GHC.U Global Consumer Uts

Filed Pursuant to Rule 424(B)(4)

Registration Statement No. 333-144799

 

PROSPECTUS

 

$300,000,000

Global Consumer Acquisition Corp.

 

 

 

•	one share of our common stock; and
•	one warrant.

		Public		Underwriting Discount		Proceeds,
		Offering Price		and Commissions (1)		Before Expenses
Per Unit		$10.00		$0.70		$9.30
Total		$300,000,000		$21,000,000		$279,000,000

(1)		Includes deferred underwriting discounts and commissions of 3% of the gross proceeds, or $0.30 per unit, payable to the underwriters only upon consummation of a business combination.

JMP Securities	Thomas Weisel Partners LLC

 

	•	references to “we,” “us,” “our,” “company” or “our company” refer to Global Consumer Acquisition Corp.;
	•	references to our “founding stockholders” refer to our sponsor and certain of our officers and directors and other persons who beneficially own, as of the date of this prospectus, shares of common stock (referred to herein as the founder shares);
	•	unless expressly stated to the contrary, the information in this prospectus assumes that the representative of the underwriters will not exercise their over-allotment option;
	•	references to our “insider warrants” refer to the 8,500,000 warrants to be purchased by our insider warrant holders in an insider private placement that will occur immediately prior to this offering at the price of $1.00 per warrant;
	•	references to our “insider warrant holder” refer to any holder of our insider warrants;
	•	references to “business combination” mean our initial acquisition of one or more assets or operating businesses with a fair market value of at least 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount) at the time of the acquisition through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination, pursuant to which we will require that a majority of the shares of common stock voted by the public stockholders are voted in favor of the acquisition and less than 30% of the public stockholders both vote against the proposed acquisition and exercise their conversion rights;
	•	references to “public stockholders” refer to holders of common stock sold as part of the units in this offering, including common stock issued upon the exercise of warrants sold as part of the units in this offering, or in the public market, including any founding stockholders to the extent that they purchase or acquire such shares of common stock;
	•	references to “sponsor” or “Hayground Cove” refer to Hayground Cove Asset Management LLC for itself and in respect of the funds and accounts it manages and which will hold ordinary shares as the context requires;
	•	references to our “officers” refer to the executive officers and non-executive officers of Global Consumer Acquisition Corp.; and
	•	references to “exchangeable share transaction” refer to a business combination whereby our shares are used as consideration for the transaction.

	•	earnings and growth potential;
	•	experience and skill of management and availability of additional personnel;
	•	capital requirements;
	•	competitive position;
	•	financial condition and results of operation;
	•	barriers to entry into the consumer products and services and related industries;
	•	stage of development of the products, processes or services;
	•	breadth of services offered;
	•	degree of current or potential market acceptance of the services;
	•	regulatory environment of the industry; and
	•	costs associated with effecting the business combination.

Securities offered		30,000,000 units, at $10.00 per unit, each unit consisting of:
		• one share of common stock; and
		• one warrant.
Trading commencement and separation of common stock and warrants		The units will begin trading on or promptly after the date of this prospectus. The common stock and warrants comprising the units will begin separate trading five business days (or as soon as practicable thereafter) following the earlier to occur of (1) the expiration of the underwriters’ over-allotment option and (2) its exercise in full, subject in either case to our (i) having filed a Current Report on Form 8-K containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering and (ii) having issued a press release announcing when such separate trading will begin.
		Following the date the common stock and warrants are eligible to trade separately, the units will continue to be listed for trading, and any securityholder may elect to break apart a unit and trade the common stock or warrants separately or as a unit. Even if the component parts of the units are broken apart and traded separately, the units will continue to be listed as a separate security and, consequently, any subsequent securityholder owning common stock and warrants may elect to combine them together and trade them as a unit. Securityholders will have the ability to trade our securities as units until such time as the warrants expire or are redeemed. Although we

		• at a price of $0.01 per warrant at any time after the warrants become exercisable,
		• upon a minimum of 30 days’ prior written notice of redemption, and

		• if, and only if, the last sales price of our common stock equals or exceeds $14.25 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption.

		In addition, we may not redeem the public warrants unless the warrants comprising the units sold in this offering and the shares of common stock underlying those warrants are covered by an effective registration statement from the beginning of the measurement period through the date fixed for the redemption.
		If the foregoing conditions are satisfied and we call the warrants for redemption, each warrant holder shall then be entitled to exercise their warrants prior to the date scheduled for redemption.

		The redemption provisions for our warrants have been established at a price that is intended to provide warrant holders a premium to the initial exercise price. There can be no assurance, however, that the price of the common stock will exceed either the redemption price of $14.25 or the warrant exercise price of $7.50 after we call the warrants for redemption. As described below, insider warrants are non-redeemable as long as the insider warrant holders or their permitted transferees hold them.

		The underwriters have no right to consent before we can exercise our redemption right.
Founder shares		On July 16, 2007, our founding stockholders purchased an aggregate of 8,625,000 shares of our common stock for an aggregate purchase price of $8,625 in a private placement. The founder shares were purchased separately and not in combination with warrants in the form of units. We will

		redeem up to an aggregate of 1,125,000 founder shares in the event that the underwriters do not fully exercise their over-allotment option. We will redeem founder shares at $0.001 per share to ensure that the amount of issued and outstanding founder shares will equal 20% of our aggregate amount of issued and outstanding common stock whether the underwriters exercise their over-allotment option in full, in part or not at all. The redemption, if applicable, would take place immediately after the expiration of the underwriters’ over-allotment option.
		Our sponsor will hold its founder shares through funds and accounts it manages, including Hayground Cove Institutional Partners LP, Hayground Cove Overseas Partners Ltd., Hayground Cove Turbo Fund LP, Hayground Cove Turbo Fund Ltd., Hayground Cove Equity Market Neutral Fund LP, Hayground Cove Equity Market Neutral Fund Ltd., TE Hayground Cove Portfolio Ltd., and Man Mac Lucendro 5B Limited.
		The founder shares are identical to the shares of common stock contained in the units being sold in this offering, except that (i) substantially all of the founder shares will be subject to a lock-up agreement with our underwriters and will not be transferable before 180 days after the consummation of a business combination, subject to certain limited exceptions (such as, in the case of our sponsor, (a) transfers among various funds under our sponsor’s management for rebalancing purposes only and (b) distributions to investors in such funds, provided that such investors agree to be bound by the lock-up agreement, or transfers to relatives and trusts for estate planning purposes) and (ii) the founder shares are being purchased pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, or the Securities Act, and will become freely tradable only after they are registered pursuant to a registration rights agreement to be signed in connection with the insider private placement described below or otherwise in

		agreement with our underwriters and will not be transferable before the consummation of a business combination, subject to certain limited exceptions (such as, in the case of our sponsor, (a) transfers among various funds under our sponsor’s management for rebalancing purposes only and (b) distributions to investors in such funds, provided that such investors agree to be bound by the lock-up agreement, or transfers to relatives and trusts for estate planning purposes), (ii) such insider warrants are being purchased pursuant to an exemption from the registration requirements of the Securities Act and will become freely tradable only after they are registered pursuant to a registration rights agreement to be signed in connection with the insider private placement or otherwise in compliance with securities laws, (iii) the shares underlying the insider warrants will be non-redeemable so long as the insider warrant holders or their permitted transferees hold them, and (iv) the insider warrants are exercisable in the absence of an effective registration statement covering the shares of common stock underlying the warrants and by means of cashless exercise. The transfer restriction does not apply to transfers made pursuant to registration or an exemption that are occasioned by operation of law, or for estate planning purposes, or transfers made among various funds under our sponsor’s management. Any transfers of insider warrants amongst funds and accounts of our sponsor during the lock-up period will take place monthly contingent upon the capital movements of the funds and accounts. The transfers will be structured as purchases and sales for the respective funds and accounts.
		If the insider warrant holders acquire warrants or units for its own account either in or after this offering in the open market, either through a purchase of warrants or a purchase of units, any such warrants or the warrants included in those units will be redeemable. If our other outstanding warrants are redeemed and the price of our common

		includes the underwriters’ deferred discount of $9,000,000 ($0.30 per unit), plus the proceeds from our insider private placement of insider warrants of $8,500,000 ($0.28 per unit), will be placed in a trust account at JPMorgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, acting as trustee pursuant to an agreement to be signed on the effective date of the registration statement of which this prospectus forms a part. We believe that the deferment of a portion of the underwriters’ deferred discount along with the placement of such deferred discount and the proceeds from the insider private placement in a trust account is a benefit to our public stockholders because additional proceeds will be available for distributions to investors if we liquidate our trust account prior to our completing an initial business combination. The proceeds held in a trust will not be released until the earlier of the completion of our business combination (with a target acquisition or acquisitions) whose fair market value is at least equal to 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount) at the time of such acquisition (or acquisitions) or liquidation of the company. Unless and until a business combination is consummated, the proceeds held in the trust account will not be available for our use for any expenses related to this offering or expenses which we may incur related to the investigation and selection of a target business combination and the negotiation of an agreement to acquire a business combination; provided, however, that to the extent the trust account earns interest or we are deemed to have earned income therewith, we will be permitted to seek disbursements from the trust account to pay any federal, state or local tax obligations related thereto, or any franchise tax obligations, and to seek disbursements of net interest income up to an aggregate of $4,100,000, for working capital purposes. Expenses incurred by us while seeking a business

		intend to structure any potential business combination such that, if up to 29.99% of our public stockholders exercised their conversion rights, the business combination could still go forward. Voting against the business combination alone will not result in conversion of a stockholder’s shares of common stock into a pro rata share of the trust account. Such stockholder must also exercise its conversion rights described below. Our threshold for conversion rights has been established at 30% and will increase the likelihood of an approval of any proposed business combination by making it easier for us to consummate a business combination with which public stockholders may not agree. However, the 30% threshold entails certain risks described under the headings, “Risk Factors—Unlike most other blank check offerings, we allow up to approximately 29.99% of our public stockholders to exercise their conversion rights. This higher threshold will make it easier for us to consummate a business combination with which you may not agree, and you may not receive the full amount of your original investment upon exercise of your conversion rights” and “—Unlike most other blank check offerings, we allow up to approximately 29.99% of our public stockholders to exercise their conversion rights.” The ability of a larger number of our stockholders to exercise their conversion rights may not allow us to consummate the most desirable business combination or optimize our capital structure.” For more information, see the section entitled “Proposed Business—Effecting a Business Combination—Opportunity for stockholder approval of a business combination.”
		For purposes of seeking approval of the majority of the shares of common stock voted by the public stockholders, non-votes will have no effect on the approval of a business combination once a quorum is obtained.
		Upon the completion of our business combination, unless required by Delaware law, the federal securities laws and

		the Delaware General Corporation Law, in which case we will as promptly as practicable thereafter adopt a plan of distribution in accordance with Section 281(b) of the Delaware General Corporation Law. Section 278 provides that our existence will continue for at least three years after its expiration for the purpose of prosecuting and defending suits, whether civil, criminal or administrative, by or against us, and of enabling us gradually to settle and close our business, to dispose of and convey our property, to discharge our liabilities and to distribute to our stockholders any remaining assets, but not for the purpose of continuing the business for which we were organized. Our existence will continue automatically even beyond the three-year period for the purpose of completing the prosecution or defense of suits begun prior to the expiration of the three-year period, until such time as any judgments, orders or decrees resulting from such suits are fully executed. Section 281(b) of the Delaware General Corporation Law will require us to adopt a plan that will provide for our payment, based on facts known to us at such time, of (i) all existing claims, (ii) all pending claims and (iii) all claims that may be potentially brought against us within the subsequent ten years. Accordingly, we would be required to provide for any creditors known to us at that time as well as provide for any claims that we believe could potentially be brought against us within the subsequent ten years prior to distributing the funds held in the trust to our public stockholders. We have not assumed that we will have to provide for payment on any claims that potentially may be brought against us within the subsequent ten years due to the speculative nature of such an assumption. 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 of creditors to the extent of distributions received by them (but no more). 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 and service providers (such as accountants, lawyers, investment bankers, etc.) and potential target businesses. While we will seek to have all vendors and service providers (which would include any third parties we engaged to assist us in any way in connection with our search for a target business) and prospective target businesses execute agreements with us waiving any right, title, interest or claim of any kind they may have in or to any monies held in the trust account, there is no guarantee that they will execute such agreements. Nor is there any guarantee that, even if such entities execute such agreements with us, they will not seek recourse against the trust account or that a court would not conclude that such agreements are not legally enforceable. Our sponsor has agreed that it will be liable to ensure that the proceeds in the trust account on the date of the consummation of this offering are not reduced by the claims of target businesses or claims of vendors, service providers or other entities that are owed money by us for services rendered or contracted for or products sold to us. We have an obligation to pursue indemnification from our sponsor pursuant to the terms of its agreement with us. We believe the fee income from the sponsor’s $1.5 billion assets under management (as of September 30, 2007) will be sufficient to cover its indemnification obligations. Further, our sponsor is liable only to the extent necessary to ensure that the amounts in the trust fund as of the closing of this offering are not reduced.
		Our founding stockholders have waived their rights to participate in any liquidation distribution with respect to all of their founder shares, and the shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering. In addition, the underwriters have agreed to waive their rights to the $9,000,000 of deferred underwriting discount deposited in the trust account in the event we

		directors and stockholders to formally vote to approve our dissolution and liquidation and to have filed a certificate of dissolution with the Delaware Secretary of State). We will, nevertheless, be continued for a term of three years from the time our existence ceases, or for such longer period as the Delaware Court of Chancery shall in its discretion direct, for the purpose of prosecuting and defending suits by or against us and of enabling us to settle and close our business, to dispose of and convey our property, to discharge our liabilities and to distribute to our stockholders any remaining assets, but not for the purpose of continuing the business for which we were organized. We cannot assure you that we will properly assess all liabilities with which we may potentially be charged. As such, our stockholders could potentially be liable for any of our obligations to the extent of distributions received by them (but no more). 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 liabilities to arise would be from our vendors and service providers (such as accountants, lawyers, investment bankers, etc.) and potential target businesses.
		In connection with any proposed business combination we submit to our stockholders for approval, we will also submit to stockholders a proposal to amend our Amended and Restated Certificate of Incorporation to provide for our perpetual existence, thereby removing this limitation on our corporate life. We will not seek to amend or waive the provision limiting our corporate life other than in connection with the approval of a business combination. We view this as a binding obligation to our stockholders. We will only consummate a business combination if stockholders vote both in favor of such business combination and our amendment to provide for our perpetual existence. Any vote to extend our corporate life to continue perpetually in connection with a business combination will be effective only if the business combination is approved. In connection with

	•	We are a recently incorporated development stage company with no operating results to date. Since we do not have an operating history, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to effect a business combination.
	•	We have limited available cash and working capital and our ability to commence operations is thus dependent on funds raised in this offering.
	•	The discretion of Mr. LaPorta and our sponsor in identifying and selecting a suitable target acquisition 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. However, we will not pursue any company affiliated with our sponsor, officers or directors, including portfolio companies and other investments or interests held by our sponsor, officers and directors.
	•	If we are unable to find a suitable target acquisition that would result in a business combination, the funds being held in trust may not be returned to you until November 27, 2009.
	•	If we are forced to liquidate before a business combination and distribute the trust account in liquidation our warrants will expire worthless.
	•	If third parties bring claims against us, the proceeds held in trust could be reduced and the per-share liquidation price received by stockholders will be less than the approximately $9.85 per share held in trust, without taking into account any interest earned on the trust account (net of any taxes due on such interest, which taxes, if any, shall be paid from the trust account).
	•	Our ability to effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our officers, directors and others, who may not continue with us following a business combination.
	•	Our officers, directors and their affiliates currently are, and may in the future become affiliated with additional entities that are, engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.
	•	Initially, we may only be able to complete one business combination, which may cause us to be solely dependent on a single asset or operation. By consummating a business combination with only a single asset or operation, our lack of diversification may subject us to numerous economic and competitive risks.

	•	Investors in this offering have no basis to evaluate the merits or risks of a business combination as we have not yet selected any target acquisition with which to complete a business combination.
	•	We are not required to use all or any of the amount in the trust account for our initial business combination as long as we consummate an initial business combination with one or more target acquisitions with a fair market value equal to at least 80% of the amount held in trust (net of taxes and excluding the portion representing our underwriters’ deferred discount). We may use any remaining proceeds held in the trust account for working capital, including director and officer compensation, change-in-control payments or payments to affiliates, to finance the operations of the target acquisition, make other acquisitions and pursue our growth strategy.

		July 16, 2007
		Actual				As Adjusted (1)
Balance Sheet Data:
Working capital		$	8,625			$	295,507,500
Total assets		$	38,625			$	295,507,500
Total liabilities		$	30,000			$	9,000,000
Value of common stock which may be converted to cash (approximately $9.85 per share)(2)		$	—			$	88,649,990
Stockholders’ equity		$	8,625			$	197,857,510

(1)		The “as adjusted” information gives effect to the sale of the units we are offering (other than pursuant to the underwriters’ over-allotment option), including the application of the related gross proceeds and the payment of the estimated remaining costs from such sale and the repayment of the accrued and other liabilities to be made.
		The as adjusted working capital and total assets amounts include the $286,950,000 from the net proceeds of this offering and the $8,500,000 purchase price of the insider warrants to be held in the trust account, which will be available to us only upon the consummation of a business combination within the time period described in this prospectus. The adjusted working capital and total assets amounts include the $9,000,000 being held in the trust account ($10,350,000 if the underwriters’ over-allotment option is exercised in full) representing the underwriters’ deferred discount. If we have not consummated a business combination by November 27, 2009, our corporate existence will cease by operation of law and we will promptly distribute only to our public stockholders the amount in our trust account (including the amounts representing deferred underwriting discounts and commissions, any accrued interest, net of taxes payable, which taxes, if any, shall be paid from the trust account) plus any remaining net assets, subject to our obligations under Delaware law to provide for claims of creditors. Our founding stockholders have agreed to waive their respective rights to participate in any liquidating distributions occurring upon our failure to consummate a business combination and subsequent liquidation with respect to their founder shares.
(2)		If the business combination is consummated, public stockholders who vote against the business combination and exercise their conversion right will be entitled to receive $9.85 per share, which amount represents the proceeds of this offering and the purchase price of the insider warrants, without taking into account any interest earned on the trust account (net of any taxes due on such interest, which taxes, if any, shall be paid from the trust account).

 

RISK FACTORS

 

Investing in our securities involves a high degree of risk. You should carefully consider the following risk factors and all other information contained in this prospectus before making a decision to invest in our units. If any of the following risks occur, our business, financial conditions or results of operations may be materially and adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.

 

Risks Related to the Company and the Offering

 

We are a development stage company with no operating history and, accordingly, you will not have any basis on which to evaluate our ability to achieve our business objective.

 

We are a recently incorporated development stage company with no operating results to date. Therefore, our ability to begin operations is dependent upon obtaining financing through the public offering of our securities. Since we do not have any operations or an operating history, you will have no basis upon which to evaluate our ability to achieve our business objective, which is to acquire one or more operating businesses in the global consumer products and services industry. We have not conducted any discussions and we have no plans, arrangements or understandings with any prospective target business with respect to a business combination. We will not generate any revenues or income until, at the earliest, after the consummation of a business combination.

 

We will liquidate if we do not consummate a business combination.

 

Pursuant to our Amended and Restated Certificate of Incorporation, we have 24 months after consummation of this offering in which to complete a business combination. If we fail to consummate a business combination within the required time frame, our corporate existence will cease, in accordance with our Amended and Restated Certificate of Incorporation, except for the purposes of winding up our affairs and liquidating. We may not be able to find suitable target businesses within the required time frame. In addition, our negotiating position and our ability to conduct adequate due diligence on any potential target may be reduced as we approach the deadline for the consummation of a business combination. We do not have any specific business combination under consideration, and neither we, nor any representative acting on our behalf, has had any contacts with any target businesses regarding a business combination, nor taken any direct or indirect actions to locate or search for a target business. We view this obligation to liquidate as an obligation to our stockholders and that investors will make an investment decision, relying, at least in part, on this provision. Thus, without the affirmative vote cast at a meeting of stockholders of at least 95% of the common stock issued in this offering, neither we nor our board of directors will take any action to amend or waive any provision of our Amended and Restated Certificate of Incorporation to allow us to survive for a longer period of time. In addition, we will not support, directly or indirectly, or in any way endorse or recommend, that stockholders approve an amendment or modification to such provision if it does not appear we will be able to consummate a business combination within the foregoing time period. Our founding stockholders have waived their rights to participate in any liquidation distribution with respect to their founder shares, and the shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering. There will be no distribution from the trust account with respect to our warrants which will expire worthless. We will pay the costs of liquidation from our remaining assets outside of the trust account. In addition, our sponsor has agreed to indemnify us for all claims of creditors to the extent that we fail to obtain valid and enforceable waivers from vendors, service providers, prospective target business or other entities in order to protect the amounts held in trust. We believe the fee income from the sponsor’s $1.5 billion assets under management (as of September 30, 2007) will be sufficient to cover its indemnification obligations; however, we cannot guarantee that our sponsor will be able to satisfy its indemnification obligations.

We cannot assure you that other provisions of our Amended and Restated Certificate of Incorporation will not be amended other than the time period during which we must consummate a business combination.

 

Although we believe that a vote to amend or waive any provision of our Amended and Restated Certificate of Incorporation would likely take place only to allow additional time to consummate a pending business combination, we cannot assure you that other provisions relating to our consummation of a business combination of our Amended and Restated Certificate of Incorporation will not be amended or waived by the affirmative vote cast at a meeting of stockholders of at least 95% of the common stock issued in this offering.

 

You will not have any rights or interest in funds from the trust account, except under certain limited circumstances.

 

Our public stockholders will be entitled to receive funds from the trust account only in the event of our liquidation or if they seek to convert their respective shares of common stock into cash upon a business combination which the stockholder voted against and which is completed by us. In no other circumstances will a stockholder have any right or interest of any kind in the trust account.

 

If we are forced to liquidate before the completion of a business combination and distribute the trust account, our public stockholders may receive significantly less than $9.85 per share and our warrants will expire worthless.

 

We must complete a business combination with a fair market value of at least 80% of the amount held in trust (net of taxes, and other than the portion representing our underwriters’ deferred discount) at the time of acquisition by November 27, 2009. If we are unable to complete a business combination within the prescribed time frame and are forced to liquidate the trust account, the per-share liquidation price received by our public stockholders from the trust account will be less than $10.00 because of the expenses of this offering, our general and administrative expenses and the anticipated costs of seeking a business combination. Upon the liquidation of the trust account, public stockholders will be entitled to receive (unless there are claims not otherwise satisfied by the amount not held in the trust account or the indemnification provided by our sponsor) approximately $9.85 per share plus interest earned on their pro rata portion of the trust account (net of taxes payable), which includes $9,000,000 ($0.30 per unit) of deferred underwriting discounts and commissions and $8,500,000 ($0.28 per unit) of the purchase price of the insider warrants. Our sponsor has agreed to indemnify us for all creditor claims to the extent we do not obtain valid and enforceable waivers from vendors, service providers, prospective target businesses or other entities, in order to protect the amounts held in the trust account. In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received a return of funds from the liquidation of our trust account could be liable for claims made by our creditors. We assume that in the event we liquidate we will not have to adopt a plan to provide for payment of claims that may potentially be brought against us. Should this assumption prove to be incorrect, we may have to adopt such a plan upon our liquidation, which could result in the per-share liquidation amount to our stockholders being significantly less than $9.85 per share, without taking into account any interest earned on the trust account (net of any taxes due on such interest, which taxes, if any, shall be paid from the trust account). Furthermore, there will be no distribution with respect to our outstanding warrants which will expire worthless if we liquidate the trust account in the event we do not complete a business combination within the prescribed time period. For a more complete discussion of the effects on our stockholders if we are unable to complete a business combination, see the section below entitled “Proposed Business—Effecting a Business Combination—Liquidation if no Business Combination.”

If we are unable to consummate a business combination, our public stockholders will be forced to wait more than 24 months before receiving liquidation distributions.

 

We have 24 months following the consummation of this offering in which to complete a business combination. We have no obligation to return funds to investors prior to such date unless we consummate a business combination prior thereto and only then in cases where investors have sought conversion of their shares. Only after the expiration of this full time period will public stockholders be entitled to liquidation distributions if we are unable to complete a business combination. Accordingly, investors’ funds may be unavailable to them until such date.

 

We may choose to redeem our outstanding warrants at a time that is disadvantageous to our warrant holders.

 

Subject to there being a current prospectus under the Securities Act with respect to the common stock issuable upon exercise of the warrants, we may redeem the warrants issued as a part of our units at any time after the warrants become exercisable in whole and not in part, at a price of $.01 per warrant, upon a minimum of 30 days prior written notice of redemption, if and only if, the last sales price of our common stock equals or exceeds $14.25 per share for any 20 trading days within a 30-trading day period ending three business days before we send the notice of redemption. In addition, we may not redeem the warrants unless the warrants comprising the units sold in this offering and the shares of common stock underlying those warrants are covered by an effective registration statement from the beginning of the measurement period through the date fixed for the redemption. Redemption of the warrants could force the warrant holders to (i) exercise the warrants and pay the exercise price at a time when it may be disadvantageous for the holders to do so, (ii) sell the warrants at the then current market price when they might otherwise wish to hold the warrants, or (iii) accept the nominal redemption price which, at the time the warrants are called for redemption, is likely to be substantially less than the market value of the warrants. We expect most purchasers of our warrants will hold their securities through one or more intermediaries and consequently you are unlikely to receive notice directly from us that the warrants are being redeemed. If you fail to receive notice of redemption from a third party and your warrants are redeemed for nominal value, you will not have recourse to the company.

 

Although we are required to use our commercially reasonable efforts to have an effective registration statement covering the issuance of the shares of common stock underlying the warrants at the time that our warrant holders exercise their warrants, we cannot guarantee that a registration statement will be effective, in which case our warrant holders may not be able to exercise our warrants and therefore the warrants could expire worthless.

 

Holders of our warrants (other than insider warrants) will be able to exercise the warrants only if (i) a current registration statement under the Securities Act relating to the shares of our common stock underlying the warrants is then effective and (ii) such shares of common stock are qualified for sale or exempt from qualification under the applicable securities laws of the states in which the various holders of warrants reside. In addition, under the terms of the warrant agreement holders of our warrants will not be able to net cash settle the warrants. Although we have undertaken in the warrant agreement, and therefore have a contractual obligation, to use our commercially reasonable efforts to maintain a current registration statement covering the shares of common stock underlying the warrants following completion of this offering to the extent required by federal securities laws, and we intend to comply with our undertaking, we cannot assure that we will be able to do so and therefore the warrants could expire worthless. Such expiration would result in each holder paying the full unit purchase price solely for the shares of common stock underlying the unit. In addition, we have

agreed to use our commercially reasonable efforts to register the shares of common stock underlying the warrants under the blue sky laws of the states of residence of the existing warrant holders, to the extent an exemption is not available. The value of the warrants may be greatly reduced if a registration statement covering the shares of common stock issuable upon the exercise of the warrants is not kept current or if the securities are not qualified, or exempt from qualification, in the states in which the holders of warrants reside. Holders of warrants who reside in jurisdictions in which the shares of common stock underlying the warrants are not qualified and in which there is no exemption will be unable to exercise their warrants and would either have to sell their warrants in the open market or allow them to expire unexercised. If and when the warrants become redeemable by us, we may exercise our redemption right even if we are unable to qualify the underlying securities for sale under all applicable state securities laws.

 

Unlike most other blank check offerings, we allow up to approximately 29.99% of our public stockholders to exercise their conversion rights. This higher threshold will make it easier for us to consummate a business combination with which you may not agree, and you may not receive the full amount of your original investment upon exercise of your conversion rights.

 

When we seek stockholder approval of a business combination, we will offer each public stockholder (other than our founding stockholders with respect to their founder shares, and the shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering) the right to have his, her or its shares of common stock converted to cash if the stockholder votes against the business combination and the business combination is approved and consummated. We will consummate the initial business combination only if the following two conditions are met: (i) a majority of the shares of common stock voted by the public stockholders are voted in favor of the business combination and (ii) public stockholders owning 30% or more of the shares sold in this offering do not vote against the business combination and exercise their conversion rights. To date, most other blank check companies have a conversion threshold of 20%, which makes it more difficult for such companies to consummate their initial business combination. Thus, because we permit a larger number of stockholders to exercise their conversion rights, it will be easier for us to consummate an initial business combination with a target business which you may believe is not suitable for us, and you may not receive the full amount of your original investment upon exercise of your conversion rights. There can be no assurance that any converting stockholder will receive equal to or more than his, her or its full invested amount.

 

Unlike most other blank check offerings, we allow up to approximately 29.99% of our public stockholders to exercise their conversion rights. The ability of a larger number of our stockholders to exercise their conversion rights may not allow us to consummate the most desirable business combination or optimize our capital structure.

 

When we seek stockholder approval of a business combination, we will offer each public stockholder (other than our founding stockholders with respect to their founder shares, and the shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering) the right to have his, her or its shares of common stock converted to cash if the stockholder votes against the business combination and the business combination is approved and consummated. Such holder must both vote against such business combination and then exercise his, her or its conversion rights to receive a pro rata share of the trust account. Unlike most other blank check offerings to date, which have a 20% threshold, we allow up to approximately 29.99% of our public stockholders to exercise their conversion rights. Accordingly, if our business combination requires us to use substantially all of our cash to pay the purchase price, because we will not know how many stockholders may

exercise such conversion rights, we may either need to reserve part of the trust account for possible payment upon such conversion, or we may need to arrange third-party financing to help fund our business combination in case a larger percentage of stockholders exercise their conversion rights than we expect. In the event that the acquisition involves the issuance of our stock as consideration, we may be required to issue a higher percentage of our stock to make up for a shortfall in funds. Raising additional funds to cover any shortfall may involve dilutive equity financing or incurring indebtedness at higher than desirable levels. This may limit our ability to effect the most attractive business combination available to us.

 

Our stockholders may be held liable for claims against us by third parties to the extent of distributions received by them.

 

Our Amended and Restated Certificate of Incorporation provides that we will continue in existence only until 24 months from the consummation of this offering. If we have not completed a business combination by such date and amended this provision in connection therewith, pursuant to the Delaware General Corporation Law, our corporate existence will cease except for the purposes of winding up our affairs and liquidating. Under Sections 280 through 282 of the Delaware General Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, it is our intention to make liquidating distributions to our stockholders as soon as reasonably possible after dissolution and, therefore, we do not intend to comply with those procedures. Because we will not be complying with those procedures, we are required, pursuant to Section 281(b) of the Delaware General Corporation Law, to adopt a plan that will provide for our payment, based on facts known to us at such time, of (i) all existing claims, (ii) all pending claims and (iii) all claims that potentially may be brought against us within the subsequent ten years. Accordingly, we would be required to provide for any creditors known to us at that time or those that we believe could potentially be brought against us within the subsequent ten years prior to distributing the funds held in the trust to stockholders. We cannot assure you that we will properly assess all claims that potentially may be brought against us. As such, our stockholders could potentially be liable for any claims to the extent of distributions received by them and any liability of our stockholders may extend well beyond the third anniversary of such date. Accordingly, we cannot assure you that third parties will not seek to recover from our stockholders amounts owed to them by us. In the event of our liquidation, we may have to adopt a plan to provide for the payment of claims that may potentially be brought against us, which could result in the per-share liquidation amount to our stockholders being significantly less than $9.85, without taking into account any interest earned on the trust account (net of any taxes due on such interest, which taxes, if any, shall be paid from the trust account).

 

Our placing of funds in trust may not protect those funds from third-party claims against us.

 

Third-party claims may include contingent or conditional claims and claims of directors and officers entitled to indemnification under our Amended and Restated Certificate of Incorporation. We intend to pay any claims, to the extent sufficient to do so, from our funds not held in trust. Although we will seek to have all vendors, service providers and prospective target

businesses or other entities with which we execute agreements waive 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. Even if they execute such agreements, they could bring 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 a claim against our assets, including the funds held in the trust account. If any third party refused to execute an agreement waiving such claims to the monies held in the trust account, we would perform an analysis of the alternatives available to us if we chose not to engage such third party and evaluate if such engagement would be in the best interest of our stockholders if such third party refused to waive such claims.

 

Examples of possible instances where we may engage a third party that refused to execute a waiver include the engagement of a third-party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a provider of required services willing to provide the waiver. In any event, our management would perform an analysis of the alternatives available to it and would only enter into an agreement with a third party that did not execute a waiver if management believed that such third party’s engagement would be significantly more beneficial to us than any alternative. 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 not seek recourse against the trust account for any reason. Accordingly, the proceeds held in trust could be subject to claims that could take priority over the claims of our public stockholders and the per-share liquidation price could be less than the $9.85 per share held in the trust account, plus interest (net of any taxes due on such interest, which taxes, if any, shall be paid from the trust account), due to claims of such creditors. If we are unable to complete a business combination and liquidate the company, our sponsor will be liable if we did not obtain a valid and enforceable waiver from any vendor, service provider, prospective target business or other entity of any rights or claims to the trust account, to the extent necessary to ensure that such claims do not reduce the amount in the trust account on the date of the consummation of this offering. We believe the fee income from the sponsor’s $1.5 billion assets under management (as of September 30, 2007) will be sufficient to cover its indemnification obligations; however, we cannot assure you that our sponsor will be able to satisfy those obligations. The indemnification provisions are set forth in an insider letter to be executed on behalf of our sponsor. The insider letter specifically sets forth that in the event we obtain a valid and enforceable waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our stockholders from a vendor, service provider, prospective target business or other entity, the indemnification from our sponsor will not be available. In addition, none of our officers have agreed to indemnify the trust in their personal capacity from claims from third party vendors, service providers, prospective target business, or other entities.

 

Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the funds held in our trust account will be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account we cannot assure you we will be able to return to our public stockholders the liquidation amounts due them.

 

In certain circumstances, our board of directors may be viewed as having breached their fiduciary duties to our creditors, thereby exposing itself and our company to claims of punitive damages.

 

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a

“fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after the termination of our existence by operation of law, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board of directors may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, thereby exposing itself and 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.

 

If the net proceeds of this offering not being placed in trust together with interest earned on the trust account available to us are insufficient to allow us to operate for at least 24 months following the consummation of this offering, we may not be able to complete a business combination.

 

We currently believe that, upon consummation of this offering, the funds available to us outside of the trust account together with up to $4,100,000 of interest earned on the trust account that may be released to us will be sufficient to allow us to operate for at least 24 months following the consummation of this offering, assuming that a business combination is not consummated during that time. Based upon the experience of the members of our board and consultation with them regarding a reasonable budget for consummating a transaction of this kind and nature, and a review of budgets publicly disclosed by blank-check companies, we determined that this was an appropriate approximation of the expenses. As a general matter, our board of directors will be asked to approve any significant expenditures in connection with a potential acquisition or any expenditure associated with the pursuit of a potential business combination that may cause us to be unable to complete a business combination within 24 months due to a lack of sufficient remaining working capital. However, if costs are higher than expected we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, any potential target acquisitions. In such event, we would need to obtain additional funds from our initial stockholders or customer source to continue operating. We anticipate that up to $50,000 not held in the trust account will be reserved for working capital purposes. We could use a portion of these funds to pay due diligence costs in connection with a potential business combination or to pay fees to consultants to assist us with our search for a target acquisition. We could also use a portion of these funds as a down payment, “reverse break-up fee” (a provision in a merger agreement designed to compensate the target for any breach by the buyer which results in a failure to close the transaction), or to fund a “no-shop” provision (a provision in letters of intent designed to keep target acquisitions from “shopping” around for transactions with others on terms more favorable to such target acquisitions) with respect to a particular proposed business combination, although we do not have any current intention to do so. If we entered into such a letter of intent where we paid for the right to receive exclusivity from a target acquisition and were subsequently required to forfeit such funds (whether as a result of our breach or otherwise) or if we agree to a reverse break-up fee and subsequently were required to pay such fee as a result of our failure to consummate the transaction in accordance with the merger agreement, we might not have sufficient funds to continue searching for, or conduct due diligence with respect to, any other potential target acquisitions. In such event, we would need to obtain additional funds from our initial stockholders or another source to continue operations.

 

Our current officers and directors may resign upon consummation of a business combination.

 

Upon consummation of a business combination, the role of our current officers and directors in the target business cannot presently be fully ascertained. While we expect that one or more of our current officers, particularly Scott LaPorta, our Chief Executive Officer, and

directors will remain in senior management or as a director following a business combination, we may employ other personnel following the business combination. If we acquire a target business in an all-cash transaction, it would be more likely that our current officers and our directors would remain with us if they chose to do so. If a business combination were structured as a merger whereby the stockholders of the target company were to control the combined company, following a business combination, it may be less likely that our current officers or directors would remain with the combined company unless it was negotiated as part of the transaction pursuant to the acquisition agreement, an employment agreement or other arrangement.

 

Negotiated retention of officers and directors after a business combination may create a conflict of interest.

 

If, as a condition to a potential business combination, we negotiate to have our current officers and directors retained after the consummation of the business combination, including the anticipated retention of Scott LaPorta, such negotiations may result in a conflict of interest. The ability of such individuals to remain with us after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. In making the determination as to whether current management should remain with us following the business combination, we will analyze the experience and skill set of the target business’ management and negotiate as part of the business combination that our current officers and directors remain if it is believed that it is in the best interests of the combined company after the consummation of the business combination. Although we intend to closely scrutinize any additional individuals we engage after a business combination, we cannot assure you that our assessment of these individuals will prove to be correct.

 

There may be tax consequences associated with our acquisition, holding and disposition of target companies and assets.

 

We may incur significant taxes in connection with effecting acquisitions; holding, receiving payments from, and operating target companies and assets; and disposing of target companies and assets.

 

Because any target business with which we attempt to complete a business combination will be required to provide our stockholders with financial statements prepared in accordance with and reconciled to U.S. generally accepted accounting principles, the pool of prospective target businesses may be limited.

 

In accordance with the requirements of U.S. federal securities laws, in order to seek stockholder approval of a business combination, a proposed target business will be required to have certain financial statements which are prepared in accordance with, or which can be reconciled to, U.S. generally accepted accounting principles, or U.S. GAAP, and audited in accordance with U.S. generally accepted auditing standards. To the extent that a proposed target business does not have financial statements which have been prepared with, or which can be reconciled to, U.S. GAAP, and audited in accordance with U.S. generally accepted auditing standards, a likely possibility considering the international nature of the global consumer products and services industry in general, we will not be able to acquire that proposed target business. These financial statement requirements may limit the pool of potential target businesses.

 

Because of our limited resources and the significant competition for business combination opportunities, including numerous companies with a business plan similar to ours, it may be more difficult for us to complete a business combination.

 

Based upon publicly available information, as of November 2, 2007, we have identified approximately 129 blank check companies that have gone public since August 2003. Of these

companies, only 38 have completed a business combination, while seven will be or have been liquidating. The remaining approximately 84 blank check companies have more than $10.5 billion in trust and are seeking to complete business acquisitions. Of these companies, only 24 have announced that they have entered into definitive agreements or letters of intent with respect to potential business combinations but have not yet consummated business combinations. Accordingly, there are approximately 49 blank check companies with more than $8.1 billion in trust that have filed registration statements and are seeking, or will be seeking, to complete business combinations. Furthermore, the fact that only 38 of such companies have completed business combinations and only 24 other of such companies have entered into definitive agreements for business combinations, and seven have liquidated or will be liquidating, may be an indication that there are only a limited number of attractive targets available to such entities or that many targets are not inclined to enter into a transaction with a blank check company, and therefore we also may not be able to consummate a business combination within the prescribed time period. If we are unable to consummate an initial transaction within the prescribed time period, our purpose will be limited to dissolving, liquidating and winding up.

 

We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies, and other entities, domestic and international, competing for the type of businesses that we may 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 consumer products and services properties, assets and entities. 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 that there are numerous target acquisitions that we could potentially acquire with the net proceeds of this offering, our ability to compete with respect to the acquisition of certain target acquisitions 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 acquisitions. Furthermore, the obligation we have to seek stockholder approval of a business combination may delay the consummation of a transaction. Additionally, our outstanding warrants and the future dilution they potentially represent may not be viewed favorably by certain target acquisitions. Also, our obligation to convert into cash the shares of common stock in certain instances may reduce the resources available for a business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.

 

We cannot assure you we will be able to successfully compete for an attractive business combination. Additionally, because of this competition, we cannot assure you we will be able to effectuate a business combination within the prescribed time period. If we are unable to consummate a business combination within the prescribed time period, we will be forced to liquidate.

 

You will not be entitled to protections normally afforded to investors of blank check companies.

 

Since the net proceeds of this offering are intended to be used to complete a business combination with an unidentified target acquisition, we may be deemed to be a “blank check” company under the U.S. securities laws. However, since we will have net tangible assets in excess of $5,000,000 upon the successful consummation of this offering and will file a Current Report on Form 8-K with the SEC upon consummation of this offering including an audited balance sheet demonstrating this fact, we are exempt from rules promulgated by the SEC to protect investors of blank check companies such as Rule 419. Accordingly, investors will not be afforded the benefits or protections of those rules, such as entitlement to all the interest earned on the funds deposited in the trust account. Because we are not subject to these rules, including Rule 419, our units will be immediately tradable and we have a longer period of time to complete a business combination in certain circumstances than we would if we were subject to such rule.

Since we have not yet selected any target acquisition with which to complete a business combination, we are unable to currently ascertain the merits or risks of the business’ operations and investors will be relying on management’s ability to source business transactions.

 

Because we have not yet identified a prospective target acquisition, investors in this offering currently have no basis to evaluate the possible merits or risks of the target acquisition. Although our management will evaluate the risks inherent in a particular target acquisition, we cannot assure you that they will properly ascertain or assess all of the significant risk factors. 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 a target acquisition. Except for the limitation that a target acquisition have a fair market value of at least 80% of the amount held in trust (net of taxes and other than the portion representing our underwriters’ deferred discount) at the time of the acquisition, we will have virtually unrestricted flexibility in identifying and selecting a prospective acquisition candidate. Investors will be relying on management’s ability to source business transactions, evaluate their merits, conduct or monitor diligence and conduct negotiations. However, we will not acquire an affiliate of our sponsor or any of our officers or directors, including portfolio companies and other investments or interests held by our sponsor, officers and directors. In addition, we will not consider business opportunities that were presented to our sponsor or its employees or opportunities that our sponsor or its employees have become aware of prior to the consummation of the offering. For a more complete discussion of our selection of a target acquisition, see the section below entitled “Proposed Business—Effecting a Business Combination—We have Not Identified a Target Business.”

 

We may issue shares of common stock to complete a business combination, which would reduce the equity interest of our stockholders and likely cause a change in control of our ownership.

 

Our Amended and Restated Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. Immediately after this offering (assuming no exercise of the underwriters’ over-allotment option), there will be 24,000,000 authorized but unissued shares of our common stock available for issuance (after appropriate reservation for the issuance of shares of common stock upon full exercise of our outstanding warrants (including insider warrants)) and all of the 1,000,000 shares of preferred stock available for issuance. Although we have no commitment as of the effective date of the registration statement, we are likely to issue a substantial number of additional shares of our common or preferred stock, or a combination of common and preferred stock, to complete a business combination. The issuance of additional shares of our common stock or any number of shares of our preferred stock:

 

 

For a more complete discussion of the possible structure of a business combination, see the section below entitled “Proposed Business—Effecting a Business Combination—We have Not Identified a Target Business.”

 

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.

 

Although we have no commitments as of the date of this prospectus to issue any notes or other debt securities, or to otherwise incur outstanding debt, we may choose to incur substantial debt to complete a business combination. The incurrence of debt could result in:

 

 

In the event we seek to acquire businesses located in foreign jurisdictions, we could experience delays and increased costs due to cultural, legal and administrative differences with respect to the acquisition process, including due diligence, negotiating and closing the transaction.

 

In the event we seek to acquire businesses located in certain foreign jurisdictions such as South America or Asia, we could experience delays due to the cultural, legal and administrative differences with respect to the acquisition process, including due diligence, negotiating and closing the transaction, that we may not experience if we were to make an acquisition in jurisdictions such as the United States. In the event we experience such delays it could increase the amount of cash we require to use outside of the trust account for working capital purposes and result in a longer period of time to present a business combination to stockholders and ultimately close a business combination.

 

Foreign, cultural, political and financial market conditions could impair our international operations and financial performance.

 

Our target acquisition may be based outside of the United States and/or some or all of our operations may be conducted or products may be sold in countries where economic growth has slowed; or where economies have suffered economic, social and/or political instability or hyperinflation or where the ability to repatriate funds has been delayed or impaired in recent years. The economies of other foreign countries important to our operations, including other countries in Europe, Latin America and Asia, could also suffer slower economic growth or economic, social and/or political instability in the future. International operations, including manufacturing and sourcing operations (and the international operations of our customers), are subject to inherent risks which could adversely affect us, including, among other things:

 

 

 

Should any of these risks occur, our ability to export our products or repatriate profits could be impaired and we could experience a loss of sales and profitability from our international operations.

 

If we effect a business combination with a company located outside of the United States, we would be subject to a variety of additional risks that may negatively impact our business operations and financial results.

 

We may effect a business combination with a company located outside of the United States. If we did, we would be subject to many special considerations or risks associated with companies operating in the target business’ governing jurisdiction, including any of the following:

 

 

We cannot assure you that we would be able to adequately address these additional risks. If we were unable to do so, our operations might suffer.

 

If we effect a business combination with a company located outside of the United States, the laws applicable to such company will likely govern all of our material agreements and we may not be able to enforce our legal rights.

 

If we effect a business combination with a company located outside of the United States, the laws of the country in which such company operates will likely govern almost all of the material agreements relating to its operations. We cannot assure you that the target business will be able to enforce any of its material agreements or that remedies will be available in this new 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.

 

Our business combination may take the form of an acquisition of less than a 100% ownership interest, which could adversely affect our decision-making authority and result in disputes between us and third party minority owners.

 

Our business combination may take the form of an acquisition of less than a 100% ownership interest in certain properties, assets or entities. In such case, the remaining minority ownership interest may be held by third parties who may or may not have been involved with the properties, assets or entities prior to our acquisition of such ownership interest. With such an acquisition, we will face additional risks, including the additional costs and time required to investigate and otherwise conduct due diligence on holders of the remaining ownership interest and to negotiate stockholder agreements and similar agreements. Moreover, the subsequent management and control of such a business will entail risks associated with multiple owners and decision-makers. Such acquisitions also involve the risk that third-party owners of the minority ownership interest might become insolvent or fail to fund their share of required capital contributions. Such third parties may have economic or other business interests or goals which are inconsistent with our business interests or goals, and may be in a position to take actions contrary to our policies or objectives. Such acquisitions may also have the potential risk of impasses on decisions, such as a sale, because neither we nor the third-party owners of the minority ownership interest would have full control over the business entity. Disputes between us and such third parties may result in litigation or arbitration that would increase our expenses and distract our officers and/or directors from focusing their time and effort on our business. Consequently, actions by, or disputes with, such third parties might result in subjecting assets owned by the business entity to additional risk. We may also, in certain circumstances, be liable for the actions of such third parties. For example, in the future we may agree to guarantee indebtedness incurred by the business entity. Such a guarantee may be on a joint and several basis with the third-party owners of the minority ownership interest in which case we may be liable in the event such third parties default on their guaranty obligation.

 

Our ability to successfully effect a business combination and to be successful thereafter will be totally dependent upon the efforts of our key personnel, including our officers, directors and others who may not continue with us following a business combination.

 

Our ability to successfully effect a business combination is dependent upon the efforts of our key personnel, including Jason N. Ader, the Chairman of our board of directors, and Scott LaPorta, our Chief Executive Officer, President and a member of our board of directors. Our key personnel will also be officers, directors, and/or members of other entities, who we anticipate we will have access to on an as needed basis, although there are no assurances that any such personnel will be able to devote either sufficient time, effort or attention to us when we need it. Other than Scott LaPorta, none of our key personnel, including our other executive officers, will have entered into employment or consultant agreements with us. Further, although we presently anticipate that our officers will remain associated in senior management, advisory or other positions with us following a business combination, some or all of the management associated with a target acquisition may also remain in place. As such, our key personnel may not continue to provide services to us after the consummation of a business combination if we are unable to negotiate employment or consulting agreements with them in connection with or subsequent to the business combination, the terms of which would be determined at such time between the respective parties. Such negotiations would take place simultaneously with the negotiation of the business combination and could provide for such individuals to receive

compensation in the form of cash payments and/or our securities for services they would render to us after the consummation of the business combination. While the personal and financial interests of such individuals may influence their motivation in identifying and selecting a target acquisition, the ability of such individuals to remain with us after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination.

 

We will have only limited ability to evaluate the management of the target business.

 

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 public company which could cause us to have to expend time and resources helping them become familiar with such requirements. This could be expensive and time-consuming and could lead to various operational issues which may adversely affect our operations.

 

Our officers and directors will allocate some portion of 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 officers and directors are not required to commit their full time to our affairs, which could create a conflict of interest when allocating their time between our operations and their other commitments. We do not intend to have any full-time employees prior to the consummation of a business combination. Our executive officers and directors are currently employed by other entities and are not obligated to devote any specific number of hours to our affairs. If other entities require them to devote more substantial amounts of time to their business and affairs, it could limit their ability to devote time to our affairs and could have a negative impact on our ability to consummate a business combination. We cannot assure you that these conflicts will be resolved in our favor. For a discussion of potential conflicts of interest that you should be aware of see the section below entitled “Management—Conflicts of Interest.”

 

Our sponsor, officers and directors currently are, and may in the future become affiliated with additional entities that are, engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.

 

Our sponsor, officers and directors may in the future become affiliated with additional entities, including other “blank check” companies which may be engaged in activities similar to those intended to be conducted by us. Additionally, our sponsor, officers and directors may become aware of business opportunities which may be appropriate for presentation to us and the other entities to which they owe fiduciary duties or other contractual obligations. No formal procedures have been established to determine how conflicts of interest that may arise due to duties or obligations owed to other entities will be resolved. Accordingly, because of their pre-existing fiduciary duties, our officers and directors may have conflicts of interest in determining to which entity a particular business opportunity should be presented. For a more detailed discussion of our management’s business affiliations and the potential conflicts of interest of which you should be aware, see the sections entitled “Management—Directors and Executive Officers” and “Certain Relationships and Related Transactions.”

Our founding stockholders currently own shares of our common stock which will not participate in the liquidation of the trust account and a conflict of interest may arise in determining whether a particular target acquisition is appropriate for a business combination.

 

Our founding stockholders own founder shares (and with respect to certain founding stockholders, also insider warrants) that were issued prior to this offering, but have waived their right to receive distributions with respect to those founder shares (and the common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering) upon the liquidation of the trust account if we are unable to consummate a business combination. Additionally, our sponsor and Chief Executive Officer have agreed to purchase 7,500,000 insider warrants and 1,000,000 insider warrants, respectively, directly from us in an insider private placement transaction immediately prior to the consummation of this offering at a purchase price of $1.00 per warrant for a total purchase price of $8,500,000. The founder shares and insider warrants acquired prior to this offering by our founding stockholders and/or the insider warrant holders will be worthless if we do not consummate a business combination. The personal and financial interests of our sponsor and certain of our officers and directors may influence their motivation in timely identifying and selecting a target acquisition and completing a business combination. Consequently, our officers’ discretion in identifying and selecting a suitable target acquisition 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, and as a result of such conflicts management may choose a target acquisition that is not in the best interests of our stockholders.

 

The requirement that we complete a business combination by November 27, 2009 may give potential target businesses leverage over us in negotiating a business combination.

 

We will liquidate and promptly distribute only to our public stockholders the amount in our trust account (subject to our obligations under Delaware law for claims of creditors) plus any remaining net assets if we do not effect a business combination by November 27, 2009. Any potential target business with which we enter into negotiations concerning a business combination will be aware of this requirement. Consequently, such target businesses may obtain leverage over us in negotiating a business combination, knowing that if we do not complete a business combination with that particular target business, we may be unable to complete a business combination with any target business. This risk will increase as we get closer to the time limits referenced above.

 

The requirement that we complete a business combination by November 27, 2009 may motivate our sponsor to approve a business combination during that time period so that they may get their out-of-pocket expenses reimbursed.

 

Our sponsor may receive reimbursement for out-of-pocket expenses it has incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. The funds for such reimbursement will be provided from the money not held in trust. Such payments may be significant and there can be no assurance that they will not exceed our working capital budget. In the event that we do not effect a business combination by November 27, 2009, then any expenses incurred by our sponsor in excess of the money being held outside of the trust will not be repaid as we will liquidate at such time. On the other hand, if we complete a business combination within such prescribed time period, those expenses will be repaid by the target business. Consequently, our sponsor may have an incentive to complete a business combination other than solely in the best interest of our stockholders.

Certain of our officers or directors, or their affiliates, have never been associated with a blank check company and such lack of experience could adversely affect our ability to consummate a business combination.

 

Certain of our officers or directors, or their affiliates, have never been associated with a blank check company. Accordingly, you may not have sufficient information with which to evaluate the ability of our management team to identify and complete a business combination using the proceeds of this offering. Our management’s lack of experience in operating a blank check company could adversely affect our ability to consummate a business combination and could result in our having to liquidate our trust account. If we liquidate, our public stockholders could receive less than the amount they paid for our securities, causing them to incur significant financial losses.

 

Other than with respect to the business combination, our officers, directors, security holders and their respective affiliates may have a pecuniary interest in certain transactions in which we are involved, and may also compete with us.

 

We will not pursue an acquisition of an affiliate of our sponsor or of any of our officers or directors, including portfolio companies and other investments or interests held by our sponsor, officers and directors. However, other than with respect to the business combination, we have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. Accordingly, such parties may have an interest in certain transactions such as strategic partnering or joint venturing in which we are involved, and may also compete with us.

 

If our common stock becomes subject to the SEC’s penny stock rules, broker-dealers may experience difficulty in completing customer transactions and trading activity in our securities may be adversely affected.

 

If our common stock becomes subject to the “penny stock” rules promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act, broker-dealers may find it difficult to effectuate customer transactions and trading activity in our securities may be adversely affected. As a result, the market price of our securities may be depressed, and you may find it more difficult to sell our securities.

 

If at any time we have net tangible assets of $5,000,000 or less and our common stock has a market price per share of less than $5.00, transactions in our common stock will be subject to these “penny stock” rules. Under these rules, broker-dealers who recommend such securities to persons other than institutional accredited investors must:

 

 

Initially, we may only be able to complete one business combination, which will cause us to be solely dependent on a single asset or property.

 

The net proceeds from this offering and the insider private placement (excluding $9,000,000 held in the trust account which represents deferred underwriting discounts and commissions) will provide us with approximately $286,450,000 which will be held in trust and may be used by us to complete a business combination. We currently have no restrictions on our ability to seek additional funds through the sale of securities or through loans. As a consequence, we could seek to acquire a target business that has a fair market value significantly in excess of 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount). Although as of the date of this prospectus we have not engaged or retained, had any discussions with, or entered into any agreements with any third party regarding any such potential financing transactions, we could seek to fund such a business combination by raising additional funds through the sale of our securities or through loan arrangements. However, if we were to seek such additional funds, any such arrangement would only be consummated simultaneously with our consummation of a business combination. Consequently, it is probable that we will have the ability to complete only a single business combination, although this may entail the simultaneous acquisitions of several assets or closely related operating businesses at the same time. However, should our management elect to pursue more than one acquisition of target businesses simultaneously, our management could encounter difficulties in consummating all or a portion of such acquisitions due to a lack of adequate resources, including the inability of management to devote sufficient time to the due diligence, negotiation and documentation of each acquisition. Furthermore, even if we complete the acquisition of more than one target business at substantially the same time, there can be no assurance that we will be able to integrate the operations of such target businesses. Accordingly, the prospects for our ability to effect our business strategy may be:

 

 

In this case, we will 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. Furthermore, since our business combination may entail the simultaneous acquisitions of several assets or operating businesses at the same time and may be with different sellers, we will need to convince such sellers to agree that the purchase of their assets or businesses is contingent upon the simultaneous closings of the other acquisitions.

 

Because of our limited resources and the significant competition for business combination opportunities, we may not be able to consummate an attractive business combination.

 

We expect to encounter intense competition from other entities having a business objective similar to ours, including private investors (which may be individuals or investment partnerships), other blank check companies, and other entities, domestic and international, competing for the type of businesses that we may 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 consumer products and services properties, assets and entities. 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 that there are numerous target acquisitions that we could potentially acquire with the net proceeds of

this offering, our ability to compete with respect to the acquisition of certain target acquisitions 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 acquisitions. Furthermore, the obligation we have to seek stockholder approval of a business combination may delay the consummation of a transaction. Additionally, our outstanding warrants and the future dilution they potentially represent may not be viewed favorably by certain target acquisitions. Also, our obligation to convert into cash the shares of common stock in certain instances may reduce the resources available for a business combination. Any of these obligations may place us at a competitive disadvantage in successfully negotiating a business combination.

 

We may be unable to obtain additional financing, if required, to complete a business combination or to fund the operations and growth of the target business, which could compel us to restructure the transaction or abandon a particular business combination.

 

Although we believe that the net proceeds of this offering and the insider private placement will be sufficient to allow us to consummate a business combination, because we have not yet identified any prospective target acquisition to acquire, we cannot ascertain the capital requirements for any particular transaction. If the net proceeds of this offering and the insider private placement prove to be insufficient, either because of the size of the business combination, the depletion of the available net proceeds in the course of searching for suitable target acquisition that we can afford to acquire, or the obligation to convert into cash a significant number of shares of common stock from dissenting stockholders, we will be required to seek additional financing. We cannot assure you that any additional financing will be available to us on acceptable terms, if at all. To the extent that additional financing proves to be unavailable when needed to consummate a particular business combination, we would be compelled to either restructure the transaction or abandon that particular business combination and seek an alternative target acquisition candidate. In addition, it is possible that we could use a portion of the funds not in the trust account to make a deposit, down payment or fund a “no-shop” provision with respect to a proposed business combination, although we do not have any current intention to do so. In the event that we were ultimately required to forfeit such funds (whether as a result of our breach of the agreement relating to such payment or otherwise), we may not have a sufficient amount of working capital available outside of the trust account to conduct due diligence and pay other expenses related to finding a suitable business combination without securing additional financing. If we are unable to secure additional financing, we would most likely fail to consummate a business combination in the allotted time and would liquidate the trust account, resulting in a loss of a portion of your investment. In addition, if we consummate a business combination, we may require additional financing to fund continuing operations and/or growth. The failure to secure additional financing if required could have a material adverse effect on our ability to continue to develop and grow, even if we consummate a business combination. None of our officers, directors or stockholders is required to provide any financing to us in connection with or after a business combination. For a more complete discussion regarding the liquidation of our trust account if we cannot consummate a business combination, see “Proposed Business—Effecting a Business Combination—Liquidation If No Business Combination.”

 

Our founding stockholders control a substantial interest in us and thus may influence certain actions requiring a stockholder vote.

 

Upon consummation of our offering, and after giving effect to the insider private placement of founder shares, our founding stockholders (including all of our officers and directors) will collectively own 20% of our issued and outstanding common stock (assuming they do not purchase units in this offering, in which case they will own a larger percentage). This

ownership interest, together with any other acquisitions of our shares of common stock (or warrants which are subsequently exercised), could allow the founding stockholders to collectively influence the outcome of matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions after completion of our initial business combination. In the event that the founding stockholders acquire shares of our common stock in this offering or in the aftermarket, we anticipate that they would vote such shares in favor of our initial business combination. Thus, additional purchases of shares of our common stock by our founding stockholders would likely allow them to exert additional influence over the approval of our initial business combination. Factors that would be considered in making such additional purchases would include consideration of the current trading price of our common stock. The interests of our founding stockholders and your interests may not always align and taking actions which require approval of a majority of our stockholders, such as selling the company, may be more difficult to accomplish.

 

If we redeem our public warrants, the insider warrants, which are non-redeemable as long as the insider warrant holders or their permitted transferees hold them, could provide the insider warrant holders with the ability to realize a larger gain than the public warrant holders.

 

The warrants held by our public warrant holders may be called for redemption at any time after the warrants become exercisable:

 

 

 

In addition, we may not redeem the public warrants unless the warrants comprising the units sold in this offering and the shares of common stock underlying those warrants are covered by an effective registration statement from the beginning of the measurement period through the date fixed for the redemption.

 

As a result of the insider warrants not being subject to the redemption features to which that our publicly held warrants are subject, the insider warrant holders, or their permitted transferees, could realize a larger gain than our public warrant holders in the event we redeem our public warrants.

 

Our founding stockholders paid an aggregate of $8,625, or approximately $0.001 per share, for their 8,625,000 founder shares issued and outstanding prior to this offering and, accordingly, you will experience immediate and substantial dilution from the purchase of our common stock.

 

The difference between the public offering price per share and the pro forma net tangible book value per share of our common stock after this offering constitutes the dilution to the investors in this offering. Our founding stockholders acquired their founder shares of common stock at a nominal price, significantly contributing to this dilution. Assuming this offering is consummated, you and the other new investors will incur an immediate and substantial dilution of approximately 29.6% or $2.96 per share (the difference between the pro forma net tangible book value per share of $7.04, and the initial offering price of $10.00 per unit), not including the effect of certain offering costs for which payment is deferred until consummation of a business combination.

Our outstanding warrants may have an adverse effect on the market price of common stock and make it more difficult to effect a business combination.

 

In connection with this offering, we will be issuing public warrants to purchase up to 30,000,000 shares of common stock. In addition, we have also agreed to issue up to an additional 4,500,000 warrants to purchase additional shares of common stock if the over-allotment option that we granted to the underwriters is exercised in full. 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 in the eyes of a target acquisition. Such securities, 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 public warrants may make it more difficult to effectuate a business combination or increase the cost of acquiring the target acquisition. Additionally, the sale, or even the possibility of sale, of the shares of common stock underlying the warrants could have an adverse effect on the market price for our securities or on our ability to obtain future financing. If and to the extent these warrants are exercised, you may experience dilution to your holdings.

 

A market for our securities may not develop, which would adversely affect the liquidity and price of our securities.

 

Although we have applied to have our securities listed on the American Stock Exchange, as of the date of this prospectus, there is currently no market for our securities. Prospective stockholders therefore have no access to information about prior trading history on which to base their investment decision. Once listed on the American Stock Exchange, an active trading market for our securities may never develop or, if developed, may not be sustained. You may be unable to sell your securities unless a market can be established and/or sustained.

 

If our founding stockholders exercise their registration rights, it may have an adverse effect on the market price of our common stock, and the existence of the registration rights may make it more difficult to effect a business combination.

 

Our founding stockholders are entitled to require us to register the resale of their founder shares at any time after the date on which such founder shares no longer are subject to a lock-up agreement with our underwriters, which, except in limited circumstances, will not be before 180 days from the consummation of a business combination. If our founding stockholders exercise their registration rights with respect to all of their founder shares beneficially owned by them as of the date of this prospectus, then there will be an additional 7,500,000 shares of common stock, or 8,625,000 shares of common stock if the underwriters’ over-allotment option is exercised, eligible for trading in the public market. Further, immediately prior to the consummation of this offering, the insider warrant holders have agreed to purchase in an insider private placement an aggregate of 8,500,000 insider warrants that are identical to the warrants contained in the units being sold in this offering, respectively, except that (i) such insider warrants will be subject to a lock-up agreement with our underwriters and will not be transferable before the consummation of a business combination, subject to certain limited exceptions (such as, in the case of our sponsor, (a) transfers among various funds under our sponsor’s management for rebalancing purposes only and (b) distributions to investors in such funds, provided that such investors agree to be bound by the lock-up agreement, or transfers to relatives and trusts for estate planning purposes), (ii) such insider warrants are being purchased pursuant to an exemption from the registration requirements of the Securities Act and will become freely tradable only after they are registered pursuant to a registration rights agreement to be signed in connection with the insider private placement, (iii) the shares underlying the insider warrants will be non-redeemable as long as the insider warrant holders or their permitted transferees hold them, and (iv) the insider warrants are exercisable in the absence of an effective registration statement covering the shares of common stock underlying the warrants and by means of cashless exercise. If all of the insider warrants are

exercised, there will be an additional 8,500,000 shares of our common stock eligible for trading in the public market. This dilution may make it more difficult for us to effect a business combination.

 

If we are deemed to be an investment company under the Investment Company Act of 1940, 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, or we may be required to incur additional expenses if we are unable to liquidate after the expiration of the allotted time periods.

 

If we are deemed to be an investment company under the Investment Company Act of 1940, as amended, or the 1940 Act, we may be subject to certain restrictions that may make it more difficult for us to complete a business combination, including:

 

 

In addition, we may have imposed upon us certain burdensome requirements, including:

 

 

We do not believe that our anticipated principal activities will subject us to the 1940 Act. To this end, the proceeds held in trust may be invested by the trust agent only in U.S. “government securities” within the meaning of Section 2(a)(16) of the 1940 Act with a maturity of 180 days or less, or in registered money market funds meeting certain conditions under Rule 2a-7 promulgated under the 1940 Act. By restricting the investment of the proceeds to these instruments, we intend to avoid being deemed an investment company within the meaning of the 1940 Act. This offering is not intended for persons who are seeking a return on investments in government securities. The trust account and the purchase of government securities for the trust account is intended as a holding place for funds pending the earlier to occur of either: (i) the consummation of our primary business objective, which is a business combination, or (ii) absent a business combination, liquidation and return of the funds held in this trust account to our public stockholders.

 

If we are deemed to be an investment company at any time, we will be required to comply with additional regulatory requirements under the 1940 Act, which would require additional expenses for which we have not budgeted.

 

Uncertainties in management’s assessment of a target business could cause us not to realize the benefits anticipated to result from an acquisition.

 

It is possible that, following our initial acquisition, uncertainties in assessing the value, strengths and potential profitability of, and identifying the extent of all weaknesses, risks, contingent and other liabilities (including environmental liabilities) of, acquisition or other transaction candidates could cause us not to realize the benefits anticipated to result from an acquisition.

 

The potential loss of key customers, management and employees of a target business could cause us not to realize the benefits anticipated to result from an acquisition.

 

It is possible that, following our initial acquisition, the potential loss of key customers, management and employees of an acquired business could cause us not to realize the benefits anticipated to result from an acquisition.

The lack of synergy from an acquisition could cause us not to realize the benefits anticipated to result from an acquisition.

 

It is possible that, following our initial acquisition, the inability to achieve identified operating and financial synergies anticipated to result from an acquisition or other transaction could cause us not to realize the benefits anticipated to result from an acquisition.

 

The determination for the offering price of our units is more arbitrary compared with the pricing of securities for an operating company in a particular industry.

 

The public offering price of the units and the terms of the warrants were negotiated between us and the representative of the underwriters. Factors considered in determining the prices and terms of the units, including the common stock and warrants underlying the units, include:

 

 

However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since we have no historical operations or financial results with which to compare them.

 

We may not obtain an opinion from an unaffiliated third party as to the fair market value of the target acquisition or that the price we are paying for the business is fair to our stockholders.

 

We are not required to obtain an opinion from an unaffiliated third party that either the target acquisition we select has a fair market value in excess of 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount) or that the price we are paying is fair to stockholders unless our board is not able to independently determine that a target acquisition has a sufficient market value. In addition, unless otherwise required by applicable law, our board is not required to obtain a third party valuation of a proposed business acquisition if there is a conflict of interest. If no opinion is obtained, our stockholders will be relying on the judgment of our board of directors.

 

In the event that our securities are listed on the American Stock Exchange, the American Stock Exchange may delist our securities from quotation on its exchange which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

 

We anticipate that our securities will be listed on the American Stock Exchange, a national securities exchange, upon consummation of this offering. We cannot assure you that our securities, if listed, will continue to be listed on the American Stock Exchange in the future. In addition, in connection with a business combination, it is likely that the American Stock Exchange may require us to file a new listing application and meet its initial listing

requirements, as opposed to its more lenient continued listing requirements. We cannot assure you that we will be able to meet those initial listing requirements at that time.

 

If the American Stock Exchange delists our securities from trading on its exchange, we could face significant material adverse consequences, including:

 

 

Provisions in our charter documents 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 charter and bylaws contain provisions that may discourage unsolicited takeover proposals that stockholders may consider to be in their best interests. Moreover, our board of directors has the ability to designate the terms of and issue new series of preferred stock and the terms of and issuance of any such series of preferred stock could reduce the value of our common stock. Although our charter includes a provision that exempts us from anti-takeover provisions under Delaware law, we may nonetheless become subject to such provisions, which could delay or prevent a change of control. Together these provisions may make the removal of management more difficult and may discourage transactions that could otherwise involve payment of a premium over prevailing market prices for our securities.

 

Limitations on a target business’ ability to protect its intellectual property rights, including its trade secrets, could cause a loss in revenue and any competitive advantage.

 

A target business’ products or services, and the processes it uses to produce or provide them, might have been granted U.S. patent protection, might have patent applications pending or might be trade secrets. After a business combination, our business may be adversely affected if our patents are unenforceable, the claims allowed under our patents are not sufficient to protect our technology, our patent applications are denied, or our trade secrets are not adequately protected. Our competitors may be able to develop technology independently that is similar to ours without infringing on our patents or gaining access to our trade secrets.

 

We may be subject to litigation if another party claims that we have infringed upon its intellectual property rights.

 

The tools, techniques, methodologies, programs and components that a target business uses in order to provide its services may infringe upon the intellectual property rights of others. Infringement claims generally result in significant legal and other costs and may distract management from running its core business. Royalty payments under licenses from third parties, if available, would increase costs. If a license were not available we might not be able to continue providing a particular product or service, which would reduce our post business combination revenue. Additionally, developing non-infringing technologies would increase our costs.

The high cost or unavailability of materials, equipment, supplies and personnel could adversely affect our ability to execute our operations on a timely basis.

 

A target business’ manufacturing operations could be dependent on having sufficient raw materials, component parts and manufacturing capacity available to meet our manufacturing plans at a reasonable cost while minimizing inventories. A target business’ ability to effectively manage our manufacturing operations and meet these goals can have an impact on our business, including our ability to meet our manufacturing plans and revenue goals, control costs and avoid shortages of raw materials and component parts. Raw materials and components of particular concern include steel alloys, copper, carbide, chemicals and electronic components. Our ability to repair or replace equipment damaged or lost in the well can also impact our ability to service our customers after a business combination.

 

People are a key resource to developing, manufacturing and delivering products and services to our customers around the world. A target business’ ability to recruit, train and retain the highly skilled workforce required by our plans will impact our business. A well-trained, motivated work force has a positive impact on our ability to attract and retain business. Rapid growth presents a challenge to us and our industry to recruit, train and retain our employees while managing the impact of wage inflation and potential lack of available qualified labor in the markets where we could operate. Labor-related actions, including strikes, slowdowns and facility occupations, could also negatively impact on our business after a business combination.

 

Compliance with governmental regulations and changes in laws and regulations and risks from investigations and legal proceedings could be costly and could adversely affect operating results.

 

The global consumer industry is subject to regulation and intervention by governments throughout the world. A target business’ operations in the United States and internationally can be impacted by changes in the legal and business environments in which we could operate, as well as the outcome of ongoing government and internal investigations and legal proceedings. Also, as a result of new laws and regulations or other factors, we could be required to curtail or cease certain operations. Changes that could impact the legal environment include new legislation, new regulation, new policies, investigations and legal proceedings and new interpretations of the existing legal rules and regulations. In particular, changes in export control laws or exchange control laws, additional restrictions on doing business in countries subject to sanctions, and changes in laws in countries identified by management for immediate focus. Changes that impact the business environment include changes in accounting standards, changes in environmental laws, changes in tax laws or tax rates, the resolution of audits by various tax authorities, and the ability to fully utilize any tax loss carryforwards and tax credits. Compliance-related issues could limit our ability to do business in certain countries. These changes could have a significant financial impact on our future operations and the way we conduct, or if we conduct, business in the affected countries.

 

Uninsured claims and litigation could adversely impact our operating results.

 

After a business combination, we expect to have insurance coverage against operating hazards, including product liability claims and personal injury claims related to our products, to the extent deemed prudent by our management and to the extent insurance is available, but no assurance can be given that the nature and amount of that insurance will be sufficient to fully indemnify us against liabilities arising out of pending and future claims and litigation. This 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 in general

do not provide complete protection against losses and risks, and our results of operations could be adversely affected by unexpected claims not covered by insurance.

 

We may re-incorporate in another jurisdiction in connection with a business combination, and the laws of such jurisdiction will likely govern all of our material agreements and we may not be able to enforce our legal rights.

 

In connection with a business combination, we may relocate the home jurisdiction of our business from Delaware to another jurisdiction, including a non-U.S. jurisdiction. If we determine to do this, the laws of such jurisdiction would likely govern all of our future material agreements. We cannot assure you that the system of laws and the enforcement of existing laws in such jurisdiction would be as certain in implementation and interpretation as in Delaware or, in the case of a non-U.S. jurisdiction, 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. Any such reincorporation and the international nature of the global consumer products and services industry will likely subject us to foreign regulation.

 

Risks Related to the Global Consumer Products and Services Industry

 

Seasonality and weather conditions may cause our operating results to vary from quarter to quarter.

 

Sales of certain of consumer products and services may be seasonal. For example, sales of outdoor products would increase during warm weather months and decrease during winter. Additionally, sales of home improvement products would be concentrated in the spring and summer months, while sales of consumer electronics would be concentrated in our fourth quarter preceding the holiday season.

 

Weather conditions may also negatively impact sales. For instance, we may not sell as many of certain outdoor recreation products (such as lanterns, tents and sleeping bags) as anticipated if there are fewer natural disasters such as hurricanes and ice storms; mild winter weather may negatively impact sales of electric blankets, heaters, some health products and smoke or carbon monoxide alarms; and the late arrival of summer weather may negatively impact sales of outdoor camping equipment and grills. Additionally, sales of home improvement products may be negatively impacted by unfavorable weather conditions and other market trends. Periods of inclement weather may reduce the amount of time spent on home improvement projects. These factors could have a material adverse effect on our business, results of operations and financial condition.

 

We must successfully anticipate changing consumer preferences and buying trends and manage our product line and inventory commensurate with customer demand.

 

Our success depends upon our ability to anticipate and respond to changing merchandise trends and customer demands in a timely manner. Consumer preferences cannot be predicted with certainty and may change between selling seasons. We must make decisions as to design, development, expansion and production of new and existing product lines. If we misjudge either the market for our products, the purchasing patterns of our retailers’ customers, or the appeal of the design, functionality or variety of our product lines, our sales may decline significantly, and we may be required to mark down certain products to sell the resulting excess inventory or sell such inventory through our outlet stores, or other liquidation channels, at prices which can be significantly lower than our normal wholesale prices, each of which would harm our business and operating results.

 

In addition, we must manage our inventory effectively and commensurate with customer demand. A substantial portion of our inventory may be sourced from vendors located outside the United States. We generally may commit to purchasing products before we receive firm

orders from our retail customers and frequently before trends are known. The extended lead times for many of our purchases, as well as the development time for design and deployment of new products, may make it difficult for us to respond rapidly to new or changing trends. In addition, the seasonal nature of our business may require us to carry a significant amount of inventory prior to the year-end holiday selling season. As a result, we will be vulnerable to demand and pricing shifts and to misjudgments in the selection and timing of product purchases. If we do not accurately predict our customers’ preferences and acceptance levels of our products, our inventory levels may not be appropriate, and our business and operating results may be adversely impacted.

 

Our business depends, in part, on factors affecting consumer spending that are out of our control.

 

Our business depends on consumer demand for our products and, consequently, is sensitive to a number of factors that influence consumer spending, including general economic conditions, disposable consumer income, recession and inflation, incidents and fears relating to national security, terrorism and war, hurricanes, floods and other natural disasters, inclement weather, consumer debt, unemployment rates, interest rates, sales tax rates, fuel and energy prices, consumer confidence in future economic conditions and political conditions, and consumer perceptions of personal well-being and security generally. Adverse changes in factors affecting discretionary consumer spending could reduce consumer demand for our products, change the mix of products we sell to a different mix with a lower average gross margin, slower inventory turnover and greater markdowns on inventory, thus reducing our sales and harming our business and operating results.

 

Our operations may be dependent upon third-party suppliers whose failure to perform adequately could disrupt our business operations.

 

We may source a significant portion of parts and products from third parties. Our ability to select and retain reliable vendors who provide timely deliveries of quality parts and products will impact our success in meeting customer demand for timely delivery of quality products. We expect not to enter into long-term contracts with our primary vendors and suppliers. Instead, most parts and products will be supplied on a “purchase order” basis. As a result, we may be subject to unexpected changes in pricing or supply of products. Any inability of our suppliers to timely deliver quality parts and products or any unanticipated change in supply, quality or pricing of products could be disruptive and costly to us.

 

Our operating results can be adversely affected by changes in the cost or availability of raw materials and energy.

 

Pricing and availability of raw materials for use in our businesses may be volatile due to numerous factors beyond our control, including general, domestic and international economic conditions, labor costs, production levels, competition, consumer demand, import duties and tariffs and currency exchange rates. This volatility may significantly affect the availability and cost of raw materials for us, and may, therefore, have a material adverse effect on our business, results of operations and financial condition.

 

During periods of rising prices of raw materials, there can be no assurance that we will be able to pass any portion of such increases on to customers. Conversely, when raw material prices decline, customer demands for lower prices could result in lower sale prices and, to the extent we have existing inventory, lower margins. As a result, fluctuations in raw material prices could have a material adverse effect on our business, results of operations and financial condition.

Some products require particular types of glass, paper, plastic, metal, wax, wood or other materials. Supply shortages for a particular type of material can delay production or cause increases in the cost of manufacturing our products. This could have a material adverse effect on our business, results of operations and financial condition. In particular, petroleum-derivative raw materials such as waxes, resins and plastics have experienced price increases in response to, among other things, higher oil prices. If wax prices, resin prices or other material prices rise further in the future we can expect the cost of goods for our businesses to increase. We cannot assure you that we will be able to pass such cost increases to our customers, and such increases could have a material adverse effect on our margins. Similarly, other energy-intensive raw materials such as metal and glass have experienced price increases in response to higher energy prices. If such prices rise further in the future, we can expect the cost of goods to increase, which could have a material adverse effect on our business, results of operations and financial condition.

 

With the growing trend towards consolidation among suppliers of many of raw materials, we may become increasingly dependent upon key suppliers whose bargaining strength is growing. In addition, many of those suppliers have been reducing production capacity of raw materials in the North American market. We may be negatively affected by changes in availability and price of raw materials resulting from this consolidation and reduced capacity, which could negatively impact our results of operations.

 

We may be subject to several production-related risks which could jeopardize our ability to realize anticipated sales and profits.

 

In order to realize sales and operating profits at anticipated levels, we may manufacture or source and deliver in a timely manner products of high quality. Among others, the following factors can have a negative effect on our ability to do these things:

 

 

Any adverse change in the above-listed factors could have a material adverse effect on our business, results of operations and financial condition.

 

We may manufacture or source a significant portion of our products from Asia and other global markets. Accordingly, our production lead times may be relatively long. Therefore, we may commit to production in advance of firm customer orders. If we fail to forecast customer or consumer demand accurately we may encounter difficulties in filling customer orders or in liquidating excess inventories, or may find that customers are canceling orders or returning products. Additionally, changes in retailer inventory management strategies could make

inventory management more difficult. Any of these results could have a material adverse effect on our business, results of operations and financial condition.

Competition in our industries may hinder our ability to execute our business strategy, achieve profitability, or maintain relationships with future customers.

 

We expect to operate in some highly competitive industries. In these industries, we may compete against numerous other domestic and foreign companies. Competition in the markets in which we expect to operate is based primarily on product quality, product innovation, price and customer service and support, although the degree and nature of such competition will vary by location and product line. We also face competition from the manufacturing operations of some of our potential customers with private label brands.

 

Some of our competitors may be more established in their industries and have substantially greater revenue or resources than we do. Our competitors may take actions to match new product introductions and other initiatives. Our competitors may source their products from third parties, and our ability to obtain a cost advantage through sourcing may be reduced. Certain of our competitors may be willing to reduce prices and accept lower profit margins to compete with us. Further, retailers often demand that suppliers reduce their prices on existing products. Competition could cause price reductions, reduced profits or losses or loss of market share, any of which could have a material adverse effect on our business, results of operations and financial condition.

 

To compete effectively in the future in the global consumer products and services industry, among other things, we must:

 

 

Our inability to do any of these things could have a material adverse effect on our business, results of operations and financial condition.

 

If we fail to develop new or expand any existing customer relationships, our ability to grow our business may be impaired.

 

Our future growth will depend to a significant degree upon our ability to develop new customer relationships and to expand existing relationships with any current customers. We cannot guarantee that new customers will be found, that any such new relationships will be successful when they are in place, or that business with any existing customers will increase. Failure to develop and expand such relationships could have a material adverse effect on our business, results of operations and financial condition.

 

If we cannot develop new products in a timely manner, and at favorable margins, we may not be able to compete effectively.

 

We believe that our future success will depend, in part, upon our ability to introduce innovative design extensions for any existing products and to develop, manufacture and market new products. We cannot assure you that we will be successful in the introduction, manufacturing and marketing of any new products or product innovations, or develop and

introduce, in a timely manner, innovations to any existing products that satisfy customer needs or achieve market acceptance. Our failure to develop new products and introduce them successfully and in a timely manner, and at favorable margins, would harm our ability to successfully grow our business and could have a material adverse effect on our business, results of operations and financial condition.

 

Our results could be adversely affected if the cost of compliance with environmental, health and safety laws and regulations becomes too burdensome.

 

We expect that our operations will be subject to federal, state and local environmental and health and safety laws and regulations, including those that impose workplace standards and regulate the discharge of pollutants into the environment and establish standards for the handling, generation, emission, release, discharge, treatment, storage and disposal of materials and substances including solid and hazardous wastes. We anticipate that after our initial business combination we will be in material compliance with such laws and regulations and that the cost of maintaining compliance will not have a material adverse effect on our business, results of operations or financial condition. However, due to the nature of our operations and the frequently changing nature of environmental compliance standards and technology, we cannot assure you that future material capital expenditures will not be required in order to comply with applicable environmental laws and regulations, which may be too burdensome.

 

We may incur significant costs in order to comply with environmental remediation obligations.

 

In addition to operational standards, environmental laws also impose obligations on various entities to clean up contaminated properties or to pay for the cost of such remediation, often upon parties that did not actually cause the contamination. Accordingly, we may be liable, either contractually or by operation of law, for remediation costs even if the contaminated property is not presently owned or operated by us, is a landfill or other location where we have disposed wastes, or if the contamination was caused by third parties during or prior to our ownership or operation of the property. There can be no assurance that all potential instances of soil or groundwater contamination will have been identified, even for those properties where an environmental site assessment has been conducted. We do not anticipate that any of our remediation obligations will have a material adverse effect upon our business, results of operations or financial condition. However, future events, such as changes in existing laws or policies or their enforcement or previously unknown contamination, may give rise to additional unanticipated remediation liabilities that may be material.

 

Changes in the retail industry and markets for consumer products affecting our customers or retailing practices could negatively impact any existing customer relationships and our results of operations.

 

We may sell consumer products to retailers, including club, department store, drug, grocery, mass merchant, sporting goods and specialty retailers, as well as directly to consumers. A significant deterioration in the financial condition of any of our major customers could have a material adverse effect on our sales and profitability. We will regularly monitor and evaluate the credit status of our customers and attempt to adjust sales terms as appropriate. Despite these efforts, a bankruptcy filing by a key customer could have a material adverse effect on our business, results of operations and financial condition.

 

In addition, as a result of the desire of retailers to more closely manage inventory levels, there is a growing trend among retailers to make purchases on a “just-in-time” basis. This will require us to shorten our lead time for production in certain cases and more closely anticipate demand, which could in the future require us to carry additional inventories.

With the growing trend towards retail trade consolidation, we may be increasingly dependent upon key retailers whose bargaining strength is growing. We may be negatively affected by changes in the policies of our retailer customers, such as inventory destocking, limitations on access to shelf space, use of private label brands, price demands and other conditions, which could negatively impact our results of operations.

 

Our business could involve the potential for product recalls, product liability and other claims against us, which could affect our earnings and financial condition.

 

In connection with any manufacturing and distribution of consumer products, we may be subject to the Consumer Products Safety Act, which empowers the Consumer Products Safety Commission to exclude from the market products that are found to be unsafe or hazardous. Under certain circumstances, the Consumer Products Safety Commission could require us to repurchase or recall one or more of our products. Additionally, laws regulating certain consumer products exist in some cities and states, as well as in other countries in which we may sell our products, and more restrictive laws and regulations may be adopted in the future. Any repurchase or recall of our products could be costly to us and could damage our reputation. If we were required to remove, or we voluntarily removed, our products from the market, our reputation could be tarnished and we might have large quantities of finished products that we could not sell.

 

We could also face exposure to product liability claims in the event that one of our products is alleged to have resulted in property damage, bodily injury or other adverse effects. Although we expect to maintain product liability insurance in amounts that we believe will be reasonable, we cannot assure you that we will be able to maintain such insurance on acceptable terms, if at all, in the future or that product liability claims will not exceed the amount of insurance coverage. Additionally, we do not expect to maintain product recall insurance. As a result, product recalls or product liability claims could have a material adverse effect on our business, results of operations and financial condition.

 

In addition, we face potential exposure to unusual or significant litigation arising out of alleged defects in any of our products or otherwise. We plan to spend substantial resources ensuring compliance with governmental and other applicable standards. However, compliance with these standards will not necessarily prevent individual or class action lawsuits, which can entail significant cost and risk. We do not expect to maintain insurance against many types of claims involving alleged defects in our products that do not involve personal injury or property damage. As a result, these types of claims could have a material adverse effect on our business, results of operations and financial condition.

 

Our product liability insurance program is expected to be an occurrence-based program based on our target’s claims experience and the availability and cost of insurance. We currently do not expect to either self-insure or administer a high retention insurance program for product liability risks. We cannot assure you that our future product liability expenses will not exceed our individual per occurrence self-insured retention.

 

We may not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses.

 

Our business combination must be with a target acquisition which satisfies the minimum valuation standard at the time of such acquisition, as discussed above. Consequently, we expect to have the ability to effect only a single business combination, although this process may entail the simultaneous acquisitions of several consumer products and services businesses. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future performance of a single business operation. Unlike other entities that may have the resources to complete several business combinations of entities or assets operating

in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks or offsetting of losses. By consummating a business combination with only a single entity or asset, our lack of diversification may:

 

 

In the event we ultimately determine to simultaneously acquire several businesses or assets and such businesses or assets are owned by different sellers, we may need for each of such sellers to agree that our purchase of its business or assets is contingent on the simultaneous closings of the other acquisition or acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the businesses or assets into a single operating business.

 

We may have limited ability to evaluate the target business’ management

 

Although we intend to closely scrutinize the incumbent management of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that our assessment will prove to be correct. In addition, we cannot assure you that new members that join our management following a business combination will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the target business following a business combination cannot presently be stated with any certainty. While our current officers and directors may remain associated in senior management or advisory positions with us following a business combination, they may not devote their full time and efforts to our affairs subsequent to a business combination. Moreover, they would only be able to remain with the company after the consummation of a business combination if they are able to negotiate employment or consulting agreements in connection with such business combination, which would be negotiated at the same time as the business combination negotiations are being conducted and which may be a term of 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 the company after the consummation of the business combination. While the personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business, the ability of such individuals to remain with the company after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. Additionally, we cannot assure you that our officers and directors will have significant experience or knowledge relating to the operations of the particular target business.

 

Following a business combination, we may seek to recruit additional managers to supplement or replace the incumbent management of the target business. We cannot assure you that we will have the ability to recruit such managers, or that any such managers we do recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management, if any.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus contains forward-looking statements. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Such forward-looking statements include statements regarding, among others, (a) our expectations about possible business combinations, (b) our growth strategies, (c) our future financing plans, and (d) our anticipated needs for working capital. Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “approximate,” “estimate,” “believe,” “intend,” “plan,” “budget,” “could,” “forecast,” “might,” “predict,” “shall” or “project,” or the negative of these words or other variations on these words or comparable terminology. This information may involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from the future results, performance, or achievements expressed or implied by any forward-looking statements. These statements may be found in this prospectus. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors, including, without limitation, the risks outlined under “Risk Factors” and matters described in this prospectus generally. In light of these risks and uncertainties, the events anticipated in the forward-looking statements may or may not occur.

 

Forward-looking statements are based on our current expectations and assumptions regarding our business, potential target businesses, the economy and other future conditions. Because forward-looking statements relate to the future, by their nature, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you, therefore, that you should not rely on any of these forward-looking statements as statements of historical fact or as guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include changes in local, regional, national or global political, economic, business, competitive, market (supply and demand) and regulatory conditions and the following:

 

 

 

These risks and others described under “Risk Factors” are not exhaustive.

 

Any forward-looking statement made by us in this prospectus speaks only as of the date on which we make it, and is expressly qualified in its entirety by the foregoing cautionary statements. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

USE OF PROCEEDS

 

We estimate that the proceeds of this offering will be used as set forth in the following table:

 

 

 

 

 

 

We intend to use the proceeds from the sale of the units and the insider warrants to acquire one or more businesses in the global consumer products and services industry.

 

Of the net proceeds of this offering, $277,950,000 (or $319,800,000 if the over-allotment option is exercised in full) plus $8,500,000 from the purchase of insider warrants, for an aggregate of $286,450,000 (or $328,300,000 if the over-allotment is exercised in full) will be placed in a trust account at JPMorgan Chase Bank, N.A., maintained by Continental Stock Transfer & Trust Company, New York, New York, as trustee. Additionally, $9,000,000 (or $10,350,000 if the underwriters’ over-allotment option is exercised in full) of the proceeds attributable to the underwriters’ discount will be deposited into such trust account for a total amount in trust of $295,450,000 (or $338,650,000 if the over-allotment is exercised in full). The proceeds will not be released from the trust account until the earlier of the completion of a business combination or as part of any liquidation of our trust account. To the extent the trust account earns interest or we are deemed to have earned income in connection therewith, we will be permitted to seek disbursements from the trust account to pay any federal, state or local tax obligations related thereto or any franchise tax obligations. The proceeds held in the trust account may be used as consideration to pay the sellers of a target acquisition with which we complete a business combination (excluding the amount held in the trust account representing a portion of the underwriters’ discount and any amount reserved for payment of taxes and/or working capital purposes). Any amounts not paid as consideration to the sellers of the target business will be used to finance our operations, which may include the target business(es) we acquired on the consummation of the business combination, to effect other acquisitions, or for working capital, as determined by our board of directors at that time. All amounts held in the trust account that are not converted to cash or released to us as interest income, net of income taxes, will be released on closing of our initial business combination with a target acquisition having a fair market value of at least 80% of the amount (excluding the amount held in the trust account representing a portion of the underwriters’ discount and any amount reserved for payment of taxes and/or working capital purposes) at the time of such business combination, subject to a majority of our public stockholders voting in favor of the business combination and less than 30% of the public stockholders voting against the business combination and electing their conversion rights.

 

We believe that prior to the consummation of a business combination, the $50,000 of proceeds initially held outside of the trust account, as well as the interest earned on the trust account, net of taxes payable on such interest, up to a maximum of $4,100,000, will be sufficient to cover our operating expenses for the 24 months subsequent to the consummation of this offering and to cover the expenses incurred in connection with a business combination.

Assuming that a business combination is not consummated during that time, we anticipate making the following expenditures during this time period:

 

 

These amounts are based on management’s estimate of the amount needed to fund our operations for the 24 months subsequent to the consummation of this offering and to consummate a business combination. This estimate may prove inaccurate, especially if a portion of the available funds is used to make a down payment or pay exclusivity or similar fees in connection with a business combination or if we expend a significant portion of the available funds in pursuit of a business combination that is not consummated. While we cannot assure you the balance of the trust account will be invested to yield these rates, we believe such rates are representative of those we may receive on the balance of the trust account. If we do not have sufficient funds available to cover our expenses, we may be forced to obtain additional financing, either from our existing stockholders, directors and officers or third parties. We may not be able to obtain additional financing and our existing stockholders, directors and officers are not obligated to provide any additional financing. If we do not have sufficient funds and cannot find additional financing, we may be forced to liquidate prior to consummating a business combination. If we choose to obtain additional financing in order to fund due diligence and other expenses associated with locating a target business, and if such additional financing were in the form of a loan, such loan would be incurred by us.

 

To the extent that our capital stock or debt securities are used in whole or in part as consideration to effect a business combination, or in the event that indebtedness from third parties is used, in whole or in part, as consideration to effect a business combination, the proceeds held in the trust account which are not used to consummate a business combination will be disbursed to the combined company and will, along with any other net proceeds not expended, be used as working capital to finance our operations. In the event that third-party indebtedness is used as consideration, our officers and directors would not be personally liable for the repayment of such indebtedness.

 

We may not use all of the proceeds in the trust in connection with a business combination, either because the consideration for the business combination is less than the proceeds in trust or because we finance a portion of the consideration with our capital stock or debt securities. In such event, the proceeds held in the trust account as well as any other net proceeds not expended will be used to finance our operations, which may include the target business(es) that we acquire on the business combination, to effect other acquisitions, or for working capital, as determined by our board of directors at that time. We may use these funds, among other things, for director and officer compensation, change-in-control payments or payments to affiliates, to finance the operations of the target acquisition, to make other acquisitions and to pursue our growth strategy.

The net proceeds of this offering that are not immediately required for the purposes set forth above will be invested only in U.S. “government securities,” defined as any Treasury Bill issued by the U.S. government having a maturity of 180 days or less, or any open-ended investment company registered under the 1940 Act that holds itself out as a registered money market fund and bears the highest credit rating issued by a U.S. nationally recognized rating agency. By restricting the investment of the proceeds to these instruments, we intend to meet the requirements for the exemption provided in Rule 3a-1 promulgated under the 1940 Act so that we are not deemed to be an investment company under the 1940 Act. The interest income earned on investment of the net proceeds not held in trust during this period, net of taxes payable on such interest, as well as the interest earned on the trust account, net of taxes payable on such interest, up to a maximum of $4,100,000, will be used to defray our general and administrative expenses, as well as costs relating to compliance with securities laws and regulations, including associated professional fees, until a business combination is completed.

 

We do not expect to pay any of our founding stockholders, directors or officers or any entity with which they are affiliated, any finder’s fee for services rendered to us prior to or in connection with a business combination. However, our founding stockholders, directors and officers will receive reimbursement for any reasonable out-of-pocket expenses incurred by them in connection with our organization, this offering and activities on our behalf, such as participating in the offering process, identifying a potential target operating business and performing due diligence on a suitable business combination. We have not reserved any specific amount for such payments, which may have the effect of reducing the available proceeds not deposited in the trust account for payment of our ongoing expenses and reimbursement of out-of-pocket expenses incurred on our behalf. In addition, since the role of present management after a business combination is uncertain, we have no ability to determine what remuneration, if any, will be paid to those persons for periods after a business combination.

 

A public stockholder (but not our founding stockholders with respect to their founder shares and shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering) will be entitled to receive funds from the trust account (including interest earned on such stockholder’s portion of the trust account, net of taxes payable and amounts disbursed for working capital purposes) only in the event of our liquidation of the trust account as part of our liquidation upon our failure to complete a business combination, or if such public stockholder converts his, her or its shares of common stock into cash in connection with a business combination that the public stockholder voted against and which we actually consummate. In no other circumstances will a public stockholder have any right or interest of any kind to or in the trust account. Founding stockholders are not entitled to convert any of their founder shares (or shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering) or shares acquired in or after this offering into a pro rata share of the trust account. However, founding stockholders who acquire shares of common stock or warrants in or after this offering will be entitled to a pro rata share of the trust account with respect to such shares of common stock (including shares acquired upon exercise of such warrants) upon the liquidation of the trust account if we fail to consummate a business combination within the required time period.

 

Upon the consummation of a business combination, the underwriters will be entitled to receive that portion of the proceeds attributable to the underwriters’ discount held in trust excluding any accrued interest thereon. In the event that we are unable to consummate a business combination and the trustee is forced to liquidate the trust account, the underwriters have agreed that: (i) they will forfeit any rights or claims to such proceeds and any accrued interest thereon; and (ii) the proceeds attributable to the underwriters’ discount will be distributed on a pro-rata basis among the public stockholders along with any accrued interest thereon.

 

DILUTION

 

The difference between the public offering price per share of common stock, assuming no value is attributed to the warrants included in the units, and the pro forma net tangible book value per share of our common stock after this offering constitutes the dilution to investors in this offering. Net tangible book value per share is determined by dividing our net tangible book value, which is our total tangible assets less total liabilities (including the value of common stock which may be converted into cash), by the number of outstanding shares of our common stock.

 

The following table sets forth information with respect to our founding stockholders and the new investors:

 

 

 

 

At July 16, 2007, our net tangible book value was $8,625. After giving effect to the sale of 30,000,000 shares of common stock included in the units and the sale of the 8,500,000 insider warrants, and the deduction of underwriting discounts and estimated expenses of this offering, our pro forma net tangible book value at July 16, 2007 would have been $7.04 per share, or $200,557,510, representing an immediate increase in net tangible book value of $7.04 per share to the founding stockholders and an immediate dilution of $2.96 per share or 29.6% to new investors.

 

For purposes of presentation, our pro forma net tangible book value after this offering is $88,649,990 less than it otherwise would have been because, if we effect a business combination, the conversion rights of the public stockholders (but not our founding stockholders either with respect to their founder shares or any shares of common stock purchased in this offering or the aftermarket) may result in the conversion into cash of up to approximately 29.99% of the aggregate number of the shares of common stock sold in this offering at a per-share conversion price equal to the amount in the trust account as of two business days prior to the consummation of the proposed business combination, inclusive of any interest, divided by the number of shares of common stock sold in this offering.

 

The following table illustrates the dilution to the new investors on a per-share basis, assuming no value is attributed to the warrants included in the units:

 

 

The pro forma net tangible book value after this offering is calculated as follows:

 

 

 

 

CAPITALIZATION

 

The following table sets forth our capitalization:

 

 

 

 

On August 31, 2007, we issued a promissory note in the amount of $139,025 in favor of our sponsor, which amount reflects the funds advanced by our sponsor to us or on our behalf in connection with this offering. This note bears an interest rate of 5.0% per annum and is due on the earlier of (i) December 31, 2007 and (ii) the consummation of this offering. The principal amount of the note plus any accrued and unpaid interest therein to the date of repayment will be repaid out of the proceeds of this offering.

 

We anticipate recording a compensation expense in connection with the issuance of 8,500,000 insider warrants in a private placement. For a more detailed discussion of the compensation expense, see Note 5 to the financial statements.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

We are a blank check company organized under the laws of the State of Delaware on June 28, 2007. We were formed to acquire, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination, one or more businesses in the global consumer products and services industry. Our business combination will be an acquisition of a majority ownership interest in an acquisition candidate. We intend to utilize cash derived from the proceeds of this offering, our capital stock, debt, or a combination of cash, capital stock and debt, in effecting a business combination. The issuance of additional shares of our capital stock:

 

 

Similarly, if we incur substantial debt, it could result in:

 

 

We have neither engaged in any operations nor generated any revenues to date. Our entire activity since inception has been to prepare for our proposed fundraising through an offering of our equity securities.

 

We estimate that the net proceeds from the sale of the units in this offering and the sale of insider warrants in the insider private placement immediately prior to the consummation of this offering will be approximately $286,450,000 (or $328,300,000 if the underwriters’ over-allotment option is exercised in full). Other than $50,000 to be used for working capital, this entire amount will be held in trust. We intend to use substantially all of the net proceeds of this offering and the insider private placement of insider warrants, including the funds held in the trust account, to effect a business combination. To the extent that our capital stock is used in whole or in part as consideration to effect a business combination, the remaining proceeds held in the trust account (excluding the amount held in the trust account representing a portion of the underwriters’ discount) as well as any other net proceeds not expended will be used to finance our operations, which may include the operations of the target business(es) we acquire on the consummation of the business combination, to effect other acquisitions, or for working capital, as determined by our board of directors at that time.

 

We believe that, upon consummation of this offering, the funds not held in trust, plus up to an aggregate of $4,100,000 in interest income on the trust account, net of taxes payable on all interest income earned on the trust account, which we will be permitted to withdraw from the trust account for working capital purposes, will be sufficient to allow us to operate for at least 24 months following the consummation of this offering, assuming that a business combination is not consummated during that time. Over this time period, we will be using these funds for identifying and evaluating prospective acquisition candidates, performing business due diligence on prospective target acquisitions, traveling to and from the property and asset locations that represent prospective target acquisitions, reviewing corporate, title, environmental, and financial documents and material agreements regarding prospective target acquisitions, selecting the target acquisition to acquire and structuring, negotiating and consummating the business combination. We anticipate that we will incur approximately $2,460,000 of expenses for the due diligence and investigation of a target acquisition (including expenses for legal, accounting and other expenses attendant to the due diligence investigations, structuring and negotiating of a business combination), approximately $500,000 of expenses in legal and accounting fees relating to our SEC reporting obligations (including the proxy statement in connection with a business combination), approximately $240,000 of expenses in fees relating to our services agreement with our sponsor and certain general and administrative services, and approximately $950,000 for general working capital that will be used for miscellaneous expenses and reserves including the cost of liquidation, which we currently estimate to be up to $75,000 if our corporate existence terminates on November 27, 2009, and including for director and officer liability insurance premiums. We do not believe we will need to raise additional funds following this offering in order to meet the expenditures required for operating our business. However, we may need to raise additional funds through a private offering of debt or equity securities if such funds are required to consummate a business combination that is presented to us.

 

Our sponsor and Chief Executive Officer have agreed to purchase a total of 8,500,000 insider warrants (7,500,000 to be purchased by our sponsor and 1,000,000 to be purchased by our Chief Executive Officer) immediately prior to the consummation of this offering at the price of $1.00 per warrant for a total of $8,500,000 from us in a private placement pursuant to the exemption from registration contained in Section 4(2) of the Securities of Act of 1933, as amended. Each insider warrant entitles the holder to purchase one share of our common stock at a price of $7.50 per share. The holders of the insider warrants are entitled, at any time and from time to time, to exercise the insider warrants on a cashless basis at the discretion of the

holder. The proceeds from the sale of the insider warrants will be deposited into a trust account, subject to a trust agreement and will be part of the funds distributed to our public stockholders in the event we are unable to complete a business combination. Based on our observation of market prices for comparable warrants, we believe $1.10 per warrant for the insider warrants will represent the fair value of such warrants on the date of purchase. The valuation is based on all comparable initial public offerings by blank check companies in 2007. We anticipate recording compensation expense in connection with the insider warrants equal to the grant date fair value of the warrants minus the purchase price. We estimate that amount will be approximately $850,000. The compensation expense will be recognized over the estimated service period of 24 months. We have estimated the service period as the estimated time to complete a business combination.

 

The public warrants and the insider warrants are not subject to net cash settlement in the event we are unable to maintain an effective registration statement under the Securities Act covering the issuance of the common stock underlying the warrants. We must use commercially reasonable efforts to file and maintain the effectiveness of the registration statement for the warrants set forth above. Except for the warrants included in the insider warrants, all such warrants are only exercisable to the extent we are able to maintain such effectiveness. The insider warrants, however, may be exercised by means of cashless exercise. If a holder of public warrants does not, or is not able to, exercise such warrants, as applicable, such warrants will expire worthless. This expiration would result in such holders paying the full unit purchase price solely for the shares of common stock underlying such units. Since we are not required to net cash settle the warrants, liability classification is not required under EITF 00-19. We will, therefore, account for the warrants as equity.

 

Our Chief Executive Officer has an option to purchase 475,000 shares of founder shares at a purchase price of $0.001 per share from our sponsor and its affiliates, which option will vest on the date (the “Trigger Date”) that is one year after the closing of a qualifying business combination, but the vesting will occur only if the appreciation of the per share price of our common stock is either (i) greater than 1x the Russell 2000 hurdle rate on the Trigger Date or (ii) exceeds the Russell 2000 hurdle rate for 20 consecutive trading days after the Trigger Date. The Russell 2000 hurdle rate means the Russell 2000 index performance over the period between the completion of this offering and the Trigger Date. We anticipate recording compensation expense in connection with the options equal to the grant date fair value of the option. The fair value of the option is based on a Black-Scholes model on the date of grant and would be approximately $4,393,340.92 using an expected life of three years, stock price of $9.25 per share, volatility of 33.7% and a risk-free interest rate of 4.98%. Because shares of our common stock do not have a trading history, the volatility assumption is based on information currently available to us. We believe that the volatility estimate is a reasonable benchmark to use in estimating the expected volatility of shares of our common stock. In addition, we believe a stock price of $9.25 is a fair assumption based on our observation of market prices for comparable shares of common stock. This assumption is based on all comparable initial public offerings by blank check companies in 2007. The compensation expense will be recognized over the service period of 24 months. We have estimated the service period as the estimated time to complete a business combination.

 

PROPOSED BUSINESS

 

Introduction

 

We are a blank check company organized under the laws of the State of Delaware on June 28, 2007. We were formed to acquire, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination, one or more businesses in the global consumer products and services industry. To date, our efforts have been limited to organizational activities. We do not have any specific business combination under consideration, nor have we had any discussions with any target business regarding a possible business combination. From the period prior to our formation through the date of this prospectus, there have been no communications or discussions between any of our officers and directors and any of their potential contacts or relationships regarding a potential business combination. We believe there are substantial opportunities to operate onshore as well as offshore, in both domestic and international markets.

 

We have not conducted any research with respect to identifying the number and characteristics of the potential acquisition candidates within any segment of the consumer products and services chain, or the likelihood or probability of success of any proposed business combination. In addition, we have not compiled a database of entities that are suitable acquisition candidates. We cannot assure you that we will be able to locate a target business meeting the criteria described above in these segments or that we will be able to engage in a business combination with a target business on favorable terms and/or in the prescribed time period. We will not pursue an acquisition of an affiliate of our sponsor or of any of our officers or directors, including portfolio companies and other investments or interests held by our sponsor, officers and directors. In addition, we will not pursue any acquisition that was presented to our sponsor or its employees prior to the consummation of this offering.

 

Our definition of “business combination” should be considered in your investment decisions in connection with this offering and ultimately in connection with the approval of a business combination. We will make an initial investment in an operating business with a fair market value of at least 80% of the amount held in trust. Under our definition of business combination, the acquisition may be consummated through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination. We will have the flexibility to acquire less than 100% of the target enterprise, but in no event less than a majority interest of a business. In the event we acquire less than 100% of an acquisition candidate, the 80% of the amount held in trust requirement will be based on the fair market value of the acquired majority interest. In evaluating a prospective target acquisition, our management will consider, among other factors, the following factors likely to affect the performance of the investment:

 

 

Management and Board Expertise

 

Our executive officers and directors have extensive experience in the global consumer products and services industry as managers, principals or directors of worldwide consumer products and services companies. For instance, our Chief Executive Officer, Scott LaPorta, has extensive experience in the global consumer products industry. In the United States he has executive management experience in the hotel, resort, gaming, restaurant, entertainment, apparel, and retail businesses. He also has significant international experience. While he was Chief Financial Officer of Park Place Entertainment he served on the Board of Directors of corporations in Australia, Canada, and Uruguay whose primary businesses included resort hotels, gaming, restaurant, entertainment, and retail. While Mr. LaPorta was employed by Levi Strauss he was President of Levi Strauss Canada and Levi Strauss Mexico where he was responsible for leading the wholesale and retail businesses for the Levi’s and Dockers brands. Additionally, Mr. LaPorta was responsible for coordinating the development of the Levi Strauss Signature brand in North America, Latin America, Europe, and Asia. Finally, his businesses at Levi Strauss sourced product in Latin America, the Middle East, Africa, and Asia. In addition, our officers and directors have significant expertise covering the key areas of the global consumer products and services industry, with experience in negotiating and structuring transactions in the areas in which we will attempt to compete. Prior to the consummation of a business combination, we intend to leverage the industry experience of our executive officers by focusing our efforts on identifying a prospective target business or businesses in the global consumer products and services industry and negotiating the terms of such transaction.

 

Subsequent to the consummation of a business combination, we believe that the strengths of our management team, particularly their extensive operations experience in the global consumer products and services industry, will be valuable with respect to operating any business we may acquire.

 

Effecting a Business Combination

 

General

 

We were formed to acquire, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar business combination, one or more businesses in the global consumer products and services industry. We are not presently engaged in, and we will not engage in, any substantive commercial business for an indefinite period of time following this offering. We intend to utilize cash derived from the proceeds of this offering, our capital stock, debt or a combination of these in effecting a business combination. Although substantially all of the net proceeds of this offering are intended to be applied generally toward effecting a business combination as described in this prospectus, the proceeds are not otherwise being designated for any more specific purposes. Accordingly, investors in this offering are investing without first having an opportunity to evaluate the specific merits or risks of any one or more business combinations.

 

Subject to the requirement that our business combination must be with a target acquisition having a fair market value that is at least 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount) at the time of such acquisition, there are no limitations on the type of investments (including investments in securities of entities that own or finance consumer products and services activities) we can make or the percentage of our total assets that may be invested in any one investment. Accordingly, other than the requirement that our business combination must be with a target acquisition having a fair market value that is at least 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount) at the time of such acquisition, our investment policies may be changed from time to time at the discretion of our board of directors, without a vote of our stockholders. Additionally, no limits have been set on the concentration of investments

(including investments in securities of entities that own or finance consumer products and services activities) in any location or product type.

 

We have not identified a target acquisition

 

To date, we have not selected any target acquisition on which to concentrate our search for a business combination. None of our officers, directors, promoters, our sponsor or other affiliates is currently engaged in discussions on our behalf or had any contacts or communications with representatives of other companies regarding the possibility of a potential merger, capital stock exchange, asset or stock acquisition or other similar business combination with us, nor have we, nor any of our agents or affiliates, been approached by any candidates (or representatives of any candidates) with respect to a possible acquisition transaction with us. Additionally, we have not, nor has anyone on our behalf, taken any measure, directly or indirectly, to identify or locate any suitable target acquisition, nor have we engaged or retained any agent or other representative to identify or locate an acquisition candidate. We have also not conducted any research with respect to identifying the number and characteristics of the potential acquisition candidates. Neither we nor our officers, directors, promoters or affiliates will engage in any communications with acquisition candidates until after the consummation of this offering. As a result, we cannot assure you that we will be able to locate a target acquisition or that we will be able to engage in a business combination on favorable terms.

 

Subject to the limitation that a target acquisition have a fair market value of at least 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount) at the time of the transaction, as described below in more detail, we will have virtually unrestricted flexibility in identifying and selecting a prospective transaction candidate. Accordingly, there is no basis for investors in this offering to evaluate the possible merits or risks of any target acquisition with which we may ultimately complete a business combination. To the extent we effect a business combination with a financially unstable asset or property, including entities without established records of sales or earnings, we may be affected by numerous risks inherent in the business and operations of such financially unstable property or asset. Although our management will endeavor to evaluate the risks inherent in a particular target acquisition, we cannot assure you that we will properly ascertain or assess all significant risk factors.

 

Sources of target acquisition

 

While we have not yet identified any candidates for a business combination, we believe that there are numerous acquisition candidates in the global consumer products and services industry that we intend to target. Target acquisitions may be brought to our attention by our officers and directors, through their industry relationships located in the United States and elsewhere that regularly, in the course of their daily business activities, see numerous varied opportunities. Target acquisitions may also be brought to our attention by such unaffiliated sources such as brokers or others as a result of being solicited by us through calls or mailings. Unaffiliated sources, such as brokers, may also introduce us to target acquisitions they think we may be interested in on an unsolicited basis, since many of these sources will have read this prospectus and know what types of businesses we are targeting. In the event we seek to utilize unaffiliated brokers or other sources any finder’s fee will be approved by our board of directors. In no event will any of our existing officers, directors or founding stockholders, or any entity with which they are affiliated, be paid any finder’s fee for any services they render, in order to effectuate the consummation of the initial business combination, nor will we acquire any affiliate of our sponsor or any of our officers or directors.

Selection of a target acquisition and structuring of a business combination

 

Subject to the requirement that our business combination must be with a target acquisition having a fair market value that is at least 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount) at the time of such acquisition our management will have virtually unrestricted flexibility in identifying and selecting prospective target acquisitions. We have not established any other specific attributes or criteria (financial or otherwise) for prospective target acquisitions.

 

In evaluating a prospective target acquisition, our management will consider, among other factors, the following factors likely to affect the performance of the investment:

 

 

These criteria are not intended to be exhaustive. Any evaluation relating to the merits of a particular business combination will be based, to the extent relevant, on the above factors as well as other considerations deemed relevant by our management in effecting a business combination consistent with our business objective. In evaluating a prospective target acquisition, we will conduct an extensive due diligence review which will encompass, among other things, a review of all environmental issues, and a review of all relevant financial and other information which is made available to us. This due diligence review will be conducted either by our management or by unaffiliated third parties we may engage, although we have no current intention to engage any such third parties. We will also seek to have all owners of any prospective target acquisition execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account. If any prospective business or owner refuses to execute such agreement, it is unlikely we would continue negotiations with such business or owner.

 

In the case of all possible acquisitions, we will seek to determine whether the transaction is advisable and in the best interests of us and our stockholders. We believe it is possible that our attractiveness as a potential buyer of businesses may increase after the consummation of an initial transaction and there may or may not be additional acquisition opportunities as we grow and integrate our acquisitions. We may or may not make future acquisitions. Fundamentally, however, we believe that, following an initial transaction, we could learn of, identify and analyze acquisition targets in the same way after an initial transaction as we will before an initial transaction. To the extent we are able to identify multiple acquisition targets and options as to which business or assets to acquire as part of an initial transaction, we intend to seek to consummate the acquisition which is most attractive and provides the greatest opportunity for creating stockholder value. The determination of which entity is the most attractive would be

based on our analysis of a variety of factors, including whether such acquisition would be in the best interests of our security holders, the purchase price, the terms of the sale, the perceived quality of the assets and the likelihood that the transaction will be consummated.

 

The time and costs required to select and evaluate a target acquisition and to structure and complete the business combination cannot presently be ascertained with any degree of certainty. Any costs incurred with respect to the identification and evaluation of a prospective target acquisition with which a business combination is not ultimately completed will result in a loss to us and reduce the amount of capital available to otherwise complete a business combination. While we may pay fees or compensation to third parties for their efforts in introducing us to a potential target business upon the approval of our board of directors, in no event, however, will we pay any of our existing officers, directors or founding stockholders, or any entity with which they are affiliated, any finders’ fee in connection with the consummation of the initial business combination.

 

Fair market value of target acquisition

 

The initial target acquisition that we acquire must have a fair market value equal to at least 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount) at the time of such acquisition, subject to the conversion rights described below, although we may acquire a target acquisition whose fair market value significantly exceeds 80% of the amount held in trust (net of taxes and excluding the amount held in the trust account representing a portion of the underwriters’ discount). In the event we acquire less than 100% of an acquisition candidate, the fair market value of the 80% of the amount held in trust requirement will be based on fair market value of the acquired majority interest. To accomplish this, we may seek to raise additional funds through credit facilities or other secured financings or a private offering of debt or equity securities if such funds are required to consummate such a business combination, although we have not entered into any such fund-raising arrangement and do not currently anticipate effecting such a financing other than in connection with the consummation of the business combination.

 

Prior to entering into an agreement for a target acquisition, the fair market value of such target acquisition will be determined by our board of directors based upon standards generally accepted by the financial community, such as actual and potential sales, earnings and cash flow and book value. We do not intend to seek a third party valuation or fairness opinion. However, in considering the entire fairness of a business combination to our stockholders, our board of directors may determine that an independent valuation or fairness opinion will be necessary in satisfying its fiduciary duties under Delaware law, including in determining the fair market value of the acquired interests, in the event the valuation is a complex analysis. If no opinion is obtained, our public stockholders will be relying solely on the judgment of our board of directors.

 

Possible lack of business diversification

 

Our business combination must be with a target acquisition which satisfies the minimum valuation standard at the time of such acquisition, as discussed above. Consequently, we expect to have the ability to effect only a single business combination, although this process may entail the simultaneous acquisitions of several consumer products and services businesses. Therefore, at least initially, the prospects for our success may be entirely dependent upon the future performance of a single business operation. Unlike other entities that may have the resources to complete several business combinations of entities or assets operating in multiple industries or multiple areas of a single industry, it is probable that we will not have the resources to diversify our operations or benefit from the possible spreading of risks or

offsetting of losses. By consummating a business combination with only a single entity or asset, our lack of diversification may:

 

 

In the event we ultimately determine to simultaneously acquire several businesses or assets and such businesses or assets are owned by different sellers, we may need for each of such sellers to agree that our purchase of its business or assets is contingent on the simultaneous closings of the other acquisition or acquisitions, which may make it more difficult for us, and delay our ability, to complete the business combination. With multiple acquisitions, we could also face additional risks, including additional burdens and costs with respect to possible multiple negotiations and due diligence investigations (if there are multiple sellers) and the additional risks associated with the subsequent assimilation of the businesses or assets into a single operating business.

 

Limited ability to evaluate the target business’ management

 

Although we intend to closely scrutinize the incumbent management of a prospective target business when evaluating the desirability of effecting a business combination, we cannot assure you that our assessment will prove to be correct. In addition, we cannot assure you that new members that join our management following a business combination will have the necessary skills, qualifications or abilities to manage a public company. Furthermore, the future role of our officers and directors, if any, in the target business following a business combination cannot presently be stated with any certainty. While our current officers and directors may remain associated in senior management or advisory positions with us following a business combination, they may not devote their full time and efforts to our affairs subsequent to a business combination. Moreover, they would only be able to remain with the company after the consummation of a business combination if they are able to negotiate employment or consulting agreements in connection with such business combination, which would be negotiated at the same time as the business combination negotiations are being conducted and which may be a term of 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 the company after the consummation of the business combination. While the personal and financial interests of such individuals may influence their motivation in identifying and selecting a target business, the ability of such individuals to remain with the company after the consummation of a business combination will not be the determining factor in our decision as to whether or not we will proceed with any potential business combination. Additionally, we cannot assure you that our officers and directors will have significant experience or knowledge relating to the operations of the particular target business.

 

Following a business combination, we may seek to recruit additional managers to supplement or replace the incumbent management of the target business. We cannot assure you that we will have the ability to recruit such managers, or that any such managers we do recruit will have the requisite skills, knowledge or experience necessary to enhance the incumbent management, if any.

 

Opportunity for stockholder approval of business combination

 

Prior to the completion of our business combination, we will submit the transaction to our stockholders for approval, even if the nature of the acquisition is such as would not ordinarily require stockholder approval under applicable state law. In connection with seeking stockholder approval of a business combination, we will furnish our stockholders with proxy solicitation materials prepared in accordance with the Exchange Act, which, among other matters, will include a description of the operations of the target business and, if applicable, historical financial statements of a target business.

 

In connection with the stockholder vote required to approve any business combination, all of our founding stockholders have agreed to vote all of their founder shares in accordance with the majority of the shares of common stock of public stockholders who vote at the special or annual meeting called for the purpose of approving a business combination. Our founding stockholders have also agreed that if they acquire shares of common stock in this offering or following completion of this offering, they will vote such acquired shares of common stock in favor of a business combination. We will proceed with the business combination only if a majority of the shares of common stock voted by the public stockholders are voted in favor of the business combination and public stockholders owning less than 30% of the shares of common stock sold in this offering exercise their conversion rights. Voting against the business combination alone will not result in conversion of a stockholder’s shares of common stock into a pro rata share of the trust account. Such stockholder must also exercise its conversion rights described below.

 

Upon the completion of our business combination, unless required by Delaware law, the federal securities laws, and the rules and regulations promulgated thereunder, or the rules and regulations of an exchange upon which our securities are listed, we do not presently intend to seek stockholder approval for any subsequent acquisitions.

 

Conversion rights

 

At the time we seek stockholder approval of any business combination, we will offer to each public stockholder (but not to our founding stockholders, either with respect to their founder shares or any shares of common stock in this offering or the aftermarket) the right to have such stockholder’s shares of common stock converted to cash if the stockholder votes against the business combination and the business combination is approved and completed. Founding stockholders are not entitled to convert any of their founder shares (and the shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering) or shares of common stock acquired in or after this offering into a pro rata share of the trust account. The actual per-share conversion price will be equal to the amount in the trust account, which shall include $8,500,000 from the purchase of the insider warrants by the insider warrant holders, inclusive of any interest (net of any taxes due on such interest, which taxes, if any, shall be paid from the trust account, and amounts disbursed for working capital purposes, and calculated as of two business days prior to the consummation of the proposed business combination), divided by the number of shares of common stock sold in this offering. Without taking into any account interest earned on the trust account or taxes payable on such interest, the initial per-share conversion price would be approximately $9.85, or $0.15 less than the per-unit offering price of $10.00. Because the initial per share conversion price is $9.85 per share (plus pro rata accrued interest net of taxes payable and amounts disbursed for working capital purposes), which may be lower than the market price of the common stock on the date of the conversion, there may be a disincentive on the part of public stockholders to exercise their conversion rights.

 

If a business combination is approved, stockholders that vote against the business combination and elect to convert their shares of common stock to cash will be entitled to receive their pro-rata portion of the $9,000,000 ($0.30 per share) of deferred underwriting discount held in the trust account.

An eligible stockholder may request conversion at any time after the mailing to our stockholders of the proxy statement and prior to the vote taken with respect to a proposed business combination at a meeting held for that purpose. Any request for conversion, once made, may be withdrawn at any time up to the date of the meeting. If a stockholder wishes to exercise his conversion rights, he must vote against the proposed business combination and, at the same time, demand that we convert his shares into cash by marking the appropriate space on the proxy card. If, notwithstanding a stockholder’s vote, the proposed business combination is consummated, then such stockholder will be entitled to receive a pro rata share of the trust account, including any interest earned thereon as of date which is two business days prior to the proposed consummation of the business combination. If a stockholder exercises his conversion rights, then he will be exchanging his shares of our common stock for cash and will no longer own these shares of common stock. A stockholder will only be entitled to receive cash for these shares if he continues to hold these shares through the closing date of the proposed business combination and then tenders his stock certificate to us. If a stockholder converts his shares of common stock, he will still have the right to exercise the warrants received as part of the units purchased in this offering in accordance with the terms hereof. If the proposed business combination is not consummated then a stockholder’s shares will not be converted into cash, even if such stockholder elected to convert.

 

Liquidation if no business combination

 

Our Amended and Restated Certificate of Incorporation provides that we will continue in existence only until November 27, 2009. This provision may not be amended except in connection with the consummation of a business combination. If we have not completed a business combination by such date, our corporate existence will cease except for the purposes of winding up our affairs liquidating, pursuant to Section 278 of the Delaware General Corporation Law. This has the same effect as if our board of directors and stockholders had formally voted to approve our dissolution pursuant to Section 275 of the Delaware General Corporation Law. Accordingly, limiting our corporate existence to a specified date as permitted by Section 102(b)(5) of the Delaware General Corporation Law removes the necessity to comply with the formal procedures set forth in Section 275 (which would have required our board of directors and stockholders to formally vote to approve our dissolution and liquidation and to have filed a certificate of dissolution with the Delaware Secretary of State). We view this provision terminating our corporate existence on November 27, 2009 as an obligation to our stockholders and that investors will make an investment decision, relying, at least in part, on this provision. Thus, without the affirmative vote cast at a meeting of stockholders of at least 95% of the common stock issued in this offering, we will not take any action to amend or waive this provision to allow us to survive for a longer period of time except in connection with the consummation of a business combination.

 

A liquidation after our existence terminates by operation of law would occur in the event that a business combination is not consummated within 24 months of the consummation of this offering. In the event we liquidate after termination of our existence by operation of law on November 27, 2009, we anticipate notifying the trustee of the trust account to begin liquidating such assets promptly after such date.

 

Our founding stockholders have waived their rights to participate in any distribution with respect to their founder shares and the shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering upon our liquidation prior to a business combination. However, founding stockholders who acquire shares of common stock or warrants in or after this offering will be entitled to a pro rata share of the trust account with respect to such shares of common stock (including shares acquired upon exercise of such warrants) upon the liquidation of the trust account if we fail to consummate a business combination within the required time period. There will be no distribution with respect to our warrants which will expire worthless. We expect that all costs associated with the implementation and

completion of our liquidation will be funded by any remaining net assets outside of the trust fund, 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, and without taking into account interest, if any, earned on the trust account, the initial per-share liquidation price would be approximately $9.85 (of which approximately $0.30 per share is attributable to the underwriters’ discount), or $0.15 less than the per-unit offering price of $10.00. There can be no assurance that any converting stockholder will receive equal to or more than his, her or its full invested amount. The proceeds deposited in the trust account could, however, become subject to the claims of our creditors which could have higher priority than the claims of our public stockholders. We cannot assure you that the actual per-share liquidation price will not be less than approximately $9.85, plus interest (net of taxes payable and amounts disbursed for working capital purposes, which taxes, if any, shall be paid from the trust account), due to claims of creditors. Although we will seek to have all vendors, service providers, prospective target businesses or other entities we engage execute agreements with us waiving any right, title, interest or claim of any kind in or to any monies held in the trust account for the benefit of our public stockholders, there is no guarantee that they will execute such agreements or even if they execute such agreements that they would be prevented from bringing claims against the trust account including but not limited to fraudulent inducement, breach of fiduciary responsibility or other similar claims, as well as claims challenging the enforceability of the waiver, in each case in order to gain an advantage with a claim against our assets, including the funds held in the trust account. If any third party refused to execute an agreement waiving such claims to the monies held in the trust account, we would perform an analysis of the alternatives available to us if we chose not to engage such third party and evaluate if such engagement would be in the best interest of our stockholders if such third party refused to waive such claims. Examples of possible instances where we may engage a third party that refused to execute a waiver include the engagement of a third party consultant whose particular expertise or skills are believed by management to be significantly superior to those of other consultants that would agree to execute a waiver or in cases where management is unable to find a provider of required services willing to provide the waiver. In any event, our management would perform an analysis of the alternatives available to it and would only enter into an agreement with a third party that did not execute a waiver if management believed that such third party’s engagement would be significantly more beneficial to us than any alternative. 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. Our sponsor agreed, pursuant to an agreement with us that, if we liquidate prior to the consummation of a business combination, it will be liable only if a vendor, service provider, prospective target business or other entity does not provide a valid and enforceable waiver to any rights or claims to the trust account as of the date of the consummation of this offering to pay debts and obligations to creditors. Additionally, the underwriters have agreed to forfeit any rights or claims against the proceeds held in the trust account which includes a portion of their underwriters’ discount. Based on information we have obtained from our sponsor, we currently believe that we have substantial means and capability to fund a shortfall in our trust account even though we have not reserved for such an eventuality. Specifically, we believe the fee income from the sponsor’s $1.5 billion assets under management (as of September 30, 2007) will be sufficient to cover its indemnification obligations. We cannot assure you, however, that we would be able to satisfy those obligations.

 

We will seek to reduce the possibility that our sponsor will have to indemnify the trust account due to claims of creditors by endeavoring to have all vendors, service providers and prospective target businesses as well as other entities execute agreements with us waiving any right, title, interest or claim of any kind in or to monies held in the trust account. We also will have access to up to $4,150,000 (comprised of $50,000 available outside of the trust account from the offering

proceeds and up to $4,100,000 interest income, net of taxes payable on all interest income earned on the trust account, which we may seek to withdraw from the trust account for working capital purposes) with which to pay any such potential claims (including costs and expenses incurred in connection with our liquidation after the termination of our existence by operation of law on November 27, 2009). The indemnification provision is set forth in the sponsor insider letter. The sponsor insider letter specifically sets forth that in the event we obtain a valid and enforceable waiver of any right, title, interest or claim of any kind in or to any monies held in the trust account as of the consummation of this offering for the benefit of our stockholders from a vendor, service provider, prospective target business or other entity, the indemnification from our sponsor will not be available. In the event that we liquidate and it is subsequently determined that the reserve for claims and liabilities is insufficient, stockholders who received a return of funds from the liquidation of our trust account could be liable for claims made by creditors.

 

Under the Delaware General Corporation Law, stockholders may be held liable for claims by third parties against a corporation to the extent of distributions received by them in a dissolution. If the corporation complies with certain procedures set forth in Section 280 of the Delaware General Corporation Law intended to ensure that it makes reasonable provision for all claims against it, including a 60-day notice period during which any third-party claims can be brought against the corporation, a 90-day period during which the corporation may reject any claims brought, and an additional 150-day waiting period before any liquidating distributions are made to stockholders, any liability of stockholders with respect to a liquidating distribution is limited to the lesser of such stockholder’s pro rata share of the claim or the amount distributed to the stockholder, and any liability of the stockholder would be barred after the third anniversary of the dissolution. However, as stated above, if we do not effect a business combination by November 27, 2009, it is our intention to make liquidating distributions to our stockholders as soon as reasonably possible after such time period 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 and any liability of our stockholders may extend well beyond the third anniversary of such date. Because we will not be complying with Section 280, Section 281(b) of the Delaware General Corporation Law requires us to adopt a plan that will provide for our payment, based on facts known to us at such time, of (i) all existing claims, (ii) all pending claims and (iii) all claims that may be potentially brought against us within the subsequent ten years. Accordingly, we would be required to provide for any claims of creditors known to us at that time or those that we believe could be potentially brought against us within the subsequent ten years prior to our distributing the funds in the trust account to our public stockholders. We have not assumed that we will have to provide for payment on any claims that may potentially be brought against us within the subsequent ten years due to the speculative nature of such an assumption. However, because we are a blank check company, rather than an operating company, and our operations will be limited to searching for prospective target businesses to acquire, the only likely claims to arise would be from our vendors (such as accountants, lawyers, investment bankers, etc.) or potential target businesses.

 

If we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, the proceeds held in the trust account could be subject to applicable bankruptcy law, and may be included in our bankruptcy estate and subject to the claims of third parties with priority over the claims of our stockholders. To the extent any bankruptcy claims deplete the trust account, we cannot assure you we will be able to return to our public stockholders at least $9.85 per share, without taking into account any interest earned on the trust account (net of any taxes due on such interest, which taxes, if any, shall be paid from the trust account). Additionally, if we are forced to file a bankruptcy case or an involuntary bankruptcy case is filed against us which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could

seek to recover all amounts received by our stockholders. Furthermore, because we intend to distribute the proceeds held in the trust account to our public stockholders promptly after the termination of our corporate existence, this may be viewed or interpreted as giving preference to our public stockholders over any potential creditors with respect to access to or distributions from our assets. Furthermore, our board may be viewed as having breached its fiduciary duty to our creditors and/or may have acted in bad faith, and thereby exposing itself and our company to claims of punitive damages, by paying public stockholders from the trust account prior to addressing the claims of creditors. We cannot assure you that claims will not be brought against us for these reasons.

 

Our public stockholders will be entitled to receive funds from the trust account only in the event of our liquidation or if they seek to convert their respective shares of common stock into cash upon a business combination which the stockholder voted against and which is completed by us. In no other circumstances will a stockholder have any right or interest of any kind to or in the trust account. Voting against the business combination alone will not result in conversion of a stockholder’s shares of common stock into a pro rata share of the trust account. Such stockholder must have also exercised its conversion rights described above.

 

 

 

If we succeed in effecting a business combination, there will be, in all likelihood, intense competition from competitors of the target acquisition. We cannot assure you that, subsequent to a business combination, we will have the resources or ability to compete effectively.

 

Facilities

 

We maintain our principal executive offices at 1370 Avenue of the Americas, New York, NY 10019.

 

 

 

 

MANAGEMENT

 

 

Jason N. Ader is our Chairman of the Board. Mr. Ader founded and has served as the President and Chief Executive Officer of Hayground Cove Asset Management LLC, or Hayground Cove, a New York-based investment management firm with approximately $1.5 billion of assets across funds and accounts under management as of September 30, 2007. Mr. Ader is the sole member of Hayground Cove Asset Management LLC, the managing member of Hayground Cove Fund Management LLC, which is the general partner of Hayground Cove Associates LP, the investment manager for Hayground Cove Institutional Partners LP, Hayground Cove Overseas Partners Ltd., Hayground Cove Turbo Fund LP, Hayground Cove Turbo Fund Ltd., Hayground Cove Equity Market Neutral Fund LP, Hayground Cove Equity Market Neutral Fund Ltd., Atlas Master Fund Ltd., First New York Securities LLC, TE Hayground Cove Portfolio Ltd., and Man Mac Lucendro 5B Limited. Mr. Ader also serves as Chairman of Hayground Cove’s Investment Committee and Co-Chairman of Hayground Cove’s Risk Committee. Since 2006, Mr. Ader has also served as Chairman of the board of India Hospitality Corp., a blank check company formed to acquire Indian businesses or assets in the hospitality, leisure, tourism, travel and related industries, which consummated the acquisition of SkyGourmet and Mars Restaurants in July 2007. Mr. Ader has a strong asset management record and, prior to founding Hayground Cove, was a Senior Managing Director at Bear Stearns & Co. Inc., from 1995 to 2003, where he performed equity and high yield research for more than 50 companies in the gaming, lodging and leisure industries. From 1993 to 1995, Mr. Ader served as a Senior Analyst at Smith Barney covering the gaming industry. From 1990 to 1993, Mr. Ader served as a buy-side analyst at Baron Capital, where he covered the casino industry. Mr. Ader was rated as one of the top ranked analysts by Institutional Investor Magazine for nine consecutive years from 1994 to 2002. Mr. Ader has a B.S. degree in Economics from New York University and an M.B.A. in Finance from New York University, Stern School of Business.

 

Scott LaPorta is our Chief Executive Officer and President and a member of our board of directors. Mr. LaPorta is also a managing director of Hayground Cove, our sponsor. Mr. LaPorta has a strong acquisition, turnaround, brand repositioning and investment background. Prior to joining us and Hayground Cove, he was an Executive Vice President of Tennenbaum Capital Partners, LLC from April 2007 to July 2007 and, prior to that, President of Levi Strauss & Co.’s brands (Dockers, Levi’s, and Signature) in Mexico and Canada as well as Levi Strauss Signature in the United States from October 2003 to March 2007. His prior responsibilities at Levi Strauss included Senior Vice President of Sales, Strategy and Finance for Levi Strauss North America where he was the lead turn around strategist from February 2002 to October 2003. Mr. LaPorta has prior experience as the Chief Financial Officer for Park Place Entertainment overseeing acquisitions, development, investor relations, corporate finance and financial planning from 1998 to 2001 and, prior to that, as the Treasurer of Hilton Hotels Corporation from 1996 to 1998. Before joining Hilton, Mr. LaPorta held a series of financial positions at the Marriott companies progressing to Treasurer of Host Marriott Corporation from 1993 to 1996. Mr. LaPorta earned a Bachelor’s degree in Accounting from the University of Virginia and a Master’s degree in Business Administration from

Vanderbilt University. Prior to attending business school he was a senior accountant at Price Waterhouse.

 

Andrew Nelson is our Chief Financial Officer and Assistant Secretary. Mr. Nelson has also served as Vice President of Finance & Accounting at Hayground Cove since September 2005. In such capacity, Mr. Nelson is responsible for the finance and accounting functions of the firm, provides financial reporting and assists with risk management. Mr. Nelson is also a member of Hayground Cove’s Risk Committee. From 2006 to 2007, Mr. Nelson also served as controller of India Hospitality Corp. Prior to joining Hayground Cove, Mr. Nelson worked at Context Capital Management, a hedge fund located in San Diego, California specializing in the convertible arbitrage strategy, as a Senior Operations Consultant from September 2004 to August 2005. Prior to that, he was a Fund Associate at Hedgeworks LLC from September 2002 to August 2004. Mr. Nelson graduated from the University of Vermont with a B.S. in Business. Mr. Nelson is a Charted Financial Analyst and is enrolled in the Executive M.B.A. Program at New York University.

 

Robert M. Foresman is a member of our board of directors. Since 2006, Mr. Foresman has been the Deputy Chairman, Head of Origination and Coverage of Renaissance Capital, the leading independent investment banking firm operating in Russia, the Commonwealth of Independent States (CIS) and Sub Saharan Africa. From 2001 to 2006, Mr. Foresman was Chairman of the Management Board, Russia/CIS of Dresdner Kleinwort Wasserstein, a London-based investment bank. Prior to that, he worked in the Moscow office of ING Barings, another London-based investment bank, as the Head of Investment Banking, Russia/CIS. In addition, from 1993 to 1997, Mr. Foresman was the Head of Ukraine Privatization Advisory Projects in Kiev and then an Investment Officer in Washington, DC for the International Finance Corporation, a member of the World Bank Group. Mr. Foresman received an M.A. in Regional Studies from Harvard University Graduate School of Arts & Sciences in 1993 and a Bachelor of Arts in International Relations and Russian Studies from Bucknell University in 1990. Furthermore, he received a Certificate from Moscow Energy Institute in 1989.

 

Carl H. Hahn, Ph.D. is a member of our board of directors. Since June 1996, Dr. Hahn has been a private investor. From 1982 to 1992, Dr. Hahn was Chairman of the Board of Management of Volkswagen AG, a leading global automobile manufacturer. Prior to that, Dr. Hahn was Chairman of the Board of Management of Continental Gummi-Werke AG, Hanover, a leading international rubber and tire manufacturer, from 1972 to 1981. From 1954 to 1971, Dr. Hahn held various leadership positions at Volkswagen, including Export Promotion Manager of Volkswagenwerk GmbH and Chief Executive Officer of Volkswagen of America, Inc. He was also a member of the Board of Management of Volkswagenwerk AG, responsible for worldwide sales. Dr. Hahn began his professional career in 1953 as Administrator at the European Productivity Agency of the Organisation for European Economic Cooperation (OEEC) in Paris. He is Honorary Chairman of Audi, Skoda and Seat, and a member of the Supervisory Boards of HAWESKO in Germany. In addition, he is a Director of Perot Systems Corporation in the United States (since April 1993) and serves as a member of the International Advisory Board of Textron/USA. Furthermore he is Professor of “Industrial Corporate Strategy” at the University of Saxony at Zwickau as well as a member of the Lauder Institute of Management at the Wharton School of Business of University of Pennsylvania and of the International Council of the Salk Institute, California. Eight universities in Germany and other countries have honored him with honorary academic degrees. Austria, Belgium, Brazil, Italy, Republic of Kyrgyzstan, Spain, South Africa, the Federal Republic of Germany as well as the State of Lower Saxony and Saxony have granted him medals of honour. Dr. Hahn studied Business Administration at the Universities of Cologne and Zurich, and subsequently Economics at Bristol University. He then attended the Institut des Études Politiques, Paris (Certificat d’Etudes Politiques). He obtained his degree of Doctor of Economics at the University of Berne, Switzerland.

 

Philip A. Marineau is a member of our board of directors. From September 1999 to November 2006, Mr. Marineau was the President and Chief Executive Officer of Levi Strauss & Co. (LS&Co.). Mr. Marineau has many years of experience in consumer products marketing

and management. Prior to joining LS&Co., Mr. Marineau was the President and Chief Executive Officer of Pepsi-Cola North America from 1997 to 1999. From 1996 to 1997, Mr. Marineau was President and Chief Operating Officer of Dean Foods Company. Prior to Dean Foods, Mr. Marineau was a 23-year veteran of the Quaker Oats Company and its President and Chief Operating Officer from 1993 to 1996. Currently, Mr. Marineau is Chairman of the Board of Shutterfly, Inc. and is a board member of the Meredith Corporation, where he is the Chairman of its audit committee, Kaiser Permanente, where he is the Chairman of its compensation committee, the Golden Gate National Parks Conservancy, the Holy Family Day Home and the American Institute of Public Service. He also is on the advisory boards of Northwestern University’s Kellogg School of Management and the Vietnam Veterans Memorial Fund. Mr. Marineau received his Master of Business Administration from Northwestern University in 1970. He received a Bachelor of Arts in history at Georgetown University in 1968.

 

Marc Soloway is a member of our board of directors. Mr. Soloway is President of Hayground Cove Overseas Partners Ltd where he is responsible for assisting the Chief Executive Officer in the portfolio management process as well as general firm decisions. Mr. Soloway also serves as Co-Chairman of Hayground Cove’s Risk Committee and is a member of Hayground Cove’s Investment Committee. He is also responsible for analyzing investment opportunities in the retail, apparel, technology and Internet sectors. Prior to joining Hayground Cove in 2003, Mr. Soloway was an Equity Research Associate at Smith Barney focusing on Discount and Department Stores from 2002 to 2003. Prior to joining Smith Barney, he was a Food and Drug Store Equity Research Associate at Bear Stearns & Co. Inc. from 2001 to 2002, as well as a Senior Analyst in the Corporate Finance Division of May Department Stores Co. from 1997 to 1999. He also has experience working as an Assistant Buyer for the Famous Barr Division of MDSC during 1997. Mr. Soloway holds a B.S. in Management from Purdue University and an M.B.A. from Washington University. Mr. Soloway is a Chartered Financial Analyst.

 

Steven Westly is a member of our board of directors. Mr. Westly founded and has served as the Chief Executive Officer of The Westly Group, a venture capital firm, since 2007 and, prior to that, he served as the Controller and Chief Fiscal Officer of the State of California from 2003 to 2007. As the Controller, he chaired the State Lands Commission and also served on various boards and commissions, including CalPERS and CalSTRS, the nation’s two largest public pension funds. Before running for office, Mr. Westly served as the senior vice president of marketing, business development, M&A, and international of eBay, an online auction company, from 1997 to 2000. Mr. Westly has also served as a senior executive for a number of Silicon Valley companies over a twenty-year period, including WhoWhere (from 1995 to 1996), the nation’s leading personal search directory, and Codd & Date (from 1990 to 1994), a relational database consulting firm with offices in five countries. Mr. Westly began his career in Washington, D.C., where he worked first on Capitol Hill and later in the Office of Conservation and Solar at the U.S. Department of Energy. Mr. Westly then returned to California to become special assistant to the president of the California Public Utilities Commission and served in such capacity from 1980 to 1981. Mr. Westly also worked for four years as a program manager for Sprint from 1983 to 1987. Mr. Westly has a B.A. from Stanford University and an M.B.A. from Stanford’s Graduate School of Business, where he served on the faculty for five years.

 

Employment Agreement with Scott LaPorta

 

Effective as of August 1, 2007, we entered into an employment agreement with Mr. LaPorta. The agreement is effective until the earlier of (i) two years after the completion of this offering and (ii) the closing of a qualifying business combination. The agreement may be renewed for an additional one-year term.

 

Pursuant to the agreement, Mr. LaPorta has waived all rights, interests and claims to the amounts in deposit in the trust account. The agreement also contains non-competition and confidentiality provisions which limit Mr. LaPorta from competing against us and using

information he obtains from us after the termination of his employment with us. Mr. LaPorta receives indemnification from us for liabilities arising from the services he provides to us under the agreement, other than those liabilities due to fraud, willful misconduct or gross negligence on his part. We will purchase and maintain an insurance policy on behalf of Mr. LaPorta against such liabilities.

 

In connection with entering into the agreement, Mr. LaPorta obtained an option to purchase 475,000 shares of founder shares at a purchase price of $0.001 per share from our sponsor and its affiliates, which option will vest on the date (the “Trigger Date”) that is one year after the closing of a qualifying business combination, but the vesting will occur only if the appreciation of the per share price of our common stock is either (i) greater than 1x the Russell 2000 hurdle rate on the Trigger Date or (ii) exceeds the Russell 2000 hurdle rate for 20 consecutive trading days after the Trigger Date. The Russell 2000 hurdle rate means the Russell 2000 index performance over the period between the completion of this offering and the Trigger Date.

 

Director Independence

 

Our board of directors has determined that Messrs. Foresman, Hahn, Marineau and Westly are “independent directors” within the meaning of Rule 121(A) of the American Stock Exchange Company Guide and Rule 10A-3 promulgated under the Securities and Exchange Act of 1934, as amended.

 

Investment Committee

 

Effective upon consummation of this offering, we will form an investment committee to advise and consult with our management team with respect to our investment policies, financing and leveraging strategies and investment guidelines. The initial members of the investment committee will be Jason N. Ader, the Chairman of our board of directors, who will serve as the initial chairman of the committee, Scott LaPorta, our Chief Executive Officer, President and a member of our board of directors, and Marc Soloway, a member of our board of directors. At this time, we have no plans to select additional committee members nor do we have any understanding that members of the investment committee must be associated with our sponsor. Mr. LaPorta will be responsible for analyzing investment opportunities and will benefit from Mr. Ader’s and Mr. Soloway’s investment experience at Hayground Cove Asset Management. The Committee will meet from time to time to discuss and assess potential business combinations.

 

Services by Our Sponsor Team

 

Our sponsor has agreed to provide us various services in connection with our search for a target business or businesses pursuant to a services agreement. See “Certain Relationships and Related Transactions — Services Agreement with Hayground Cove.” We believe that our ability to leverage the experience of our sponsor’s team will provide us an advantage in sourcing and closing a business combination. Members of our sponsor team that will be assisting us include:

 

Jennifer Albrecht —She is Vice President and Research Analyst at Hayground Cove Asset Management LLC. In such capacity, Ms. Albrecht is responsible for analyzing investments in the retail, apparel and Internet sectors. Prior to joining Hayground Cove, Ms. Albrecht worked at Satellite Asset Management as a Research Analyst. Prior to working at Satellite Asset Management, she was a Research Assistant at Smith Barney covering specialty retailers. She received a B.A. from the University of Virginia. Ms. Albrecht is also a CFA Level Three Candidate.

 

Mira Cho —She is Research Analyst at Hayground Cove Asset Management LLC. In such capacity, Ms. Cho is responsible for analyzing investment opportunities in the retail, apparel, Internet and technology industries. Prior to joining Hayground Cove, she was a consultant with Factset Research Systems, a supplier of online financial and economic database services, and a

Research Analyst with Guideline, Inc., a provider of customized business research and analysis. Ms. Cho graduated from Johns Hopkins University with a B.A. in Public Health Studies with Economics concentration. Ms. Cho is also a CFA Level Two Candidate.

 

Evan Wax —He is Head Trader at Hayground Cove Asset Management LLC. In such capacity, Mr. Wax manages all operations of the trading desk. Mr. Wax also serves on both Hayground Cove’s Investment Committee and Risk Committee. Prior to joining Hayground Cove, Mr. Wax worked as a Financial Analyst at Goldman Sachs. Prior to working at Goldman Sachs, Mr. Wax worked at Williams Trading LLC. Mr. Wax graduated from Yale University where he received a B.A. in Economics.

 

Laura Conover —She is Chief Compliance Officer & Vice President of Operations at Hayground Cove Asset Management LLC. In such capacity, Ms. Conover is responsible for compliance oversight and the operations & back office functions of the firm. Ms. Conover is also a member of Hayground Cove’s Investment Committee. Prior to joining Hayground Cove, Ms. Conover was a Research Assistant for Mr. Ader at Bear Stearns & Co. Ms. Conover graduated from Kean University where she received a B.A. in Finance.

 

Timothy Collins, Jr. —He is Managing Director, Investor Relations at Hayground Cove Asset Management LLC. In such capacity, Mr. Collins is responsible for all areas of client services and marketing. Prior to joining Hayground Cove in March 2007, he was a Senior Managing Director at Bear Stearns & Co and, prior to that, he was a Senior Institutional Salesman at Schroders. Mr. Collins graduated from the Leeds School of Business at the University of Colorado with B.S. in Finance.

 

Audit Committee

 

Effective upon consummation of this offering, we will establish an audit committee of the board of directors, which we believe will consist of Messrs. Hahn, Westly and Marineau. Mr. Westly will serve as the chairman of our audit committee. The independent directors we appoint to our audit committee will each be an independent member of our board of directors, as defined by the rules of the SEC. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to:

 

 

Nominating Committee

 

Effective upon consummation of this offering, we will establish a nominating committee of the board of directors, which we believe will consist of Messrs. Marineau and Westly, each of whom is an independent director as defined by the rules of the American Stock Exchange and the SEC. Mr. Marineau will serve as the chairman of our nominating committee. The nominating committee is responsible for overseeing the selection of persons to be nominated to serve on our board of directors. The nominating committee considers persons identified by its members, management, stockholders, investment bankers and others.

 

The guidelines for selecting nominees, which are specified in the nominating committee charter, generally provide that persons to be nominated should be actively engaged in business endeavors, have an understanding of financial statements, corporate budgeting and capital structure, be familiar with the requirements of a publicly traded company, be familiar with industries relevant to our business endeavors, be willing to devote significant time to the oversight duties of the board of directors of a public company, and be able to promote a diversity of views based on the person’s education, experience and professional employment. The nominating committee evaluates each individual in the context of the board as a whole, with the objective of recommending a group of persons that can best implement our business plan, perpetuate our business and represent stockholder interests. The nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time. The nominating committee does not distinguish among nominees recommended by stockholders and other persons.

 

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 and the rules of the American Stock Exchange.

 

Conflicts of Interest

 

Potential investors should be aware of the following potential conflicts of interest:

 

None of our officers and directors are required to commit their full time to our affairs and, accordingly, they may have conflicts of interest in allocating their time among various business activities.

 

In the course of their other business activities, our officers and directors may become aware of investment and business opportunities that may be appropriate for presentation to us as well as the other entities with which they are affiliated. They may have conflicting fiduciary duties in determining to which entity a particular business opportunity should be presented. In the event that our directors or officers were to take any action that would compete with us in our search for a business, we would take appropriate action, including potentially removing such person from our management team or board, as applicable. However no formal procedures have been established if such conflicts arise. For a complete description of our management’s other affiliations, see the discussion below as well as the previous section entitled “Management—Directors and Executive Officers” and “Risk Factors—Risks Related to Our Business. Our officers and directors currently are, and may in the future become affiliated with additional entities that are, engaged in business activities similar to those intended to be conducted by us and, accordingly, may have conflicts of interest in determining to which entity a particular business opportunity should be presented.” Such officers and directors may become subject to conflicts of interest regarding us and other business ventures in which they may be involved, which conflicts may have an adverse effect on our ability to consummate a business combination. Currently, neither Hayground nor any of our officers and directors owes any fiduciary duty to present a business opportunity that would be suitable to us to anyone prior to us.

 

Our officers and directors are not restricted from forming or becoming affiliated with entities, including other blank check companies or similar entities, engaged in business activities similar to those intended to be conducted by our company prior to the business combination. However, our directors and officers will not seek any business opportunity that would conflict with our search for an acquisition candidate, which would include any involvement in a blank check company that is potentially seeking acquisition candidates in the global consumer products and services industry.

 

Since substantially all of the founding stockholders’ founder shares will be subject to a lock-up agreement with our underwriters, which agreement will expire only if a business combination is successfully completed, and since the founding stockholders may own securities which will become worthless if a business combination is not consummated, our board, whose members are founding stockholders, may have a conflict of interest in determining whether a particular target acquisition is appropriate to effect a business combination. Additionally, members of our executive management may enter into consulting, asset management or employment agreements with us as part of a business combination, pursuant to which they may be entitled to compensation for their services. The personal and financial interests of our directors and officers may influence their motivation in identifying and selecting a target acquisition, timely completing a business combination and securing the release of their stock.

 

We will not pursue an acquisition of an affiliate of our sponsor or of any of our officers or directors, including portfolio companies and other investments or interests held by our sponsor, officers and directors. Other than with respect to the business combination, we have not adopted a policy that expressly prohibits our directors, officers, security holders or affiliates from having a direct or indirect pecuniary interest in any investment to be acquired or disposed of by us or in any transaction to which we are a party or have an interest. Accordingly, such parties may have an interest in certain transactions in which we are involved, and may also compete with us.

Our founding stockholders may purchase shares of common stock as part of the units sold in this offering or in the open market. All of the founding stockholders have agreed to vote all their shares of common stock owned by them prior to this offering in accordance with the majority of shares of common stock held by public stockholders who vote at a meeting with respect to a business combination and any shares of common stock acquired by them in or after this offering in favor of a business combination.

 

If we were to make a deposit, down payment or fund a “no shop” provision in connection with a potential business combination, we may have insufficient funds available outside of the trust to pay for due diligence, legal, accounting and other expenses attendant to completing a business combination. In such event, the founding stockholders may have to incur such expenses in order to proceed with the proposed business combination. As part of any such business combination, such founding stockholders may negotiate the repayment of some or all of any such expenses, without interest or other compensation which, if not agreed to by the target business’ management, could cause our management to view such potential business combination unfavorably, thereby resulting in a conflict of interest.

 

If our management negotiates to be retained post business combination as a condition to any potential business combination, their financial interests, including compensation arrangements, could influence their motivation in selecting, negotiating and structuring a transaction with a target business, and such negotiations may result in a conflict of interest. In the event that any employment or consulting agreements are proposed to be entered into as a term of a business combination, such arrangement will be required to be approved by a majority of the disinterested members of our board of directors.

 

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:

 

 

Accordingly, as a result of certain other business affiliations and as more fully discussed below, our officers and directors may have similar legal obligations relating to presenting business opportunities meeting the above-listed criteria to multiple entities in which they also serve as officers and/or directors. In addition, conflicts of interest may arise when our board evaluates a particular business opportunity with respect to the above-listed criteria. Although neither our founder nor our officers and directors intend to seek any business opportunity that would present a conflict with us, no formal procedures have been established to determine how conflicts of interest that may arise due to duties or obligations owed to other entities will be resolved. However, we expect the disinterested members of our board to determine whether a conflict exists and a majority of the disinterested members of our board will be required to approve any such affiliate transaction.

 

Each of our officers and directors actively manages his or her personal investments, some of which are in the global consumer products and services industry. We are not precluded from acquiring a company in which our officers and directors have made an investment. Although there are no arrangements, understandings or agreements regarding the priorities and preferences assigned to us as compared to the personal investments of our officers and directors, we believe that we will receive priority regarding any business opportunities since, except as described above, none our officers and directors owes fiduciary duties to other entities.

 

In addition to both statutory and common law obligations of fiduciary responsibility, our officers and directors have agreed to give the company priority regarding any business opportunities, except as described above. In order to minimize potential conflicts of interest which may arise from other corporate affiliations that may arise in the future, prior to

consummation of this offering, each of our officers and directors has agreed, except as described above, until the earliest of our consummation of a business combination, our liquidation or such time as he or she ceases to be an officer or director, (i) to present to our company for our consideration, prior to presentation to any other entity, any business opportunity which may reasonably be deemed appropriate for our company based on the description in this registration statement of our proposed business or which is required to be presented to us under Delaware law, and (ii) that he or she shall not assist or participate with any other person or entity in the pursuit of or negotiation with respect to such business opportunity unless and until he or she receives written notice from us that we have determined not to pursue such business opportunity.

 

In the course of their other business activities, our officers and directors have not identified investment and business opportunities that may be appropriate for presentation to us as well as the other entities with which they are affiliated.

 

In connection with the stockholder vote required to approve any business combination, all of the founding stockholders have agreed to vote their founder shares in accordance with the majority of shares of common stock held by the public stockholders who vote at the special or annual meeting called for the purpose of approving a business combination. The founding stockholders have also agreed that if they acquire shares of common stock in or following this offering, they will vote such acquired shares of common stock in favor of a business combination. Accordingly, any shares of common stock acquired by founding stockholders in or after this offering in the open market will not have the same right to vote as public stockholders with respect to a potential business combination (since they are required to vote in favor of a business combination). Additionally, the founding stockholders will not have conversion rights with respect to shares of common stock acquired during or subsequent to this offering (since they may not vote against a business combination), except upon our liquidation. In addition, with respect to their founder shares, and the shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering, they have agreed to waive their respective rights to participate in any liquidation including the liquidation of our trust account to our public stockholders, occurring upon our failure to consummate a business combination, but only with respect to their founder shares and not with respect to any shares of common stock acquired in or after this offering in the open market.

 

PRINCIPAL STOCKHOLDERS

 

The following table sets forth information regarding the beneficial ownership of our common stock as of the date of this prospectus and as adjusted to reflect the sale of our common stock included in the units offered by this prospectus (assuming none of the individuals listed purchase units in this offering), by:

 

 

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.

 

 

 

 

 

Our sponsor and Chief Executive Officer, prior to the consummation of this offering, have agreed to purchase in an insider private placement transaction a total of 8,500,000 (7,500,000 by our sponsor and 1,000,000 by our Chief Executive Officer) insider warrants from us at a price of $1.00 per warrant. These insider warrants cannot be sold or transferred by the sponsor until the consummation of a business combination, except in certain limited circumstances. The $8,500,000 purchase price of the insider warrants will be added to the proceeds of this offering to be held in the trust account pending our completion of one or more business combinations. If we do not complete one or more business combinations that meet the criteria described in this prospectus, then the $8,500,000 purchase price of the insider warrants will become part of the liquidation amount distributed to our public stockholders from our trust account and the insider warrants will become worthless.

 

In addition, we have agreed to redeem up to an aggregate of 1,125,000 founder shares in the event that the underwriters do not fully exercise their over-allotment option. We will redeem founder shares only in an amount sufficient to cause the amount of issued and outstanding founder shares to equal 20% of our aggregate amount of issued and outstanding common stock after giving effect to this offering and the exercise, if any, of the underwriters’ over-allotment option.

 

Immediately after this offering and the potential redemption of common stock described in the preceding paragraph, our founding stockholders, collectively, will beneficially own 20% of the then issued and outstanding shares of our common stock (assuming they do not purchase units in this offering). Because of this ownership percentage, the founding stockholders may be able to collectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors and approval of significant corporate transactions, other than approval of a business combination.

 

Substantially all of the founder shares will be subject to a lock-up agreement with our underwriters until the earliest of:

 

 

During the lock-up period, the founding stockholders will not be able to sell or transfer their founder shares except in certain limited circumstances (such as, in the case of our sponsor, (a) transfers among various funds under our sponsor’s management for rebalancing purposes only and (b) distributions to investors in such funds, provided that such investors agree to be bound by the lock-up agreement, or transfers to relatives and trusts for estate planning purposes), but will retain all other rights as our stockholders, including, without limitation, the right to vote their founder shares and the right to receive cash dividends, if declared. If dividends are declared and payable in shares of common stock, such dividends will also be subject to the lock-up. If we are unable to effect a business combination and liquidate, none of our founding stockholders will receive any portion of the liquidation proceeds with respect to their founder shares, or any shares of common stock underlying any insider warrants acquired by a founding stockholder immediately prior to this offering.

 

Each of Messrs. Ader and LaPorta is deemed to be our “parent” and “promoter,” as these terms are defined under the Federal securities laws.

 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

Securities Issuances to Our Executive Officers and Directors

 

On July 16, 2007, we issued 8,625,000 shares of our common stock (of which 1,125,000 shares are subject to redemption in the event that the underwriters do not fully exercise their over-allotment option, as more fully described in “Principal Stockholders”) to certain of the affiliates listed below for an aggregate amount of $8,625 in cash, at a purchase price of $0.001 per share. Subsequently, certain of those shares were transferred among our affiliates at the initial purchase of $0.001 per share. The following table shows the ownership of our stock by our executive officers and directors:

 

 

 

 

All of such founder shares were issued in connection with our organization pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. The founder shares issued to the individuals and entities above were sold for an aggregate offering price of $8,625 at a purchase price of $0.001 per share. No underwriting discounts or commissions were paid, nor was there any general solicitation, with respect to such sales.

 

Immediately after this offering (and after giving effect to the exercise of the underwriters’ over-allotment option or any redemption of shares of common stock by our founding stockholders in the event that the underwriters do not fully exercise their over-allotment option, as more fully described in “Principal Stockholders”), our founding stockholders, collectively, will beneficially own 20% of the then issued and outstanding shares of our common stock. Because of this ownership percentage, the founding stockholders may be able to collectively influence the outcome of all matters requiring approval by our stockholders, including the election of directors and approval of significant corporate transactions, other than approval of a business combination.

 

Our sponsor and Chief Executive Officer, prior to the consummation of this offering, have agreed to purchase in a private placement transaction pursuant to Regulation D under the Securities Act a total of 8,500,000 (7,500,000 by our sponsor and 1,000,000 by our Chief Executive Officer) insider warrants from us at a price of $1.00 per warrant. These warrants, which we collectively refer to as the insider warrants, will not be sold or transferred by the sponsor until the completion of our initial business combination. The $8,500,000 purchase price of the insider warrants will be added to the proceeds of this offering to be held in the trust account pending our completion of one or more business combinations. If we do not complete one or more business combinations that meet the criteria described in this prospectus, then the $8,500,000 purchase price of the insider warrants will become part of the liquidation amount distributed to our public stockholders from our trust account and the insider warrants will become worthless.

Registration Rights

 

The holders of a majority of all of the (i) founder shares and (ii) shares of common stock issuable upon exercise of the insider warrants will be entitled to make up to two demands that we register these securities pursuant to an agreement to be signed in connection with the insider private placement. Such holders may elect to exercise these registration rights at any time commencing on or after the date of consummation of this offering. In addition, these stockholders have certain “piggy-back” registration rights with respect to registration statements we might file subsequent to the date of consummation of this offering. We will bear the expenses incurred in connection with the filing of any such registration statements.

 

Reimbursement and Indemnification of Officers and Directors

 

We will reimburse our officers and directors, subject to board approval, for any reasonable out-of-pocket business expenses incurred by them in connection with certain activities on our behalf such as identifying and investigating possible target acquisitions and business combinations. There is no limit on the amount of out-of-pocket expenses reimbursable by us, our board, which includes persons who may not seek reimbursement, or a court of competent jurisdiction if such reimbursement is challenged. Accountable out-of-pocket expenses incurred by our officers and directors will not be repaid out of proceeds held in trust until these proceeds are released to us upon the completion of a business combination, provided there are sufficient funds available for reimbursement after such consummation.

 

No finders fees will be paid to any of our founding stockholders, officers or directors, or to any of their respective affiliates, prior to or in connection with a business combination.

 

We have entered into agreements with our directors and officers to provide contractual indemnification in addition to the indemnification provided in our amended and restated certificate of incorporation. We believe that these provisions and agreements are necessary to attract qualified directors and officers. Our 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 indemnification. We will purchase a policy of directors’ and officers’ liability insurance that insures our directors and officers against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify the directors and officers.

 

Employment Agreements

 

Effective as of August 1, 2007, we entered into an employment agreement with Mr. LaPorta. The agreement is effective until the earlier of (i) two years after the completion of this offering and (ii) the closing of a qualifying business combination. The agreement may be renewed for an additional one-year term.

 

Pursuant to the agreement, Mr. LaPorta has waived all rights, interests and claims to the proceeds of this offering and the insider private placement to be held in a trust account. The agreement also contains non-competition and confidentiality provisions which limit Mr. LaPorta from competing against us and using information he obtains from us after the termination of his employment with us. Mr. LaPorta receives indemnification from us for liabilities arising from the services he provides to us under the agreement, other than those liabilities due to fraud, willful misconduct or gross negligence on his part. We will purchase and maintain an insurance policy on behalf of Mr. LaPorta against such liabilities.

 

In connection with entering into the agreement, Mr. LaPorta obtained an option to purchase 475,000 shares of founder shares at a purchase price of $0.001 per share from our sponsor and its affiliates, which option will vest on the date (the “Trigger Date”) that is one year after the closing of a qualifying business combination, but the vesting will occur only if the appreciation of the per share price of our common stock is either (i) greater than 1x the Russell 2000 hurdle rate on the Trigger Date or (ii) exceeds the Russell 2000 hurdle rate for 20 consecutive trading days after the Trigger Date. The Russell 2000 hurdle rate means the

Russell 2000 index performance over the period between the completion of this offering and the Trigger Date.

 

After the consummation of a business combination, if any, to the extent our management remains as officers of the resulting business, some of our officers and directors may enter into employment agreements, the terms of which shall be negotiated and which we expect to be comparable to employment agreements with other similarly-situated companies in the global consumer products and services industry. Further, after the consummation of a business combination, if any, to the extent our directors remain as directors of the resulting business, we anticipate that they will receive compensation comparable to directors at other similarly-situated companies in the global consumer products and services industry.

 

All ongoing and future transactions between us and any of our officers and directors or their respective affiliates will be on terms believed by us to be no less favorable than are available from unaffiliated third parties. Such transactions will require prior approval by a majority of our disinterested “independent” directors or the members of our board who do not have an interest in the transaction, in either case who had access, at our expense, to our attorneys or independent legal counsel. We will not enter into any such transaction unless our disinterested “independent” directors determine that the terms of such transaction are no less favorable to us than those that would be available to us with respect to such a transaction from unaffiliated third parties.

 

Services Agreement with Hayground Cove

 

We entered into an agreement with Hayground Cove, effective July 16, 2007, whereby Hayground Cove:

 

 

 

 

The services provided under this agreement includes the service of our sponsor’s team. Please see “Management—Services by our Sponsor Team” for a description of the team.

 

Hayground Cove will receive $10,000 per month for these services after the consummation of this offering. In addition, we have undertaken to reimburse Hayground Cove, monthly in arrears, all out-of-pocket expenses incurred by Hayground Cove in performing these services

and other services as maybe requested by us from time to time. Such reimbursement payments has not and will not exceed $10,000 per month. We believe that the fees charged by Hayground Cove for the foregoing services are at least as favorable as we could have obtained from an unaffiliated third party. This services agreement between Hayground Cove and us will terminate upon the consummation of an initial business combination.

 

Promissory Note

 

On August 31, 2007, we issued a promissory note in the amount of $139,025 in favor of our sponsor, which amount reflects the funds advanced by our sponsor to us or on our behalf in connection with this offering. This note bears an interest rate of 5.0% per annum and is due on the earlier of (i) December 31, 2007 and (ii) the consummation of this offering. The principal amount of the note plus any accrued and unpaid interest thereon to the date of repayment will be repaid out of the proceeds of this offering.

 

DESCRIPTION OF SECURITIES

 

General

 

Our Amended and Restated Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of common stock, par value $0.0001 per share, and 1,000,000 shares of preferred stock, par value $0.0001 per share. Prior to the consummation of this offering, 8,625,000 shares of common stock (of which 1,125,000 shares are subject to redemption in the event that the underwriters do not fully exercise their over-allotment option, as more fully described in “Principal Stockholders”) will be outstanding. No shares of preferred stock are outstanding as of the date of this prospectus.

 

Units

 

Each unit consists of one share of common stock and one warrant. Each warrant entitles the holder to purchase one share of common stock. The 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 five business days (or as soon as practicable thereafter) following the earlier to occur of (1) the expiration of the underwriters’ over-allotment option and (2) its exercise in full, subject in either case to our having filed a Current Report on Form 8-K referenced below and having issued a press release announcing when such separate trading will begin. In no event will the common stock and warrants begin to trade separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering. We will file this Form 8-K promptly after the consummation of this offering. Even if the component parts of the units are broken apart and traded separately, the units will continue to be listed as a separate security, and any securityholder of our common stock and warrants may elect to combine them together and trade them as a unit. Securityholders will have the ability to trade our securities as units until such time as the warrants expire or are redeemed. Although we will not distribute copies of the Form 8-K to individual unit holders, the Form 8-K will be available on the SEC’s website after filing. See the section appearing elsewhere in this prospectus entitled “Where You Can Find Additional Information.”

 

Common stock

 

Common stockholders of record are entitled to one vote for each share held on all matters to be voted on by stockholders. In connection with the stockholder vote required to approve any business combination, all of our founding stockholders have agreed to vote the shares of common stock owned by them prior to this offering, in accordance with the majority of the shares of common stock of public stockholders who vote at the special or annual meeting called for the purpose of approving a business combination. Our founding stockholders have also agreed that if they acquire shares of common stock in or following this offering, they will vote such acquired shares of common stock in favor of a business combination.

 

In accordance with Article Sixth of our Amended and Restated Certificate of Incorporation (which Article Sixth cannot be amended without the affirmative vote cast at a meeting of stockholders of at least 95% of the common stock issued in this offering), we will proceed with the business combination only if a majority of the shares of common stock voted by the public stockholders are voted in favor of the business combination and public stockholders owning less than 30% of the shares of common stock sold in this offering both vote against the business combination and exercise their conversion rights discussed below. For purposes of seeking approval of the majority of the shares of common stock voted by the public stockholders, non-votes will have no effect on the approval of a business combination once a quorum is obtained. We intend to give approximately 30 (but not less than 10 nor more than 60) days prior written notice of any meeting at which a vote shall be taken to approve a business combination.

There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares of common stock eligible to vote for the election of directors can elect all of the directors.

 

Pursuant to our Amended and Restated Certificate of Incorporation, if we do not consummate a business combination by November 27, 2009, our corporate existence will cease except for the purposes of winding up our affairs and liquidating. If we are forced to liquidate our trust account because we have not consummated a business combination within the required time period, our public stockholders are entitled to share ratably in the trust account, inclusive of any interest (net of taxes payable and amounts disbursed for working capital purposes, which taxes, if any, shall be paid from the trust account), and any net assets remaining available for distribution to them after payment of liabilities. Our founding stockholders have agreed to waive their respective rights to participate in any liquidation occurring upon our failure to consummate a business combination but only with respect to their founder shares or the shares of common stock underlying any insider warrants.

 

Our stockholders are entitled to receive ratable dividends when, as and if declared by the board of directors out of funds legally available therefor. In the event of a liquidation, dissolution or winding up of the company after a business combination, our stockholders are entitled, subject to the rights of holders of preferred stock, if any, 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 conversion, preemptive or other subscription rights. There are no sinking fund or redemption provisions applicable to the common stock, except that public stockholders have the right to convert their shares of common stock to cash equal to their pro rata share of the trust account if they vote against the business combination and the business combination is approved and completed. The actual per-share conversion price will be equal to the amount in the trust account, which shall include $8,500,000 from the purchase of the insider warrants by our sponsor and Chief Executive Officer, inclusive of any interest (net of any taxes due on such interest, which taxes, if any, shall be paid from the trust account, and calculated as of two business days prior to the consummation of the proposed business combination), divided by the number of shares of common stock sold in this offering. Public stockholders who convert their stock into their share of the trust account still have the right to exercise the warrants that they received as part of the units. Founding stockholders are not entitled to convert any of their founder shares (including shares of common stock underlying any insider warrants held by a founding stockholder), or shares of common stock acquired in or after this offering into a pro rata share of the trust account, except that founding stockholders will be entitled to a pro rata share of the trust fund upon liquidation of the trust account with respect to any shares acquired in or after this offering.

 

Due to the fact that our Amended and Restated Certificate of Incorporation authorizes the issuance of up to 100,000,000 shares of common stock, if we were to enter into a business combination, we may (depending on the terms of such a business combination) be required to increase the number of shares of common stock which we are authorized to issue at the same time as our stockholders vote on the business combination.

 

Preferred stock

 

Our Amended and Restated Certificate of Incorporation authorizes the issuance of 1,000,000 shares of blank check preferred stock with such designation, rights and preferences as may be determined from time to time by our board of directors. No shares of preferred stock are being issued or registered in this offering. Accordingly, our board of directors is empowered, without stockholder approval, to issue preferred stock with dividend, liquidation, conversion, voting or other rights which could adversely affect the voting power, liquidation preference or other rights of the holders of common stock. However, the underwriting

agreement prohibits us, prior to a business combination, from issuing preferred stock which participates in any manner in the proceeds of the trust account, or which votes as a class with the common stock on a business combination. We may issue some or all of our authorized preferred stock to effect a business combination. In addition, preferred stock could be utilized as a method of discouraging, delaying or preventing our change in control. Although we do not currently intend to issue any shares of preferred stock, we cannot assure you that we will not do so in the future.

 

Warrants

 

Immediately prior to the consummation of this offering, there will be 8,500,000 insider warrants outstanding representing warrants included in the insider warrants. Immediately after this offering, we will have an additional 30,000,000 public warrants outstanding, or 34,500,000 public warrants outstanding if the underwriters’ over-allotment option is exercised. Each warrant entitles the holder to purchase one share of our common stock at a price of $7.50 per share, subject to adjustment as discussed below, at any time commencing on the later of:

 

 

The warrants will expire at 5:00 p.m., New York City time on November 27, 2012 or earlier upon redemption.

 

The warrants will begin separate trading five business days (or as soon as practicable thereafter) following the earlier to occur of (1) the expiration of the underwriters’ over-allotment option and (2) their exercise in full, subject in either case to our having filed a Current Report on Form 8-K referenced below and having issued a press release announcing when such separate trading will begin. The units will begin trading on or promptly after the consummation of this offering. In no event will the common stock and warrants begin to trade separately until we have filed a Current Report on Form 8-K with the SEC containing an audited balance sheet reflecting our receipt of the gross proceeds of this offering. We will file this Form 8-K promptly after the consummation of this offering.

 

We may call the public warrants for redemption at any time after the warrants become exercisable:

 

 

In addition, we may not redeem the warrants unless the warrants comprising the units sold in this offering and the shares of common stock underlying those warrants are covered by an effective registration statement from the beginning of the measurement period through the date fixed for the redemption.

 

We have established these criteria to provide warrant holders with a reasonable premium to the initial warrant exercise price as well as a degree of liquidity to cushion against a negative market reaction, if any, to our redemption call. If the foregoing conditions are satisfied and we call the warrants for redemption, each warrant holder will then be entitled to exercise his or her warrant prior to the date scheduled for redemption; however, there can be no assurance that the price of the common stock will exceed the call trigger price or the warrant exercise price after the redemption call is made.

 

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 has been 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 exercise price and number of shares of common stock issuable on exercise of the warrants may be adjusted in certain circumstances, including in the event of a stock dividend, extraordinary dividend or our recapitalization, reorganization, merger or consolidation. However, the warrants will not be adjusted for issuances of common stock at a price below their respective exercise prices.

 

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, 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 warrants will be exercisable unless at the time of exercise a prospectus relating to common stock issuable upon exercise of the warrants is current and the common stock has been registered or qualified or deemed to be exempt under the securities laws of the state of residence of the holder of the warrants. Under the terms of the warrant agreement, we have agreed to use our commercially reasonable efforts to maintain a current prospectus relating to common stock issuable upon exercise of the warrants until the expiration of the warrants. If we are unable to maintain the effectiveness of such registration statement or maintain a current prospectus until the expiration of the warrants, and therefore are unable to deliver registered shares of common stock, the warrants may become worthless. Such expiration would result in each holder paying the full unit purchase price solely for the shares of common stock underlying the unit. Additionally, the market for the warrants may be limited if the prospectus relating to the common stock issuable upon the exercise of the warrants is not current or if the shares of common stock are not qualified or exempt from qualification in the jurisdictions in which the holders of the warrants reside. In no event will the registered holders of a warrant be entitled to receive a net-cash settlement, stock, or other consideration in lieu of physical settlement in shares of our common stock.

 

Because the insider warrants sold in the Regulation D private placement were originally issued pursuant to an exemption from registration requirements under the federal securities laws, the holders of warrants purchased in the Regulation D private placement will be able to exercise their warrants even if, at the time of exercise, a prospectus relating to the common stock issuable upon exercise of such warrants is not current. As described above, the holders of the public warrants purchased in this offering will not be able to exercise them unless we have a current registration statement covering the shares of common stock issuable upon their exercise.

 

No fractional shares of common stock will be issued upon exercise of the warrants. If, upon exercise of the warrants, a holder would be entitled to receive a fractional interest in a share, we will, upon exercise, round up to the nearest whole number the number of shares of common stock to be issued to the warrant holder.

 

Our sponsor and Chief Executive Officer have agreed to purchase an aggregate of 8,500,000 insider warrants from us in an insider private placement at a price of $1.00 per warrant immediately prior to the consummation of this offering. The insider warrants have terms and provisions that are identical to the units and warrants being sold in this offering, respectively, except that (i) such insider warrants will be subject to a lock-up agreement with our underwriters and will not be transferable before the consummation of a business

combination, subject to certain limited exceptions (such as, in the case of our sponsor, (a) transfers among various funds under our sponsor’s management for rebalancing purposes only and (b) distributions to investors in such funds, provided that such investors agree to be bound by the lock-up agreement, or transfers to relatives and trusts for estate planning purposes), (ii) such insider warrants are being purchased pursuant to an exemption from the registration requirements of the Securities Act and will become freely tradable only after they are registered pursuant to a registration rights agreement to be signed in connection with the insider private placement, (iii) the insider warrants will be non-redeemable so long as the sponsor or its permitted transferees holds them, and (iv) the insider warrants are exercisable in the absence of an effective registration statement covering the shares of common stock underlying the insider warrants and by means of cashless exercise. The transfer restriction does not apply to transfers made pursuant to registration or an exemption that are occasioned by operation of law, or for estate planning purposes, or transfers made among various funds under our sponsor’s management. The non-redemption provision does not apply to public warrants included in units or otherwise purchased in open market transactions, if any. The price of the warrants has been arbitrarily established by us and the representative of the underwriters after giving consideration to numerous factors, including but not limited to, the pricing of units in this offering, the pricing associated with warrants in other blank-check financings in both the public after-market and any pre-offering insider private placement, and the warrant purchase obligations of managers in similar type transactions. No particular weighting was given to any one aspect of those factors considered. We have not performed any method of valuation of the warrants. As part of the negotiations between the representative of the underwriters and our sponsor, our sponsor has agreed to purchase the insider warrants directly from us in an insider private placement and not in open market transactions. By making a direct investment in us, the amount held in trust pending a business combination has been increased, since the purchase price of the insider warrants will be added to the proceeds held in the trust account. The purchase of the insider warrants in an insider private placement also has the benefit of reducing any concerns about open-market purchases by affiliates present in other blank check offerings.

 

The insider warrants will become worthless if we do not consummate a business combination. The personal and financial interests of our sponsor and its affiliates may influence their motivation in identifying and selecting a target business and completing a business combination in a timely manner. Consequently, certain of 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 a business combination. The payment of cash dividends in the future will be dependent upon our revenues and earnings, if any, capital requirements and general financial condition subsequent to completion of a business combination. The payment of any dividends subsequent to a business combination will be within the discretion of our then board of directors. It is the present intention of our board of directors to retain all earnings, if any, for use in our business operations and, accordingly, our board does not anticipate declaring any dividends in the foreseeable future. In addition, our board is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future, except if we may increase the size of the offering pursuant to Rule 462(b) under the Securities Act. Further our ability to declare dividends may be limited to restrictive covenants if we incur any indebtedness.

 

Rule 144(k)

 

Under Rule 144(k), a person who 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 who has beneficially owned the restricted shares of common stock proposed to be sold for at least two years, including the holding period of any prior owner other than an affiliate, is entitled to sell their shares of common stock without complying with the manner of sale, public information, volume limitation or notice provisions of Rule 144 as required in the preceding section.

 

SEC Position on Rule 144 Sales

 

The SEC has taken the position that promoters or affiliates of a blank check company and their transferees, both before and after a business combination, act as “underwriters” under the Securities Act when reselling the securities of a blank check company acquired prior to the consummation of its initial public offering. Accordingly, the SEC believes that those securities can be resold only through a registered offering and that Rule 144 would not be available for those resale transactions despite technical compliance with the requirements of Rule 144.

 

As of the date of this prospectus, such restricted shares would include the 8,625,000 founder shares (without giving effect to the redemption of 1,125,000 founder shares by our founding stockholders in the event that the underwriters do not fully exercise their over-allotment option, as more fully described in “Principal Stockholders”) purchased at inception by our officers and directors.

 

Registration Rights

 

The holders of a majority of all of (i) the 7,500,000 founder shares, or 8,625,000 founder shares if the over-allotment option is exercised in full, owned or held by the founding stockholders and (ii) the 8,500,000 shares of common stock issuable upon exercise of the 8,500,000 insider warrants will be entitled to make up to two demands that we register these securities pursuant to a registration rights agreement to be signed in connection with the insider private placements. Such holders may elect to exercise these registration rights at any time commencing on or after the date of consummation of this offering. In addition, these stockholders will have certain “piggy-back” registration rights with respect to registration statements filed by us subsequent to the date of consummation of this offering. We will bear the expenses incurred in connection with the filing of any such registration statements. Any securities registered pursuant to the registration rights agreement during the lock-up period will remain subject to the respective lock-up agreements of our founders.

 

Amendments to Our Amended and Restated Certificate of Incorporation

 

Our Amended and Restated Certificate of Incorporation to be filed with the State of Delaware contains provisions designed to provide certain rights and protections to our stockholders prior to the consummation of a business combination, including:

 

 

 

Our Amended and Restated Certificate of Incorporation, and the underwriting agreement that we will enter into with the underwriters in connection with this offering, prohibit the amendment or modification of any of the foregoing provisions prior to the consummation of a business combination unless the affirmative vote cast at a meeting of stockholders of at least 95% of the common stock issued in the offering approve an amendment or modification to the foregoing provisions. Additionally our board of directors has undertaken not to amend or modify the foregoing provisions. While these rights and protections have been established for the purchasers of units in this offering, it is nevertheless possible that the prohibition against amending or modifying these rights and protections at any time prior to the consummation of the business combination could be challenged as unenforceable under Delaware law, although, pursuant to the underwriting agreement we are prohibited from amending or modifying these rights and protections at any time prior to the consummation of a business combination. We have not sought an unqualified opinion regarding the enforceability of the prohibition on amendment or modification of such provisions because we view these provisions as fundamental and contractual terms of this offering. We believe these provisions to be obligations of our company to its stockholders and that investors will make an investment in our company relying, at least in part, on the enforceability of the rights and obligations set forth in these provisions including, without limitation, the prohibition on any amendment or modification of such provisions. As a result, without the affirmative vote cast at a meeting of stockholders of at least 95% of the common stock issued in the offering, the board of directors will not, and pursuant to the underwriting agreement cannot, at any time prior to the consummation of a business combination, propose any amendment or modification of our Amended and Restated Certificate of Incorporation relating to any of the foregoing provisions and will not support, directly or indirectly, or in any way endorse or recommend that stockholders approve an amendment or modification to such provisions. We believe that a vote for such an amendment or waiver would likely take place only to allow additional time to consummate a pending business combination. In such a case, stockholders would receive a proxy statement related to such action approximately 30 (but not less than 10 nor more than 60) days before the meeting date scheduled to vote thereupon.

 

Listing

 

We have applied to have our units, common stock and warrants listed on the American Stock Exchange under the symbols “GHC.U,” “GHC” and “GHC.W,” respectively. We anticipate that our units will commence trading on the American Stock Exchange on, or promptly after the consummation of this offering. Following the date the common stock and warrants are eligible to trade separately, we anticipate that the common stock and warrants will trade both separately and as a unit on the American Stock Exchange.

 

Delaware Anti-takeover Law

 

Pursuant to our Amended and Restated Certificate of Incorporation, we have opted out of the provisions of Section 203 of the Delaware General Corporation Law regulating corporate takeovers. This section prevents certain Delaware corporations, under certain circumstances, from engaging in a “business combination” with:

 

 

 

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:

 

 

This statute could prohibit or delay mergers or other change in control attempts, and thus may discourage attempts to acquire us.

 

U.S. FEDERAL INCOME TAX CONSIDERATIONS

 

General

 

The following is a summary of certain United States federal income tax considerations of the purchase, ownership, and disposition of the units. This summary is based upon existing United States federal income tax law, which is subject to change or differing interpretations, possibly with retroactive effect. This summary does not discuss all aspects of United States federal income taxation which may be important to particular investors in light of their individual circumstances, such as units held by investors subject to special tax rules ( e.g. , financial institutions, insurance companies, broker-dealers, tax-exempt organizations, and non-U.S. stockholders (as defined below)) or to persons that will hold the notes as part of a straddle, hedge, conversion, constructive sale, or other integrated transaction for United States federal income tax purposes, partnerships or their partners, or U.S. stockholders (as defined below) that have a functional currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below. In addition, this summary does not discuss any (i) United States federal income tax consequences to a non-U.S. stockholder that (A) is engaged in the conduct of a United States trade or business, (B) is a nonresident alien individual and such holder is present in the United States for 183 or more days during the taxable year, or (C) is a corporation which operates through a United States branch, or (ii) state, local or non-United States tax considerations. This summary is written for investors that will hold their units as “capital assets” under the Internal Revenue Code of 1986, as amended (the “Code”). Each prospective investor is urged to consult its tax advisor regarding the United States federal, state, local, and foreign income and other tax consequences of the purchase, ownership, and disposition of the units.

 

The term “U.S. stockholder” means a holder of our common stock or our warrants that, for United States federal income tax purposes is:

 

 

A “non-U.S. stockholder” is a holder who is not a U.S. stockholder.

 

Taxation of Company

 

We are treated as a taxable C corporation under the Code. As such, the income and losses from our operations and our net capital gains are taxable to us at applicable corporate income tax rates.

 

Taxation of U.S. Stockholders

 

Units

 

There is no authority addressing the treatment, for United States federal income tax purposes, of securities with terms substantially the same as the units, and, therefore, such treatment is not entirely clear. Each unit should be treated for United States federal income tax purposes as an investment unit consisting of one share of our common stock and a warrant to acquire one share of our common stock. Each holder of a unit must allocate the purchase price

paid by such holder for such unit between the share of common stock and the warrant based on their respective relative fair market values.

 

Our view of the characterization of the units described above and a holder’s purchase price allocation are not, however, binding on the Internal Revenue Service (the “IRS”) or the courts. Because there are no authorities that directly address instruments that are similar to the units, no assurance can be given that the IRS or the courts will agree with the characterization described above or the discussion below. Accordingly, prospective investors are urged to consult their own tax advisors regarding the United States federal tax consequences of an investment in a unit (including alternative characterizations of a unit) and with respect to any tax consequences arising under the laws of any state, local or non-United States taxing jurisdiction. Unless otherwise stated, the following discussions are based on the assumption that the characterization of the units and the allocation described above are accepted for United States federal tax purposes.

 

Dividends

 

A U.S. stockholder will be required to take into account as dividends any distributions made out of our current or accumulated earnings and profits. A U.S. stockholder that is a taxable corporation generally should qualify for the dividends received deduction if the requisite holding period is satisfied. A U.S. stockholder that is taxed as an individual generally will be subject to tax at the maximum rate accorded to capital gains for any qualified dividends for taxable years beginning on or before December 31, 2010 (after which the rate applicable to dividends is currently scheduled to return to the tax rate generally applicable to ordinary income) if the requisite holding periods are satisfied and the stockholder does not elect to treat the dividends as investment income for purposes of the investment interest limitations. It is unclear whether the conversion rights with respect to the common stock, described above under “Proposed Business—Effecting a Business Combination—Conversion rights,” may prevent a U.S. stockholder from satisfying the applicable holding period requirements with respect to the dividends received deduction or the preferential tax rate on qualified dividend income, as the case may be.

 

A U.S. stockholder will not incur tax on a distribution in excess of our current and accumulated earnings and profits if the distribution does not exceed the adjusted basis of the U.S. stockholder’s common stock. Instead, the distribution will reduce the adjusted basis of the shares of common stock. Any amount in excess of both our current and accumulated earnings and profits and the adjusted tax basis will be treated as capital gain, long-term if the shares of common stock have been held for more than one year, as described below under “Taxation of U.S. Stockholders—Disposition of Common Stock.”

 

Disposition of Common Stock

 

A U.S. stockholder generally will recognize capital gain or loss for United States federal income tax purposes upon a sale or other disposition of our common stock (which would include a dissolution and liquidation in the event we do not consummate an initial business combination within the required timeframe) in an amount equal to the difference between the amount realized from the sale or disposition and the stockholder’s adjusted tax basis in the common stock. Such gain generally will be long-term if, on the date of such sale or disposition, the common stock was held by the U.S., stockholder for more than one year. There is substantial uncertainty, however, as to whether the conversion rights with respect to the common stock, described above under “Proposed Business—Effecting a Business Combination—Conversion rights,” may suspend the running of the applicable holding period for this purpose. The deductibility of a capital loss may be subject to limitations.

Conversion of Common Stock

 

In the event that a U.S. stockholder converts our common stock into a right to receive cash pursuant to the exercise of a conversion right, the transaction will be treated for United States federal income tax purposes as a redemption of the common stock. If that redemption qualifies as a sale of common stock by the U.S. stockholder under Section 302 of the Code, the holder will be treated as described under “Taxation of U.S. Stockholders—Disposition of Common Stock” above. If that redemption does not qualify as a sale of common stock under Section 302 of the Code, the U.S. stockholder will be treated as receiving a corporate distribution with the tax consequences described below. Whether that redemption qualifies for sale treatment will depend largely on the total number of shares of our stock treated as held by the U.S. stockholder (including any stock constructively owned by the holder as a result of, among other things, owning warrants). The conversion of common stock generally will be treated as a sale or exchange of the common stock (rather than as a corporate distribution) if the receipt of cash upon the conversion (i) is “substantially disproportionate” with respect to the U.S. stockholder, (ii) results in a “complete termination” of the U.S. stockholder’s interest in us or (iii) is “not essentially equivalent to a dividend” with respect to the U.S. stockholder. These tests are explained more fully below.

 

In determining whether any of the foregoing tests are satisfied, a U.S. stockholder takes into account not only stock actually owned by the holder, but also shares of our stock that are constructively owned by it. A U.S. stockholder may constructively own, in addition to stock owned directly, stock owned by certain related individuals and entities in which the stockholder has an interest or that have an interest in such stockholder, as well as any stock the holder has a right to acquire by exercise of an option, which generally would include common stock which could be acquired pursuant to the exercise of the warrants. In order to meet the substantially disproportionate test, the percentage of our outstanding voting stock actually and constructively owned by the U.S. stockholder immediately following the conversion of common stock must, among other requirements, be less than 80 percent of the percentage of our outstanding voting stock actually and constructively owned by the stockholder immediately before the conversion. There will be a complete termination of a U.S. stockholder’s interest if either (i) all of the shares of our stock actually and constructively owned by the U.S. stockholder are converted or (ii) all of the shares of our stock actually owned by the U.S. stockholder are converted and the U.S. stockholder is eligible to waive, and effectively waives in accordance with specific rules, the attribution of stock owned by certain family members and the U.S. stockholder does not constructively own any other stock. The conversion of the common stock will not be essentially equivalent to a dividend if a U.S. stockholder’s conversion results in a “meaningful reduction” of the stockholder’s proportionate interest in us. Whether the conversion will result in a meaningful reduction in a U.S. stockholder’s proportionate interest in us will depend on the particular facts and circumstances. However, the IRS has indicated in a published ruling that even a small reduction in the proportionate interest of a small minority stockholder in a publicly held corporation who exercises no control over corporate affairs may constitute such a “meaningful reduction.” A U.S. stockholder should consult with its own tax advisors as to the tax consequences of an exercise of the conversion right.

 

If none of the foregoing tests are satisfied, then the conversion will be treated as a corporate distribution and the tax effects will be as described under “Taxation of U.S. Stockholders—Dividends,” above. After the application of those rules, any remaining tax basis of the U.S. stockholder in the converted common stock will be added to the holder’s adjusted tax basis in its remaining stock, or, if it has none, to the holder’s adjusted tax basis in its warrants or possibly in other stock constructively owned by it.

 

Exercise, Disposition or Expiration of Warrants

 

Upon the exercise of a warrant, a U.S. stockholder will not recognize gain or loss and will have a tax basis in the common stock received equal to the U.S. stockholder’s tax basis in the

warrant plus the exercise price of the warrant. The holding period for the common stock purchased pursuant to the exercise of a warrant will begin on the day following the date of exercise and will not include the period during which the U.S. stockholder held the warrant.

 

Upon the sale, redemption or other disposition of a warrant, a U.S. stockholder will recognize capital gain or loss in an amount equal to the difference between the amount realized and the U.S. stockholder’s tax basis in the warrant. Such gain or loss will be long-term gain or loss if the U.S. stockholder has held the warrant for more than one year. In the event that a warrant lapses unexercised, a U.S. stockholder will recognize a capital loss in an amount equal to its tax basis in the warrant. Such loss will be long-term if the warrant has been held for more than one year.

 

Taxation of Non-U.S. Stockholders

 

Dividends

 

The dividends on our common stock paid to a non-U.S. stockholder generally will be subject to withholding of United States federal income tax at a 30% rate on the gross amount of the dividend or such lower rate as may be provided by an applicable income tax treaty. In addition, if we determine that we are likely to be classified as a “United States real property holding corporation” (see “Disposition of Common Stock” below), we intend to withhold 10% of any distribution that exceeds our current and accumulated earnings and profits.

 

A non-U.S. stockholder who claims the benefit of an applicable income tax treaty generally will be required to satisfy applicable certification and other requirements prior to the distribution date. In general, non-U.S. stockholders must provide the withholding agent with a properly executed IRS Form W-8BEN (or successor form) claiming an exemption from or reduction in withholding under an applicable income tax treaty. Applicable Treasury regulations provide alternative methods for satisfying this requirement. Under these Treasury regulations, in the case of common stock held by a foreign intermediary (other than a “qualified intermediary”) or a foreign partnership (other than a “withholding foreign partnership”), the foregoing intermediary or partnership, as the case may be, generally must provide an IRS Form W-8IMY (or successor form) and attach thereto an appropriate certification by each beneficial owner or partner.

 

Exercise of Warrants

 

The United States federal income tax treatment of a non-U.S. stockholder’s exercise of a warrant generally will correspond to the United States federal income tax treatment of the exercise of a warrant by a U.S. stockholder, as described under “Taxation of U.S. Stockholders—Exercise, Disposition or Expiration of Warrants” above.

 

Disposition of Common Stock or Warrants

 

A non-U.S. stockholder generally will not be subject to United States federal income tax (or withholding thereof) in respect of gain recognized on a disposition of our common stock (which would include a dissolution and liquidation in the event we do not consummate an initial business combination within the required timeframe) or warrants (including an expiration of our warrants), unless we are or have been a United States real property holding corporation at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. stockholder held our common stock. Although we currently are not a United States real property holding corporation, we cannot determine whether we will be a United States real property holding corporation in the future until we consummate an initial business combination. A corporation will be classified as a “United States real property holding corporation” if the fair market value of its United States real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business.

If we are a United States real property holding corporation, a non-U.S. stockholder will be subject to United States federal income tax in respect of gain recognized on a disposition of our common stock in the same manner as described above under the caption “Taxation of U.S. Stockholders—Disposition of Common Stock.” In addition, upon such disposition, the non-U.S. stockholder may be subject to a 10% withholding tax on the amount realized on such disposition. If our common stock is treated as being regularly traded on an established securities market, the tax on dispositions described above would not apply to any non-U.S. stockholder who beneficially owns (actually or constructively), at all times during the shorter of the five-year period preceding the date of the disposition or the non-U.S. stockholder’s holding period, held 5% or less of our common stock.

 

Conversion of Common Stock

 

The characterization for United States federal income tax purposes of a non-U.S. stockholder’s conversion of our common stock into a right to receive cash pursuant to an exercise of a conversion right generally will correspond to the United States federal income tax characterization of the exercise of such a conversion right by a U.S. stockholder, as described under “Taxation of U.S. Stockholders—Conversion of Common Stock” above, and the consequences of the conversion to the non-U.S. stockholder will be as described above under “Taxation of Non-U.S. Stockholders—Dividends” and “Taxation of Non-U.S. Stockholders—Disposition of Common Stock or Warrants,” as applicable.

 

Information Reporting and Backup Withholding Tax

 

We must report annually to the IRS and to each non-U.S. stockholder the amount of dividends paid to that stockholder and the tax withheld with respect to those dividends. A copy of the information returns reporting those dividends and the amount of tax withheld may also be made available to the tax authorities in the country in which the non-U.S. stockholder is a resident under the provisions of an applicable income tax treaty or exchange of information treaty.

 

United States federal backup withholding generally will not apply to payments of dividends or proceeds from the disposition of our common stock or warrants made by us or our paying agents, in their capacities as such, to a non-U.S. stockholder if the stockholder has provided the required certification that the stockholder is not a United States person (usually satisfied by providing an IRS Form W-8BEN or successor form) or certain other requirements are met. Notwithstanding the foregoing, backup withholding may apply if either we or our paying agent has actual knowledge, or reason to know, that the stockholder is a United States person that is not an exempt recipient.

 

Proceeds from the disposition of shares of common stock or warrants paid to or through the United States office of a broker generally will be subject to backup withholding and information reporting unless the non-U.S. stockholder certifies that it is not a United States person under penalties of perjury (usually on an IRS Form W-8BEN or successor form) or otherwise establishes an exemption. Payments of the proceeds from a disposition or redemption effected outside the United States by or through a non-United States broker generally will not be subject to information reporting or backup withholding. However, information reporting, but generally not backup withholding, will apply to such a payment if the broker has certain connections with the United States unless the broker has documentary evidence in its records that the beneficial owner thereof is a non-U.S. stockholder and specified conditions are met or an exemption is otherwise established.

 

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules from a payment to a non-U.S. stockholder that result in an overpayment of taxes generally will be refunded, or credited against the stockholder’s United States federal income tax liability, if any, provided that the required information is timely furnished to the IRS.

 

UNDERWRITING

 

Subject to the terms and conditions of the underwriting agreement, the underwriters named below, through their representative Deutsche Bank Securities Inc., have severally agreed to purchase from us on a firm commitment basis the following respective number of units at a public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus:

 

 

The underwriting agreement provides that the obligation of the underwriters to purchase all of the 30,000,000 units being offered to the public is subject to specific conditions, including the absence of any material adverse change in our business or in the financial markets, the purchase by our sponsor and Chief Executive Officer of 7,500,000 insider warrants and 1,000,000 insider warrants, respectively, at a purchase price of $1.00 per warrant in an insider private placement immediately prior to the consummation of this offering, and the receipt of certain legal opinions, certificates and letters from us, our counsel and the independent auditors. Subject to the terms of the underwriting agreement, the underwriters will purchase all of the 30,000,000 units being offered to the public, other than those covered by the over-allotment option described below, if any of these units are purchased.

 

We have been advised by the representative of the underwriters that the underwriters propose to offer the units to the public at the public offering price set forth on the cover of this prospectus and to dealers at a price that represents a concession not in excess of $0.24 per unit under the public offering price. The underwriters may allow, and these dealers may re-allow, a concession of not more than $0.10 per unit to other dealers. After the initial public offering, the representative of the underwriters may change the offering price and other selling terms.

 

After we consummate a business combination, we intend to use our commercially reasonable efforts to file and maintain the effectiveness of a registration statement relating to the common stock issuable upon exercise of the warrants in order to allow exercise of the publicly traded warrants. We will file post-effective amendments to our registration statement in order to reflect in the prospectus any facts or events which arise after the effective date of our registration statement which, individually or in the aggregate, represent a fundamental change in the information set forth in our registration statement.

 

Over-Allotment Option

 

We have granted to the underwriters an option, exercisable not later than 30 days after the effective date of the registration statement, to purchase up to 4,500,000 additional units at the public offering price less the underwriting discounts and commissions set forth on the cover of this prospectus. The underwriters may exercise this option only to cover over-allotments made in connection with the sale of the units offered by this prospectus. To the extent that the underwriters exercise this option, each of the underwriters will become obligated, subject to conditions, to purchase approximately the same percentage of these additional units as the number of units to be purchased by it in the above table bears to the total number of units offered by this prospectus. We will be obligated, pursuant to the option, to sell these additional units to the underwriters to the extent the option is exercised. If any additional units are purchased, the underwriters will offer the additional units on the same terms as those on which the other units are being offered hereunder.

The underwriting discounts and commissions are 7% of the initial public offering price. We have agreed to pay the underwriters the discounts and commissions set forth below, assuming either no exercise or full exercise by the underwriters of the underwriters’ over-allotment option.

 

 

 

 

 

Upon the consummation of a business combination, the underwriters will be entitled to receive that portion of the proceeds attributable to the underwriters’ discount held in the trust account without any interest accrued thereon. If we are unable to consummate a business combination and the trustee is forced to liquidate the trust account, the underwriters have agreed that: (i) they will forfeit any rights to or claims against such proceeds and (ii) the proceeds attributable to the underwriters’ discount will be distributed on a pro-rata basis among the public stockholders along with any interest accrued thereon.

 

Pricing of this Offering

 

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 representative of the underwriters. Factors considered in determining the prices and terms of the units, including the common stock and warrants underlying the units, include:

 

 

However, although these factors were considered, the determination of our offering price is more arbitrary than the pricing of securities for an operating company in a particular industry since the underwriters are unable to compare our financial results and prospects with those of public companies operating in the same industry.

 

Price Stabilization and Short Positions

 

In order to facilitate the offering of our units, the underwriters may engage in transactions that stabilize, maintain, or otherwise affect the market price of our units. Specifically, the underwriters may over-allot units in connection with this offering, thus creating a short sales position in our units for their own account. A short sales position results when an underwriter sells more units than that underwriter is committed to purchase. A short sales position may

involve either “covered” short sales or “naked” short sales. Covered short sales are sales made for an amount not greater than the underwriters’ over-allotment option to purchase additional units in the offering described above. The underwriters may close out any covered short position by either exercising their over-allotment option or purchasing units in the open market. In determining the source of units to close out the covered short position, the underwriters will consider, among other things, the price of units available for purchase in the open market as compared to the price at which they may purchase units through the over-allotment option. Naked short sales are sales in excess of the over-allotment option. The underwriters will have to close out any naked short position by purchasing units in the open market. 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 this offering. Accordingly, to cover these short sales positions or to stabilize the market price of our units, the underwriters may bid for, and purchase, units in the open market. These transactions may be effected on the American Stock Exchange or otherwise.

 

Additionally, the representative, on behalf of the underwriters, may also reclaim selling concessions allowed to an underwriter or dealer if the underwriting syndicate repurchases units distributed by that underwriter or dealer. Similar to other purchase transactions, the underwriters’ purchases to cover the syndicate short sales or to stabilize the market price of our units may have the effect of raising or maintaining the market price of our units or preventing or mitigating a decline in the market price of our units. As a result, the price of our units may be higher than the price that might otherwise exist in the open market. The underwriters are not required to engage in these activities and, if commenced, may end any of these activities at any time.

 

Other Terms

 

Although 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, any of the underwriters may, among other things, introduce us to potential target acquisitions or assist us in raising additional capital, as needs may arise in the future. If any of the underwriters provide services to us after this offering, we may pay such underwriter fair and reasonable fees that would be determined at that time in an arm’s length negotiation; provided that no agreement will be entered into with any of the underwriters and no fees for such services will be paid to any of the underwriters prior to the date which is 90 days after the effective date of the registration statement, unless the FINRA determines that such payment would not be deemed underwriters compensation in connection with this offering.