Attached files
file | filename |
---|---|
EX-10.1 - EX-10.1 - Chart Acquisition Corp. | ex10i.htm |
EX-23.1 - EX-23.1 - Chart Acquisition Corp. | ex23i.htm |
EX-14.1 - EX-14.1 - Chart Acquisition Corp. | ex14i.htm |
EX-10.5 - EX-10.5 - Chart Acquisition Corp. | ex10v.htm |
EX-3.2 - EX-3.2 - Chart Acquisition Corp. | ex3ii.htm |
EX-3.3 - EX-3.3 - Chart Acquisition Corp. | ex3iii.htm |
EX-10.3 - EX-10.3 - Chart Acquisition Corp. | ex10iii.htm |
EX-10.8 - EX-10.8 - Chart Acquisition Corp. | ex10viii.htm |
As filed with the Securities and Exchange Commission on
November 21 , 2011
Registration No.: 333- 177280
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
Amendment No. 1
to
to
Form S-1
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
UNDER THE SECURITIES ACT OF 1933
CHART ACQUISITION CORP.
(Exact name of registrant as specified in its
charter)
Delaware |
6770 |
45-2853218 |
||||||||
(State or other
jurisdiction of incorporation or organization) |
(Primary Standard Industrial Classification Code Number) |
(I.R.S. Employer Identification Number) |
75 Rockefeller Plaza, 14th Floor
New York, NY 10019
(212) 350-8205
(Address, including zip code, and telephone number, including
area code, of registrants principal executive offices)
New York, NY 10019
(212) 350-8205
(Address, including zip code, and telephone number, including
area code, of registrants principal executive offices)
Christopher D. Brady
President
c/o The Chart Group, LLC
75 Rockefeller Plaza, 14th Floor
New York, NY 10019
(212) 350-8205
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
President
c/o The Chart Group, LLC
75 Rockefeller Plaza, 14th Floor
New York, NY 10019
(212) 350-8205
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Douglas S.
Ellenoff, Esq. Stuart Neuhauser, Esq. Ellenoff Grossman & Schole LLP 150 East 42nd Street New York, New York 10017 (212) 370-1300 (212) 370-7889 Facsimile |
Jack I. Kantrowitz, Esq. DLA Piper LLP (US) 1251 Avenue of the Americas New York, New York 10020-1104 (212) 335-4500 (212) 884-8645 Facsimile |
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of the registration statement.
As soon as practicable after the effective date of the registration statement.
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following
box: [ ]
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: [ ]
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering: [ ]
If this Form is a post-effective
amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering: [ ]
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large
accelerated filer [ ] |
Accelerated
filer [ ] |
Non-accelerated filer [X] (Do not check if a smaller reporting company) |
Smaller
reporting company [ ] |
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered |
Amount to be Registered (1) |
Proposed Maximum Offering Price per Unit (1) |
Proposed Maximum Aggregate Offering Price (1) |
Amount of Registration Fee |
||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Units, each
consisting of one share of Common Stock, $.0001 par value, and one Warrant (2) |
11,500,000 | $ | 10.00 | $ | 115,000,000 | $ | 13,179 | |||||||||||
Shares of
Common Stock included as part of the Units (2) |
11,500,000 | | | | (3) | |||||||||||||
Warrants
included as part of the Units (2) |
11,500,000 | | | | (3) | |||||||||||||
Total |
$ | 115,000,000 | $ | 13,179 | (5 ) |
(1) |
Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) . |
(2) |
Includes 1,500,000 units, 1,500,000 shares of common stock and 1,500,000 warrants underlying such units, which may be issued on exercise of a 45-day option granted to the underwriters to cover overallotments, if any. |
(3) |
No fee pursuant to Rule 457(g). |
(4) |
Pursuant to Rule 416, there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions. |
(5) |
Previously paid. |
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange
Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may
be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is
not permitted.
PRELIMINARY PROSPECTUS
|
Subject to Completion, Dated November 21 , 2011 |
$100,000,000
Chart Acquisition Corp.
10,000,000 Units
Chart 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, directly or indirectly, with respect to identifying any acquisition
target. We are not limited to a particular industry, geographic region or minimum transaction value for our initial business
combination.
This is an initial public offering of our securities. We are
offering 10,000,000 units. Each unit has an offering price of $10.00 and consists of one share of our common stock and one warrant. Each warrant
entitles the holder to purchase one share of our common stock at a price of $11.50, subject to adjustment as described in this prospectus. The warrants
will become exercisable on the later of 30 days after the consummation of our initial business combination or 12 months from the closing of this
offering, and will expire five years after the consummation of our initial business combination or earlier upon redemption or liquidation, as described
in this prospectus. We have also granted the underwriters a 45-day option to purchase up to an additional 1,500,000 units to cover overallotments, 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 any amounts representing interest earned on the trust account, less
any interest released to us for working capital purposes, the payment of taxes or dissolution expenses, 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 and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a
proposed 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, and the terms of a proposed
business combination. If, however, a stockholder vote is required by law, or we decide to hold a stockholder vote for business or other reasons, we
will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If we are
unable to consummate a business combination within 21 months from the date of this prospectus, we will redeem the public shares at a per-share price,
payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust
account, less any interest released to us for working capital purposes, the payment of taxes or dissolution expenses, divided by the number of then
outstanding public shares, subject to applicable law and as further described herein.
Our sponsor, Chart Acquisition Group LLC has committed to
purchase 300,000 placement units and Cowen Overseas Investment LP, an affiliate of Cowen and Company, LLC, the lead underwriter in this offering, has
committed to purchase 175,000 placement units, each consisting of one share of common stock and one warrant to purchase one share of common stock with
an exercise price of $11.50, at a price of $10.00 per unit (a total of $4.75 million) in a private placement that will occur simultaneously with the
consummation of this offering. These placement units and their component securities are subject to lock-up provisions described
herein.
Currently, there is no public market for our units, common stock
or warrants. We anticipate o ur 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 52 nd day following the date of this prospectus unless Cowen and Company, LLC informs us of its decision to
allow earlier separate trading, in each case 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, we anticipate
the common stock and warrants will be traded on the OTCBB under the symbols and
, respectively.
Investing in our securities involves risks. See Risk
Factors beginning on page 24 of this prospectus . Investors will not be entitled to protections normally afforded to investors in
Rule 419 blank check offerings.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
Per Unit |
Total |
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Public
offering price |
$ | 10.00 | $ | 125,000,000 | ||||||||||
Underwriting discount(1) |
$ | 0.5875 | $ | 5,875,000 | ||||||||||
Proceeds,
before expenses, to us |
$ | 7.4125 | $ | 94.125,000 |
(1) |
Includes $0.3125 per unit, or approximately $3.125 million in the aggregate (approximately $3.6 million if the underwriters overallotment option is exercised in full), payable to the underwriters for deferred underwriting commissions to be placed in the trust account described below. Such funds will be released to the underwriters only on completion of an initial business combination, as described in this prospectus. See Underwriting beginning on page 125 and Conflicts of Interest beginning on page 130. |
Of the proceeds we receive from this offering and the sale of the
units in the private placement described in this prospectus, $100.6 million ($10.06 per share), or approximately $115.19 million (approximately $10.01
per share) if the underwriters overallotment option is exercised in full, will be deposited into a trust account maintained by Continental Stock
Transfer & Trust Company, acting as trustee. Except for interest income earned on the trust account balance and released to us for working capital
purposes, to pay taxes or dissolution expenses, and any amounts necessary to purchase up to 15% of our public shares if we seek stockholder approval of
our business combination, each as described herein, our amended and restated certificate of incorporation provides that none of the funds held in trust
will be released from the trust account, until the earlier of (i) the consummation of our initial business combination; (ii) the expiration or
termination of any tender offer conducted by us in connection with a proposed business combination not otherwise withdrawn; (iii) the redemption of our
public shares if we are unable to consummate a business combination within 21 months from the date of this prospectus, subject to applicable law; or
(iv) otherwise upon our liquidation, in the event our management resolves to liquidate the trust account and ceases to pursue the consummation of a
business combination prior to the expiration of the 21 month period. The proceeds deposited in the trust account could become subject to the
claims of our creditors, if any, which could have priority over the claims of our public stockholders.
The underwriters expect to deliver the units
against payment in New York, New York on
,
2011.
Cowen and Company |
,
2011
Page |
||||||
---|---|---|---|---|---|---|
1 | ||||||
24 | ||||||
58 | ||||||
59 | ||||||
64 | ||||||
65 | ||||||
67 | ||||||
68 | ||||||
73 | ||||||
101 | ||||||
108 | ||||||
112 | ||||||
114 | ||||||
125 | ||||||
130 | ||||||
130 | ||||||
130 | ||||||
130 | ||||||
F-1 |
You should rely
only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with
different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters
are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information
appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of
operation and prospects may have changed since that date.
i
This summary provides an overview
of selected information contained elsewhere in this prospectus and does not contain all of the information you should consider before investing in our
securities. You should carefully read the prospectus in its entirety before investing in our securities, including the information
discussed under Risk Factors beginning on page 24 and our financial statements and notes thereto that appear elsewhere in
this prospectus. Unless otherwise stated in this prospectus , all the information in this prospectus assumes that the underwriters will not
exercise their overallotment option.
As used in this
prospectus:
|
references to we, us, company or our company refer to Chart Acquisition Corp.; |
|
references to our sponsor refer to Chart Acquisition Group LLC, a Delaware limited liability company formed for the express purpose of acting as the sponsor of this offering. The members of our sponsor are The Chart Group L.P., an affiliate of Christopher D. Brady, our president and director, Kendall Family Investments and Joseph R. Wright, our chairman and chief executive officer; |
|
references to Cowen Overseas are to Cowen Overseas Investment LP, a Cayman Islands limited partnership and an affiliate of Cowen and Company, LLC, the lead underwriter of this offering; |
|
references 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); |
|
references to public stockholders refer to the holders of our public shares, which may include our sponsor and members of our management team if and to the extent our sponsor and/or members of our management team purchase public shares, provided that our sponsors and a member of managements status as a public stockholder shall only exist with respect to such public shares; |
|
references to private placement refers to the private placement of 300,000 placement units being purchased by our sponsor and 175,000 placement units being purchased by Cowen Overseas, that will occur simultaneously with the consummation of this offering for a purchase price of $10.00 per placement unit for a total purchase price of $4,750,000; |
|
references to placement units are to an aggregate of 475,000 units being purchased separately by our sponsor and Cowen Overseas in the private placement, each placement unit consisting of one placement share and one placement warrant; |
|
references to placement shares are to an aggregate of 475,000 shares of our common stock included within the placement units being purchased separately by our sponsor and Cowen Overseas in the private placement; |
|
references to placement warrants are to warrants to purchase an aggregate of 475,000 shares of our common stock included within the placement units being purchased by our sponsor and Cowen Overseas in the private placement; and |
|
references to our management or our management team refer to our officers and certain of our directors . |
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, directly or indirectly, with respect to identifying any
acquisition target. We have conducted no operations and have generated no revenues to date and we will not generate operating revenues
at the earliest until we consummate our initial business combination.
1
We seek to capitalize on the global
network and investing and operating experience of our management team to identify, acquire and operate one or more businesses focused on the provision
and/or outsourcing of government services operating within or outside of the United States, although we may pursue acquisition opportunities in other
business sectors. We believe that the acquisition and operation of an established business focused on the provision and/or outsourcing of government
services will provide a strong foundation from which to build, through acquisition or organic growth, a diversified business platform. We believe our
management team has the skills and experience to identify, evaluate and consummate a business combination and is positioned to assist businesses we
acquire to satisfy the demand for the provision and/or outsourcing of government services created by the expected constraints on state and federal
budgets. However, our management teams global network and investing and operating experience do not guarantee a
successful initial business combination. The members of our management team are not required to devote any significant amount of time to our business
and are concurrently involved with other businesses. There is no guarantee that our current officers and directors will continue their respective
roles, or any other role, after our initial business combination, and their expertise may only be of benefit to us until our initial business
combination is completed. Past performance by our management team is not a guarantee of success with respect to any business combination we may
consummate. Although we may acquire a non-United States business, our primary search for acquisition targets will focus on domestic operating
businesses. In addition, our initial business combination is not required to have any minimum transaction value.
We anticipate structuring a business
combination to acquire 100% of the equity interest or assets of the target business or businesses. We may, however, structure a business combination to
acquire less than 100% of such interests or assets of the target business, but we will only consummate such business combination if we (or any entity
that is a successor to us in a business combination) acquire a majority of the outstanding voting securities or assets of the target
with the objective of making sure that we are not required to register as an investment company under the Investment Company Act of 1940,
as amended, or the Investment Company Act , based on the fact that less than 40% of our assets will be defined as investment securities under the
provisions of that statute . We will not consider any transaction that does not meet these criteria. Even though we will own a majority interest in
the target, our stockholders prior to the business combination may collectively own a minority interest in the post business combination company,
depending on valuations ascribed to the target and us in the business combination transaction.
Our management team intends to focus on
increasing stockholder value by growing revenue (through organic growth and acquisitions) and improving the efficiency of business operations of the
acquired company. Consistent with this strategy, we believe the following general criteria and guidelines are important in evaluating
prospective target businesses. We will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into a
business combination with a target business that does not meet these criteria and guidelines.
|
Opportunities for Platform Growth: We will seek to acquire one or more businesses or assets that we can grow both organically and through acquisitions. Particularly in regard to the provision and/or outsourcing of government services, we may initially consider those sectors that complement our management teams background, such as information technology and analysis, communications, equipment manufacturing and assembling, advanced materials, electronic components, and imaging and sensors. |
|
History of and Potential for Strong Free Cash Flow Generation: We will seek to acquire one or more businesses that have the potential to generate strong free cash flow (i.e., companies that typically generate cash in excess of that required to maintain or expand the businesss asset base, typical of businesses concerned with the provision and/or outsourcing of government service s ). We will focus on one or more businesses that have recurring revenue streams and low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance stockholder value. |
|
Established Companies with Proven Track Records: We will seek to acquire established companies , particularly those focused on industries connected to the provision and/or outsourcing of government services with sound historical financial performance. We will typically focus on companies with a |
2
history of strong operating and financial results. Although we are not restricted from doing so, we do not intend to acquire start-up companies. |
|
Experienced and Motivated Management Teams: We will seek to acquire businesses that have strong, experienced management teams with a substantial personal economic stake in the performance of the acquired business. We will focus on management teams with a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow. We expect that the operating expertise of our officers and directors will complement, not replace the targets management team. |
|
Strong Competitive Industry Position: We will seek to acquire businesses focused on the provision and/or outsourcing of government services industries that have strong fundamentals although we may acquire businesses in other industries . The factors we will consider include growth prospects, competitive dynamics, level of consolidation, need for capital investment and barriers to entry. We will focus on companies that have a leading or niche market position. We will analyze the strengths and weaknesses of target businesses relative to their competitors, focusing on product quality, customer loyalty, cost impediments associated with customers switching to competitors, intellectual property protection and brand positioning. We will seek to acquire one or more businesses that demonstrate advantages when compared to their competitors, which may help to protect their market position and profitability. |
These criteria are not intended to be
exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into a
business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not
meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be
in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Our management team and board of
directors have engaged in many different aspects of government services with a focus on defense, intelligence and national security and, as a
result, have developed a global network of contacts in those sectors. We anticipate that our management teams global network of contacts would
provide us with insight into the changing nature and needs of these sectors which tend to predominantly fall under the purview of state and
federal governments. We believe we can leverage the experience of our officers and directors and the network of contacts they maintain within these
industries to identify and potentially consummate a business combination within these sectors.
Our chairman and chief executive
officer, Joseph R. Wright, has served in the United States government in various capacities since the 1980s and is currently a member of the Defense
Business Board. Mr. Wright also has corporate experience, including as chief executive officer of PanAmSat Corporation and chairman of Intelsat
Ltd., providers of satellite/fiber services with global fleets providing services to international corporations and governments. Mr. Wright has
additional industry experience through his role as chairman of GRC International, a public company providing advanced information technologies
primarily to government customers. Mr. Wright is also an independent director of Cowen Group, Inc., the parent company of Cowen and Company, LLC, the
lead underwriter in this offering. Our president, Christopher D. Brady, who is affiliated with The Chart Group L.P., a member of our sponsor, has over
25 years experience in private equity, venture capital, corporate finance and capital markets. Mr. Brady has had experience working on various
government-related transactions, a focus of the business of The Chart Group L.P. Our chief financial officer, Michael LaBarbera, serves as managing
director of Chart Group Advisors, an affiliate of The Chart Group L.P., and has over 25 years experience in arranging acquisition and growth capital
financings for both private and public companies. Peter A. Cohen, one of our directors, is Chairman and Chief Executive Officer of Cowen Group, Inc.
Mr. Cohen has over 40 years experience in the financial industry, including serving as Chairman and Chief Executive Officer of Shearson Lehman
Brothers. Over his career he has served on a number of corporate, industry and philanthropic boards, including The New York Stock Exchange, The Federal
Reserve International Capital Markets Advisory Committee, The Depository Trust Company, The Ohio State University Foundation, The New York City Opera,
The American Express Company, GRC International, Olivetti SpA, Société Générale de Belgique, Telecom Italia SpA,
Presidential Life Corporation, Kroll, Inc.,
3
and L-3 Communications. He is presently a Director of Mount Sinai Hospital, Safe Auto Insurance, and Scientific Games Corporation.
Our knowledge of the government service
industry is further enhanced by virtue of the experience of certain of our other directors. In 2003, Governor Thomas Ridge, a director, former
Congressman and former Governor of Pennsylvania, was appointed the first Secretary of the Department of Homeland Security by President George W. Bush.
Senator Robert Kerrey, a director, was the Governor of Nebraska from 1983-1987, and was elected to the United States Senate in 1988 and reelected in
1994. Both Governor Ridge and Senator Kerrey served in the Vietnam War. Senator Kerrey was a member of the National Commission on Terrorist Attacks on
the United States, or as commonly called the 9-11 Commission, an independent, bipartisan commission created by congressional legislation
and the signature of President Bush in 2002, chartered to prepare a full and complete account of the circumstances surrounding the September 11, 2001
terrorist attacks, including preparedness for and the immediate response to the attacks. The Commission was also mandated to provide recommendations
designed to guard against future attacks. Governor Ridge gave key testimony before the 9-11 Commission, and between Governor Ridge and Senator Kerrey,
they have a deep understanding of the government and the defense industry through their political and military backgrounds. Our director, Timothy N.
Teen is a founder of Chart Venture Partners, an affiliate of our sponsor, and founded Blue Ocean Capital Partners, a strategic advisory firm to the
Aerospace & Defense sectors and serves as its chief executive officer. Since 2004, Mr. Teen has served as the president and chief executive officer
of InSitech, Inc., a government services firm that advises the United States Army, Navy and Marines on private sector trends and technology related
issues.
In addition to any potential business
candidates we may identify on our own, we anticipate that other target business candidates will be brought to our attention from various unaffiliated
sources, including investment market participants, private equity funds and large business enterprises seeking to divest non-core assets or
divisions.
In evaluating a prospective target
business, we expect to conduct an extensive due diligence review which will encompass, as applicable and among other things, meetings with incumbent
management and employees, document reviews, interviews of customers and suppliers, inspection of facilities, as well as a 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. Additionally, we are not prohibited from
partnering, submitting joint bids, or entering into any similar transaction with our sponsor, or an affiliate of our sponsor, in the pursuit of an
initial business combination. In the event we seek to complete an initial business combination with such a company or we partner with our sponsor or an
affiliate of our sponsor in our pursuit of an initial business combination, 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.
As more fully discussed in
ManagementConflicts of Interest, if any of our officers or directors becomes aware of a business combination opportunity that falls
within the line of business of any entity to which he has pre-existing fiduciary or contractual obligations, he may be required to present such
business combination opportunity to such entity prior to presenting such business combination opportunity to us. Certain of our directors currently
have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to us. In addition, our officers and
directors have agreed not to participate in the formation of, or become an officer or director of, any blank check company until we have entered into a
definitive agreement regarding our initial business combination or we have failed to complete our initial business combination within 21 months from
the date of this prospectus.
Conflict of Interest Relating to Underwriting
Activities
Joseph Wright, our chairman and chief
executive officer serves as an independent director of the Cowen Group, Inc., the parent company of Cowen and Company, LLC, the lead underwriter of
this offering. Peter A. Cohen, one of our directors, serves as chief executive officer and chairman of the board of the Cowen Group,
4
Inc. Therefore, we are deemed to be an affiliate of Cowen and Company, LLC, a member of the Financial Industry Regulatory Authority or FINRA. As a result, Cowen and Company, LLC, is deemed to have a conflict of interest under Rule 5121(f)(5) of the Conduct Rules of FINRA. Accordingly, this offering will be made in compliance with Rule 5121(a)(2) of FINRAs Conduct Rules, which requires that a qualified independent underwriter, as defined by FINRA, participate in the preparation of the registration statement and exercise the usual standard of due diligence with respect to such document. will act as the qualified independent underwriter with respect to this offering.
Our executive offices are located at 75
Rockefeller Plaza, 14th Floor, New York, NY 10019 and our telephone number is (212) 350-8205.
5
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, among other things,
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 24 of this prospectus.
Securities
offered |
10,000,000 units, at $10.00 per unit, each unit consisting of: |
|||||
one share of common stock; and |
||||||
one warrant. |
||||||
Proposed OTCBB
symbols |
Units: |
|||||
Common Stock: |
||||||
Warrants: |
||||||
Trading
commencement and separation of common stock and warrants |
We anticipate t he 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 Cowen and Company, LLC informs us of its
decision to allow earlier separate trading, subject, in each case, to our having filed the Current Report on Form 8-K as described below and having
issued a press release announcing when such separate trading will begin. |
|||||
Separate
trading of the common stock and warrants is prohibited until we have filed a Current Report on Form 8-K |
In no
event will our 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 overallotment 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 overallotment
option. |
|||||
Units: |
||||||
Number of
placement units outstanding before this offering |
0 |
|||||
Number of
placement units to be sold simultaneously with this offering |
475,000 |
Number of
units to be outstanding after this offering and the private placement |
10,475,000 |
6
Common
stock: |
||||||
Number
outstanding before this offering |
2,875,000(1)(2) |
|||||
Number
outstanding after this offering |
12,975,000(2)(3) |
|||||
Warrants: |
||||||
Number of
warrants outstanding before this offering |
0 |
|||||
Number of
warrants outstanding after this offering |
10,475,000( 3 )( 4 ) |
|||||
Exercisability |
Each
warrant offered in this offering is exercisable to purchase one share of our common stock. |
|||||
Exercise
price |
$11.50 per share, subject to adjustments as described herein. |
|||||
Exercise
period |
The
warrants will become exercisable on the later of: |
|||||
30 days after the consummation of our initial business combination, or |
||||||
12 months from the closing of this offering; |
||||||
provided that no warrants will be exercisable for cash unless we have an effective and current registration statement covering the
shares of common stock issuable upon exercise of the warrants and a current prospectus relating to such shares of common stock is available, and such
shares are registered, qualified or exempt from registration under the securities laws of |
(1) |
This number includes an aggregate of 375,000 founder shares held by our sponsor that are subject to forfeiture to the extent that the overallotment option is not exercised by the underwriters. |
(2) |
This number includes all founder shares in an aggregate amount equal to 20% of our issued and outstanding shares (excluding the placement shares) after this offering and the expiration of the underwriters overallotment option. A number of founder shares in an amount equal to 2.5% of our shares of common stock issued and outstanding after expiration of the underwriters overallotment option (excluding the placement shares) are subject to forfeiture by our sponsor in the event the last sales price of our stock does not equal or exceed $11.50 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. An additional number of founder shares in an amount equal to 2.5% of our shares of common stock issued and outstanding after expiration of the underwriters overallotment option (excluding the placement shares) will be subject to forfeiture by our sponsor in the event the last sales price of our stock does not equal or exceed $13.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for at least one period of 20 trading days within any 30-trading day period within 60 months following the closing of our initial business combination. Our sponsor has agreed that, except as set forth herein, it will not sell or transfer any of its founder shares until the earlier of: (i) one year after the consummation 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 and, to the extent applicable, will not sell or transfer founder shares that remain subject to forfeiture as described above, until such time as the related forfeiture provisions no longer apply. Also includes 475,000 placement shares included in the placement units. |
(3) |
Assumes no exercise of the underwriters overallotment option and the resulting forfeiture of 375,000 founder shares as described in footnote (1). Our sponsor and Cowen Overseas have agreed to purchase, simultaneously with the consummation of this offering, an aggregate of 475,000 private placement units, each unit consisting of one placement share and one placement warrant. Our sponsor |
7
and Cowen Overseas will hold 21.58% and 1.35%, respectively of the outstanding common stock following this offering and the expiration of the underwriters overallotment option. The placement units are not subject to forfeiture but will be subject to transfer restrictions as described in Principal StockholdersTransfers of Founder Shares and Placement Units (including securities contained therein).
(4) |
Includes 475,000 placement warrants included in the placement units. |
(5) |
Assumes no exercise of the underwriters overallotment option. |
the
state of residence of the holder. Notwithstanding the foregoing, if a registration statement covering the shares of common stock issuable upon exercise
of the public warrants has not been declared effective by the 60th business day following the closing of our initial business combination,
warrantholders may, until such time as there is an effective registration statement and during any period when we shall have failed to maintain an
effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of the Securities Act of
1933, as amended, or the Securities Act. |
||||||
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 earlier of the date the warrants expire or are redeemed and, the date on
which all of the warrants have been exercised and to qualify the resale of such shares under state blue sky laws, to the extent an exemption is not
available. |
||||||
The
warrants will expire at 5:00 p.m., New York time, five years after the consummation of our initial business combination or earlier upon redemption or
liquidation. On the exercise of any warrant, the warrant exercise price will be paid directly to us and not placed in the trust
account. |
||||||
Redemption of
warrants |
Once
the warrants become exercisable, we may redeem the outstanding warrants (except as described herein with respect to the placement
warrants): |
|||||
in whole and not in part; |
||||||
at a price of $0.01 per warrant; |
||||||
upon a minimum of 30 days prior written notice of redemption, or the 30-day redemption period; and |
||||||
if, and only if, the last sale price of our common stock equals or exceeds $17.50 per share for any 20 trading days within a
30 trading day period ending on the third business day before we send the notice of redemption to the warrant holders. |
8
We
will not redeem the warrants unless an effective registration statement covering the shares of common stock issuable upon exercise of the warrants
is effective and a current prospectus relating to those shares is available throughout the 30-day redemption
period. |
||||||
If we
call the warrants for redemption as described above, our management will have the option to require all holders that wish to exercise warrants to do so
on a cashless basis. In such event, each holder would pay the exercise price by surrendering the warrants for that number of shares of
common stock equal to the quotient obtained by dividing: (x) the product of the number of shares of common stock underlying the warrants, multiplied by
the difference between the exercise price of the warrants and the fair market value (defined below) by (y) the fair market value. The
fair market value means the average reported last sale price of the common stock for the 10 trading days ending on the third trading day
prior to the date on which the notice of redemption is sent to the holders of warrants. |
||||||
None
of the placement warrants will be redeemable by us so long as they are held by their initial holders, or their permitted transferees. |
||||||
Founder
shares |
On
August 9, 2011, our sponsor purchased an aggregate of 2,875,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.0087 per
share. |
|||||
The
founder shares purchased by our sponsor include an aggregate of 375,000 shares subject to forfeiture to the extent that the underwriters
overallotment option is not exercised in full, so that our sponsor will own in the aggregate a number of shares equal to
21.58% of our issued and outstanding shares of common stock after this offering ( which includes 2,500,000
founder shares and 300,000 placement shares and assumes it does not purchase any units in this offering and it is not required to
forfeit its founder earn out shares, as described in this prospectus) . A number of founder shares in an amount equal to 2.5% of our shares of
common stock issued and outstanding after the expiration of the underwriters overallotment option (excluding the placement shares) are subject to
forfeiture by our sponsor in the event the last sales price of our common stock does not equal or exceed $11.50 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. An additional number of |
9
founder shares in an amount equal to 2.5% of our shares of common stock issued and outstanding after the expiration of the underwriters
overallotment option (excluding the placement shares), will be subject to forfeiture by our sponsor in the event the last sales price of our stock does
not equal or exceed $13.50 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 60 months following the closing of our initial business combination. None of the
placement shares will be subject to forfeiture. |
||||||
The
founder shares are identical to the shares of common stock included in the units being sold in this offering, except that: |
||||||
the founder shares are subject to certain transfer restrictions, as described in more detail below, and |
||||||
our sponsor has agreed: (i) to waive its redemption rights with respect to its founder shares, placement 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 and
placement shares if we fail to consummate a business combination within 21 months from the date of this prospectus. However, our sponsor will be
entitled to redemption rights with respect to any public shares held by it if we fail to consummate a business combination within such time
period. |
||||||
If we
submit our initial business combination to our public stockholders for a vote, our sponsor has agreed to vote its founder shares, placement shares and
any public shares purchased during or after the offering in favor of our initial business combination. |
||||||
Transfer
restrictions on founder shares |
Our
sponsor has agreed not to transfer, assign or sell any of its founder shares (except to permitted transferees, as described herein under
Principal StockholdersTransfers of Founder Shares and Placement Units (including securities contain therein) until: (i) one year
after the consummation 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 |
10
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 StockholdersTransfers of Founder Shares and Placement Units (including securities contained therein))
and to the extent applicable, it will not sell or transfer founder shares that remain subject to forfeiture until such time as the related forfeiture
provisions no longer apply. |
||||||
Placement
Units |
Our
sponsor has committed to purchase 300,000 placement units and Cowen Overseas Investment LP, an affiliate of Cowen and Company, LLC, the lead
underwriter of this offering, has committed to purchase 175,000 placement units, each consisting of one share of common stock and one warrant to
purchase one share of our common stock exercisable at $11.50, at a price of $10.00 per unit ($4.75 million in the aggregate) in a private placement
that will occur simultaneously with the closing of this offering. The purchase price of the placement units will be added to the proceeds
from this offering to be held in the trust account. If we do not complete a business combination within 21 months from the date of this prospectus, the
proceeds from the sale of the placement units held in the trust account will be used to fund the redemption of our public shares (subject to the
requirements of applicable law) and the placement warrants will expire worthless. |
|||||
Transfer
restrictions on placement units |
The
placement units and the component securities contained therein will not be transferable, assignable or salable until 30 days after the consummation of
our initial business combination and the placement warrants will be non-redeemable so long as they are held by their initial holders or their permitted
transferees (except as described herein under Principal StockholdersTransfers of Founder Shares and Placement Units (including securities
contained therein); provided that Cowen Overseas will not in any event be permitted to sell any placement units (including the component
securities therein) prior to the date 180 days immediately following the completion of this offering. If the placement units are held by someone other
than the initial holders, or their respective permitted transferees, the placement warrants will be redeemable by us and exercisable by such holders on
the same basis as the warrants included in the units being sold in this offering. |
|||||
Proceeds to be
held in trust account |
$100.6 million, or $10.06 per public share of the proceeds of this offering together with all the proceeds of the private
placement of the placement units (approximately $115.19 million, or approximately |
11
$10.01 per share, if the underwriters overallotment 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 $3.125 million (or approximately $3.6 million if
the underwriters over-allotment option is exercised in full) in deferred underwriting commissions. An increase in the size of the offering
without an increase in the size of the private placement would reduce the per-share amount payable to our public stockholders upon
our liquidation or of our public stockholders exercise of their redemption rights because the portion of the trust account attributable to
the sale proceeds of the private placement 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 $0.06. |
||||||
We
may increase the initial amount held in the trust account from approximately $10.06 per public share prior to the effectiveness of the registration
statement of which this prospectus forms a part. In such case, we expect that the increase would be funded by an increase in the amount of the deferral
by the underwriters of the underwriting commissions payable in connection with this offering, an increase in the number of placement units to be
purchased by our sponsor or Cowen Overseas at $10.00 per unit and/or a reduction from $800,000 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, and/or Cowen Overseas purchases additional placement units. We do not intend to reduce the initial amount to be
held in the trust account. |
||||||
Except for any interest income released to us for working capital purposes, to pay taxes or dissolution expenses, and any amounts necessary to
purchase up to 15% of our public shares if we seek stockholder approval of our business combination, as discussed below and subject to the requirements
of law, none of the funds held in trust will be released from the trust account until the earlier of (i) the consummation of our initial business
combination; (ii) the expiration or termination of any tender offer conducted by us in connection with a proposed business combination not otherwise
withdrawn; (iii) the redemption of our public shares if we are unable to consummate a business combination within 21 months from the date of
this |
12
prospectus, subject to applicable law; or (iv) otherwise upon our liquidation, in the event our management resolves to liquidate the trust
account and ceases to pursue the consummation of a business combination prior to the expiration of the 21 month period (for example,
if our management determines in its business judgment that it is unlikely that we would be able to consummate a business
combination prior to the expiration of the 21 month period). The proceeds deposited in the trust account could become subject to the claims of our
creditors, if any, which could have priority over the claims of our public stockholders. |
||||||
Anticipated
expenses and funding sources |
Unless and until we complete our initial business combination, no proceeds held in the trust account, other than the interest earned on the
trust account, 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. We may pay our expenses only from: |
|||||
such interest; and |
||||||
the net proceeds of this offering not held in the trust account, which will be $800,000 in working capital after the payment
of approximately $600,000 in expenses relating to this offering (not including underwriting discounts ). |
||||||
Conditions to
consummating our initial business combination |
There
is no limitation on our ability to raise funds privately or through loans in connection with our initial business combination. Because, unlike many
blank check companies, we do not have the limitation that a target business have a minimum fair market enterprise value equal to a specified percentage
of the net assets held in the trust account at the time of our signing a definitive agreement in connection with our initial business combination, our
management will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses. We will consummate our
initial business combination only if we (or any entity that is a successor to us in a business combination) will acquire a majority of
the outstanding voting securities or assets of the target or otherwise are not required to register as an investment company under the Investment
Company Act. Even though we (or our stockholders, if we are not the surviving corporation) will own a majority 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. For example, we could pursue a transaction in which we issue
a |
13
substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case, we
would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our
stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such
transaction. |
||||||
Permitted
purchases of public shares by us prior to the consummation of our initial business combination using amounts held in the trust
account |
Unlike many blank check companies, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in
connection with our business combination pursuant to the tender offer rules, prior to the consummation of a business combination, our amended and
restated certificate of incorporation will permit the release to us from the trust account amounts necessary to purchase up to 15% of the shares sold
in this offering (1,500,000 shares, or 1,725,000 shares if the underwriters over-allotment option is exercised in full) . These purchases could
occur at any time commencing after the filing of a preliminary proxy statement for our initial business combination and ending on the record
date of the stockholder meeting to approve our initial business combination. Purchases of our public shares will be made only in
open market transactions at times when we are not in possession of any material non-public information and may not be made during a restricted period
under Regulation M under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Due to the relatively sporadic public trading of
securities of similarly structured blank check companies, it is unlikely that we would be able to make such purchases under Rule 10b-18 under the
Exchange Act , which provides a non-exclusive safe harbor for such market purchases, and still accomplish the intended goals of such purchases as
described below. Therefore, we do not intend to comply with Rule 10b-18 and may make purchases outside of the requirements of Rule 10b-18 as we see
fit. Purchases outside the safe harbor could result in our liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the
Exchange Act. Any purchases we make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account
(approximately $10.06 per share or approximately $10.01 per share if the underwriters overallotment option is exercised in full). We
may purchase any or all of the 1,500,000 shares (or 1,725,000 shares if the underwriters overallotment 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 |
14
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. |
||||||
Other
permitted purchases of public shares by us or our affiliates |
In
addition to the permitted purchases of public shares by us prior to the consummation of the initial business combination using amounts held in the
trust account, as described above, if we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection
with our business combination pursuant to the tender offer rules, we may enter into privately negotiated transactions to purchase public shares from
stockholders following consummation of the initial business combination with proceeds released to us from the trust account immediately following
consummation of the initial business combination. Our sponsor, directors, officers or their affiliates may also purchase shares in privately negotiated
transactions either prior to or following the consummation of our initial business combination. Neither we nor our directors, officers, advisors or
their affiliates will make any such purchases when we or they are in possession of any material nonpublic information not disclosed to the seller or
during a restricted period under Regulation M under the Exchange Act. Although neither we nor they currently anticipate paying any premium purchase
price for such public shares, in the event we or they do, the payment of a premium may not be in the best interest of those stockholders not receiving
any such additional consideration. In addition, the payment of a premium by us after the consummation of our initial business combination may not be in
the best interest of the remaining stockholders who do not redeem their shares, because such stockholders will experience a reduction in book value per
share compared to the value received by stockholders that have their shares purchased by us |
15
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 number of shares that could be acquired by us or our affiliates, or the price we or they may pay, if we hold a
stockholder vote. |
||||||
Redemption
rights for public stockholders upon consummation of our initial business combination |
We
will provide our stockholders with the opportunity to redeem their shares of common stock upon the consummation of our initial business combination at
a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest
earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or dissolution expenses divided by the
number of then outstanding public shares, subject to the limitations described herein. The amount in the trust account is initially anticipated to be
approximately $10.06 per public share (or approximately $10.01 per public share if the underwriters overallotment 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 any public shares it may acquire in connection with, or following the consummation of, this offering
in connection with a tender offer or stockholder vote. Each of our sponsor and Cowen Overseas (as applicable) has agreed to waive its redemption
rights with respect to the founder shares and placement shares (i) in connection with the consummation of a business
combination , (ii) if we fail to consummate our initial business combination within 21 months from the date of this prospectus , (iii)
in connection with an expired or unwithdrawn tender offer, and (iv) upon our liquidation prior to the expiration of the 21 month
period . |
|||||
Manner of
conducting redemptions |
Unlike many blank check companies that hold stockholder votes and conduct proxy solicitations in conjunction with their initial
business combinations and 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 reasons, we will,
pursuant to our amended and restated certificate of incorporation: |
|||||
conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers
and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of the proposed business
combination, and |
16
file tender offer documents with the SEC prior to consummating our initial business combination that 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, and we will not be permitted to consummate our initial business combination until the expiration of the
tender offer period. |
||||||
If,
however, stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other reasons, we
will: |
||||||
conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which
regulates the solicitation of proxies, and not pursuant to the tender offer rules, and |
||||||
file proxy materials with the SEC. |
||||||
If we
seek stockholder approval, we will consummate our initial business combination only if a majority of the outstanding shares of common stock voted are
voted in favor of the business combination. In such case, our sponsor has agreed to vote its founder shares, placement shares and any public shares
purchased during or after the offering in favor of our initial business combination. Additionally, each public stockholder may elect to redeem their
public shares irrespective of whether they vote for or against the proposed transaction for cash equal to their pro rata share of the aggregate amount
then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us for
working capital purposes, the payment of taxes or dissolution expenses, and subject to certain volume limitations described herein. |
||||||
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 has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to
complete business |
17
combinations because the number of shares voted against the initial business combination 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 percentage threshold for redemption in our amended and restated certificate of incorporation and since even those public
stockholders who vote in favor of our initial business combination have the right to redeem their public shares , our structure is different
in this respect from the structure that has been used by many blank check companies. This may make it easier for us to consummate our initial
business combination. 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 and the terms of the proposed business combination may require our net tangible assets to be greater than $5,000,001. For example, the
proposed business combination may require: (i) cash consideration to be paid to the target or members of its management team, (ii) cash to be
transferred to the target for working capital or other general corporate purposes or (iii) the allocation of cash to satisfy other conditions in
accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would be required to pay for all
shares of common stock that are validly tendered plus any amount required to satisfy cash conditions pursuant to the terms of the proposed business
combination exceed the aggregate amount of cash available to us, we will not consummate the business combination and any shares of common stock
tendered pursuant to the tender offer will be returned to the holders thereof following the expiration of the tender offer. Additionally, since we are
required to maintain net tangible assets of at least $5,000,001 (which may be substantially higher depending on the terms of our potential business
combination), the chance that the holders of our common stock electing to redeem in connection with a redemption conducted pursuant to the proxy rules
will cause us to fall below such minimum requirement is increased. |
||||||
Limitation on
redemption and voting rights of stockholders holding 10% or more of the shares sold in the offering if we hold stockholder vote |
Notwithstanding the foregoing redemption rights, if we seek stockholder approval of our initial business combination and we do not conduct
redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated certificate of incorporation
provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert
or as a group (as |
18
defined under Section 13 of the Exchange Act), will be restricted from redeeming its shares with respect to more than an aggregate of 10% of
the shares sold in this offering. Moreover, any individual stockholder or group will also be restricted from voting public shares in excess
of an aggregate of 10% of the public shares sold in this offering, and all additional such shares in excess of 10%, which we refer to as the
Excess Shares, will be deemed ineligible to vote at a meeting of stockholders. |
||||||
We
believe the restrictions described above will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders
to use their ability to redeem their shares as a means to force us or our management to purchase their shares at a significant premium to the
then-current market price or on other undesirable terms. Absent these provisions, a public stockholder holding more than an aggregate of 10% of the
shares sold in this offering could threaten to exercise its redemption rights or vote against a business combination if such 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 or vote no more than 10% of the shares sold in this offering, we believe we will limit the ability of a small number of
stockholders to unreasonably attempt to block our ability to consummate our initial business combination, particularly in connection with
a business combination with a target that requires as a closing condition that we have a minimum net worth or a certain amount of
cash. |
||||||
Release of
funds in trust account on closing of our initial business combination |
On
the closing of our initial business combination, all amounts held in the trust account will be released to us. We will use these funds to pay amounts
due to any public stockholders who exercise their redemption rights as described above under Redemption rights for public stockholders upon
consummation of our initial business combination and to pay the underwriters their deferred underwriting discounts . 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 as described above and for general corporate purposes, including for maintenance or |
19
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. |
||||||
Redemption of
public shares and distribution and liquidation if no initial business combination |
Our
sponsor, officers and directors have agreed that we will have only 21 months from the date of this prospectus to consummate our initial business
combination. If we have not consummated a business combination within 21 months from the date of this prospectus, or earlier, at the discretion of our
board pursuant to the expiration of a tender offer conducted in connection with a failed business combination, 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 all public shares then
outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts
representing interest earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or dissolution
expenses, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as
stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably
possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject
in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no
redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to consummate our initial business
combination within the 21 month time period. |
|||||
Each of our sponsor and Cowen Overseas (as applicable) has agreed to waive its redemption rights with respect to the
founder shares and placement shares (i) in connection with the consummation of a business combination, (ii) if we fail to consummate our initial
business combination within 21 months from the date of this prospectus, (iii) in connection with an expired or unwithdrawn tender offer, and (iv) upon
our liquidation prior to the expiration of the 21 month period. However, if our sponsor, Cowen Overseas or any of their respective
officers, directors or affiliates, should acquire public shares in or after this offering, they will be entitled to redemption rights with
respect |
20
to
such public shares if we fail to consummate a business combination within the required time period. |
||||||
The
underwriters have agreed to waive their rights to their deferred underwriting commission held in the trust account in the event we do not consummate a
business combination within 21 months from the date of this prospectus and, in such event, such amounts will be included with the funds held in the
trust account that will be available to fund the redemption of our public shares. |
||||||
Limited
payments to insiders |
There
will be no 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: |
|||||
Repayment of $175,000 in loans made to us by our sponsor to cover offering-related and organizational
expenses; |
||||||
A payment of an aggregate of $10,000 per month to The Chart Group L.P., an affiliate of our sponsor, for office space,
secretarial and administrative services; |
||||||
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; and |
||||||
Repayment of incremental loans made by our sponsor or an affiliate of our sponsor or certain of our officers and directors
to finance transaction costs in connection with an intended initial business combination, provided that if we do not consummate an initial business
combination, we may use a portion of the working capital held outside the trust account to repay such loaned amounts but no proceeds from our trust
account would be used for such repayment. The terms of such loans by our officers and directors, if any, have not been determined and no written
agreements exist with respect to such loans. |
||||||
Our
independent directors will approve all payments in excess of $5,000 to be made to our sponsor, officers, directors or our or their
affiliates. |
21
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 at least until we consummate our
initial business combination we 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 BusinessComparison of This Offering to Those of Blank Check Companies Subject to Rule 419. You should carefully consider
these and the other risks set forth in the section entitled Risk Factors within this prospectus and read this entire prospectus before
investing in the units.
22
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.
As of August 9, 2011 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Actual |
As Adjusted |
||||||||||
Balance
Sheet Data: |
|||||||||||
Working
capital (deficiency) |
$ | (18,932 | ) | $ | 98,299,567 | ||||||
Total assets
|
243,499 | 101,424,567 | |||||||||
Total
liabilities |
218,932 | 3,125,000 | |||||||||
Value of
common stock that may be redeemed in connection with our initial business combination (approximately $10.06 per share) |
| 93,299,566 | |||||||||
Stockholders equity(1) |
24,567 | 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 placement units, repayment of the $175,000 loan made to us by our sponsor and the payment of the
estimated expenses of this offering. The as adjusted total assets amount includes the $100.6 million held in the trust account for the
benefit of our public stockholders, which amount, less deferred underwriting commissions, will be available to us only upon the consummation of a
business combination within 21 months from the date of this prospectus. The as adjusted working capital and as adjusted total
assets include approximately $3.125 million (or approximately $3.6 million if the underwriters overallotment option is exercised in full)
representing deferred underwriting commissions.
If no business combination is consummated within 21 months from
the date of this prospectus, the proceeds held in the trust account, including the deferred underwriting commissions, including any amounts
representing interest earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or dissolution
expenses and any amounts released to purchase up to 15% of our public shares if we seek stockholder approval of our business combination, as
described in this prospectus, will be used to fund the redemption of our public shares. Our sponsor has agreed to waive its redemption rights with
respect to their founder shares if we fail to consummate a business combination within such 21 month time period.
23
An investment in our securities
involves a high degree of risk. You should consider carefully all of the risks described below and all of the other information
set forth in this prospectus before , deciding to invest in our units. If any of the events or developments
described below occur, our business, financial condition or results of operations could be negatively affected. In that
case , 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, which is to acquire one or more operating
businesses focused on the provision and/or outsourcing of government services industries. 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
to approve 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 reasons. Accordingly, we may consummate our initial business combination even if
holders of a majority of the outstanding shares of our common stock do not approve of the business combination we
consummate.
If we seek stockholder approval of our initial business
combination, our sponsor has agreed to vote in favor of such initial business combination, regardless of how our public stockholders
vote.
Unlike many other blank check companies
in which the founders agree to vote their founder shares in accordance with the majority of the votes cast by the public stockholders in connection
with an initial business combination, our sponsor has agreed to vote its founder shares and its placement shares, as well as any public shares
purchased by them in or after the offering, in favor of our initial business combination. Our sponsor will own shares equal to
21.58 % of our issued and outstanding shares of common stock ( which includes 300,000 placement shares ) immediately following
the consummation of this offering . Accordingly, if we seek stockholder approval of our initial business combination, it is more likely that the
necessary stockholder approval will be received than would be the case if our sponsor agreed to vote its founder shares and its placement shares in
accordance with the majority of the votes cast by our public stockholders.
Your only opportunity to affect the investment decision
regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek
stockholder approval of the business combination.
At the time of your investment in us,
you will not be provided with an opportunity to evaluate the specific merits or risks of one or more target businesses. Since our board of directors
may consummate a business combination without seeking stockholder approval, public stockholders may not have the right or opportunity to vote on the
business combination, unless we seek such stockholder vote. Accordingly, your only opportunity to affect the investment decision regarding a potential
business combination may be limited to exercising your redemption rights within the period of time (which will be at least 20 business days) set forth
in our tender offer documents mailed to our public stockholders in which we describe our business combination.
24
The ability of our public stockholders to redeem their
shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter
into a business combination with a target.
We may enter into a transaction
agreement with a prospective target that requires as a closing condition that we have a minimum net worth or a certain amount of cash. If too many
public stockholders exercise their redemption rights, we may not be able to meet such closing condition, and as a result, would not be able to proceed
with the business combination. Furthermore, in no event will we redeem our public shares in an amount that would cause our net tangible assets to be
less than $5,000,001. Our amended and restated certificate of incorporation requires us to provide all of our stockholders with an opportunity to
redeem all of their shares in connection with the consummation of any initial business combination, although each of our sponsor and Cowen
Overseas (as applicable) has agreed to waive its respective redemption rights with respect to the founder shares and, placement
shares, (i) in connection with the consummation of our initial business combination , (ii) if we fail to consummate our initial
business combination within 21 months from the date of this prospectus , (iii) in connection with an expired or unwithdrawn tender offer, and (iv)
upon our liquidation prior to the expiration of the 21 month period . Consequently, if accepting all properly submitted redemption requests
would cause our net tangible assets to be less than $5,000,001 or such greater amount necessary to satisfy a closing condition as described above, we
would not proceed with such redemption and the related business combination and may instead search for an alternate business combination. Prospective
targets would be aware of these risks and, thus, may be reluctant to enter into a business combination transaction with us.
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.
In connection with the
consummation of our business combination, we may redeem up to that number of shares of common stock that would permit us to maintain net
tangible assets of $5,000,001. If our business combination requires us to use substantially all of our cash to pay the purchase price, the redemption
threshold may be further limited. Alternatively, we may either need to reserve part of the trust account for possible payment upon such redemption, or
we may need to arrange third party financing to help fund our business combination in case a larger percentage of stockholders exercise their
redemption rights than we expect. If the acquisition involves the issuance of our stock as consideration, we may be required to issue a higher
percentage of our stock to the target or its stockholders to make up for the failure to satisfy a minimum cash requirement. Raising additional funds to
cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to
effectuate the most attractive business combination available to us.
The requirement that we maintain a minimum net worth or
retain a certain amount of cash could increase the probability that our business combination would be unsuccessful and that you would have to wait for
liquidation in order to redeem your stock.
If, pursuant to the terms of our
proposed business combination, we are required to maintain a minimum net worth or retain a certain amount of cash in trust in order to consummate the
business combination and regardless of whether we proceed with redemptions under the tender or proxy rules, the probability that our business
combination would be unsuccessful is increased. If our business combination is unsuccessful, you would not receive your pro rata portion of the trust
account until we liquidate or you are able to sell your stock in the open market. If you were to attempt to sell your stock in the
open market at such time our stock may trade at a discount to the pro rata amount in our trust account. In either situation, you may suffer a
material loss on your investment or lose the benefit of funds expected in connection with our redemption until we liquidate .
25
The requirement that we complete a business combination
within 21 months from the date of this prospectus may give potential target businesses leverage over us in negotiating a business combination and may
decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine
our ability to consummate a business combination on terms that would produce value for our stockholders.
Any potential target business with
which we enter into negotiations concerning a business combination will be aware that we must consummate a business combination within 21 months from
the date of this prospectus. 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 might have rejected upon a more comprehensive investigation.
We may not be able to consummate a business combination
within 21 months from the date of this prospectus, in which case we would cease all operations except for the purpose of winding up and we would redeem
our public shares and liquidate.
Our sponsor, officers and directors
have agreed that we must complete our initial business combination within 21 months from the date of this prospectus. We may not be able to find a
suitable target business and consummate a business combination within such time period. If we have not consummated a business combination within 21
months from the date of this prospectus, or earlier, at the discretion of our board pursuant to the expiration of a tender offer conducted in
connection with a failed business combination, 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 all public shares then outstanding at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest
released to us for working capital purposes, the payment of taxes or dissolution expenses, divided by the number of then outstanding public shares,
which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation
distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of
our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide
for claims of creditors and the requirements of other applicable law.
If we are unable to complete our initial business
combination within the prescribed time frame, our warrants will expire worthless.
Our outstanding warrants may not be
exercised until after the completion of our initial business combination and are not entitled to participate in the redemption of the shares of our
common stock conducted in connection with the consummation of our business combination, unless a warrant redemption offer is specifically made a part
thereof. The warrants will therefore expire worthless if we are unable to consummate a business combination within the 21 month time period, or
earlier, if our board resolves to liquidate and dissolve pursuant to the expiration of a tender offer conducted in connection with a failed business
combination.
Our purchase of common stock in the open market may
support the market price of the common stock and/ or warrants during the buyback period and, accordingly, the termination of the support provided by
such purchases may materially adversely affect the market price of the units, common stock and/or warrants.
Unlike many blank check companies, if
we seek stockholder approval of our initial business combination, prior to the consummation of a business combination, our amended and restated
certificate of incorporation will permit the release to us from the trust account amounts necessary to purchase up to 15% of the shares sold in this
offering (1,500,000 shares, or 1,725,000 shares if the overallotment option is exercised in full) at any time commencing after the filing of a
preliminary proxy statement for our initial business combination
26
and ending on the record date of the stockholder meeting to approve the initial business combination. 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 of common stock 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
or their affiliates may also purchase shares in privately negotiated transactions either prior to or following the consummation of our initial business
combination. Neither we nor our directors, officers, advisors or their affiliates will make any such purchases when we or they are in possession of any
material non-public information not disclosed to the seller. Such a purchase would include a contractual acknowledgement that such stockholder,
although still the record holder of our shares is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights. In
the event that we or our sponsor, directors, officers or their affiliates purchase shares in privately negotiated transactions from public stockholders
who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem
their shares. Although neither we nor any of our sponsor, directors, officers or their respective affiliates currently anticipate paying
any premium purchase price for such public shares, in the event we or they do, the payment of a premium may not be in the best interest of those
stockholders not receiving any such additional consideration. In addition, the payment of a premium by us after the consummation of our initial
business combination may not be in the best interest of the remaining stockholders who do not redeem their shares. Such stockholders will experience a
reduction in book value per share compared to the value received by stockholders that have their shares purchased by us at a premium. In addition, in
the event we seek stockholder approval of our business combination, our amended and restated certificate of incorporation will permit the release to us
from the trust account amounts necessary to purchase up to 15% of the shares sold in this offering (1,500,000 shares, or 1,725,000 shares if the
underwriters over- allotment option is exercised in full). Due to the relatively sporadic public trading of securities of similarly structured
blank check companies, it is unlikely that we would be able to make such purchases under the safe harbor provided by Rule 10b-18 under the
Exchange Act and still accomplish the intended goals of such purchases. Therefore, we do not intend to comply with Rule 10b-18 and may make purchases
outside of the requirements of Rule 10b-18 as we see fit. This could result in our liability for manipulation under Section 9(a)(2) and Rule 10b-5 of
the Exchange Act. Any purchases we make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account
(approximately $10.06 per share or approximately $10.01 per share if the underwriters overallotment option is exercised in
full).
The purpose of such purchases would be
to: (i) increase the likelihood of obtaining stockholder approval of the business combination or (ii), where the purchases are made by our sponsor,
directors, officers or their affiliates, to satisfy a closing condition in an agreement with a target that requires us to have a minimum net worth or a
certain amount of cash at the closing of the business combination, where it appears that such requirement would otherwise not be met. This may result
in the consummation of a business combination that may not otherwise have been possible. In addition, purchases in the open market would provide
liquidity to those public stockholders whose shares are so purchased in advance of the closing of the business combination.
Our purchases of common stock in the open market or in
privately negotiated transactions would reduce the funds available to us after the business combination.
If we seek stockholder approval of our
business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, we may privately
negotiate
27
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 up to 15% of the shares sold in this offering (1,500,000 shares, or 1,725,000 shares if the underwriters overallotment option is exercised in full). Any purchases we make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account (approximately $10.06 per share or approximately $10.01 per share if the underwriters overallotment option is exercised in full). As a consequence of such purchases, the funds in our trust account that are so used will not be available to us after the business combination.
Purchases of common stock in the open market or in
privately negotiated transactions by us or our sponsor, directors, officers or their affiliates may make it difficult for us to list our common stock
on a national securities exchange.
If we or our sponsor, directors,
officers or their affiliates purchase shares of our common stock in the open market or in privately negotiated transactions, it would reduce the public
float of our common stock and the number of beneficial holders of our securities, which may make it difficult to obtain the quotation,
listing or trading of our securities on a national securities exchange if we determine to apply for such quotation or listing in connection with the
business combination.
Our purchases of common stock in the open market or in
privately negotiated transactions may have negative economic effects on our remaining public stockholders.
If we seek stockholder approval of our
business combination and purchase shares in privately negotiated or market transactions from stockholders who would have otherwise elected to have
their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for a per-share pro rata portion of the trust account, our
remaining public stockholders will bear the economic burden of the franchise and income taxes payable. In addition, our remaining public stockholders
following the consummation of a business combination will bear the economic burden of the deferred underwriting discount as well as the
amount of any premium we may pay to the per-share pro rata portion of the trust account using funds released to us from the trust account following the
consummation of the business combination. This is because the stockholders from whom we purchase shares in open market or in privately negotiated
transactions may receive a per share purchase price payable from the trust account that is not reduced by a pro rata share of the franchise and income
taxes or the deferred underwriting discount and, in the case of purchases at a premium, have received such premium.
If we purchase shares using funds held in the
trust account prior to the consummation of our initial business combination outside the safe harbor provisions of Rule 10b-18 under the Exchange
Act, we could be subject to liability under the Exchange Act. This could cause the proceeds held in the trust account to be reduced and the per-share
redemption price received by stockholders to be less than approximately $10.06 (or approximately $10.01 if the overallotment option is exercised in
full).
We are permitted to withdraw funds
held in the trust account prior to the consummation of our initial business combination to purchase shares of our common stock as described
in this prospectus. It is probable that we will not make such purchases under Rule 10b-18 under the Exchange Act, which provides for a
safe harbor from liability for manipulation under Section 9(a)(2) of and Rule 10b-5 under the Exchange Act. As such, a stockholder
could bring an action against us claiming our purchases have resulted in market manipulation, because our share price and trading volume may be higher
than it would be without our purchases. If a stockholder brought such an action and a court found that we violated Section 9(a)(2) of and Rule
10b-5 under the Exchange Act, we would be subject to monetary damages to the stockholder. In addition, in those circumstances we
may be subject to an enforcement action by the SEC. Any such event could cause the proceeds held in the trust account to be reduced and the per-share
redemption price received
28
by stockholders to be less than approximately $10.06 (or approximately $10.01 if the over-allotment option is exercised in full).
Although we may purchase shares using trust account
proceeds, such purchases will not be made pursuant to a set 10b5-1 purchase plan and accordingly, we are not required to provide stockholders with any
formal advance notice as to when we will make purchases, or if making purchases, when such purchases will cease.
As indicated above, we may purchase
shares using trust account proceeds. However, unlike certain other similarly structured blank check companies, such purchases will not be made pursuant
to a set 10b5-1 purchase plan that requires the company to maintain a limit order for shares to be purchased at a specific minimum price for a specific
period of time. Where all purchases are made under a 10b5-1 plan, stockholders have the benefit of knowing exactly when purchases will
commence and cease. Because our purchases will not be made pursuant to such a set purchase program, public stockholders will not have the benefit of
any formal advance notice as to our decision to make purchases or, if we have decided to make such purchases, notice as to when we decide to cease
making such purchases (provided that any purchases must cease no later than the date we announce our initial business combination or, if we elect to
seek stockholder approval of our initial business combination, on the record date for the vote to approve our initial business
combination).
You will not have any rights to or
interest 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) the consummation of our initial business combination; (ii) the
expiration or termination of any tender offer conducted by us in connection with a proposed business combination not otherwise withdrawn; (iii) the
redemption of our public shares if we are unable to consummate a business combination within 21 months from the date of this prospectus, subject to
applicable law; or (iv) otherwise upon our liquidation prior to the expiration of the 21 month period , in the event our management resolves to
liquidate the trust account and ceases to pursue the consummation of a business combination (if, for example our management determines in its
business judgment that it is unlikely that we would be able to consummate a business combination prior to the expiration of the 21 month period).
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 date of
this prospectus is not consummated for any reason, compliance with Delaware law may require that we submit a plan of dissolution to our then-existing
stockholders for approval prior to the distribution of the proceeds held in our trust account. In that case, public stockholders may be forced to wait
beyond 21 months before they receive funds from our trust account. In no other circumstances will a public stockholder have any right or interest of
any kind in the trust account. Accordingly, to liquidate your investment, you may be forced to sell your public shares or warrants, potentially at a
loss.
We do not intend to establish an audit committee or a
compensation committee until the consummation of an initial business combination. Until such time, no formal committee of independent directors will
review matters related to our business, and such lack of review could negatively impact our business.
Upon consummation of an initial
business combination, our board of directors intends to establish an audit committee and a compensation committee, and adopt charters for these
committees. Prior to such time we do not intend to establish either committee. Accordingly, there will not be a separate committee comprised of some
members of our board of directors with specialized accounting and financial knowledge to meet, analyze and discuss solely financial matters concerning
prospective target businesses nor will there be a separate formal committee to review the reasonableness of expense reimbursement requests by anyone
other than our board of directors, which includes persons who may seek such reimbursements. The absence of such committees to review the matters
discussed above until the consummation of our initial business combination could negatively impact our operations and profitability and/or have an
adverse effect on the market price of our public securities .
29
We anticipate o ur 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 a 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.
We anticipate o ur 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 a national
securities exchange . Quotation of our securities on the OTCBB will limit the liquidity and price of our securities more than if our securities were
quoted or listed on the NYSE Amex Market or another national securities exchange. Lack of liquidity would 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 of any national securities exchange. The OTCBB does not impose listing standards or requirements. If our securities were
listed on a national securities exchange, we would be subject to a number of listing standards, including requirements relating to our
minimum unaffiliated market capitalization and common stock trading price, the independence of a majority of our board of directors, requirements
regarding committees of our board and certain other stockholder approval and corporate governance requirements. In addition, we would be subject to any
special stock exchange requirements applicable to blank check companies, such as requirements that we obtain stockholder approval of our initial
business combination and that we do not enter into an initial business combination that has an acquisition value that is less than 80% of the
funds in the trust account.
You will not be entitled to protections normally
afforded to investors of many other blank check companies.
Since the net proceeds of this offering
are intended to be used to complete an initial business combination with a target business that has not been identified, we may be deemed to be a
blank check company under the United States securities laws. However, because we will have net tangible assets in excess of $5.0
million upon the 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 under the Securities Act .
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 BusinessComparison
of This Offering to Those of Blank Check Companies Subject to Rule 419.
If we seek stockholder approval of our business
combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a group of stockholders are deemed
to hold in excess of 10% of our common stock, you will lose the ability both to redeem and vote all such shares in excess of 10% of our
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, our
amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other
person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be restricted
from seeking redemption rights with respect to more than an aggregate of 10% of the shares sold in this offering. Moreover, any individual shareholder
or group will also be restricted from voting public shares in excess of an aggregate of 10% of the public shares sold in this offering, and
all additional such shares in excess of 10%, which we refer to as Excess Shares . Your inability to vote and
redeem any Excess Shares will reduce your influence over our ability to consummate a business
30
combination and you could suffer a material loss on your investment in us if you sell Excess Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Excess Shares if we consummate our business combination. And as a result, you will continue to hold that number of shares exceeding 10% and, in order to dispose of such shares, would be required to sell your stock in open market transactions, potentially at a loss.
Because of our limited resources and the significant
competition for business combination opportunities, it may be more difficult for us to complete a business combination. If we are unable to complete
our initial business combination, our public stockholders may receive only approximately $10.06 per share (or approximately $10.01 per public share if
the underwriters overallotment option is exercised in full) on our redemption, and our warrants will expire
worthless.
We expect to encounter intense
competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment
partnerships), other blank check companies and other entities, domestic and international, competing for the types of businesses we intend to acquire.
Many of these individuals and entities are well-established and have extensive experience in identifying and effecting, directly or indirectly,
acquisitions of companies operating in or providing services to various industries. Many of these competitors possess greater technical, human and
other resources, or more local industry knowledge than we do and our financial resources will be relatively limited when contrasted with those of many
of these competitors. While we believe there are numerous target businesses we could potentially acquire with the net proceeds of this offering, our
ability to compete with respect to the acquisition of certain target businesses that are sizable will be limited by our available financial resources.
This inherent competitive limitation gives others an advantage in pursuing the acquisition of certain target businesses. Any of these obligations may
place us at a competitive disadvantage in successfully negotiating a business combination. If we are unable to complete our initial business
combination, our public stockholders may receive only approximately $10.06 per share (or approximately $10.01 per share if the underwriters
over-allotment option is exercised in full) on our redemption, and our warrants will expire worthless.
If the net proceeds of this offering not being held in
the trust account, plus the amounts representing interest income earned on the trust account we are entitled to withdraw are insufficient to allow us
to operate for 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 any amounts representing interest income earned on the trust account we are entitled to withdraw, may not be sufficient to
allow us to operate for 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 amounts we are entitled to withdraw for operating
expenses will be sufficient to allow us to operate for at least the next 21 months; however, we cannot assure you of this. W e 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 are unable to fund such down payments or no
shop provisions, our ability to close a contemplated transaction could be impaired. Furthermore, 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.
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, in
part, 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 $800,000 will be available to us initially outside the trust account to fund our working capital requirements. In the event that our offering
expenses exceed our estimate of $600,000, we may fund such excess , out of the $800,000 not to be held in the trust account. In
such case,
31
the amount of funds we intend to be held outside the trust account would be decrease d by a corresponding amount. Conversely, in the event that the offering expenses (excluding the deferred underwriting discount) are less than our estimate of $600,000, the amount of funds not 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 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. T he current interest rate environment may make it more difficult for us to generate sufficient interest from the proceeds in the trust account 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.
Subsequent to our consummation of our initial business
combination, we may be required to subsequently take write-downs or write-offs, restructuring and impairment or other charges that could have a
significant negative effect on our financial condition, results of operations and our stock price, which could cause you to lose some or all of your
investment.
Even if we conduct extensive due
diligence on a target business with which we combine, we cannot assure you that this diligence will surface all material issues that may be present
inside a particular target business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that
factors outside of the target business and outside of our control will not later arise. As a result of these factors, we may be forced to later
write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in our reporting losses. Even if our
due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent
with our preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we
report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may cause
us to violate net worth or other covenants to which we may be subject as a result of assuming pre-existing debt held by a target business or by virtue
of our obtaining post-combination debt financing.
If the size of the offering is increased, the portion
of the trust account attributable to the proceeds of the sale of the private placement units 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 the private placement units purchased by our sponsor and Cowen Overseas.
Accordingly, upon our liquidation or our stockholders exercise of redemption rights, the portion of the trust account attributable to the
sale proceeds of the private placement ($4.75 million) will be spread pro rata across a greater number of public shares, which will reduce the
per-share amount payable to each public stockholder. Assuming a 20% increase in the size of this offering, the per-share redemption or
liquidation amount could decrease by as much as approximately $0.06.
If third parties bring claims against us, the proceeds
held in the trust account could be reduced and the per-share redemption amount received by stockholders may be less than approximately $10.06 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
32
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
public stockholders could be less than the approximately $10.06 per share initially held in the trust account (or approximately $10.01 per share if the
underwriters overallotment option is exercised in full), due to claims of such creditors. Pursuant to a written agreement, Messrs. Wright
and Brady, our Chairman and Chief Executive Officer, and President and Director, respectively, have agreed that they will be liable to us if and to the
extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into
a transaction agreement, reduce the amounts in the trust account to below $10.06 per share (or approximately $10.01 per share if the underwriters
overallotment option is exercised in full) except as to any claims by a third party who executed a waiver of 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, Messrs. Wright and Brady will not
be responsible to the extent of any liability for such third party claims. However, we have not asked Messrs. Wright and Brady to reserve for such
indemnification obligations and we cannot assure you that Messrs. Wright and Brady would be able to satisfy those obligations. With the exception of
Messrs. Wright and Brady as described above, none of our officers will indemnify us for claims by third parties including, without limitation, claims
by vendors and prospective target businesses.
Our directors may decide not to enforce the
indemnification obligations of Messrs. Wright and Brady, resulting in a reduction in the amount of funds in the trust account available for
distribution to our public stockholders.
In the event that the proceeds in the
trust account are reduced below $10.06 per public share (or approximately $10.01 per public share if the underwriters overallotment option is
exercised in full) and Messrs. Wright and Brady assert that they are unable to satisfy their obligations or that they have no indemnification
obligations related to a particular claim, our independent directors would determine whether to take legal action against Messrs. Wright and Brady to
enforce their indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against
Messrs. Wright and Brady to enforce their indemnification obligations to us, it is possible that our independent directors in exercising their business
judgment may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the
amount of funds in the trust account available for distribution to our public stockholders may be reduced below $10.06 per share (or approximately
$10.01 if the underwriters overallotment option is not exercised in full).
If, after we distribute the proceeds in the trust
account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, a
bankruptcy court may seek to recover such proceeds, and the members of our board of directors may be viewed as having breached their fiduciary duties
to our creditors, thereby exposing the members of our board of directors and us to claims of punitive damages.
If, after we distribute the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, any distributions
33
received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a preferential transfer or a fraudulent conveyance. As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. In addition, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or having acted in bad faith, thereby exposing itself and us to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors.
If, before distributing the proceeds in the trust
account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed, the
claims of creditors in such proceeding may have priority over the claims of our stockholders and the per-share amount that would otherwise be received
by our stockholders in connection with our liquidation may be reduced.
If, before distributing the proceeds in
the trust account to our public stockholders, we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not
dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and
subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust
account, the per-share amount that would otherwise be received by our stockholders in connection with our liquidation may be reduced.
If we are deemed to be an investment company under the
Investment Company Act, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it
difficult for us to complete a business combination.
If we are deemed to be an investment
company under the Investment Company Act, our activities may be restricted, including:
|
restrictions on the nature of our investments; and |
|
restrictions on the issuance of securities, |
each of which may make it difficult for us to complete a business
combination.
In addition, we may have imposed upon
us burdensome requirements, including:
|
registration as an investment company; |
|
adoption of a specific form of corporate structure; and |
|
reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations. |
We do not believe that our anticipated
principal activities will subject us to the Investment Company Act. The proceeds held in the trust account may be invested by the trustee only in
United States government treasury bills with a maturity of 180 days or less or in money market funds investing solely in United States Treasuries and
meeting certain conditions under Rule 2a-7 under the Investment Company Act. Because the investment of the proceeds will be restricted to these
instruments, we believe we will meet the requirements for the exemption provided in Rule 3a-1 promulgated under the Investment Company Act. If we were
deemed to be subject to the Investment Company Act, compliance with these additional regulatory burdens would require additional expenses for which we
have not allotted funds and may hinder our ability to consummate a business combination. If we are unable to complete our initial business combination,
our public stockholders may only receive approximately $10.06 per share (or approximately $10.01 per share if the underwriters overallotment
option is exercised in full) on our redemption, and our warrants will expire worthless.
Changes in laws or regulations, or a failure to comply
with any laws and regulations, may adversely affect our business, investments and results of operations.
We are subject to laws and regulations
enacted by national, regional and local governments. In particular, we will be required to comply with certain SEC and other legal requirements.
Compliance with, and monitoring of, applicable laws and regulations may be difficult, time consuming and costly. Those laws and
34
regulations and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations. In addition, a failure to comply with applicable laws or regulations, as interpreted and applied, could have a material adverse effect on our business and results of operations.
Our stockholders may be held liable for claims by third
parties against us to the extent of distributions received by them upon redemption of their shares.
Under the Delaware General Corporation
Law, or DGCL, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a
dissolution. The pro rata portion of our trust account distributed to our public stockholders upon the redemption of our public shares in the event we
do not consummate our initial business combination within 21 months from the date of this prospectus may be considered a liquidation distribution under
Delaware law. If a corporation complies with certain procedures set forth in Section 280 of the DGCL intended to ensure that it makes reasonable
provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a
90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions
are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such 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. However, it is our intention to redeem our public shares as soon as reasonably possible following our 21st
month in the event we do not consummate an initial business combination and, therefore, we do not intend to comply with those
procedures.
Because we will not be complying with
Section 280, Section 281(b) of the DGCL requires us to adopt a plan, based on facts known to us at such time that will provide for our payment of all
existing and pending claims or claims that may be potentially brought against us within the 10 years following our dissolution. However, because we are
a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire,
the only likely claims to arise would be from our vendors (such as lawyers, investment bankers, etc.) or prospective target businesses. If our plan of
distribution complies with Section 281(b) of the DGCL, any liability of stockholders with respect to a liquidating distribution is limited to the
lesser of such stockholders pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would
likely be barred after the third anniversary of the dissolution. We cannot assure you that we will properly assess all claims that may be potentially
brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them (but no more)
and any liability of our stockholders may extend beyond the third anniversary of such date. Furthermore, if the pro rata portion of our trust account
distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial business combination
within 21 months from the date of this prospectus is not considered a liquidation distribution under Delaware law and such redemption distribution is
deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could then be six years after the
unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution.
We do not currently intend to hold an annual meeting of
stockholders until after our consummation of a business combination and you will not be entitled to any of the corporate protections provided by such a
meeting.
We do not currently intend to hold an
annual meeting of stockholders until after we consummate a business combination, and thus may not be in compliance with Section 211(b) of the DGCL,
which requires an annual meeting of stockholders be held for the purposes of electing directors in accordance with a 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.
35
We are not registering the shares of common stock
issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place
when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants and causing such warrants to
expire worthless.
We are not registering the shares of
common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the
warrant agreement, we have agreed to use our best efforts to file a registration statement under the Securities Act covering such shares and maintain a
current prospectus relating to the common stock issuable upon exercise of the warrants, and to use our best efforts to take such action as is necessary
to register or qualify for sale, in those states in which the warrants were initially offered by us, the shares issuable upon exercise of the warrants,
to the extent an exemption is not available. We cannot assure you that we will be able to do so. If the shares issuable upon exercise of the warrants
are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis, under certain
circumstances specified in the warrant agreement. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated
to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified
under the securities laws of the state of the exercising holder, unless an exemption is available. In no event will we be required to issue cash,
securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants
under the Securities Act or applicable state securities laws. If the issuance of the shares upon exercise of the warrants is not so registered or
qualified, the holder of such warrant shall not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such
event, holders who acquired their warrants as part of a purchase of units will have paid the full unit purchase price solely for the shares of common
stock included in the units. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register
or qualify the underlying shares of common stock for sale under all applicable state securities laws.
The grant of registration rights to our sponsor and
Cowen Overseas 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 Cowen Overseas and their permitted transferees can
demand that we register the founder shares, placement units, placement shares and placement warrants, and the shares of common stock issuable upon
exercise of the placement warrants, as the case may be. The registration rights will be exercisable with respect to the founder shares, the placement
units, placement shares and the placement warrants and the shares of common stock issuable upon exercise of such placement warrants at any time
commencing upon the date that such shares are released from transfer restrictions (as discussed herein under Principal
StockholdersTransfers of Founder Shares and Placement Units (including securities contained therein)). We will bear the cost of
registering these securities. If such persons exercise their registration rights in full, there will be an additional 2,975,000 shares of common stock
(assuming no exercise of the underwriters overallotment option) and up to 475,000 shares of common stock issuable on exercise of the placement
warrants eligible for trading in the public market. The registration and availability of such a significant number of securities for trading in the
public market may have an adverse effect on the market price of our common stock. In addition, the existence of the registration rights may make our
initial business 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 and Cowen Overseas are registered.
36
Because we have not selected a particular segment within
the provision and/or outsourcing of government services industry , or any other industry or any specific target businesses with which to pursue a
business combination, you will be unable to ascertain the merits or risks of any particular target business
operations.
We will seek to consummate a business
combination with an operating company in the United States in the provision and/or outsourcing of government services industry, but may also
pursue acquisition opportunities in other business sectors or geographic regions, except that we will not, under our amended and restated certificate
of incorporation, be permitted to effectuate a business combination with another blank check company or similar company with nominal operations.
Because we have not yet identified or approached any specific target business with respect to a business combination, there is no basis at this time
for you 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 initial business combination , we may be affected by numerous
risks inherent in the business operations of the entity with which we combine. For example, if we combine with 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.
We may seek investment opportunities in sectors outside
of the provision and/or outsourcing of government services industry (which may or may not be outside of our managements area of
expertise).
Although we intend to focus on
identifying business combination candidates in the provision and/or outsourcing of government services industry, we will consider a business
combination outside of the provision and/or outsourcing of government services industry if a business combination candidate is presented to us and we
determine that such candidate offers an attractive investment opportunity for our company. In the event we elect to pursue an investment outside
of the provision and/or outsourcing of government services industry, our managements expertise related to that industry would not
be directly applicable to its evaluation or operation, and the information contained herein regarding the government services industry
might not be relevant to an understanding of the business that we elect to acquire.
Although we identified general criteria and guidelines
that we believe are important in evaluating prospective target businesses, we may enter into a business combination with a target does not meet such
criteria and guidelines, and as a result, the target business with which we enter into our initial business combination may not have attributes
entirely consistent with our general criteria and guidelines.
Although we have identified specific
criteria and guidelines for evaluating prospective target businesses, it is possible that a target business with which we enter into a business
combination will not have all of these positive attributes. If we consummate a business combination with a target that does not meet some or all of
these guidelines, such combination may not be as successful as a combination with a business that does meet all of our general criteria and guidelines.
In addition, if we announce a prospective business combination with a target that does not meet our general criteria and guidelines, a greater number
of stockholders may exercise their redemption rights, which may make it difficult for us to meet any closing condition with a target business that
requires us to have a minimum net worth or a certain amount of cash. In addition, if stockholder approval of the transaction is required by law, or we
decide to obtain stockholder approval for business or other reasons, it may be more difficult for us to attain stockholder approval of our initial
business combination if the target business does not meet our general criteria and guidelines. If we are unable to complete our initial business
combination, our public stockholders may only receive approximately $10.06 per share (or approximately $10.01 per share if the underwriters
overallotment option is exercised in full) on our redemption, and our warrants will expire worthless.
37
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 our initial 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.
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
target in our initial business combination is fair to our stockholders from a financial point of view.
Unless we consummate our
initial business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm that
the price we are paying is fair to our 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 76,550,000 (assuming that the underwriters have not exercised their
overallotment option) authorized but unissued shares of common stock available for issuance and not reserved for issuance upon exercise of outstanding
warrants. We may issue a substantial number of additional shares of common or preferred stock to complete our initial business combination or under an
employee incentive plan after consummation of our initial business combination. The issuance of additional shares of common or preferred
stock:
|
may significantly dilute the equity interest of investors in this offering; |
|
may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock; |
|
could cause a change in control if a substantial number of shares 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 |
38
|
may adversely affect prevailing market prices for our units, common stock and/or warrants. |
Resources could be wasted in researching acquisitions
that are not consummated, which could materially adversely affect subsequent attempts to locate and acquire or merge with another business. If we are
unable to complete our initial business combination, our public stockholders may only receive approximately $10.06 per share (or approximately $10.01
per share if the underwriters overallotment option is exercised in full) on our redemption, and our warrants will expire
worthless.
We anticipate that the investigation of
each specific target business and the negotiation, drafting, and execution of relevant agreements, disclosure documents, and other instruments will
require substantial management time and attention and substantial costs for accountants, attorneys and others. If we decide not to complete a specific
initial business combination, the costs incurred up to that point for the proposed transaction likely would not be recoverable. Furthermore, if we
reach an agreement relating to a specific target business, we may fail to consummate our initial business combination for any number of reasons
including those beyond our control. Any such event will result in a loss to us of the related costs incurred which could materially adversely affect
subsequent attempts to locate and acquire or merge with another business. In addition, in the event we seek stockholder approval of our business
combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, our amended and restated
certificate of incorporation will permit the release to us from the trust account amounts necessary to purchase in the open market up to 15% of
the shares sold in this offering. If such business combination is not consummated, these purchases would have the effect of reducing the funds
available in the trust account for future business combinations. If we are unable to complete our initial business combination, our public stockholders
may only receive approximately $10.06 per share (or approximately $10.01 per share if the underwriters overallotment option is exercised in full)
on our redemption, and our warrants will expire worthless.
We are dependent upon our officers and directors and
their loss could adversely affect our ability to operate.
Our operations are dependent upon a
relatively small group of individuals and, in particular, our officers and directors. We believe that our success depends on the continued service of
our officers and directors, at least until we have consummated a business combination. In addition, our officers and directors are not required to
commit any specified amount of time to our affairs and, accordingly, will have conflicts of interest in allocating management time among various
business activities, including identifying potential business combinations and monitoring the related due diligence , and these conflicts of interest
that may not be resolved in our favor . 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.
39
Our key personnel may negotiate employment or consulting
agreements with a target business in connection with our initial business combination. These agreements may provide for them to receive
compensation following our initial 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 our initial 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 our initial 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 our initial 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 our initial 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 our initial 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 expected . 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.
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 our initial business combination cannot be ascertained at this time. Although we
contemplate that certain members of an acquisition candidates management team will remain associated with us following our
initial business combination, it is possible that members of the management of an acquisition candidate will not wish to remain in place. The
loss of an acquisition targets key personnel could negatively impact the operations and profitability of our post-combination
business.
Our officers and directors will allocate their time to
other businesses thereby causing conflicts of interest in their determination as to how much time to devote to our affairs. This conflict of interest
could have a negative impact on our ability to consummate a business combination.
Our executive officers and directors
are not required to, and will not, commit their full time to our affairs, which may result in a conflict of interest in allocating their time between
our operations and the search for a business combination on the one hand and their other businesses on the other hand. We do not intend to have any
full-time employees prior to the consummation of our business combination. Each of our executive officers is engaged in several other business
endeavors for which he is entitled to substantial compensation and our executive officers are not obligated to contribute any specific number of hours
per week to our affairs.
Our independent directors also serve as
officers and board members for other entities. If our executive officers and directors other business affairs require them to devote
substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs
which may have a negative impact on our ability to consummate our business combination.
40
Our officers and directors may in the future become
affiliated with entities engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of
interest in allocating their time and determining to which entity a particular business opportunity should be presented.
Following the completion of this
offering and until we consummate our initial business combination, we intend to engage in the business of identifying and combining with one or
more businesses. Our executive officers and directors may in the future become, affiliated with entities that are engaged in a similar business.
Certain of our directors serve as officers and board members for other entities. As a result, our directors may compete with us for attractive
opportunities for business combinations. In each case, our directors existing directorships or other responsibilities may give rise to
contractual or fiduciary obligations that take priority over any obligation owed to us.
Our amended and restated certificate of
incorporation will provide that the doctrine of corporate opportunity, or any other analogous doctrine, will not apply against us or any of our
officers or directors or in circumstances that would conflict with any fiduciary duties or contractual obligations they may have as of the date of this
prospectus. See ManagementConflicts of Interest. Accordingly, business opportunities that may be attractive to the entities described
above will not be presented to us unless such entities have declined to accept such opportunities.
Accordingly, our officers and directors
may have conflicts of interest in determining to which entity a particular business opportunity should be presented. We cannot assure you that these
conflicts will be resolved in our favor or that a potential target business would not be presented to another entity prior to its presentation to
us.
Our officers, directors, security holders and their
respective affiliates may have competitive pecuniary interests that conflict with our interests.
We have not adopted a policy that
expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary or financial interest in any
investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. In fact, we may enter into a business
combination with a target business that is affiliated with our sponsor or with one or more of our directors or officers, although we do
not intend to do so , and we do not 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 officers and directors also serve as officers and board members for other entities. Such entities may compete with us for
business combination opportunities. Our sponsor, officers and directors are not currently aware of any specific opportunities for us to consummate a
business combination with any entities with which they are affiliated, and there have been no preliminary discussions concerning a business combination
with any such entity or entities. Although we will not be specifically focusing on, or targeting, any transaction with any affiliated entities, we
would pursue such a transaction if we determined that such affiliated entity met our criteria for a business combination as set forth in Proposed
BusinessEffecting our initial business combinationSelection 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 of our securities , 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.
41
We may partner, submit a joint bid or enter into a
similar transaction with our sponsor or an affiliate in connection with our pursuit of, or in connection with, a business
combination.
We are not prohibited from partnering,
submitting a joint bid or entering into any similar transaction with our sponsor or an affiliate of our sponsor in our pursuit of a business
combination. Although we currently have no plans to partner with our sponsor or an affiliate of our sponsor, we could pursue such a transaction if we
determined that such affiliated entity met our criteria for a business combination as set forth in Proposed BusinessEffecting our initial
business combinationSelection 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 our sponsor or an affiliate of our sponsor, the terms of the
business combination may not be as advantageous to our public stockholders as they would be absent any conflicts of interest. Additionally, were we
successful in consummating such a transaction with our sponsor or an affiliate of our sponsor, conflicts could invariably arise from our
sponsors, or an affiliate of our sponsor s interest in maximizing returns to its members or limited partners, which may be at
odds with the strategy of the post-business combination company or not in the best interests of the stockholders of the post-business
combination company. Any or all of such conflicts could materially reduce the value of your investment, whether before or after
our initial business combination.
Since our sponsor will lose its entire investment in us
if a business combination is not consummated and certain of 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.
Our sponsor purchased an aggregate of
2,875,000 shares of our common stock for an aggregate of $25,000, or approximately $0.0087 per share, up to 375,000 of which will be forfeited if the
underwriters overallotment is not exercised in full and all of which will be worthless if we do not consummate our
initial business combination. In addition, our sponsor has committed to purchase 300,000 placement units at a price of $10.00 per unit (totaling
$3.0 million) in a private placement that will occur simultaneously with the consummation of this offering, which will also be worthless if we do not
consummate our initial business combination. A number of founder shares in an amount equal to 2.5% of our shares of common stock issued
and outstanding after the consummation of this offering and expiration of the underwriters overallotment option are subject to forfeiture
by our sponsor in the event the last sales price of our stock does not equal or exceed $11.50 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. An additional number of founder shares in an amount equal to 2.5% of our shares of common stock issued and outstanding
after the consummation of this offering and expiration of the underwriters overallotment option (excluding the placement shares) will be subject
to forfeiture by our sponsor in the event the last sales price of our stock does not equal or exceed $13.50 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like) for at least one period of 20 trading days within any 30-trading day period within 60
months following the closing of our initial business combination. None of the placement shares are subject to forfeiture. The personal and
financial interests of certain of our officers and directors , directly or as members of our sponsor, may influence their motivation in
identifying and selecting a target business combination and completing an initial business combination. Consequently, the discretion of our officers
and directors, in identifying and selecting a suitable target business combination may result in a conflict of interest when determining whether the
terms, conditions and timing of a particular initial business combination are appropriate and in the best interest of our public
stockholders.
Our lead underwriter and Cowen Overseas will have
an interest in the consummation of our initial business combination.
Cowen Overseas has committed to
purchase 175,000 placement units at $10.00 per unit (totaling $1.75 million) in a private placement that will occur simultaneously with the
consummation of this offering. Cowen Overseas has agreed to waive its redemption rights with respect to the placement shares contained within the
placement units (i) in connection with the consummation of our initial business combination , (ii) if we fail to
42
consummate our initial business combination within 21 months from the date of this prospectus , (iii) in connection with an expired or unwithdrawn tender offer, and (iv) upon our liquidation prior to the expiration of the 21 month period . These placement units (including the component securities therein) will be worthless if we do not consummate our initial business combination. Further, Cowen Overseas is an affiliate of Cowen and Company, LLC, the lead underwriter of this offering, and Cowen and Company, LLC and the other underwriters, if any will also lose their deferred underwriting discount of $3.125 million (or $3.6 million if the underwriters overallotment option is exercised in full) if we do not complete our initial business combination. Therefore it is anticipated that Cowen and we will have an interest in the consummation of our initial business combination and it may be expected that Cowen Overseas will vote its placement shares in favor of a proposed business combination.
We may issue notes or other debt securities, or
otherwise incur substantial debt, to complete a business combination, which may adversely affect our leverage and financial condition and thus
negatively impact the value of our stockholders investment in us.
Although we have no commitments as of
the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial
debt to complete our initial business combination. The incurrence of debt could have a variety of negative effects,
including:
|
default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
|
acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
|
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand; |
|
our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding; |
|
our inability to pay dividends on our common stock; |
|
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes; |
|
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
|
increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and |
|
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt. |
We do not have a maximum debt
leverage ratio or a policy with respect to how much debt we may incur. To the extent that the amount of our debt increases, the impact of the
negative effects listed above may also increase.
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
and the private placement will provide us with approximately $100.6 million (or approximately $115.19 million if the underwriters
overallotment option is exercised in full) that we may use to complete a business combination (excluding the approximately $3.125 million,
or
43
approximately $3.6 million if the overallotment is exercised in full, deferred underwriting discount being held in the trust account).
We may effectuate an initial business
combination with a single target business or multiple target businesses simultaneously. However, we may not be able to effectuate a business
combination with more than one target business because of various factors, including the existence of complex accounting issues and the requirement
that we prepare and file pro forma financial statements with the SEC that present operating results and the financial condition of several target
businesses as if they had been operated on a combined basis. By consummating an initial business combination with only a single entity, our lack of
diversification may subject us to numerous economic, competitive and regulatory developments. Further, we would not be able to diversify our operations
or benefit from the possible spreading of risks or offsetting of losses, unlike other entities which may have the resources to complete several
business combinations in different industries or different areas of a single industry. Accordingly, the prospects for our success may
be:
|
solely dependent upon the performance of a single business, property or asset, or |
|
dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
This lack of diversification may
subject us to numerous economic, competitive and regulatory developments, any or all of which may have a substantial adverse impact upon the particular
industry in which we may operate subsequent to an initial business combination.
We may attempt to simultaneously consummate business
combinations with multiple prospective targets, which may hinder our ability to consummate an initial business combination and give rise to increased
costs and risks that could negatively impact our operations and profitability.
If we determine to simultaneously
acquire several businesses that are owned by different sellers, we will need for each of such sellers to agree that our purchase of its business is
contingent on the simultaneous closings of the other business combinations, which may make it more difficult for us, and delay our ability, to complete
the initial business combination. With multiple business combinations, we could also face additional risks, including additional burdens and costs with
respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the
subsequent assimilation of the operations and services or products of the acquired companies in a single operating business. If we are unable to
adequately address these risks, it could negatively impact our profitability and results of operations.
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 expected , 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 expected , if at all.
Furthermore, the relative lack of information about a private company may hinder our ability to properly assess the value of such a company in
relation to public company comparables, in which case we may pay too much to acquire a private company in our initial business
combination.
If we effect our initial business
combination with a business located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our
operations.
We may effect an initial business
combination with a business located outside of the United States. If we do, we would be subject to any special considerations or risks associated with
businesses operating in the targets home jurisdiction, including any of the following:
|
rules and regulations or currency conversion or corporate withholding taxes on individuals; |
44
|
tariffs and trade barriers; |
|
regulations related to customs and import/export matters; |
|
longer payment cycles; |
|
tax issues, such as tax law changes and variations in tax laws as compared to the United States; |
|
currency fluctuations and exchange controls; |
|
challenges in collecting accounts receivable; |
|
cultural and language differences; |
|
employment regulations; |
|
crime, strikes, riots, civil disturbances, terrorist attacks and wars; and |
|
deterioration of political relations with the United States. |
We may not be able to adequately address these additional risks.
If we are unable to do so, our operations might suffer.
If we effect our initial business
combination with a business located outside of the United States, the laws applicable to such business will likely govern all of our material
agreements and we may not be able to enforce our legal rights.
If we effect our initial
business combination with a business located outside of the United States, the laws of the country in which such business operates will govern almost
all of the material agreements relating to its operations. The target business may not be able to enforce any of its material agreements or
enforce remedies for breaches of those agreements in that jurisdiction. The system of laws and the enforcement of existing
laws in such jurisdiction may not be as certain in implementation and interpretation as in the United States. The inability to enforce or obtain a
remedy under any of our future agreements could result in a significant loss of business, business opportunities or capital. Additionally, if we
acquire a business located outside of the United States, it is likely that substantially all of our assets would be located outside of the United
States and some of our officers and directors might reside outside of the United States. As a result, it may not be possible for investors in the
United States to enforce their legal rights, to effect service of process upon our directors or officers or to enforce judgments of United States
courts predicated upon civil liabilities and criminal penalties of our directors and officers under federal securities laws.
If a business we acquire exports products to foreign
countries, and we are unable to maintain required licenses, we may be prevented from exporting our products, adversely affecting our financial
condition and results of operations.
We may be required to obtain export
licenses to the extent we develop or manufacture products in certain countries. We may not be successful in obtaining or maintaining the licenses and
other authorizations required to export our products from applicable governmental authorities. Our failure to obtain or maintain any required export
license or authorization could hinder our ability to sell our products, adversely affecting our financial condition and results of
operations.
We may not be able to maintain control of a target
business after our initial business combination. We cannot provide assurance that, upon loss of control of a target business, new management will
possess the skills, qualifications or abilities necessary to profitably operate such business.
We may structure a business combination
to acquire less than 100% of the equity interests or assets of a target business, but we will only consummate such business combination if we (or any
entity that is a successor to us in a business combination) acquire a majority of the outstanding voting securities or assets of the
target or otherwise is not required to register as an investment company under the Investment Company Act. Even though we will own a
majority interest in the target, our stockholders prior to our initial business
45
combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target and to us in the business combination transaction. For example, we could pursue a transaction in which we issue a substantial number of new shares of common stock in exchange for all of the outstanding capital stock of a target. In this case, we would acquire a 100% interest in the target. However, as a result of the issuance of a substantial number of new shares of common stock, our stockholders immediately prior to such transaction could own less than a majority of our outstanding shares of common stock subsequent to such 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 number of our stockholders do not agree.
Since we have no specified percentage
threshold for redemption in our amended and restated certificate of incorporation, our structure is different in this respect from the structure that
has been used by many blank check companies. Many blank check companies would not be able to consummate a business combination if the holders of the
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 has typically been between 19.99% and 39.99%. As a result, many
blank check companies have been unable to complete business combinations because the amount of shares voted by their public stockholders electing
conversion exceeded the maximum conversion threshold pursuant to which such company could proceed with a business combination. As a result, we may be
able to consummate a business combination even though a substantial number of our public stockholders do not agree with the transaction
and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection
with our business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to us or our
sponsor, officers, directors, advisors or their affiliates. However, in no event will we redeem our public shares in an amount that would cause our net
tangible assets to be less than $5,000,001. Furthermore, the redemption threshold may be further limited by the terms and conditions of our initial
business combination. In such case, we would not proceed with the redemption of our public shares and the related initial business combination,
and instead may search for an alternate business combination.
The exercise price for the public warrants is higher
than in many similar blank check company offerings in the past, and, accordingly, the warrants are more likely to expire
worthless.
The exercise price of the warrants is
higher than is typical in many similar blank check companies. Historically, the exercise price of a warrant was generally a fraction of the purchase
price of the units in the initial public offering. The exercise price for our public warrants is $11.50 per share. As a result, the warrants are less
likely to ever be in the money and more likely to expire worthless.
In order to effectuate a business combination, blank
check companies have, in the recent past, amended various provisions of their charters and modified governing instruments. We cannot assure you that we
will not seek to amend our amended and restated certificate of incorporation or governing instruments in a manner that will make it easier for us to
consummate a business combination that our stockholders may not support.
In order to effectuate a business
combination, blank check companies have, in the recent past, amended various provisions of their charters and modified governing instruments. For
example, blank check companies have amended the definition of initial 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.
46
P rovisions of our amended and restated
certificate of incorporation that relate to our pre-business combination activity (and corresponding provisions of the agreement governing the release
of funds from our trust account) may be amended with the approval of at least 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. A mendment of these provisions requires
approval by between 90% and 100% of the companys public stockholders in many cases . Our amended and restated certificate of incorporation
provides that provisions related to pre-business combination activity may be amended if approved by 65% of our stockholders, and corresponding
provisions of the trust agreement governing the release of funds from our trust account may be amended if approved by holders of 65% of our
outstanding common stock . 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 may only receive approximately
$10.06 per share (or approximately $10.01 per share if the underwriters overallotment option is exercised in full) on our redemption, and our
warrants will expire worthless.
Although we believe that the net
proceeds of this offering and the private placement held in the trust account (excluding the deferred underwriting discount of approximately
$3.125 million, or approximately $3.6 million if the overallotment option is exercised in full) 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 that amount proves to be insufficient, either because of the size of our initial business combination, the
depletion of the available net proceeds in search of a target business, the obligation to repurchase for cash a significant number of shares from
stockholders who elect redemption in connection with our initial business combination or the terms of negotiated transactions to purchase shares in
connection with our initial business combination, we may be required to seek additional financing or to abandon the proposed business combination. We
cannot assure you that such financing will be available on acceptable terms, if at all. The current economic environment has made it especially
difficult for companies to obtain acquisition financing. To the extent that additional financing proves to be unavailable when needed to consummate our
initial business combination, we would be compelled to either restructure the transaction or abandon that particular initial business combination and
seek an alternative target business candidate. If we are unable to complete our initial business combination, our public stockholders may only receive
approximately $10.06 per share (or approximately $10.01 per share if the underwriters overallotment option is exercised in full) on our
redemption, and our warrants will expire worthless. In addition, even if we do not need additional financing to consummate our initial business
combination, we may require such financing to fund the operations or growth of the target business. The failure to secure additional financing could
have a material adverse effect on the continued development or growth of the target business. None of our officers, directors or stockholders is
required to provide any financing to us in connection with or after a business combination.
Our sponsor controls a substantial interest in us and
thus may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not
support.
Upon closing of this offering, our
sponsor will own shares equal to 21.58 % of our issued and outstanding shares of common stock ( which includes 300,000
placement shares) assuming it does not purchase any units in this offering . Our sponsor has committed to purchase 300,000 placement
shares contained within the
47
placement units, in a private placement that will occur simultaneously with the consummation of this offering. Accordingly, it may exert a substantial influence on actions requiring a stockholder vote, potentially in a manner that you do not support, including amendments to our amended and restated certificate of incorporation. If our sponsor purchases units in this offering or if we or our sponsor purchase any additional shares of common stock in the aftermarket or in privately negotiated transactions, this would increase their control. Neither our sponsor nor, to our knowledge, any of our officers or directors, has any current intention to purchase additional securities, other than as disclosed in this prospectus. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our common stock. In addition, our board of directors, whose members were elected by our sponsor, is and will be divided into three classes, each of which will generally serve for a term of three years with only one class of directors being elected in each year. It is unlikely that there will be an annual meeting of stockholders to elect new directors prior to the consummation of our initial business combination, in which case all of the current directors will continue in office at least until 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, you should anticipate that our sponsor will continue to exert control at least until the consummation of our initial business combination.
Our sponsor paid an aggregate of $25,000, or
approximately $0.0087 per founder share and, accordingly, you will experience immediate and substantial dilution from the purchase of our units
including shares 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 86.5% or $8.65 per share (the difference between the pro forma net tangible book value per share of $1.35 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 Stock Transfer & Trust Company, as warrant agent, and us. The warrant agreement
provides that the terms of the warrants may be amended without the consent of any holder to cure any ambiguity or correct any defective provision, but
requires the approval by the holders of at least 65% of the then outstanding public warrants to make any change that adversely affects the interests of
the registered holders. Accordingly, we may amend the terms of the warrants in a manner adverse to a holder if holders of at least 65% of the then
outstanding public warrants approve of such amendment. Although our ability to amend the terms of the warrants with the consent of at least 65% of the
then outstanding warrants is unlimited, examples of such amendments could be amendments to, among other things, increase the exercise price of the
warrants, shorten the exercise period or decrease the number of shares of our common stock purchasable upon exercise of a warrant.
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 (excluding any placement warrants held by our sponsor and Cowen Overseas or their permitted transferees ) at any time
after they become exercisable and prior to their expiration, at $0.01 per warrant, provided that the last reported sales price of the common stock
equals or exceeds $17.50 per share for any 20 trading days within a 30 trading-day period ending on the third business day prior to the date we
send 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
48
an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the warrants and a current prospectus relating to them is available. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force you: (i) to exercise your warrants and pay the exercise price therefor at a time when it may be disadvantageous for you to do so, (ii) to sell your warrants at the then-current market price when you might otherwise wish to hold your warrants or (iii) to accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of your warrants.
Our warrants may have an adverse effect on the market
price of our common stock and make it more difficult to effectuate a business combination.
In this offering, we will be
issuing warrants to purchase up to 10,000,000 shares of common stock (11,500,000 if the underwriters overallotment option is exercised in
full) as part of the public units . In addition, on the closing date of this offering, we will sell 300,000 placement units to our
sponsor and 175,000 placement units to Cowen Overseas , with each unit consisting of one placement share and a placement warrant to purchase one
share of common stock. If our sponsor or one of its affiliates or certain of our officers and directors makes any loans to
fund working capital deficiencies or finance transaction costs in connection with an intended initial business combination up to
$750,000 of those loans may be convertible into up to an additional 1,000,000 warrants (at $0.75 per warrant) of the
post-business combination entity having the same terms as the placement warrants at the option of the lender . To the extent we issue shares
of common stock to effect a business combination, 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
combination. Therefore, our warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring the target
business.
The placement warrants (and any
warrants to be issued to our sponsor upon its conversion of up to $750,000 in working capital loans) are identical to the warrants sold as part of the
units in this offering except that, so long as they are held by their initial holders or their 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 (as described
in more detail below under Principal StockholdersTransfers of Founder Shares and Placement Units (including securities contained
therein)) , be transferred, assigned or sold by the holders until 30 days after the consummation of our initial business combination and (iii)
they may be exercised by the holders on a cashless basis.
The determination of the offering price of our units and
the size of this offering is more arbitrary than the pricing of securities and size of an offering of an operating company in a particular industry.
You may have less assurance, therefore, that the offering price of our units properly reflects the value of such units than you would have in a typical
offering of an operating company.
Prior to this offering there has been
no public market for any of our securities. The public offering price of the units and the terms of the warrants were negotiated between us and the
underwriters. In determining the size of this offering, management held customary organizational meetings with representatives of the underwriters,
both prior to our inception and thereafter, with respect to the state of capital markets, generally, and the amount the underwriters believed they
reasonably could raise on our behalf. Factors considered in determining the size of this offering, prices and terms of the units, including the common
stock and warrants underlying the units, include:
|
the history and prospects of companies whose principal business is the acquisition of other companies; |
|
prior offerings of those companies; |
|
our prospects for acquiring an operating business at attractive values; |
49
|
a review of debt to equity ratios in leveraged transactions; |
|
our capital structure; |
|
an assessment of our management and their experience in identifying operating companies; |
|
general conditions of the securities markets at the time of this offering; and |
|
other factors as were deemed relevant. |
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 an
active 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. The lack of a
public trading market for our shares may have a negative effect on your ability to sell your shares in the future and it also may have a
negative effect on the price, if any, for which you may be able to sell your shares. As a result an investment in our securities may be illiquid
in nature and investors could lose some or all of their investment in our company. 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.
If we hold a stockholder vote to
approve our initial business combination, 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. If
w e make a tender offer for our public shares, we will include the same financial statement disclosure in our tender offer
documents that is 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 offer and sale of the securities
qualified or in which that offer and sale is exempt from qualification. Although resales of our securities are exempt from state registration
requirements, state securities commissioners who view blank check offerings unfavorably may attempt to hinder resales in their
states.
We have applied to register our
securities, or will rely on an exemption from registration, to offer and sell the units to retail customers only in Colorado, Delaware, the District of
Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Louisiana, Minnesota, Missouri, New York, Rhode Island, South Carolina, South Dakota, Utah,
Virginia, Wisconsin, and Wyoming. In the states where we have applied to have the units registered for sale, we will not sell the units to retail
customers in these states unless and until such registration is effective. If you are not an institutional investor (as defined in the laws
and regulations of the applicable jurisdiction) you must be a resident of one of these jurisdictions to purchase our securities in the offering. We may
offer and sell the units to institutional investors in every state except Idaho in this offering
50
pursuant to an exemption provided for sales to these investors under the Blue Sky laws of various states. The definition of an institutional investor varies from state to state but generally includes financial institutions, broker-dealers, banks, insurance companies and other qualified entities. Under the National Securities Markets Improvement Act of 1996, states are pre-empted from regulating transactions in certain categories of securities that are designated as covered securities. Since we will file periodic and annual reports under the Securities Exchange Act of 1934, our public securities will be considered covered securities. Therefore, the resale of the units and, once they become separately transferable, the public shares and public warrants comprising the public units are exempt from state registration requirements. However, each state retains jurisdiction to investigate and bring enforcement actions with respect to fraud or deceit, or unlawful conduct by a broker or dealer, in connection with the sale of securities. Although we are not aware of a state having used these powers to prohibit or restrict resales of securities issued by blank check companies generally, certain state securities commissioners view blank check companies unfavorably and might use these powers, or threaten to use these powers, to hinder the resale of securities of blank check companies in their state. For a complete discussion of the Blue Sky state securities laws and registrations affecting this offering, please see the section entitled UnderwritingState Blue Sky Information herein.
Compliance obligations under the Sarbanes-Oxley Act of
2002 may make it more difficult for us to effectuate a business combination, require substantial financial and management resources, and increase the
time and costs of completing an acquisition.
Section 404 of the Sarbanes-Oxley Act
of 2002, or the Sarbanes-Oxley Act, requires that we evaluate and report on our system of internal controls and requires that we have such system of
internal controls audited beginning with our Annual Report on Form 10-K for the year ending December 31, 2012. 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.
Risks Related to the Provision and/or Outsourcing of
Government Services Industries
We intend to focus our search on target
businesses focused on the provision and/or outsourcing of government services industries. We believe that the following risks will apply to us
following the consummation of our initial business combination with a target business focused on the provision and/or outsourcing of government
services industries. If we elect to pursue an investment outside of the provision and/or outsourcing of government services industries, the disclosure
below would not be relevant to an understanding of the business that we elect to acquire.
51
If we are unable to respond to the technological, legal,
financial or other changes in the provision and/or outsourcing of government services industries and changes in customers requirements and
preferences, we will not be able to effectively compete with other businesses in these industries.
If we are unable, for technological,
legal, financial or other reasons, to adapt in a timely manner to changing market conditions, customer needs or regulatory requirements, we could lose
customers. Changes in customer requirements and preferences, the introduction of new products and services embodying new technologies, and the
emergence of new industry standards and practices could render the existing products of the business we acquire obsolete. Our success will depend, in
part, on our ability to:
|
enhance products and services; |
|
anticipate changing customer requirements by designing, developing, and launching new products and services that address the increasingly sophisticated and varied needs of customers; |
|
respond to technological advances and emerging industry standards and practices on a cost-effective and timely basis; and |
|
respond to changing regulatory requirements in a cost effective and timely manner. |
The development of additional products
and services involves significant technological and business risks and requires substantial expenditures and lead time. If we fail to introduce
innovative products or services to the market on a cost-efficient and timely basis, or adapt our products to new technologies, we will not be able to
effectively compete with other businesses focused on the provision and/or outsourcing of government services industries. Even if we are able to
introduce new products or adapt our products to new technologies, our products may not gain acceptance among our customers.
The market in certain segments of the provision and/or
outsourcing of government services industries is still not fully developed, and, if we acquire a business operating in one of those segments, and if
the market for our products does not expand as we expect after acquiring a business, there could be a material adverse effect on our financial
condition and results of operations.
The market in certain segments of the
provision and/or outsourcing of government services industries, including outdoor perimeter protection, video analytics and digital video, is still
emerging. If we acquire a business in one of these segments, our growth will be dependent on, among other things, the size and pace at which the
markets for our products or services develop. If the market for our products or services decreases, remains constant or grows more slowly
than we anticipate, there could be a material adverse effect on our financial condition and results of operations.
It is difficult to forecast the timing of revenues in
industries involved with the provision and/or outsourcing of government services, and it is likely that any business we acquire will have significant
variations in revenues from period to period.
It is difficult to forecast the timing
of revenues in industries involved with the provision and/or outsourcing of government services because the development period for a customized system
or solution may be lengthy, customers often need a significant amount of time to evaluate products before purchasing them and, in the case of
governmental customers, sales are dependent on budgetary and other bureaucratic processes. The period between initial customer contact and a purchase
by a customer varies greatly, and could be a year or more. During the evaluation period, customers may defer or scale down proposed orders of products
or systems for various reasons, including:
|
changes in budgets and purchasing priorities; |
|
a reduced need to upgrade existing systems; |
|
deferrals in anticipation of enhancements or new products; |
|
introduction of products by competitors; and |
52
|
lower prices offered by competitors. |
Organized labor action or occupational health and safety
laws and regulations could have a material adverse effect on our operations.
The security industry has been the
subject of campaigns to increase the number of unionized employees. Although relationships between management and employees of acquired businesses may
be good, assurances can not be given on the likelihood that organized labor action may occur. Such organized labor actions and occupational health and
safety laws could have a material adverse effect on our operations.
Failure to successfully integrate multiple acquired
businesses in industries involved with the provision and/or outsourcing of government services could have a material adverse effect on the
companys results.
If we acquire a portfolio of businesses
in the same sector of the provision and/or outsourcing of government services industries, failure to integrate multiple acquired businesses in the
security industry successfully or manage their growth effectively could have a material adverse effect on the companys results.
We may be unable to protect or enforce the intellectual
property rights of any target businesses that we acquire.
We may acquire a target business whose
business is dependent upon its proprietary technology and intellectual property. Accordingly, the protection of trademarks, trade names, copyrights,
patents, domain names, trade dress, and trade secrets may be critical to the ability of our target business to compete with its competitors. In such a
case, our target business will likely rely on a combination of copyright, trademark, and trade secret laws and contractual restrictions to protect any
proprietary technology and rights that it may acquire. Despite its efforts to protect proprietary technology and rights, the business acquisition
candidate may not be able to prevent misappropriation of its proprietary rights or deter independent development of technologies that compete with the
business we acquire. Competitors may file patent applications or obtain patents and proprietary rights that block or compete with its patents.
Litigation may be necessary in the future to enforce our target businesss intellectual property rights, to protect its trade secrets, or to
determine the validity and scope of the proprietary rights of others. It is also possible that third parties may claim our target business has
infringed their patent, trademark, copyright or other proprietary rights. Claims or litigation, with or without merit, could result in substantial
costs and diversions of resources, either of which could have a material adverse effect on the competitive position and business of our target
business. Depending on the target business that we acquire, we may be required to protect trademarks, patents, and domain names in an increasing number
of jurisdictions, a process that is expensive and may not be successful in every location. With respect to certain proprietary rights, such as
trademarks and copyrighted materials, of the target business that we will acquire, the target business may have entered into license agreements in the
past and may continue to enter into such agreements in the future. These licensees may take actions that diminish the value of such target
businesss proprietary rights or cause harm to such target businesss reputation.
We may not be able to hire or retain the qualified
personnel needed by businesses operating in industries involved with the provision and/or outsourcing of government
services.
Businesses operating in industries
involved with the provision and/or outsourcing of government services typically utilize personnel with specific skills and experience, including those
with backgrounds in such diverse fields as engineering, information technology, systems integration and government program management. Any target
business with which we effect our initial business combination would likely face intense competition for competent professionals and qualified
personnel in these industries. Following our initial business combination, we may not be successful in attracting, hiring and retaining qualified
people at favorable rates or at all. If we are unable to hire and retain qualified personnel as and when needed, our business could be materially
adversely affected.
Our target business may face operating hazards,
including product liability or other liability risks, that could result in large claims against us.
Our target business may face operating
hazards, including product liability and other liability risks related to our products. Its products may be relied upon in emergencies, such as rescue
and public safety situations that involve physical harm, and in situations involving potential loss or damage to property. Manufacturing
or
53
maintenance defects or an improper use could cause systems to fail. A product liability claim, or other legal claims based on theories including personal injury or wrongful death, made against our target business could adversely affect its financial condition and results of operations.
Although we expect to have insurance
coverage against operating hazards to the extent deemed prudent by our management and to the extent insurance is available, no assurance can be given
that the nature and amount of such insurance will be sufficient to fully indemnify us against liabilities arising out of pending and future claims and
litigation. The insurance will have deductibles or self-insured retentions and will contain certain coverage exclusions. The insurance will not cover
damages from breach of contract by us or based on alleged fraud or deceptive trade practices. Insurance and customer agreements do not provide complete
protection against losses and risks, and our financial condition and results of operations could be adversely affected by unexpected claims not covered
by insurance. Furthermore, our target business, if engaged in the sale of so-called anti-terrorism technologies, may not be able to avail
itself of the liability protections intended to be afforded by the Support Anti-Terrorism by Fostering Effective Technologies Act of 2002, or the
SAFETY Act.
An acquisition strategy that involves purchasing a
foreign the provision and/or outsourcing of government services business could involve greater administrative costs and require additional time to
consummate than the purchase of a United States security firm.
Given the global nature of the
provision and/or outsourcing of government services industries, we will pursue a merger and acquisition strategy that considers target businesses in
and outside of the United States. If we target a foreign business for an acquisition, we would likely incur additional legal, accounting, due diligence
and travel expenses.
Risks Related to Government Contracts
We may acquire a target business that
contracts directly with federal, state or local governments with respect to security or defense or a combination thereof. Alternatively, our target
business may act as a subcontractor, supplier or partner with another party or parties that contract with the government. The key risk factors related
to government contracts are discussed below.
Our target business could be adversely affected by
significant changes in the contracting or fiscal policies of governments and governmental entities.
The revenues of our target business may
be substantially derived from contracts with federal, state and local governments and government agencies and subcontracts under federal government
prime contracts and we believe that the growth of our target business may depend on our procurement of government contracts either directly or through
prime contractors. Accordingly, changes in government contracting policies or government budgetary constraints could directly affect the financial
performance of our target business. Among the factors that could adversely affect our target business are:
|
changes in fiscal policies or decreases in available government funding; |
|
changes in government programs or applicable requirements; |
|
changes in the presidential administration or composition of Congress; |
|
the adoption of new laws or regulations or changes to existing laws and regulations; |
|
changes in political or social attitudes with respect to homeland security or defense issues; and |
|
potential delays or changes in the government appropriations process. |
These and other factors could cause
governments and governmental agencies, or prime contractors that may use our target business as a subcontractor, to reduce their purchases under
existing contracts, to exercise their rights to terminate contracts at-will or to abstain from exercising options to renew contracts, any
of
54
which could have a material adverse effect on the business, financial condition and results of operations of our target business.
Government contracts typically must comply with complex
procurement laws and regulations which may impose added costs on our target businesss operations.
If we acquire a target business that
contracts directly with the federal government, our target business will likely have to comply with and will be affected by laws and regulations
relating to the formation, administration and performance of federal government contracts, which affect how they do business with their customers and
may impose added costs on their business. For example, our target business or parties with which it does business will likely be subject to the Federal
Acquisition Regulations and all supplements (including those issued by the Department of Homeland Security), which comprehensively regulate the
formation, administration and performance of federal government contracts, and to the Truth-in-Negotiations Act, which requires certification and
disclosure of cost and pricing data in connection with contract negotiations. If a government review or investigation uncovers improper or illegal
activities, our target business may be subject to civil and criminal penalties and administrative sanctions, including termination of contracts,
forfeiture of profits, suspension of payments, fines and suspension or debarment from doing business with federal government agencies, which could
materially adversely affect our target businesss operations, prospects, financial condition or operating results. In addition, our target
business or parties with which it does business will likely be subject to industrial security regulations of the Department of Defense and other
federal agencies that are designed to safeguard against foreign access to classified information. We may also be liable for systems and services
failure and security breaks with respect to the solutions, services, products, or other applications we sell to the government. The government may
reform its procurement practices or adopt new contracting rules and regulations, including cost-accounting standards, that could be costly to satisfy
or that could impair our target businesss ability to obtain new contracts.
Government contracts are subject to audit and cost
adjustments, which could reduce revenue of our target business, disrupt its business or otherwise adversely affect its results of
operations.
Government agencies routinely audit and
investigate government contracts and government contractors administrative processes and systems. These agencies review performance on contracts,
pricing practices, cost structure and compliance with applicable laws, regulations and standards. They also review the contracting parties
compliance with regulations and policies and the adequacy of internal control systems and policies, including the purchasing, property, estimating,
compensation and management information systems of our target business. Any costs found to be improperly allocated to a specific contract will not be
reimbursed and any such costs already reimbursed must be refunded. Moreover, if any of the administrative processes and systems are found not to comply
with requirements, our target business may be subjected to increased government oversight and approval that could delay or otherwise adversely affect
its ability to compete for or perform contracts. Therefore, an unfavorable outcome to a government audit could cause the actual results of our target
business to differ materially from those anticipated. If an investigation uncovers improper or illegal activities, our target business may be subject
to civil and criminal penalties and administrative sanctions, including termination of contracts, forfeitures of profits, suspension of payments, fines
and suspension or debarment from doing business with the government. In addition, our target business could suffer serious harm to its reputation if
allegations of impropriety were made against it. Each of these results could cause the actual results of our target business to differ materially from
those anticipated.
Our target business may derive significant revenue from
contracts awarded through a competitive bidding process, and the failure to compete effectively in this procurement environment could have a material
adverse effect on our target businesss prospects, financial condition and results of operations.
Government contracts are awarded
through a competitive bidding process. A material portion of our target businesss operations in the future may be awarded through competitive
bidding. The competitive bidding process presents a number of risks, including the following:
|
bids may be made on programs before the completion of their design, which may result in unforeseen difficulties and cost overruns; |
55
|
substantial cost and managerial time and effort to prepare bids may be expended on proposals for contracts that may not be won; |
|
it may be difficult to estimate accurately the resources and cost structure that will be required to service any contract won; and |
|
expense and delay may be incurred if competitors protest or challenge awards of contracts to our target business in competitive bidding, and any such protest or challenge could result in the resubmission of bids on modified specifications, or in the termination, reduction, or modification of the awarded contract. |
Budgetary pressures and changes in the
procurement process have caused many government clients to increasingly purchase goods and services through indefinite delivery or indefinite quantity
(IDIQ) contracts, General Services Administration (GSA) schedule contracts and other government-wide acquisition contracts.
These contracts, some of which are awarded to multiple contractors, may result in increased competition and pricing pressure causing our target
business to make sustained post-award efforts to realize revenue under each relevant contract. Our target business may not be able to successfully sell
its services or otherwise increase revenues under these contracts. In addition, the net effect of such programs may reduce the number of bidding
opportunities available to our target business. Moreover, even if our target business is qualified to work on a particular new contract, it may not be
awarded business because of the governments policy and practice of maintaining a diverse contracting base. Our target businesss failure to
compete effectively in this procurement environment could have a material adverse effect on our target businesss prospects, financial condition
and results of operations.
Our target business may be required to comply with
complex procurement laws and regulations, including export restrictions, Buy America provisions or other regulatory barriers that may
prevent realization of the target businesss full potential either domestically or internationally and could lead to increased operating
costs.
Our target business may be required to
comply with and may be affected by laws and regulations relating to the formation, administration and performance of federal government contracts,
which affect how it does business with its customers and may impose added costs on its business. For example, our target business or parties with which
it does business may be subject to the FAR and all supplements (including those issued by the Department of Homeland Security and the Department of
Defense), which comprehensively regulate the formation, administration and performance of federal government contracts, and to the
Truth-in-Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with contract negotiations. In addition,
our target business or parties with which it does business may be subject to industrial security regulations of the Department of Defense and other
federal agencies that are designed to safeguard against foreigners access to classified information. Our target business may also be liable for
systems and services failures and security breaks with respect to the solutions, services, products, or other applications it sells to the government.
If our target business was to come under foreign ownership, control or influence, its federal government customers could terminate or decide not to
renew their contracts, which could impair the ability of our target business to obtain new contracts. The government may reform its procurement
practices or adopt new contracting rules and regulations, including cost-accounting standards, that could be costly to satisfy or that could impair the
ability of our target business to obtain new contracts.
As the security environment continues
to evolve, there may be additional Congressional or other regulatory action that could adversely affect the ability of the target business to pursue
business opportunities overseas. The same could be true if the target business is internationally based and must deal with future Buy
America provisions for federal government procurement.
Governments may increasingly regulate
products that monitor and record voice, video and data transmissions over public communications networks, which are integral features of many products
and services associated with the provision and/or outsourcing of government services. The adoption of new laws or regulations governing the use of
products or changes made to existing laws or regulations could cause a decline in the use of our products and could result in increased expenses for
the business we acquire, particularly if we are required to modify or redesign our products to accommodate these new or changing laws or
regulations.
56
The loss or impairment of a target businesss
relationship with the federal government and its agencies could adversely affect our ability to generate revenues and achieve profitability following
an acquisition.
Our target business may derive a
substantial portion of its revenue from work performed under United States government contracts, either directly or as a subcontractor or supplier to a
party performing under such a contract. If our target business or other business with which we had any such relationship was suspended, debarred, or
prohibited from contracting with the federal government or state governments, or if any agencies of the federal government ceased doing business with
it or significantly decreased the amount of business done with it, our target businesss prospects, financial condition and results of operations
could be significantly impaired.
Our target business may regularly employ subcontractors
to assist in satisfying its contractual obligations. If these subcontractors fail to adequately perform their contractual obligations, our target
businesss prime contract performance and its ability to obtain future business could be materially and adversely
affected.
The performance by our target business
of government contracts may involve the issuance of subcontracts to other businesses upon which our target business may rely to perform all or a
portion of the work it is obligated to deliver to customers. There is a risk that our target business may have disputes with subcontractors concerning
a number of issues including the quality and timeliness of work performed by the subcontractor. A failure by one or more of our target businesss
subcontractors to satisfactorily deliver on a timely basis the agreed-upon supplies or perform the agreed-upon services may materially and adversely
affect the ability of our target business to perform its obligations as a prime contractor. In extreme cases, such subcontractor performance
deficiencies could result in the government terminating our target businesss contract for default. A default termination could expose our target
business to liability for excess costs of reprocurement by the government and have a material adverse effect on the ability of our target business to
compete for future contracts.
If our target business cannot obtain the necessary
security clearances, it may not be able to perform classified work for the government and the financial conditions and results of operations of our
target business may suffer.
Certain government contracts may
require the facilities of our target business and some of its employees to maintain security clearances. If our target business loses or is unable to
obtain required security clearances, the customer can terminate the contract or decide not to renew it upon its expiration. As a result, to the extent
our target business cannot obtain the required security clearances for its employees working on a particular contract, our target business may not
derive the revenue anticipated from the contract, which, if not replaced with revenue from other contracts, could seriously harm its financial
condition and results of operations.
Security breaches of sensitive government systems could
result in the loss of customers and negative publicity.
Our target business may offer products
and services involving managing and protecting information involved in national security and other sensitive government functions. A security breach
involving our target businesss products or services could cause serious harm to its business, could result in negative publicity and could
prevent our target business from having further access to such critically sensitive information or other similarly sensitive areas for other
governmental customers.
57
Certain statements contained in this
prospectus, which reflect our current views with respect to future events and financial performance, and any other statements of a future or
forward-looking nature, constitute forward-looking statements for the purposes of federal securities laws. 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:
|
our ability to complete our initial business combination; |
|
our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
|
our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination, as a result of which they would then receive expense reimbursements; |
|
our potential ability to obtain additional financing to complete our initial business combination; |
|
our pool of prospective target businesses; |
|
the ability of our officers and directors to generate a number of potential investment opportunities; |
|
our public securities potential liquidity and trading; |
|
the lack of a market for our securities; |
|
the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; or |
|
our financial performance following this offering. |
The forward-looking statements
contained in this prospectus are based on our current expectations and beliefs concerning future developments and their potential effects on us. There
can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of
risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward- looking statements. These risks and uncertainties include, but are not limited to, those
factors described under the heading Risk Factors . 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.
58
We are offering 10,000,000 units at an
offering price of $10.00 per unit. We estimate that the net proceeds of this offering together with the funds we will receive from the sale of the
placement units ( all of which will be deposited into the trust account) will be used as set forth in the following
table.
Without Overallotment Option |
Overallotment Option Exercised in Full |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Gross
proceeds |
||||||||||
Proceeds from
units offered to the public(1) |
$ | 100,000,000 | $ | 115,000,000 | ||||||
Proceeds from
private placement |
4,750,000 | 4,750,000 | ||||||||
Total gross
proceeds |
$ | 104,750,000 | $ | 119,750,000 | ||||||
Estimated
offering expenses(2) |
||||||||||
Underwriting
commissions (2.750% of gross proceeds from units offered to public, excluding deferred portion)(3) |
$ | 2,750,000 | $ | 3,162,500 | ||||||
Legal fees
and expenses |
250,000 | 250,000 | ||||||||
Printing and
engraving expenses |
40,000 | 40,000 | ||||||||
Accounting
fees and expenses |
45,000 | 45,000 | ||||||||
SEC fees
|
13,179 | 13,179 | ||||||||
FINRA fees
|
12,000 | 12,000 | ||||||||
Blue Sky fees
and expenses |
30,000 | 30,000 | ||||||||
Travel and
roadshow |
75,000 | 75,000 | ||||||||
Directors and
officers insurance |
125,000 | 125,000 | ||||||||
Miscellaneous
expenses |
9,821 | 9,821 | ||||||||
Total
offering expenses |
$ | 3,350,000 | $ | 3,762,500 | ||||||
Proceeds
after offering expenses |
$ | 101,400,000 | $ | 115,987,500 | ||||||
Held in trust
account |
100,600,000 | 115,187,500 | ||||||||
% of
public offering proceeds held in trust (4) |
100.6 | % | 100.2 | % | ||||||
Not held in
trust account |
$ | 800,000 | $ | 800,000 |
The following table shows the use of
the $800,000 of net proceeds of the offering not held in the trust account and the interest earned on amounts in the trust account that
may be released to us to cover operating expenses(4).
Amount |
Percentage |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Use of net
proceeds not held in trust and approximate amounts available from interest income earned on the trust
account( 5 )( 6 ) |
||||||||||
Due diligence
(excluding accounting and legal due diligence) of prospective target(s) |
$ | 200,000 | 19.0 | % | ||||||
Legal and
accounting expenses attendant to the due diligence investigations, structuring and negotiations of an initial business combination |
400,000 | 38.1 | % | |||||||
Legal and
accounting fees relating to SEC reporting obligations |
150,000 | 14.3 | % | |||||||
Administrative services and support payable to our sponsors (up to $10,000 per month for up to 21 months) |
210,000 | 20.0 | % | |||||||
Reserve for
liquidation expenses |
30,000 | 2.9 | % | |||||||
Other
miscellaneous expenses |
60,000 | 5.7 | % | |||||||
Total
|
$ | 1,050,000 | 100.0 | % |
(1) |
Includes amounts payable to public stockholders who properly redeem their shares in connection with the consummation of our initial business combination. |
59
(2) |
In addition, a portion of the offering expenses have been pre paid from the proceeds of $175,000 of a loan from our sponsor, as described in this prospectus. This loan will be repaid upon consummation of this offering out of the $600,000 of the proceeds of this offering devoted to the expenses of this offering not included in the trust account . In the event that offering expenses are less than set forth in this table, any such amounts will be used for post-closing working capital expenses. |
(3) |
The underwriters have agreed to defer approximately $3.125 million of their underwriting commissions discounts (or approximately $3.6 million if the underwriters overallotment option is exercised in full), which equals 3.125% 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 $3.125 million, which constitutes the underwriters deferred commissions (or approximately $3.6 million if the underwriters overallotment option is exercised in full) will be paid to the underwriters from the funds held in the trust account, and the remaining funds will be released to us and can be used to pay all or a portion of the purchase price of the business or businesses with which our initial business combination occurs or for general corporate purposes, including payment of principal or interest on indebtedness incurred in connection with our initial business combination, to fund the purchases of other companies or for working capital. |
(4) |
All of the proceeds of the private placement and a portion of proceeds of the offering (being $95,850,000 of the gross proceeds from this offering, including approximately $3.125 million (or $110,437,500 of the proceeds of the offering and approximately $3.6 million in proceeds of the private placement , if the underwriters overallotment option is exercised in full) of deferred underwriting discounts, will be placed in a trust account with Continental Stock Transfer & Trust Company. |
( 5 ) |
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 $0.4 million as a result of the current interest rate environment. Based on the current interest rate environment, we would expect approximately $250,000 (after payment of taxes owed on such interest income) to be available to us from interest earned on the funds held in the trust account; however, we can provide no assurances regarding this amount. This estimate assumes an interest rate of 0.25% per annum based upon current yields of securities in which the trust account may be invested. |
( 6 ) |
Includes estimated amounts that may also be used in connection with our initial business combination 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) and commitment fees for financing. |
A total of approximately $100.6 million
(or approximately $115.19 million if the underwriters over- allotment option is exercised in full) of the aggregate net proceeds from this
offering and all of the private placement , including approximately $3.125 million (or approximately $3.6 million if the underwriters
overallotment option is exercised in full) of the deferred underwriting discount , will be placed in a trust account with
Continental Stock Transfer & Trust Company acting as trustee and will be invested only in United States government treasury bills with a maturity
of 180 days or less or in money market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under the
Investment Company Act. Except for any interest income released to us for working capital purposes, the payment of taxes or dissolution expenses, as
discussed below, and any amounts necessary to purchase up to 15% of our public shares if we seek stockholder approval of our business combination as
will be permitted under our amended and restated certificate of incorporation, none of the funds held in the trust account will be
60
released, subject to the requirements of law, until the earlier of (i) the consummation of our initial business combination; (ii) the expiration or termination of any tender offer conducted by us in connection with a proposed business combination not otherwise withdrawn; (iii) the redemption of our public shares if we are unable to consummate a business combination within 21 months from the date of this prospectus, subject to applicable law; or (iv) otherwise upon our liquidation, in the event our management resolves to liquidate the trust account and ceases to pursue the consummation of a business combination prior to the expiration of the 21 month period (for example, if our management determines in its business judgment that it is unlikely that we would be able to consummate a business combination prior to the expiration of the 21 month period) .
We may increase the initial amount held
in the trust account from approximately $10.06 per public share prior to the effectiveness of the registration statement of which this prospectus forms
a part. In such case, we expect that the increase would be funded by an increase in the amount of the deferral by the underwriters of the underwriting
discount payable in connection with this offering, an increase in the number of placement units to be purchased by our sponsor or
Cowen Overseas at $10.00 per unit and/or a reduction from $800,000 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, or Cowen Overseas purchases additional placement units. We do not intend to reduce the initial amount to be held in the trust
account.
The net proceeds held in the trust
account may be used as consideration to pay the sellers of a target business with which we ultimately complete a business combination. If our initial
business combination is paid for using stock or debt securities, or not all of the funds released from the trust account are used for payment of the
purchase price in connection with our business combination, we may apply the cash released from the trust account that is not applied to the purchase
price for general corporate purposes, including for maintenance or expansion of operations of acquired businesses, the payment of principal or interest
due on indebtedness incurred in consummating the initial business combination, to fund the purchase of other companies or for working
capital.
We believe that amounts not held in
trust plus interest income on the amount in the trust account that may be released to fund 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, 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. To the extent that the underwriters exercise
their overallotment option, the interest income we may withdraw from the trust account will proportionately increase. In addition, if the size
of this offering is increased or decreased, it would result in a proportionate increase or decrease in the amount of interest earned in the
trust account. We will use any such 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 earned and released to us would facilitate our ability 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 The Chart Group L.P., an affiliate of our sponsor, a total of $10,000 per month for
office space, administrative services and secretarial support. This arrangement is being agreed to by The Chart Group L.P. for our benefit and is not
intended to provide The Chart Group L.P. 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 consummation of our initial business combination or our liquidation, we will cease paying
these monthly fees.
As of the date of this prospectus, our
sponsor has loaned to us a total of $175,000 to be used for a portion of the expenses of this offering. These loans are non-interest bearing, unsecured
and are due at the
61
earlier of March 31, 2012 or the closing of this offering. The loan will be repaid upon the closing of this offering out of the proceeds of this offering.
In addition, in order to finance
transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers
and directors may, but are not obligated to, loan us funds as may be required. If we consummate an initial business combination, we would repay such
loaned amounts. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the trust
account to repay such loaned amounts but no proceeds from our trust account would be used to repay such loaned amounts. Up to $750,000 of such loans
may be convertible into warrants of the post business combination entity at a price of $0.75 per warrant at the option of the lender. The warrants
would be identical to the placement warrants. The terms of such loans by our officers and directors, if any, have not been determined and no written
agreements exist with respect to such loans.
Unlike many blank check companies, if
we seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant
to the tender offer rules, prior to the consummation of a business combination, our amended and restated certificate of incorporation will permit the
release to us from the trust account of amounts necessary to purchase up to 15% of the shares sold in this offering (1,500,000 shares, or 1,725,000
shares if the underwriters overallotment 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 record date of the stockholder meeting to approve our initial business
combination. Purchases of our public shares 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. Due to the relatively sporadic public
trading of securities of similarly structured blank check companies, it is unlikely that we would be able to make such purchases under Rule 10b-18
under the Exchange Act which provides a non-exclusive safe harbor for such market purchases, and still accomplish the intended goals of such
purchases as described below. Therefore, we do not intend to comply with Rule 10b-18 and may make purchases outside of the requirements of Rule 10b-18
as we see fit. Purchases outside the safe harbor could result in our liability for manipulation under Section 9(a)(2) and Rule 10b-5 of
the Exchange Act. Any purchases we make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account
(approximately $10.06 per share or approximately $10.01 per share if the underwriters overallotment option is exercised in full). We
may purchase any or all of the 1,500,000 shares (or 1,725,000 shares if the underwriters overallotment 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 .
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 or their affiliates may also purchase shares in privately negotiated transactions either prior to or following the consummation of our initial
business combination. Neither we nor our directors, officers, advisors or their affiliates will make any such purchases when we or they are in
possession of any material non-public information not disclosed to the seller. Although we do not currently anticipate paying any premium purchase
price for such public shares, in the event we do, the payment of a premium may not be in the best interest of those stockholders not
receiving
62
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 number of shares that could be acquired by us or our affiliates, or the price we or they may pay, if we hold a stockholder vote.
In no event will we redeem our public
shares in an amount that would cause our net tangible assets to be less than $5,000,001. Furthermore, the redemption threshold may be further limited
by the terms and conditions of our initial business combination. In such case, we would not proceed with the redemption of our public shares or the
business combination, and instead may search for an alternate business combination.
A public stockholder will be entitled
to receive funds from the trust account only upon the earlier to occur of: (i) the consummation of our initial business combination; (ii) the
expiration or termination of any tender offer conducted by us in connection with a proposed business combination not otherwise withdrawn; (iii) the
redemption of our public shares if we are unable to consummate a business combination within 21 months from the date of this prospectus, subject to
applicable law; or (iv) otherwise upon our liquidation, in the event our management resolves to liquidate the trust account and ceases to pursue the
consummation of a business combination prior to the expiration of the 21 month period (for example, if management determines in our business
judgment that it is unlikely that we would be able to consummate a business combination prior to the expiration of the 21 month period) . In
no other circumstances will a public stockholder have any right or interest of any kind to or in the trust account.
Our sponsor and Cowen
Overseas (as applicable) has each agreed to waive their redemption rights with respect to its founder shares and placement
shares (i) in connection with the consummation of a business combination, (ii) if we fail to consummate our initial business combination
within 21 months from the date of this prospectus, (iii) in connection with an expired or unwithdrawn tender offer, and (iv) upon our
liquidation prior to the expiration of the 21 month period . However, if our sponsor or any of our officers, directors or affiliates ,
or Cowen Overseas, 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 our initial business combination within the required time period.
63
We have not paid any cash dividends on
our common stock to date and do not intend to pay cash dividends prior to the completion of an initial business combination. The payment of cash
dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to
completion of an initial business combination. The payment of any cash dividends subsequent to an initial business combination will be within the
discretion of our board of directors at such time. In addition, our board of directors is not currently contemplating and does not anticipate declaring
any stock dividends in the foreseeable future, except if we increase the size of the offering pursuant to Rule 462(b) under the Securities Act, in
which case we will effect a stock dividend immediately prior to the consummation of the offering in an amount such that our sponsors ownership of
founder shares (but excluding any placement shares) is maintained at 20.0% of the issued and outstanding shares of our common stock upon the
consummation of this offering. Further, if we incur any indebtedness in connection with a business combination, our ability to declare dividends may be
limited by restrictive covenants we may agree to in connection therewith.
64
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 warrants contained in the placement units, 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 placement 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 9, 2011, our net tangible
book value was a deficiency of $(18,932), or approximately ($0.01) per share of common stock. After giving effect to the sale of 10,000,000 shares of
common stock included in the units we are offering by this prospectus, the sale of the placement units and the deduction of underwriting commissions
and estimated expenses of this offering, our pro forma net tangible book value at August 9, 2011, would have been $5,000,001 or 1.35 per share,
representing an immediate increase in net tangible book (as decreased by the value of the approximately 9,274,311 shares of common stock that may be
redeemed for cash and assuming no exercise of the underwriters overallotment option) value of $1.36 per share to sponsor as of the date of this
prospectus and an immediate dilution of $8.65 per share or 86.5% 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 placement
warrants:
For purposes of presentation, we have
reduced our pro forma net tangible book value after this offering (assuming no exercise of the underwriters overallotment option) by $93,299,566
because holders of up to approximately 9,274,311 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 any amounts representing interest earned on the trust account, less any interest released to us for working capital purposes, the
payment of taxes or dissolution expenses), divided by the number of shares of common stock sold in this offering.
Public
offering price |
$ | 10.00 | ||||||||
Net tangible
book value before this offering |
$ | (0.01 | ) | |||||||
Increase
attributable to new investors |
1.36 | |||||||||
Pro forma net
tangible book value after this offering |
1.35 | |||||||||
Dilution to
new investors |
$ | 8.65 |
65
The following table sets forth
information with respect to our sponsor and the public stockholders:
Total shares(1) |
Total consideration |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Number |
% |
Amount |
% |
Average price per share(1) |
|||||||||||||||||||
Sponsor
(founder shares) |
2,500,000 | 19 | % | $ | 25,000 | 0 | % | $ | .01 | ||||||||||||||
Placement
shares |
475,000 | 4%(2 | ) | 4,750,000 | 5 | % | $ | 10.00 | |||||||||||||||
Public
stockholders |
10,000,000 | 77 | % | 100,000,000 | 95 | % | $ | 10.00 | |||||||||||||||
Total
|
12,975,000 | 100 | % | $ | 104,775,000 | 100 | % |
(1) |
Assumes no exercise of the underwriters overallotment option and corresponding forfeiture of 375,000 founder shares by our sponsor as a result thereof. |
(2) |
Assumes no value is attributed to the placement warrants contained in the placement units. |
Numerator: |
||||||||||
Net tangible
book value before this offering |
$ | (18,932 | ) | |||||||
Net proceeds
from this offering and sale of placement units |
101,400,000 | |||||||||
Offering
costs incurred in advance and excluded from net tangible book value before this offering |
43,499 | |||||||||
Less:
Deferred underwriting commission |
(3,125,000 | ) | ||||||||
Less:
Proceeds held in the trust account which may be redeemed for cash |
(93,299,566 | ) | ||||||||
$ | 5,000,001 | (2) | ||||||||
Denominator: |
||||||||||
Shares of
common stock outstanding prior to this offering(1) |
2,875,000 | |||||||||
Shares of
common stock included in the units offered |
10,000,000 | |||||||||
Placement
units issued |
475,000 | |||||||||
Less: Shares
subject to forfeiture assuming no over allotment option exercised |
(375,000 | ) | ||||||||
Less: Shares
subject to redemption to maintain net tangible assets of $5,000,001 (2) |
(9,274,311 | ) | ||||||||
$ | 3,700,689 |
(1) |
Assumes no exercise of the underwriters overallotment option and that 375,000 initial shares of common stock have been forfeited by our sponsor as a result thereof. |
(2) |
Computed as follows: $93,299,566 (assuming the redemption threshold is $5,000,001) divided by redemption value per share ($10.06); redemption value per share is computed as follows: Proceeds held in the trust account ($100,600,000) divided by total public shares (10,000,000). |
66
The following table sets forth our
capitalization at August 9, 2011 and as adjusted to give effect to the filing of our amended and restated certificate of incorporation, the sale of our
units and the placement units and the application of the estimated net proceeds derived from the sale of such securities:
August 9, 2011 |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Actual |
As Adjusted(1) |
||||||||||
Deferred
underwriting commissions |
$ | | $ | 3,125,000 | |||||||
Notes payable
to affiliate(2) |
175,000 | | |||||||||
Common stock,
subject to redemption(3) |
| 93,299,566 | |||||||||
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; 2,875,000 shares issued and outstanding; 12,975,000 shares issued and outstanding, as
adjusted |
288 | 1,298 | (4) | ||||||||
Additional
paid-in capital |
24,712 | 4,999,136 | |||||||||
Deficit
accumulated during the development stage |
(433 | ) | (433 | ) | |||||||
Total
stockholders equity |
24,567 | 5,000,001 | |||||||||
Total
capitalization |
$ | 199,567 | $ | 101,424,567 |
(1) |
Includes the $4.75 million we will receive from the sale of the placement units. |
(2) |
Notes payable to affiliate is a promissory note issued in the amount of $175,000 to our sponsor. The note is non-interest bearing and is payable on the earlier of March 31, 2012 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 any amounts representing interest earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or dissolution expenses, subject to the limitations described herein whereby our net tangible assets will be maintained at a minimum of $5,000,001 and any limitations (including but not limited to cash requirements) created by the terms of the proposed business combination. Each of our sponsor and Cowen Overseas (as applicable) has agreed with respect to the founder shares and the placement shares contained within the placement units to waive their respective redemption rights (i) in connection with the consummation of our initial business combination , (ii) if we fail to consummate our initial business combination within 21 months from the date of this prospectus , (iii) in connection with an expired or unwithdrawn tender offer, and (iv) upon our liquidation prior to the expiration of the 21 month period. . |
(4) |
Assumes the overallotment option has not been exercised and a corresponding forfeiture of an aggregate of 375,000 founder shares held by our sponsor, but no forfeiture of the founder earn out shares. |
67
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, 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 placement units, 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 9, 2011, we had $200,000 in cash and deferred offering costs of $43,499. Further, we expect to continue to incur
significant costs in the pursuit of
68
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 at the earliest the consummation 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 and the private placement of placement units.
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 loans from our sponsor in the amount of $175,000. We estimate
that the net proceeds from: (i) the sale of the units in this offering, after deducting offering expenses of approximately $600,000 and $800,000 not
to be held in the trust account that we expect to set aside for working capital , but including deferred underwriting commissions of approximately
$3.125 million (or approximately $3.6 million if the underwriters overallotment option is exercised in full), and (ii) the sale of 300,000
placement units to our sponsor and 175,000 placement units to Cowen Overseas for an aggregate purchase price of $4.75 million, will be
approximately $100.6 million (or approximately $115.19 million if the underwriters overallotment option is exercised in full), and will be held
in the trust account. The remaining $800,000 will not be held in the trust account. In the event that our offering expenses exceed our estimate of
$600,000, we may fund such excess with funds from the $800,000 not to be held in the trust account. In such case, the amount of funds we intend to be
held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering expenses are less than our estimate
of $600,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding amount.
We intend to use substantially all of
the funds held in the trust account, including any amounts representing interest earned on the trust account (less amounts released to us for working
capital purposes or to pay taxes and deferred underwriting commissions) to consummate our initial business combination. We may use interest earned on
the trust account for purposes of working capital, to pay taxes and dissolution expenses. We estimate our annual franchise tax obligations, based on
the number of shares of our common stock authorized and outstanding after the completion of this offering to be $180,000. Our annual income tax
obligations will depend on the amount of interest and other income earned on the amounts held in the trust account. To the extent that our capital
stock or debt is used, in whole or in part, as consideration to consummate our initial business combination, the remaining proceeds held in the trust
account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth
strategies.
Prior to the consummation of our
initial business combination, we will have available to us the $800,000 of proceeds held outside the trust account and all interest income on the
balance of the trust account (less amounts released to us to pay taxes or dissolution expenses) that will be released to us to fund our working capital
requirements. Should this amount be insufficient, our sponsor or an affiliate of our sponsor may fund our additional working capital requirements or
finance transaction costs, as necessary. However, such parties are under no obligation to do so. We will use these funds, including any loans from our
sponsor or an affiliate of our sponsor, 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. We will depend in
part on interest being earned on the proceeds held in the trust account to provide us with additional working capital
69
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.
As stated above, in order to fund
working capital deficiencies or 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 income earned on such proceeds. Up to 750,000 of such loans may be convertible into warrants of the post business
combination entity at a price of $0.75 per warrant at the option of the lender. The warrants would be identical to the placement warrants. The terms of
such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans.
We expect our primary liquidity
requirements during the period between the closing of this offering the consummation of our initial business combination to include approximately
$400,000 for legal, accounting, due diligence, travel and other expenses associated with structuring, negotiating and documenting successful business
combinations; $200,000 for due diligence (excluding accounting and legal due diligence) of prospective target(s); $210,000 for office space,
administrative services and support payable to The Chart Group L.P., an affiliate of our sponsor, representing $10,000 per month for up to 21 months;
$150,000 for legal and accounting fees related to regulatory reporting requirements; and $60,000 for other miscellaneous expenses. We may have
additional expenses that may be incurred by us in connection with this offering over and above the amounts listed in the section of this prospectus
entitled Use of Proceeds.
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, 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, 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, 2012. 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
70
assess the internal controls of our target business or businesses prior to the consummation of our initial business combination and, if necessary, to implement and test additional controls as we may determine are necessary in order to state that we maintain an effective system of internal controls. A target business may not be in compliance with the provisions of the Sarbanes-Oxley Act regarding the adequacy of internal controls. Many small and mid-sized target businesses we may consider for a business combination may have internal controls that need improvement in areas such as:
|
staffing for financial, accounting and external reporting areas, including segregation of duties; |
|
reconciliation of accounts; |
|
proper recording of expenses and liabilities in the period to which they relate; |
|
evidence of internal review and approval of accounting transactions; |
|
documentation of processes, assumptions and conclusions underlying significant estimates; and |
|
documentation of accounting policies and procedures. |
Because it will take time, management
involvement and perhaps outside resources to determine what internal control improvements are necessary for us to meet regulatory requirements and
market expectations for our operation of a target business, we may incur significant expense in meeting our public reporting responsibilities,
particularly in the areas of designing, enhancing, or remediating internal and disclosure controls. Doing so effectively may also take longer than we
expect, thus increasing our exposure to financial fraud or erroneous financing reporting.
Once our 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
and the private placement , including amounts in the trust account, will be invested in United States government treasury bills with a maturity of
180 days or less or in money market funds investing solely in United States Treasuries and 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
On August 9, 2011, our sponsor
purchased an aggregate of 2,875,000 founder shares for an aggregate purchase price of $25,000, or approximately $0.0087 per share. The members of our
sponsor are Kendall Family Investments, The Chart Group L.P., an affiliate of Christopher D. Brady, our president and director, and Joseph Wright, our
chairman and chief executive officer.
Joseph Wright, our chairman and chief
executive officer, serves as a director of the Cowen Group, Inc., the parent company of Cowen and Company, LLC, the lead underwriter in the offering.
Peter A. Cohen, one of our directors, serves as chief executive officer and chairman of the board of the Cowen Group, Inc. Cowen Overseas Investment
LP, the entity that has committed to purchase 175,000 placement units in a private placement that will occur simultaneously with the closing of this
offering, is an indirect, wholly-owned subsidiary of Cowen Group, Inc. and an affiliate of Cowen and Company, LLC.
As of the date of this prospectus, our
sponsor has loaned to us a total of $175,000 for payment of offering expenses. These loans are non-interest bearing, unsecured and are due at the
earlier of March 31, 2012 or the closing of this offering. These loans will be repaid upon the closing of this offering out of the 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 The Chart Group L.P. a monthly fee of $10,000 for office space and general administrative services.
71
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 income earned
thereon. Up to $750,000 of such loans may be convertible into warrants of the post business combination entity at a price of $0.75 per warrant at the
option of the lender. The warrants would be identical to the placement warrants. The terms of such loans by our officers and directors, if any, have
not been determined and no written agreements exist with respect to such loans.
Our sponsor has committed to purchase
300,000 placement units and Cowen Overseas has committed to purchase 175,000 placement units ($4.75 million in the aggregate) in a private placement
that will occur simultaneously with the closing of this offering. Each placement warrant entitles the holder to purchase one share of our common stock
at $11.50 per share. Our sponsor and Cowen Overseas will be permitted to transfer the placement units held by them solely to their respective officers
and directors, and other persons or entities affiliated with such entities, but the transferees receiving such securities will be subject to the same
agreements with respect to such securities as their initial holders. Otherwise, these securities will not, subject to certain limited exceptions (as
described in more detail above under Principal Stockholders Transfers of Founder Shares and Placement Units (including securities
contained therein)) , be transferable or salable by their initial holders until 30 days after the consummation of our initial business
combination; provided that Cowen Overseas will not in any event be permitted to sell any placement units (or the component securities contained
therein) prior to the date 180 days immediately following the completion of this offering. We will bear the costs and expenses of filing any such
registration statements. The placement warrants will be non-redeemable so long as they are held their initial holders or their permitted transferees.
The placement warrants may also be exercised by their initial holders or their permitted transferees for cash or on a cashless basis. Otherwise, the
placement 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 and Cowen Overseas on or prior to the date of this prospectus, we may be required to register certain
securities for sale under the Securities Act. These holders 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 holders 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 (i) in the case of the founder shares, upon the earlier of (A) one year after the
consummation 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 placement shares and placement
warrants and the respective common stock underlying such warrants, 30 days after the consummation 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 9, 2011, we did not have
any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K and did not have any commitments or contractual obligations. No
unaudited quarterly operating data is included in this prospectus as we have conducted no operations to date.
72
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, directly or indirectly, with respect to identifying any acquisition target.
Business Strategy
We seek to capitalize on the global
network and investing and operating experience of our management team to identify, acquire and operate one or more businesses focused on the provision
and/or outsourcing of government services operating within or outside of North America, although we may pursue acquisition opportunities in other
business sectors or geographic regions. We believe that the acquisition and operation of an established business focused on the provision and/or
outsourcing of government services will provide a foundation from which to build, through acquisition or organic growth, a diversified business
platform. We believe our management team has the skills and experience to identify, evaluate and consummate a business combination and is
positioned to assist businesses we acquire to satisfy the increased demand for the provision and/or outsourcing of government services
because of the experience of our management team in the government sector. However, our management teams global network and investing and
operating experience is not a guarantee of a successful initial business combination. The members of our management team are not required
to devote any significant amount of time to our business and are concurrently involved with other businesses. There is no guarantee that our
current officers and directors will continue their respective roles, or any other role, after our initial business combination, and their
expertise may only be of benefit to us until our initial business combination is completed . Although we may acquire a non-United
States business, our primary search for acquisition targets will focus on domestic operating businesses. In addition, our initial business
combination is not required to have any minimum transaction value.
We anticipate structuring a business
combination to acquire 100% of the equity interest or assets of the target business or businesses. We may, however, structure a business combination to
acquire less than 100% of such interests or assets of the target business, but we will only consummate such business combination if we (or any entity
that is a successor to us in a business combination) acquire a majority of the outstanding voting securities or assets of the
target with the objective of making sure that we are not required to register as an investment company under the Investment Company
Act , based on the fact that less than 40% of our assets will be defined as investment securities under the provisions of that statute . We will
not consider any transaction that does not meet such criteria. Even though we will own a majority interest in the target, our stockholders prior to the
business combination may collectively own a minority interest in the post business combination company, depending on valuations ascribed to the target
and us in the business combination transaction.
Our management team intends to focus on
increasing stockholder value by growing revenue (through organic growth and acquisitions) and improving the efficiency of business operations.
Consistent with this strategy, we believe the following general criteria and guidelines are important in evaluating prospective target businesses. We
will use these criteria and guidelines in evaluating acquisition opportunities, but we may decide to enter into a business combination with a target
business that does not meet these criteria and guidelines.
|
Opportunities for Platform Growth: We will seek to acquire one or more businesses or assets that we can grow both organically and through acquisitions. Particularly in regard to the provision and/or outsourcing of government services, we may initially consider those sectors that complement our management teams background, such as information technology and analysis, communications, equipment manufacturing and assembling, advanced materials, electronic components, and imaging and sensors. |
|
History of and Potential for Strong Free Cash Flow Generation: We will seek to acquire one or more businesses that have the potential to generate strong free cash flow (i.e. companies that typically |
73
generate cash in excess of that required to maintain or expand the businesss asset base , typical of businesses concerned with the provision and/or outsourcing of government services ). We will focus on one or more businesses that have recurring revenue streams and low working capital and capital expenditure requirements. We may also seek to prudently leverage this cash flow in order to enhance stockholder value. |
|
Established Companies with Proven Track Records: We will seek to acquire established companies particularly those focused on industries connected to the provision and/or outsourcing of government services industries with sound historical financial performance. We will typically focus on companies with a history of strong operating and financial results. Although we are not restricted from doing so, we do not intend to acquire start-up companies. |
|
Experienced and Motivated Management Teams: We will seek to acquire businesses that have strong, experienced management teams with a substantial personal economic stake in the performance of the acquired business. We will focus on management teams with a proven track record of driving revenue growth, enhancing profitability and generating strong free cash flow. We expect that the operating expertise of our officers and directors will complement, not replace the targets management team. |
|
Strong Competitive Industry Position: We will seek to acquire businesses focused on the provision and/or outsourcing of government services industries that have strong fundamentals although we may acquire businesses in other industries . The factors we will consider include growth prospects, competitive dynamics, level of consolidation, need for capital investment and barriers to entry. We will focus on companies that have a leading or niche market position. We will analyze the strengths and weaknesses of target businesses relative to their competitors, focusing on product quality, customer loyalty, cost impediments associated with customers switching to competitors, intellectual property protection and brand positioning. We will seek to acquire one or more businesses that demonstrate advantages when compared to their competitors, which may help to protect their market position and profitability. |
These criteria are not intended to be
exhaustive. Any evaluation relating to the merits of a particular initial business combination may be based, to the extent relevant, on these general
guidelines as well as other considerations, factors and criteria that our management may deem relevant. In the event that we decide to enter into a
business combination with a target business that does not meet the above criteria and guidelines, we will disclose that the target business does not
meet the above criteria in our stockholder communications related to our initial business combination, which, as discussed in this prospectus, would be
in the form of tender offer documents or proxy solicitation materials that we would file with the SEC.
Competitive Strengths:
We believe we have the following
competitive strengths:
Management
Experience
Our chairman and chief executive
officer, Joseph R. Wright, has served in the United States government in various capacities since the 1980s and is currently a member of the Defense
Business Board. Mr. Wright also has corporate experience, including as chief executive officer of PanAmSat Corporation and chairman of Intelsat
Ltd., providers of satellite/fiber services with global fleets providing services to international corporations and governments. Mr. Wright has
additional industry experience through his role as chairman of GRC International, a public company providing advanced information technologies
primarily to government customers, and is a senior advisor to The Chart Group L.P., a member of our sponsor. Our president, Christopher D. Brady, who
is affiliated with The Chart Group L.P., has over 25 years experience in private equity, venture capital, corporate finance and capital markets. Mr.
Brady has had experience working on various government-related transactions, a focus of the business of The Chart Group L.P. Our chief financial
officer, Michael LaBarbera, serves as managing director of Chart Group Advisors, an affiliate of The Chart Group L.P. and has experience in
arranging acquisition and growth capital financings for both private and public companies in a variety of sectors, including on behalf of companies
that provide services to
74
government entities. Peter A. Cohen is Chairman and Chief Executive Officer of Cowen Group, Inc., the parent company of Cowen and Company, LLC, the lead underwriter in this offering. Mr. Cohen has over 40 years experience in the finance industry, including serving as Chairman and Chief Executive Officer of Shearson Lehman Brothers. Over his career he has served on a number of corporate, industry and philanthropic boards, including The New York Stock Exchange, The Federal Reserve International Capital Markets Advisory Committee, The Depository Trust Company, The Ohio State University Foundation, The New York City Opera, The American Express Company, GRC International, Olivetti SpA, Société Générale de Belgique, Telecom Italia SpA, Presidential Life Corporation, Kroll, Inc., and L-3 Communications. He is presently a Director of Mount Sinai Hospital, Safe Auto Insurance, and Scientific Games Corporation.
Our knowledge of the government service
industry is further enhanced by virtue of the experience of certain of our other directors. In 2003, Governor Thomas Ridge, a director, former
Congressman and former Governor of Pennsylvania, was appointed the first Secretary of the Department of Homeland Security by President George W. Bush.
Senator Robert Kerrey, a director, was the Governor of Nebraska from 1983-1987, and was elected to the United States Senate in 1988 and reelected in
1994. Both Governor Ridge and Senator Kerrey served in the Vietnam War. Senator Kerrey was a member of the National Commission on Terrorist Attacks on
the United States or as commonly called the 9-11 Commission, an independent, bipartisan commission created by congressional legislation and
the signature of President Bush in 2002, chartered to prepare a full and complete account of the circumstances surrounding the September 11, 2001
terrorist attacks, including preparedness for and the immediate response to the attacks. The Commission was also mandated to provide recommendations
designed to guard against future attacks. Governor Ridge gave key testimony before the 9-11 Commission. Through their political and military
backgrounds, each of Governor Ridge and Senator Kerrey has insight into the needs and operations of the U.S. government, as well as and the
defense industry. Our director, Timothy N. Teen founded Blue Ocean Capital Partners, a strategic advisory firm focused on the intersection of
technology, markets and capital within the aerospace and defense industry, and serves as its chief executive officer. Since 2004, Mr. Teen has also
served as the president and chief executive officer of InSitech, Inc., a government services firm that advises the United States Army, Navy and Marines
on private sector trends and technology related issues.
Prior Public
Company Experience
Mr. Wright, in his various executive
positions, has extensive experience in both the Government and the private sector. For example, he has either been a major U.S. Government contracting
officer or has supervised contracting officers for approximately 16 years. In addition, as Chairman he oversaw the commercialization of government
research at GRC International and as Board member worked with management on a similar activity at Titan which was eventually sold to L3 Communications.
Mr. Wright also formed the government services division for PanAmSat Corporation, a global satellite operator. While at PanAmSat, Mr. Wright oversaw
the an increase of over 30% in EBITDA to almost $700 million, or 78% of revenues while Capex was reduced and cash flow substantially increased under
his leadership before the company was sold to Intelsat, Ltd. where he then became chairman. Peter A. Cohen, one of our directors, is Chairman and Chief
Executive Officer of Cowen Group, Inc. Mr. Cohen also served as Chairman and Chief Executive Officer of Shearson Lehman Brothers . Mr. Cohen is
presently also a director of Safe Auto Insurance and Scientific Games Corporation.
Acquisition
Sourcing Expertise and Extensive Industry Contacts
Over the course of their careers, our
management team and board of directors have developed a global network of contacts and working relationships with principals as well as intermediaries
who constitute our most likely source of identifying prospective business transactions. Our management team and board of directors is comprised of
members each with over 30 years of experience in operating, advising, acquiring, financing and selling private and public companies in numerous
industries. In particular, Mr. Wright and The Chart Group L.P., have partnered with corporations, governments, public and private institutional
investors and high-net-worth individuals in the United States. We believe that this network of contacts and relationships will provide us with an
important source of investment opportunities .
75
In addition, we anticipate that target
business candidates will be brought to our attention from various unaffiliated sources, including investment market participants, private equity funds
and large business enterprises seeking to divest non-core divisions.
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 cash available for a business
combination initially in the amount of approximately $97.5 million after payment of approximately $3.125 million of deferred underwriting fees (or
$111.6 million after payment of approximately $3.6 million of deferred underwriting fees if the underwriters overallotment option is exercised in
full), we offer a target business a variety of options such as creating a liquidity event for its owners, providing capital for the potential growth
and expansion of its operations or strengthening its balance sheet by reducing its debt ratio. Because we are able to consummate a business combination
using our cash, debt or equity securities, or a combination thereof, we have the flexibility to use the most efficient combination that will allow us
to tailor the consideration to be paid to the target business to fit its needs and desires. However, we have not taken any steps to secure third party
financing and there can be no assurance it will be available to us.
Effecting our initial business
combination
General
We are not presently engaged in, and we
will not engage in, any operations for an indefinite period of time following this offering. We intend to effectuate our initial business combination
using cash from the proceeds of this offering and the private placement of the placement units, our capital stock, debt or a combination of these as
the consideration to be paid in our initial business combination. We will seek to acquire established companies that have demonstrated sound historical
financial performance. Although we are not restricted from doing so, we do not intend to acquire start-up companies. In the event we did acquire such a
company, we would be subject to the numerous risks inherent in such companies and business, which we would disclose in the tender offer or proxy
materials.
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
76
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, with respect to identifying any acquisition target. From the period
prior to our formation through the date of this prospectus, there have been no communications or discussions between any of our officers, directors or
our sponsor and any of their potential contacts or relationships regarding a potential initial business combination. Additionally, we have not engaged
or retained any agent or other representative to identify or locate any suitable acquisition candidate, to conduct any research or take any measures,
directly or indirectly, to locate or contact a target business.
Because, unlike many blank check
companies, we do not have the limitation that a target business have a minimum fair market enterprise value of the net assets held in the trust account
at the time of our signing a definitive agreement in connection with our initial business combination, we will have virtually unrestricted flexibility
in identifying and selecting one or more prospective target businesses. Accordingly, there is no current basis for investors in this offering to
evaluate the possible merits or risks of the target business with which we may ultimately complete our initial business combination. Although our
management will assess the risks inherent in a particular target business with which we may combine, we cannot assure you that this assessment will
result in our identifying all risks that a target business may encounter. Furthermore, some of those risks may be outside of our control, meaning that
we can do nothing to control or reduce the chances that those risks will adversely impact a target business.
We may seek to raise additional funds
through a private offering of debt or equity securities in connection with the consummation of our initial business combination, and we may effectuate
an initial business combination using the proceeds of such offering rather than using the amounts held in the trust account. Subject to compliance with
applicable securities laws, we would consummate such financing only simultaneously with the consummation of our business combination. In the case of an
initial business combination funded with assets other than the trust account assets, our tender offer documents or proxy materials disclosing the
business combination would disclose the terms of the financing and, only if required by law, we would seek stockholder approval of such financing.
There are no prohibitions on our ability to raise funds privately or through loans in connection with our initial business combination. At this time,
we are not a party to any arrangement or understanding with any third party with respect to raising any additional funds through the sale of securities
or otherwise.
Sources of
Acquisition Candidates
We believe there are numerous
candidates in industries involved with the provision and/or outsourcing of government services that present opportunities for acquisition and value
enhancement by our management team, board of directors and advisors. Although we may consider a target business outside of the United States as a
result of the increased globalization of business and heightened security concerns abroad, we currently intend to concentrate our search of target
businesses in the United States.
We anticipate that target business
candidates will be brought to our attention from various unaffiliated sources, including investment bankers, attorneys, accountants, venture capital
funds, private equity funds, leveraged buyout funds, management buyout funds, brokers and other members of the financial community and corporate
executives. These target candidates may present solicited or unsolicited proposals. We expect such sources to become aware that we are seeking a
business combination candidate by a variety of means, including publicly available information relating to this offering, public relations and
marketing efforts or direct contact by management following the completion of this offering.
Our officers and directors, as well as
their affiliates, may also bring to our attention target business candidates that they become aware of through their contacts as a result of formal or
informal inquiries or discussions they may have, as well as attending trade shows or conventions. 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
77
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), other than the up to $10,000 per month for office space, administrative services and other incurred expenses relating to our operations payable to The Chart Group L.P., an affiliate of our sponsor. 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 criterion in our selection process of an acquisition candidate.
We are not prohibited from pursuing an
initial business combination with a company that is affiliated with our sponsor, officers or directors. Additionally, we are not prohibited from
partnering, submitting joint bids, or entering into any similar transaction with our sponsor, or an affiliate of our sponsor, in the pursuit of an
initial business combination. In the event we seek to complete an initial business combination with such a company or we partner with our sponsor or an
affiliate of our sponsor in our pursuit of an initial business combination, 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.
Unless we consummate our initial
business combination with an affiliated entity, we are not required to obtain an opinion from an independent investment banking firm that the price we
are paying is fair to our company from a financial point of view. If no opinion is obtained, our stockholders will be relying on the judgment of our
board of directors, who will determine fair market value and fairness based on standards generally accepted by the financial community. The application
of such standards would involve a comparison, from a valuation standpoint, of our business combination target to comparable public companies, as
applicable, and a comparison of our contemplated transaction with such business combination target to other then-recently announced comparable private
and public company transactions, as applicable. The application of such standards and the basis of our board of directors determination will be
discussed and disclosed in our tender offer or proxy solicitation materials, as applicable, related to our initial business
combination.
Selection of a
target business and structuring of our initial business combination
Because, unlike many blank check
companies, we do not have the limitation that a target business have a minimum fair market enterprise value equal to a specified percentage of the net
assets held in the trust account at the time of our signing a definitive agreement in connection with our initial business combination, our management
will have virtually unrestricted flexibility in identifying and selecting one or more prospective target businesses, although we will not be permitted
to effectuate our initial business combination with another blank check company or a similar company with nominal operations. In any case, we will
consummate our initial business combination only if we (or any entity that is a successor to us in a business combination) will acquire a
majority of the outstanding voting securities or assets of the target or otherwise are 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. We will seek to acquire established companies that have demonstrated sound historical
financial performance. Although we are not restricted from doing so, we do not intend to acquire start-up companies. 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
78
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 a review of financial and other information
which will be made available to us.
The time required to select and
evaluate a target business and to structure and complete our initial business combination, and the costs associated with this process, are not
currently ascertainable with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target
business with which a business combination is not ultimately completed will result in our incurring losses and will reduce the funds we can use to
complete another business combination. We will not pay any finders or consulting fees to members of our management team, or any of their respective
affiliates, for services rendered to or in connection with a business combination.
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:
|
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 |
|
cause us to depend on the marketing and sale of a single product or limited number of products or services. |
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 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.
79
However, we will seek stockholder
approval, if it is required by law, or we may decide to seek stockholder approval for business or other reasons. Presented in the table below is a
graphic explanation of the types of initial business combinations we may consider and whether stockholder approval is currently required under Delaware
law for each such transaction.
Type of Transaction |
Whether Stockholder Approval is Required |
|||||
---|---|---|---|---|---|---|
Purchase of
assets |
No | |||||
Purchase of
stock of target not involving a merger with the company |
No | |||||
Merger of
target into a subsidiary of the company |
No | |||||
Merger of the
company with a target |
Yes |
Permitted
purchases of our securities
If we seek stockholder approval of our
initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the tender offer rules, prior to
the consummation of a business combination, our amended and restated certificate of incorporation will permit the release to us from the trust account
amounts necessary to purchase up to 15% of the shares sold in this offering (1,500,000 shares, or 1,725,000 shares if the underwriters
overallotment 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 record date of the stockholder meeting to approve our 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. Due to the relatively sporadic public trading of securities of similarly structured blank
check companies, it is unlikely that we would be able to make such purchases under Rule 10b-18 under the Exchange Act , which provided a
non-exclusive safe harbor with respect to such purchases, and still accomplish the intended goals of such purchases as described below. Therefore,
we do not intend to comply with Rule 10b-18 and may make purchases outside of the requirements of Rule 10b-18 as we see fit. Purchases
outside the safe harbor could result in our liability for manipulation under Section 9(a)(2) and Rule 10b-5 of the Exchange Act. Any purchases we
make will be at prices (inclusive of commissions) not to exceed the per-share amount then held in the trust account (approximately $10.06 per share or
approximately $10.01 per share if the underwriters overallotment option is exercised in full). We may purchase any or all of the
1,500,000 shares (or 1,725,000 shares if the underwriters overallotment 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 or their affiliates may also purchase shares in privately negotiated
transactions either prior to or following the consummation of our initial business combination. Neither we nor our directors, officers, advisors or
their affiliates will make any such purchases when we or they are in possession of any material non-public information not disclosed to the seller.
Such a purchase would include a
80
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 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 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:
|
the funds in our trust account that are so used will not be available to us after the business combination; |
|
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; |
|
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. That is, if we seek stockholder approval of our initial business combination, the redemption price per share payable to public stockholders who elect to have their shares redeemed will be reduced by a larger percentage of the franchise or income taxes payable than it would have been in the absence of such privately negotiated or market transactions, and stockholders who do not elect to have their shares redeemed and remain our stockholders after the business combination will bear the economic burden of the deferred commissions and franchise or income taxes payable because such amounts will be payable by us; and |
|
the payment of any premium would result in a reduction in book value per share for the remaining stockholders compared to the value received by stockholders that have their shares purchased by us at a premium. |
Our sponsor, officers, directors and/or
their affiliates anticipate that they will identify the stockholders with whom our sponsor, officers, directors or their affiliates may pursue
privately negotiated purchases by either the stockholders contacting us directly or by our receipt of redemption requests submitted by stockholders
following our mailing of tender offer materials in connection with our initial business combination. To the extent that our sponsor, officers,
directors, advisors or their affiliates enter into a private purchase, they would identify and contact only potential selling stockholders who have
expressed their election to redeem their shares for a pro rata share of the trust account or vote against the business combination. Pursuant to the
terms of such arrangements, any shares so purchased by our sponsor, officers, advisors, directors and/or their affiliates would then revoke their
election to redeem such shares. The terms of such purchases would operate to facilitate our ability to consummate a proposed business combination by
potentially reducing the number of shares redeemed for cash.
Redemption
rights for public stockholders upon consummation of our initial business combination
We will provide our stockholders with
the opportunity to redeem their shares upon the consummation of our initial business combination at a per-share price, payable in cash, equal to the
aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest
released to us for working capital purposes, the payment of taxes or dissolution expenses, divided by the number of then outstanding public shares,
subject to the limitations described herein. The amount in the
81
trust account is initially anticipated to be approximately $10.06 per public share, or approximately $10.01 per public share if the underwriters overallotment option is exercised in full. Our sponsor and Cowen Overseas (as applicable) have each agreed with respect to the founder shares and the placement shares held by them to waive their respective redemption rights in connection with the consummation of our initial business combination.
Manner of
Conducting Redemptions
Unlike many blank check companies that
hold stockholder votes and conduct proxy solicitations in conjunction with their initial business combinations and provide for related redemptions of
public shares for cash upon consummation of such initial business combinations even if not required by law, if a stockholder vote is not required by
law and we do not decide to hold a stockholder vote for business or other reasons, we will, pursuant to our amended and restated certificate of
incorporation:
|
conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of the proposed business combination, and |
|
file tender offer documents with the SEC prior to consummating our initial business combination that 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 , and we will not be permitted to consummate our initial business combination until the expiration of the tender offer
period .
In connection with the
consummation of our business combination, we may redeem pursuant to a tender offer up to that number of shares of common stock that would permit us to
maintain net tangible assets of $5,000,001. However, the redemption threshold may be further limited by the terms and conditions of our proposed
initial business combination. For example, the proposed business combination may require: (i) cash consideration to be paid to the target or members of
its management team, (ii) cash to be transferred to the target for working capital or other general corporate purposes or (iii) the allocation of cash
to satisfy other conditions in accordance with the terms of the proposed business combination. In the event the aggregate cash consideration we would
be required to pay for all common stock that is validly tendered plus any amount required to satisfy cash conditions pursuant to the terms of the
proposed business combination exceed the aggregate amount of cash available to us, we will not consummate the business combination, we will not
purchase any shares of common stock pursuant to the tender offer and all shares of common stock will be returned to the holders thereof following the
expiration of the tender offer. Additionally, since we are required to maintain net tangible assets of at least $5,000,001 (which may be substantially
higher depending on the terms of our potential business combination), the chance that the holders of our common stock electing to redeem in connection
with a redemption conducted pursuant to the proxy rules will cause us to fall below such minimum requirement is increased.
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,
placement shares and public shares in connection with any such tender offer.
If, however, stockholder approval of
the transaction is required by law, or we decide to obtain stockholder approval for business or other reasons, we will:
|
conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and |
|
file proxy materials with the SEC. |
82
In the event that we seek stockholder
approval of our initial business combination, we will distribute proxy materials and, in connection therewith, provide our public stockholders with the
redemption rights described above upon consummation of the initial business combination.
If we seek stockholder approval, we
will consummate our initial business combination only if a majority of the outstanding shares of common stock voted are voted in favor of the business
combination. In such case, our sponsor has agreed to vote its founder shares and its placement shares, placement shares and any public shares purchased
during or after the offering in favor of our initial business combination. Additionally, each public stockholder may elect to redeem their public
shares irrespective of whether they vote for or against the proposed transaction for cash equal to their pro rata share of the aggregate amount then on
deposit in the trust account, including interest but less interest withdrawn for working capital purposes, to pay taxes or dissolution costs and
subject to certain volume limitations, as described below . In addition, our sponsor has agreed to waive its redemption rights with respect
to their founder shares, placement 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 has typically been between 19.99% and 39.99%. As a result, many blank check companies have been unable to complete business combinations
because the number of shares voted , against their initial business combination 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 and since even those public stockholders who vote in favor of our initial business combination will have the right to
redeem their public shares , our structure is different in this respect from the structure that has been used by many blank check companies. This
may make it easier for us to consummate our intitial business combination. 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. Furthermore, the redemption threshold may be further limited by the terms and
conditions of our initial business combination. 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.
Limitation on redemption or voting rights upon consummation of a business combination if we seek stockholder approval |
Notwithstanding the foregoing, if we
seek stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to
the tender offer rules, our amended and restated certificate of incorporation provides that a public stockholder, together with any affiliate of such
stockholder or any other person with whom such stockholder is acting in concert or as a group (as defined under Section 13 of the Exchange
Act), will be restricted from seeking redemption rights with respect to more than an aggregate of 10% of the shares sold in this offering. Moreover,
any individual stockholder or group will also be restricted from voting public shares in excess of an aggregate of 10% of the public shares
sold in this offering, and all additional such shares in excess of 10%, which we refer to as the Excess Shares, will be deemed ineligible
to vote at a meeting of stockholders. We believe these restrictions will discourage stockholders from accumulating large blocks of shares, and
subsequent attempts by such holders to use their ability to exercise their redemption rights or vote against a proposed business combination as a means
to force us or our management to purchase their shares at a significant premium to the then-current market price or on other undesirable terms. Absent
this provision, a public stockholder holding more than an aggregate of 10% of the shares sold in this offering could threaten to exercise its
redemption rights or voting rights if such 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 or vote no more than 10% of the shares sold in this offering, we
believe we will limit the ability of a small number of stockholders to unreasonably attempt to block our ability to consummate
our initial 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.
83
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 option rights surviving past the consummation of the business combination until the
redeeming holder delivered its certificate. The requirement for physical or electronic delivery prior to the meeting ensures that a redeeming
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 date of
this prospectus.
Redemption of
public shares and liquidation if no initial business combination
Our sponsor, officers and directors
have agreed that we will have only 21 months from the date of this prospectus to consummate our initial business combination. If we have not
consummated a business combination within 21 months from the date of this prospectus, or earlier, at the discretion of our board
84
pursuant to the expiration of a tender offer conducted in connection with a failed business combination, 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 all public shares then outstanding at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or dissolution expenses, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Our sponsor and Cowen
Overseas (as applicable) have each agreed to waive their respective redemption rights with respect to the founder shares and placement
shares (i) in connection with the consummation of our initial business combination, (ii) if we fail to consummate a business combination within
21 months from the date of this prospectus, (iii) in connection with an expired or unwithdrawn tender offer, and (iv) upon our
liquidation prior to the expiration of the 21 month period. 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
our initial business combination within the required time period. There will be no redemption rights or liquidating distributions with respect
to our warrants, which will expire worthless in the event we do not consummate a business combination within the allotted month time period. We expect
that all costs and expenses associated with implementing our plan of dissolution, as well as payments to any creditors, will be funded from amounts
remaining out of the $800,000 of proceeds held outside the trust account and 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.
If we were to expend all of the net
proceeds of this offering, other than the proceeds deposited in the trust account, the per-share redemption amount received by stockholders upon our
dissolution would be approximately $10.06 (or approximately $10.01 if the underwriters overallotment option is exercised in full). The proceeds
deposited in the trust account could, however, become subject to the claims of our creditors which would have higher priority than the claims of our
public stockholders. We cannot assure you that the actual per-share redemption amount received by stockholders will not be less than approximately
$10.06. Under Section 281(b) of the DGCL, our plan of dissolution must provide for all claims against us to be paid in full or make provision for
payments to be made in full, as applicable, if there are sufficient assets. These claims must be paid or provided for before we make any distribution
of our remaining assets to our stockholders. While we intend to pay such amounts, if any, we cannot assure you that we will have funds sufficient to
pay or provide for all creditors claims.
Although we will seek to have all
vendors, service providers, prospective target businesses or other entities with which we do business execute agreements with us waiving any right,
title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee
that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust
account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging
the enforceability of the waiver, in each case in order to gain an advantage with respect to a claim against our assets, including the funds held in
the trust account. If any third party refuses to execute an agreement waiving such claims to the monies held in the trust account, our management will
perform an analysis of the alternatives available to it and will only enter into an agreement with a third party that has not executed a waiver if
management believes that such third 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,
85
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, pursuant to a written agreement, Messrs. Wright and Brady, our Chairman and Chief Executive Officer, and President and Director, respectively, have agreed that they will be liable to us if and to the extent any claims by a vendor for services rendered or products sold to us, or a prospective target business with which we have discussed entering into a transaction agreement, reduce the amounts in the trust account to below $10.06 per share (or approximately $10.01 per share if the underwriters overallotment option is exercised in full), except as to any claims by a third party who executed a waiver of rights to seek access to the trust account and except as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. In the event that an executed waiver is deemed to be unenforceable against a third party, Messrs. Wright and Brady will not be responsible to the extent of any liability for such third party claims. We cannot assure you, however, that , Messrs. Wright and Brady would be able to satisfy those obligations. With the exception of Messrs. Wright and Brady as described above, none of our officers will indemnify us for claims by third parties including, without limitation, claims by vendors and prospective target businesses.
In the event that the proceeds in the
trust account are reduced below $10.06 per public share (or approximately $10.01 per public share if the underwriters overallotment option is
exercised in full) and Messrs. Wright and Brady asserts that they are unable to satisfy any applicable obligations or that they have no indemnification
obligations related to a particular claim, our independent directors would determine whether to take legal action against Messrs. Wright and Brady to
enforce their indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against
Messrs. Wright and Brady to enforce their indemnification obligations to us, it is possible that our independent directors in exercising their business
judgment may choose not to do so in any particular instance. Accordingly, we cannot assure you that due to claims of creditors the actual value of the
per-share redemption price will not be less than $10.06 per public share (or approximately $10.01 per public share if the underwriters
overallotment option is exercised in full).
We will seek to reduce the possibility
that Messrs. Wright and Brady 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. Messrs. Wright and Brady will also not be liable as to any claims under our indemnity of
the underwriters of this offering against certain liabilities, including liabilities under the Securities Act. We will have access to up to $800,000
from the proceeds of this offering, and any amounts representing interest earned on the trust account, less any interest released to us for working
capital purposes, the payment of taxes or dissolution expenses with which to pay any such potential claims (including costs and expenses incurred in
connection with our liquidation). 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 $600,000, we may fund such excess with funds from the $800,000 not to be held in the trust account. In such case, the
amount of funds we intend to be held outside the trust account would decrease by a corresponding amount. Conversely, in the event that the offering
expenses are less than our estimate of $600,000, the amount of funds we intend to be held outside the trust account would increase by a corresponding
amount.
Under the DGCL, stockholders may be
held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. The pro rata portion of
our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial
business combination within 21 months from the date of this prospectus 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
86
amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution.
Furthermore, if the pro rata portion of
our trust account distributed to our public stockholders upon the redemption of our public shares in the event we do not consummate our initial
business combination within 21 months from the date of this prospectus is not considered a liquidation distribution under Delaware law and such
redemption distribution is deemed to be unlawful, then pursuant to Section 174 of the DGCL, the statute of limitations for claims of creditors could
then be six years after the unlawful redemption distribution, instead of three years, as in the case of a liquidation distribution. If we have not
consummated a business combination within 21 months from the date of this prospectus, or earlier, at the discretion of our board pursuant to the
expiration of a tender offer conducted in connection with a failed business combination, 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 all public shares then outstanding at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest
earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or dissolution expenses, divided by
the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including
the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such
redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our
obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Accordingly, it is our intention to
redeem our public shares as soon as reasonably possible following our 21st 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, Messrs. Wright and Brady may be liable only to the extent
necessary to ensure that the amounts in the trust account are not reduced below $10.06 per public share (or approximately $10.01 per public share if
the underwriters overallotment option is exercised in full) less any per-share amounts distributed from our trust account to our public
stockholders in the event we are unable to consummate a business combination within 21 months from the date of this prospectus, and will not be liable
as to any claims under our indemnity of the underwriters of this offering against certain liabilities, including liabilities under the Securities Act.
In the event that an executed waiver is deemed to be unenforceable against a third party, Messrs. Wright and Brady will not be responsible to the
extent of any liability for such third-party claims.
If we file a bankruptcy petition or an
involuntary bankruptcy petition is filed against us that is not dismissed, the proceeds held in the trust account could be subject to applicable
bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our
stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return $10.06 per share to our
public stockholders. Additionally, if we file a bankruptcy petition or an involuntary bankruptcy petition is filed against us that is not dismissed,
any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a preferential
transfer or a fraudulent conveyance. As a result, a bankruptcy court could seek to recover all amounts received by our stockholders.
Furthermore, our board may be viewed as having breached its fiduciary duty to
87
our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.
Our public stockholders will be
entitled to receive funds from the trust account only in the event of the redemption of our public shares if we do not consummate a business
combination within 21 months from the date of this prospectus or if they redeem their respective shares for cash upon the consummation of the initial
business combination. Also, our management may cease to pursue a business combination prior to the expiration of the 21 month period and
commence liquidation of the trust account, if for example, our directors determine in their business judgment that it is unlikely that we would
be able to consummate a business combination prior to the expiration of the 21 month period. 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.
Comparison of redemption or purchase prices in connection with
our initial business combination and if we fail to consummate a business combination.
The following table compares the
redemptions and other permitted purchases of public shares that may take place in connection with the consummation of our initial business combination
and if we are unable to consummate an initial business combination within 21 months from the date of this prospectus.
88
Redemptions in Connection with our Initial Business Combination |
Other Permitted Purchases of Public Shares by us or our Affiliates |
Redemptions if we fail to Consummate an
Initial Business Combination |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Calculation of
redemption price |
Redemptions at
the time of our initial business combination may be made pursuant to a tender offer or in connection with a stockholder vote. The redemption price will
be the same whether we conduct redemptions pursuant to a tender offer or in connection with a stockholder vote. In either case, our public stockholders
may redeem their public shares for cash equal to the aggregate amount then on deposit in the trust account (which is initially anticipated to be
approximately $10.06 per public share, or approximately $10.01 per public share if the underwriters overallotment option is exercised in full),
including any amounts representing interest earned on the trust account, less any interest released to us for working capital purposes, the payment of
taxes or dissolution expenses, 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 and any limitations (including but not limited to cash
requirements) agreed to in connection with the negotiation of terms of a proposed business combination. |
If we seek
stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the
tender offer rules, prior to the consummation of a business combination, there can be released to us from the trust account amounts necessary to
purchase up to 15% of the shares sold in this offering. Such purchases would be at prices not to exceed the per-share amount then held in the trust
account (which is initially anticipated to be approximately $10.06 per share or approximately $10.01 per share if the underwriters overallotment
option is exercised in full). In addition, if we seek stockholder approval of our initial business combination, we may enter into privately negotiated
transactions to purchase public shares from stockholders following consummation of the initial business combination with proceeds released to us from
the trust account immediately following consummation of the initial business combination. There is no limit to the prices that we or our sponsor,
directors, officers or their affiliates may pay in these transactions. |
If we are unable
to consummate an initial business combination within 21 months from the date of this prospectus, we will redeem all public shares at a per-share price,
payable in cash, equal to the aggregate amount, then on deposit in the trust account (which is initially anticipated to be approximately $10.06 per
public share, or approximately $10.01 per public share if the underwriters overallotment option is exercised in full), including any amounts
representing interest earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or dissolution
expenses divided by the number of then outstanding public shares. |
89
Redemptions in Connection with our Initial Business Combination |
Other Permitted Purchases of Public Shares by us or our Affiliates |
Redemptions if we fail to Consummate an
Initial Business Combination | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Impact to
remaining stockholders |
The redemptions
in connection with our initial business combination will reduce the book value per share for our remaining stockholders, who will bear the burden of
the deferred underwriting commissions and franchise and income taxes payable. |
If 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. If the permitted purchases described above are made at prices not exceeding the per-share amount then held in the trust
account, these purchases will reduce the book value per share for our remaining stockholders following a business combination, who will bear the burden
of the deferred underwriting commissions and franchise and income taxes payable. If we make these purchases using funds released to us from the trust
account following consummation of a business combination at prices that are at a premium to the per-share amount then held in the trust account, our
remaining stockholders will also experience a reduction in book value per share to the extent of such premiums. |
The redemption of
our public shares if we fail to consummate a business combination will reduce the book value per share for the shares held by our sponsor, who will be
our only remaining stockholders after such redemptions. |
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 overallotment option. None of the provisions of Rule 419 apply to our
offering.
90
Terms of Our Offering |
Terms Under a Rule 419 Offering |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
Escrow of
offering proceeds |
Approximately
$100.6 million of the net offering proceeds, which includes a portion of the $4.75 million net proceeds from the sale of 300,000 placement units to the
sponsor and 175,000 placement units to Cowen Overseas and approximately $3.125 million in deferred underwriting commissions (approximately $3.6 million
if the underwriters overallotment option is exercised in full), will be deposited into a trust account with Continental Stock Transfer &
Trust Company acting as trustee. |
Approximately
$90.54 million of the offering proceeds, representing the gross proceeds of this offering, would be required to be deposited into either an escrow
account with an insured depositary institution or in a separate bank account established by a broker-dealer in which the broker-dealer acts as trustee
for persons having the beneficial interests in the account. |
||||||||
Investment of
net proceeds |
Approximately
$100.6 million of the net offering proceeds, which includes a portion of the $4.75 million net proceeds from the sale of 300,000 placement units to the
sponsor and 175,000 placement units to Cowen Overseas and approximately $3.125 million in deferred underwriting commissions (approximately $3.6 million
if the underwriters overallotment option is exercised in full) held in trust will be invested only in United States government treasury bills
with a maturity of 180 days or less or in money market funds investing solely in United States Treasuries and meeting certain conditions under Rule
2a-7 under the Investment Company Act. |
Proceeds could be
invested only in specified securities such as a money market fund meeting conditions of the Investment Company Act or in securities that are direct
obligations of, or obligations guaranteed as to principal or interest by, the United States. |
||||||||
Receipt of
interest on escrowed funds |
We will be
entitled to withdraw interest income earned on the funds in the escrow account for working capital purposes, the payment of taxes or dissolution
expenses. Our stockholders will have no right to receive any pro-rata portion of interest income earned on the proceeds held in the trust account
released to us. |
Interest on funds
in escrow account would be held for the sole benefit of investors, unless and only after the funds held in escrow were released to us in connection
with our consummation of a business combination. |
||||||||
Limitation on
fair value or net assets of target business |
We are not
required to set a minimum valuation on either the fair market value or net assets of a target business. |
The fair value or
net assets of a target business must represent at least 80% of the maximum offering proceeds. |
91
Terms of Our Offering |
Terms Under a Rule 419 Offering | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
Trading of
securities issued |
The units will
begin trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading on the
52nd day following the date of this prospectus unless Cowen and Company, LLC 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 overallotment 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 overallotment
option. |
No trading of the
units or the underlying common stock and warrants would be permitted until the completion of a business combination. During this period, the securities
would be held in the escrow or trust account. |
||||||||
Exercise of
the warrants |
The warrants
cannot be exercised until the later of 30 days after the consummation of our initial business combination or 12 months from the closing of this
offering. |
The warrants
could be exercised prior to the completion of a business combination, but securities received and cash paid in connection with the exercise would be
deposited in the escrow or trust account. |
||||||||
Election to
remain an investor |
We will provide
our public stockholders with the opportunity to redeem their public shares for cash equal to their pro rata share of the aggregate amount then on
deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us for working
capital purposes, the payment of taxes or dissolution expenses, upon the consummation of our initial business combination, subject to the limitations
described herein and any limitations (including but not limited to cash requirements) agreed to in connection with the negotiation of terms of a
proposed business combination. 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 |
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. |
92
Terms of Our Offering |
Terms Under a Rule 419 Offering | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
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. Additionally, each public stockholder may elect to redeem their public shares irrespective of whether
they vote for or against the proposed transaction for cash equal to their pro rata share of the aggregate amount then on deposit in the trust account,
including interest but less interest withdrawn for working capital purposes, to pay taxes or dissolution costs. In addition, our sponsor has agreed to
waive its redemption rights with respect to its founder shares, placement shares and public shares in connection with the consummation of our initial
business combination. Our sponsor and Cowen Overseas have each agreed to waive their redemption rights with respect
to its placement shares in connection with the consummation of our initial business combination and if we fail to consummate our initial business
combination within 21 months from date of this prospectus. |
||||||||||
Business
combination deadline |
If we are unable
to complete a business combination within 21 months from date of this prospectus, we shall: (i) cease all operations except for the purpose of winding
up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in
cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less
any interest released to us for working capital purposes, the payment of taxes or dissolution expenses, divided by the number of then outstanding
public shares, which redemption will completely |
If an acquisition
has not been consummated within 18 months after the effective date of the companys registration statement, funds held in the trust or escrow
account are returned to investors. |
93
Terms of Our Offering |
Terms Under a Rule 419 Offering |
|||||||||
---|---|---|---|---|---|---|---|---|---|---|
extinguish public
stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and
(iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors,
dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other
applicable law. |
||||||||||
Release of
funds |
Except for
interest income earned on the trust account balance that is released to us 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 consummation of our initial business combination; (ii) the expiration or termination of any tender offer
conducted by us in connection with a proposed business combination not otherwise withdrawn; (iii) the redemption of our public shares if we are unable
to consummate a business combination within 21 months from the date of this prospectus, subject to applicable law; or (iv) otherwise upon our
liquidation, in the event our management resolves to liquidate the trust account and ceases to pursue the consummation of a business combination prior
to the expiration of the initial 21 month period. |
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. |
Comparison of This Offering to Those of Many Blank Check
Companies Not Subject to Rule 419
The following table compares the terms
of this offering to the terms of many blank check companies that are not subject to Rule 419. Each term of this offering described in the table below
is located in our amended and restated certificate of incorporation other than Warrant terms which is located in the warrant
agreement.
94
Terms of Our Offering |
Terms of Many Blank Check Offerings |
Impact on Whether a Particular Business Combination is Completed |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Requirement to
conduct a tender offer or hold a stockholder vote |
We will provide
our stockholders with the opportunity to redeem their shares of common stock upon the consummation of our initial business combination on the terms
described in this prospectus. We intend to conduct these redemptions pursuant to the tender offer rules without filing a proxy statement with the SEC
and without conducting a stockholder vote to approve our initial business combination, unless stockholder approval is required by law or we decide to
seek stockholder approval for business or other reasons. |
Many blank check
companies are required to file a proxy statement with the SEC and hold a stockholder vote to approve their initial business combination regardless of
whether such a vote is required by law. These blank check companies may not consummate a business combination if the majority of the companys
public shares voted are voted against a proposed business combination. |
Our ability to
consummate our initial business combination without conducting a stockholder vote in the event that a stockholder vote is not required by law may
increase the likelihood that we will be able to complete our initial business combination and decrease the ability of public stockholders to affect
whether or not a particular business combination is completed. |
95
Terms of Our Offering |
Terms of Many Blank Check Offerings |
Impact on Whether a Particular Business Combination is Completed | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Requirement to
vote against a business combination in order to redeem |
If we seek
stockholder approval in conjunction with the consummation of our initial business combination, each public stockholder may elect to redeem their public
shares irrespective of whether they vote for or against the proposed transaction for cash equal to their pro rata share of the aggregate amount then on
deposit in the trust account, including interest but less interest withdrawn for working capital purposes, to pay taxes or dissolution costs. In
addition, our sponsor has agreed to waive its redemption rights with respect to their founder shares, placement shares and public shares in connection
with the consummation of our initial business combination and if we fail to consummate our initial business combination within 21 months from the date
of this prospectus. Cowen Overseas has agreed to waive its redemption rights with respect to the placement shares contained within the placement units
(i) in connection with the consummation of our initial business combination and (ii) if we fail to consummate our initial business combination within
21 months from the date of this prospectus. |
Many blank check
companies require public stockholders to vote against the proposed business combination in order to redeem their shares. |
The ability of
our public stockholders to vote in favor of a business combination and redeem their shares may increase the likelihood that we will be able to complete
our initial business combination and decrease the ability of public stockholders to affect whether or not a particular business combination is
completed. |
96
Terms of Our Offering |
Terms of Many Blank Check Offerings |
Impact on Whether a Particular Business Combination is Completed |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Limited
Redemption and Voting Rights of 10% Public Stockholders |
If we seek
shareholder 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 shareholder, together with any affiliate of such
shareholder or any other person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of the Exchange
Act), will be restricted from redeeming its shares with respect to more than an aggregate of 10% of the shares sold in this offering. Moreover, any
individual shareholder or group will also be restricted from voting public shares in excess of an aggregate of 10% of the public shares
sold in this offering, and all Excess Shares would be ineligible to vote at a meeting of stockholders. |
Many blank check
companies limit the redemption rights of 10% public stockholders but do not limit the voting rights of such public stockholders. |
We believe these
restrictions will discourage stockholders from accumulating large blocks of shares, and subsequent attempts by such holders to use their ability to
redeem or vote 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. |
|||||||||||
Redemption
threshold |
We do not have a
specified maximum redemption threshold apart from the limitation that we will not redeem our public shares in an amount that would cause our net
tangible assets to be less than $5,000,001. Furthermore, the redemption threshold may be further limited by the terms and conditions of our initial
business combination. In such case, we would not proceed with the redemption of our public shares and the related business combination, and instead may
search for an alternate business combination. |
Many blank check
companies are not permitted to consummate a business combination if more than a specified percentage of the shares sold in such companys initial
public offering, which percentage threshold has typically been between 19.99% and 39.99%, elect to redeem or convert their shares in connection with
the stockholder vote. |
The absence of a
redemption threshold in our offering will make it easier for us to consummate our initial business combination even if a substantial majority of our
stockholders do not agree. |
97
Terms of Our Offering |
Terms of Many Blank Check Offerings |
Impact on Whether a Particular Business Combination is Completed |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Accelerated
deadline to complete business combination |
We will only have
21 months from the date of this prospectus to complete our initial business combination. |
Many blank check
companies have between 24 and 36 months to complete their initial business combinations. |
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. |
|||||||||||
Permitted
purchases of shares by us prior to the consummation of our initial business combination using amounts held in the trust account |
If we seek
stockholder approval of our initial business combination and we do not conduct redemptions in connection with our business combination pursuant to the
tender offer rules, prior to the consummation of a business combination, there could be released to us from the trust account amounts necessary to
purchase up to 15% of the shares sold in this offering at any time commencing after the filing of a preliminary proxy statement for our initial
business combination and ending on the date of the stockholder meeting to approve the initial business combination. |
Many blank check
companies are prohibited from utilizing funds from the trust account to purchase shares from public stockholders prior to the consummation of their
initial business combination. |
Our ability to
purchase shares prior to the consummation of our initial business combination using amounts held in the trust account may increase the likelihood that
we will be able to complete our initial business combination and decrease the ability of public stockholders to affect whether or not a particular
business combination is completed. |
|||||||||||
Minimum fair
market value of target |
We may enter into
our initial business combination with a target regardless of its fair market value so long as we (or any entity that is a successor to us in a business
combination) acquire a majority of the outstanding voting securities or assets of the target or otherwise are not required to
register as an investment company under the Investment Company Act. |
Many blank check
companies are required to consummate their initial business combination with a target whose fair market value is equal to at least 80% of the amount of
money held in the trust account of the blank check company at the time of entry into a definitive agreement for a business
combination. |
The absence of a
minimum fair market value requirement in our offering may increase the likelihood that we will be able to complete our initial business combination but
should not impact the ability of our public stockholders to affect whether or not a particular business combination is completed. |
|||||||||||
Warrant
terms |
The warrants
issued in this offering (i) have an exercise price that is above the initial public offering price of our units and that is subject to reduction in
the |
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 |
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 |
98
Terms of Our Offering |
Terms of Many Blank Check Offerings |
Impact on Whether a Particular Business Combination is Completed |
||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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
pursuant to Section 3(a)(9) of the Securities Act, if a registration statement covering the shares of common stock issuable upon exercise of the public
warrants has not been declared effective by the 60th business day following the closing of our initial business combination, and until such
time as there is an effective registration statement (subject to compliance with state blue sky laws). |
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 (subject to compliance with state blue sky laws). |
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. |
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 75 Rockefeller Plaza, 14th Floor, New York, NY 10019. The cost for this space is included in the $10,000 per month fee described
above that The Chart Group L.P. charges us for general and administrative services. We believe, based on rents and fees for similar services in the New
York metropolitan area that the fee charged by The Chart Group L.P. is at least as favorable as we could have obtained from an unaffiliated person. We
consider our current office space adequate for our current operations.
Employees
We currently have three 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
99
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, 2012 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.
100
Directors and Executive Officers
Our directors, executive officers and
director nominees are as follows:
Name |
Age |
Title |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Joseph R.
Wright |
72 | Chairman and Chief Executive Officer |
||||||||
Christopher D.
Brady |
56 | President and Director |
||||||||
Michael
LaBarbera |
62 | Chief
Financial Officer, Secretary |
||||||||
Peter A. Cohen
|
65 | Director |
||||||||
Governor
Thomas Ridge |
66 | Director |
||||||||
Senator Joseph
Robert Bob Kerrey |
68 | Director |
||||||||
Timothy N.
Teen |
48 | Director |
Joseph R. Wright has been our
chairman of our Board of Directors and chief executive officer since our inception. Mr. Wright is a Senior Advisor to The Chart Group, L.P., a merchant
banking firm and an affiliate of our sponsor, a senior advisor to Providence Equity and a member of the Strategic Advisory Board of The Comvest Group.
Mr. Wright served as Scientific Games Corp.s Chief Executive Officer during 2009 and was a member of its board from 2004 through December 2010.
From July 2006 through April 2008, Mr. Wright served as Chairman of Intelsat, Ltd., a provider of satellite services, and as Chief Executive Officer of
PanAmSat Corporation from August 2001 until it was combined with Intelsat in July 2006 (during which time he also served as a director). Mr. Wright was
Chairman of GRC International, Inc. from 1996 to March 2000 and was Executive Vice President and Vice Chairman of W.R. Grace & Co. from 1989 to
1994. Mr. Wright was a member of President Reagans Cabinet, was Director and Deputy Director of the White House Office of Management and Budget
from 1982 to 1989 and was Deputy Secretary of the Department of Commerce from 1981 to 1982. In 1989, Mr. Wright was appointed to the Presidents
Export Council by President George H.W. Bush as Chairman of the Export Control Sub-Committee. In 2003, President George W. Bush appointed Mr. Wright to
the Presidents Commission on the U.S. Postal Service Reform, the National Security Telecommunications Advisory Committee (NSTAC), the FCCs
Network Reliability and Interoperability Council and the FCCs Media and Security Reliability Council. Mr. Wright currently serves on President
Bar ack Obamas Defense Business Board which examines and advices the president on the overall management and governance of the Department
of Defense. Mr. Wright received the Distinguished Citizens Award from President Reagan in 1988. Mr. Wright is currently a member of the Defense
Business Board in Washington, D.C. Mr. Wright is a director of Cowen Group, Inc., the parent of Cowen and Company, LLC, the lead underwriter of this
offering, Education Management Corporation and Federal Signal Corporation. In addition, Mr. Wright is well qualified to serve as chairman of our Board
of Directors due to his background in government services and private equity.
Christopher D. Brady has been
the president and a member of our Board of Directors since our inception. Mr. Brady founded The Chart Group L.P., a merchant banking firm and an
affiliate of our sponsor, in 1994, and serves as its Chairman and Managing Director. Mr. Brady has over 25 years of experience in private equity,
corporate finance and capital markets, with a focus on identifying and building portfolio companies. Prior to founding The Chart Group L.P., Mr. Brady
spent 14 years in the corporate finance and capital markets departments of Lehman Brothers from 1981-1987 and Dillon Read from 1987-1992. Mr. Brady
currently serves as a director of SeaMobile, Inc., a government and commercial satellite communications provider, Miami International Holdings, a newly
formed options exchange , Templeton Emerging Markets Investment Trust PLC, an international asset manager, Airborne Tactical Advantage Company (ATAC),
a tactical military training service, and Genesis Today, Inc., a natural health supplement from organic liquid vitamins , and in other private
companies in which either The Chart Group L.P. or its affiliates have invested. Mr. Brady serves as the Chairman for Chart Capital Partners I, II and
Chart Venture Partners. Mr. Brady served as a member of the Transition Team for the United States Army Secretary Dr. Francis Harvey 2004-2005. Mr.
Brady earned his B.A. from Middlebury College and his M.B.A. from Columbia University Graduate School of Business. In addition, Mr. Brady is well
qualified to serve on our
101
board of directors due to his background in private equity, corporate finance and capital markets, with a focus on identifying and building portfolio companies.
Michael LaBarbera has been our
chief financial officer and secretary since our inception. Mr. LaBarbera serves as a Managing Director of Chart Group Advisors, a merchant banking firm
and affiliate of our sponsor. Prior to Chart, from 1996-2002 he was Managing Director, Head of Private Placements & Fundraising at Dresdner
Kleinwort Capital, the global private equity business within Dresdner Kleinwort Wasserstein Securities, LLC. From 1994-1996, he was Managing Director,
Head of Private Placements at S.G. Warburg & Co., and a Director of S.G. Warburg, PLC. From 1984-1994 he was Senior Vice President, Co-Head of
Private Placements at Dillon, Read & Co. Inc. Prior to Dillon Read, he was a member of the Corporate Treasurers Departments of both Penn
Central Corporation and Exxon Corporation. Mr. LaBarbera has advised both public and private companies on corporate issuance and on structuring
financings for acquisitions, business expansion and balance sheet restructurings. Mr. LaBarbera currently serves as a Director and Audit Committee
Chair for Laney Directional Drilling, Co. He received an M.B.A. in Finance from Columbia University Graduate School of Business and a B.S. in Chemistry
from Brooklyn College, City University of New York.
Peter A. Cohen has been a member
of our Board of Directors since September 2011. Mr. Cohen serves as Chief Executive Officer and Chairman of the Board of Directors of Cowen Group,
Inc., a diversified financial services company, and parent company of Cowen and Company, LLC, the lead underwriter of this offering. Prior to Cowen
Group, Mr. Cohen was the founder of Ramius LLC. He also served as a managing member and senior member of the Executive Committee of Ramius. After
receiving his Bachelor of Science degree from Ohio State University in 1968, Mr. Cohen earned his M.B.A. from Columbia University in 1969 and began a
career on Wall Street at Reynolds & Co. In 1970, he joined the firm which became Shearson Lehman Brothers. In 1973, Mr. Cohen became Assistant to
the Chairman of the firm, Sanford Weill, and was involved in all aspects of the firms activities. In 1978, Mr. Cohen left Shearson for one year
to work directly for Edmond Safra at Republic NY Corporation and Trade Development Bank Holdings in Geneva, Switzerland and returned to Shearson in
1979. Shearson merged with American Express in 1981 at which time he became President & Chief Operating Officer and in 1983 Chairman and Chief
Executive Officer, a position he held until 1990. In 1991, Mr. Cohen formed Republic New York Securities and Republic Asset Management for Republic
National Bank of New York and at the same time commenced the activities around which Ramius was formed in 1994. Over his career he has served on a
number of corporate, industry and philanthropic boards, including The New York Stock Exchange, The Federal Reserve International Capital Market
Advisory Committee, The Depository Trust Company, The Ohio State University Foundation, The New York City Opera, The American Express Company, GRC
International, Olivetti SpA, Société Générale de Belgique, Telecom Italia SpA, Presidential Life Corporation, Kroll, Inc.,
and L-3 Communications. Mr. Cohen is presently a Director of Mount Sinai Hospital, Safe Auto Insurance, and Scientific Games Corporation. Mr. Cohen is
well qualified to serve on our Board of Directors by virtue of his substantial corporate leadership and financial industry expertise and his
significant investment experience.
Governor Thomas J. Ridge has
been a member of our directors since inception. Governor Ridge is President and Chief Executive Officer of Ridge Global, LLC, Washington, D.C., a
global strategic consulting company. He has held that position since July 2006. Additionally, in April 2010, Governor Ridge became a partner in Ridge
Policy Group, Harrisburg, Pennsylvania and Washington, D.C., a bi-partisan, full-service government affairs and issue management group. From April 2005
to July 2006, he was President and Chief Executive Officer of Thomas Ridge LLC. From October 2001 to February 2005, Governor Ridge was Secretary of the
U.S. Department of Homeland Security. Prior to his service as Secretary of Homeland Security, he was Governor of Pennsylvania from 1995 to 2001.
Governor Ridges background and experience have prepared him well for membership on our Board. As President and Chief Executive Officer of Ridge
Global, he leads a team of international experts that helps businesses and governments address issues such as risk management, global trade security,
technology integration and crisis management. As a partner in Ridge Policy Group, he provides strategic advice to clients to assist them in navigating
the complexities of state and local government and raising awareness of their products and services that are relevant to government markets. As
twice-elected Governor of Pennsylvania, he has championed issues such as health care and the environment. As Secretary of the Department
of Homeland Security, he formed a new agency from 22 agencies employing more than 180,000 employees. Governor Ridge has been a director of Exelon
Corporation
102
since May 2005, a director of The Hershey Co. since November 2007, a director of Brightpoint Inc. since September 2009 and a director of Geospatial Holdings, Inc. since April 2010. He was formerly a director of Vonage from August 2005 to April 2010 and Home Depot, Inc. from May 2005 to May 2007. Governor Ridge holds a bachelors degree, cum laude, from Harvard University and a Juris Doctor degree from The Dickinson School of Law of The Pennsylvania State University. Governor Ridges background and substantial government experience have prepared him well for membership on our Board of Directors. Governor Ridge also brings significant corporate governance experience and compliance oversight expertise by virtue of his prior and on-going directorships.
Senator Joseph Robert
Bob Kerrey has been a member of our Board of Directors since inception. Senator Kerrey is President Emeritus of The New School in New
York City and served as its President from January 2001 until January 2011. From 1988 to 2000, he served as United States Senator from Nebraska. During
that period, he was a member of numerous congressionally-chartered commissions and Senate committees, including the Senate Finance and Appropriations
Committees and the Senate Select Committee on Intelligence. Prior to that time, he served as Governor of Nebraska from 1982 to 1987. Senator Kerrey is
a director of Scientific Games Corporation, Jones Apparel Group, Inc., Tenet Healthcare Corporation and Genworth Financial, Inc. In addition, Senator
Kerreys background and substantial government experience have prepared him well for membership on our Board of Directors and, by virtue of his
current directorships, he will add significant corporate governance and compliance oversight expertise to our Board of Directors.
Timothy N. Teen has been a
member of our Board of Directors since our inception. Mr. Teen is a founder of Chart Venture Partners, an affiliate of our sponsor, since its
inception. Mr. Teen also founded Blue Ocean Capital Partners, a strategic advisory firm to the aerospace and defense sectors, in 2009 and serves as its
Chief Executive Officer. Blue Ocean Capital Partners consults with aerospace and defense firms, homeland defense suppliers, as well as some of the
largest investment firms in this sector, to source transactions, perform diligence and provide general portfolio assistance. Since 2004, Mr. Teen has
served as the Chief Executive Officer and Board member of InSitech, Inc., a government services firm with offices in New Jersey, California and
Maryland, that advises the United States Army, Navy and Marines on a variety of program initiatives including private sector investment trends, as well
as sourcing emerging technology solutions for military requirements. Under Mr. Teens leadership, InSitech has sourced and evaluated
numerous companies for the military and has also represented the United States Army in the creation of a private
sector technology campus within the security confines of Picatinny Arsenal. Tenants include some of the largest military contractors and homeland
defense suppliers such as ATK, BAE, Booz-Allen, Raytheon and SAIC. Mr. Teen has over 25 years of leadership experience in strategic planning,
corporate/business development and marketing in technology based businesses and has led firms through transition and change. Mr.
Teen is also a founder and investment committee member of Chart Venture Partners an early stage venture capital fund focused on
investing in companies that serve the g overnment and c ommercial sectors. Mr. Teen is a recipient of the Secretary of
the Army Public Service Awardone of the highest civilian honors given. Mr. Teen has a BS in Marketing and Management from Montclair University,
Upper Montclair, NJ. Mr. Teen is well qualified to serve on our Board of Directors by virtue of his significant experience in the government services
sector as well as his on-going corporate advisory and investment responsibilities.
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 Messrs. Cohen and Brady
will expire at our first annual meeting of stockholders. The term of office of the second class of directors, consisting of Governor Ridge and Senator
Kerrey and Mr. Teen, will expire at the second annual meeting of stockholders. The term of office of the third class of directors, consisting of Mr.
Wright, 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
103
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 private equity businesses, public companies and in government services. These
individuals will play a key role in identifying and evaluating prospective acquisition candidates, selecting the target businesses, and structuring,
negotiating and consummating their acquisition.
Director Independence
Although we anticipate our
securities will be quoted on the OTC Bulletin Board, we apply the NYSE Amex listing standard to determine our independent directors, as well as Rule
10A-3 promulgated under the Exchange Act. The NYSE Amex defines an independent director, 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.
We have determined that Governor Ridge
and Senator Kerrey are independent directors, as defined under the NYSE Amex listing standards and Rule 10A-3 of the Exchange Act.
Executive Officer and Director
Compensation
None of our executive officers or
directors has received any compensation (cash or non-cash) 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 The Chart Group L.P., an affiliate of
Christopher D. Brady, our president and director, a total of $10,000 per month for office space and administrative services, including secretarial
support. This arrangement is being agreed to by The Chart Group L.P. for our benefit and is not intended to provide The Chart Group L.P. or Mr. Brady
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 $10,000 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 approve all payments in excess of $5,000 to be made to our sponsor, officers, directors or our or their affiliates.
After the consummation of our initial
business combination, directors or members of our management team who remain in one of those capacities , 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.
104
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:
|
the corporation could financially undertake the opportunity; |
|
the opportunity is within the corporations line of business; and |
|
it would not be fair to the corporation and its stockholders for the opportunity not to be brought to the attention of the corporation. |
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, or any other fiduciary duties or contractual obligations they may have as of the date of this prospectus.
Accordingly, if any of our officers or
directors becomes aware of a business combination opportunity that falls within the line of business of any entity to which he has pre-existing
fiduciary or contractual obligations, he may be required to present such business combination opportunity to such entity prior to presenting such
business combination opportunity to us or, in the case of a non-compete obligation, possibly prohibited from referring such opportunity to us. Certain
of our officers and directors currently have certain relevant fiduciary duties or contractual obligations that may take priority over their duties to
us. Mr. Cohen, one of our directors, has pre-existing fiduciary duties to the Cowen Group, Inc., and through that to its direct and indirect
subsidiaries. Mr. Cohen also has fiduciary duties to Scientific Games Corporation. If Mr. Cohen becomes aware of a potential business that may be
suitable for our initial business combination, that falls within the line of business of any entity to which he has a pre-existing fiduciary duty, 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 any future non-compete obligation, possibly prohibited from referring such opportunity to us. Other than the foregoing, none of our
officers or directors currently has fiduciary duties that may take priority over their duties to us.
We do not believe that any of the
foregoing pre-existing fiduciary duties or contractual obligations will materially undermine our ability to consummate our initial
business combination because the foregoing entities have specific industry focuses and even, within those industries, may have constraints on the size
of acquisitions they would consider.
Each of our officers and directors may
become involved with subsequent blank check companies similar to our company, although pursuant to a letter agreement, they have agreed not to
participate in the formation of, or become an officer or director of, any blank check company until we have entered into a definitive agreement
regarding our initial business combination or we have failed to complete our initial business
105
combination within 21 months from the date of this prospectus. 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:
|
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. |
|
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. |
|
Our sponsor purchased founder shares prior to the date of this prospectus . Our sponsor and Cowen Overseas have each committed to purchase an aggregate of 475,000 placement units, at the price of $10.00 per unit, in a private placement that will occur simultaneously with the closing of this offering. Our sponsor and Cowen Overseas (as applicable), have each agreed to waive their respective redemption rights with respect to the founder shares and placement shares (i) in connection with the consummation of our initial business combination , (ii) if we fail to consummate our initial business combination within 21 months from the date of this prospectus , (iii) in connection with an expired or unwithdrawn tender offer, and (iv) upon our liquidation prior to the expiration of the 21 month period . To the extent our sponsor transfers any of these securities to our officers and directors, our officers and directors will agree, as a condition to such transfer, to waive these same redemption rights. If we do not complete our initial business combination within such 21 month time period, the proceeds of the sale of the placement units will be used to fund the redemption of our public shares, and the placement warrants will expire worthless. With certain limited exceptions (as described in more detail below under Principal Stockholders Transfers of Founder Shares and Placement Units (including securities contained therein)) , the founder shares, placement units and their underlying securities will not be transferable, assignable or salable (i) in the case of the founder shares, by our sponsor until the earlier of (A) one year after the consummation 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 placement units and the component securities therein, by our sponsor and Cowen Overseas until 30 days after the consummation of our initial business combination. In addition, Cowen Overseas is an affiliate of Cowen and Company, LLC, the lead underwriter in this offering, which will receive deferred underwriting compensation only if we complete our business combination. |
|
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 our initial business combination. |
We are not prohibited from pursuing an
initial business combination with a company that is affiliated with our sponsor, officers or directors. Additionally, we are not prohibited from
partnering, submitting joint bids, or entering into any similar transaction with our sponsor, or an affiliate of our sponsor, in the pursuit of an
initial business combination. In the event we seek to complete an initial business combination with such a company or we partner with our sponsor or an
affiliate of our sponsor in our pursuit of an initial business combination, we, or a committee of independent directors, would obtain an opinion from
an independent investment banking firm which is a member of FINRA that such an initial business combination is fair to our stockholders from a
financial point of view. Furthermore, in no event will our sponsor or any of our existing officers or directors, or
106
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, placement shares and any shares
purchased in or after the offering, and our officers and directors, if applicable, will agree to vote such shares they may hold directly, in favor of
our initial business combination.
Conflict of Interest Relating to Underwriting
Activities
Joseph Wright, our chairman and chief
executive officer serves as an independent director of Cowen Group, Inc., the parent company of Cowen and Company, LLC, the lead underwriter of this
offering. Peter A. Cohen, one of our directors, serves as a chief executive officer and chairman of the board of Cowen Group, Inc. Therefore, we are
deemed to be an affiliate of Cowen and Company, LLC, a member of the Financial Industry Regulatory Authority or FINRA. As a result, Cowen and Company,
LLC is deemed to have a conflict of interest under Rule 5121(f)(5) of the Conduct Rules of FINRA. Accordingly, this offering will be made
in compliance with Rule 5121(a)(2) of FINRAs Conduct Rules, which requires that a qualified independent underwriter, as defined by
FINRA, participate in the preparation of the registration statement and exercise the usual standard of due diligence with respect to such document.
will
act as the qualified independent underwriter with respect to this offering.
Limitation on Liability and Indemnification of Officers and
Directors
Our amended and restated certificate of
incorporation provides that our officers and directors will be indemnified by us to the fullest extent authorized by Delaware law, as it now exists or
may in the future be amended. In addition, our amended and restated certificate of incorporation provides that our directors will not be personally
liable for monetary damages to us for breaches of their fiduciary duty as directors, unless they violated their duty of loyalty to us or our
stockholders, acted in bad faith, knowingly or intentionally violated the law, authorized unlawful payments of dividends, unlawful stock purchases or
unlawful redemptions, or derived an improper personal benefit from their actions as directors.
We will enter into agreements with our
officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate
of incorporation. Our amended and restated bylaws also will permit us to secure insurance on behalf of any officer, director or employee for any
liability arising out of his or her actions, regardless of whether Delaware law would permit such indemnification. We will purchase a policy of
directors and officers liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a
judgment in some circumstances and insures us against our obligations to indemnify our officers and directors.
These provisions may discourage
stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty. These provisions also may have the effect of reducing
the likelihood of derivative litigation against officers and directors, even though such an action, if successful, might otherwise benefit us and our
stockholders. Furthermore, a 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.
107
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:
|
each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; |
|
each of our officers, directors and director nominees that beneficially owns shares of our common stock; and |
|
all our officers and directors as a group. |
Unless otherwise indicated, we believe
that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The
following table does not reflect record or beneficial ownership of the placement warrants as these warrants are not exercisable within 60 days of the
date of this prospectus.
Prior to the Offering(2) |
After the Offering(2)(3) |
||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name and Address of Beneficial Owners(1) |
Amount and nature of beneficial ownership |
Percentage of outstanding common stock |
Amount and nature of beneficial ownership |
Percentage of outstanding common stock |
|||||||||||||||
Chart
Acquisition Group LLC |
3,175,000 | 94.77 | % | 2,800,000 | 21.58 | % | |||||||||||||
The Chart
Group L.P.(4) |
3,175,000 | 94.77 | 2,800,000 | 21.58 | |||||||||||||||
Joseph
Wright |
|
|
|
|
|||||||||||||||
Christopher
D. Brady(4) |
3,175,000 | 94.77 | 2,800,000 | 21.58 | |||||||||||||||
Michael
LaBarbera(4) |
|
|
|
|
|||||||||||||||
Governor
Thomas Ridge |
|
|
|
|
|||||||||||||||
Senator
Joseph Robert Kerrey |
|
|
|
|
|||||||||||||||
Timothy N.
Teen(4) |
|
|
|
|
|||||||||||||||
Peter A.
Cohen(5) |
175,000 | 5.23 | 175,000 | 1.35 | |||||||||||||||
Cowen
Overseas Investment LP(5) |
175,000 | 5.23 | 175,000 | 1.35 | |||||||||||||||
All
directors and officers as a group (7 persons) |
3,350,000 | 100.00 | % | 2,975,000 | 22.93 | % |
* |
Less than 1 percent. |
(1) |
Unless otherwise noted, the business address of each of the beneficial owners is 75 Rockefeller Plaza, 14th Floor, New York, NY 10019. |
(2) |
Includes 2,875,000 founder shares and assumes the sale of 475,000 placement units subject to subscription agreements in a private placement to be completed simultaneously with this offering. |
(3) |
Assumes the underwriters overallotment option has not been exercised and as a result, an aggregate of 375,000 founder shares held by our sponsor have been forfeited. Includes a number of founder shares equal to 2.5% of our shares of common stock issued and outstanding after the consummation of this offering (excluding the placement shares) which will be subject to forfeiture by our sponsor in the event the last sales price of our stock does not equal or exceed $11.50 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. An additional number of founder shares equal to 2.5% of our shares of common stock issued and outstanding after the consummation of this offering (excluding the placement shares) which will be subject to forfeiture in the event the last sales price of our stock does not equal or exceed $13.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for at least one period of 20 trading days within any 30-trading day period within 60 months following the closing of our initial business combination. None of the placement shares will be subject to forfeiture. |
108
(4) |
Includes 100% of the shares of our common stock held by our sponsor. The Chart Group L.P. is the managing member of our sponsor, and has voting and dispositive power over our sponsor. As a result, The Chart Group L.P. may be deemed to be the beneficial owner of all shares held by our sponsor. In addition, The Chart Group L.P. is a limited partnership that is managed and controlled by its general partner, Antwerp L.L.C., a New York limited liability company. Mr. Brady owns a majority of the membership interests in Antwerp L.L.C., and he is its Chief Executive Officer and a member of its Management Committee. As such, Mr. Brady may be deemed to control or share control of Antwerp L.L.C. Each of Messrs. Brady, LaBarbera and Teen disclaim beneficial ownership of any shares of our common stock in which they do not have an actual pecuniary interest. |
(5) |
Cowen Group, Inc. has, indirectly, sole voting and dispositive power over Cowen Overseas through its ownership of Ramius Advisors, LLC a wholly-owned subsidiary of Cowen Group, Inc. and the general partner of Cowen Overseas. This amount includes placement shares beneficially owned by Cowen Overseas Investment LP. However, in no event will Cowen Overseas sell any of its placement shares or placement warrants prior to the date 180 days immediately following the completion of this offering. As Chairman and Chief Executive Officer of Cowen Group, Inc., Mr. Cohen may be deemed to control or share control of Cowen Group, Inc. Mr. Cohen disclaims beneficial ownership of the placement shares owned by Cowen Overseas. |
Immediately after this offering
(assuming no exercise of the underwriters overallotment option), our sponsor will beneficially own shares equal to 2 1.58 % of
the then issued and outstanding shares of our common stock ( which includes 300,000 placement shares and assumes
it does not purchase any units in this offering . Because of this ownership block, our sponsor may be able to
effectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors, amendments to our amended
and restated certificate of incorporation and approval of significant corporate transactions other than approval of our initial business
combination.
To the extent the underwriters do not
exercise the overallotment option, up to an aggregate of 375,000 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 20.0% ownership of
common stock excluding the placement shares , and 21.58% including the placement shares, in each case after giving effect to
the offering and the exercise, if any, of the underwriters overallotment option. In addition, the founder earn out shares (a number of founder
shares equal to 2.5% of our shares of common stock issued and outstanding after the expiration of the underwriters overallotment option,
excluding the placement shares) are subject to forfeiture by our sponsor in the event the last sales price of our stock does not equal or exceed $11.50
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. An additional number of founder shares equal to 2.5%
of our shares of common stock issued and outstanding after the consummation of this offering and expiration of the underwriters overallotment
option (excluding the placement shares), will be subject to forfeiture by our sponsor in the event the last sales price of our stock does not equal or
exceed $13.50 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for at least one period of 20
trading days within any 30-trading day period within 60 months following the closing of our initial business combination. None of the placement
shares are subject to forfeiture.
Our sponsor has committed to purchase
300,000 placement units and Cowen Overseas has committed to purchase 175,000 placement units at the price of $10.00 per unit, for an aggregate purchase
price of $4.75 million, in a private placement that will occur simultaneously with the closing of this offering. Each placement warrant contained in a
placement unit entitles the holder to purchase one share of our common stock at $11.50 per share. The purchase price of the placement units will be
added to the proceeds from this offering to be held in the trust account pending our consummation of our initial business combination. If we do not
complete our initial business combination within 21 months from the date of this prospectus, the proceeds of the sale of the placement units will be
used to fund the redemption of our public shares, and the placement warrants will expire worthless. The placement units are subject to the transfer
restrictions described below under Principal Stockholders Transfers of Founder Shares and Placement Units (including securities
contained therein) . The placement warrants will not be redeemable by us so long as they are held by the
109
initial holders or their permitted transferees. If the placement warrants are held by holders other than its initial holders, the placement 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 placement warrants may also be exercised by their initial holders or their permitted transferees on a cashless basis. Otherwise, the placement warrants have terms and provisions that are identical to those of the warrants being sold as part of the units in this offering. After giving effect to the private placement of founder shares and placement units, consisting of placement shares, our sponsor will own 21.58% and Cowen Overseas will own 1.35% of the outstanding common stock following the offering and the exercise, if any, of the underwriters overallotment option (assuming that neither our sponsor nor Cowen Overseas purchases any public shares in the offering or the public market.)
Our sponsor and executive officers are
deemed to be our promoters as such term is defined under the federal securities laws.
Transfers of Founder Shares and Placement Units (including
securities contained therein)
The founder shares, placement units and
securities contained therein that are owned by our sponsor, officers or directors, and Cowen Overseas (as applicable) 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 (with
respect to its founder shares and placement units and the securities contained therein) and by Cowen Overseas (with respect to its placement units and
the securities contained therein). 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 consummation 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 placement units, including the component securities therein, until the later of (i) one year from the
consummation of the offering and (ii) 30 days after the consummation of our initial business combination, except in each case (a) to the officers or
directors, any affiliates or family members of any of the officers or directors, any members of our sponsor or partners of Cowen Overseas or any of
their respective affiliates, (b) by gift to a member of our sponsor , or a partner of Cowen Overseas, their immediate family or to
a trust, the beneficiary of which is a member of ( one of the members of ) our sponsors immediate family or to a charitable
organization; (c) by virtue of laws of descent and distribution upon death of an officer or director, one of the members of our sponsor ,
or a partner of Cowen Overseas; (d) pursuant to a qualified domestic relations order; (e) in the event of our liquidation prior to
our consummation of our initial business combination; or (f) by virtue of the laws of Delaware or the Sponsors limited liability
company agreement upon dissolution of our sponsor or, in the case of Cowen Overseas, by virtue of the laws of the Cayman Islands or its
controlling limited partnership agreement ( g ) in the event of our consummation of a liquidation, merger, stock exchange or other
similar transaction which results in all of our stockholders having the right to exchange their shares of common stock for cash, securities or other
property subsequent to our consummation of our initial business combination; provided, however, that in the case of clauses (a) through
( f ) these permitted transferees must enter into a written agreement agreeing to be bound by these transfer restrictions. Our sponsor has
also agreed, to the extent applicable, that it will not sell or transfer founder shares that remain subject to forfeiture. In addition, in no event
will Cowen Overseas be permitted to sell or transfer any of the placement units or the securities included therein until the date that is 180 days
after the consummation of this offering.
Registration Rights
The holders of the founder shares,
placement units (including securities contained therein) and warrants that may be issued upon conversion of working capital loans will have
registration rights to require us to register a sale of any of our securities held by them pursuant to a registration rights agreement to be signed
prior to or on the effective date of this offering. These holders will be entitled to make up to three demands,
110
excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders 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 and placement shares, upon the earlier of (A) one year after the consummation 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 holders having the right to exchange their shares of common stock for cash, securities or other property, and (ii) in the case of the placement warrants and the respective common stock underlying such warrants, 30 days after the consummation of our initial business combination. We will bear the costs and expenses of filing any such registration statements.
111
On August 9, 2011 we issued an
aggregate of 2,875,000 founder shares to our sponsor for an aggregate purchase price of $25,000 in cash, or approximately $0.0087 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 overallotment option, our sponsor has agreed, pursuant to a written agreement with us, that it will forfeit up to an aggregate of
375,000 founder shares in proportion to the portion of the underwriters overallotment option that was not exercised. In addition, the founder
earn out shares (a number of founder shares equal to 2.5% of our shares of common stock issued and outstanding after the expiration of the
underwriters overallotment option, excluding the placement shares) are subject to forfeiture by our sponsor in the event the last sales price of
our stock does not equal or exceed $11.50 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. An additional
number of founder shares equal to 2.5% of our shares of common stock issued and outstanding after the expiration of the underwriters
overallotment option (excluding the placement shares), will be subject to forfeiture by our sponsor in the event the last sales price of our stock does
not equal or exceed $13.50 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 60 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 $3,262.50. 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. None of the placement shares are subject to forfeiture.
Our sponsor has committed to purchase
300,000 placement units and Cowen Overseas has agreed to purchase 175,000 placement units, at the price of $10.00 per unit for an aggregate purchase
price of $4.75 million, in a private placement that will occur simultaneously with the closing of this offering. All of the proceeds received from the
sale of the placement units will be financed from available funds and not from borrowed funds. All of the proceeds from the purchase
price of the placement units will be added to the proceeds from this offering to be held in the trust account pending our completion of an initial
business combination. The placement warrants will be identical to the warrants sold in this offering, except that if held by the original holders or
their permitted assigns, they (i) may be exercised for cash or on a cashless basis; and (ii) are not subject to being called for redemption. The
placement units and the component securities contained therein will be subject to lockup (i.e. not transferable, assignable or saleable) until 30 days
after the consummation of our initial business combination. If we do not complete an initial business combination that meets the criteria described in
this prospectus, the portion of the $4,750,000 purchase price of the placement units placed in the trust account will be included as a part of the
liquidation amount payable to our public stockholders and the placement warrants will expire worthless. Including the private placement of
founder shares and placement units, our sponsor will own 21.58% and Cowen Overseas will own 1.35% of the outstanding common stock
following offering and the exercise, if any, of the underwriters overallotment option (assuming that neither our sponsor nor Cowen
Overseas purchases any shares in the offering or the public market.)
The placement units will be sold in a
private placement pursuant to Section 4(2) or Regulation D of the Securities Act and will be exempt from registration requirements under the federal
securities laws. As such, the holders of the placement warrants included in the placement units will be able to exercise such placement warrants even
if, at the time of exercise, an effective registration statement and a current prospectus relating to the common stock issuable upon exercise of such
warrants is not available. Our placement units and the underlying securities will become freely tradable only after they are
registered.
The Chart Group L.P., an entity
affiliated with Christopher D. Brady, our President and member of our board of directors, has agreed to, from the date that our securities are first
quoted on the OTCBB through the earlier of our consummation of our initial business combination or our liquidation, make available to us
office
112
space and certain office and secretarial services, as we may require from time to time. We have agreed to pay The Chart Group L.P. $10,000 per month for these services. However, this arrangement is solely for our benefit and is not intended to provide The Chart Group L.P. compensation in lieu of salary. We believe, based on rents and fees for similar services in the New York metropolitan area, that the fee charged by The Chart Group L.P. is at least as favorable as we could have obtained from an unaffiliated person.
Other than the $10,000 per-month
administrative fee paid to The Chart Group L.P., an affiliate of our sponsor, and reimbursement of any out-of-pocket expenses incurred in connection
with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations, no
compensation or fees of any kind, including 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 combination (regardless of the type of
transaction that it is). Our independent directors will approve all payments in excess of $5,000 to be made to our sponsor, officers, directors or our
or their affiliates.
As of the date of this prospectus our
sponsor has also advanced to us an aggregate of $175,000 to cover expenses related to this offering. These loans will be payable without interest on
the earlier of March 31, 2012 or the closing of this offering. We intend to repay these loans 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 interest on such proceeds. Up
to $750,000 of such loans may be convertible into warrants of the post business combination entity at a price of $0.75 per warrant at the option of the
lender. These warrants would be identical to the placement warrants. The terms of such loans by our officers and directors, if any, have not been
determined and no written agreements exist with respect to such loans.
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, placement shares and placement warrants, which is described under the heading Principal
Stockholders Registration Rights.
113
Pursuant to our amended and restated
certificate of incorporation, 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. We anticipate that t he common stock
and warrants comprising the units will begin separate trading on the 52 nd day following the date of this prospectus unless Cowen and
Company, LLC 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 overallotment option if such option is exercised prior to the filing of the Current Report on
Form 8-K. If the underwriters overallotment 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
overallotment option.
Common Stock
As of the date of this prospectus,
there were 2,875,000 shares of our common stock outstanding, all of which were held of record by our sponsor. This includes an aggregate of 375,000
shares of common stock subject to forfeiture by our sponsor to the extent that the underwriters overallotment option is not exercised in full so
that our sponsor will own founder shares equal to 20.0% of our issued and outstanding shares after this offering (excluding the placement shares and
assuming it does not purchase any units in this offering and it is not required to forfeit the founder earn out shares, as described in
this prospectus) . Our sponsor has committed to purchase 300,000 placement shares contained in the placement units in a private placement
that will occur simultaneously with the consummation of this offering (and our sponsor will hold an aggregate of 21.58% of the issued and
outstanding common stock following the offering) . The members of our sponsor are Kendall Family Investments, The Chart Group L.P. and Joseph P.
Wright, our chairman and chief executive officer. The Chart Group L.P., an affiliate of certain of our officers and directors, has sole voting and
dispositive control of the shares of our common stock held by our sponsor. Upon closing of this offering 12,975,000 shares of our common stock will be
outstanding (assuming no exercise of the underwriters overallotment 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 our initial
business combination, we may (depending on the terms of such that 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 that business combination.
We do not currently intend to hold an
annual meeting of stockholders until after we consummate our initial business combination, and thus may not be in compliance with Section
211(b) of the DGCL. Therefore,
114
if our stockholders want us to hold an annual meeting prior to our consummation of our initial business combination, they may attempt to force us to hold one by submitting an application to the Delaware Court of Chancery in accordance with Section 211(c) of the DGCL.
We will provide all 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 any amounts representing interest earned on the trust account, less any interest
released to us for working capital purposes, the payment of taxes or dissolution expenses, divided by the number of then outstanding public shares,
subject to the limitations described herein and any limitations (including but not limited to cash requirements) agreed to in connection with the
negotiation of terms of a proposed business combination. The amount in the trust account is initially anticipated to be approximately $10.06 per public
share, or approximately $10.01 per public share if the underwriters overallotment option is exercised in full. Each of o ur
sponsor and Cowen Overseas, as applicable, has agreed to waive its redemption
rights with respect to the founder shares and placement shares , (i) in connection with the
consummation of our intitial business combination , (ii) if we fail to consummate our initial
business combination within 21 months from the date of this prospectus , (iii) in connection with an expired or unwithdrawn tender offer, and (iv)
upon our liquidation prior to the expiration of the 21 month period . To the extent our sponsor transfers any of these securities to our
officers and directors, our officers and directors will agree, as a condition to such transfer, to waive these same redemption rights. Also, Cowen
Overseas has committed to purchase 175,000 placement units, at the price of $10.00 per unit, in a private placement that will occur simultaneously with
the closing of this offering. If we submit our initial business combination to our public stockholders for a vote, our sponsor has agreed, and
our officers and directors, as applicable, will agree, to vote their respective founder shares, placement shares and any public shares purchased in or
after the offering in favor of our initial 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 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,
stockholder approval of the transaction is required by law, or we decide to obtain stockholder approval for business or other 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, or
their respective affiliates in privately-negotiated transactions (as described in this prospectus), if any, could result in the approval of
our initial 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 our initial 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 stockholder meeting, if required, at which a vote shall be taken to approve
our initial business combination.
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 shareholder, together with any affiliate of such shareholder or any
other person with whom such shareholder is acting in concert or as a group (as defined under Section 13 of the Exchange Act), will be
restricted from redeeming its shares with respect to more than an aggregate of 10% of the shares sold in this offering. Moreover, any individual
shareholder or group will also be restricted from voting public shares in excess of an aggregate of 10% of the public shares sold in
this
115
offering, and all additional such shares in excess of 10%, which we refer to as the Excess Shares, will be deemed ineligible to vote at a meeting of stockholders.
If we seek stockholder approval in
connection with our initial business combination, our sponsor and, to the extent he owns any shares of our common stock, each of our
officers and directors have agreed to vote any founder shares and any placement shares held by
them and any public shares purchased during or after the offering in favor of our initial business combination. Assuming our intitial
business combination is approved, to the extent provided in this prospectus , each public stockholder may elect to redeem their public shares
irrespective of whether they vote for or against the proposed transaction, for cash equal to a pro rata share of the aggregate amount
then on deposit in the trust account, including interest but less interest withdrawn for working capital purposes, to pay taxes or dissolution costs
and excluding the deferred underwriting discount .
Pursuant to our amended and restated
certificate of incorporation, if we are unable to consummate a business combination within 21 months from the date of this prospectus, we will (i)
cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more than ten business days thereafter,
redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any
amounts representing interest earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or
dissolution expenses, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders
rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as
reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and
liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
Each of our sponsor and Cowen Overseas (as applicable) has agreed to waive its redemption rights with respect to the
founder shares and placement shares contained within the placement units (i) in connection with the consummation of a business
combination , (ii) if we fail to consummate our initial business combination within 21 months from the date of this
prospectus , (iii) in connection with an expired or unwithdrawn tender offer, and (iv) upon our liquidation prior to the expiration of the 21 month
period . However, if our sponsor or any of our officers, directors or affiliates or Cowen Overseas 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 our initial business
combination within the required time period.
In the event of a liquidation,
dissolution or winding up of the company after our initial 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
our common stock, except that upon the consummation of our initial business combination, subject to the limitations described
herein, 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 any amounts representing interest earned on the trust account, less any interest
released to us for working capital purposes, the payment of taxes or dissolution expenses .
Founder Shares and Placement
Shares
The founder shares and
placement shares are each identical to the shares of common stock included in the units being sold in this offering, and holders of founder shares or
placement shares, as applicable, have the same stockholder rights as public stockholders, except that (i) the founder shares and placement shares are
subject to certain transfer restrictions, as described in more detail above under Principal StockholdersTransfers of Founder
Shares and Placement Units (including securities contained therein), and (ii) each of our sponsor and Cowen Overseas, as
applicable, has agreed to waive its redemption rights with respect to their founder shares and placement shares , (A)
in connection with the consummation of a business combination, (B) if we fail to consummate our initial business combination within 21 months
from the date of this prospectus, (C) in connection with an expired or unwithdrawn tender offer, and (D) upon our liquidation
prior
116
to the expiration of the 21 month period. To the extent our sponsor transfers any of these securities to our officers and directors, our officers and directors will agree, as a condition to such transfer, to waive these same redemption rights. Also, Cowen Overseas has committed to purchase 175,000 placement units, at the price of $10.00 per unit, in a private placement that will occur simultaneously with the closing of this offering. If we submit our initial business combination to our public stockholders for a vote, our sponsor has agreed, and our officers and directors, will each agree, to vote their respective founder shares, placement shares and any public shares purchased in or after the offering in favor of our initial business combination.
With certain limited exceptions as
described in more detail above under Principal Stockholders Transfers of Founder Shares and Placement Units (including securities
contained therein) , the founder shares are not transferable, assignable or salable (except to our officers and directors and other persons or
entities affiliated with our sponsor, each of whom will be subject to the same transfer restrictions) until the earlier of (i) one year after the
consummation of our initial business combination or earlier if, subsequent to our business combination, the last sales price of our common stock equals
or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days
within any 30-trading day period commencing at least 150 days after our initial business combination, or (ii) the date on which we consummate a
liquidation, merger, stock exchange or other similar transaction after our initial business combination that results in all of our stockholders having
the right to exchange their shares of common stock for cash, securities or other property. In addition, the founder earn out shares (a number of
founder shares equal to 2.5% of our shares of common stock issued and outstanding after the expiration of the underwriters overallotment option,
excluding the placement shares) are subject to forfeiture by our sponsor in the event the last sales price of our stock does not equal or exceed $11.50
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. An additional number of founder shares equal to 2.5%
of our shares of common stock issued and outstanding after the expiration of the underwriters overallotment option (excluding the placement
shares), will be subject to forfeiture by our sponsor in the event the last sales price of our stock does not equal or exceed $13.50 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 60 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 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. However, if issued prior to our initial business
combination, none of the shares of our preferred stock will have any right to amounts held in the trust account.
Warrants
Public
Warrants
Each warrant entitles the registered
holder to purchase one share of our common stock at a price of $11.50 per share, subject to adjustment as discussed below, at any time commencing on
the later of one year from the closing of this offering or 30 days after the consummation of our initial business combination. The warrants will expire
five years after the consummation of our initial business combination, at 5:00 p.m., New York time, or earlier upon redemption or
liquidation.
117
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 therefrom under the securities laws of the state of residence of the registered holder of the
warrants. In the event that the conditions in the two immediately preceding sentence are not satisfied with respect to a warrant, the holder of such
warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will we be required to net
cash settle any warrant. In the event that a registration statement is not effective for the exercised warrants, the purchaser of a unit containing
such warrant will have paid the full purchase price for the unit solely for the share of common stock underlying such unit.
We have agreed that as soon as
practicable, but in no event later than fifteen (15) business days, after the closing of our initial business combination, we will use our best efforts
to file with the SEC a post-effective amendment to the registration statement of which this prospectus is a part, or a new registration statement, for
the registration, under the Securities Act, of the shares of common stock issuable upon exercise of the warrants, and we will use our best efforts to
take such action as is necessary to register or qualify for sale, in those states in which the warrants were initially offered by us, the shares of
common stock issuable upon exercise of the warrants, to the extent an exemption therefrom is not available. We will use our best efforts to
cause the post effective amendment or new registration statement the same to become effective and to maintain the effectiveness of such
registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the
warrant agreement. In addition, we agree to use our best efforts to register the shares of common stock issuable upon exercise of a warrant under the
blue sky laws of the states of residence of the exercising warrant holder to the extent an exemption is not available.
No warrants will be exercisable for
cash unless we have an effective and current registration statement covering the shares of common stock issuable upon exercise of the warrants and a
current prospectus relating to such shares of common stock. Notwithstanding the foregoing, if a registration statement covering the shares of common
stock issuable upon exercise of the public warrants has not been declared effective by the 60th business day following the closing of our initial
business combination, warrant holders may, until such time as there is an effective registration statement and during any period when we shall have
failed to maintain an effective registration statement, exercise warrants on a cashless basis pursuant to the exemption provided by Section 3(a)(9) of
the Securities Act of 1933. If cashless exercise is permitted, each holder of our warrants exercising on a cashless basis 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 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.
Once the warrants become exercisable,
we may call the warrants for redemption:
|
in whole and not in part; |
|
at a price of $0.01 per warrant; |
|
upon not less than 30 days prior written notice of redemption (the 30-day redemption period to each warrant holder; and |
|
if, and only if, the reported last sale price of the common stock equals or exceeds $17.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send to the notice of redemption to the warrant holders. |
118
We will not redeem the warrants unless
an effective registration statement covering the shares of common stock issuable upon exercise of the warrants is current and available throughout the
30-day redemption period.
We have established the last of the
redemption criterion discussed above to prevent a redemption call unless there is at the time of the call a significant premium to the warrant exercise
price. If the foregoing conditions are satisfied and we issue a notice of redemption of the warrants, each warrant holder will be entitled to exercise
his, her or its warrant prior to the scheduled redemption date. However, the price of the common stock may fall below the $17.50 redemption trigger
price as well as the $11.50 warrant exercise price after the redemption notice is issued.
If we call the warrants for redemption
as described above, our management will have the option to require any holder that wishes to exercise his, her or its warrant to do so on a
cashless basis. If our management takes advantage of this option, all holders of warrants would pay the exercise price by surrendering his,
her or its warrants for that number of shares of common stock equal to the quotient obtained by dividing (x) the product of the number of shares of
common stock underlying the warrants, multiplied by the difference between the exercise price of the warrants and the fair market value
(defined below) by (y) the fair market value. The fair market value shall mean the average reported last sale price of the common stock for
the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of warrants. If our
management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of common
stock to be received upon exercise of the warrants, including the fair market value in such case. Requiring a cashless exercise in this
manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a warrant redemption. We believe this feature is an
attractive option to us if we do not need the cash from the exercise of the warrants after our initial business combination. If we call
our warrants for redemption and our management does not take advantage of this option, our sponsor and their permitted transferees would still be
entitled to exercise their placement 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 (ii) one (1) minus the quotient of
(x) the price per share of common stock paid in such rights offering divided by (y) the fair market value. For these purposes (i) if the rights
offering is for securities convertible into or exercisable for common stock, in determining the price payable for common stock, there will be taken
into account any consideration received for such rights, as well as any additional amount payable upon exercise or conversion and (ii) fair market
value means the volume weighted average price of common stock as reported during the ten (10) trading day period ending on the trading day prior to the
first date on which the shares of common stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive
such rights.
In addition, if we, at any time while
the warrants are outstanding and unexpired, pay a dividend or make a distribution in cash, securities or other assets to the holders of common stock on
account of such shares of common stock (or other shares of our capital stock into which the warrants are convertible), other than (a)
as
119
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 upon the occurrence of certain events, and that if less than 70%
of the consideration receivable by the holders of common stock in the applicable event is payable in the form of common stock in the successor entity
that is listed for trading on a national securities exchange or on the OTC Bulletin Board, or is to be so listed for trading immediately following such
event, then the warrant exercise price will be reduced in accordance with a formula specified in the warrant agreement.
The warrants will be issued in
registered form under a warrant agreement between 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 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.
120
Placement
Warrants
Our sponsor has committed to purchase
300,000 placement warrants and Cowen Overseas has agreed to purchase 175,000 placement warrants, which are included in the placement units to be
purchased at a price of $10.00 per unit for an aggregate purchase price of $4,750,000, in a private placement that will occur simultaneously with the
closing of this offering. The placement warrants will be identical to the warrants sold in this offering except that if held by the original holders or
their permitted assigns, they (i) may be exercised for cash or on a cashless basis; (ii) are not subject to being called for redemption. A portion of
the proceeds from the sale of the placement warrants will be held in our trust account for the benefit of our public stockholders. If we do not
complete one or more business combinations as described in this prospectus, the placement warrants will become worthless.
The placement warrants will be sold in
a private placement pursuant to Regulation D of the Securities Act and will be exempt from registration requirements under the federal securities laws.
However, the holders of these placement warrants have agreed that they will not exercise them if, at the time of exercise, an effective registration
statement and a current prospectus relating to the common stock issuable upon exercise of the public warrants is not available, unless, at that time,
the public warrants are exercisable on a cashless basis.
The placement warrants will become
worthless if we do not consummate our initial business combination. The personal and financial interests of holders of the placement
warrants may influence their motivation in identifying and selecting a target business and completing our initial business combination in
a timely manner. Consequently, our officers and directors discretion in identifying and selecting a suitable target business may result in
a conflict of interest when determining whether the terms, conditions and timing of a particular business combination are appropriate and in our
stockholders best interest.
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 our 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 our initial business combination. The payment of any cash dividends subsequent to our initial
business combination will be within the discretion of our board of directors at such time. In addition, our board of directors is not currently
contemplating and does not anticipate declaring any stock dividends in the foreseeable future, except if we increase the size of the offering pursuant
to Rule 462(b) under the Securities Act, in which case we will effect a stock dividend immediately prior to the consummation of the offering in an
amount such that our sponsors ownership of founder shares (but excluding any placement shares) is maintained at 20.0% of the issued
and outstanding shares of our common stock upon the consummation of this offering. Further, if we incur any indebtedness, our ability to declare
dividends may be limited by restrictive covenants we may agree to in connection therewith.
Our Transfer Agent and Warrant Agent
The transfer agent for our common stock
and warrant agent for our warrants is 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:
121
|
if we are unable to consummate our initial business combination within 21 months from the date of this prospectus, we will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest released to us for working capital purposes, the payment of taxes or dissolution expenses, divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders (including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our board of directors, dissolve and liquidate, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law; |
|
after the consummation of this offering and 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; |
|
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; |
|
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 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 our initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act; and |
|
we will not effectuate our initial business combination with another blank check company or a similar company with nominal operations. |
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:
|
a stockholder who owns 15% or more of our outstanding voting stock (otherwise known as an interested stockholder); |
|
an affiliate of an interested stockholder; or |
|
an associate of an interested stockholder, for three years following the date that the stockholder became an interested stockholder. |
|
A business combination includes a merger or sale of more than 10% of our assets. However, the above provisions of Section 203 do not apply if: |
|
our board of directors approves the transaction that made the stockholder an interested stockholder, prior to the date of the transaction; |
|
after the completion of the transaction that resulted in the stockholder becoming an interested stockholder, that stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, other than statutorily excluded shares of common stock; or |
122
|
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. |
Securities Eligible for Future Sale
Immediately after this offering
(assuming no exercise of the underwriters overallotment option and the forfeiture of 375,000 founder shares held by our sponsor) we will have
12,975,000 shares of common stock outstanding (including 475,000 placement shares). Of these shares, the 10,000,000 shares sold in this offering will
be freely tradable without restriction or further registration under the Securities Act, except for any shares purchased by one of our affiliates
within the meaning of Rule 144 under the Securities Act. All of the remaining 2,500,000 founder shares and all 475,000 placement units (including
component securities contained therein) 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:
|
1% of the total number of shares of common stock then outstanding, which will equal 129,750 shares immediately after this offering (or 148,500 if the underwriters exercise their overallotment option); or |
|
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. |
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:
|
the issuer of the securities that was formerly a shell company has ceased to be a shell company; |
|
the issuer of the securities is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; |
|
the issuer of the securities has filed all Exchange Act reports and material required to be filed, as applicable, during the preceding 12 months (or such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports; and |
|
at least one year has elapsed from the time that the issuer filed current Form 10 type information with the SEC reflecting its status as an entity that is not a shell company. |
As a result, our sponsor will be able
to sell its founder shares, placement shares and placement warrants, as applicable, and Cowen Overseas will be able to sell its placement units,
placement shares and placement
123
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,
placement shares and placement warrants and warrants that may be issued upon conversion of working capital loans (and any shares of common stock
issuable upon the exercise of the placement warrant and warrants that may be issued upon conversion of working capital loans) will be entitled to
registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of this offering. The holders of the
majority of these securities are entitled to make up to three demands, excluding short form demands, that we register such securities. In addition, the
holders have certain piggy-back registration rights with respect to registration statements filed subsequent to our consummation of an
initial business combination. However, the registration rights agreement provides that we will not permit any registration statement filed under the
Securities Act to become effective until termination of the applicable lock-up period, which occurs (i) in the case of the founder shares and placement
shares, upon the earlier of (A) one year after the consummation 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 placement warrants, or warrants that may be issued upon conversion of working capital loans, and the
respective common stock underlying such warrants, 30 days after the consummation 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 anticipate o ur units
will be quoted on the OTCBB under the symbol , and we anticipate that our common stock and warrants will be quoted
on the OTCBB under the symbols and , respectively. We anticipate
o ur 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. The units will continue separate trading on the OTCBB .
124
In accordance with the terms and
conditions contained in the underwriting agreement, we have agreed to sell to each of the underwriters named below, and each of the underwriters, for
which Cowen and Company, LLC is acting as representative and sole book-running manager, has agreed to purchase on a firm commitment basis, the number
of units set forth opposite their respective name below:
Underwriter |
Number of Units |
|||||
---|---|---|---|---|---|---|
Cowen and
Company, LLC |
||||||
Total
|
10,000,000 |
The underwriting agreement provides
that the obligations of the underwriters to purchase the units included in this offering are subject to approval of legal matters by counsel and to
other conditions. The underwriters are obligated to purchase all of the units (other than those covered by the overallotment 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. Cowen and
Company, LLC has advised us that it does not intend to make sales to discretionary accounts.
If the underwriters sell more units
than the total number set forth in the table above, we have granted to the underwriters an option, exercisable for 45 days from the date of this
prospectus, to purchase up to 1,500,000 additional units at the public offering price less the underwriting discount. The underwriters may exercise
this option solely for the purpose of covering overallotments, 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.
Our sponsor has agreed not to, subject
to certain limited exceptions (as more fully described in more detail above under Principal StockholdersTransfers of Founder
Shares and Placement Units (including securities contained therein) , transfer, assign or sell any of the founder shares until
the earlier of: (i) one year after the consummation of our initial business combination or earlier if, subsequent to our business combination, the last
sales price of our common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations
and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after our initial business combination, or (ii) the
date on which we consummate a liquidation, merger, stock exchange or other similar transaction after our initial business combination that results in
all of our stockholders having the right to exchange their shares of common stock for cash, securities or other property. In addition, our sponsor has
agreed not to, subject to certain limited exceptions, transfer, assign or sell any of the placement shares, placement warrants or warrants that
may be issued upon conversion of working capital loans (including the common stock issuable upon exercise of such warrants) until 30 days after the
consummation of our initial business combination.
Prior to this offering, there has been
no public market for our securities. Consequently, the initial public offering price for the units was determined by negotiations between us and the
representative. The determination of our per unit offering price was more arbitrary than would typically be the case if we were an operating company.
Among the factors considered in determining initial public offering price were the history and prospects of companies whose principal business is the
acquisition of other companies, prior offerings of those companies, our management, our capital structure, and currently prevailing general conditions
in equity securities markets, including current market valuations of publicly traded companies considered comparable to our company. We cannot assure
you, however, that the price at which the units, common stock or warrants will sell in the public market after this offering will not be lower than the
initial public offering price or that an active trading market in our units, common stock or warrants will develop and continue after this
offering.
125
We anticipate o ur units
will be quoted on the OTC Bulletin Board (OTCBB) under the symbol , and, once the common stock and
warrants begin separate trading, we anticipate our common stock and warrants will be 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 overallotment option.
Fees |
Fee per Unit |
Without Exercise of the Overallotment Option |
With Exercise of Overallotment Option |
|||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Public
offering price |
$ | 10.00 | $ | 100,000,000 | $ | 115,000,000 | ||||||||
Underwriting
discount(1) |
0.275 | 2,750,000 | 3,162,500 | |||||||||||
Deferred
underwriting discount(1) |
0.3125 | 3,125,000 | 3,593,750 | |||||||||||
Proceeds
before expenses(2) |
9.41 | 94,125,000 | 108,243,750 |
(1) |
The underwriters have agreed to defer $3,125,000, or $3,593,750 if the underwriters overallotment option is exercised in full, of the underwriting discounts and commissions, equal to 3.125% of the gross proceeds of the units being offered to the public, until the consummation of our initial business combination. Upon the consummation of our initial 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 in the United States 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. No discounts or commissions will be paid on the sale of the placement units. |
(2) |
The offering expenses are estimated at $600,000, which are not reflected in the preceding table. |
If we do not complete our initial
business combination within 21 months from the date of this prospectus, the trustee and the underwriters have agreed that: (i) they will forfeit any
rights or claims to their deferred underwriting discounts and commissions, including any accrued interest thereon, then in the trust account, and (ii)
that the deferred underwriters discounts and commissions will be distributed on a pro rata basis, excluding any accrued interest thereon and net
of franchise and income taxes payable 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 overallotment option, and stabilizing purchases.
|
Short sales involve secondary market sales by the underwriters of a greater number of shares than they are required to purchase in the offering. |
|
Covered short sales are sales of units in an amount up to the number of units represented by the underwriters overallotment option. |
|
Naked short sales are sales of units in an amount in excess of the number of units represented by the underwriters overallotment option. |
|
Covering transactions involve purchases of units either pursuant to the overallotment option or in the open market after the distribution has been completed in order to cover short positions. |
|
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. |
|
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 overallotment option. In determining the source |
126
of shares to close the covered short position, the underwriters will consider, among other things, the price of units available for purchase in the open market as compared to the price at which they may purchase units through the overallotment option. |
|
Stabilizing transactions involve bids to purchase units so long as the stabilizing bids do not exceed a specified maximum. |
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 $600,000, 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 our initial
business combination , subject to the limitations described herein .
Conflict of Interest Relating to Underwriting
Activities
Joseph Wright, our chairman and chief
executive officer serves as an independent director of Cowen Group, Inc., the parent company of Cowen and Company, LLC, the lead underwriter of this
offering. Peter A. Cohen, one of our directors, serves as a chief executive officer and chairman of the board of Cowen Group, Inc. Therefore, we are
deemed to be an affiliate of Cowen and Company, LLC, a member of the Financial Industry Regulatory Authority or FINRA. As a result, Cowen and Company,
LLC is deemed to have a conflict of interest under Rule 5121(f)(5) of the Conduct Rules of FINRA. Accordingly, this offering will be made
in compliance with Rule 5121(a)(2) of FINRAs Conduct Rules, which requires that a qualified independent underwriter, as defined by
FINRA, participate in the preparation of the registration statement and exercise the usual standard of due diligence with respect to such document.
will
act as the qualified independent underwriter with respect to this offering.
Cowen Overseas has agreed that, in no
event, will it sell any of its placement units, placement shares or placement warrants prior to the date 180 days immediately following the completion
of this offering.
State Blue Sky Information
We will offer and sell the units to
retail customers only in Colorado, Delaware, the District of Columbia, Florida, Georgia, Hawaii, Illinois, Indiana, Louisiana, Minnesota, Missouri, New
York, Rhode Island, South Carolina, South Dakota, Utah, Virginia, Wisconsin and Wyoming. In New York and Hawaii, we have relied on exemptions from the
state registration requirements. In the other states listed above, we will apply to have the
127
units registered for sale and will not sell the units to retail customers in these states unless and until such registration is effective in each of these states (including Colorado, pursuant to 11-51-302(6) of the Colorado Revised Statutes).
If you are not an institutional
investor (as defined in the laws and regulations of the applicable jurisdiction), you may purchase our securities in this offering only in the
jurisdictions described directly above. Institutional investors in every state except Idaho may purchase the units in this offering pursuant to
exemptions under the Blue Sky laws of various states. The definition of an institutional investor varies from state to state but generally
includes financial institutions, broker-dealers, banks, insurance companies and other qualified entities.
The National Securities Markets
Improvement Act of 1996, which is a federal statute, pre-empts the states from regulating transactions in certain securities, which are referred to as
covered securities. The resale of the units, from and after the effective date, and the common stock and warrants comprising the units,
once they become separately transferable, are exempt from state registration requirements under the National Securities Markets Improvement Act because
we will file periodic and annual reports under the Securities Exchange Act of 1934. However, states are permitted to require notice filings and collect
fees with regard to these transactions and a state may suspend the offer and sale of securities within such state if any such required filing is not
made or fee is not paid. As of the date of this prospectus, Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida,
Georgia, Hawaii, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri,
Nebraska, Nevada, New Jersey, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Utah, Virginia,
Washington, West Virginia, Wisconsin and Wyoming either do not presently require any notice filings or fee payments or have not yet issued rules or
regulations indicating whether notice filings or fee payments will be required. The District of Columbia, Illinois, Montana, New Hampshire, North
Dakota, Oregon, Puerto Rico, Rhode Island, Tennessee, Texas and Vermont currently permit the resale of the units, and the common stock and warrants
comprising the units, once they become separately transferable, if we have registered the securities in the state or the proper notice filings and fees
have been submitted. As of the date of this prospectus, we have not determined in which, if any, of these states we will submit the required notice
filings or pay the required fee. Additionally, if any of these states that has not yet adopted a statute relating to the National Securities Markets
Improvement Act adopts such a statute in the future requiring a filing or fee or if any state amends its existing statutes with respect to its
requirements, we would need to comply with those new requirements in order for our securities to continue to be eligible for resale in those
jurisdictions.
Under the National Securities Markets
Improvement Act, the states retain the jurisdiction to investigate and bring enforcement actions with respect to fraud or deceit, or unlawful conduct
by a broker or dealer, in connection with the sale of securities. Although we are not aware of a state having used these powers to prohibit or restrict
resales of securities issued by blank check companies generally, certain state securities commissioners view blank check companies unfavorably and
might use these powers, or threaten to use these powers, to hinder the resale of securities of blank check companies in their states. The state of
Idaho deems blank check companies inherently fraudulent and such offerings may not be registered or qualify for an exemption from registration in that
state.
Aside from the exemption from
registration provided by the National Securities Markets Improvement Act, we believe that the units, from and after the effective date, and the common
stock and warrants comprising the units, once they become separately transferable, will be eligible for sale on a secondary market basis in various
states based on the availability of another applicable exemption from state registration requirements, in certain instances subject to waiting periods,
notice filings or fee payments.
Notice to Prospective Investors in the European Economic
Area
In relation to each member state of the
European Economic Area that has implemented the Prospectus Directive (each, a relevant member state), with effect from and including the date on which
the Prospectus Directive is implemented in that relevant member state (the relevant implementation date), an offer of units described in
this prospectus may not be made to the public in that relevant member state prior to the publication of a prospectus in relation to the units that has
been approved by the competent authority in that
128
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:
|
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; |
|
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; |
|
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 |
|
in any other circumstances that do not require the publication of a prospectus pursuant to Article 3 of the Prospectus Directive. |
Each purchaser of units described in
this prospectus located within a relevant member state will be deemed to have represented, acknowledged and agreed that it is a qualified
investor within the meaning of Article 2(1)(e) of the Prospectus Directive.
For the purpose of this provision, the
expression an offer to the public in any relevant member state means the communication in any form and by any means of sufficient
information on the terms of the offer and the units to be offered so as to enable an investor to decide to purchase or subscribe for the units, as the
expression may be varied in that member state by any measure implementing the Prospectus Directive in that member state, and the expression
Prospectus Directive means Directive 2003/71/EC and includes any relevant implementing measure in each relevant member
state.
We have not authorized and do not
authorize the making of any offer of units through any financial intermediary on their behalf, other than offers made by the underwriters with a view
to the final placement of the units as contemplated in this prospectus. Accordingly, no purchaser of the units, other than the underwriters, is
authorized to make any further offer of the units on behalf of us or the underwriters.
Notice to Prospective Investors in the United
Kingdom
This prospectus is only being
distributed to, and is only directed at, persons in the United Kingdom that are qualified investors within the meaning of Article 2(1)(e) of the
Prospectus Directive that are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005 (the Order) or (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling
within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as a relevant person). This prospectus and its
contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons
in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its
contents.
Notice to Prospective Investors in France
Neither this prospectus nor any other
offering material relating to the units described in this prospectus has been submitted to the clearance procedures of the Autorité des
Marchés Financiers or by the competent authority of another member state of the European Economic Area and notified to the Autorité des
Marchés Financiers. The units have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.
Neither this prospectus nor any other offering material relating to the units has been or will be:
|
released, issued, distributed or caused to be released, issued or distributed to the public in France; or |
|
used in connection with any offer for subscription or sale of the units to the public in France. |
|
Such offers, sales and distributions will be made in France only: |
129
|
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; |
|
to investment services providers authorized to engage in portfolio management on behalf of third parties; or |
|
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 (Reglement Général) of the Autorité des Marchés Financiers, does not constitute a public offer (appel public à lépargne). |
The units sold in this offering 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.
Joseph R. Wright, our chairman and
chief executive officer, is a director of Cowen Group, Inc., the parent company of Cowen and Company, LLC, the lead underwriter of this offering. Peter
A. Cohen, one of our directors, serves as a chief executive officer and chairman of the board of Cowen Group, Inc. Therefore, we are deemed be an
affiliate of Cowen and Company. As a result, Cowen and Company is deemed to have a conflict of interest under Rule 5121(f)(5) of the
Conduct Rules of FINRA. Accordingly, this offering will be made in compliance with Rule 5121(a)(2) of the Conduct Rules of FINRA, which requires that a
qualified independent underwriter, as defined by FINRA participate in the preparation of the registration statement and exercise the usual
standard of due diligence with respect to such document.
will act as the qualified independent underwriter and participate in preparation of the registration statement and exercise of the usual
standards of due diligence in respect thereto.
Ellenoff Grossman & Schole LLP, New
York, New York, is acting as counsel in connection with the registration of our securities under the Securities Act, and as such, will pass upon the
validity of the securities offered in this prospectus. In connection with this offering DLA Piper LLP (US), New York, New York, is acting as counsel to
the underwriters.
The financial statements of Chart
Acquisition Corp. (a development stage company) as of August 9, 2011 and for the period June 22, 2011 (inception) through August 9, 2011, have been
included herein in reliance upon the report of Rothstein, Kass & Company, P.C., independent registered public accounting firm, appearing elsewhere
herein, and upon the authority of Rothstein, Kass & Company, P.C. as experts in accounting and auditing.
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.
130
CHART ACQUISITION CORP.
(a development stage company)
(a development stage company)
F-2 | ||||||
Financial
Statements |
||||||
F-3 | ||||||
F-4 | ||||||
F-5 | ||||||
F-6 | ||||||
F-7
F-12 |
||||||
To the Board of Directors and Stockholders of
Chart Acquisition Corp.
Chart Acquisition Corp.
We have audited the accompanying balance sheet of Chart
Acquisition Corp. (a development stage company) (the Company) as of August 9, 2011, and the related statements of operations, changes in
stockholders equity, and cash flows for the period July 22, 2011 (date of inception) to August 9, 2011. 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 the Company as of August 9, 2011, and the results of its operations, changes in
stockholders equity, and cash flows for the period July 22, 2011 (date of inception) to August 9, 2011, in conformity with U.S. generally
accepted accounting principles.
/s/
Rothstein Kass & Company, P.C. Rothstein Kass & Company, P.C. |
Roseland, New Jersey
October 4, 2011
October 4, 2011
F-2
CHART ACQUISITION CORP.
(a development stage company)
(a development stage company)
ASSETS |
|||||||
Current
Assets: |
|||||||
Cash
|
$ | 200,000 | |||||
Non-current
Assets: |
|||||||
Deferred
Offering Costs |
43,499 | ||||||
Total Assets
|
$ | 243,499 | |||||
LIABILITIES AND STOCKHOLDERS EQUITY |
|||||||
Current
Liabilities: |
|||||||
Accounts
Payable and Accrued Expenses |
$ | 43,932 | |||||
Note Payable,
Sponsor |
175,000 | ||||||
Total Current
Liabilities |
218,932 | ||||||
Commitment
and Contingencies |
| ||||||
Stockholders Equity: |
|||||||
Preferred
Stock, $.0001 par value; 1,000,000 shares authorized, no shares issued and outstanding |
| ||||||
Common Stock,
$.0001 par value; 100,000,000 shares authorized, 2,875,000 shares issued and outstanding |
288 | ||||||
Additional
Paid-in Capital |
24,712 | ||||||
Deficit
Accumulated During Development Stage |
(433 | ) | |||||
Total
Stockholders Equity |
24,567 | ||||||
Total
Liabilities and Stockholders Equity |
$ | 243,499 |
F-3
CHART ACQUISITION CORP.
(a development stage company)
(a development stage company)
Revenue
|
$ | | ||||
Formation and
operating costs |
(433 | ) | ||||
Net Loss
Attributable to Common Stockholders |
(433 | ) | ||||
Weighted
Average Number of Common Shares Outstanding, basic and diluted |
2,875,000 | |||||
Basic and
Diluted Net Loss per Share Attributable to Common Stockholders |
$ | (0.00 | ) |
F-4
CHART ACQUISITION CORP.
(a development stage company)
(a development stage company)
STATEMENT OF CHANGES IN
STOCKHOLDERS EQUITY
For the Period from July 22, 2011 (date of inception) to August 9, 2011
For the Period from July 22, 2011 (date of inception) to August 9, 2011
Common Stock |
||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Shares |
Amount $.0001 Par |
Additional Paid-in Capital |
Deficit Accumulated During Developmental Stage |
Total Stockholders Equity |
||||||||||||||||||
Sale of
common stock issued to Sponsor on August 9, 2011 at $.008696 per share |
2,875,000 | $ | 288 | $ | 24,712 | $ | | $ | 25,000 | |||||||||||||
Net loss
attributable to common stockholders |
(433 | ) | (433 | ) | ||||||||||||||||||
Balance,
August 9, 2011 |
2,875,000 | $ | 288 | $ | 24,712 | $ | (433 | ) | $ | 24,567 |
F-5
CHART ACQUISITION CORP.
(a development stage company)
(a development stage company)
Cash Flows
from Operating Activities |
||||||
Net Loss
|
$ | (433 | ) | |||
Adjustment to
reconcile net loss to net cash used in operating activities: |
||||||
Change in
operating assets and liabilities: |
||||||
Accounts
Payable and Accrued Expenses |
433 | |||||
Net Cash Used
in Operating Activities |
| |||||
Cash Flows
from Financing Activities |
||||||
Proceeds from
Note Payable, Sponsor |
175,000 | |||||
Proceeds from
Sale of Common Stock to Sponsor |
25,000 | |||||
Net Cash
Provided by Financing Activities |
200,000 | |||||
Net increase
in Cash |
200,000 | |||||
Cash at
Beginning of the Period |
| |||||
Cash at
Ending of the Period |
$ | 200,000 | ||||
Supplemental
Disclosure for Non-cash Transactions: |
||||||
Deferred
Offering Costs Included in Accrued Expenses |
$ | 43,499 |
F-6
CHART ACQUISITION CORP.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
1. DESCRIPTION OF ORGANIZATION AND BUSINESS
OPERATIONS
Chart Acquisition Corp. (the
Company) was incorporated in Delaware on July 22, 2011. The Company is a newly-organized blank check company formed for the purpose of
acquiring, through a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, exchangeable share transaction or similar
business combination, one or more operating businesses or assets (an initial business combination). The Company has neither engaged in any
operations nor generated any revenues to date. The Company has selected December 31 as its fiscal year end.
The Company intends to finance the
initial business combination in part with the net proceeds from an initial public offering of 10,000,000 units (or 11,500,000 units if the
underwriters overallotment option is exercised in full), with each unit consisting of one share of its common stock and one warrant to purchase
one share of its common stock (the public offeringNote 3), a private placement of 2,875,000 shares of its common stock to the
Companys sponsor (the founder shares), and a private placement, for an aggregate of 475,000 units to the sponsor and Cowen Overseas
Investment LP (Cowen Overseas), an affiliate of Cowen and Company, LLC, the lead underwriter of the public offering, each unit consisting
of one share of common stock and a warrant to purchase one share of common stock (collectively, the private placementsNote 4). The
Companys sponsor is Chart Acquisition Group LLC, a Delaware limited liability Company (the sponsor).
Upon the closing of the public offering
and the private placements, $100,600,000 (or $115,187,500 if the underwriters overallotment option is exercised in full) will be held in the
trust account (discussed below). The proceeds held in the trust account will be invested only in United States government treasury bills with a
maturity of 180 days or less or in money market funds investing solely in United States Treasuries and meeting certain conditions under Rule 2a-7 under
the Investment Company Act of 1940, as amended. The trust account will be held at a bank and maintained by Continental Stock Transfer & Trust
Company acting as trustee. Except for a portion of the interest income that may be released to the Company to pay any taxes to fund working capital
requirements and for dissolution expenses, if any, and, under certain conditions, any amounts necessary to purchase up to 15% of the Companys
outstanding public shares, none of the funds held in trust will be released from the trust account until the earlier of: (i) the consummation of the
Companys initial business combination; (ii) the expiration or termination of any tender offer conducted by the Company in connection with a
proposed business combination not otherwise withdrawn; (iii) the redemption of the Companys public shares if it is unable to consummate a
business combination within 21 months from the date of the Companys final prospectus, subject to applicable law; or (iv) otherwise upon the
Companys liquidation, in the event its management resolves to liquidate the trust account and ceases to pursue the consummation of a business
combination prior to the expiration of the 21 month period.
Initial Business Combination
For the purposes of consummating an
initial business combination, the Company is not limited to a particular industry, geographic region or minimum transaction value, although its
management team intends to focus on operating businesses in the following sectors: the provision and/or outsourcing of government services. The
management team anticipates structuring a business combination to acquire 100% of the equity interests or assets of the target business or businesses.
It may also, however, structure a business combination to acquire less than 100% of such interests or assets of the target business but will not
acquire less than a controlling interest.
The Company intends to consummate the
initial business combination and conduct the redemptions without stockholder vote pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which
regulate issuer tender offers, and will file tender offer documents with the Securities and Exchange Commission.
F-7
CHART ACQUISITION CORP.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
1. DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS
(continued)
Initial Business Combination (continued)
If, however, a stockholder vote is
required by law, or the Company decides to hold a stockholder vote for business or legal reasons, it will conduct the redemptions in conjunction with a
proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company holds a stockholder vote, public stockholders
regardless of how they vote that elect to exercise their redemption rights shall be entitled to receive cash equal to their pro rata share of the
aggregate amount then on deposit in the trust account, including any amounts representing interest earned on the trust account, less any interest
released to the Company for working capital purposes, the payment of taxes or dissolution expenses. Regardless of whether the Company holds a
stockholder vote or a tender offer in connection with an initial business combination, public stockholders 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 taxes
payable plus amounts released to fund working capital requirements and any amounts used for purchasing public shares. As a result, such shares 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.
The Company will not redeem its public
shares in an amount that would cause its net tangible assets to be less than $5,000,001 and, solely if it seeks stockholder approval, a majority of the
outstanding shares of common stock voted are voted in favor of the business combination.
Solely if the Company holds a
stockholder vote to approve the initial business combination, and it does not conduct redemptions pursuant to the tender offer rules, it may enter into
privately negotiated transactions to purchase public shares from stockholders who would otherwise elect to redeem their shares, with such purchases
made using funds held in the trust account. All shares so purchased by the Company will be immediately cancelled.
Liquidation
If the Company does not consummate an
initial business combination within 21 months from the closing of the public offering, it 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 all public shares then outstanding, at a
per-share price, payable in cash, equal to the aggregate amount then on deposit in the trust account, including any amounts representing interest
earned on the trust account, less any interest released to the Company for working capital purposes, the payment of taxes or dissolution expenses,
divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders rights as stockholders
(including the right to receive further liquidation distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible
following such redemption, subject to the approval of its remaining stockholders and board of directors, dissolve and liquidate, subject in each case
to its obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Basis of Presentation
The accompanying financial statements
are presented in U.S. dollars in conformity with accounting principles generally accepted in the United States of America (GAAP) 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. As of August 9, 2011, the Company had not commenced operations or
generated revenue. All activity through the date the financial statements were issued relates to the Companys formation, the
private
F-8
CHART ACQUISITION CORP.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
placement of the founder shares to the sponsor, and the proposed public offering. Following the public 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 Common Share
Net loss per common share is computed
by dividing net loss applicable to common stockholders by the weighted average number of common shares outstanding for the period. During the period
from inception through August 9, 2011, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or
converted into common shares and then share in the earnings of the Company. As a result, dilutive loss per common share is equal to basic loss per
common share for the period.
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 Tax
The Company complies with GAAP which
requires an asset and liability approach to financial reporting for income taxes. Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of assets and liabilities that will result in future taxable or deductible amounts, based on
enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are
established, when necessary, to reduce deferred income tax assets to the amount expected to be realized.
The Company is required to determine
whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any
related appeals or litigation processes, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of
benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. De-recognition
of a tax benefit previously recognized results in the Company recording a tax liability that reduces ending retained earnings.
Based on its analysis, the Company has
determined that it has not incurred any liability for unrecognized tax benefits as of August 9, 2011.
The Company may be subject to potential
examination by U.S. federal, U.S. states or foreign jurisdiction authorities in the areas of income taxes. These potential examinations may include
questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with U.S. federal, U.S. state and
foreign tax laws. The Companys management does not expect that the total amount of unrecognized tax benefits will materially change over the next
twelve months.
Deferred Offering Costs
Deferred offering costs consist
principally of $43,499 of legal and accounting fees incurred through the balance sheet date that are related to the proposed public offering and
private placements and that will be charged to stockholders equity upon the completion of the public offering, or charged to operations if the
public offering is not completed.
F-9
CHART ACQUISITION CORP.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(continued)
Fair Value of Financial Instruments
Unless otherwise disclosed, the fair
values of the Companys financial instruments, including cash and note payable to officer, approximate their carrying amounts represented on the
balance sheet.
Recent Accounting Pronouncements
Management does not believe that any
recently issued, but not effective, accounting standards, if currently adopted, would have a material effect on the Companys financial
statements.
3. PROPOSED PUBLIC OFFERING
Pursuant to the proposed public
offering, the Company will offer for sale 10,000,000 units (or 11,500,000 units if the underwriters overallotment option is exercised in full) at
a purchase price of $10.00 per unit. Each unit consists of (i) one share of the Companys common stock, $0.0001 par value (common
stock), and (ii) one warrant to purchase one share of common stock (warrant). Each warrant entitles the holder to purchase one share
of the Companys common stock at a price of $11.50. Each warrant will become exercisable on the later of 30 days after the completion of an
initial business combination and one year from the date of the prospectus for the proposed public offering, and will expire five years from the date of
the initial business combination, or earlier upon redemption or liquidation. The Company may redeem the warrants at a price of $0.01 per warrant upon
30 days prior written notice after the warrants become exercisable, only in the event that the last sales price of the common stock equals or
exceeds $17.50 per share for any 20 trading days within a 30 trading day period ending three business days before the notice of redemption is given. In
the event that a registration is not effective at the time of exercise, the holders of the warrants shall not be entitled to exercise such warrants
(except on a cashless basis under certain circumstances) 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 warrants and the warrants will expire worthless.
4. RELATED PARTY TRANSACTIONS
Private Placements
On August 9, 2011, the Company issued
to its sponsor in a private placement 2,875,000 founder shares of restricted common stock for an aggregate purchase price of $25,000, of which up to
375,000 are subject to complete or partial forfeiture. The initial shares will not be released from transfer restrictions until: (i) one year after the
consummation of the Companys initial business combination or earlier if, subsequent to its business combination, the last sales price of its
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 its initial business combination, or (ii) the date on which it
consummates a liquidation, merger, stock exchange or other similar transaction after its initial business combination that results in all of its
stockholders having the right to exchange their shares of common stock for cash, securities or other property.
F-10
CHART ACQUISITION CORP.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
4. RELATED PARTY TRANSACTIONS
(continued)
Private Placements (continued)
The sponsor and Cowen Overseas have
separately agreed to purchase, on or before the date of the prospectus for the proposed public offering, an aggregate of 475,000 units (the
placement units) from the Company at a price of $10.00 per unit, each unit consisting of one share of common stock (placement
shares) and a warrant to purchase one share of common stock (placement warrants) (for an aggregate purchase price of $4,750,000) in
private placement pursuant to Section 4(2) of the Securities Act of 1933, as amended. The placement warrants will be identical to the warrants sold in
the public offering except that if held by the original holders or their permitted assigns, they (i) may be exercised for cash or on a cashless basis
at the option of the holder; and (ii) will not be redeemable by the Company. In addition, the placement warrants and placement shares will be subject
to transfer restrictions until 30 days following the consummation of the initial business combination. Since the Company is not required to net-cash
settle the placement warrants, management has determined that they 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.
The founder shares and
the placement 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 and the placement shares will be subject to certain transfer restrictions as described above, and (ii) each of the sponsor
and Cowen Overseas has agreed not to redeem any of the founder shares or placement shares, as the case may be, held by them
in connection with the consummation of an initial business combination, and each has also waived its rights to participate in any redemption with
respect to its initial shares and placement shares, as the case may be, if the Company fails to consummate an initial business combination.
However, each of the sponsor and Cowen Overseas (as applicable) will be entitled to redeem any public shares it acquires in or after the public
offering in the event the Company fails to consummate an initial business combination within the required time period.
In connection with a stockholder vote
to approve an initial business transaction, if any, each of the Companys initial stockholders has agreed to vote their initial shares and/or
placement shares, as the case may be, in favor of the initial business transaction. In addition, the Companys sponsor, officers and directors
have each also agreed to vote any shares of common stock acquired in the public offering or in the aftermarket in favor of the initial business
transaction submitted to stockholders for approval, if any.
The initial holders of the
Companys founder shares and placement shares and their permitted transferees will be entitled to registration rights pursuant to a registration
rights agreement to be signed on or before the date of the prospectus for the proposed public offering.
Such holders will be entitled to demand
registration rights and certain piggy-back registration rights with respect to the initial shares, the placement shares, the placement
warrants and the shares of common stock underlying the placement warrants, commencing, in the case of the initial shares, one year after the
consummation of the initial business combination and commencing, in the case of the placement shares, the placement warrants and the shares of common
stock underlying the placement warrants, 30 days after the consummation of the initial business combination.
Note Payable to Sponsor
The Company issued a $175,000 unsecured
promissory note to the Sponsor on August 9, 2011, the proceeds from the loan will be used to fund organizational and offering expenses incurred or
expected to be incurred by the Company. The principal balance of the note is payable on the earlier of (i) the date of the consummation of the public
offering and (ii) March 31, 2012. The principal balance is prepayable without
F-11
CHART ACQUISITION CORP.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
For the Period from July 22, 2011 (date of inception) to August 9, 2011
4. RELATED PARTY TRANSACTIONS
(continued)
penalty at any time in whole or in part. No interest accrues on the unpaid principal balance of the note. Due to the short-term nature of the note, the fair value of the note approximates its carrying amount.
Administrative Services
The Company has agreed to pay its
sponsor or an affiliate of its sponsor $10,000 per month for office space and general and administrative services, commencing upon the date of the
prospectus of the public offering. This agreement commences on the date of the public offering and shall continue until the earlier to occur of: (i) an
initial business combination and (ii) 21 months from the date of the Companys prospectus.
5. COMMITMENTS
The Company has granted Cowen and
Company, as the representative of the underwriters for the offering, a 45-day option to purchase up to 1,500,000 units (over and above the 10,000,000
units referred to above) solely to cover overallotments, if any.
The Company is committed to pay an
underwriting discount of 2.750% of the public unit offering price to the underwriters at the closing of the public offering, with an additional
deferred fee of 3.125% of the gross offering proceeds payable to the representative of the underwriters upon the Companys consummation of an
initial business combination.
6. STOCKHOLDERS EQUITY
Common Stock
The Company is authorized to issue
100,000,000 shares of common stock. Holders of the Companys common stock are entitled to one vote for each share. At August 9, 2011, there were
2,875,000 shares of common stock outstanding.
Preferred Stock
The Company is authorized to issue
1,000,000 shares of preferred stock, in one or more series, with such designations, voting and other rights and preferences as may be determined from
time to time by the board of directors. At August 9, 2011, the Company has not issued any shares of preferred stock.
7. SUBSEQUENT EVENT
These financial statements were
approved by management and available for issuance on October 4, 2011. Subsequent events have been evaluated through this date.
F-12
$100,000,000
Chart Acquisition Corp.
10,000,000 Units
PROSPECTUS
Cowen and Company
,
2011
Until
, 2012,
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) will be as
follows:
SEC filing fee
|
13,179 | |||||
FINRA filing
fee |
12,000 | |||||
Accounting
fees and expenses |
45,000 | |||||
Printing and
engraving expenses |
40,000 | |||||
Legal fees and
expenses |
250,000 | |||||
Blue Sky legal
and filing fees |
30,000 | |||||
Miscellaneous
expenses(1) |
9,821 | |||||
Total
|
$ | 400,000 |
(1) |
This amount represents additional expenses that may be incurred by us in connection with the offering over and above those specifically listed above, including distribution and mailing costs. |
Item 14. Indemnification of Directors
and Officers.
Our amended and restated certificate of
incorporation provides that all of our directors, officers, employees and agents will be entitled to be indemnified by us to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law.
Section 145 of the Delaware General
Corporation Law concerning indemnification of officers, directors, employees and agents is set forth below.
Section 145. Indemnification of
officers, directors, employees and agents; insurance.
(a) A corporation shall have
power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact
that the person is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint venture, trust account or other enterprise, against expenses (including
attorneys fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with such action,
suit or proceeding if the person acted in good faith and in a manner the person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe the 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 agent
of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust account or other enterprise against expenses (including attorneys fees) actually and reasonably incurred by the
person in connection with the defense or settlement of such action or suit if the person acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interests of the corporation and except that no indemnification
II-1
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 directors and officers or other employees
and agents may be so paid upon such terms and conditions, if any, as the corporation deems appropriate.
(f) The indemnification and
advancement of expenses provided by, or granted pursuant to, the other subsections of this section shall not be deemed exclusive of any other rights to
which those seeking indemnification or advancement of expenses may be entitled under any bylaw, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such persons official capacity and as to action in another capacity while holding such
office.
(g) A corporation shall have
power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust account
or other enterprise against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such
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, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another
corporation, partnership, trust or other enterprise, shall stand in the same position under this section with respect to the resulting or surviving
corporation as such person would have with respect to such constituent corporation if its separate existence had continued.
(i) For purposes of this
section, references to other enterprises shall include employee benefit plans; references to fines shall include any excise
taxes assessed on a person with respect to any employee benefit plan; and references to serving at the request of the corporation shall
include any service as a director, officer, employee or agent of the corporation which imposes duties on, or involves services by, such
director,
II-2
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.
Section 8.2 of our amended and restated
certificate of incorporation provides:
The Corporation, to the full extent
permitted by Section 145 of the DGCL, as amended from time to time, shall indemnify all persons whom it may indemnify pursuant thereto. Expenses
(including attorneys fees) incurred by an officer or director in defending any civil, criminal, administrative, or investigative action, suit or
proceeding for which such officer or director may be entitled to indemnification hereunder shall be paid by the Corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized hereby.
Our bylaws provide for the
indemnification of our directors, officers or other persons in accordance with our amended and restated certificate of incorporation.
Pursuant to the Underwriting Agreement
filed as Exhibit 1.1 to this Registration Statement, we have agreed to indemnify the underwriters, and the underwriters have agreed to indemnify us,
against certain civil liabilities that may be incurred in connection with this offering, including certain liabilities under the Securities
Act.
Item 15. Recent Sales of Unregistered
Securities.
During the past three years, we sold
the following shares of common stock without registration under the Securities Act:
Stockholders |
Number of Shares |
|||||
---|---|---|---|---|---|---|
Chart
Acquisition Holdings LLC |
2,875,000 | |||||
Total
|
2,875,000 |
Such shares of common stock were issued
to our sponsor on August 9, 2011 in connection with our organization pursuant to the exemption from registration contained in Section 4(2) of the
Securities Act as they were sold to an accredited investor as defined in Rule 501(a) of the Securities Act. The shares of common stock
issued to our sponsor were sold for an aggregate offering price of $25,000 at a purchase price
II-3
of $.0087 per share. No underwriting discounts or commissions were paid with respect to such sales. Of these securities, up to 500,000 shares of common stock are subject to forfeiture in the event that the underwriters overallotment option is not exercised, in full.
On or before the date of the prospectus
accompanying this registration statement, our sponsor and Cowen Overseas will separately purchase an aggregate of 475,000 placement units. These
placement units will be issued pursuant to the exemption from registration contained in Section 4(2) of the Securities Act as they will be sold to
accredited investors as defined in Rule 501(a) of the Securities Act. No underwriting discounts or commissions will be paid with respect to
such sales. A private placement subscription agreement has been entered into between the Company and our sponsor in connection with these placement
units and is attached as an exhibit.
In addition, if we increase the size of
the offering pursuant to Rule 462(b) under the Securities Act, we may effect a stock dividend immediately prior to the consummation of the offering in
such amount as to maintain our sponsors collective ownership of founder shares at 20% of our issued and outstanding shares of common stock upon
consummation of the offering (excluding the placement shares). If we decrease the size of the offering we will effect a reverse split of our common
stock immediately prior to the consummation of the offering in such amount as to maintain our sponsors collective ownership of founder shares at
20% of our issued and outstanding shares of common stock (excluding the placement shares) upon the date of this prospectus, in each case without giving
effect to the sale of placement units to our sponsor as described above. Any such increased number of shares will be subject to
forfeiture in the event that the underwriters overallotment option is not exercised in full. Any such decreased number of shares will be
forfeited, with the remainder subject to forfeiture in the event that the underwriters overallotment option is not exercised in
full.
Item 16. Exhibits and Financial
Statement Schedules.
See the Exhibit Index, which follows
the signature page and which is incorporated by reference herein.
Item
17. Undertakings.
( a ) The undersigned hereby undertakes to provide to the underwriter at the closing specified in the
underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to
each purchaser.
( b ) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to
directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that
in the opinion of the SEC such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication of such issue.
( c ) The undersigned registrant hereby undertakes that:
(1) For purposes
of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) For the
purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a
new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-4
SIGNATURE
Pursuant to the requirements of the
Securities Act of 1933, as amended, the registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New York, on the 21st day of November ,
2011.
CHART ACQUISITION
CORP.
By: /s/
CHRISTOPHER D.
BRADY
Name: Christopher D. Brady Title: President |
Pursuant to
the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed by the following persons in the capacities and
on the dates indicated.
Name |
Position |
Date |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
/s/ JOSEPH R. WRIGHT * |
Chief
Executive Officer and |
November 21 , 2011 |
||||||||
Joseph R.
Wright |
Chairman
of the Board |
|||||||||
/s/ CHRISTOPHER D. BRADY |
President
and Director |
November 21 , 2011 |
||||||||
Christopher D.
Brady |
||||||||||
/s/ MICHAEL LABARBERA * |
Principal
Accounting and Financial |
November 21 , 2011 |
||||||||
Michael
LaBarbera |
Officer,
Secretary |
|||||||||
/s/ GOVERNOR THOMAS RIDGE * |
Director |
November 21 , 2011 |
||||||||
Governor Thomas
Ridge |
||||||||||
/s/ SENATOR JOSEPH ROBERT * BOB
KERREY |
Director |
November 21 , 2011 |
||||||||
Senator Joseph
Robert Bob Kerrey |
||||||||||
/s/ PETER A. COHEN * |
Director |
November 21 , 2011 |
||||||||
Peter A.
Cohen |
||||||||||
/s/ TIMOTHY N. TEEN * |
Director |
November 21 , 2011 |
||||||||
Timothy N.
Teen |
||||||||||
*By: /s/
Christopher D. Brady Name: Christopher D. Brady Attorney-in-Fact |
II-5
EXHIBIT INDEX
Exhibit No. |
Description |
|||||
---|---|---|---|---|---|---|
1.1 | Form
of Underwriting Agreement.* |
|||||
3.1 | Certificate of Incorporation. ** |
|||||
3.2 | Form
of Amended and Restated Certificate of Incorporation. |
|||||
3.3 | Bylaws. |
|||||
4.1 | Specimen Unit Certificate.* |
|||||
4.2 | Specimen Common Stock Certificate.* |
|||||
4.3 | Specimen Warrant Certificate.* |
|||||
4.4 | Form
of Warrant Agreement between Continental Stock Transfer & Trust Company and the Registrant.* |
|||||
5.1 | Opinion of Ellenoff Grossman & Schole LLP.* |
|||||
10.1 | Form
of Investment Management Trust Account Agreement between Continental Stock Transfer & Trust Company and the Registrant. |
|||||
10.2 | Form
of Registration Rights Agreement among the Registrant and security holders. * |
|||||
10.3 | Form
of Letter Agreement by and between the Registrant and Chart Acquisition Group LLC, the officers and directors of the Registrant, and Cowen
Overseas Investment LP |
|||||
10.4 | Securities Purchase Agreement dated August 9, 2011 between the Registrant and Chart Acquisition Group LLC. ** |
|||||
10.5 | Promissory Note, dated August 9, 2011 issued to Chart Acquisition Group LLC in the amount of $175,000. |
|||||
10.6 | Placement Unit Subscription Agreement between the Registrant and Sponsor. ** |
|||||
10.7 | Placement Unit Subscription Agreement between the Registrant and Cowen Overseas Investment LP. ** |
|||||
10.8 | Form
of Letter Agreement between Chart Acquisition Group LLC and Registrant regarding administrative support. |
|||||
10.9 | Form
of Indemnity Agreement.* |
|||||
14.1 | Code
of Business and Ethics. |
|||||
23.1 | Consent of Rothstein Kass & Company P.C. |
|||||
23.2 | Consent of Ellenoff Grossman & Schole LLP (included in Exhibit 5.1).* |
* |
To be filed by amendment |
** |
Previously filed. |
II-6