Related Party Transactions |
8 Months Ended |
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Sep. 30, 2011 | |
Related Party Transactions |
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| Related Party Transactions |
Note 5. Related Party Transactions
Founder Shares — In February 2011, the Sponsor
purchased 4,417,683 shares of common stock (the “Founder
Shares”) for an aggregate purchase price of $25,000, or
approximately $0.01 per share. Subsequently, in March 2011, the
Sponsor transferred an aggregate of 44,176 Founder Shares to Dennis
A. Miller and James M. McNamara (together with the Sponsor, the
“Initial Stockholders”), each of whom agreed to serve
on the Company’s board of directors upon the closing of the
Public Offering.
The
securities described in the preceding paragraph were issued by the
Company in connection with the Company’s organization
pursuant to the exemption from registration contained in Section
4(2) of the Securities Act of 1933, as amended (the
“Securities Act”), and were sold to accredited
investors.
Forfeiture — As a result of the underwriters’
partial exercise of their over-allotment option for the Public
Offering, the Sponsor forfeited an aggregate of 248,598 Founder
Shares on May 18, 2011, reflected on the audited balance sheet as
of May 19, 2011, which the Company has cancelled. After giving
effect to the forfeitures, the Initial Stockholders owned 18% of
the Company’s issued and outstanding shares.
In
addition, a portion of the Founder Shares in an amount equal to
4.0% of the Company’s issued and outstanding shares after the
Public Offering (“Earnout Shares”), will be subject to
forfeiture on the third anniversary of the closing of the
Company’s Business Combination unless following the Business
Combination (i) the last sales price of the Company’s stock
equals or exceeds $13.00 per share (as adjusted for stock splits,
stock dividends, reorganizations, recapitalizations and the like)
for any 20 trading days within any 30-trading day period or (ii)
the Company completes a liquidation, merger, stock exchange or
other similar transaction that results in all of the
Company’s stockholders having the right to exchange their
shares of common stock for consideration in cash, securities or
other property which equals or exceeds $13.00 per share (as
adjusted for stock splits, stock dividends, reorganizations,
recapitalizations and the like).
Rights — The Founder Shares are identical to the
shares of common stock included in the units sold in the Public
Offering except that (i) the Founder Shares are subject to certain
transfer restrictions, as described in more detail below, and (ii)
the Initial Stockholders have agreed to waive their redemption
rights with respect to the Founder Shares (and any Public Shares
they may purchase) in connection with the Business Combination and
also waived their redemption rights with respect to the Founder
Shares if the Company fails to consummate a Business Combination
within 21 months from the closing of the Public
Offering.
Voting — If the Company seeks stockholder approval of
the Business Combination, the Initial Stockholders have agreed to
vote the Founder Shares in accordance with the majority of the
votes cast by the public stockholders and to vote any public shares
purchased during or after the Public Offering in favor of the
Business Combination.
Liquidation — Although the Initial Stockholders waived
their redemption rights with respect to the Founder Shares if the
Company fails to consummate a Business Combination within 21 months
from the closing of the Public Offering, they will be entitled to
redemption rights with respect to any Public Shares they may
own.
Disposition Restrictions —The Initial Stockholders
have agreed not to transfer, assign or sell any of their Founder
Shares, except to certain permitted transferees, until one year
after the completion of the Business Combination or earlier if the
last sales price of the Company’s common stock exceeds $13.00
per share (as adjusted for stock splits, stock dividends,
reorganizations, recapitalizations and the like) for any 20 trading
days within any 30-trading day period commencing at least 150 days
from the date of consummation of a Business
Combination.
Sponsor Warrants — The Sponsor purchased an aggregate
of 7,000,000 Sponsor Warrants at a price of $0.75 per warrant (for
an aggregate purchase price of $5,250,000) from the Company on a
private placement basis simultaneously with the closing of the
Public Offering. Subsequently, in July 2011, the Sponsor
transferred 333,333 Sponsor Warrants to Dennis A. Miller for an
aggregate purchase price of $250,000, or $0.75 per Sponsor
Warrant.
Exercise conditions — Each Sponsor Warrant is
exercisable into one share of common stock at $11.50 per share. The
proceeds from the sale of the Sponsor Warrants were added to the
portion of the proceeds from the Public Offering placed in the
Trust Account. The Sponsor Warrants are identical to the warrants
included in the units sold in the Public Offering except that the
Sponsor Warrants (i) are not be redeemable by the Company as long
as they are held by the Sponsor or any of its permitted
transferees, (ii) are subject to certain transfer restrictions
described in more detail below and (iii) may be exercised for cash
or on a cashless basis.
Accounting — Because
the Company is not required to net-cash settle the Sponsor
Warrants, the Sponsor Warrants were recorded at fair value and
classified within stockholders’ equity as “Additional
paid-in capital” upon their issuance in accordance with FASB
ASC Topic 815-40.
Disposition Restrictions — The holders of the Sponsor
Warrants may not transfer, assign or sell any of the Sponsor
Warrants, including the common stock issuable upon exercise of the
Sponsor Warrants, except to certain permitted transferees, until 30
days after the completion of a Business Combination.
Registration Rights — The holders of the Founder
Shares, Sponsor Warrants and warrants that may be issued upon
conversion of working capital loans which may be made to the
Company as described in the Prospectus have registration rights,
pursuant to a registration rights agreement, to require the Company
to register for sale any of the securities held by them. These
security holders will be entitled to make up to three demands,
excluding short form demands, that the Company register such
securities for sale under the Securities Act of 1933, as amended
(the “Securities Act”). In addition, these security
holders have “piggy-back” registration rights to
include their securities in other registration statements filed by
the Company. However, the registration rights agreement provides
that the Company will not permit any registration statement filed
under the Securities Act to become effective until termination of
the applicable lock-up period, which occurs (i) in the case of the
Founder Shares, (A) one year after the completion of the Business
Combination or earlier if, subsequent to the Business Combination,
the last sales price of the Company’s common stock equals or
exceeds $13.00 per share (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and the like) for any
20 trading days within any 30-trading day period commencing at
least 150 days after the Business Combination or (B) when the
Company consummates a liquidation, merger, stock exchange or other
similar transaction after the Company’s Business Combination
which results in all of the Company’s stockholders having the
right to exchange their shares of common stock for cash, securities
or other property, and (ii) in the case of the Sponsor Warrants and
the respective common stock underlying such warrants, 30 days after
the completion of the Company’s Business Combination. The
Company will bear the costs and expenses of filing any such
registration statements.
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Other |
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| Related Party Transactions |
Note 6. Other Related Party Transactions
Administrative
Services
The
Company has agreed to pay $10,000 a month in total for office space
and general and administrative services to Roscomare Ltd., an
entity owned and controlled by Harry E. Sloan, the Company’s
Chairman and Chief Executive Officer, commencing promptly after the
date the Company’s securities were first listed on Nasdaq
(May 13, 2011) and terminating upon the earlier of (i) the
completion of a Business Combination or (ii) the liquidation of the
Company. $45,806 in payments have been made under this
agreement as of September 30, 2011. The Company has
also agreed to pay $15,000 a month to James A. Graf, the
Company’s Chief Financial Officer, commencing promptly after
the date the Company’s securities were first listed on Nasdaq
(May 13, 2011) and terminating upon the earlier of (i) the
completion of a Business Combination or (ii) the liquidation of the
Company. The Company has incurred approximately $69,000
under this agreement for the period ended September 30,
2011.
Note Payable
The
Company issued an unsecured promissory note (the
“Note”) to the Sponsor on February 2, 2011 that
provided for the Sponsor to advance to the Company, from time to
time, up to $200,000 for expenses related to the Public
Offering. The Note was non-interest bearing and was
payable on the earlier of August 1, 2011 or the completion of the
Public Offering. In the period from February 2, 2011 to September
30, 2011, the Sponsor advanced $140,000 to the Company under the
Note in a series of transactions prior to the Public Offering,
leaving a total $60,000 as yet undrawn on such date. The
Note was paid in full on May 18, 2011 and no balance remained
outstanding as of September 30, 2011.
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