vote, against such business
combination. 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 combination once a quorum is obtained. We
intend to give approximately 30 days (but not less than 10 days 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 combination.
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If we
seek stockholder approval in connection with a business combination, our sponsor
has agreed to vote its founder shares and any public shares purchased during or
after the offering in favor of our initial business
combination. Additionally, each public stockholder may elect to
redeem their public shares irrespective of whether they vote for or against the
proposed transaction; provided, however, our public stockholders voting in favor
of our initial business combination may elect to exercise their redemption
rights and shall be entitled to receive cash equal to their pro rata share of
the aggregate amount then on deposit in the trust account, including any amounts
representing interest earned on the trust account, less taxes and up to $1.25
million, subject to adjustment as described herein, withdrawn for working
capital purposes, but our public stockholders voting against the business
combination and electing to exercise their redemption rights shall only be
entitled to receive cash equal to their pro rata share of the aggregate amount
in the trust account less taxes and interest earned on the proceeds placed in
the trust account.
Pursuant
to our amended and restated certificate of incorporation, if we are unable to
consummate a business combination within 21 months from the date of this
prospectus (or 24 months from the date of this prospectus if a letter of intent
or a definitive agreement has been executed within 21 months from the date of
the prospectus and the business combination relating thereto has not yet been
completed within such 21-month period), we will (i) cease all operations except
for the purpose of winding up, (ii) as promptly as reasonably possible but no
more than ten business days thereafter, redeem the public shares, at a per-share
price, payable in cash, equal to the aggregate amount then on deposit in the
trust account, including interest but net of franchise and income taxes payable
(less up to $100,000 of such net interest to pay dissolution expenses), divided
by the number of then outstanding public shares, which redemption will
completely extinguish public stockholders’ rights as stockholders (including the
right to receive further liquidation distributions, if any), subject to
applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board
of directors, dissolve and liquidate, subject in each case to our obligations
under Delaware law to provide for claims of creditors and the requirements of
other applicable law. Our sponsor has agreed to waive its redemption
rights with respect to its founder shares if we fail to consummate a business
combination within 21 (or 24) months from the closing of this
offering. However, if our sponsor or any of our officers, directors
or affiliates acquire public shares in or after this offering, they will be
entitled to redemption rights with respect to such public shares if we fail to
consummate a business combination within the required time period.
In the
event of a liquidation, dissolution or winding up of the company after a
business combination, 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 preemptive or other
subscription rights. There are no sinking fund provisions applicable
to the common stock, except that we will provide our stockholders with the
opportunity to redeem their shares of our common stock for cash equal to their
pro rata share of the aggregate amount then on deposit in the trust account,
including interest but net of any franchise and income taxes payable, upon the
consummation of our initial business combination, subject to the limitations
described herein.
Founder
Shares
The
founder shares are identical to the shares of common stock included in the units
being sold in this offering, and holders of founder shares have the same
stockholder rights as public stockholders, except that (i) the founder shares
are subject to certain transfer restrictions, as described in more detail below,
and (ii) our sponsor has agreed (A) to waive its redemption rights with respect
to its founder shares and public shares in connection with the consummation of a
business combination and (B) to waive their redemption rights with respect to
their founder shares if we fail to consummate a business combination within 21
(or 24) months from the closing of this offering, although they will be entitled
to redemption rights with respect to any public shares they hold if we fail to
consummate a business combination within such time period. If we
submit our initial business combination to our public stockholders for a vote,
our sponsor has agreed to vote its founder shares and any public shares
purchased during or after the offering in favor of our initial business
combination.
With
certain limited exceptions, the founder shares are not transferable, assignable
or salable (except to our officers and directors and other persons or entities
affiliated with our sponsor, each of whom will be subject to the same transfer
restrictions) until the earlier of (i) one year after the completion of our
initial business combination or earlier if, subsequent to our business
combination, the last sales price of our common stock equals or exceeds $12.00
per share (as adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like) for any 20 trading days within any 30-trading
day period commencing at least 150 days after our initial business combination,
or (ii) the date on which we consummate a liquidation, merger, stock exchange or
other similar transaction after our initial business combination that results in
all of our stockholders having the right to exchange their shares of common
stock for cash, securities or other property. In addition, the
founder earn out shares (equal to 3.0% of our issued and outstanding shares
after this offering and the expiration of the underwriters’ over-allotment
option) will be subject to forfeiture by our sponsor in the event the last sales
price of our stock does not equal or exceed $12.00 per share (as adjusted for
stock splits, stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30- trading day period within 24 months
following the closing of our initial business combination.
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Preferred
Stock
Our
amended and restated certificate of incorporation provides that shares of
preferred stock may be issued from time to time in one or more
series. Our board of directors will be authorized to fix the voting
rights, if any, designations, powers, preferences, the relative, participating,
optional or other special rights and any qualifications, limitations and
restrictions thereof, applicable to the shares of each series. Our
board of directors will be able to, without stockholder approval, issue
preferred stock with voting and other rights that could adversely affect the
voting power and other rights of the holders of the common stock and could have
anti-takeover effects. The ability of our board of directors to issue
preferred stock without stockholder approval could have the effect of delaying,
deferring or preventing a change of control of us or the removal of existing
management. We have no preferred stock outstanding at the date
hereof. 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. No shares of preferred stock are being issued or registered
in this offering.
Warrants
Public
Stockholders’ Warrants
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 one year from the closing of this offering or 30
days after the completion of our initial business combination. The
warrants will expire five years after the completion of our initial business
combination, at 5:00 p.m., New York time, or earlier upon redemption or
liquidation.
We will
not be obligated to deliver any shares of common stock pursuant to the exercise
of a warrant and will have no obligation to settle such warrant exercise unless
a registration statement under the Securities Act with respect to the shares of
common stock underlying the warrants is then effective and a prospectus relating
thereto is current, subject to our satisfying our obligations described below
with respect to registration. No warrant will be exercisable and we
will not be obligated to issue shares of common stock upon exercise of a warrant
unless common stock issuable upon such warrant exercise has been registered,
qualified or deemed to be exempt under the securities laws of the state of
residence of the registered holder of the warrants. In the event that
the conditions in the two immediately preceding sentence are not satisfied with
respect to a warrant, the holder of such warrant will not be entitled to
exercise such warrant and such warrant may have no value and expire
worthless. In no event will we be required to net cash settle any
warrant. In the event that a registration statement is not effective
for the exercised warrants, the purchaser of a unit containing such warrant will
have paid the full purchase price for the unit solely for the share of common
stock underlying such unit.
We have
agreed that as soon as practicable, but in no event later than fifteen (15)
business days, after the closing of our initial business combination, we will
use our best efforts to file with the SEC a post-effective amendment to the
registration statement of which this prospectus is a part, or a new registration
statement, for the registration, under the Securities Act, of the shares of
common stock issuable upon exercise of the warrants, and we will use our best
efforts to take such action as is necessary to register or qualify for sale, in
those states in which the warrants were initially offered by us, the shares of
common stock issuable upon exercise of the warrants, to the extent an exemption
is not available. We will use our best efforts to cause the same to
become effective and to maintain the effectiveness of such registration
statement, and a current prospectus relating thereto, until the expiration of
the warrants in accordance with the provisions of the warrant
agreement. In addition, we agree to use our best efforts to register
the shares of common stock issuable upon exercise of a warrant under the blue
sky laws of the states of residence of the exercising warrant holder to the
extent an exemption is not available.
If any
such post-effective amendment or registration statement has not been declared
effective by the 60th
business day following the closing of our initial business combination, holders
of the warrants will have the right, during the period beginning on the 61st
business day after the closing of our initial business combination and ending
upon such post-effective amendment or registration statement being declared
effective by the SEC, and during any other period when we will fail to have
maintained an effective registration statement covering the shares of common
stock issuable upon exercise of the warrants, to exercise such warrants on a
“cashless basis,” by exchanging the warrants (in accordance with Section 3(a)(9)
of the Securities Act or another exemption) 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 warrant exercise price and the fair market value” by (y) the fair
market value. For these purposes, fair market value will mean the
volume weighted average price of common stock as reported during the ten (10)
trading day period ending on the trading day prior to the date that notice of
exercise is received by the warrant agent from the holder of such warrants or
our securities broker or intermediary.
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Once the
warrants become exercisable, we may call the warrants for
redemption:
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in
whole and not in part;
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at
a price of $0.01 per warrant;
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upon
not less than 30 days’ prior written notice of redemption (the “30-day
redemption period” to each warrant holder;
and
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if,
and only if, the reported last sale price of the 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 to the notice of
redemption to the warrant holders.
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We will
not redeem the warrants unless an effective registration statement covering the
shares of common stock issuable upon exercise of the warrants is current and
available throughout the 30-day redemption period.
We have
established the last of the redemption criterion discussed above to prevent a
redemption call unless there is at the time of the call a significant premium to
the warrant exercise price. If the foregoing conditions are satisfied
and we issue a notice of redemption of the warrants, each warrant holder will be
entitled to exercise his, her or its warrant prior to the scheduled redemption
date. However, the price of the common stock may fall below the
$17.50 redemption trigger price as well as the $11.50 warrant exercise price
after the redemption notice is issued.
If we
call the warrants for redemption as described above, our management will have
the option to require any holder that wishes to exercise his, her or its warrant
to do so on a “cashless basis.” If our management takes advantage of this
option, all holders of warrants would pay the exercise price by surrendering
his, her or its 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” (defined below) 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. If our management takes advantage of
this option, the notice of redemption will contain the information necessary to
calculate the number of shares of common stock to be received upon exercise of
the warrants, including the “fair market value” in such
case. Requiring a cashless exercise in this manner will reduce the
number of shares to be issued and thereby lessen the dilutive effect of a
warrant redemption. We believe this feature is an attractive option
to us if we do not need the cash from the exercise of the warrants after a
business combination. If we call our warrants for redemption and our
management does not take advantage of this option, our sponsor and their
permitted transferees would still be entitled to exercise their sponsor warrants
for cash or on a cashless basis using the same formula described above that
other warrant holders would have been required to use had all warrant holders
been required to exercise their warrants on a cashless basis, as described in
more detail below.
A holder
of a warrant may notify us in writing in the event it elects to be subject to a
requirement that such holder will not have the right to exercise such warrant,
to the extent that after giving effect to such exercise, such person (together
with such person’s affiliates), to the warrant agent’s actual knowledge, would
beneficially own in excess of 9.8% of the shares of common stock outstanding
immediately after giving effect to such exercise.
If the
number of outstanding shares of common stock is increased by a stock dividend
payable in shares of common stock, or by a split-up of shares of common stock or
other similar event, then, on the effective date of such stock dividend,
split-up or similar event, the number of shares of common stock issuable on
exercise of each warrant will be increased in proportion to such increase in the
outstanding shares of common stock. A rights offering to holders of
common stock entitling holders to purchase shares of common stock at a price
less than the fair market value will be deemed a stock dividend of a number of
shares of common stock equal to the product of (i) the number of shares of
common stock actually sold in such rights offering (or issuable under any other
equity securities sold in such rights offering that are convertible into or
exercisable for common stock) multiplied by (ii) the quotient of (x) the price
per share of common stock paid in such rights offering divided by (y) the fair
market value. For these purposes (i) if the rights offering is for
securities convertible into or exercisable for common stock, in determining the
price payable for common stock, there will be taken into account any
consideration received for such rights, as well as any additional amount payable
upon exercise or conversion and (ii) fair market value means the volume weighted
average price of common stock as reported during the ten (10) trading day period
ending on the trading day prior to the first date on which the shares of common
stock trade on the applicable exchange or in the applicable market, regular way,
without the right to receive such rights.
In
addition, if we, at any time while the warrants are outstanding and unexpired,
pay a dividend or make a distribution in cash, securities or other assets to the
holders of common stock on account of such shares of common stock (or other
shares of our capital stock into which the warrants are convertible), other than
(a) as described above, (b) certain ordinary cash dividends, (c) to satisfy the
redemption rights of the holders of common stock in connection with a proposed
initial business combination, or (d) in connection with the redemption of our
public shares upon our failure to consummate our initial business combination,
then the warrant exercise price will be decreased, effective immediately after
the effective date of such event, by the amount of cash and/or the fair market
value of any securities or other assets paid on each share of common stock in
respect of such event.
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If the
number of outstanding shares of our common stock is decreased by a
consolidation, combination, reverse stock split or reclassification of shares of
common stock or other similar event, then, on the effective date of such
consolidation, combination, reverse stock split, reclassification or similar
event, the number of shares of common stock issuable on exercise of each warrant
will be decreased in proportion to such decrease in outstanding shares of common
stock.
Whenever
the number of shares of common stock purchasable upon the exercise of the
warrants is adjusted, as described above, the warrant exercise price will be
adjusted by multiplying the warrant exercise price immediately prior to such
adjustment by a fraction (x) the numerator of which will be the number of shares
of common stock purchasable upon the exercise of the warrants immediately prior
to such adjustment, and (y) the denominator of which will be the number of
shares of common stock so purchasable immediately thereafter.
In case
of any reclassification or reorganization of the outstanding shares of common
stock (other than those described above or that solely affects the par value of
such shares of common stock), or in the case of any merger or consolidation of
us with or into another corporation (other than a consolidation or merger in
which we are the continuing corporation and that does not result in any
reclassification or reorganization of our outstanding shares of common stock),
or in the case of any sale or conveyance to another corporation or entity of the
assets or other property of us as an entirety or substantially as an entirety in
connection with which we are dissolved, the holders of the warrants will
thereafter have the right to purchase and receive, upon the basis and upon the
terms and conditions specified in the warrants and in lieu of the shares of our
common stock immediately theretofore purchasable and receivable upon the
exercise of the rights represented thereby, the kind and amount of shares of
stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon a dissolution
following any such sale or transfer, that the holder of the warrants would have
received if such holder had exercised their warrants immediately prior to such
event. The warrant agreement provides for certain modifications to
what holders of warrants will have the right to purchase and receive upon the
occurrence of certain events, and that if less than 70% of the consideration
receivable by the holders of common stock in the applicable event is payable in
the form of common stock in the successor entity that is listed for trading on a
national securities exchange or on the OTC Bulletin Board, or is to be so listed
for trading immediately following such event, then the warrant exercise price
will be reduced in accordance with a formula specified in the warrant
agreement.
The
warrants will be issued in registered form under a warrant agreement between
[Transfer Agent], as warrant agent, and us. You should review a copy
of the warrant agreement, which will be filed as an exhibit to the registration
statement of which this prospectus is a part, for a complete description of the
terms and conditions applicable to the warrants.
The
warrants may be exercised upon surrender of the warrant certificate on or prior
to 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 (or on a cashless
basis, if applicable), by certified or official bank check payable to us, for
the number of warrants being exercised. 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 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.
Sponsor
Warrants
The
sponsor warrants (including the common stock issuable upon exercise of the
sponsor warrants) will not be transferable, assignable or salable until 30 days
after the completion of our initial business combination (except, among other
limited exceptions as described under “Principal Stockholders — Transfers of
Founder Shares and Sponsor Warrants,” to our officers and directors and other
persons or entities affiliated with the sponsor) and they will not be redeemable
by us so long as they are held by members of the sponsor or their permitted
transferees. Otherwise, the sponsor warrants have terms and
provisions that are identical to those of the warrants being sold as part of the
units in this offering, except that such warrants may be exercised by the
holders on a cashless basis. If the sponsor warrants are held by
holders other than members of the sponsor or their permitted transferees, the
sponsor warrants will be redeemable by us and exercisable by the holders on the
same basis as the warrants included in the units being sold in this
offering.
If
holders of the sponsor warrants elect to exercise them on a cashless basis, they
would pay the exercise price by surrendering his, her or its 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” (defined below) 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 warrant exercise is sent to the warrant
agent. The reason that we have agreed that these warrants will be
exercisable on a cashless basis so long as they are held by our sponsor or its
affiliates and permitted transferees is because it is not known at this time
whether they will be affiliated with us following a business
combination. If they remain affiliated with us, their ability to sell
our securities in the open market will be significantly limited. We
expect to have policies in place that prohibit insiders from selling our
securities except during specific periods of time. Even during such
periods of time when insiders will be permitted to sell our securities, an
insider cannot trade in our securities if he or she is in possession of material
non-public information. Accordingly, unlike public stockholders who
could exercise their warrants and sell the shares of common stock received upon
such exercise freely in the open market in order to recoup the cost of such
exercise, the insiders could be significantly restricted from selling such
securities. As a result, we believe that allowing the holders to
exercise such warrants on a cashless basis is appropriate.
85
Our
sponsor has agreed not to transfer, assign or sell any of the sponsor warrants
(including the common stock issuable upon exercise of any of these warrants)
until the date that is 30 days after the date we complete our initial business
combination, except that, among other limited exceptions as described under
“Principal Stockholders — Transfers of Founder Shares and Sponsor Warrants,”
transfers can be made to our officers and directors and other persons or
entities affiliated with the sponsor.
Dividends
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 combination. 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 combination. The payment of
any cash dividends subsequent to a business combination will be within the
discretion of our board of directors at such time. 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 immediately prior to the consummation
of the offering in such amount as to maintain our sponsors’ ownership at 16.0%
of the 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.
Our
Transfer Agent and Warrant Agent
The
transfer agent for our common stock and warrant agent for our warrants is
[Transfer Agent]. We have agreed to indemnify [Transfer Agent] in its
roles as transfer agent and warrant agent, its agents and each of its
stockholders, directors, officers and employees against all claims and losses
that may arise out of acts performed or omitted for its activities in that
capacity, except for any liability due to any gross negligence or intentional
misconduct of the indemnified person or entity.
Amendments
to our Amended and Restated 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 combination. These provisions cannot be
amended without the approval of 65% of our stockholders. Our sponsor,
who will beneficially own 16.0% of our common stock upon the closing of this
offering (assuming it does not purchase any units in this offering), will
participate in any vote to amend our amended and restated certificate of
incorporation and will have the discretion to vote in any manner it
chooses. Specifically, our amended and restated certificate of
incorporation provides, among other things, that:
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if
we are unable to consummate a business combination within 21 (or 24)
months from the date of this prospectus, we will (i) cease all operations
except for the purpose of winding up, (ii) as promptly as reasonably
possible but not more than ten business days thereafter, redeem the public
shares, at a per-share price, payable in cash, equal to the aggregate
amount then on deposit in the trust account, including interest but net of
franchise and income taxes payable (less up to $100,000 of such net
interest to pay dissolution expenses), divided by the number of then
outstanding public shares, which redemption will completely extinguish
public stockholders’ rights as stockholders (including the right to
receive further liquidation distributions, if any), subject to applicable
law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our
board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the
requirements of other applicable
law;
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prior
to our initial business combination, we may not issue additional shares of
capital stock that would entitle the holders thereof to (i) receive funds
from the trust account or (ii) vote on any initial business
combination;
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although
we do not intend to enter into a business combination 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, or a committee of independent directors, will
obtain an opinion from an independent investment banking firm that is a
member of FINRA that such a business combination is fair to our
stockholders from a financial point of
view;
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if
a stockholder vote on our initial business combination is not required by
law and we do not decide to hold a stockholder vote for business or other
legal reasons, we will offer to redeem our public shares pursuant to Rule
13e-4 and Regulation 14E of the Securities Exchange Act of 1934, as
amended, and will file tender offer documents with the SEC prior to
consummating our initial business combination which contain substantially
the same financial and other information about the initial business
combination and the redemption rights as is required under Regulation 14A
of the Exchange Act; and
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we
will not effectuate our initial business combination with another blank
check company or a similar company with nominal
operations.
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In
addition, our amended and restated certificate of incorporation provides that
under no circumstances will we redeem our public shares in an amount that would
cause our net tangible assets to be less than $5,000,001.
Certain
Anti-Takeover Provisions of Delaware Law
We will
be subject to the provisions of Section 203 of the DGCL regulating corporate
takeovers upon consummation of this offering. This statute prevents
certain Delaware corporations, under certain circumstances, from engaging in a
“business combination” with:
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a
stockholder who owns 15% or more of our outstanding voting stock
(otherwise known as an “interested
stockholder”);
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an
affiliate of an interested stockholder;
or
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an
associate of an interested stockholder, for three years following the date
that the stockholder became an interested
stockholder.
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A
“business combination” includes a merger or sale of more than 10% of our
assets. However, the above provisions of Section 203 do not
apply if:
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our
board of directors approves the transaction that made the stockholder an
“interested stockholder,” prior to the date of the
transaction;
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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
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on
or subsequent to the date of the transaction, the business combination 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.
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Securities
Eligible for Future Sale
Immediately
after this offering (assuming no exercise of the underwriters’ over-allotment
option and the forfeiture of 285,715 founder shares held by our sponsor) we will
have 11,904,762 shares of common stock outstanding. Of these shares,
the 10,000,000 shares sold in this offering will be freely tradable without
restriction or further registration under the Securities Act, except for any
shares purchased by one of our affiliates within the meaning of Rule 144 under
the Securities Act. All of the remaining 1,904,762 shares and all
4,000,000 sponsor warrants are restricted securities under Rule 144, in that
they were issued in private transactions not involving a public
offering.
Rule
144
Pursuant
to Rule 144, 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 and have filed all required reports
under Section 13 or 15(d) of the Exchange Act during the 12 months (or such
shorter period as we were required to file reports) preceding 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:
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1%
of the total number of shares of common stock then outstanding, which will
equal 119,048 shares immediately after this offering (or 136,905 if the
underwriters exercise their over-allotment option);
or
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the
average weekly reported trading volume of the common stock during the four
calendar weeks preceding the filing of a notice on Form 144 with respect
to the sale.
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Sales by
our affiliates under Rule 144 are also limited by manner of sale provisions and
notice requirements and to the availability of current public information about
us.
Restrictions
on the Use of Rule 144 by Shell Companies or Former Shell Companies
Rule 144
is not available for the resale of securities initially issued by shell
companies (other than business combination related shell companies) or issuers
that have been at any time previously a shell company. However, Rule
144 also includes an important exception to this prohibition if the following
conditions are met:
87
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the
issuer of the securities that was formerly a shell company has ceased to
be a shell company;
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the
issuer of the securities is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange
Act;
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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
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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.
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As a
result, our sponsor will be able to sell its founder shares and sponsor
warrants, as applicable, pursuant to Rule 144 without registration one year
after we have completed our initial business combination.
Registration
Rights
The
holders of the founder shares, sponsor warrants and warrants that may be issued
upon conversion of working capital loans (and any shares of common stock
issuable upon the exercise of the sponsor warrant and warrants that may be
issued upon conversion of working capital loans) will be entitled to
registration rights pursuant to a registration rights agreement to be signed
prior to or on the effective date of this offering. The holders of
the majority of these securities are entitled to make up to three demands,
excluding short form demands, that we register such securities. In
addition, the holders have certain “piggy-back” registration rights with respect
to registration statements filed subsequent to our consummation of an initial
business combination. However, the registration rights agreement
provides that we will not permit any registration statement filed under the
Securities Act to become effective until termination of the applicable lock-up
period, which occurs (i) in the case of the founder shares, upon the earlier of
(A) one year after the completion of our initial business combination or earlier
if, subsequent to our business combination, the last sales price of our common
stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days after our
initial business combination, or (B) the date on which we consummate a
liquidation, merger, stock exchange or other similar transaction after our
initial business combination that results in all of our stockholders having the
right to exchange their shares of common stock for cash, securities or other
property, and (ii) in the case of the sponsor warrants and the respective common
stock underlying such warrants, 30 days after the completion of our initial
business combination. We will bear the expenses incurred in
connection with the filing of any such registration statements.
Quotation
of Securities
We will
apply to have our units, common stock and warrants quoted on the OTCBB under the
symbols “ ,” “ ,” and “ ,” respectively. We anticipate that our units
will be quoted on the OTCBB 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 OTCBB.
88
UNDERWRITING
Ladenburg
Thalmann & Co. Inc. is acting as sole book-running manager of this offering
and as representative of the underwriters named below. Subject to the
terms and conditions stated in the underwriting agreement dated the date of this
prospectus, each underwriter named below has severally agreed to purchase and we
have agreed to sell to that underwriter, the number of units set forth opposite
the underwriter’s name.
Underwriter
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Number of Units
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Ladenburg
Thalmann & Co. Inc.
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Total
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10,000,000 |
The
underwriting agreement provides that the obligations of the underwriters to
purchase the units included in this offering are subject to approval of legal
matters by counsel and to other conditions. The underwriters are
obligated to purchase all of the units (other than those covered by the
over-allotment option described below) if they purchase any of the
units.
Units
sold by the underwriters to the public will initially be offered at the initial
public offering price set forth on the cover of this prospectus. Any
units sold by the underwriters to securities dealers may be sold at a discount
from the initial public offering price not to exceed $[ ] per
unit. If all of the units are not sold at the initial offering price,
the underwriters may change the offering price and the other selling
terms. Ladenburg Thalmann & Co. Inc. has advised us that the
underwriters do not intend to make sales to discretionary accounts.
If the
underwriters sell more units than the total number set forth in the table above,
we have granted to the underwriters an option, exercisable for 45 days from the
date of this prospectus, to purchase up to 1,500,000 additional units at the
public offering price less the underwriting discount. The
underwriters may exercise this option solely for the purpose of covering
over-allotments, if any, in connection with this offering. To the
extent the option is exercised, each underwriter must purchase a number of
additional units approximately proportionate to that underwriter’s initial
purchase commitment. Any units issued or sold under the option will
be issued and sold on the same terms and conditions as the other units that are
the subject of this offering.
Our
sponsor has agreed not to, subject to certain limited exceptions, transfer,
assign or sell any of the founder shares until the earlier of: (i) one year
after the completion of our initial business combination or earlier if,
subsequent to our business combination, the last sales price of our common stock
equals or exceeds $12.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days after our
initial business combination, or (ii) the date on which we consummate a
liquidation, merger, stock exchange or other similar transaction after our
initial business combination that results in all of our stockholders having the
right to exchange their shares of common stock for cash, securities or other
property. In addition, our sponsor has agreed not to, subject to
certain limited exceptions, transfer, assign or sell any of the sponsor warrants
(including the common stock issuable upon exercise of the sponsor warrants)
until 30 days after the completion of our initial business
combination.
Prior to
this offering, there has been no public market for our
securities. Consequently, the initial public offering price for the
units was determined by negotiations between us and the
representative. The determination of our per unit offering price was
more arbitrary than would typically be the case if we were an operating
company. Among the factors considered in determining initial public
offering price were the history and prospects of companies whose principal
business is the acquisition of other companies, prior offerings of those
companies, our management, our capital structure, and currently prevailing
general conditions in equity securities markets, including current market
valuations of publicly traded companies considered comparable to our
company. We cannot assure you, however, that the price at which the
units, common stock or warrants will sell in the public market after this
offering will not be lower than the initial public offering price or that an
active trading market in our units, common stock or warrants will develop and
continue after this offering.
We will
apply to have our units quoted on the OTC Bulletin Board (“OTCBB”) under the
symbol “ ,“ and, once the common stock and warrants begin separate
trading, to have our common stock and warrants quoted on the OTCBB under the
symbol “ “ and “ “, respectively.
The
following table shows the underwriting discounts and commissions that we are to
pay to the underwriters in connection with this offering. These
amounts are shown assuming both no exercise and full exercise of the
underwriters’ over-allotment option.
Paid by us
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No Exercise
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Full Exercise
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Per
Unit
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$ | 0.50 | $ | 0.50 | ||||
Total(1)
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$ | 5,000,000 | $ | 5,750,000 |
(1)
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The
underwriters have agreed to defer $3.0 million (or $3.45 million if the
underwriters’ over-allotment option is exercised in full) of the
underwriting discounts and commissions, equal to 3.0% of the gross
proceeds of the units being offered to the public, until the consummation
of a business combination. Upon the consummation of a business
combination, deferred underwriting discounts and commissions shall be
released to the underwriters out of the gross proceeds of this offering
held in a trust account with [Transfer Agent] acting as
trustee. The underwriters will not be entitled to any interest
accrued on the deferred underwriting discounts and
commissions.
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89
If we do
not complete our initial business combination within 21 (or 24) months from the
date of this prospectus , the trustee and the underwriters have agreed that: (i)
they will forfeit any rights or claims to their deferred underwriting discounts
and commissions, including any accrued interest thereon, then in the trust
account, and (ii) that the deferred underwriters’ discounts and commissions will
be distributed on a pro rata basis, together with any accrued interest thereon
and net of franchise and income taxes payable income taxes on such interest, to
the public stockholders.
In
connection with the offering, the underwriters may purchase and sell units in
the open market. Purchases and sales in the open market may include
short sales, purchases to cover short positions, which may include purchases
pursuant to the over-allotment option, and stabilizing purchases.
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Short
sales involve secondary market sales by the underwriters of a greater
number of shares than they are required to purchase in the
offering.
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“Covered”
short sales are sales of units in an amount up to the number of units
represented by the underwriters’ over-allotment
option.
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“Naked”
short sales are sales of units in an amount in excess of the number of
units represented by the underwriters’ over-allotment
option.
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Covering
transactions involve purchases of units either pursuant to the
over-allotment option or in the open market after the distribution has
been completed in order to cover short
positions.
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To
close a naked short position, the underwriters must purchase shares in the
open market after the distribution has been completed. A naked
short position is more likely to be created if the underwriters are
concerned that there may be downward pressure on the price of the units in
the open market after pricing that could adversely affect investors who
purchase in the offering.
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To
close a covered short position, the underwriters must purchase units in
the open market after the distribution has been completed or must exercise
the over-allotment option. In determining the source of shares
to close the covered short position, the underwriters will consider, among
other things, the price of units available for purchase in the open market
as compared to the price at which they may purchase units through the
over-allotment option.
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Stabilizing
transactions involve bids to purchase units so long as the stabilizing
bids do not exceed a specified
maximum.
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Purchases
to cover short positions and stabilizing purchase, as well as other purchases by
the underwriters for their own accounts, may have the effect of preventing or
retarding a decline in the market price of the units. They may also
cause the price of the units to be higher than the price that would otherwise
exist in the open market in the absence of these transactions. The
underwriters may conduct these transactions in the over-the-counter market or
otherwise. If the underwriters commence any of these transactions,
they may discontinue them at any time.
We
estimate that our portion of the total expenses of this offering payable by us
will be $400,000, excluding underwriting discounts and commissions.
We have
agreed to indemnify the underwriters against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the
underwriters may be required to make because of any of those
liabilities.
We are
not under any contractual obligation to engage any of the underwriters to
provide any services for us after this offering, and have no present intent to
do so. However, any of the underwriters may introduce us to potential
target businesses or assist us in raising additional capital in the
future. If any of the underwriters provide services to us after this
offering, we may pay such underwriter fair and reasonable fees that would be
determined at that time in an arm’s length negotiation; provided that no
agreement will be entered into with any of the underwriters and no fees for such
services will be paid to any of the underwriters prior to the date that is 90
days from the date of this prospectus, unless FINRA determines that such payment
would not be deemed underwriters’ compensation in connection with this offering
and 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 combination.
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, Indiana, Louisiana,
Minnesota, Missouri, New York, Rhode Island, South Carolina, South Dakota, Utah,
Virginia, Wisconsin and Wyoming. In New York and Hawaii, we have
relied on exemptions from the state registration requirements. In the
other states listed above, we will apply to have the units registered for sale
and will not sell the units to retail customers in these states unless and until
such registration is effected.
90
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 Idaho may
purchase the units in this offering pursuant to exemptions 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, which is a federal statute,
pre-empts the states from regulating transactions in certain securities, which
are referred to as “covered securities.” The resale of the units, from and after
the effective date, and the common stock and warrants comprising the units, once
they become separately transferable, are exempt from state registration
requirements under the National Securities Markets Improvement Act because we
will file periodic and annual reports under the Securities Exchange Act of
1934. However, states are permitted 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, Alabama,
Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida,
Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine,
Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Nebraska,
Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma,
Pennsylvania, South Carolina, South Dakota, Utah, Virginia, Washington, West
Virginia, Wisconsin and Wyoming either do not presently require any notice
filings or fee payments or have not yet issued rules or regulations indicating
whether notice filings or fee payments will be required. The District
of Columbia, Illinois, Montana, New Hampshire, North Dakota, Oregon, Puerto
Rico, Rhode Island, Tennessee, Texas and Vermont currently permit the resale of
the units, and the common stock and warrants comprising the units, once they
become separately transferable, if we have registered the securities in the
state or the proper notice filings and fees have been submitted. As
of the date of this prospectus, we have not determined in which, if any, of
these states we will submit the required notice filings or pay the required
fee. Additionally, if any of these states that has not yet adopted a
statute relating to the National Securities Markets Improvement Act adopts such
a statute in the future requiring a filing or fee or if any state amends its
existing statutes with respect to its requirements, we would need to comply with
those new requirements in order for our securities to continue to be eligible
for resale in those jurisdictions.
Under the
National Securities Markets Improvement Act, 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. The state of Idaho deems blank check companies inherently fraudulent and
such offerings may not be registered or qualify for an exemption from
registration in that state.
Aside
from the exemption from registration provided by the National Securities Markets
Improvement Act, 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, will be eligible for sale on a secondary market basis
in various states based on the availability of another applicable exemption from
state registration requirements, in certain instances subject to waiting
periods, notice filings or fee payments.
Notice
to Prospective Investors in the European Economic Area
In
relation to each member state of the European Economic Area that has implemented
the Prospectus Directive (each, a relevant member state), with effect from and
including the date on which the Prospectus Directive is implemented in that
relevant member state (the “relevant implementation date”), an offer of units
described in this prospectus may not be made to the public in that relevant
member state prior to the publication of a prospectus in relation to the units
that has been approved by the competent authority in that relevant member state
or, where appropriate, approved in another relevant member state and notified to
the competent authority in that relevant member state, all in accordance with
the Prospectus Directive, except that, with effect from and including the
relevant implementation date, an offer of our units may be made to the public in
that relevant member state at any time:
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to
any legal entity that is authorized or regulated to operate in the
financial markets or, if not so authorized or regulated, whose corporate
purpose is solely to invest in
securities;
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to
any legal entity that has two or more of (1) an average of at least 250
employees during the last financial year; (2) a total balance sheet of
more than €43,000,000 and (3) an annual net turnover of more than
€50,000,000, as shown in its last annual or consolidated
accounts;
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to
fewer than 100 natural or legal persons (other than qualified investors as
defined below) subject to obtaining the prior consent of the underwriter
for any such offer; or
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in
any other circumstances that do not require the publication of a
prospectus pursuant to Article 3 of the Prospectus
Directive.
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91
Each
purchaser of units described in this prospectus located within a relevant member
state will be deemed to have represented, acknowledged and agreed that it is a
“qualified investor” within the meaning of Article 2(1)(e) of the Prospectus
Directive.
For the
purpose of this provision, the expression an “offer to the public” in any
relevant member state means the communication in any form and by any means of
sufficient information on the terms of the offer and the units to be offered so
as to enable an investor to decide to purchase or subscribe for the units, as
the expression may be varied in that member state by any measure implementing
the Prospectus Directive in that member state, and the expression “Prospectus
Directive” means Directive 2003/71/EC and includes any relevant implementing
measure in each relevant member state.
We have
not authorized and do not authorize the making of any offer of units through any
financial intermediary on their behalf, other than offers made by the
underwriters with a view to the final placement of the units as contemplated in
this prospectus. Accordingly, no purchaser of the units, other than
the underwriters, is authorized to make any further offer of the units on behalf
of us or the underwriters.
Notice
to Prospective Investors in the United Kingdom
This
prospectus is only being distributed to, and is only directed at, persons in the
United Kingdom that are qualified investors within the meaning of Article
2(1)(e) of the Prospectus Directive that are also (i) investment professionals
falling within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005 (the “Order”) or (ii) high net worth entities,
and other persons to whom it may lawfully be communicated, falling within
Article 49(2)(a) to (d) of the Order (all such persons together being referred
to as a “relevant person”). This prospectus and its contents are
confidential and should not be distributed, published or reproduced (in whole or
in part) or disclosed by recipients to any other persons in the United
Kingdom. Any person in the United Kingdom that is not a relevant
person should not act or rely on this document or any of its
contents.
Notice
to Prospective Investors in France
Neither
this prospectus nor any other offering material relating to the units described
in this prospectus has been submitted to the clearance procedures of the
Autorité des Marchés Financiers or by the competent authority of another member
state of the European Economic Area and notified to the Autorité des Marchés
Financiers. The units have not been offered or sold and will not be
offered or sold, directly or indirectly, to the public in
France. Neither this prospectus nor any other offering material
relating to the units has been or will be:
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released,
issued, distributed or caused to be released, issued or distributed to the
public in France; or
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used
in connection with any offer for subscription or sale of the units to the
public in France.
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Such
offers, sales and distributions will be made in France
only:
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to
qualified investors (investisseurs qualifiés) and/or to a restricted
circle of investors (cercle restreint d’investisseurs), in each
case investing for their own account, all as defined in, and in accordance
with, Article L.411-2, D.411-1, D.411-2, D.734-1, D.744-1,
D.754-1 and D.764-1 of the French Code monétaire et
financier;
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to
investment services providers authorized to engage in portfolio management
on behalf of third parties; or
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in
a transaction that, in accordance with article L.411-2-II-1°-or-2°-or 3°
of the French Code monétaire et financier and article 211-2 of the General
Regulations (Règlement Général) of the Autorité des Marchés Financiers,
does not constitute a public offer (appel public à
l’épargne).
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The units
may be resold directly or indirectly, only in compliance with Articles L.411-1,
L.411-2, L.412-1 and L.621-8 through L.621-8-3 of the French Code monétaire et
financier.
92
LEGAL
MATTERS
Ellenoff
Grossman & Schole LLP, New York, New York, is acting as counsel in
connection with the registration of our securities under the Securities Act, and
as such, will pass upon the validity of the securities offered in this
prospectus. In connection with this offering Greenberg Traurig, LLP,
New York, New York, is acting as counsel to the underwriters.
EXPERTS
The
financial statements of SCG Financial Acquisition Corp. (a development stage
company) as of January 28, 2011 and for the period January 5, 2011 (inception)
through January 28, 2011, have been included herein in reliance upon the report
of Rothstein, Kass & Company, P.C., independent registered public accounting
firm, appearing elsewhere herein, and upon the authority of Rothstein, Kass
& Company, P.C. 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 under the Securities Act
with respect to the securities we are offering by this
prospectus. This prospectus does not contain all of the information
included in the registration statement. For further information about
us and our securities, you should refer to the registration statement and the
exhibits and schedules filed with the registration
statement. Whenever we make reference in this prospectus to any of
our contracts, agreements or other documents, the references are materially
complete but may not include a description of all aspects of such contracts,
agreements or other documents, and you should refer to the exhibits attached to
the registration statement for copies of the actual contract, agreement or other
document.
Upon
completion of this offering, we will be subject to the information requirements
of the Exchange Act and will file annual, quarterly and current event reports,
proxy statements and other information with the SEC. You can read our
SEC filings, including the registration statement, over the Internet at the
SEC’s website at www.sec.gov. You may also read and copy any document
we file with the SEC at its public reference facility at 100 F Street, N.E.,
Washington, D.C. 20549.
You may
also obtain copies of the documents at prescribed rates by writing to the Public
Reference Section of the SEC at 100 F Street, N.E., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the operation of the public reference
facilities.
93
SCG
Financial Acquisition Corp.
(a
development stage company)
INDEX
TO FINANCIAL STATEMENTS
Page
|
||
Report
of Independent Registered Public Accounting Firm
|
F-2
|
|
Financial
Statements:
|
||
Balance
Sheet as of January 28, 2011
|
F-3
|
|
Statement
of Operations for the period January 5, 2011 (inception) to January 28,
2011
|
F-4
|
|
Statement
of Changes in Shareholders’
Equity for the period January 5, 2011 (inception) to January 28,
2011
|
F-5
|
|
Statement
of Cash Flows for the period January 5, 2011 (inception) to January 28,
2011
|
F-6
|
|
Notes
to Financial Statements
|
F-7
–
F11
|
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and Stockholders of
SCG
Financial Acquisition Corp.
We have
audited the accompanying balance sheet of SCG Financial Acquisition Corp. (a
development stage company) (the “Company”) as of January 28, 2011, and the
related statements of operations, changes in stockholder’s equity and cash flows
for the period from January 5, 2011 (date of inception) to January 28,
2011. 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, such financial statements present fairly, in all material respects, the
financial position of the SCG Financial Acquisition Corp. (a development stage
company) as of January 28, 2011, and the results of its operations and its cash
flows for the period from January 5, 2011 (date of inception) to January 28,
2011, in conformity with accounting principles generally accepted in the United
States of America.
/s/
ROTHSTEIN, KASS & COMPANY, P.C.
|
Roseland,
New Jersey
|
February
4, 2011
|
F-2
SCG
FINANCIAL ACQUISITION CORP.
(a
development stage company)
BALANCE
SHEET
January
28, 2011
ASSETS
|
||||
Current
Assets
|
||||
Cash
|
$ | 62,500 | ||
Deferred
Offering Costs
|
47,500 | |||
Total
Assets
|
$ | 110,000 | ||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
Current
Liabilities
|
||||
Accrued
Expenses
|
$ | 10,000 | ||
Notes
Payable, Stockholders
|
75,000 | |||
Total
Liabilities
|
85,000 | |||
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; 2,190,477 shares
issued and outstanding
|
219 | |||
Additional
Paid-in Capital
|
24,781 | |||
Deficit
Accumulated during Development Stage
|
- | |||
Total
Stockholders' Equity
|
25,000 | |||
Total
Liabilities and Stockholders' Equity
|
$ | 110,000 |
The
accompanying notes are an integral part of the financial
statements.
F-3
SCG
FINANCIAL ACQUISITION CORP.
(a
development stage company)
STATEMENT
OF OPERATIONS
For
the Period from January 5, 2011 (date of incorporation) to January 28,
2011
Revenue
|
$ | - | ||
General
and Administrative Expenses
|
||||
Loss
from Operations
|
- | |||
Interest
and Dividend Income
|
- | |||
Net
Loss Attributable to Common Stockholder
|
$ | - | ||
Weighted
Average Number of Common Shares Outstanding,
|
2,190,477 | |||
Basic
and Diluted Net Loss per Share Attributable to Other
Stockholders
|
$ | - |
The
accompanying notes are an integral part of the financial
statements.
F-4
SCG
FINANCIAL ACQUISITION CORP.
(a
development stage company)
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
For
the Period from January 5, 2011 (date of incorporation) to January 28,
2011
Deficit
|
||||||||||||||||||||
Accumulated
|
||||||||||||||||||||
Additional
|
During
|
Total
|
||||||||||||||||||
Common
Stock
|
Paid-in
|
Development
|
Stockholders'
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Stage
|
Equity
|
||||||||||||||||
Sale
of common stock issued to initial stockholders on January 28, 2011 at
$.0114 per share
|
2,190,477 | $ | 219 | $ | 24,781 | $ | - | $ | 25,000 | |||||||||||
Net
loss attributable to common stockholders
|
- | - | - | - | - | |||||||||||||||
Balance,
January 28, 2011
|
2,190,477 | $ | 219 | $ | 24,781 | $ | - | $ | 25,000 |
The
accompanying notes are an integral part of the financial
statements.
F-5
SCG
FINANCIAL ACQUISITION CORP.
(a
development stage company)
BALANCE
SHEET
January
28, 2011
Cash
Flows from Operating Activities
|
||||
Net
Loss
|
$ | - | ||
Cash
Flows from Financing Activities
|
||||
Proceeds
from note payable, stockholder
|
75,000 | |||
Proceeds
from issuance of stock to initial investor
|
25,000 | |||
Payment
of offering costs
|
(37,500 | ) | ||
Net
cash provided by financing activities
|
62,500 | |||
Net
increase in cash
|
62,500 | |||
Cash
at beginning of the period
|
- | |||
Cash
at end of the period
|
$ | 62,500 | ||
Supplemental
Disclosure of Non-cash Transactions:
|
||||
Accrual
for offering costs
|
$ | 10,000 |
The
accompanying notes are an integral part of the financial
statements.
F-6
SCG
FINANCIAL ACQUISITION CORP.
(a
development stage company)
NOTES
TO FINANCIAL STATEMENTS
For the
period from January 5, 2011 (date of incorporation) to January 28,
2011
1. DESCRIPTION
OF ORGANIZATION AND BUSINESS OPERATIONS
SCG
Financial Acquisition Corp. (the “Company”), a corporation in the development
stage, was incorporated in Delaware on January 5, 2011. The Company was formed
for the purposed 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 Combination”). The Company has
neither engaged in any operations nor generated significant revenue 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 3 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 Combination. Furthermore, there is no
assurance that the Company will be able to successfully affect a Business
Combination. An amount equal to 100.0% 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 Combination or (ii) the distribution of the Trust Account as describe
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 Combination if it is approved by the board of
directors. Only in the event that we are required to seek stockholder
approval in connection with our initial Business Combination, the Company will
proceed with a Business Combination only if a majority of the outstanding shares
of common stock voted are voted in favor of the Business
Combination. In connection with such a vote, if a Business
Combination is approved and consummated, stockholders that vote against the
Business Combination and elect to redeem their shares of common stock will
be entitled to receive their pro-rata portion of the Trust Account as follows:
(i) public stockholders voting against the Business Combination and electing to
redeem shares of common stock 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 Combination and
electing to redeem shares of common stock shall be entitled to receive a
per share pro rata portion of the Trust Account (together with interest thereon
which was not previously used for working capital 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. SCG Financial Holdings LLC (the
“Sponsor”) has agreed, in the event the Company is required to seek stockholder
approval of its Business Combination, to vote their initial shares in favor of
approving a Business Combination. The Sponsors 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
Combination submitted to the Company’s stockholders for
approval.
F-7
SCG
FINANCIAL ACQUISITION CORP.
(a
development stage company)
NOTES
TO FINANCIAL STATEMENTS
For the
period from January 5, 2011 (date of incorporation) to January 28,
2011
The
Company’s Sponsors, officers and directors have agreed that the Company will
only have 21 months from the date of this prospectus plus an additional three
month extension subject to a signed letter of intent to consummate its initial
Business Combination. If the Company does not consummate a Business
Combination within this period of time , it shall (i) cease all operations
except for the purposes of winding up; (ii) redeem the public shares of common
stock for a per share pro rata portion of the Trust Account, including a portion
of the interest earned thereon which was not previously used for working
capital, 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 the
Company's net assets to its remaining stockholders, as part of our
plan of dissolution and liquidation. The Sponsor has waived its
rights 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 acquire 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 Combination 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.
2. 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 January 28, 2011, the Company has not commenced
any operations nor generated revenue to date. All activity through
January 28, 2011 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 Combination, 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.
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 January 28,
2011, 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 concentration 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.
F-8
SCG
FINANCIAL ACQUISITION CORP.
(a
development stage company)
NOTES
TO FINANCIAL STATEMENTS
For the
period from January 5, 2011 (date of incorporation) to January 28,
2011
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 U.S. generally accepted
accounting principles 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 $47,500
of legal fees and accounting 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.
Income
taxes
The
Company complies with the accounting and reporting requirements of Financial
Accounting Standards Board Accounting Standard Codification, or 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.
There
were no unrecognized tax benefits as of January 28, 2011. 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 January 28, 2011. 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 January 28, 2011.
Recently
issued accounting standards
In January 2010, the FASB issued “Fair
Value Measurements and Disclosures (Topic 820): Improving Disclosures
about Fair Value Measurements,” which provides guidance on how investment assets
and liabilities are to be valued and disclosed. Specifically, the
amendment requires reporting entities to disclose (i) the input and valuation
techniques used to measure fair value for both recurring and nonrecurring fair
value measurements, for Level 2 or Level 3 positions, (ii) transfers between all
levels (including Level 1 and Level 2) will be required to be disclosed on a
gross basis (i.e. transfers out must be disclosed separately from transfers in)
as well as the reason(s) for the transfers and (iii) purchases, sales, issuances
and settlements must be shown on a gross basis in the Level 3 roll forward
rather than as one net number. The effective date of the amendment is
for interim and annual periods beginning after December 15, 2009. However, the requirement to provide the
Level 3 activity for purchases, sales, issuances and settlements on a gross
basis will be effective for interim and annual periods beginning after
December 15,
2010.
F-9
SCG
FINANCIAL ACQUISITION CORP.
(a
development stage company)
NOTES
TO FINANCIAL STATEMENTS
For the
period from January 5, 2011 (date of incorporation) to January 28,
2011
The
adoption of the amendment did not have a material impact on the Company’s
condensed interim financial statements.
Management
does not believe that any other recently issued, but not yet effective,
accounting pronouncements, if currently adopted, would have a material effect on
the Company’s financial statements.
3. PROPOSED
OFFERING
Pursuant
to the Proposed Offering, the Company will offer for sale up to 10,000,000 units
at $10.00 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) 30 days after the completion of a Business
Combination, and will expire five years from the date of the consummation of the
Business Combination. 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.
4. RELATED
PARTY TRANSACTIONS
The
Company issued a $75,000 unsecured promissory note to SCG Financial Holdings LLC
on January 28, 2011. The note is non-interest bearing and are
payable on the earlier of December 30, 2011 or the consummation of the Proposed
Offering. Due to the short-term nature of the notes, the fair value
of the notes approximates their carrying amount of $75,000.
On
January 28, 2011, the Company issued to the Sponsor 2,190,477 shares of
restricted common stock for an aggregate purchase price of $25,000 in
cash. The purchase price for each share of common stock was
approximately $0.0114 per share. These shares include 285,715 shares
of common stock that are subject to forfeiture if and to the extent the
underwriter’s over-allotment option is not exercised, so that the Sponsor and
its permitted transferees will own 16% of the Company’s issued and outstanding
shares after the Proposed Offering. In addition, a portion of the
Sponsor’s shares in an amount equal to 3% of the Company’s issued and
outstanding shares after the Proposed Offering and the exercise of the
over-allotment option, if applicable, will be subject to forfeiture by the
Sponsor in the event the last sales price of the Company’s stock does not equal
or exceed $12.00 per share for any 20 trading days within any 30
trading day period within 24 months following the closing of a Business
Combination. The Sponsor has agreed that it will not sell or transfer
its shares until one year following consummation of a Business
Combination.
The
Sponsors have agreed to purchase, in a private placement, 4,000,000 Warrants
prior to the Proposed Offering at a price of $0.75 per warrant (a purchase price
of $3,000,000) from the Company. Based on the observable market
prices, the Company believes that the purchase price of $0.75 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 Sponsors have agreed
that the Warrants purchased will not be sold or transferred until 30 days
following consummation of a Business Combination, subject to certain limited
exceptions. If the Company does not complete a Business Combination,
then the proceeds will be part of the liquidating distribution to the public
stockholders and the Warrants issued to the Sponsors 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.
F-10
SCG
FINANCIAL ACQUISITION CORP.
(a
development stage company)
NOTES
TO FINANCIAL STATEMENTS
For the
period from January 5, 2011 (date of incorporation) to January 28,
2011
Commencing
on the date of the Proposed Offering, the Company plans to enter into an
Administrative Services Agreement with Sachs Capital Group, LP, an affiliate of
the Sponsor for an estimated aggregate monthly fee of $7,500 for office space,
secretarial, and administrative services, with up to an additional $7,500 for
its other operating expenses incurred by the Sponsor. This agreement
will expire upon the earlier of: (a) the successful completion of the Company’s
Business Combination, (b) 21 months from the date of this prospectus plus an
additional 3 month extension subject to a signed letter of intent, or (c) the
date on which the Company is dissolved and liquidated.
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
lockup. The Company will bear the expenses incurred in connection
with the filing of any such registration statements.
5. COMMITMENTS
& CONTINGENCIES
The
Company expects to grant the underwriters a 45-day option to purchase up to
1,500,000 additional Units to cover the over-allotment at the initial public
offering price less the underwriting discounts and commissions.
The
underwriter will be entitled to an underwriting discount of 2 percent (2.0%)
which shall be paid in cash at the closing of the Proposed
Offering, including any amounts raised pursuant to the overallotment
option. In addition, the underwriter will be entitled to a
deferral fee of 3 percent (3.0%) of the Proposed Offering, including any
amounts raised pursuant to the overallotment option, payable in cash upon the
closing of a Business Combination.
6. SUBSEQUENT
EVENTS
Management
has approved the financial statements and performed an evaluation of subsequent
events through February 4, 2011, the date the financial statements were
available for issuance, noting no items which require adjustment or
disclosure.
F-11
$100,000,000
SCG
Financial Acquisition Corp.
PROSPECTUS
,
2011
Ladenburg
Thalmann & Co. Inc.
Until
[ ], 2011 (90 days after the date of this prospectus), all dealers
that buy, sell or trade shares of our common stock, 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 and with respect to their unsold allotments or
subscriptions.
94
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
filing fees
|
$ | 13,352 | ||
FINRA
filing fees
|
12,000 | |||
Accounting
fees and expenses
|
50,000 | |||
Blue
sky services and expenses
|
40,000 | |||
Printing
and engraving expenses
|
32,000 | |||
Legal
fees and expenses
|
250,000 | |||
Miscellaneous(1)
|
2,649 | |||
Total
|
$ | 400,000 |
(1) This
amount represents additional expenses that may be incurred by the Company in
connection with the offering over and above those specifically listed above,
including distribution and mailing costs. The SEC filing fee has been
rounded from $13,351.50.
Item
14. Indemnification of Directors and Officers.
Our
amended and restated certificate of incorporation provides that all of our
directors, officers, employees and agents shall 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 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 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.
95
(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 officers and directors 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. A right
to indemnification or to advancement of expenses arising under a provision of
the certificate of incorporation or a bylaw shall not be eliminated or impaired
by an amendment to such provision after the occurrence of the act or omission
that is the subject of the civil, criminal, administrative or investigative
action, suit or proceeding for which indemnification or advancement of expenses
is sought, unless the provision in effect at the time of such act or omission
explicitly authorizes such elimination or impairment after such action or
omission has occurred.
(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 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,
joint venture, 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.
96
(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).
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.
In
accordance with Section 102(b)(7) of the DGCL, our amended and restated
certificate of incorporation, will provide that no director shall be personally
liable to us or any of our stockholders for monetary damages resulting from
breaches of their fiduciary duty as directors, except to the extent such
limitation on or exemption from liability is not permitted under the
DGCL. The effect of this provision of our amended and restated
certificate of incorporation is to eliminate our rights and those of our
stockholders (through stockholders’ derivative suits on our behalf) to recover
monetary damages against a director for breach of the fiduciary duty of care as
a director, including breaches resulting from negligent or grossly negligent
behavior, except, as restricted by Section 102(b)(7) of the
DGCL. However, this provision does not limit or eliminate our rights
or the rights of any stockholder to seek non-monetary relief, such as an
injunction or rescission, in the event of a breach of a director’s duty of
care.
If the
DGCL is amended to authorize corporate action further eliminating or limiting
the liability of directors, then, in accordance with our amended and restated
certificate of incorporation, the liability of our directors to us or our
stockholders will be eliminated or limited to the fullest extent authorized by
the DGCL, as so amended. Any repeal or amendment of provisions of our
amended and restated certificate of incorporation limiting or eliminating the
liability of directors, whether by our stockholders or by changes in law, or the
adoption of any other provisions inconsistent therewith, will (unless otherwise
required by law) be prospective only, except to the extent such amendment or
change in law permits us to further limit or eliminate the liability of
directors on a retroactive basis.
Our
amended and restated certificate of incorporation will also provide that we
will, to the fullest extent authorized or permitted by applicable law, indemnify
our current and former officers and directors, as well as those persons who,
while directors or officers of our corporation, are or were serving as
directors, officers, employees or agents of another entity, trust or other
enterprise, including service with respect to an employee benefit plan, in
connection with any threatened, pending or completed proceeding, whether civil,
criminal, administrative or investigative, against all expense, liability and
loss (including, without limitation, attorney’s fees, judgments, fines, ERISA
excise taxes and penalties and amounts paid in settlement) reasonably incurred
or suffered by any such person in connection with any such
proceeding. Notwithstanding the foregoing, a person eligible for
indemnification pursuant to our amended and restated certificate of
incorporation will be indemnified by us in connection with a proceeding
initiated by such person only if such proceeding was authorized by our board of
directors, except for proceedings to enforce rights to
indemnification.
The right
to indemnification conferred by our amended and restated certificate of
incorporation is a contract right that includes the right to be paid by us the
expenses incurred in defending or otherwise participating in any proceeding
referenced above in advance of its final disposition, provided, however, that if
the DGCL requires, an advancement of expenses incurred by our officer or
director (solely in the capacity as an officer or director of our corporation)
will be made only upon delivery to us of an undertaking, by or on behalf of such
officer or director, to repay all amounts so advanced if it is ultimately
determined that such person is not entitled to be indemnified for such expenses
under our amended and restated certificate of incorporation or
otherwise.
97
The
rights to indemnification and advancement of expenses will not be deemed
exclusive of any other rights which any person covered by our amended and
restated certificate of incorporation may have or hereafter acquire under law,
our amended and restated certificate of incorporation, our amended and restated
bylaws, an agreement, vote of stockholders or disinterested directors, or
otherwise.
Any
repeal or amendment of provisions of our amended and restated certificate of
incorporation affecting indemnification rights, whether by our stockholders or
by changes in law, or the adoption of any other provisions inconsistent
therewith, will (unless otherwise required by law) be prospective only, except
to the extent such amendment or change in law permits us to provide broader
indemnification rights on a retroactive basis, and will not in any way diminish
or adversely affect any right or protection existing at the time of such repeal
or amendment or adoption of such inconsistent provision with respect to any act
or omission occurring prior to such repeal or amendment or adoption of such
inconsistent provision. Our amended and restated certificate of
incorporation will also permit us, to the extent and in the manner authorized or
permitted by law, to indemnify and to advance expenses to persons other that
those specifically covered by our amended and restated certificate of
incorporation.
Our
amended and restated bylaws, which we intend to adopt immediately prior to the
closing of this offering, include the provisions relating to advancement of
expenses and indemnification rights consistent with those set forth in our
amended and restated certificate of incorporation. In addition, our
amended and restated bylaws provide for a right of indemnitee to bring a suit in
the event a claim for indemnification or advancement of expenses is not paid in
full by us within a specified period of time. Our amended and
restated bylaws also permit us to purchase and maintain insurance, at our
expense, to protect us and/or any director, officer, employee or agent of our
corporation or another entity, trust or other enterprise against any expense,
liability or loss, whether or not we would have the power to indemnify such
person against such expense, liability or loss under the DGCL.
Any
repeal or amendment of provisions of our amended and restated bylaws affecting
indemnification rights, whether by our board of directors, stockholders or by
changes in applicable law, or the adoption of any other provisions inconsistent
therewith, will (unless otherwise required by law) be prospective only, except
to the extent such amendment or change in law permits us to provide broader
indemnification rights on a retroactive basis, and will not in any way diminish
or adversely affect any right or protection existing thereunder with respect to
any act or omission occurring prior to such repeal or amendment or adoption of
such inconsistent provision.
We will
enter into indemnification agreements with each of our officers and directors, a
form of which is filed as Exhibit 10.10 to this registration
statement. These agreements will require us to indemnify these
individuals to the fullest extent permitted under Delaware law against
liabilities that may arise by reason of their service to us, and to advance
expenses incurred as a result of any proceeding against them as to which they
could be indemnified.
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.
On
January 28, 2011, SCG Financial Holdings LLC, our sponsor, purchased 2,190,477
shares of our common stock for an aggregate offering price of $25,000 at an
average purchase price of approximately $0.01 per share. The founder
shares held by our sponsor include an aggregate of 285,715 shares subject to
forfeiture to the extent that the underwriters’ over-allotment option is not
exercised in full. Such shares (equal to 3.0% of our issued and
outstanding shares after this offering and the expiration of the underwriters’
over-allotment option) will be subject to forfeiture by our sponsor in the event
the last sales price of our stock does not equal or exceed $12.00 per share (as
adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period within 24
months following the closing of our initial business
combination. Such securities were issued in connection with our
organization pursuant to the exemption from registration contained in Section
4(2) of the Securities Act.
Our
sponsor has committed to purchase from us an aggregate of 4,000,000 sponsor
warrants at $0.75 per warrant (for an aggregate purchase price of $3.0
million). These purchases will take place on a private placement
basis simultaneously with the consummation of our initial public
offering. These issuances will be made pursuant to the exemption from
registration contained in Section 4(2) of the Securities Act.
98
No
underwriting discounts or commissions were paid with respect to such
sales.
Item
16. Exhibits and Financial Statement Schedules.
(a)
|
The
following exhibits are filed as part of this Registration
Statement:
|
See the
Exhibit Index, which follows the signature page which is incorporated by
reference.
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 of
1933;
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 of 1933,
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 of 1933 to any purchaser in the initial distribution of the securities, 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 registrant hereby undertakes to provide to the underwriter at the
closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
99
(c) Insofar
as indemnification for liabilities arising under the Securities Act of 1933 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 Securities and Exchange Commission 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 Act and will
be governed by the final adjudication of such issue.
(d) The
undersigned registrant hereby undertakes that:
(1) For
purposes of determining any liability under the Securities Act of 1933, 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 of 1933, 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.
100
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the registrant has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on the 4th day of February, 2011.
SCG
FINANCIAL ACQUISITION CORP.
|
||
By:
|
/s/ Gregory H. Sachs
|
|
Gregory
H. Sachs
|
||
Chief
Executive Officer
|
POWER
OF ATTORNEY
KNOW ALL
MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Gregory H. Sachs his true and lawful attorney-in-fact,
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 file
the same, with all exhibits thereto, and other documents in connection
therewith, with the SEC, hereby ratifying and confirming all that said
attorney-in-fact or his substitute, each acting alone, may lawfully do or cause
to be done by virtue thereof.
Pursuant
to the requirements of the Securities Act, this Registration Statement has been
signed by the following persons in the capacities and on the dates
indicated.
Name:
|
Title:
|
Date:
|
||
Chairman,
Chief Executive Officer and President
|
February
4, 2011
|
|||
/s/
Gregory H. Sachs
|
(Principal
Executive Officer)
|
|||
Gregory
H. Sachs
|
||||
Chief
Financial Officer, Treasurer and Secretary
|
February
4, 2011
|
|||
/s/
Michelle Sibley
|
(Principal
Accounting Officer)
|
|||
Michelle
Sibley
|
101
EXHIBIT
INDEX
Exhibit No.
|
Description
|
|
1.1
|
Form
of Underwriting Agreement*
|
|
3.1
|
Certificate
of Incorporation
|
|
3.2
|
By-laws*
|
|
3.3
|
Form
of Amended and Restated Certificate of Incorporation*
|
|
4.1
|
Specimen
Unit Certificate*
|
|
4.2
|
Specimen
Common Stock Certificate*
|
|
4.3
|
Specimen
Warrant Certificate*
|
|
4.4
|
Form
of Warrant Agreement between [Transfer Agent] and the
Registrant*
|
|
5.1
|
Form
of Opinion of Ellenoff Grossman & Schole LLP*
|
|
10.1
|
Promissory
Note, dated January 28, 2011, issued to SCG Financial Holdings
LLC
|
|
10.2
|
Form
of Letter Agreement between the Registrant and SCG Financial Holdings
LLC*
|
|
10.3
|
Form
of Letter Agreement between the Registrant and certain directors and
officers of the Registrant*
|
|
10.5
|
Form
of Investment Management Trust Agreement between [Transfer Agent] and the
Registrant*
|
|
10.6
|
Form
of Administrative Services Agreement by and between Registrant and Sachs
Capital Group LP*
|
|
10.7
|
Form
of Registration Rights Agreement between the Registrant and SCG Financial
Holdings LLC*
|
|
10.8
|
Securities
Purchase Agreement, dated January 28, 2011, between the Registrant SCG
Financial Holdings LLC
|
|
10.9
|
Warrant
Purchase Agreement, dated January 28, 2011, between the Registrant and SCG
Financial Holdings LLC
|
|
10.10
|
Form
of Indemnity Agreement*
|
|
14
|
Form
of Code of Ethics*
|
|
23.1
|
Consent
of Rothstein, Kass & Company, P.C.
|
|
23.2
|
Consent
of Ellenoff Grossman & Schole LLP (included on Exhibit
5.1)*
|
|
24
|
Power
of Attorney (included on signature page)
|
|
99.1
|
Consent
of Kenneth B. Leonard
|
|
99.2
|
Consent
of Donna Parlapiano
|
|
99.3
|
Consent
of Marvin Shrear
|
|
99.4
|
|
Consent
of Frederick H. White
|
* To be
filed by amendment
102