As filed with
the Securities and Exchange Commission on September 23,
2010
Registration
No. 333-168798
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C.
20549
Amendment No. 1
to
Form S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
JWC ACQUISITION CORP.
(Exact name of registrant as
specified in its charter)
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Delaware
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6770
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27-3092187
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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111 Huntington Avenue
Suite 2900
Boston, Massachusetts 02199
(617) 753-1100
(Address, including zip code,
and telephone number,
including area code, of
registrants principal executive offices)
Adam L. Suttin
President
111 Huntington Avenue
Suite 2900
Boston, Massachusetts 02199
(617) 753-1100
(Name, address, including zip
code, and telephone number,
including area code, of agent
for service)
Copies to:
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Bernard S. Kramer, Esq.
Joel L. Rubinstein, Esq.
McDermott Will & Emery LLP
340 Madison Avenue
New York, New York 10173
(212) 547-5400
(212) 547-5444
Facsimile
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Bruce S. Mendelsohn, Esq.
Akin Gump Strauss Hauer & Feld LLP
One Bryant Park
New York, New York 10036
(212) 872-1000
(212) 872-1002 Facsimile
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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. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in
Rule 12b-2
of the Exchange Act. (Check one):
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Large accelerated
filer o
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Accelerated
filer o
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Non-accelerated
filer þ
(Do not check if a smaller
reporting company)
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Smaller reporting
company o
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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, as amended, or until the
Registration Statement shall become effective on such date as
the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
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SUBJECT TO
COMPLETION, DATED SEPTEMBER 23, 2010
PRELIMINARY PROSPECTUS
$150,000,000
JWC Acquisition Corp.
15,000,000 Units
JWC 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 15,000,000 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 $12.00, 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 2,250,000 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. Our sponsor, JWC
Acquisition LLC, 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. 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 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. If we are unable to consummate a
business combination within 21 months from the closing of
this offering, we will redeem 100% of 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 has agreed to
waive its redemption rights with respect to its founder shares
if we fail to consummate a business combination within
21 months from the closing of this offering (although it
will be entitled to redemption rights with respect to any public
shares it holds if we fail to consummate a business combination
within such time period).
Members of our sponsor have committed to purchase an aggregate
of 5,000,000 warrants at a price of $0.75 per warrant
($3.75 million in the aggregate) in a private placement
that will occur simultaneously with the consummation of this
offering. We refer to these warrants throughout this prospectus
as the sponsor warrants.
Currently, there is no public market for our units, common stock
or warrants. It is anticipated that our units will be quoted on
the
Over-the-Counter
Bulletin Board quotation system, or the OTCBB, under the
symbol
on or promptly after the date of this prospectus. The common
stock and warrants comprising the units will begin separate
trading on the 52nd day following the date of this
prospectus unless Citigroup Global Markets Inc. informs us of
its decision to allow earlier separate trading, subject to our
filing a Current Report on
Form 8-K
with the SEC containing an audited balance sheet reflecting our
receipt of the gross proceeds of this offering and issuing a
press release announcing when such separate trading will begin.
Once the securities comprising the units begin separate trading,
the common stock and warrants will be traded on the OTCBB under
the symbols
and
,
respectively.
Investing in our securities involves a high degree of risk.
See Risk Factors beginning on page 18 for a
discussion of information that should be considered in
connection with an investment in our securities.
Neither the SEC nor any state securities commission has approved
or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
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Per Unit
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Total Proceeds
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Public offering price
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$
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10.00
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$
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150,000,000
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Underwriting discounts and commissions(1)
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$
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0.50
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7,500,000
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Proceeds, before expenses, to us
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$
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9.50
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$
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142,500,000
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(1)
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Includes $0.25 per unit, or
approximately $3.75 million in the aggregate (approximately
$4.31 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. Such funds will be released to the underwriters only on
completion of an initial business combination, as described in
this prospectus.
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Of the proceeds we receive from this offering and the sale of
the sponsor warrants described in this prospectus, approximately
$9.85 per unit, or approximately $147.75 million in the
aggregate (approximately $9.84 per unit or approximately
$169.69 million if the underwriters over-allotment
option is exercised in full) will be deposited into a trust
account with Continental Stock Transfer &
Trust Company 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, 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 100% of our public shares if we
are unable to consummate a business combination within
21 months from the closing of this offering (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 on a firm commitment
basis. The underwriters expect to deliver the units to
purchasers on or
about ,
2010.
Citi
,
2010
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.
TABLE OF
CONTENTS
i
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 JWC
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 its 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, references to
our sponsor refer to JWC Acquisition, LLC, a
Delaware limited liability company, and references to J.W.
Childs refer to J.W. Childs Associates, L.P., a Delaware
limited partnership. Unless we tell you otherwise, the
information in this prospectus assumes that the underwriters
will not exercise their over-allotment option. Registered
trademarks referred to in this prospectus are the property of
their respective owners.
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 will seek to capitalize on the substantial deal sourcing,
investing and operating expertise of our management team to
identify, acquire and operate a middle-market business in the
consumer products or specialty retail sectors operating
primarily in North America, although we may pursue acquisition
opportunities in other sectors or in other geographic regions.
We believe that consumer products and specialty retail
businesses possess attractive investment attributes compared to
other sectors including strong brand franchises, barriers to
competition, lower capital requirements and lower technology
risks. Our Chairman and Chief Executive Officer, John W. Childs,
our President, Adam L. Suttin, and other members of our
management team have extensive experience acquiring and
operating businesses across various sectors, but remain
primarily focused on acquisition opportunities in the consumer
products and specialty retail sectors. Our Vice President, Fuad
Sawaya, has over 20 years experience in sourcing,
structuring and negotiating control investments in consumer
businesses. Our executive officers include seven individuals who
are professionals with J.W. Childs Associates, L.P. (which we
refer to in this prospectus as J.W. Childs), a private equity
firm founded by Mr. Childs and Mr. Suttin in 1995 to
make investments in middle market growth businesses,
Mr. Sawaya, a principal of Sawaya Segalas & Co.,
LLC, an investment bank providing financial advisory services to
the consumer sector, and John D. Shulman, a principal of
Juggernaut Capital Partners, a middle market private equity firm
in Washington, D.C., with over $100 million in assets
under management. J.W. Childs has invested approximately
$3 billion of equity capital in 40 businesses with an
aggregate enterprise value (which includes all equity investment
and incurred and assumed net indebtedness) at the time of
investment of over $12 billion. In addition, 20 of these
portfolio companies have made follow-on acquisitions.
We believe that Mr. Sawayas involvement in management
and the network of relationships that Mr. Sawaya and Sawaya
Segalas, of which Mr. Sawaya is a principal, have developed
over the years will greatly benefit our sourcing of acquisition
candidates. Sawaya Segalas investment banking and
financial advisory business has served a diverse set of clients
around the world. Sawaya Segalas has expertise in the consumer
sector, with a focus on the
over-the-counter
medicine, personal care, household products, housewares and food
and beverage sectors. The Sawaya Segalas team of investment
bankers will be additional resources to us as we seek to
identify acquisition candidates.
1
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 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. 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 will focus on increasing stockholder value
by growing revenue (through organic growth and acquisitions) and
improving the efficiency of business and manufacturing
processes. Consistent with this strategy, we have identified the
following general criteria and guidelines that we believe 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.
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Middle-Market Growth Business. We will
seek to acquire one or more growth businesses with an enterprise
value ranging from $300 million to $1 billion. We
believe that our focus on businesses in this segment of the
middle market will offer us a substantial number of potential
business targets that we believe can achieve and maintain
significant revenue and earnings growth. We do not intend to
acquire
start-up
companies and, under our amended and restated certificate of
incorporation, we will not be permitted to effectuate our
initial business combination with another blank check company or
a similar company with nominal operations.
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Strong Competitive Industry
Position. We will seek to acquire one or more
businesses that operate within segments of the consumer products
and specialty retail sectors 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. Within these sectors, 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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Business with Revenue and Earnings Growth
Potential. We will seek to acquire one or
more businesses that have the potential for revenue and earnings
growth through a combination of brand and new product
development, expense reduction and synergistic follow-on
acquisitions.
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Companies with Potential for Strong Free Cash Flow
Generation. We will seek to acquire one or
more businesses that have the potential to generate strong and
stable free cash flow. We will focus on one or more businesses
that have predictable, 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.
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Business with Experienced and Motivated Management
Teams. We will seek to acquire one or more
businesses with experienced management teams that have strong
track records, have achieved superior performance and whose
members have a substantial personal economic stake in the
performance of the acquired business. We expect to implement a
management equity incentive plan that will align management of
the acquired business with the interests of our stockholders.
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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
2
related to our initial business combination, which, as discussed
is this prospectus, would be in the form of tender offer
documents or proxy solicitation materials that we would file
with the Securities and Exchange Commission, or the SEC.
Approximately 69% of the investments led by members of our
management team have been in businesses in the consumer products
and specialty retail sectors, including The Meow Mix Company, a
manufacturer and distributor of premium cat food; Sunny Delight
Beverages Co., a producer of juice beverages; Bass Pro Shops,
Inc., a fishing and hunting goods retailer; Brookstone, Inc., a
specialty retailer and product development company; American
Safety Razor Company, a manufacturer of personal care products;
Personal Care Group, Inc., a branded personal care products
company with brands including Chubs, Wet Ones, Binaca, and
Mr. Bubble; Beltone Electronics Corporation, a manufacturer
and distributor of hearing instruments; Pinnacle Foods Group
Inc., a producer and marketer of branded frozen and dry foods
with brands including Duncan Hines, Aunt Jemima, Vlasic and
Lenders; Esselte Ltd., a manufacturer and marketer of
filing and workspace products with brands including Pendaflex,
Oxford and Leitz; Mattress Firm, Inc., a bedding retailer; and
Advantage Sales and Marketing, Inc., a sales and marketing
agency. Prior to founding J.W. Childs, Mr. Childs served as
Senior Managing Director of the Thomas H. Lee Company, a private
equity firm, and led the teams investing in Snapple Beverage
Corp., a producer of beverages, and Ghirardelli Chocolate
Company, a producer of chocolate products.
Over the course of their careers, the members of our management
team have developed a broad network of contacts and corporate
relationships that have served as an extremely useful source of
investment opportunities. This network has been developed
through:
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our management team acquiring, sourcing and financing businesses;
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the reputation of our management team for integrity and fair
dealing with sellers, financing sources and target management
teams; and
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the experience of our management team in executing transactions
under varying economic and financial market conditions.
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This network has provided our management team with a flow of
referrals that has resulted in numerous transactions which were
proprietary or where a limited group of investors were invited
to participate in the sale process. We believe that the network
of contacts and relationships of our management team will
provide us with an important source of investment opportunities.
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 assets
or divisions.
Our management team has broad experience acquiring businesses
from a wide variety of sellers in different transaction
structures, including, the acquisition of brands or divisions
from larger companies selling non-core or underperforming
businesses (The Meow Mix Company and Sunny Delight Beverages
Co.), the acquisition of family-owned businesses (Beltone
Electronics Corporation and Snapple Beverages Corp.), the
acquisition of publicly-owned companies (American Safety Razor
Company and Esselte Ltd.), and the acquisition of businesses
from private equity firms (Pinnacle Foods Group Inc. and
Advantage Sales and Marketing, Inc.). Additionally, the
operating expertise of our management team has enabled J.W.
Childs to pursue acquisitions of businesses where brands were
being acquired with limited continuing management or with
management succession issues for family run and controlled
businesses.
As a result of the acquisition and management of over 40
businesses during the past 20 years, Mr. Childs and
the other members of our management team have developed
substantial expertise in operating middle market growth
businesses. Members of our management team have been responsible
for the implementation of the business plan for portfolio
companies and have worked closely with management on a variety
of business and strategic initiatives, including operational
improvements, brand strategies, increasing productivity, expense
reduction, personnel, new market opportunities and acquisitions.
Additionally, our Vice Presidents, William E. Watts,
Raymond Rudy and Arthur Byrne have served as chief executive
officers of multiple businesses and have served as operating
partners of J.W. Childs, providing direct and active management
expertise for many of the J.W. Childs portfolio companies. As
operating partners, Messrs. Watts, Rudy and
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Byrne have been involved in all aspects of selecting
investments, including sourcing investment opportunities and due
diligence, and have taken direct responsibility for the
implementation of the business plans by serving as interim
executives or chairman of the board of many of the J.W. Childs
portfolio companies.
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 management team, as
well as their affiliates, may also bring to our attention target
business candidates that they become aware of through their
business contacts as a result of formal or informal inquiries or
discussions they may have, as well as by attending trade shows
or conventions. In addition, we expect to receive a number of
proprietary deal flow opportunities (i.e., opportunities that
would not be offered publicly) as a result of the track record
and business relationships of our management team.
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.
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. We do not consider Sawaya Segalas as
being independent for purposes of obtaining such opinion.
Each of our officers has agreed, pursuant to a written agreement
with us, that until the earliest of our initial business
combination, our redemption of 100% of our public shares if we
fail to complete our initial business combination within
21 months from the closing of this offering 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
$100 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 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. All of
our officers currently have certain relevant fiduciary duties or
contractual obligations that may take priority over their duties
to us. In addition, our officers 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 closing of this offering.
Our executive offices are located at 111 Huntington Avenue,
Boston, Massachusetts 02199, and our telephone number is
(617) 753-1100.
4
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.
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Securities offered |
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15,000,000 units, at $10.00 per unit, each unit consisting
of: |
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one share of common stock; and
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one warrant.
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Proposed OTCBB symbols |
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Units:
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Common Stock:
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Warrants:
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Trading commencement and separation of common stock
and warrants |
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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 Citigroup Global Markets 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. |
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Separate trading of the common stock and warrants
is prohibited until we have filed a Current
Report on
Form 8-K |
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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:
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Number outstanding before
this offering |
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0 |
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Number outstanding after
this offering |
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15,000,000 |
Common
stock:
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Number outstanding before
this offering |
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2,464,286(1)(2) |
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Number outstanding after
this offering |
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17,142,857(2)(3) |
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(1) |
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This number includes an aggregate of 321,429 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) |
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This number includes a portion of the founder shares in an
amount equal to 2.5% 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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Assumes no exercise of the underwriters over-allotment
option and the resulting forfeiture of 321,429 founder shares. |
Warrants:
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Number of sponsor warrants to be
sold simultaneously with closing of
this offering |
|
5,000,000 |
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Number of warrants to
be outstanding after this offering
and the private placement |
|
20,000,000 |
|
Exercisability |
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Each warrant offered in this offering is exercisable to purchase
one share of our common stock. |
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Exercise price |
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$12.00 per share, subject to adjustments as described herein. |
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Exercise period |
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The warrants will become exercisable on the later of: |
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30 days after the completion of our initial
business combination, or
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12 months from the closing of this offering;
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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. |
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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. |
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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. |
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Redemption of warrants |
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Once the warrants become exercisable, we may redeem the
outstanding warrants (except as described below with respect to
the sponsor warrants): |
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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 a minimum of 30 days prior written
notice of redemption, or the
30-day
redemption period; and
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if, and only if, the last sale price of our common
stock equals or exceeds $18.00 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.
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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. |
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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 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. |
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None of the sponsor warrants will be redeemable by us so long as
they are held by members of our sponsor or their permitted
transferees. |
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Founder shares |
|
In August 2010, our sponsor purchased an aggregate of 2,464,286
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 321,429 shares subject to
forfeiture to the extent that the underwriters
over-allotment option is not exercised in full, so that our
sponsor will own 12.5% of our issued and outstanding shares
after this offering (assuming our sponsor does not purchase
units in this offering). In addition, the founder earnout shares
(equal to 2.5% 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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The founder shares are identical to the shares of common stock
included in the units being sold in this offering, except that: |
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the founder shares are subject to certain transfer
restrictions, as described in more detail below, and
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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 closing of
this offering (although it will be entitled to redemption rights
with respect to any public shares it holds if we fail to
consummate a business combination within such time period).
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If we submit our initial business combination to our public
stockholders for a vote, our sponsor has agreed to vote its
founder shares in accordance with the majority of the votes cast
by the public stockholders and to vote any public shares
purchased during or after the offering in favor of our initial
business combination. |
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Transfer restrictions on founder shares |
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Our sponsor has agreed not to transfer, assign or sell any of
the 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 below under Principal
Stockholders Transfers of Common Stock and Warrants
by Our Sponsor and its Members). |
|
Sponsor warrants |
|
Members of our sponsor have committed to purchase an aggregate
of 5,000,000 sponsor warrants, each exercisable to purchase one
share of our common stock at $12.00 per share, at a price of
$0.75 per warrant ($3.75 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 closing of this
offering, 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. |
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Transfer restrictions on sponsor warrants |
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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 |
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they are held by members of our sponsor or their permitted
transferees (except as described below under Principal
Stockholders Transfers of Common Stock and Warrants
by Our Sponsor its Members). If the sponsor warrants are
held by holders other than members of our 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. |
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Proceeds to be held in trust account |
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$147.75 million, or approximately $9.85 per unit of the
proceeds of this offering and the proceeds of the private
placement of the sponsor warrants ($169.69 million, or
approximately $9.84 per unit, if the underwriters
over-allotment option is exercised in full) will be placed in a
segregated trust account with Continental Stock
Transfer & Trust Company acting as trustee. These
proceeds include approximately $3.75 million (or
approximately $4.31 million if the underwriters
over-allotment option is exercised in full) in deferred
underwriting commissions. |
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An increase in the size of the offering will reduce the
per-share amount payable to our public stockholders upon our
liquidation or our stockholders exercise of their
redemption rights because the portion of the trust account
attributable to the sales proceeds of the sponsor warrants will
be allocated pro rata among a greater number of public shares.
Assuming a 20% increase in the size of this offering, the
per-share redemption or liquidation amount could decrease by as
much as approximately $0.02. |
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We may increase the initial amount held in the trust account
from approximately $9.85 per unit prior to the effectiveness of
the registration statement of which this prospectus forms a
part. In such case, the increase would be funded by an increase
in the amount of the deferral of the underwriting commissions
payable in connection with this offering, 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 $1,250,000 of
the amount initially available to us for working capital that is
not 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. |
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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, 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 100%
of our public shares if we are unable to consummate a business
combination within 21 months from the closing of this
offering (subject to the requirements of 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. |
9
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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
$2.25 million, subject to adjustment as described below, 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: |
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such interest; and
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the net proceeds of this offering not held in the
trust account, which will be $1.25 million in working
capital after the payment of approximately $1.0 million in
expenses relating to this offering.
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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. |
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Conditions to consummating our initial business
combination |
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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 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. 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. |
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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 (2,250,000 shares, or
2,587,500 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 |
10
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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, at prices (inclusive of commissions) not
to exceed the per-share amount then held in the trust account
(approximately $9.85 per share or approximately $9.84 per share
if the underwriters over-allotment option is exercised in
full). We can purchase any or all of the 2,250,000 shares
(or 2,587,500 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. |
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Other permitted purchases of public shares by us or our
affiliates |
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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. 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. 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 |
11
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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
if we hold a stockholder vote. |
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Redemption rights for public stockholders upon consummation
of our initial business combination |
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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 $9.85 per public share (or approximately $9.84 per
public share if the underwriters
over-allotment
option is exercised in full), or approximately $0.15 less than
the per-unit
offering price of $10.00 (approximately $0.16 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 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 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,
(i) conduct the redemptions pursuant to
Rule 13e-4
and Regulation 14E of the Exchange Act, which regulate
issuer tender offers, and (ii) 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.
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. 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, 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. In such case, our sponsor has
agreed to vote its founder shares in |
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accordance with the majority of the votes cast by the public
stockholders and to vote any public shares purchased during or
after the offering in favor 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. |
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Many blank check companies would not be able to consummate a
business combination if the holders of the companys 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 companys initial public offering,
which percentage threshold is typically 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, 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. |
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Limitation on redemption 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. We believe this restriction 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
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 if such holders
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 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. |
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However, we would not be restricting our stockholders
ability to vote all of their shares for or against a business
combination. |
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Release of funds in trust account on closing of our initial
business combination |
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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 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. |
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Redemption of common stock and distribution and liquidation
if no initial business combination |
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Our sponsor, officers and directors have agreed that we will
have only 21 months from the closing of this offering to
consummate our initial business combination. If we are unable to
consummate a business combination 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 not more than ten business days thereafter, redeem
100% of 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 subject to the requirement that
any refund of income taxes that were paid from the trust account
which is received after the redemption shall be distributed to
the former public stockholders, 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-month
time period. |
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Our sponsor has waived its redemption rights with respect to its
founder shares if we fail to consummate an initial business |
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combination within 21 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. |
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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 months from the closing of this offering 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. |
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Limited payments to insiders |
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There will be no finders 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: |
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Repayment of a $25,000 loan made to us by J.W.
Childs, an affiliate of our sponsor, to cover offering-related
and organizational expenses;
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A payment of an aggregate of $5,000 per month to
J.W. Childs for office space, secretarial and administrative
services;
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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
$2.25 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
otherwise, of interest earned on the trust account that may be
released to us to fund working capital requirements; and
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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.
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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 beginning on
page 18 of 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.
|
|
|
|
|
|
|
|
|
|
|
August 5, 2010
|
|
|
|
Actual
|
|
|
As Adjusted
|
|
|
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
Working capital (deficiency)
|
|
$
|
(35,500
|
)
|
|
$
|
145,270,000
|
|
Total assets
|
|
$
|
105,500
|
|
|
$
|
149,020,000
|
|
Total liabilities
|
|
$
|
85,500
|
|
|
$
|
3,750,000
|
|
Value of common stock that may be redeemed in connection with
our initial business combination (approximately $9.85 per share)
|
|
$
|
|
|
|
$
|
140,269,999
|
|
Stockholders equity(1)
|
|
$
|
20,000
|
|
|
$
|
5,000,001
|
|
|
|
|
(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 $25,000 loan made to us by J.W. Childs and the
payment of the estimated expenses of this offering. The as
adjusted total assets amount includes the $147,750,000
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 closing
of this offering. The as adjusted working capital
and as adjusted total assets include approximately
$3.75 million being held in the trust account
(approximately $4.31 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 closing of this offering, 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 its
founder shares if we fail to consummate a business combination
within such
21-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.
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. In addition, 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 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. In either 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
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
18
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.
We may
not be able to consummate a business combination within
21 months from the closing of this offering, 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 closing of this offering. If we have not consummated a
business combination 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 not more than ten business days thereafter, redeem
100% of 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 subject to the requirement that
any refund of income taxes that were paid from the trust account
which is received after the redemption shall be distributed to
the former public stockholders, 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. We may
not be able to find a suitable target business and consummate a
business combination within such time period.
The
requirement that we complete a business combination within
21 months from the closing of this offering 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.
If we have not consummated a business combination within
21 months from the closing of this offering, we will redeem
100% of the public shares, subject to applicable law and as
further described herein. Any potential target business with
which we enter into negotiations concerning a business
combination will be aware of this requirement. 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.
If we
are unable to complete our initial business combination within
the prescribed time frame, our public stockholders will receive
less than $10.00 per share on our redemption and our warrants
will expire worthless.
If we are unable to complete our initial business combination
within the prescribed time frame and are forced to redeem 100%
of the public shares, the per-share redemption amount received
by stockholders will 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. If we were unable to conclude our initial business
combination and expended 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 $2.25 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 otherwise, in
19
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
$9.85, or $0.15 less than the
per-unit
offering price of $10.00 (or $9.84, or $0.16 less if the
underwriters over-allotment option is exercised in full).
Furthermore, our outstanding warrants are not entitled to
participate in any redemption or liquidating distribution and
the warrants will therefore expire worthless if we are unable to
consummate a business combination within the 21-month time
period.
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 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 (2,250,000 shares, or
2,587,500 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 markets 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. 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
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. 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
(2,250,000 shares, or 2,587,500 shares if the
underwriters over-allotment option is exercised in full),
in the open market in a manner intended to comply with
Rule 10b-18
under the Exchange Act, using funds held in the trust account so
long as the price paid for such shares does not exceed the
per-share amount then held in the trust account (approximately
$9.85 per share or approximately $9.84 per share if the
underwriters over-allotment option is exercised in full).
20
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, and may make it more difficult
for us to list our common stock on a national securities
exchange.
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
(2,250,000 shares, or 2,587,500 shares if the
underwriters over-allotment option is exercised in full),
in the open market in a manner intended to comply with
Rule 10b-18
under the Exchange Act, using funds held in the trust account so
long as the price paid for such shares does not exceed the
per-share amount then held in the trust account (approximately
$9.85 per share or approximately $9.84 per share if the
underwriters over-allotment option is exercised in full).
As a consequence of such purchases:
|
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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 if we determine to apply for such quotation or listing
in connection with the business combination; and
|
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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
purchases of common stock in the open market or in privately
negotiated transactions may have negative economic effects on
our remaining public stockholders following the initial business
combination.
If we seek stockholder approval of our business combination and
purchase shares in privately negotiated or market transactions
immediately following the consummation of the initial 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 remaining public
stockholders following the initial business combination will
bear the economic burden of the deferred underwriting
commissions and franchise and income taxes payable. 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 deferred underwriting
commissions or franchise and income taxes payable on the
interest earned by the trust account.
21
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 100% of our public shares if we are unable to consummate an
initial business combination within 21 months from the
closing of this offering, 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 months from the closing of this offering
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, investors may be forced to wait beyond 21 months
before they receive funds from our trust account. In no other
circumstances will a 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 board of directors intends to establish an audit committee
and a compensation committee upon consummation of an initial
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 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 Nasdaq Stock 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 Nasdaq Stock
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 Nasdaq Stock 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.
We do not currently meet the listing standards for the Nasdaq
Stock Market or any another national securities exchange. The
OTCBB does not impose listing standards or requirements. If our
securities were listed on the Nasdaq Stock 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 stockholder approval and other corporate governance
requirements.
22
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 will receive less than $10.00 per share 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 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 will receive less
than $10.00 per share 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 $2.25 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 otherwise, 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 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 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
23
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 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 will receive less
than $10.00 per share on our redemption, and our warrants will
expire worthless.
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 $1.25 million
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 $1.0 million, we
may fund such excess with funds from the $1.25 million 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
$1.0 million, 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
$2.25 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
otherwise, 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 will receive less than $10.00 per share 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.
24
If the
size of the offering is increased, the portion of the trust
account attributable to the proceeds of the sale of sponsor
warrants will be allocated pro rata among a greater number of
public shares, which will reduce the per-share amount payable to
our public stockholders upon our liquidation or our
stockholders exercise of redemption rights.
If the size of the offering is increased, there will be no
corresponding increase in the number of sponsor warrants
purchased by our sponsor. Accordingly, the portion of the trust
account attributable to the sale proceeds of the sponsor
warrants will be spread pro rata across a greater number of
public shares, which will reduce the per-share amount payable to
each public stockholder upon our liquidation or our
stockholders exercise of redemption rights. Assuming a 20%
increase in the size of this offering, the per share redemption
or liquidation amount could decrease by as much as approximately
$0.02.
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
$9.85 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 partys 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. 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
stockholders could be less than the $9.85 per share held in the
trust account, including interest but net of any franchise and
income taxes payable (or approximately $9.84 per share if the
underwriters over-allotment option is exercised in full),
due to claims of such creditors. J.W. Childs has agreed that it
will be liable to us if and to the extent any claims by a vendor
for services rendered or products sold to us, or a prospective
target business with which we have discussed entering into a
transaction agreement, reduce the amounts in the trust account
to below $9.85 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, J.W. Childs will not be
responsible to the extent of any liability for such third party
claims. However, we have not asked J.W. Childs to reserve for
such indemnification obligations and we cannot assure you that
J.W. Childs would be able to satisfy those obligations. None of
our officers will indemnify us for claims by third parties
including, without limitation, claims by vendors and prospective
target businesses.
25
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, 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. Furthermore, because we intend to redeem our
public shares for a per-share pro rata portion of the trust
account in the event we do not consummate a business combination
within 21 months from the closing of this offering, this
may be viewed or interpreted as giving preference to our public
stockholders over any potential creditors with respect to access
to or distributions from our assets. 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.
Our
directors may decide not to enforce J.W. Childs
indemnification obligations, resulting in a reduction in the
amount of funds in the trust account available for distribution
to our public stockholders.
In the event that the proceeds in the trust account are reduced
below $9.85 per public share (or approximately $9.84 per public
share if the underwriters over-allotment option is
exercised in full) and J.W. Childs asserts that it 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
J.W. Childs to enforce its indemnification obligations. While we
currently expect that our independent directors would take legal
action on our behalf against J.W. Childs 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 directors
choose not to enforce these indemnification obligations, the
amount of funds in the trust account available for distribution
to our public stockholders may be reduced below $9.85 per share.
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:
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restrictions on the nature of our investments; and
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restrictions on the issuance of securities,
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each of which may make it difficult for us to complete a
business combination.
26
In addition, we may have imposed upon us burdensome
requirements, including:
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registration as an investment company;
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adoption of a specific form of corporate structure; and
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reporting, record keeping, voting, proxy and disclosure
requirements and other rules and regulations.
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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 will receive less than $10.00 per share 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.
Our sponsor, officers and directors have agreed that we will
have only 21 months from the closing of this offering to
consummate our initial business combination. If we are unable to
consummate a business combination 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 not more than ten business days thereafter, redeem
100% of 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 subject to the requirement that
any refund of income taxes that were paid from the trust account
which is received after the redemption shall be distributed to
the former public stockholders, 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. Under
the DGCL, stockholders may be held liable for claims by third
parties against a corporation to the extent of distributions
received by them pursuant to a dissolution, and the redemption
of our public shares may be deemed a liquidating distribution.
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
stockholders pro rata share of the claim or the amount
distributed to the stockholder, and any liability of the
stockholder would be barred after the third anniversary of the
dissolution. Because we will not be complying with certain
procedures
27
set forth in Section 280 of the DGCL, as set forth above, a
stockholder who received distributions in the redemption may be
liable for the lesser of such stockholders pro rata share
of the claim or the amount distributed to the stockholder until
the third anniversary of the dissolution.
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
companys 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.
Although
we are required to use our best efforts to have an effective
registration statement covering the issuance of the shares of
common stock underlying the warrants when the warrants are
exercisable, such registration statement may not be effective
when the warrants are exercised, in which case our warrant
holders may not be able to exercise their warrants and therefore
the warrants could expire worthless.
Holders of our warrants will be able to exercise the warrants
for cash only if we have an effective registration statement
covering the shares of common stock issuable upon exercise of
the warrants and a current prospectus relating to such common
stock. Although we have undertaken in the warrant agreement, and
therefore have a contractual obligation, to use our best efforts
to maintain an effective registration statement covering the
shares of common stock issuable upon exercise of the warrants
when the warrants are exercisable, and we intend to comply with
our undertaking, we may not be able to do so. Factors such as an
unexpected inability to remain current in our SEC reporting
obligations or other material developments concerning our
business could present difficulties in maintaining an effective
registration statement and a current prospectus. If we do not
maintain an effective registration statement and current
prospectus, the warrant agreement permits holders of warrants to
exercise their warrants on a cashless basis under certain
circumstances. However, holders of warrants will not be entitled
to a cash settlement for their warrants if we fail to have an
effective registration statement or a current prospectus
available relating to the common stock issuable upon exercise of
the warrants. The expiration of warrants prior to exercise would
result in each unit holder paying the full unit purchase price
solely for the shares of common stock underlying the unit.
An
investor will only be able to exercise a warrant if the issuance
of common stock upon such exercise has been registered or
qualified or is deemed exempt under the securities laws of the
state of residence of the holder of the warrants.
No warrants will be exercisable and we will not be obligated to
issue shares of common stock unless the common stock issuable
upon such exercise has been registered or qualified or deemed to
be exempt under the securities laws of the state of residence of
the holder of the warrants. However, some states may not permit
us to register the shares issuable upon exercise of our warrants
for sale. The value of the warrants will be greatly reduced if
the securities are not qualified, or exempt from qualification,
in the states in which the holders of warrants reside. We have
no obligation to issue cash, securities or other compensation in
exchange for the warrants in the event that we are unable to
register the shares underlying the warrants under applicable
state securities laws, and the warrants may expire unexercised
and unredeemed. Holders of warrants who reside in jurisdictions
in which the shares underlying the warrants are not qualified
and in which there is no exemption will be unable to exercise
their warrants and would either have to sell their warrants in
the open market or allow them to expire unexercised. 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 underlying the units. If and when the warrants become
redeemable by us, we may exercise our redemption right even if
we are unable to qualify the underlying securities for sale
under all applicable state securities laws.
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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 and members of our sponsor 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. 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, its members
or their respective permitted transferees are registered.
Because
we have not selected a particular segment of the consumer
products or specialty retail sectors 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 may consummate a business combination with an operating
company in the consumer products and specialty retail sectors,
but will not limit the pursuit of acquisition opportunities only
within that industry, 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 businesss 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. Except for our intentions to initially
focus on the consumer products and specialty retail sector
located in North America, we will have virtually unrestricted
flexibility in identifying and selecting a prospective target
business.
We may
seek investment opportunities in sectors outside of the consumer
products and specialty retail sectors (which industries may or
may not be outside of our managements area of
expertise).
Although we intend to focus on identifying business combination
candidates in the consumer products or specialty retail sectors
and we will not initially actively seek to identify business
combination candidates in other sectors (which sectors may be
outside our managements area of expertise), we will
consider a business combination outside of the consumer products
or specialty retail sectors if a business combination candidate
is presented to us and we determine that such candidate offers
an attractive investment opportunity for our company or we are
unable to identify a suitable candidate in the consumer products
or specialty retail sectors after having expended a reasonable
amount of time and effort in an attempt to do so. 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
29
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 consumer products or specialty
retail sectors, our managements expertise in the consumer
products and specialty service sectors industries would not be
directly applicable to its evaluation or operation, and the
information contained herein regarding the consumer products and
specialty retail sectors industries 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 a stockholder
vote is required by law, or we decide to hold a stockholder vote
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 will
receive less than $10.00 per share 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. Managements unrestricted
flexibility in identifying and selecting a prospective
acquisition candidate, along with our managements
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
managements 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.
Managements unrestricted flexibility in identifying and
selecting a prospective acquisition candidate, along with
managements 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.
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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.
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 100,000,000 shares of common stock,
par value $0.0001 per share, and 1,000,000 shares of
preferred stock, par value $0.0001 per share. Immediately after
this offering, there will be 62,857,143 (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:
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may significantly dilute the equity interest of investors in
this offering;
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may subordinate the rights of holders of common stock if
preferred stock is issued with rights senior to those afforded
our common stock;
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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
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may adversely affect prevailing market prices for our common
stock and/or
warrants.
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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 will receive less than $10.00 per share
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. 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.
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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.
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 targets management, therefore, may
prove to be incorrect and such management may lack the skills,
qualifications or abilities we suspected. Should the
targets 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.
32
The
officers and directors of an acquisition candidate may resign
upon consummation of a business combination. The loss of an
acquisition targets key personnel could negatively impact
the operations and profitability of our post-combination
business.
The role of an acquisition candidates key personnel upon
the consummation of a business combination cannot be ascertained
at this time. Although we contemplate that certain members of an
acquisition candidates 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.
Mr. Childs is the Chairman of the Board and Chief Executive
Officer of J.W. Childs and a Director of Advantage Sales and
Marketing, Inc., Sunny Delight Beverages Co., Esselte Ltd.,
Mattress Firm, Inc. and Simcon, Inc. and Chairman of the Board
of CHG Healthcare Services, Inc. Mr. Suttin is a
Partner of J.W. Childs and a Director of Advantage Sales and
Marketing, Inc., Brookstone, Inc., Refrigerator Manufacturers,
Inc., Sunny Delight Beverages Co., Esselte Ltd., JA Apparel
Corp. (Joseph Abboud), Mattress Firm, Inc., and The Nutrasweet
Company. Mr. Byrne is an Operating Partner of J.W. Childs
and a Director of WS Packaging Group, Inc. and is the
Chairman of the Board of Esselte Ltd. Mr. Fiorentino is a
Partner with J.W. Childs and a Director of CHG Healthcare
Services, Inc., WS Packaging Group, Inc., Fitness Quest, Inc.,
Mattress Firm, Inc., JA Apparel Corp. (Joseph Abboud) and
Esselte Ltd. Mr. Rudy is an Operating Partner of J.W.
Childs, Chairman of the Board of Sunny Delight Beverages Co. and
a Director of Advantage Sales and Marketing, Inc.
Mr. Sawaya is the Co-Founder and President of Sawaya
Segalas. Mr. Shulman is a Director of Advantage Sales and
Marketing, Inc. Mr. Teschke is a Partner of J.W. Childs and
a Director of Advantage Sales and Marketing, Inc., Sunny Delight
Beverages Co., Esselte Ltd. and Fitness Quest, Inc.
Mr. Watts is an Operating Partner of J.W. Childs and
Chairman of the Board of Mattress Firm, Inc. and JA Apparel
Corp. (Joseph Abboud) and a Director of Brookstone, Inc.,
Fitness Quest, Inc. and EmployBridge, Inc.
Our independent directors also serve as officers and board
members for other entities, including, without
limitation, .
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.
Certain
of our officers and directors are now, and all of them 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 are, or may in
the future become, affiliated with entities that are engaged in
a similar business. Our officers and directors serve as officers
and board members for other entities, including, without
limitation, Advantage Sales and Marketing, Inc., Sunny Delight
Beverages Co., Esselte Ltd., Mattress Firm, Inc., CHG Healthcare
Services, Inc., Simcon, Inc., Fitness Quest, Inc., EmployBridge,
Inc., JA Apparel Corp. (Joseph Abboud), Brookstone, Inc.,
Refrigerator Manufacturers, Inc., The Nutrasweet Company and WS
Packaging Group, Inc. As a result, our executive officers and
directors may compete with us for attractive opportunities
33
for business combinations. In each case, our executive
officers and 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 currently or in the future in respect of J.W. Childs as a
general partner of J.W. Childs Equity Partners II, L.P. and J.W.
Childs Equity Partners III, L.P., or any companies in which J.W.
Childs Equity Partners II, L.P. or J.W. Childs Equity Partners
III, L.P. have invested, or in respect of Mr. Sawaya as
president of Sawaya Segalas, or any other fiduciary duties or
contractual obligations they may have as of the date of this
prospectus. 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.
In addition, our officers 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 that is not
limited to a particular industry 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 closing of this offering. Our
officers 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.
Sawaya
Segalas may represent one or more clients in competition with us
to acquire potential target businesses, thereby causing
conflicts of interest as to our knowledge of or ability to
pursue potential target businesses. This conflict of interest
could have a negative impact on our ability to consummate a
business combination.
Sawaya Segalas undertakes a wide range of investment banking and
financial advisory activities for a variety of clients in the
consumer sector. Accordingly, there may be situations in which
Sawaya Segalas has an obligation or an interest that actually or
potentially conflicts with our interests. These conflicts may
not be resolved in our favor and, as a result, we may be denied
certain attractive acquisition opportunities notwithstanding our
relationship with Sawaya Segalas.
Clients of Sawaya Segalas investment banking and financial
advisory business may compete with us for acquisition
opportunities meeting our investment objectives. If Sawaya
Segalas is engaged to act for any such clients, we may be
precluded from being presented with such opportunities. In
addition, investment ideas generated within Sawaya Segalas,
including by Mr. Sawaya who is our Vice President, may be
suitable for both us and for an investment banking client and
may be directed to such client rather than to us. Sawaya
Segalas investment banking and financial advisory business
may also be engaged to advise the seller of an entity, business
or assets that would qualify as an acquisition opportunity for
us. In such cases, we may be precluded from participating in the
sale process or from purchasing the entity, business or assets.
If we are permitted to pursue the acquisition opportunity,
Sawaya Segalas interests or obligations to the seller may
conflict with our interests.
Neither Sawaya Segalas nor Mr. Sawaya has any obligation to
present us with any opportunity for a potential business
combination of which they become aware. Sawaya Segalas or
Mr. Sawaya, in his capacity as an officer of Sawaya
Segalas, may choose or be obligated to present potential
business combinations to Sawaya Segalas, or third parties,
including clients of Sawaya Segalas, before they present such
opportunities to us. As a result, you should assume that to the
extent Mr. Sawaya identifies an opportunity for a potential
business combination equally suitable for us and another entity
to which such person has a fiduciary duty or pre-existing
contractual obligation to present such opportunity,
Mr. Sawaya will first give such opportunity to such other
entity, and he will only present such opportunity to us to the
extent such other entity first rejects or is unable to pursue
such opportunity.
34
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, including, without limitation,
Advantage Sales and Marketing, Inc., Sunny Delight Beverages
Co., Esselte Ltd., Mattress Firm, Inc., CHG Healthcare Services,
Inc., Simcon, Inc., Fitness Quest, Inc., EmployBridge, Inc., JA
Apparel Corp. (Joseph Abboud), Brookstone, Inc., Refrigerator
Manufacturers, Inc., The Nutrasweet Company and WS Packaging
Group, Inc. 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. We do not consider Sawaya Segalas as being independent
for purposes of obtaining such opinion.
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 August 2010, our sponsor purchased an aggregate of 2,464,286
founder shares for an aggregate purchase price of $25,000, or
approximately $0.01 per share (which includes up to
321,429 shares that are subject to forfeiture to the extent
that the underwriters over-allotment option is not
exercised in full) that will be worthless if we do not
consummate a business combination. Members of our sponsor have
committed to purchase an aggregate of 5,000,000 sponsor
warrants, each exercisable for one share of our common stock at
$12.00 per share, for a purchase price of $3.75 million, or
$0.75 per warrant, that will also be worthless if we do not
consummate a business combination. In addition, the founder
earnout shares (equal to 2.5% 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.
35
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:
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default and foreclosure on our assets if our operating revenues
after an initial business combination are insufficient to repay
our debt obligations;
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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;
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our immediate payment of all principal and accrued interest, if
any, if the debt security is payable on demand;
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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;
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our inability to pay dividends on our common stock;
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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;
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limitations on our flexibility in planning for and reacting to
changes in our business and in the industry in which we operate;
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increased vulnerability to adverse changes in general economic,
industry and competitive conditions and adverse changes in
government regulation; and
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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.
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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 $149.0 million (or approximately
$170.94 million if the underwriters over-allotment
option is exercised in full) that we may use to complete a
business combination.
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:
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solely dependent upon the performance of a single business,
property or asset, or
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dependent upon the development or market acceptance of a single
or limited number of products, processes or services.
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36
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.
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 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
companys 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, 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 companys 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
companys initial public offering, which percentage
threshold is typically 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
37
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 $12.00 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 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 companys pre-business
combination activity, without approval by a certain percentage
of the companys stockholders. Typically, amendment of
these provisions requires approval by between 90% and 100% of
the companys 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.
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.
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 will
receive less than $10.00 per share 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
38
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. 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 (an entity controlled
by our officers and directors) will own 12.5% of our issued and
outstanding shares of common stock (assuming it does not
purchase any units in this offering and it is not required to
forfeit its founder earnout shares, as described in this
prospectus). Our board of directors 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. If our sponsor purchases additional shares, this
may increase its 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.
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 82.8% or $8.28 per share (the difference between
the pro forma net tangible book value per share of $1.72 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 Continental Transfer & Stock
Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without
the consent of any holder to cure any ambiguity or correct any
defective provision, but requires the approval by the holders of
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
39
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.
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 $18.00 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. 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
outstanding 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 15,000,000 shares
of our common stock (or up to 17,250,000 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 5,000,000 sponsor
warrants, each exercisable to purchase one share of common stock
at $12.00 per share. 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:
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the history and prospects of companies whose principal business
is the acquisition of other companies;
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40
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prior offerings of those companies;
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our prospects for acquiring an operating business at attractive
values;
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a review of debt to equity ratios in leveraged transactions;
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our capital structure;
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an assessment of our management and their experience in
identifying operating companies;
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general conditions of the securities markets at the time of this
offering; and
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other factors as were deemed relevant.
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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-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 will offer and sell the units to retail customers only in
Delaware, the District of Columbia, Florida, Georgia, Hawaii,
Illinois, Indiana, Louisiana, New York, Rhode Island and
Wyoming. 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 and
Oregon 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, 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
41
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 below.
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.
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.
42
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 managements 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:
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our ability to complete our initial business combination;
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our success in retaining or recruiting, or changes required in,
our officers, key employees or directors following our initial
business combination;
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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;
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our potential ability to obtain additional financing to complete
our initial business combination;
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our pool of prospective target businesses;
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the ability of our officers and directors to generate a number
of potential investment opportunities;
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our public securities potential liquidity and trading;
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the lack of a market for our securities;
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the use of proceeds not held in the trust account or available
to us from interest income on the trust account balance; or
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our financial performance following this offering.
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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.
43
USE OF
PROCEEDS
We are offering 15,000,000 units at an offering price of
$10.00 per unit. We estimate that the net proceeds of this
offering, in addition to the funds we will receive from the sale
of the sponsor warrants (all of which will be deposited into the
trust account), will be as set forth in the following table.
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Without Over-
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Over-Allotment
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Allotment Option
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Option Exercised
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Gross proceeds
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Gross proceeds from units offered to public(1)
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$
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150,000,000
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$
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172,500,000
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Gross proceeds from sponsor warrants offered in the private
placement
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3,750,000
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3,750,000
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Total gross proceeds
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$
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153,750,000
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$
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176,250,000
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Offering expenses(2)
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Underwriting commissions (2.5% of gross proceeds from units
offered to public, excluding deferred portion)(3)
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$
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3,750,000
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$
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4,312,500
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Legal fees and expenses
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500,000
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500,000
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Printing and engraving expenses
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26,000
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26,000
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Accounting fees and expenses
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40,000
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40,000
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Blue Sky filing fees
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40,000
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40,000
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SEC/FINRA Expenses
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29,800
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29,800
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Travel and road show
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75,000
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75,000
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Directors and officers insurance
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150,000
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150,000
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Miscellaneous
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139,200
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139,200
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Total offering expenses
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$
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4,750,000
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$
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5,312,500
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Proceeds after offering expenses
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$
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149,000,000
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$
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170,937,500
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|
|
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Held in trust account(3)
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$
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147,750,000
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$
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169,687,500
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% of public offering size
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98.5
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98.4
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Not held in trust account
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$
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1,250,000
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$
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1,250,000
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Use of net proceeds not held in the trust account and up to
an additional $2.25 million, subject to adjustment in the
event the size of the offering changes as a result of the
underwriters exercise of any portion of the over-allotment
option or otherwise, of interest earned on our trust account
(net of income and franchise taxes payable) that may be released
to us to cover operating expenses(4).
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Amount
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% of Total
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Legal, accounting, due diligence, travel, and other expenses in
connection with any business combination(5)
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$
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3,050,000
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87.1
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%
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Legal and accounting fees related to regulatory reporting
obligations
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$
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200,000
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5.7
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%
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Payment for office space, administrative and support services
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$
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105,000
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3.0
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%
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Printing
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$
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50,000
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1.4
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%
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Consulting and travel for search for business combination target
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$
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50,000
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1.4
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%
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Working capital to cover miscellaneous expenses
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$
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45,000
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1.3
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%
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Total
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$
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3,500,000
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100
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%
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(1) |
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Includes amounts payable to public stockholders who properly
redeem their shares in connection with our successful
consummation of our initial business combination. |
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(2) |
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In addition, a portion of the offering expenses have been paid
from the proceeds of a $25,000 loan from J.W. Childs, as
described in this prospectus. This loan will be repaid upon
consummation of this offering out of the $1.0 million of
offering proceeds that has been allocated for the payment of
offering expenses. |
44
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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. |
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(3) |
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The underwriters have agreed to defer approximately
$3.75 million of their underwriting commissions (or
approximately $4.31 million if the underwriters
over-allotment option is exercised in full), which equals 2.5%
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
$3.75 million, which constitutes the underwriters
deferred commissions (or approximately $4.31 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, general corporate purposes, 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. |
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(4) |
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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
$2.25 million as a result of the current interest rate
environment. |
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(5) |
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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. |
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.
A total of approximately $3.75 million (or approximately
$4.31 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 $3.75 million (or
approximately $4.31 million if the underwriters
over-allotment option is exercised in full) of deferred
underwriting commissions will be placed in a trust account with
Continental Stock Transfer & Trust Company 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 and the Investment Trust
Management Agreement with Continental Stock Transfer &
Trust Company, none of the funds held in the trust account will
be released until the earlier of (i) the completion of our
initial business combination or (ii) the redemption of 100%
of our public shares if we are unable to consummate a business
combination within 21 months from the closing of this
offering (subject to the requirements of law).
We may increase the initial amount held in the trust account
from approximately $9.85 per unit prior to the effectiveness of
the registration statement of which this prospectus forms a
part. In such case, the increase would be funded by an increase
in the amount of the deferral of the underwriting commissions
payable in
45
connection with this offering, 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 $1,250,000 of the amount initially available to
us for working capital that is not 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.
We believe that amounts not held in trust, as well as the
interest income of up to $2.25 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 otherwise, 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
$2.25 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 (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 $2.59 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 such a 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 J.W. Childs, an entity owned
and controlled by John W. Childs, our Chairman and Chief
Executive Officer, a total of $5,000 per month for office space,
administrative services and secretarial support. This
arrangement is being agreed to by Mr. Childs for our
benefit and is not intended to provide Mr. Childs
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, J.W. Childs has advanced to
us a total of $25,000 to be used for a portion of the expenses
of this offering. These advances are non-interest bearing,
unsecured and are due at the earlier of December 31, 2010
or the closing of this offering. The loan will be repaid upon
the closing of this offering out of the $1.0 million 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. 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.
46
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 (2,250,000 shares, or
2,587,500 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, at prices (inclusive of commissions) not
to exceed the per-share amount then held in the trust account
(approximately $9.85 per share or approximately $9.84 per share
if the underwriters over-allotment option is exercised in
full). We can purchase any or all of the 2,250,000 shares
(or 2,587,500 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.
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. 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 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.
The net proceeds of this offering not held in the trust account
and not immediately required for the purposes set forth above
will 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. Interest income of
up to $2.25 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 otherwise, on the trust account balance (net of
franchise and income taxes payable) may be released to us
47
from the trust account to fund a portion of our working capital
requirements. The funds held in the trust account will be held
in the name of a wholly-owned subsidiary of the Company that is
qualified as a Massachusetts security corporation.
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 months following the closing of this
offering, 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 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.
48
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 dividends subsequent to an
initial business combination will be within the discretion of
our board of directors at such time. It is the present intention
of our board of directors to retain all earnings, if any, for
use in our business operations and, accordingly, our board of
directors does not anticipate declaring any dividends in the
foreseeable future. In addition, our board of directors is not
currently contemplating and does not anticipate declaring any
stock dividends in the foreseeable future, except if we increase
the size of the offering pursuant to Rule 462(b) under the
Securities Act, in which case we will effect a stock dividend
immediately prior to the consummation of the offering in such
amount as to maintain our sponsors ownership at 12.5% of
our 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.
49
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 August 5, 2010, our net tangible book value was a
deficiency of $(35,500), or approximately $(0.02) per share of
common stock. After giving effect to the sale of
15,000,000 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 August 5, 2010 would have been $5,000,001 or
$1.72 per share, representing an immediate increase in net
tangible book (as decreased by the value of the approximately
14,240,609 shares of common stock that may be redeemed for
cash and assuming no exercise of the underwriters
over-allotment option) value of $8.15 per share to our sponsor
as of the date of this prospectus and an immediate dilution of
$9.85 per share or 98.5% 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:
|
|
|
|
|
|
|
|
|
Public offering price
|
|
|
|
|
|
$
|
10.00
|
|
Net tangible book value before this offering
|
|
$
|
(0.02
|
)
|
|
|
|
|
Increase attributable to public stockholders
|
|
|
8.15
|
|
|
|
|
|
Decrease attributable to public shares subject to redemption
|
|
|
(9.85
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro forma net tangible book value after this offering and the
sale of the sponsor warrants
|
|
|
|
|
|
$
|
(1.72
|
)
|
|
|
|
|
|
|
|
|
|
Dilution to public stockholders
|
|
|
|
|
|
$
|
8.28
|
|
|
|
|
|
|
|
|
|
|
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 $140,269,999
because holders of up to approximately 95% 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).
The following table sets forth information with respect to our
sponsor and the public stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
Shares Purchased
|
|
|
Total Consideration
|
|
|
Price
|
|
|
|
Number
|
|
|
Percentage
|
|
|
Amount
|
|
|
Percentage
|
|
|
per Share
|
|
|
Sponsor
|
|
|
2,142,857
|
|
|
|
12.5
|
%
|
|
$
|
25,000
|
|
|
|
0.02
|
%
|
|
$
|
0.01
|
|
Public Stockholders
|
|
|
15,000,000
|
|
|
|
87.5
|
%
|
|
|
150,000,000
|
|
|
|
99.98
|
%
|
|
$
|
10.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,142,857
|
|
|
|
100.0
|
%
|
|
$
|
150,025,000
|
|
|
|
100.0
|
%
|
|
$
|
8.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50
The pro forma net tangible book value per share after the
offering is calculated as follows:
|
|
|
|
|
Numerator:
|
|
|
|
|
Net tangible book value before this offering
|
|
$
|
(35,500
|
)
|
Proceeds from this offering and sale of the sponsor warrants,
net of expenses
|
|
|
149,000,000
|
|
Offering costs excluded from net tangible book value before this
offering
|
|
|
55,500
|
|
Less: deferred underwriters commissions payable
|
|
|
(3,750,000
|
)
|
Less: amount of common stock subject to redemption to maintain
net tangible assets of $5,000,001
|
|
|
(140,269,999
|
)
|
|
|
|
|
|
|
|
$
|
5,000,001
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
Shares of common stock outstanding prior to this offering
|
|
|
2,464,286
|
|
Shares forfeited if over-allotment is not exercised
|
|
|
(321,429
|
)
|
Shares of common stock included in the units offered
|
|
|
15,000,000
|
|
Less: shares subject to redemption to maintain net tangible
assets of $5,000,001
|
|
|
(14,240,609
|
)
|
|
|
|
|
|
|
|
|
2,902,248
|
|
|
|
|
|
|
51
CAPITALIZATION
The following table sets forth our capitalization at
August 5, 2010 and as adjusted to give effect to the sale
of our units and the sponsor warrants and the application of the
estimated net proceeds derived from the sale of such securities:
|
|
|
|
|
|
|
|
|
|
|
August 5, 2010
|
|
|
|
Actual
|
|
|
As Adjusted(1)
|
|
|
Deferred underwriting commissions
|
|
$
|
|
|
|
$
|
3,750,000
|
|
Notes payable to affiliate(2)
|
|
|
25,000
|
|
|
|
|
|
Common stock, subject to redemption(3)
|
|
|
|
|
|
|
140,269,999
|
|
Stockholders 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; 2,464,286 shares issued and outstanding;
17,142,857 shares issued and outstanding, as adjusted
|
|
|
246
|
|
|
|
1,714
|
(4)
|
Additional paid-in capital
|
|
|
24,754
|
|
|
|
5,003,287
|
|
Deficit accumulated during the development stage
|
|
|
(5,000
|
)
|
|
|
(5,000
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
20,000
|
|
|
|
5,000,001
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
$
|
45,000
|
|
|
$
|
149,020,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Includes the $3.75 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 $25,000 in the aggregate to J.W. Childs. The note is
non-interest bearing and is payable on the earlier of
December 31, 2010 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 321,429 founder shares held by our sponsor have
been forfeited, but no forfeiture of the founder earnout shares. |
52
MANAGEMENTS
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
August 5, 2010, we had $50,000 in cash and deferred
offering costs of $55,500. Further, we expect to continue to
incur significant costs in the pursuit of
53
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.
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 J.W. Childs in the amount of $25,000. We
estimate that the net proceeds from (i) the sale of the
units in this offering, after deducting offering expenses of
approximately $1.0 million, but including deferred
underwriting commissions of approximately $3.75 million (or
approximately $4.31 million if the underwriters
over-allotment option is exercised in full), and (ii) the
sale of the sponsor warrants for a purchase price of
$3.75 million, will be approximately $149.0 million
(or approximately $170.94 million if the underwriters
over-allotment option is exercised in full). Approximately
$147.75 million (or approximately $169.69 million if
the underwriters over-allotment option is exercised in
full), will be held in the trust account, which includes
approximately $3.75 million (or approximately
$4.31 million if the underwriters over-allotment
option is exercised in full) of deferred underwriting
commissions. The remaining $1.25 million will not be held
in the trust account. In the event that our offering expenses
exceed our estimate of $1.0 million, we may fund such
excess with funds from the $1.25 million 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 $1.0 million, 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 estimate our annual franchise
tax obligations, based on current tax rates, to be approximately
$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.
Over this time period, 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 proportionately
decrease. Assuming a 20% increase in the size of this offering,
the per share redemption or liquidation amount could decrease by
as much as approximately $0.02.
54
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. 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 $3,050,000 million for legal,
accounting, due diligence, travel and other expenses associated
with structuring, negotiating and documenting successful
business combinations; $5,000 per month for up to 21 months
for office space, administrative services and support payable to
J.W. Childs, an entity controlled by Mr. Childs, our
Chairman and Chief Executive Officer; $200,000 for legal and
accounting fees related to regulatory reporting requirements;
$50,000 for printing; $50,000 for consulting and travel for the
search for a business combination target; and approximately
$45,000 for general working capital that will be used for
miscellaneous expenses 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.
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, we will rely on
the funds available to us outside of the trust account and
interest earned of up to $2.25 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 otherwise, on the trust account (net of
franchise and income taxes payable) that may be available to us
to fund such expenditures along with any loans from our sponsor,
affiliates of our sponsor, our directors or our officers, as
discussed above. 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 $2.25 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
55
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:
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staffing for financial, accounting and external reporting areas,
including segregation of duties;
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reconciliation of accounts;
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proper recording of expenses and liabilities in the period to
which they relate;
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evidence of internal review and approval of accounting
transactions;
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documentation of processes, assumptions and conclusions
underlying significant estimates; and
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documentation of accounting policies and procedures.
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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 managements 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 businesss 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 August 2010, our sponsor purchased an aggregate of 2,464,286
founder shares for an aggregate purchase price of $25,000, or
approximately $0.01 per share. John W. Childs, our Chairman and
Chief Executive Officer, Adam L. Suttin, our President, David A.
Fiorentino, a Vice President of our company our Chief Financial
Officer, Jeffrey J. Teschke, a Vice President of our company and
our Treasurer and Secretary, and our Vice Presidents Arthur P.
Byrne, Raymond B. Rudy, John D. Shulman and William E. Watts,
are each members of our sponsor. In addition Fuad Sawaya, a Vice
President of our company, is a member of a limited liability
company that is a member of our sponsor.
As of the date of this prospectus, J.W. Childs has advanced on
our behalf a total of $25,000 for payment of offering expenses.
This advance is non-interest bearing, unsecured and is due at
the earlier of December 31, 2010 or the closing of this
offering. This loan will be repaid upon the closing of this
offering out of the $1.0 million 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 J.W. Childs, an entity controlled by
Mr. Childs, a monthly fee of $5,000 for office space and
general administrative services.
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
56
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. 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.
Members of our sponsor have committed to purchase an aggregate
of 5,000,000 sponsor warrants at a price of $0.75 per warrant
($3.75 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 $12.00 per share. Members of
our sponsor will be permitted to transfer the sponsor warrants
held by them 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 the members of our sponsor.
Otherwise, these warrants will not, subject to certain limited
exceptions, be transferable or salable by the members of 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 the
sponsor or their permitted transferees. The sponsor warrants may
also be exercised by the members of 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 August 5, 2010, 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.
57
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 will seek to capitalize on the substantial deal sourcing,
investing and operating expertise of our management team to
identify, acquire and operate a middle-market business in the
consumer products or specialty retail sectors operating
primarily in North America, although we may pursue acquisition
opportunities in other sectors or in other geographic regions.
We believe that consumer products and specialty retail
businesses possess attractive investment attributes compared to
other sectors including strong brand franchises, barriers to
competition, lower capital requirements and lower technology
risks. Our Chairman and Chief Executive Officer, John W. Childs,
our President, Adam L. Suttin, and other members of our
management team have extensive experience acquiring and
operating businesses across various sectors, but primarily
focused in the consumer products and specialty retail sectors.
Our Vice President, Fuad Sawaya, has over 20 years
experience in sourcing, structuring and negotiating control
investments in consumer businesses. All of our executives are
either professionals with J.W. Childs, a private equity firm
founded by Mr. Childs and Mr. Suttin in 1995 to make
investments in middle market growth businesses, or, in the case
of Mr. Sawaya, a principal of Sawaya Segalas, an investment
bank providing financial advisory services to the consumer
sector and, in the case of John D. Shulman, a principal of
Juggernaut Capital Partners, a middle market private equity firm
in Washington, D.C., with over $100 million in assets
under management. J.W. Childs has invested approximately
$3 billion of equity capital in 40 businesses with an
aggregate enterprise value (which includes all equity investment
and incurred and assumed net indebtedness) at the time of
investment of over $12 billion. In addition, 20 of these
portfolio companies have made follow-on acquisitions.
We believe that our sourcing of acquisition candidates will
benefit from the involvement of Mr. Sawaya in our
management and the network of relationships that Mr. Sawaya
and Sawaya Segalas, of which Mr. Sawaya is a principal,
have developed. Sawaya Segalas investment banking and
financial advisory business serves a diverse set of clients
around the world. Sawaya Segalas has expertise in the consumer
sector, with a focus on the
over-the-counter
medicine, personal care, household products, housewares and food
and beverage sectors. The Sawaya Segalas team of investment
bankers will be additional resources to us as we seek to
identify acquisition candidates.
Our management team will focus on increasing stockholder value
through growing revenue (through organic growth and
acquisitions) and improving the efficiency of business and
manufacturing processes. Consistent with this strategy, we have
identified the following general criteria and guidelines that we
believe 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.
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Middle-Market Growth Business. We will
seek to acquire one or more growth businesses with an enterprise
value ranging from $300 million to $1 billion. We
believe that our focus on businesses in this segment of the
middle market will offer us a substantial number of potential
business targets that we believe can achieve and maintain
significant revenue and earnings growth. We do not intend to
acquire
start-up
companies and, under our amended and restated certificate of
incorporation, we will not be permitted to effectuate our
initial business combination with another blank check company or
a similar company with nominal operations.
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Strong Competitive Industry
Position. We will seek to acquire one or more
businesses that operate within segments of the consumer products
and specialty retail sectors that have strong fundamentals.
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The factors we will consider include growth prospects,
competitive dynamics, level of consolidation, need for capital
investment and barriers to entry. Within these sectors, 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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Business with Revenue and Earnings Growth
Potential. We will seek to acquire one or
more businesses that have the potential for revenue and earnings
growth through a combination of brand and new product
development, expense reduction and synergistic follow-on
acquisitions.
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Companies with Potential for Strong Free Cash Flow
Generation. We will seek to acquire one or
more businesses that have the potential to generate strong and
stable free cash flow. We will focus on one or more businesses
that have predictable, 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.
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Business with Experienced and Motivated Management
Teams. We will seek to acquire one or more
businesses with experienced management teams that have strong
track records, have achieved superior performance and have a
substantial personal economic stake in the performance of the
acquired business. We expect to implement a management equity
incentive plan that will align management of the acquired
business with the interests of our stockholders.
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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
is 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:
Acquisition
and Sourcing Expertise
Our management team has substantial expertise acquiring
businesses across many sectors, including the consumer products
and specialty retail sectors. All the members of our management
team have been associated with J.W. Childs, a private equity
firm making investments in middle market growth companies. Since
its founding by Messrs. Childs and Suttin in 1995, J.W.
Childs has sponsored three equity capital funds which, together
with related co-investors, have invested an aggregate of
approximately $3 billion of equity capital in 40 portfolio
companies with an aggregate enterprise value at the time of
investment in excess of $12 billion. In addition, 20 of
these portfolio companies have made follow-on acquisitions.
Approximately 69% of the investments led by members of our
management team have been investments in businesses in the
consumer products and specialty retail sectors, including The
Meow Mix Company, a manufacturer and distributor of premium cat
food; Sunny Delight Beverages Co., a producer of juice
beverages; Bass Pro Shops, Inc., a fishing and hunting goods
retailer; Brookstone, Inc., a specialty retailer and product
development company; American Safety Razor Company, a
manufacturer of personal care products; Personal Care Group,
Inc., a branded personal care products company with brands
including Chubs, Wet Ones, Binaca, and Mr. Bubble; Beltone
Electronics Corporation, a manufacturer and distributor of
hearing instruments; Pinnacle Foods Group Inc., a producer and
marketer of branded frozen and dry foods with brands including
Duncan Hines, Aunt Jemima, Vlasic and Lenders; Esselte
Ltd., a manufacturer and marketer of filing and workspace
products with brands including Pendaflex, Oxford and Leitz;
Mattress Firm, Inc., a
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bedding retailer; and Advantage Sales and Marketing, Inc., a
sales and marketing agency. Prior to founding J.W. Childs,
Mr. Childs served as Senior Managing Director of the Thomas
H. Lee Company, a private equity firm, and led the teams
investing in Snapple Beverage Corp., a producer of beverages,
and Ghirardelli Chocolate Company, a producer of chocolate
products.
Over the course of their careers, our management team has
developed a broad network of contacts and corporate
relationships that has served as an extremely useful source of
investment opportunities. This network has been developed
through:
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our management team acquiring and financing businesses;
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the reputation of our management team for integrity and fair
dealing with sellers, financing sources and target management
teams; and
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the experience of our management team in closing and financing
transactions under varying economic and financial market
conditions.
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This network has provided our management team with a steady flow
of referrals that have resulted in numerous transactions which
were proprietary or where a limited group of investors were
invited to participate in the sale process. We believe that the
network of contacts and relationships of our management team
will provide us with an important source of investment
opportunities. 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 brands or divisions.
Our management team has broad experience acquiring businesses
from a wide variety of sellers in different transaction
structures, including, the acquisition of brands or divisions
from larger companies selling non-core or underperforming
businesses (The Meow Mix Company and Sunny Delight Beverages
Co.), the acquisition of family-owned businesses (Beltone
Electronics Corporation and Snapple Beverages Corp..), the
acquisition of publicly-owned companies (American Safety Razor
Company and Esselte Ltd.), and the acquisition of businesses
from private equity firms (Pinnacle Foods Group Inc. and
Advantage Sales and Marketing, Inc.). Additionally, the
operating expertise of our management team has enabled J.W.
Childs to pursue acquisitions of businesses where brands were
being acquired with limited continuing management or with
management succession issues for family run and controlled
businesses.
Operating
Expertise
As a result of the acquisition and management of 40 businesses
during the past 20 years, Mr. Childs and the other
members of our management team have developed substantial
expertise in operating middle market growth businesses. Members
of our management team have been responsible for the
implementation of the business plan for portfolio companies and
have worked closely with management on a variety of business and
strategic initiatives, including operational improvements, brand
strategies, increasing productivity, expense reduction,
personnel, new market opportunities and acquisitions.
Additionally, our Vice Presidents, William E. Watts,
Raymond Rudy and Arthur Byrne have served as chief executive
officers of multiple businesses and have served as operating
partners of J.W. Childs, providing direct and active management
expertise for many of the J.W. Childs portfolio companies. As
operating partners Messrs. Watts, Rudy and Byrne have been
involved in all aspects of selecting investments, including
sourcing investment opportunities and due diligence, and have
taken direct responsibility for the implementation of the
business plans by serving as interim executives or chairman of
the board of many of the J.W. Childs portfolio companies.
Mr. Watts served as the President and Chief Executive
Officer of General Nutrition Companies, a retailer of vitamin
supplements, from 1991 to 2001. During his tenure as Chief
Executive Officer, General Nutrition opened over 4,000 new
stores and generated sales and earnings growth in excess of 15%
earnings per annum. Since joining J.W. Childs as an operating
partner in 2001, Mr. Watts has served as Chairman of
Murrays Discount Auto Stores, where he recruited new
senior management and redesigned the companys operating
plan, leading to a successful sale to a strategic buyer.
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Mr. Rudy served as Deputy Chairman of Snapple Beverage
Corp. from 1992 until its sale in 1994, where he was responsible
for all of Snapples international activities and played a
key role in recruiting senior executives to direct
Snapples rapid growth. Mr. Rudy served as President
of Best Foods Affiliates of PC International from 1987 to 1989,
President and Chief Executive Officer of Arnold Foods Company
from 1984 to 1986, President of Oroweat Foods Company from
1979 to 1984 and various executive positions at General Foods
Corporation from 1973 to 1979. Since joining J.W. Childs as an
operating partner in 1995, Mr. Rudy served as Chairman of
The Meow Mix Company, where he played a significant role in the
acquisition of the Meow Mix brands from Purina Pet Care Company
and the formation and growth of The Meow Mix Company as a
stand-alone pet food company. Mr. Rudy also played a
significant role in the acquisition of the Sunny Delight
Beverages Co. brands from The Procter & Gamble Company
and currently serves as Chairman of Sunny Delight Beverages Co.
Mr. Byrne served as Chairman, President and Chief Executive
Officer of Wiremold Company, a manufacturer of wire and cable
management solutions, from 1991 until 2002, where he
successfully employed lean management processes to substantially
improve productivity. Previously, Mr. Byrne has served in
various executive positions with Danaher Corporation and General
Electric Company. Mr. Byrne is widely considered to be one
of the leading experts on lean management and he has
successfully implemented these processes at Esselte Ltd., and
W/S Packaging Group, Inc., a manufacturer of pressure sensitive
labels.
Examples of our management teams operating expertise are
as follows:
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Beltone Electronics Corporation: In
1997, Messrs. Childs and Rudy led the acquisition of
Beltone, a hearing instrument manufacturer and distributor in
the United States, from Beltones founding family.
Mr. Rudy as Chairman and Mr. Childs as a director
recruited a new management team that implemented wide-ranging
improvements in manufacturing productivity and systems and
distribution capabilities. In 1999, Beltone acquired the hearing
instrument business of Royal Phillips Electronics which gave
Beltone an expanded international presence, greater access to
technology and low-cost digital chip capabilities.
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American Safety Razor Company: In 1999,
Messrs. Childs, Suttin and Rudy led the acquisition of
American Safety Razor Company, a leading manufacturer of private
label shaving razors and blades. Prior to this acquisition,
American Safety Razor Company was a public company.
Messrs. Childs, Suttin and Rudy recruited a new management
team which successfully introduced new products, grew
international sales and acquired a complementary wet shaving
business while disposing of two non-core businesses.
Mr. Byrne led the introduction of lean management processes
in 2002 which substantially reduced working capital requirements
and increased free cash flow.
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The Meow Mix Company: In 2002,
Messrs. Childs, Suttin and Rudy led the acquisition of the
Meow Mix brand of premium dry cat food, together with co-packing
and transition services agreements, from the Purina Pet Care
Company. Mr. Rudy served as an executive chairman of The
Meow Mix Company and recruited a new management team that
created a stand-alone company in less than four months,
established a
state-of-the-art
manufacturing facility and introduced new products and line
extensions.
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Murrays Discount Auto Sales. In
2003, as Chairman of Murrays Discount Auto Stores, a
Midwestern aftermarket auto parts chain, Mr. Watts
recruited a former colleague as chief executive officer.
Mr. Watts and the chief executive officer led a significant
turnaround in operating performance over a one year period by
increasing same store sales through improved merchandising and
product selection, opening 21 new stores, and significantly
reducing infrastructure costs and increasing advertising
productivity.
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Esselte Ltd. In 2002,
Messrs. Childs, Suttin and Byrne led the acquisition of
Esselte, Ltd., a Swedish public company and a global
manufacturer of office and craft products. Mr. Byrne, as
Chairman, recruited a new chief executive officer who led the
management team to implement lean manufacturing processes that
substantially improved productivity and free cash flow and
reduced manufacturing costs through the relocation of
manufacturing facilities to Mexico and eastern Europe and the
construction of a new manufacturing facility in China.
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Advisory
and Sourcing Expertise
In addition to the experience and contacts of our management
team, we will have access to the resources of Sawaya Segalas and
their senior professionals. Sawaya Segalas is a leading
independent investment bank that provides financial and
strategic advice on mergers and acquisition matters involving
companies in the consumer sector. We believe that our sourcing
of candidates will benefit from the network of relationships
which Sawaya Segalas has developed over the course of
undertaking advisory mandates for its clients and the previous
experience of its managing directors and senior officers. We
also believe that our affiliation with Sawaya Segalas augments
our considerable sector expertise and insight into sector
participants, strategies and trends. Furthermore, where
appropriate, Sawaya Segalas senior officers will be
available to offer us valuable advice on transaction structuring
and other matters. Managing directors and senior officers of
Sawaya Segalas will not be granted any other awards or
incentives, such as a finders fee, by us for efforts in
sourcing a target for our initial business combination. As of
June 30, 2010, Sawaya Segalas employed three senior
officers with an average of approximately 20 years of
mergers and acquisitions, consulting and strategic advisory
experience.
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.
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 companys profile among potential new
customers and vendors and aid in attracting talented employees.
Financial
position
With funds available for a business combination initially in the
amount of approximately $147.75 million, 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 of the foregoing, 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 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. Accordingly, prospective investors
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will at the time of their investment in us not be provided an
opportunity to evaluate the specific merits or risks of a target
business. 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. In the absence of a
requirement by law, we would not seek separate stockholder
approval of such financing inasmuch as the financing portion of
any initial business combination would be disclosed in our
tender offer documents or proxy materials. 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.
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
63
attention target business candidates that they become aware of
through their business 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 finders fee, consulting fee or other
compensation to be determined in an arms 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 finders 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 finders
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). None of our sponsor, officers,
directors and any of their respective affiliates will be allowed
to receive any compensation, finders 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 criteria 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 companys 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. We do not consider
Sawaya Segalas as being independent for purposes of obtaining
such opinion.
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 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. However, we will only
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
64
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.
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 targets 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 may conduct a stockholder vote, if it is required by
law, or we decide to hold such vote 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 would be required under
Delaware law for each such transaction.
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Whether Stockholder
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Type of Transaction
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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
(2,250,000 shares, or 2,587,500 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, at prices (inclusive of commissions) not
to exceed the per-share amount then held in trust (approximately
$9.85 per share or approximately $9.84 per share if the
underwriters over-allotment option is exercised in full).
We can purchase any or all of the 2,250,000 shares (or
2,587,500 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.
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. 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; and
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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 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 months from the closing of
this offering). 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.
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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.
Redemption
rights for 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 $9.85 per public
share, or approximately $9.84 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 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 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, (i) conduct the redemptions pursuant to
Rule 13e-4
and Regulation 14E of the Exchange Act, which regulate
issuer tender offers, and (ii) 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. 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. 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, 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. In such case, our sponsor has
agreed to vote its founder shares in accordance with the
majority of the votes cast by the public stockholders and to
vote any public shares purchased during or after the offering in
favor of our initial
67
business combination. Each public stockholder may elect to
redeem their public shares irrespective of whether they vote for
or against the proposed transaction. In addition, 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.
Many blank check companies would not be able to consummate a
business combination if the holders of the companys 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 companys initial public offering,
which percentage threshold is typically 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.
Conduct
of redemption pursuant to tender offer rules
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.
Submission
of our initial business combination to a stockholder
vote
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 submit our initial business combination to our
stockholders for approval, our sponsor has agreed to vote its
founder shares in accordance with the majority of the votes cast
by the public stockholders and to vote any public shares
purchased during or after the offering in favor of our initial
business combination. In addition, 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.
Limitation
on redemption rights upon consummation of a business combination
if we seek a stockholder vote
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. We believe this restriction will discourage
stockholders from accumulating large blocks of shares, and
subsequent attempts by such holders to use their ability to
exercise their redemption rights 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 if such holders
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 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
68
closing condition that we have a minimum net worth or a certain
amount of cash. However, we would not be restricting our
stockholders ability to vote all of their shares for or
against a business combination.
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 Companys DWAC (Deposit/Withdrawal At Custodian)
System, at the holders 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
companys 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 a redemption right
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 holders 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.
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 months from the closing of this
offering. Public
69
stockholders would be entitled to receive their pro rata share
of the aggregate amount on deposit in the trust account,
including any amounts representing interest earned on the trust
account, less franchise and income taxes payable, provided that
such stockholders follow the specific procedures for redemption
that will be set forth in the proxy statement relating to the
stockholder vote on a proposed initial business combination,
only in the event that the initial business combination is
consummated. If the proposed business combination is not
consummated then a stockholders election to exercise its
redemption rights will not be honored, and such redemption will
not be entitled to a cash payment, even if such redemption right
was properly exercised.
Redemption
of common stock and liquidation if no initial business
combination
Our sponsor, officers and directors have agreed that we will
have only 21 months from the closing of this offering to
consummate our initial business combination. If we are unable to
consummate a business combination 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 not more than ten business days thereafter, redeem
100% of 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 subject to the requirement that
any refund of income taxes that were paid from the trust account
which is received after the redemption shall be distributed to
the former public stockholders, 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. Pursuant
to the terms of our amended and restated certificate of
incorporation, our powers following the expiration of the
permitted time period for consummating a business combination
will automatically thereafter be limited to acts and activities
relating to dissolving and winding up our affairs.
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 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. 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
21-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 $1.25 million of proceeds held outside the trust
account and from the up to $2.25 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 otherwise, 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 $9.85
(or approximately $9.84 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 $9.85, 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
70
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
partys 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, J.W. Childs has agreed that it will be liable to us if
and to the extent any claims by a vendor for services rendered
or products sold to us, or a prospective target business with
which we have discussed entering into a transaction agreement,
reduce the amounts in the trust account to below $9.85 per share
(or approximately $9.84 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, J.W. Childs will not
be responsible to the extent of any liability for such third
party claims. We cannot assure you, however, that J.W. Childs
would be able to satisfy those obligations. None of our officers
will indemnify us for claims by third parties including, without
limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the trust account are reduced
below $9.85 per public share (or approximately $9.84 per public
share if the underwriters over-allotment option is
exercised in full) and in the event we redeem 100% of our public
shares for a per-share pro rata portion of the trust account, or
upon our liquation, and J.W. Childs asserts that it is unable to
satisfy any applicable obligations or that it has no
indemnification obligations related to a particular claim, our
independent directors would determine whether to take legal
action against J.W. Childs to enforce its indemnification
obligations. While we currently expect that our independent
directors would take legal action on our behalf against J.W.
Childs 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. 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 $9.85 per public share (or approximately
$9.84 per public share if the underwriters over-allotment
option is exercised in full).
We will seek to reduce the possibility that J.W. Childs 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. J.W. Childs 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 $1.25 million from the
proceeds of this offering, and the up to $2.25 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 otherwise, in interest
income on the
71
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 $1.0 million, we
may fund such excess with funds from the $1.25 million 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
$1.0 million, 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 100% of our public shares in
the event we do not consummate our initial business combination
within 21 months from the closing of this offering 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
stockholders 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. If we are unable to consummate a business
combination within 21 months from the closing of this
offering, 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
100% of 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 subject to the requirement that
any refund of income taxes that were paid from the trust account
which is received after the redemption shall be distributed to
the former public stockholders, 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 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, J.W. Childs may be liable only to
the extent necessary to ensure that the amounts in the trust
account are not reduced below $9.85 per public share (or
approximately $9.84 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
72
21 months from the closing of this offering, 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, J.W. Childs 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 $9.85 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, because we intend to distribute the
proceeds held in the trust account to our public stockholders
promptly after the termination of our corporate existence, this
may be viewed or interpreted as giving preference to our public
stockholders over any potential creditors with respect to access
to or distributions from our assets. Furthermore, our board may
be viewed as having breached its fiduciary duty to our creditors
and/or may
have acted in bad faith, and thereby exposing itself and our
company to claims of punitive damages, by paying public
stockholders from the trust account prior to addressing the
claims of creditors. We cannot assure you that claims will not
be brought against us for these reasons.
Our public stockholders will be entitled to receive funds from
the trust account only in the event of the redemption of 100% of
our public shares if we do not consummate a business combination
within 21 months from the closing of this offering 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 stockholders voting in connection with the
business combination alone will not result in a
stockholders 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.
73
Comparison
of redemption prices in connection with our initial business
combination and in connection with our liquidation
The following table compares the redemptions of public shares
that may take place in connection with the consummation of our
initial business combination with the redemptions of 100% of the
public shares that will take place if we are unable to
consummate an initial business combination within 21 months
from the closing of this offering.
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Redemptions in Connection
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Redemptions in Connection
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with Our Initial Business Combination
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with our Liquidation
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Calculation of
redemption price
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As described in this prospectus, 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 $9.85 per public share, or approximately $9.84 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.
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If we are unable to consummate an initial business combination
within 21 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
$9.85 per public share, or approximately $9.84 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. In addition we will be required to distribute to
the former public stockholders any refund of income taxes that
were paid from the trust account which is received after the
redemption.
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Impact to remaining stockholders
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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.
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The redemptions in connection with our liquidation will reduce
the book value per share for the shares held by our sponsor, who
will be our only remaining stockholder after the public such
redemptions.
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74
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.
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Escrow of offering proceeds
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Approximately $147.75 million of the net offering proceeds,
which includes the $3.75 million net proceeds from the sale of
the sponsor warrants and approximately $3.75 million in deferred
underwriting commissions (approximately $4.31 million if the
underwriters over-allotment option is exercised in full),
will be deposited into a trust account with Continental Stock
Transfer & Trust Company acting as trustee.
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Approximately $132.5 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.
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Investment of net proceeds
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Approximately $147.75 million of the net offering proceeds,
which includes the $3.75 million net proceeds from the sale of
the sponsor warrants and approximately $3.75 million in deferred
underwriting commissions (approximately $4.31 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.
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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.
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Receipt of interest on escrowed funds
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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 $2.25 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 otherwise, 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.
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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.
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Limitation on fair value or net assets of target business
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We are not required to set a minimum valuation on either the
fair market value or net assets of a target business.
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The fair value or net assets of a target business must represent
at least 80% of the maximum offering proceeds.
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75
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Trading of securities issued
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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 Citigroup Global Markets 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.
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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.
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Exercise of the warrants
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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.
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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.
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76
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Election to remain an investor
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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
SECs 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. Each public stockholder may elect to redeem their
public shares irrespective of whether they vote for or against
the proposed transaction.
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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 companys 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.
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77
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Business combination deadline
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If we are unable to complete a business combination
by , 2012,
21 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 100% of 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 subject
to the requirement that any refund of income taxes that were
paid from the trust account which is received after the
redemption shall be distributed to the former public
stockholders, 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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If an acquisition has not been consummated within 21 months
after the effective date of the companys registration
statement, funds held in the trust or escrow account are
returned to investors.
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78
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Terms of Our Offering
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Terms Under a Rule 419 Offering
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Release of funds
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Except for up to $2.25 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 otherwise, 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 Continental Stock Transfer & Trust Company, 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 100% of our public shares
if we are unable to consummate a business combination within
21 months from the closing of this offering (subject to the
requirements of applicable law).
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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.
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79
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.
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Impact on Whether
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Terms of
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Terms of Many
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a Particular Business
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Our Offering
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Blank Check Offerings
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Combination is Completed
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Requirement to file proxy statement and conduct a stockholder
vote
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We intend to conduct 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. 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, 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, and 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. Each
public stockholder may elect to redeem their public shares
irrespective of whether they vote for or against the proposed
transaction.
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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 was required by law. These blank check companies may not
consummate a business combination if the majority of the
companys public shares voted are voted against a proposed
business combination.
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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.
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80
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Impact on Whether
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Terms of
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Terms of Many
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a Particular Business
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Our Offering
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Blank Check Offerings
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Combination is Completed
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Redemption threshold
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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.
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Many blank check companies are not permitted to consummate a
business combination if more than a specified percentage of the
shares sold in such companys initial public offering,
which percentage threshold is typically between 19.99% and
39.99%, elect to redeem or convert their shares in connection
with the stockholder vote.
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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.
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Accelerated deadline to complete business combination
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We will only have 21 months to complete our initial
business combination.
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Many blank check companies have between 24 and 36 months to
complete their initial business combinations.
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The 21 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.
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Impact on Whether
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Terms of
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Terms of Many
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a Particular Business
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Our Offering
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Blank Check Offerings
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Combination is Completed
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Permitted purchases of shares by us prior to the consummation
of our initial business combination using
amounts held in the trust account
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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
(2,250,000 shares, or 2,587,500 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, at prices (inclusive of commissions) not to exceed
the per-share amount then held in the trust.
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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.
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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.
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Minimum fair market value of target
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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.
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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.
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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.
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Impact on Whether
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Terms of
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Terms of Many
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a Particular Business
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Our Offering
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Blank Check Offerings
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Combination is Completed
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Warrant terms
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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.
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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 companys 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.
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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.
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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 111 Huntington
Avenue, Boston, Massachusetts 02199. The cost for this space is
included in the $5,000 per month fee described above that J.W.
Childs charges us for general and administrative services. We
believe, based on rents and fees for similar services in the
Boston metropolitan area that the fee charged by J.W. Childs 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.
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Employees
We currently have nine 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.
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.
84
MANAGEMENT
Directors
and Executive Officers
As of August 10, 2010, our directors, executive officers
and director nominees are as follows:
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Name
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Age
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Position
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John W. Childs
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Chairman and Chief Executive Officer
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Adam L. Suttin
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President
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Arthur P. Byrne
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Vice President
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David A. Fiorentino
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Vice President and Chief Financial Officer
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Raymond B. Rudy
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Vice President
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Fuad Sawaya
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Vice President
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John D. Shulman
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Vice President
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Jeffrey J. Teschke
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Vice President, Treasurer and Secretary
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William E. Watts
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Vice President
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Director
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Director
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John W. Childs is our Chairman and Chief Executive
Officer. Mr. Childs has been Chairman and Chief Executive
Officer of J.W. Childs since 1995. From 1991 to 1995
Mr. Childs was Senior Managing Director of the Thomas H.
Lee Company and from 1987 to 1990 was a Managing Director of
Thomas H. Lee Company. Prior to 1987, Mr. Childs was
associated with the Prudential Insurance Company of America for
17 years where he held various executive positions in the
investment area, ultimately serving as Senior Managing Director
in charge of the Capital Markets Group where he was responsible
for Prudentials approximately $77 billion fixed
income portfolio, including all the Capital Markets Groups
investments in leveraged acquisitions. He is currently a
director of Advantage Sales and Marketing, Inc., Sunny Delight
Beverages Co., Esselte Ltd., Mattress Firm, Inc. and Simcon,
Inc. and Chairman of the Board of CHG Healthcare Services, Inc.
Mr. Childs graduated from Yale University with a B.A.
degree and from Columbia University with an M.B.A. degree.
Mr. Childs designation as a Director and Chairman of
our board of directors was based upon his extensive background
in the private equity industry and his substantial experience in
identifying and acquiring a wide variety of businesses.
Adam L. Suttin is our President. Mr. Suttin
co-founded J.W. Childs in 1995 and is a Partner of the firm.
From 1989 to 1995 Mr. Suttin was an investment professional
at Thomas H. Lee Company. He is currently a Director of
Advantage Sales and Marketing, Inc., Brookstone, Inc.,
Refrigerator Manufacturers, Inc., Sunny Delight Beverages Co.,
Esselte Ltd., JA Apparel Corp. (Joseph Abboud), Mattress Firm,
Inc., and The NutraSweet Company. Mr. Suttin graduated from
the Wharton School of the University of Pennsylvania with a B.S.
degree and from the Moore School of Engineering of the
University of Pennsylvania with a Bachelor of Applied Science
degree.
Arthur P. Byrne is our Vice President. Mr. Byrne has
been an Operating Partner of J.W. Childs since August 2002. From
1991 until 2002 he was Chairman, President and CEO of The
Wiremold Company From 1985 until 1991, Mr. Byrne was a
Group Executive with the Danaher Corporation. Prior to joining
Danaher, Mr. Byrne held various positions with the General
Electric Company including General Manager of its Nickel Cadmium
Battery Operations and its High Intensity and Quartz Lamp
Department. Mr. Byrne is currently Chairman of the Board of
Esselte Ltd. and a Director of WS Packaging Group, Inc.
Mr. Byrne graduated from Boston College with a B.S. degree
and from Babson College with an M.B.A. degree.
David A. Fiorentino is our Vice President and Chief
Financial Officer. Mr. Fiorentino is a Partner of J.W.
Childs. He joined the firm in 2000 after working previously in
the investment banking division of Morgan Stanley. He has been
involved in numerous investments by J.W. Childs in the consumer
products, retail and healthcare sectors and is currently a
Director of CHG Healthcare Services, Inc., W/S Packaging Group,
Inc., Fitness Quest, Inc., Mattress Firm, Inc., JA Apparel Corp.
(Joseph Abboud) and Esselte Ltd.. Mr. Fiorentino
85
graduated from Amherst College with a B.A. degree and from
Harvard Business School with an M.B.A. degree.
Raymond B. Rudy is our Vice President. Mr. Rudy has
been an Operating Partner of J.W. Childs since July 1995. From
1992 until its sale in 1994 he was Deputy Chairman of Snapple
Beverage Corp. From 1987 to 1989, Mr. Rudy was President of
the Best Foods Affiliates of CPC International. From 1984 to
1986, Mr. Rudy was Chairman, President and CEO of Arnold
Foods Company, a leveraged buyout, led by Clayton,
Dubilier & Rice. From 1979 to 1984, Mr. Rudy was
President of Oroweat Foods Company, a subsidiary of Continental
Grain Company. From 1963 to 1979, Mr. Rudy served in
various executive positions at General Foods Corporation,
including Group Vice President for diversified operations (1973
to 1976) and international development (1976 to 1979).
Mr. Rudy is Chairman of the Board of Sunny Delight
Beverages Co. and is a Director of Advantage Sales and
Marketing, Inc. Mr. Rudy graduated from UCLA with a B.S.
degree and from Xavier University with an M.B.A. degree.
Fuad Sawaya is our Vice President. Mr. Sawaya is the
Co-Founder and President of Sawaya Segalas. Prior to co-founding
Sawaya Segalas in 2001, Mr. Sawaya was a Managing Director
and Group Head of the Middle Market Consumer Products Group at
J.P. Morgan & Co. From 1986 to 2000,
Mr. Sawaya held various positions at PaineWebber, Inc.,
first in the Mergers & Acquisitions department and
later in its Consumer Products Investment Banking Group, which
he ran in the late 1990s. During his 21 year investment
banking career, Mr. Sawaya has handled many transactions
involving clients in the consumer sector and well-known brands
such as Snapple Beverage Corp., Orange Glo International, CNS,
Inc., Armor All Products, Prestone Products and SoBe Beverages,
among others. In addition, Mr. Sawaya has been involved
with transactions involving companies in the retailing,
distribution and marketing services industries such as Advantage
Sales & Marketing, Randalls Supermarkets and
FoxMeyer Drug Company. Mr. Sawaya graduated from the
American University of Beirut with a B.S. degree in Civil
Engineering and from the Columbia University Graduate School of
Business with an M.B.A. degree.
John D. Shulman is our Vice President. Mr. Shulman
is Founder and Managing Partner of Juggernaut Capital Partners,
a middle market private equity firm in Washington, D.C.,
with over $100 million in assets under management. From
2000 to 2008, Mr. Shulman was a Managing Director and a
member of the Management and Investment Committees of Allied
Capital, a private equity firm in Washington, D.C. with
over $5 billion in assets under management. Prior to
Allied, Mr. Shulman was President and CEO of ONYX
International, LLC, a private equity firm based in
Washington, D.C. Mr. Shulman currently serves on the
Boards of Directors of Advantage Sales and Marketing LLC, Amerex
Group LLC, CR Brands, Inc., Foresite Towers LLC, IMDC, Inc. and
Witt Group Holdings LLC. He is a member of the Board of the
National Aquarium Institute, Junior Achievement of Greater
Washington and is a former Board Member of the Boys and Girls
Clubs of Greater Washington. Mr. Shulman holds a B.S.
degree in Finance from The McIntire School of Commerce at the
University of Virginia and he attended the London School of
Economics where he studied International Finance.
Jeffrey J. Teschke is our Vice President, Treasurer and
Secretary. Mr. Teschke is a Partner of J.W. Childs. He
joined the firm in 1998 after working at Quad-C Management,
Inc., a private equity firm based Charlottesville, VA, from 1996
to 1998 and in the Leveraged Finance Department of Merrill
Lynch & Co. from 1994 to 1996. Mr. Teschke has
been involved with numerous investments by J.W. Childs in the
consumer products sector and is currently a director of
Advantage Sales and Marketing, Inc., Sunny Delight Beverages
Co., Esselte Ltd. and Fitness Quest, Inc. Mr. Teschke
graduated from the University of Rochester with a B.A. degree
and from Harvard Business School with an M.B.A. degree.
William E. Watts is our Vice President. Mr. Watts
has been an Operating Partner of J.W. Childs since June 2001.
From 1991 to 2001, he was President and Chief Executive Officer
of General Nutrition Companies. Prior to being named President
and Chief Executive Officer in 1991, Mr. Watts held the
positions of President and Chief Operating Officer of General
Nutrition, President and Chief Operating Officer of General
Nutrition Center, Senior Vice President of Retailing and Vice
President of Retail Operations. Mr. Watts currently serves
as Chairman of the Board of Mattress Firm, Inc. and JA Apparel
Corp. (Joseph Abboud) and is a Director of
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Brookstone, Inc., Fitness Quest, Inc. and EmployBridge, Inc.
Mr. Watts graduated from the State University of New York
at Buffalo with a B.A. degree.
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 ,
will expire at our first annual meeting of stockholders. The
term of office of the second class of directors, consisting
of ,
will expire at the second annual meeting of stockholders. The
term of office of the third class of directors, consisting of
Mr. Childs, 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. 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 companys board of directors would interfere with the
directors exercise of independent judgment in carrying out
the responsibilities of a director.
Our board of directors has determined that each of
Mr. and
Mr. ,
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 American Stock Exchange and
Rule 10A-3
of the Exchange Act. Although our company will not be listed on
the American Stock Exchange upon consummation of this offering,
we have voluntarily applied the definition of director
independence used by the American Stock Exchange in making the
determinations with respect to
Mr.
and
Mr. .
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 J.W. Childs, an entity controlled by
Mr. Childs, a total of $5,000 per month for office space
and administrative services, including secretarial support. This
arrangement is being agreed to by J.W. Childs for our benefit
and is not intended to provide Mr. Childs 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 $5,000 per month fee,
no compensation of any kind, including finders 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.
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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
managements 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 corporations 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 J.W.
Childs as a general partner of J.W. Childs Equity Partners II,
L.P. and J.W. Childs Equity Partners III, L.P., or any companies
in which J.W. Childs Equity Partners II, L.P. or J.W. Childs
Equity Partners III, L.P. have invested, or in respect of Mr.
Sawaya as president of Sawaya Segalas, 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
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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
$100 million or more.
Accordingly, 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 or, in the case of a
non-compete obligation, possibly prohibited from referring such
opportunity to us. All of our officers and directors (other than
our independent directors) currently have certain relevant
fiduciary duties or contractual obligations that may take
priority over their duties to us.
J.W. Childs is a private equity firm based in Boston,
Massachusetts specializing in leveraged buyouts and
recapitalizations of middle market growth companies. Since its
founding in 1995, J.W. Childs has sponsored three equity capital
funds:
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J.W. Childs Equity Partners, L.P. was formed in 1995 with
aggregate committed capital of $463 million. This fund
invested in ten companies, all of which investments have been
realized.
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J.W. Childs Equity Partners II, L.P. was formed in 1998, with
aggregate committed capital of $1.1 billion. This fund
invested in 12 companies. All of these investments, other
than investments in The NutraSweet Company, a manufacturer of
high intensity sweeteners, InSight Health Services Corp., a
provider of diagnostic imaging and information treatment and
related management services, and Simcon, Inc., a flight training
company, have been realized.
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J.W. Childs Equity Partners III, L.P. was formed in 2002 with
aggregate committed capital of $1.9 billion. This fund
invested in 18 companies. Six of these investments have
been fully realized leaving this fund with investments in
Advantage Sales and Marketing, Inc., a sales and marketing
agency; Brookstone, Inc., a specialty retailer and product
development company; CHG Healthcare Services, Inc., a healthcare
staffing company; Refrigerator Manufacturers, Inc., a
manufacturer of commercial refrigeration and food service
equipment; Esselte Ltd., a manufacturer of filing and workspace
documents; EmployBridge, Inc., a provider of specialty staffing
services; Fitness Quest, Inc., a distributor of home fitness and
related products; JA Apparel Corp. (Joseph Abboud), a mens
apparel company; Mattress Firm, Inc., a bedding retailer; Sunny
Delight Beverages Co., a producer of juice beverages; and WS
Packaging Group, Inc., a manufacturer of pressure sensitive
labels.
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Under the terms of the partnership agreement of these funds, no
further investments may be made by these funds other than
investments in the existing portfolio companies listed above.
All of our officers and directors other than Mr. Sawaya and
our independent directors are also directors and in some cases
officers of the general partners of these funds and the
portfolio companies listed above and therefore owe fiduciary
duties to these funds and each of these companies.
Sawaya Segalas was formed in 2001 and engages in a wide range of
investment banking and financial advisory activities for a
variety of clients, including institutions, companies and
individuals. Sawaya Segalas has no fiduciary obligations to us.
Therefore, it has no obligation to present business combination
opportunities to us and will only do so if it believes it will
not violate its other contractual or fiduciary obligations.
Accordingly, there may be situations in which Sawaya Segalas has
an obligation or an interest that actually or potentially
conflicts with our interests.
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Mr. Sawaya is the Co-Founder and President of Sawaya
Segalas, has other responsibilities (including advisory
responsibilities) within Sawaya Segalas and has an economic
interest in the success of Sawaya Segalas separate and apart
from his economic interest in us. Mr. Sawaya will continue
to work for and receive compensation relating to advisory
activities at Sawaya Segalas notwithstanding his association
with us.
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Clients of Sawaya Segalas investment banking and financial
advisory business may compete with us for acquisition
opportunities meeting our investment objectives. If Sawaya
Segalas is engaged to act for any such clients, we may be
precluded from pursuing such opportunities.
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Sawaya Segalas investment banking and financial advisory
business may also be engaged to advise the seller of an entity,
business or assets that would qualify as an acquisition
opportunity for us. In such cases, we may be precluded from
participating in the sale process or from purchasing the entity,
business or asset. If we are permitted to pursue the
opportunity, the interests of Sawaya Segalas or its obligation
to the seller will diverge from our interests. Accordingly, in
any such case, we expect that Mr. Sawaya would not
participate in any deliberations with respect to such potential
acquisitions.
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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 executive 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
that is not limited to a particular industry 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 closing of
this offering. 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 managements
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 months from the
closing of this offering. If we do not complete our initial
business combination within such
21-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 by our sponsor
(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. Since each of
Messrs. Childs, Suttin, Byrne, Fiorentino, Rudy, Shulman,
Teschke and Watts will indirectly own shares of our common stock
or warrants through our
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sponsor, our officers and directors 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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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. We do not consider
Sawaya Segalas as being independent for purposes of obtaining
such opinion. Furthermore, in no event will our sponsor or any
of our existing officers or directors, or any of their
respective affiliates, be paid any finders 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, our sponsor has agreed to
vote its founder shares in accordance with the majority of the
votes cast by the public stockholders and to vote 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. We believe that these provisions
and agreements are necessary to attract qualified directors. 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
stockholders 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.
91
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 and directors; 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.
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Approximate
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Percentage of
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Outstanding
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Common Stock
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Number of Shares
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Before
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After
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Name and Address of Beneficial Owner(1)
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Beneficially Owned
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Offering
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Offering(2)
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JWC Acquisition, LLC (our sponsor)(3)
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2,464,286
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100
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%
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12.5
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%
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All directors and executive officers as a group (eleven
individuals)
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2,464,286
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100
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%
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12.5
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%
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(1) |
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Unless otherwise noted, the business address of each of the
following is 111 Huntington Avenue, Suite 2900, Boston
Massachusetts 02199. |
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Assumes exercise of the underwriters over-allotment option
and no resulting forfeiture of an aggregate of 321,429 founder
shares held by our sponsor and includes a portion of the founder
shares in an amount equal to 2.5% 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 equity interests of our
sponsor are held by Messrs. Childs, Suttin, Byrne,
Fiorentino, Rudy, Shulman, Teschke and Watts and a limited
liability company of which Mr. Sawaya is a member. Under
our sponsors limited liability company agreement, the
consent of members holding at least a majority of our
sponsors equity interests is required in order to vote and
dispose of the shares of our common stock held by our sponsor.
John W. Childs, and any one of Adam L. Suttin, Sawaya Capital
Partners, LLC and William E. Watts will hold a majority of our
sponsors equity interests; accordingly, each of them may
be deemed to be the beneficial owner of these shares but each
disclaims beneficial ownership of these shares except to the
extent of his or its pecuniary interest therein. |
In August 2010, our sponsor purchased 2,464,286 founder shares
for an aggregate purchase price of $25,000, or approximately
$0.01 per share. John W. Childs, our Chairman and Chief
Executive Officer, Adam L. Suttin, our President, David A.
Fiorentino, a Vice President of our company our Chief Financial
Officer, Jeffrey J. Teschke, a Vice President of our company and
our Treasurer and Secretary, and our Vice Presidents Arthur P.
Byrne, Raymond B. Rudy, John D. Shulman and William E. Watts,
are each members of our sponsor. In addition Fuad Sawaya, a Vice
President of our company, is a member of a limited liability
company that is a member of our sponsor.
Immediately after this offering (assuming no exercise of the
underwriters over-allotment option), our sponsor will
beneficially own 12.5% of the then issued and outstanding shares
of our common stock. Because of this ownership block, it may be
able to effectively influence the outcome of all matters
requiring approval
92
by our stockholders, including the election of directors 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 321,429 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 12.5% 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 earnout shares (equal to 2.5% 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.
Members of our sponsor have committed to purchase an aggregate
of 5,000,000 sponsor warrants at a price of $0.75 per warrant
($3.75 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 $12.00 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 closing of this offering, 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 members of 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.
J.W. Childs, 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 Common Stock and Warrants by our Sponsor and its
Members
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 and its members. 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 sponsors
immediate family or to a trust, the beneficiary of which is a
member of one of the members of our sponsors 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
sponsors 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
93
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 and sponsor warrants will hold
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 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.
94
CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
In August 2010, we issued an aggregate of 2,464,286 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 321,429 founder shares in proportion to the portion
of the underwriters over-allotment option that was not
exercised. In addition, the founder earnout shares (equal to
2.5% 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 $3,261. 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.
Members of our sponsor have committed to purchase an aggregate
of 5,000,000 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 $12.00 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 Messrs. Childs, Suttin, Byrne, Fiorentino, Rudy,
Shulman, Teschke and Watts is a member of JWC Acquisition, LLC.
Mr. Sawaya is a member of a limited liability company that
is a member of JWC Acquisition, LLC. 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
$100 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. All of
our officers and directors (other than our independent
directors) currently have certain relevant fiduciary duties or
contractual obligations that may take priority over their duties
to us.
J.W. Childs, an entity controlled by Mr. Childs, our
Chairman and Chief Executive Officer, 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 J.W. Childs
$5,000 per month for these services. However, this arrangement
is solely for our benefit and is not intended to provide
Mr. Childs compensation in lieu of salary. We believe,
based on rents and fees for similar services in the Boston
metropolitan area, that the fee charged by J.W. Childs is at
least as favorable as we could have obtained from an
unaffiliated person.
Other than the $5,000 per-month administrative fee paid to J.W.
Childs 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 finders 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
95
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, J.W. Childs has also advanced
to us an aggregate of $25,000 to cover expenses related to this
offering. This loan will be payable without interest on the
earlier of December 31, 2010 or the closing of this
offering. We intend to repay this loan from the proceeds of this
offering not 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. 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.
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.
96
DESCRIPTION
OF SECURITIES
Our authorized capital stock consists of 100,000,000 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 Citigroup Global Markets 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
2,464,286 shares of our common stock outstanding, all of
which were held of record by our sponsor. This includes an
aggregate of 321,429 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 12.5% of our issued and
outstanding shares after this offering (assuming our sponsor
does not purchase units in this offering). John W. Childs, our
Chairman and Chief Executive Officer, Adam L. Suttin, our
President, David A. Fiorentino, a Vice President of our company
our Chief Financial Officer, Jeffrey J. Teschke, a Vice
President of our company and our Treasurer and Secretary, and
our Vice Presidents Arthur P. Byrne, Raymond B. Rudy, John D.
Shulman and William E. Watts, are each members of our sponsor.
In addition Fuad Sawaya, a Vice President of our company, is a
member of a limited liability company that is a member of our
sponsor. Upon closing of this offering, 17,142,857, 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
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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 $9.85 per public
share, or approximately $9.84 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 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
SECs proxy rules. 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, 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.
If we seek stockholder approval in connection with a business
combination, our sponsor has agreed to vote its founder shares
in accordance with the majority of the votes cast by the public
stockholders and to vote any public shares purchased during or
after the offering in favor 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. In addition, 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, although it will be entitled to redemption rights
with respect to any public shares it holds if we fail to
consummate a business combination within the required time
period.
Pursuant to our amended and restated certificate of
incorporation, if we are unable to consummate a business
combination within 21 months from the closing of this
offering, 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
100% of 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 subject to the requirement that
any refund of income taxes that were paid from the trust account
which is received after the redemption shall be distributed to
the former public stockholders, 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
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its redemption rights with respect to its founder shares if we
fail to consummate a business combination within 21 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 its redemption rights
with respect to its founder shares if we fail to consummate a
business combination within 21 months from the closing of
this offering, although it will be entitled to redemption rights
with respect to any public shares it holds 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 in accordance with the majority of the votes cast
by the public stockholders and to vote 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 the
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 earnout shares (equal
to 2.5% 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.
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
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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 $12.00 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 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.
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.
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. 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.
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 $18.00 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 $18.00 redemption trigger
price as well as the $12.00 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, members of
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 persons affiliates), to the warrant agents
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
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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.
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 under certain
circumstances, and that if more than 30% 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 not listed for trading on a national securities
exchange or on the OTC Bulletin Board, or is not 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 Continental Stock Transfer &
Trust Company, 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
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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 Common Stock and Warrants
by Our Sponsor, 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, Mr. Childs or their 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.
Members of our sponsor have 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 Common Stock and Warrants
by our Sponsor and its Members 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
dividends subsequent to a business combination will be within
the discretion of our board of directors at such time. It is the
present intention of our board of directors to retain all
earnings, if any, for use in our business operations and,
accordingly, our board of directors does not anticipate
declaring any dividends in the foreseeable future. In addition,
our board of directors is not currently contemplating and does
not anticipate declaring any stock dividends in the foreseeable
future, except if we increase the size of the offering pursuant
to Rule 462(b) under the Securities
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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 12.5% of our issued and
outstanding shares of our common stock upon the consummation of
this offering. Further, if we incur any indebtedness, our
ability to declare dividends may be limited by restrictive
covenants we may agree to in connection therewith.
Our
Transfer Agent and Warrant Agent
The transfer agent for our common stock and warrant agent for
our warrants is Continental Stock Transfer &
Trust Company. We have agreed to indemnify Continental
Stock Transfer & Trust Company 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. 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 months from the closing of this offering, 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 100% of 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 subject to the requirement that any refund of income taxes
that were paid from the trust account which is received after
the redemption shall be distributed to the former public
stockholders, 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 (we do not consider Sawaya
Segalas as being independent for such purposes);
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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
321,429 founder shares held by our sponsor) we will have
17,142,857 shares of common stock outstanding. Of these
shares, the 15,000,000 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 2,142,857 shares and all
5,000,000 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 171,428 shares immediately
after this offering (or 197,142 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:
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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 and sponsor warrants (and any
shares of common stock issuable upon the exercise of any of the
foregoing) 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 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.
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MATERIAL
U.S. FEDERAL TAX CONSIDERATIONS
This is a general summary of the material U.S. federal tax
consequences of the acquisition, ownership and disposition of
our units, common stock and warrants, which we refer to
collectively as our securities, purchased by public stockholders
pursuant to this offering. This discussion assumes that
stockholders will hold our securities as capital assets within
the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended (the Code). This discussion does
not address all aspects of U.S. federal taxation that may
be relevant to a public stockholder in light of such
stockholders particular circumstances. In addition, this
discussion does not address (i) U.S. gift or estate
tax laws except to the limited extent set forth below,
(ii) state, local or foreign tax consequences,
(iii) the special tax rules that may apply to certain
stockholders, including without limitation banks, insurance
companies, financial institutions, broker-dealers, taxpayers
that have elected
mark-to-market
accounting, taxpayers subject to the alternative minimum tax
provisions of the Code, tax-exempt entities,
S corporations, regulated investment companies, real estate
investment trusts, taxpayers whose functional currency is not
the U.S. dollar, U.S. expatriates or former long-term
residents of the United States, or governments or their agencies
or instrumentalities, or (iv) the special tax rules that
may apply to a stockholder that acquires, holds, or disposes of
our securities as part of a straddle, hedge, wash sale (except
to the limited extent described below), constructive sale or
conversion transaction or other integrated investment.
Additionally, this discussion does not consider the tax
treatment of partnerships (including entities treated as
partnerships for U.S. federal tax purposes) or other
pass-through entities or persons who hold our securities through
such entities. The tax treatment of a partnership and each
partner thereof will generally depend upon the status and
activities of the partnership and such partner. Thus,
partnerships, other pass-through entities and persons holding
our securities through such entities should consult their own
tax advisors.
This discussion is based on current provisions of the Code,
U.S. Treasury regulations promulgated under the Code,
judicial opinions, and published rulings and procedures of the
United States Internal Revenue Service (IRS), all as
in effect on the date of this prospectus and all of which are
subject to change, possibly with retroactive effect. We have not
sought, and will not seek, any ruling from the IRS or any
opinion of counsel with respect to the tax consequences
discussed below, and there can be no assurance that the IRS will
not take a position contrary to the tax consequences discussed
below or that any position taken by the IRS would not be
sustained.
As used in this Material U.S. Federal Tax
Considerations section only, the term
U.S. person means a person that is, for
U.S. federal income tax purposes (i) an individual
citizen or resident of the United States, (ii) a
corporation (or other entity treated as a corporation for
U.S. federal income tax purposes) created or organized in
or under the laws of the United States, any State thereof or the
District of Columbia, (iii) an estate the income of which
is subject to U.S. federal income taxation regardless of
its source, or (iv) a trust if (A) a court within the
United States is able to exercise primary supervision over the
administration of the trust and one or more U.S. persons
have the authority to control all substantial decisions of the
trust, or (B) it has in effect a valid election to be
treated as a U.S. person. As used in this discussion, the
term U.S. holder means a beneficial owner of
our securities that is a U.S. person and the term
non-U.S. holder
means a beneficial owner of our securities (other than an entity
that is treated as a partnership or as a disregarded entity for
U.S. federal income tax purposes) that is not a
U.S. person.
This discussion is only a summary of material U.S. federal
income and estate tax consequences of the acquisition, ownership
and disposition of our securities. Each prospective investor is
urged to consult its own tax advisors with respect to the
U.S. federal, state, local and foreign tax consequences to
such investor of the acquisition, ownership and disposition of
our securities.
Company
Personal
Holding Company Status
We could be subject to a second level of U.S. federal
income tax on a portion of our income if we are determined to be
a personal holding company (PHC) for
U.S. federal income tax purposes. A U.S. corporation
generally will be classified as a PHC for U.S. federal
income tax purposes in a given taxable year if (i) at any
time during the last half of such taxable year, five or fewer
individuals (without regard to their citizenship
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or residency and including as individuals for this purpose
certain entities such as certain tax-exempt organizations,
pension funds, and charitable trusts) own or are deemed to own
(pursuant to certain constructive ownership rules) more than 50%
of the stock of the corporation by value and (ii) at least
60% of the corporations adjusted ordinary gross income, as
determined for U.S. federal income tax purposes, for such
taxable year consists of PHC income (which includes, among other
things, dividends, interest, certain royalties, annuities and,
under certain circumstances, rents).
Depending on the date and size of our initial business
combination, it is possible that at least 60% of our adjusted
ordinary gross income may consist of PHC income as discussed
above. In addition, depending on the concentration of our stock
in the hands of individuals, including the members of our
sponsor and certain tax-exempt organizations, pension funds, and
charitable trusts, it is possible that more than 50% of our
stock will be owned or deemed owned (pursuant to the
constructive ownership rules) by such persons during the last
half of a taxable year. Thus, no assurance can be given that we
will not become a PHC following this offering or in the future.
If we are or were to become a PHC in a given taxable year, we
would be subject to an additional PHC tax on our undistributed
PHC income, which generally includes our taxable income, subject
to certain adjustments. For taxable years beginning after
December 31, 2010, the tax rate on undistributed PHC income
will be equal to the highest marginal rate on ordinary income
applicable to individuals (scheduled to be 39.6% after
December 31, 2010). For the tax year ending
December 31, 2010, the tax rate is 15%.
Public
Shareholders
General
There is no authority addressing the treatment, for
U.S. federal income tax purposes, of securities with terms
substantially the same as the units, and, therefore, that
treatment is not entirely clear. Each unit should be treated for
U.S. federal income tax purposes as an investment unit
consisting of one share of our common stock and a warrant to
acquire one share of our common stock. Each holder of a unit
must allocate the purchase price paid by such holder for such
unit between the share of common stock and the warrant based on
their respective relative fair market values. A holders
initial tax basis in the common stock and the warrant included
in each unit should equal the portion of the purchase price of
the unit allocated thereto.
The foregoing treatment of the common stock and warrants and a
holders purchase price allocation are not binding on the
IRS or the courts. Because there are no authorities that
directly address instruments that are similar to the units, no
assurance can be given that the IRS or the courts will agree
with the characterization described above or the discussion
below. Accordingly, each prospective investor is urged to
consult its own tax advisors regarding the U.S. federal,
state, local and any foreign tax consequences of an investment
in a unit (including alternative characterizations of a unit).
Unless otherwise stated, the following discussions are based on
the assumption that the characterization of the common stock and
warrants and the allocation described above are accepted for
U.S. federal tax purposes.
U.S.
Holders
Taxation
of Distributions
If we pay cash distributions to U.S. holders of shares of
our common stock, such distributions generally will constitute
dividends for U.S. federal income tax purposes to the
extent paid from our current or accumulated earnings and
profits, as determined under U.S. federal income tax
principles. Distributions in excess of current and accumulated
earnings and profits will constitute a return of capital that
will be applied against and reduce (but not below zero) the
U.S. holders adjusted tax basis in our common stock.
Any remaining excess will be treated as gain realized on the
sale or other disposition of the common stock and will be
treated as described under U.S. Holders
Gain or Loss on Sale, Taxable Exchange or Other Taxable
Disposition of Common Stock below.
Dividends we pay to a U.S. holder that is a taxable
corporation generally will qualify for the dividends received
deduction if the requisite holding period is satisfied. With
certain exceptions (including, but not limited to, dividends
treated as investment income for purposes of investment interest
deduction limitations),
108
and provided certain holding period requirements are met,
dividends we pay to a non-corporate U.S. holder generally
will constitute qualified dividends that will be
subject to tax at the maximum tax rate accorded to long-term
capital gains (currently 15%) for tax years beginning on or
before December 31, 2010, after which the rate applicable
to dividends is currently scheduled to return to the tax rate
generally applicable to ordinary income (currently scheduled to
increase to a maximum rate of 39.6% for 2011 and 2012, and 43.4%
for 2013 and later years). It is unclear whether the redemption
rights with respect to the common stock described in this
prospectus may prevent a U.S. holder from satisfying the
applicable holding period requirements with respect to the
dividends received deduction or the preferential tax rate on
qualified dividend income, as the case may be.
Gain
or Loss on Sale, Taxable Exchange or Other Taxable Disposition
of Common Stock
In general, a U.S. holder must treat any gain or loss
recognized upon a sale, taxable exchange or other taxable
disposition of our common stock (which would include a
dissolution and liquidation in the event we do not consummate an
initial business combination within 21 months from the
closing of this offering) as capital gain or loss. Any such
capital gain or loss will be long-term capital gain or loss if
the U.S. holders holding period for the common stock
so disposed of exceeds one year. It is unclear, however, as to
whether the redemption rights with respect to the common stock
described in this prospectus may suspend the running of the
applicable holding period for this purpose. Generally, a
U.S. holder will recognize gain or loss in an amount equal
to the difference between (i) the sum of the amount of cash
and the fair market value of any property received in such
disposition (or, if the common stock is held as part of a unit
at the time of the disposition, the portion of the amount
realized on such disposition that is allocated to the common
stock based upon the then fair market values of the common stock
and the warrant included in the unit) and (ii) the
U.S. holders adjusted tax basis in its common stock
so disposed of. A U.S. holders adjusted tax basis in
its common stock generally will equal the
U.S. holders acquisition cost (that is, as discussed
above, the portion of the purchase price of a unit allocated to
a share of common stock) less any prior return of capital.
Long-term capital gain realized by a non-corporate
U.S. holder generally will be subject to a maximum rate of
15% for tax years beginning on or before December 31, 2010,
after which the maximum long-term capital gains rate is
scheduled to increase to 20% for 2011 and 2012, and 23.8% for
2013 and later years. The deduction of capital losses is subject
to limitations, as is the deduction for losses realized upon a
taxable disposition by a U.S. holder of our common stock
(whether or not held as part of a unit) if, within a period
beginning 30 days before the date of such disposition and
ending 30 days after such date, such U.S. holder has
acquired (by purchase or by an exchange on which the entire
amount of gain or loss was recognized by law), or has entered
into a contract or option so to acquire, substantially identical
stock or securities.
Redemption
of Common Stock
In the event that a U.S. holder redeems common stock
pursuant to the redemption provisions described in this
prospectus, the treatment of the transaction for
U.S. federal income tax purposes will depend on whether the
redemption qualifies as sale of the common stock. If that
redemption qualifies as a sale of common stock by the
U.S. holder under Section 302 of the Code, the
U.S. holder will be treated as described under
U.S. Holders Gain or Loss on Sale,
Taxable Exchange or Other Taxable Disposition of Common
Stock above. If that redemption does not qualify as a sale
of common stock under Section 302 of the Code, the
U.S. holder will be treated as receiving a corporate
distribution with the tax consequences described above. Whether
that redemption qualifies for sale treatment will depend largely
on the total number of shares of our stock treated as held by
the U.S. holder (including any stock constructively owned
by the U.S. holder as a result of, among other things,
owning warrants) relative to all of our shares both before and
after the redemption. The redemption of common stock generally
will be treated as a sale of the common stock (rather than as a
corporate distribution) if the redemption (i) is
substantially disproportionate with respect to the
U.S. holder, (ii) results in a complete
termination of the U.S. holders interest in us
or (iii) is not essentially equivalent to a
dividend with respect to the U.S. holder. These tests
are explained more fully below.
In determining whether any of the foregoing tests are satisfied,
a U.S. holder takes into account not only stock actually
owned by the U.S. holder, but also shares of our stock that
are constructively owned by it. A
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U.S. holder may constructively own, in addition to stock
owned directly, stock owned by certain related individuals and
entities in which the U.S. holder has an interest or that
have an interest in such U.S. holder, as well as any stock
the U.S. holder has a right to acquire by exercise of an
option, which would generally include common stock which could
be acquired pursuant to the exercise of the warrants. In order
to meet the substantially disproportionate test, the percentage
of our outstanding voting stock actually and constructively
owned by the U.S. holder immediately following the
redemption of common stock must, among other requirements, be
less than 80 percent of the percentage of our outstanding
voting stock actually and constructively owned by the
U.S. holder immediately before the redemption. There will
be a complete termination of a U.S. holders interest
if either (i) all of the shares of our stock actually and
constructively owned by the U.S. holder are redeemed or
(ii) all of the shares of our stock actually owned by the
U.S. holder are redeemed and the U.S. holder is
eligible to waive, and effectively waives in accordance with
specific rules, the attribution of stock owned by certain family
members and the U.S. holder does not constructively own any
other stock. The redemption of the common stock will not be
essentially equivalent to a dividend if a
U.S. holders conversion results in a meaningful
reduction of the U.S. holders proportionate
interest in us. Whether the redemption will result in a
meaningful reduction in a U.S. holders proportionate
interest in us will depend on the particular facts and
circumstances. However, the IRS has indicated in a published
ruling that even a small reduction in the proportionate interest
of a small minority stockholder in a publicly held corporation
who exercises no control over corporate affairs may constitute
such a meaningful reduction. A U.S. holder
should consult with its own tax advisors as to the tax
consequences of a redemption.
If none of the foregoing tests are satisfied, then the
redemption will be treated as a corporate distribution and the
tax effects will be as described under
U.S. Holders Taxation of
Distributions, above. After the application of those
rules, any remaining tax basis of the U.S. holder in the
redeemed common stock will be added to the
U.S. holders adjusted tax basis in its remaining
stock, or, if it has none, to the U.S. holders
adjusted tax basis in its warrants or possibly in other stock
constructively owned by it.
The tax treatment of the receipt of any premium
purchase price by U.S. holders in connection with a
privately negotiated transaction as described in this prospectus
(see The Offering Private transactions if we
hold a stockholder vote) is unclear. The premium may be
treated as either (i) additional consideration received in
exchange for the tendered common stock in a redemption, in which
case such payments will be taken into account in determining the
amount of gain or loss on the exchange as discussed above, or
(ii) a separate fee for voting in favor of the proposed
business combination, in which case such payments will be
treated as ordinary income to recipient U.S. holders. There
can be no assurance that the IRS will not attempt to treat the
receipt of the premiums as the receipt of separate consideration
for voting in favor of the proposed business combination.
U.S. holders are urged to consult their own tax advisors as
to the proper treatment of the premiums.
U.S. holders who actually or constructively own one percent
or more of our stock (by vote or value) may be subject to
special reporting requirements with respect to a redemption of
common stock, and such holders should consult with their own tax
advisors with respect to their reporting requirements.
Exercise
of a Warrant
Except as discussed below with respect to the cashless exercise
of a warrant, a U.S. holder will not be required to
recognize taxable gain or loss upon exercise of a warrant. The
U.S. holders tax basis in the share of our common
stock received upon exercise of the warrant generally will be an
amount equal to the sum of the U.S. holders initial
investment in the warrant (i.e., the portion of the
U.S. holders purchase price for a unit that is
allocated to the warrant, as described above under
General) and the exercise price. The
U.S. holders holding period for the share of our
common stock received upon exercise of the warrant will begin on
the date following the date of exercise (or possibly the date of
exercise) of the warrant and will not include the period during
which the U.S. holder held the warrant.
The tax consequences of a cashless exercise of a warrant are not
clear under current tax law. A cashless exercise may be
tax-free, either because the exercise is not a gain realization
event or because the exercise is treated as a recapitalization
for U.S. federal income tax purposes. In either tax-free
situation, a U.S. holders
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basis in the common stock received would equal the holders
basis in the warrant. If the cashless exercise were treated as
not being a gain realization event, a U.S. holders
holding period in the common stock would be treated as
commencing on the date following the date of exercise (or
possibly the date of exercise) of the warrant. If the cashless
exercise were treated as a recapitalization, the holding period
of the common stock would include the holding period of the
warrant.
It is also possible that a cashless exercise could be treated as
a taxable exchange in which gain or loss would be recognized. In
such event, a U.S. holder could be deemed to have
surrendered warrants equal to the number of common shares having
a value equal to the exercise price for the total number of
warrants to be exercised. The U.S. holder would recognize
capital gain or loss in an amount equal to the difference
between the fair market value of the common stock represented by
the warrants deemed surrendered and the U.S. holders
tax basis in the warrants deemed surrendered. In this case, a
U.S. holders tax basis in the common stock received
would equal the sum of the fair market value of the common stock
represented by the warrants deemed surrendered and the
U.S. holders tax basis in the warrants exercised. A
U.S. holders holding period for the common stock
would commence on the date following the date of exercise (or
possibly the date of exercise) of the warrant.
Due to the absence of authority on the U.S. federal income
tax treatment of a cashless exercise, there can be no assurance
which, if any, of the alternative tax consequences and holding
periods described above would be adopted by the IRS or a court
of law. Accordingly, U.S. holders should consult their tax
advisors regarding the tax consequences of a cashless exercise.
Sale,
Taxable Exchange, Redemption or Expiration of a
Warrant
Upon a sale, taxable exchange (other than by exercise),
redemption, or expiration of a warrant, a U.S. holder will
be required to recognize taxable gain or loss in an amount equal
to the difference between (i) the amount realized upon such
disposition or expiration (or, if the warrant is held as part of
a unit at the time of the disposition of the unit, the portion
of the amount realized on such disposition that is allocated to
the warrant based on the then fair market values of the warrant
and the common stock included in the unit) and (ii) the
U.S. holders tax basis in the warrant (that is, as
discussed above, the portion of the U.S. holders
purchase price for a unit that is allocated to the warrant, as
described above under General). Such
gain or loss would generally be treated as long-term capital
gain or loss if the warrant was held by the U.S. holder for
more than one year at the time of such disposition or
expiration. As discussed above, the deductibility of capital
losses is subject to certain limitations, as is the deduction
for losses upon a taxable disposition by a U.S. holder of a
warrant (whether or not held as part of a unit) if, within a
period beginning 30 days before the date of such
disposition and ending 30 days after such date, such
U.S. holder has acquired (by purchase or by an exchange on
which the entire amount of gain or loss was recognized by law),
or has entered into a contract or option so to acquire,
substantially identical stock or securities.
Non-U.S.
Holders
Taxation
of Distributions
In general, any distributions we make to a
non-U.S. holder
of shares of our common stock, to the extent paid out of our
current or accumulated earnings and profits (as determined under
U.S. federal income tax principles), generally will
constitute dividends for U.S. federal income tax purposes
and, provided such dividends are not effectively connected with
the
non-U.S. holders
conduct of a trade or business within the United States, we
generally will be required to withhold tax from the gross amount
of the dividend at a rate of 30%, unless such
non-U.S. holder
is eligible for a reduced rate of withholding tax under an
applicable income tax treaty and provides proper certification
of its eligibility for such reduced rate (usually on an IRS
Form W-8BEN).
Any distribution not constituting a dividend will be treated
first as reducing (but not below zero) the
non-U.S. holders
adjusted tax basis in its shares of our common stock and, to the
extent such distribution exceeds the
non-U.S. holders
adjusted tax basis, as gain realized from the sale or other
disposition of the common stock, which will be treated as
described under
Non-U.S. Holders
Gain on Sale, Taxable Exchange or Other Taxable
Disposition of Common Stock and Warrants below. In
addition, if we determine
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that we are likely to be classified as a United States
real property holding corporation (see
Non-U.S. Holders
Gain on Sale, Taxable Exchange or Other Taxable Disposition of
Common Stock and Warrants below), we will withhold 10% of
any distribution that exceeds our current and accumulated
earnings and profits.
Dividends we pay to a
non-U.S. holder
that are effectively connected with such
non-U.S. holders
conduct of a trade or business within the United States
generally will not be subject to U.S. withholding tax,
provided such
non-U.S. holder
complies with certain certification and disclosure requirements
(usually by providing an IRS
Form W-8ECI).
Instead, such dividends generally will be subject to
U.S. federal income tax, net of certain deductions, at the
same graduated individual or corporate rates applicable to
U.S. holders (subject to an exemption or reduction in such
tax as may be provided by an applicable income tax treaty). If
the
non-U.S. holder
is a corporation, dividends that are effectively connected
income may also be subject to a branch profits tax
at a rate of 30 percent (or such lower rate as may be
specified by an applicable income tax treaty).
Exercise
of a Warrant
The U.S. federal income tax treatment of a
non-U.S. holders
exercise of a warrant generally will correspond to the
U.S. federal income tax treatment of the exercise of a
warrant by a U.S. holder, as described under
U.S. Holders Exercise of a Warrant
above, although to the extent a cashless exercise results in a
taxable exchange, the consequences would be similar to those
described below in
Non-U.S. Holders
Gain on Sale, Taxable Exchange or Other Taxable Disposition of
Common Stock and Warrants.
Gain
on Sale, Taxable Exchange or Other Taxable Disposition of Common
Stock and Warrants
A
non-U.S. holder
generally will not be subject to U.S. federal income or
withholding tax in respect of gain recognized on a sale, taxable
exchange or other taxable disposition of our common stock (which
would include a dissolution and liquidation in the event we do
not consummate an initial business combination within
21 months from the closing of this offering) or warrants
(including an expiration or redemption of our warrants), in each
case without regard to whether those securities were held as
part of a unit, unless:
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the gain is effectively connected with the conduct of a trade or
business by the
non-U.S. holder
within the United States (and, under certain income tax
treaties, is attributable to a United States permanent
establishment or fixed base maintained by the
non-U.S. holder);
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the
non-U.S. holder
is an individual who is present in the United States for
183 days or more in the taxable year of disposition and
certain other conditions are met; or
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we are or have been a U.S. real property holding
corporation for U.S. federal income tax purposes at
any time during the shorter of the five-year period ending on
the date of disposition or the period that the
non-U.S. holder
held our common stock, and, in the case where shares of our
common stock are regularly traded on an established securities
market, the
non-U.S. holder
has owned, directly or indirectly, more than 5% of our common
stock at any time within the shorter of the five-year period
preceding the disposition or such
non-U.S. holders
holding period for the shares of our common stock. There can be
no assurance that our common stock will be treated as regularly
traded on an established securities market for this purpose.
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Unless an applicable treaty provides otherwise, gain described
in the first bullet point above will be subject to tax at
generally applicable U.S. federal income tax rates. Any
gains described in the first bullet point above of a
non-U.S. holder
that is a foreign corporation may also be subject to an
additional branch profits tax at a 30% rate (or
lower treaty rate). Gain described in the second bullet point
above (which may be offset by U.S. source capital losses)
will be subject to a flat 30% U.S. federal income tax.
Non-U.S. holders
should consult their own tax advisors regarding possible
eligibility for benefits under income tax treaties.
Although we currently are not a U.S. real property holding
corporation, we cannot determine whether we will be a United
States real property holding corporation in the future until we
consummate an initial business combination. We will be
classified as a U.S. real property holding corporation if
the fair market value of our U.S. real property
interests equals or exceeds 50 percent of the sum of
the fair market value of our
112
worldwide real property interests plus our other assets used or
held for use in a trade or business, as determined for
U.S. federal income tax purposes.
Redemption
of Common Stock
The characterization for U.S. federal income tax purposes
of a
non-U.S. holders
redemption of our common stock pursuant to the redemption
provisions described in this prospectus generally will
correspond to the U.S. federal income tax characterization
of the exercise of such a redemption by a U.S. holder, as
described under U.S. Holders Redemption
of Common Stock above, and the consequences of the
redemption to the
non-U.S. holder
will be as described above under
Non-U.S. Holders
Taxation of Distributions and
Non-U.S. Holders
Gain on Sale, Taxable Exchange or Other Taxable Disposition of
Common Stock and Warrants, as applicable.
As discussed above in U.S. Holders
Redemption of Common Stock, the treatment of the receipt
of any premiums in connection with a privately negotiated
transaction as described in this prospectus is unclear.
Accordingly, we intend to withhold U.S. federal income tax
at a rate of 30% from any premium paid to a
non-U.S. Holder,
unless (i) the
non-U.S. holder
is engaged in the conduct of a trade or business in the United
States to which the receipt of the premium is effectively
connected and provides a properly executed IRS
Form W-8ECI
or (ii) a U.S. tax treaty either eliminates or reduces
such withholding tax with respect to the premium paid to the
non-U.S. holder
and the
non-U.S. holder
provides a properly executed IRS
Form W-8BEN
(claiming exemption or reduction under an applicable treaty),
and in both cases, neither we nor our paying agent knows or has
reason to know that such certification is false. If such
withholding results in an overpayment of taxes, the applicable
non-U.S. holder
may be able to obtain a refund or credit, provided that the
required information is timely furnished to the IRS.
Non-U.S. holders
should consult their tax advisors with respect to the tax
treatment of any such premium.
Information
Reporting and Backup Withholding
We must report annually to the IRS and to each holder the amount
of dividends or other distributions we pay to such holder on our
shares of common stock and the amount of tax withheld with
respect to those distributions, regardless of whether
withholding is required. In the case of a
non-U.S. holder,
the IRS may make copies of the information returns reporting
those dividends and amounts withheld available to the tax
authorities in the country in which the
non-U.S. holder
resides pursuant to the provisions of an applicable income tax
treaty or exchange of information treaty.
The gross amount of dividends and proceeds from the disposition
of our common stock or warrants paid to a holder that fails to
provide the appropriate certification in accordance with
applicable U.S. Treasury regulations generally will be
subject to backup withholding at the applicable rate.
Information reporting and backup withholding generally are not
required with respect to the amount of any proceeds from the
sale by a
non-U.S. holder
of common stock or warrants outside the United States through a
foreign office of a foreign broker that does not have certain
specified connections to the United States. However, if a
non-U.S. holder
sells common stock or warrants through a U.S. broker or the
U.S. office of a foreign broker, the broker will be
required to report to the IRS the amount of proceeds paid to
such holder, unless the
non-U.S. holder
provides appropriate certification (usually on an IRS
Form W-8BEN)
to the broker of its status as a
non-U.S. holder
or such
non-U.S. holder
is an exempt recipient. In addition, for information reporting
purposes, certain
non-U.S. brokers
with certain type of relationships with the United States will
be treated in a manner similar to United States brokers.
Backup withholding is not an additional tax. Any amounts we
withhold under the backup withholding rules may be refunded or
credited against the holders U.S. federal income tax
liability, if any, by the IRS if the required information is
furnished to the IRS in a timely manner.
Recent legislation may impose additional reporting or
certification requirements on certain
non-U.S. holders.
Each
non-U.S. holder
is urged to consult its own tax advisors with respect to any
reporting and certifications applicable to it.
113
Federal
Estate Tax
Shares of our common stock or warrants owned or treated as owned
by an individual who is not a U.S. citizen or resident (as
specifically defined for U.S. federal estate tax purposes)
at the time of his or her death will be included in the
individuals gross estate for U.S. federal estate tax
purposes, unless an applicable estate tax treaty provides
otherwise, and therefore may be subject to U.S. federal
estate tax. Although the U.S. federal estate tax was
repealed in the 2010 calendar year, new legislation may
retroactively reinstate the estate tax for 2010. The estate tax
is scheduled to be reinstated on January 1, 2011. Each
non-U.S. holder
should consult its own tax advisors regarding the
U.S. federal estate tax.
114
UNDERWRITING
Citigroup Global Markets 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 underwriters name.
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Underwriter
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Number of Units
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Citigroup Global Markets Inc.
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Total
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15,000,000
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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. Citigroup
Global Markets 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 2,250,000 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 underwriters 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.
We, our sponsor and our officers and directors have agreed that,
for a period of 180 days from the date of this prospectus,
we and they will not, without the prior written consent of
Citigroup Global Markets Inc., offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any
units, warrants, shares of common stock or any other securities
convertible into, or exercisable, or exchangeable for, shares of
common stock. Citigroup Global Markets Inc. in its sole
discretion may release any of the securities subject to these
lock-up
agreements at any time without notice.
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, members of our sponsor have 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
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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
symbols
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.
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Paid by JWC Acquisition Corp.
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No Exercise
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Full Exercise
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Per Unit
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$
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0.50
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$
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0.50
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Total(1)
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$
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7,500,000
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$
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8,625,000
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The underwriters have agreed to defer $3.75 million, or
$4.31 million if the underwriters over-allotment
option is exercised in full, of the underwriting discounts and
commissions, equal to 2.5% 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 Continental Stock
Transfer & Trust Company acting as trustee. The
underwriters will not be entitled to any interest accrued on the
deferred underwriting discounts and commissions. |
If we do not complete our initial business combination within
21 months from the closing of this offering, 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
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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 $1,000,000, 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 arms 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
finders 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
Delaware, the District of Columbia, Florida, Georgia, Hawaii,
Illinois, Indiana, Louisiana, New York, Rhode Island and
Wyoming. In New York and Hawaii, we have relied on exemptions
from the state registration requirements. In the other states,
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 effective.
If you are not an institutional investor, you may purchase our
securities in this offering only in the jurisdictions described
directly above. Institutional investors in every state except in
Idaho and Oregon 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.
Under the National Securities Markets Improvement Act of 1996,
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 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.
Alabama, Alaska, Arizona, Arkansas, California, Colorado,
Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Indiana,
Iowa, Kansas, Kentucky, Louisiana, Maine, Massachusetts,
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, Maryland, Michigan, Montana, Nebraska, New
Hampshire, North
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Dakota, Ohio, 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 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 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.
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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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.
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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
dinvestisseurs), 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
lépargne).
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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.
119
LEGAL
MATTERS
McDermott Will & Emery 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 Akin Gump Strauss
Hauer & Feld LLP, New York, New York, is acting as
counsel to the underwriters.
EXPERTS
The financial statements of JWC Acquisition Corp. (a development
stage company) as of August 5, 2010 and for the period
July 22, 2010 (inception) through August 5, 2010, 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 SECs 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.
120
INDEX TO
FINANCIAL STATEMENTS
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Page
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Audited Financial Statements of JWC Acquisition Corp. (a
corporation in the development stage):
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F-2
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F-3
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F-4
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F-5
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F-6
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F-7
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F-1
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of
JWC Acquisition Corp.
We have audited the accompanying balance sheet of JWC
Acquisition Corp. (a corporation in the development stage) (the
Company) as of August 5, 2010, and the related
statements of operations, stockholders equity and cash
flows for the period from July 22, 2010 (date of inception)
to August 5, 2010. These financial statements are the
responsibility of the Companys 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 Companys internal control over
financial reporting. Accordingly, we express no such opinion. An
audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of JWC Acquisition Corp. (a corporation in the development
stage) as of August 5, 2010, and the results of its
operations and its cash flows for the period from July 22,
2010 (date of inception) to August 5, 2010, in conformity
with accounting principles generally accepted in the United
States of America.
/s/ ROTHSTEIN,
KASS & COMPANY, P.C.
Roseland, New Jersey
August 11, 2010
F-2
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ASSETS:
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Current assets:
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Cash
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$
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50,000
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Non-current assets:
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Deferred offering costs (Note 2)
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55,500
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Total assets
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$
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105,500
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LIABILITIES AND STOCKHOLDERS EQUITY:
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Current liabilities:
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Note payable to affiliate (Note 5)
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$
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25,000
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Accrued expenses- other
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5,000
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Accrued offering costs
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55,500
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Total current liabilities
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$
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85,500
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Commitment and contingencies (Notes 1,3,4,5)
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Stockholders equity:
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Preferred stock, $0.0001 par value; 1,000,000 shares
authorized; none issued and outstanding
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$
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Common stock, $0.0001 par value; 100,000,000 shares
authorized; 2,464,286 shares issued and outstanding
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246
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Additional paid-in capital
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24,754
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Deficit accumulated during the development stage
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(5,000
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)
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Total stockholders equity, net
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20,000
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Total liabilities and stockholders equity
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$
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105,500
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See accompanying notes to financial statements.
F-3
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Formation and operating costs
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$
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5,000
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Loss before provision for income taxes
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(5,000
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)
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Provision for income taxes (Note 6)
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Net loss applicable to common stockholders
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$
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(5,000
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)
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Weighted average number of common shares outstanding, basic and
diluted
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2,464,286
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Net loss per common share, basic and diluted
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$
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(0.00
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)
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See accompanying notes to financial statements.
F-4
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Deficit
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Accumulated
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During the
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Total
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Common Stock
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Additional
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Development
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Stockholders
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Shares
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Amount
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Paid-In Capital
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Stage
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Equity
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Sale of common stock to Sponsor at $0.010 per share (Note 4)
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2,464,286
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$
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246
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$
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24,754
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$
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$
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25,000
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Net loss
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(5,000
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)
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(5,000
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Balance as of August 5, 2010
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2,464,286
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$
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246
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$
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24,754
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$
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(5,000
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$
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20,000
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See accompanying notes to financial statements.
F-5
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Cash Flows From Operating Activities:
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Net loss
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($
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5,000
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Changes in operating liabilities:
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Accrued expenses other
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5,000
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Net cash provided by operating activities
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Cash Flows From Financing Activities:
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Proceeds from sale of common stock to Sponsor
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25,000
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Proceeds from note payable to affiliate
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25,000
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Net cash provided by financing activities
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50,000
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Increase in cash
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50,000
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Cash at beginning of period
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Cash at end of period
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$
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50,000
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Supplemental Schedule of Non-Cash Financing Activities:
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Deferred offering costs included in accrued expenses
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$
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55,500
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See accompanying notes to financial statements.
F-6
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1.
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Organization
and Business Operations
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Incorporation
JWC Acquisition Corp. (the Company) was incorporated
in Delaware on July 22, 2010.
Sponsor
The companys sponsor is JWC Acquisition, LLC, a Delaware
limited liability company (the Sponsor). Members of
the Sponsor owning a majority of the Sponsors equity
interests are affiliated with J.W. Childs Associates, L.P.
(Associates), a private equity firm founded in 1995
by John W. Childs, the Companys Chairman and Chief
Executive Officer, and Adam L. Suttin, the Companys
President.
Fiscal
Year End
The Company has selected December 31 as its fiscal year end.
Business
Purpose
The Company was formed to effect a merger, capital stock
exchange, asset acquisition, stock purchase, reorganization or
similar business combination with one or more businesses (an
Initial Business Combination).
Financing
The Sponsor intends to finance an Initial Business Combination
in part with proceeds from a $150,000,000 public offering (the
Public Offering Note 3), and a
$3,750,000 private placement (Note 4).
Upon the closing of the Public Offering and the private
placement, $147,750,000 (or $169,687,500 if the
underwriters over-allotment option is exercised in
full Note 3) will be held in the Trust
Account (discussed below).
Trust Account
The trust account (the Trust Account) will be
invested in permitted United States government
securities within the meaning of Section 2(a)(16) of
the Investment Company Act of 1940, as amended, which we refer
to as the Investment Company Act, having a maturity of
180 days or less or in money market funds meeting certain
conditions under
Rule 2a-7
promulgated under the Investment Company Act. The funds in the
Trust Account will be held in the name of a wholly-owned
subsidiary of the Company qualified as a Massachusetts Security
corporation.
Except for a portion of interest income earned on the Trust
Account balance that may be released to the Company to pay any
taxes on such interest and to fund working capital requirements,
and any amounts necessary for the Company to purchase up to 15%
of the Companys public shares if the Company seeks
stockholder approval of the Initial Business Combination, none
of the funds held in trust will be released until the earlier
of: (i) the consummation of the Initial Business
Combination; or (ii) the redemption of 100% of the shares
of common stock included in the units being sold in the Public
Offering if we are unable to consummate an Initial Business
Combination within 21 months from the closing of the Public
Offering (subject to the requirements of law).
F-7
JWC
ACQUISITION CORP.
(A Corporation in the Development Stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
Business
Combination
An Initial Business Combination is subject to the following
size, focus and stockholder approval provisions:
Size The prospective target
business will not have a limitation to size, however, the
Company will not consummate an Initial Business Combination
unless it acquires a controlling interest in a target company or
are otherwise not required to register as an investment company
under the Investment Company Act.
Focus The Companys
efforts in identifying prospective target businesses will
initially be focused on businesses in the consumer products and
specialty retail sectors but the Company may pursue
opportunities in other business sectors.
Tender Offer/Stockholder
Approval The Company, after signing a
definitive agreement for an Initial Business Combination will
either (i) seek stockholder approval of the Initial
Business Combination at a meeting called for such purpose at
which stockholders may seek to redeem their shares, regardless
of whether they vote for or against the Initial Business
Combination, for cash equal to their pro rata share of the
aggregate amount then on deposit in the Trust Account,
including interest but less franchise and income taxes payable,
or (ii) provide stockholders with the opportunity to sell
their shares to the Company by means of a tender offer (and
thereby avoid the need for a stockholder vote) for an amount in
cash equal to their pro rata share of the aggregate amount then
on deposit in the Trust Account, including interest but
less franchise and income taxes payable. The decision as to
whether the Company will seek stockholder approval of the
Initial Business Combination or will allow stockholders to sell
their shares in a tender offer will be made by the Company,
solely in its discretion, and will be based on a variety of
factors such as the timing of the transaction and whether the
terms of the transaction would otherwise require the Company to
seek stockholder approval. If the Company seeks stockholder
approval, it will consummate its initial business combination
only if a majority of the outstanding shares of common stock
voted are voted in favor of the Initial Business Combination.
However, in no event will the Company redeem its public shares
in an amount that would cause its net tangible assets to be less
than $5,000,001. In such case, the Company would not proceed
with the redemption of its public shares and the related Initial
Business Combination, and instead may search for an alternate
Initial Business Combination.
Regardless of whether the Company holds a stockholder vote or a
tender offer in connection with an Initial Business Combination,
a public stockholder will have the right to redeem their shares
for an amount in cash equal to their pro rata share of the
aggregate amount then on deposit in the Trust Account,
including interest but less franchise and income taxes payable.
As a result, such shares of common stock will be recorded at
conversion/tender value and classified as temporary equity upon
the completion of the Public Offering, in accordance with
Financial Accounting Standards Board, or FASB, ASC Topic 480,
Distinguishing Liabilities from Equity.
Permitted Purchase of Public
Shares If the Company seeks stockholder
approval prior to the Initial Business Combination and does not
conduct redemptions pursuant to the tender offer rules, prior to
the Initial Business Combination, the Companys Amended and
Restated Certificate of Incorporation will permit the release to
the Company from the Trust Account, amounts necessary to
purchase up to 15% of the shares sold in the Public Offering.
All shares so purchased by the Company will be immediately
cancelled.
F-8
JWC
ACQUISITION CORP.
(A Corporation in the Development Stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
Liquidation
If the Company does not consummate an Initial Business
Combination within 21 months from the closing of the Public
Offering, the Company 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 100% of the common stock sold as part of the
units in the Public Offering, 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 subject
to the requirement that any refund of income taxes that were
paid from the Trust Account which is received after the
redemption shall be distributed to the former public
stockholders, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of the
Companys remaining stockholders and the Companys
board of directors, dissolve and liquidate, subject in each case
to the Companys obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable
law.
In the event of liquidation, it is likely 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 share in the Public
Offering (assuming no value is attributed to the warrants
contained in the units to be offered in the Public Offering
discussed in Note 3).
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2.
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Significant
Accounting Policies
|
Basis
of Presentation
The accompanying financial statements of the Company 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.
Development
Stage Company
The Company is considered to be in the development stage as
defined by FASB ASC 915, Development Stage
Entities, and is subject to the risks associated with
activities of development stage companies. The Company has
neither engaged in any operations nor generated any income to
date. All activity through the date the financial statements
were issued relates to the Companys formation and the
Public Offering. Following such offering, the Company will not
generate any operating revenues until after completion of an
Initial 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 Public Offering.
Net
Loss Per Share
Basic net loss per share is computed by dividing net loss by the
weighted average number of shares of common stock outstanding
during the period. Diluted net loss per share is computed by
dividing net loss per share by the weighted average number of
shares of common stock outstanding, plus to the extent dilutive,
the incremental number of shares of common stock to settle
warrants held by the Sponsor (see Note 4), as calculated
using the treasury stock method. During the period from
inception through August 5, 2010, the Company had no
contracts to issue common stock. As a result, dilutive loss per
common share is equal to basic loss per common share.
F-9
JWC
ACQUISITION CORP.
(A Corporation in the Development Stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
Use
of Estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States
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 revenue and
expenses during the reporting period. Actual results could
differ from those estimates.
Income
Taxes
Deferred income taxes are provided for the differences between
the bases of assets and liabilities for financial reporting and
income tax purposes. A valuation allowance is established when
necessary to reduce deferred tax assets to the amount expected
to be realized.
The Company evaluates the uncertainty in tax positions taken or
expected to be taken in the course of preparing the
Companys financial statements to determine whether the tax
positions are more likely than not of being
sustained by the applicable tax authority. Tax positions deemed
not to meet the more likely than not threshold would
be recorded as a tax expense in the current period. The Company
has no uncertain tax positions at August 5, 2010.
Deferred
Offering Costs
Deferred offering costs consist principally of legal and
accounting fees incurred through the balance sheet date that are
related to the Public Offering and that will be charged to
capital upon the receipt of the capital raised or charged to
operations if the Public Offering is not completed.
Fair
Value of Financial Instruments
Unless otherwise disclosed, the fair values of financial
instruments, including cash and the note payable to related
party, approximate their carrying amount due primarily to their
short-term nature.
Recent
Accounting Pronouncements
Management does not believe that any other recently issued, but
not effective, accounting standards, if currently adopted, would
have a material effect on the Companys financial
statements.
Public
Units
The Public Offering calls for the Company to offer for sale
15,000,000 units at a price of $10.00 per unit (the
Public Units). Each unit consists of one share of
the Companys common stock, $0.0001 par value (the
Public Stock), and one warrant (the Public
Warrants). The Company intends to grant the underwriters a
45-day
option to purchase up to 2,250,000 additional Public Units
solely to cover over-allotments, if any.
Public
Warrant Terms and
Conditions:
Exercise Conditions Each Public
Warrant will entitle the holder to purchase from the Company one
share of common stock at an exercise price of $12.00 per share
commencing on later of: (i) the consummation of an Initial
Business Combination, or (ii) 12 months from the date
of the prospectus for the offering, provided that the Company
has an effective registration statement covering the shares of
common stock issuable upon exercise of the Public Warrants. The
Public Warrants expire five years from the date of the
prospectus, unless earlier redeemed. The Public Warrants will be
redeemable in whole and not in part at a price of $0.01 per
F-10
JWC
ACQUISITION CORP.
(A Corporation in the Development Stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
warrant upon a minimum of 30 days notice after the
warrants become exercisable, only in the event that the last
sale price of the common stock exceeds $18.00 per share for any
20 trading days within a 30-trading day period. If the Public
Warrants are redeemed by the Company, management will have the
option to require all holders that wish to exercise warrants to
do so on a cashless basis.
Registration Risk In accordance
with a warrant agreement relating to the Public Warrants, the
Company will only be required to use its reasonable efforts to
maintain the effectiveness of the registration statement
relating to common stock which would be issued upon exercise of
the Public Warrants. The Company will not be obligated to
deliver securities, and there are no contractual penalties for
failure to deliver securities, if a registration statement is
not effective at the time of exercise. Additionally, in the
event that a registration is not effective at the time of
exercise, the holders of such Public Warrants shall not be
entitled to exercise such Public Warrants and in no event
(whether in the case of a registration statement not being
effective or otherwise) will the Company be required to net cash
settle the Public Warrants exercise. Consequently, the Public
Warrants may expire unexercised, unredeemed and worthless, and
an investor in the Public Offering may effectively pay the full
unit price solely for the shares of common stock included in the
Public Units.
Accounting Since the Company is
not required to net-cash settle the Public Warrants, management
has determined that the Public Warrants will be recorded at fair
value and classified within stockholders equity as
Additional paid-in capital upon their issuance in
accordance with FASB
ASC 815-40.
Underwriting
Agreement
The Company is committed to pay an underwriting discount of 2.5%
of the public unit offering price to the underwriters at the
closing of the Public Offering, with an additional fee of 2.5%
of the gross offering proceeds payable upon the Companys
consummation of an Initial Business Combination. The
underwriters will not be entitled to any interest accrued on the
deferred discount.
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4.
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Related
Party Transactions
|
Founder Shares In August 2010,
the Sponsor purchased 2,464,286 shares of common stock (the
Founder Shares) for $25,000, or $0.01 per share.
Forfeiture The Founder Shares
include 321,429 shares of common stock that are subject to
forfeiture if and to the extent the underwriters
over-allotment option is not exercised, so that the Sponsor and
its permitted transferees will own 12.5% of the Companys
issued and outstanding shares after the Public Offering.
In addition, a portion of the Founder Shares in an amount equal
to 2.5% of the Companys issued and outstanding shares
after the Public Offering and the exercise of the over-allotment
option, if applicable (Earnout Shares), will be
subject to forfeiture by the Sponsor in the event the last sales
price of the Companys 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 the
Companys Initial Business Combination.
Rights The Founder Shares are
identical to the shares of common stock included in the units
being sold in the Public Offering except that (i) the
Founder Shares will be subject to certain transfer restrictions,
as described in more detail below, and (ii) the Sponsor
will agree to waive its redemption rights with respect to the
Founder Shares and public shares it purchases in connection with
the Initial Business Combination and will also waive its
redemption rights with respect to the Founder Shares if the
Company fails to consummate an Initial Business Combination
within 21 months from the closing of the Public Offering.
F-11
JWC
ACQUISITION CORP.
(A Corporation in the Development Stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
Voting If we seek stockholder
approval, the Sponsor will agree to vote the Founder Shares in
accordance with the majority of the votes cast by the public
stockholders and to vote any public shares purchased during or
after the Public Offering in favor of the Initial Business
Combination.
Liquidation Although the
Sponsor and its permitted transferees will waive their
redemption rights with respect to the Founder Shares if the
Company fails to consummate an Initial Business Combination
within 21 months from the closing of the Public Offering,
as promptly as reasonably possible following such redemption,
subject to the approval of the Companys remaining
stockholders and the Board of Directors, the Company will be
dissolved and liquidated, subject in each case to the
Companys obligations under Delaware law to provide for
claims of creditors and the requirements of other applicable law.
Sponsor Warrants Members of the
Sponsor have agreed to purchase an aggregate of 5,000,000
warrants (the Sponsor Warrants) at $0.75 per warrant
(for an aggregate purchase price of $3,750,000) from the Company
on a private placement basis simultaneously with the closing of
the Public Offering.
Exercise Conditions Each
Sponsor Warrant is exercisable into one share of common stock at
$12.00 per share. The proceeds from the Sponsor Warrant will be
added to the proceeds from the Public Offering held in the
Trust Account. The Sponsor Warrants will be identical to
the warrants included in the units sold in the Public Offering
except that the Sponsor Warrants (i) will not be redeemable
by the Company as long as they are held by members of the
Sponsor or any of their permitted transferees, (ii) will be
subject to certain transfer restrictions described in more
detail below and (iii) may be exercised for cash or on a
cashless basis.
Liquidation The Sponsor and its
permitted transferees will have no right to participate in any
distribution from the Trust Account with respect to the Sponsor
Warrants if the Company fails to consummate an Initial Business
Combination.
Accounting Since the Company is
not required to net-cash settle the Sponsor Warrants, management
has determined that the Sponsor Warrants will be recorded at
fair value and classified within stockholders equity as
Additional paid-in capital upon their issuance in
accordance with FASB
ASC 815-40.
Disposition
Restrictions
The Sponsor will agree not to transfer, assign or sell any of
the Founder Shares until (i) one year after the completion
of its Initial Business Combination or earlier if the last sales
price of the Companys common stock exceeds $12.00 per
share for any 20 trading days within any 30-trading day period
commencing at least 150 days from the date of consummation
of an Initial Business Combination. The Sponsor has agreed not
to 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 an Initial
Business Combination.
Registration
Rights
The holders of the Founder Shares and Sponsor Warrants will hold
registration rights to require the Company to register a sale of
any of the 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 that the Company 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 the
Company. However, the registration rights agreement provides
that the Company 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,
(A) one year after the completion of the initial business
combination or earlier if, subsequent to the initial business
combination, the last sales price of the Companys 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
F-12
JWC
ACQUISITION CORP.
(A Corporation in the Development Stage)
NOTES TO FINANCIAL
STATEMENTS (Continued)
commencing at least 150 days after the initial business
combination or (B) when the Company consummates a
liquidation, merger, stock exchange or other similar transaction
after the Companys Initial Business Combination which
results in all of the Companys 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 the
Companys initial business combination. The Company will
bear the costs and expenses of filing any such registration
statements.
|
|
5.
|
Other
Related Party Transactions
|
Administrative
Services
The Company has agreed to pay up to $5,000 a month in total for
office space and general and administrative services to
Associates. Services will commence promptly after the date the
Companys securities are first quoted on the OTCBB and will
terminate upon the earlier of (i) the consummation of an
Initial Business Combination or (ii) the liquidation of the
Company.
Note
Payable
On August 5, 2010, the Company issued an unsecured
promissory note for $25,000 to the Associates; proceeds from the
loan were used to fund a portion of the organizational and
offering expenses owed by the Company to third parties. The
principal balance of the loan is repayable on the earlier of
(i) the date of the consummation of the Public Offering and
(ii) December 31, 2010. The principal balance is
pre-payable without penalty at any time in whole or in part. No
interest accrues on the unpaid principal balance of the loan.
Due to the short-term nature of the note, the fair value of the
note approximates its carrying amount.
Components of the Companys deferred tax assets are as
follows:
|
|
|
|
|
Net operating loss carry-forward
|
|
$
|
1,700
|
|
Less, valuation allowance
|
|
|
(1,700
|
)
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
Management has recorded a full valuation allowance against its
deferred tax assets because it does not believe it is more
likely than not that sufficient taxable income will be
generated. The effective tax rate differs from the statutory
rate of 34% due to the establishment of the valuation allowance.
The net operating loss carry-forward expires in 2030.
Common Stock The authorized common
stock of the Company includes up to 100,000,000 shares.
Holders of the Companys common stock are entitled to one
vote for each share of common stock. At August 5, 2010,
there were 2,464,286 shares of common stock outstanding.
Preferred Shares The Company is
authorized to issue 1,000,000 preferred shares with such
designations, voting and other rights and preferences as may be
determined from time to time by the Board of Directors.
F-13
$150,000,000
JWC Acquisition Corp.
15,000,000 Units
PRELIMINARY PROSPECTUS
,
2010
Citi
Until ,
2010 (25 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.
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 and the
representatives non-accountable expense allowance) will be
as follows:
|
|
|
|
|
SEC/FINRA Expenses
|
|
$
|
29,800
|
|
Accounting fees and expenses
|
|
|
40,000
|
|
Blue sky services and expenses
|
|
|
40,000
|
|
Printing and engraving expenses
|
|
|
26,000
|
|
Travel and road show expenses
|
|
|
75,000
|
|
Directors & Officers liability insurance premiums(1)
|
|
|
150,000
|
|
Legal fees and expenses
|
|
|
500,000
|
|
Miscellaneous(2)
|
|
|
139,200
|
|
|
|
|
|
|
Total
|
|
$
|
1,000,000
|
|
|
|
|
(1) |
|
This amount represents the approximate amount of annual director
and officer liability insurance premiums the registrant
anticipates paying following the consummation of its initial
public offering and until it consummates a business combination. |
|
(2) |
|
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. |
|
|
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 persons
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 persons 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
II-1
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.
(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 persons 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 persons 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,
II-2
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.
(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 corporations 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 directors
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.
II-3
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, attorneys 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.
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.
II-4
We will enter into indemnification agreements with each of our
officers and directors a form of which is filed as
Exhibit 10.9 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 August 5, 2010, JWC Acquisition, LLC, our sponsor,
purchased 2,464,286 shares of our common stock (up to
321,429 of which are subject to forfeiture if the
underwriters over-allotment option is not exercised in
full) for an aggregate offering price of $25,000 at an average
purchase price of approximately $0.01 per share. Such securities
(equal to 2.5% 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.
John W. Childs, our Chairman and Chief Executive Officer, Adam
L. Suttin, our President, David A. Fiorentino, a Vice President
of our company our Chief Financial Officer, Jeffrey J. Teschke,
a Vice President of our company and our Treasurer and Secretary,
and our Vice Presidents Arthur P. Byrne, Raymond B. Rudy, John
D. Shulman and William E. Watts, are each members of our
sponsor. In addition Fuad Sawaya, a Vice President of our
company, is a member of a limited liability company that is a
member of our sponsor. Our sponsor is an accredited investor for
purposes of Rule 501 of Regulation D. Each of the
equity holders in our sponsor is an accredited investor under
Rule 501 of Regulation D. The sole business of our
sponsor is to act as the companys sponsor in connection
with this offering. The limited liability company agreement of
our sponsor provides that its membership interests may only be
transferred to officers or directors of the company or other
persons affiliated with our sponsor, or in connection with
estate planning transfers.
In addition, members of our sponsor have committed to purchase
from us an aggregate of 5,000,000 sponsor warrants at $0.75 per
warrant (for an aggregate purchase price of $3.75 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. The obligation to purchase the sponsor warrants
was made pursuant to a Sponsor Warrants Purchase Agreement,
dated as of August 5, 2010. Such obligation was made prior
to the filing of the Registration Statement, and the only
conditions to the obligation undertaken by our sponsor are
conditions outside of our sponsors control. Consequently,
the investment decision relating to the purchase of the warrants
was made prior to the filing of the Registration Statement
relating to the public offering and therefore constitutes a
completed private placement.
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:
|
|
|
|
|
Exhibit
|
|
|
No.
|
|
Description
|
|
|
1
|
.1
|
|
Form of Underwriting Agreement.**
|
|
3
|
.1
|
|
Form of Amended and Restated Certificate of Incorporation.*
|
|
3
|
.2
|
|
Form of Amended and Restated By-laws.*
|
|
4
|
.1
|
|
Specimen Unit Certificate.*
|
II-5
|
|
|
|
|
Exhibit
|
|
|
No.
|
|
Description
|
|
|
4
|
.2
|
|
Specimen Common Stock Certificate.*
|
|
4
|
.3
|
|
Specimen Warrant Certificate.*
|
|
4
|
.4
|
|
Form of Warrant Agreement between Continental Stock
Transfer & Trust Company and the Registrant.*
|
|
5
|
.1
|
|
Opinion of McDermott Will & Emery LLP.*
|
|
10
|
.1
|
|
Promissory Note, dated August 5, 2010, issued to J.W.
Childs Associates, L.P.***
|
|
10
|
.2
|
|
Form of Letter Agreement among the Registrant, JWC Acquisition,
LLC, J.W. Childs Associates, L.P. and each of the members of JWC
Acquisition, LLC.*
|
|
10
|
.3
|
|
Form of Letter Agreement between the Registrant and each of our
independent directors.*
|
|
10
|
.4
|
|
Form of Investment Management Trust Agreement between
Continental Stock Transfer & Trust Company and
the Registrant.*
|
|
10
|
.5
|
|
Letter Agreement, dated as of August 5, 2010, between J.W.
Childs Associates, L.P. and Registrant regarding administrative
support.***
|
|
10
|
.6
|
|
Form of Registration Rights Agreement among the Registrant, JWC
Acquisition, LLC and each of the members of JWC Acquisition,
LLC.*
|
|
10
|
.7
|
|
Securities Purchase Agreement, effective as of August 5,
2010, between the Registrant and JWC Acquisition, LLC.***
|
|
10
|
.8
|
|
Sponsor Warrants Purchase Agreement, dated as of August 5,
2010, among the Registrant and the members of the
Registrants sponsor.***
|
|
10
|
.9
|
|
Form of Indemnity Agreement.*
|
|
14
|
.
|
|
Form of Code of Ethics.*
|
|
23
|
.1
|
|
Consent of Rothstein, Kass & Company, P.C.*
|
|
23
|
.2
|
|
Consent of McDermott Will & Emery LLP (included on
Exhibit 5.1).*
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24
|
.
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Power of Attorney.***
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* |
|
Filed herewith. |
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** |
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To be filed by amendment. |
(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;
II-6
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.
(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.
II-7
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 Boston, State of Massachusetts, on
the 23rd day of September, 2010.
JWC ACQUISITION CORP.
Adam L. Suttin
President
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|
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Name
|
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Position
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Date
|
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|
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*
John
W. Childs
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|
Chairman and Chief Executive Officer (Principal Executive
Officer)
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|
September 23, 2010
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/s/ Adam
L. Suttin
Adam
L. Suttin
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President
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September 23, 2010
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|
|
|
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*
David
A. Fiorentino
|
|
Vice President and Chief Financial Officer (Principal Financial
Officer)
|
|
September 23, 2010
|
|
|
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|
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*
Jeffrey
J. Teschke
|
|
Vice President, Treasurer and Secretary (Principal Accounting
Officer)
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|
September 23, 2010
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* Pursuant to Power of Attorney
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/s/ Adam
L. Suttin
Attorney-in-fact
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S-1
EXHIBIT INDEX
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|
|
|
|
Exhibit
|
|
|
No.
|
|
Description
|
|
|
1
|
.1
|
|
Form of Underwriting Agreement.**
|
|
3
|
.1
|
|
Form of Amended and Restated Certificate of Incorporation.*
|
|
3
|
.2
|
|
Form of Amended and Restated By-laws.*
|
|
4
|
.1
|
|
Specimen Unit Certificate.*
|
|
4
|
.2
|
|
Specimen Common Stock Certificate.*
|
|
4
|
.3
|
|
Specimen Warrant Certificate.*
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|
4
|
.4
|
|
Form of Warrant Agreement between Continental Stock
Transfer & Trust Company and the Registrant.*
|
|
5
|
.1
|
|
Opinion of McDermott Will & Emery LLP.*
|
|
10
|
.1
|
|
Promissory Note, dated August 5, 2010, issued to J.W.
Childs Associates, L.P.***
|
|
10
|
.2
|
|
Form of Letter Agreement among the Registrant, JWC Acquisition,
LLC, J.W. Childs Associates, L.P. and each of the members of JWC
Acquisition, LLC.*
|
|
10
|
.3
|
|
Form of Letter Agreement between the Registrant and each of our
independent directors.*
|
|
10
|
.4
|
|
Form of Investment Management Trust Agreement between
Continental Stock Transfer & Trust Company and
the Registrant.*
|
|
10
|
.5
|
|
Letter Agreement, dated as of August 5, 2010, between J.W.
Childs Associates, L.P. and Registrant regarding administrative
support.***
|
|
10
|
.6
|
|
Form of Registration Rights Agreement among the Registrant, JWC
Acquisition, LLC and each of the members of JWC Acquisition,
LLC.*
|
|
10
|
.7
|
|
Securities Purchase Agreement, effective as of August 5,
2010, between the Registrant and JWC Acquisition, LLC.***
|
|
10
|
.8
|
|
Sponsor Warrants Purchase Agreement, dated as of August 5,
2010, among the Registrant and the members of the
Registrants sponsor.***
|
|
10
|
.9
|
|
Form of Indemnity Agreement.*
|
|
14
|
.
|
|
Form of Code of Ethics.*
|
|
23
|
.1
|
|
Consent of Rothstein, Kass & Company, P.C.*
|
|
23
|
.2
|
|
Consent of McDermott Will & Emery LLP (included on
Exhibit 5.1).*
|
|
24
|
.
|
|
Power of Attorney.***
|
|
|
|
* |
|
Filed herewith. |
|
** |
|
To be filed by amendment. |
E-1